Figure 1, below, shows Nvidia’s revenue by geographic segment for the last few years. 

As you can see, from the start of 2022 into mid-2023, Nvidia’s largest single market was Taiwan; but even then, the company also had an impressively even spread of revenue among the United States, China, and the rest of the world, too. 

That all changed at the start of this year, when the U.S. first became Nvidia’s primary geographic market — and then peeled away from all others, even as total revenue had also taken off like a rocket. In the space of nine months, the U.S. market had become hugely important for Nvidia’s success. 

Then we get to the really good stuff: Nvidia’s revenue by operating segment. See Figure 2, below. 

Holy silicon! We knew for a while that sales of chips for AI systems (seen in blue above) were leading the charge at Nvidia, but we didn’t appreciate just how much Nvidia has become an AI chip company. Its revenue from AI chips have zoomed into the stratosphere, while a few side businesses still bring in about $3 billion every quarter. 

To put things another way, those non-AI segments at Nvidia are on pace to bring in $12.9 billion in 2024. If Nvidia spun out those rump segments as a stand-alone business (and we can hear you all saying, “Hmmmm, that’s interesting….”), that NewCo would fall smack in the middle of the S&P 500. And it’s the business we’re all squinting to see, compared to the AI chip segment. 

Pulling together this analysis was easy. We simply opened our Footnotes & Disclosure Query page and looked up Nvidia’s operating segments disclosure. Then we hovered our cursor over the relevant tables for a moment until ‘Export tag history’ appeared, and exported. A few quick keystrokes later in Excel, and we had our charts ready for you.

Who could’ve guessed that was coming? Calcbench users, that’s who!

Back in August we had two consecutive posts about large entertainment companies taking big impairments on their cable TV operations: Warner Bros. Discovery ($WBD) announced a $9.1 billion impairment charge on Aug. 7, and then Paramount Global ($PARA) followed up with a $6 billion impairment charge one day later. 

In both instances, the companies disclosed a long-term growth rate of negative 3 percent and discount rates of an eye-popping 10.5 percent (Warner Bros.) and 11 percent (Paramount). 

With horrible long-term prospects from those two, should anyone really be surprised that Comcast is getting out of cable TV now, before things get even worse? 

Comcast didn’t disclose similarly precise (and grim) projections in the Management Discussion & Analysis of its most recent quarterly report, but you could find clues in the text if you looked. For example, Page 20 provided a table breakdown of Comcast’s various operating units, including a “Media” unit that saw Q3 revenue up 36.5 percent. 

Underneath that table, however, Comcast warned that “We operate our Media segment as a combined television and streaming business. We expect that the number of subscribers and audience ratings at our linear television networks will continue to decline as a result of the competitive environment and shifting video consumption patterns…” (Plus, those Q3 numbers included a one-time pop from broadcasting the Olympics. Excluding Olympic revenue, the Media unit’s overall revenue only grew 4.9 percent.

One could also use our Disclosure & Footnote Query page to research whether Comcast has taken any goodwill impairments of its own. 

The answer, according to the company’s 2023 annual report, is kinda sorta. The goodwill in Comcast’s Media division held steady at $14.7 billion in 2021 and 2022, and then was revised upward in 2023 to $21.9 billion largely as a result of the company re-jiggering some of its operating divisions; but it also declared an $8.1 billion impairment in 2022 for its Sky operating division, which is the British media business that Comcast acquired in 2018.

In other words, if you had been reading Comcast’s footnote disclosures closely, and kept an eye on what its competitors were saying, it wouldn’t be far-fetched to guess that Comcast might do something like spin out its media business. 

The pieces of that mosaic were all there, scattered in the data. You just needed a good tool (like Calcbench) to find them!

As devout readers of this blog know, we use the Earnings Tracker to collect financial disclosures as companies file their latest earnings releases with the Securities and Exchange Commission. We first turned on the tracker for Q3 2024 earnings several weeks ago; as of today we now have data on nearly 3,200 non-financial firms crunched and ready for your analysis.

The headline performance numbers are in Figure 1, below.

As you can see, revenue is up 3.7 percent from the year-ago period, while net income is down 8.3 percent. We previously noted that the decline in net income was driven by two specific one-time items at Intel ($INTC) and Johnson & Johnson ($JNJ) that were so huge they skewed net income for the entire sample; strike those two, and net income for everyone else was actually up. 

That still holds true this week. Net income for all 3,200 firms was collectively 8.3 percent lower than third-quarter 2023, but if you strike Intel and J&J, net income is actually up 2.1 percent.

Even more interesting, however, is that (net) capex spending number: up 17 percent from the year-earlier period. In theory that’s great news; it means that lots of companies are spending lots of money to buy equipment, build plants, install new technology, and do all sorts of other things to foster long-term economic growth. 

So is that what’s really happening? As always, Calcbench dug into the data to find out. 

Answer: no.

Concentration of Capex

First let’s look at the absolute numbers. Total capex spending reported so far for Q3 2024 is $322.1 billion. That’s an increase of $46.9 billion from the year-earlier amount, which was $275.2 billion.

But then we looked at the companies that reported the largest increases in capex spending. The 10 firms with the largest spending jumps reported a total increase of $49.1 billion — which is $3 billion more than the total increase for the whole sample group of 3,200 firms. 

In other words, those big-spender firms accounted for all of the increase in capex spending, and then some. Among the other 3,190 firms in our sample, capex spending actually fell. 

Figure 2, below, shows who those 10 big spenders actually are. 

They are all tech companies, energy companies, and telecom companies. That’s it. Capex spending among all other companies, in all other industries, is collectively less this Q3 than it was one year ago.

What does that mean for economic growth in the future? We don’t know, but clearly an insight like this is worth keeping in mind as you run your own models and prepare for whatever earnings call is on your calendar. Calcbench gives you the information you need to ask better questions, and then find better answers. 

Calcbench will continue to update our earnings tracker at the end of every week for the next few weeks, as quarterly reports flood into the database. 

If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file. 

Please note that it will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at us@calcbench.com.

This is important because more companies now have more of their total assets tied up in goodwill or other intangible assets — so if you do need to declare an impairment, it can be a gut punch to the income statement. Investors do not like this, and financial analysts are always on the lookout for warning signs of impairments. 

The good news is that we have no visible shifts in market dynamics this year that suggest a wave of goodwill impairments are looming. (Compare that to, say, 2020, when the covid pandemic forced companies to declare goodwill impairments all over the place.) Still, we wanted to get a sense of companies’ overall exposure to goodwill assets, just as a thought experiment to help us understand who might be most vulnerable to impairment risk.

For example, Figure 1, below, shows the comparison of goodwill, intangible assets, and all other assets for the S&P 500 for the last five years. (Using our Bulk Data Query page, we did this in about two minutes.)

As you can see (if you squint), goodwill and other intangibles actually fell as a percentage of total assets among the S&P 500, from 14.8 percent in 2019 to 13.7 percent in 2023. Goodwill alone fell from 9.3 percent to 8.9 percent. 

OK, but perhaps that’s because S&P 500 firms tend to have large operations with lots of cash, inventory, and other physical assets. Would a larger pool of companies give a different result? Again using the Bulk Data Query page, we ran the same exercise for all non-financial companies with more than $100 million in annual revenue, about 2,100 firms in total. The result was Figure 2, below.

So we have the same pattern of goodwill and intangibles declining as a percentage of total assets over time, but they do start from a higher base: 27.4 percent of total assets in 2019, to 25.6 percent last year. What will they be for 2024 numbers? We’ll know in another five months or so.

Of course, what’s more useful to financial analysts are insights about the specific companies that have a high percentage of total assets tied up in goodwill. No fear, Calcbench can do that too! We fired up our Multi-Company page to identify those firms with the highest goodwill percentage, again looking at all non-financial firms with $100 million or more in revenue. The top 10 are in the table below.

To be clear, we have no idea whether any of these firms actually will declare goodwill impairments. We’re simply pointing out that these are the firms with an exceptionally high portion of total assets tied up in goodwill. But if you’re an analyst wondering about where goodwill impairments might send a company reeling, exercises like these are one good, logical place to begin.

All you need is the data, which Calcbench has in spades.

One good example comes from Dollar General ($DG), the discount retail giant that made $38.7 billion in its fiscal 2023. Dollar General filed its second-quarter earnings release at the end of August, and included numerous nifty items:

• Same-store sales

• Merchandise inventories

• Category sales

• Store count

• Square footage

You can track all these disclosures in the Footnote Query & Disclosure tool in Calcbench, seeing how they have evolved over time. For example, we used the Export History feature to dig up the total square footage of Dollar General stores for the last 14 quarters and put them into a chart. Figure 1, below, took us less than three minutes. 

But wait, there’s more! We then dug up Dollar General’s quarterly revenue, too; and calculated revenue per square foot over the same period. See Figure 2.

So even though revenue increased by 21.5 percent over those 14 quarters (from $8.4 billion at the start of 2021 to $10.2 billion in second-quarter 2024), revenue per square foot only went from $65.15 to $66.10 in that same timeframe. Except for a single spike at the end of 2022 (hello inflation, we see you there), revenue per square foot fluctuated within a narrow band.

Other Retail Metrics

Another critical metric for retail sector performance is same-store sales, also known as comparable store sales. It measures the change in sales at individual stores open for some set period (usually a year), so analysts can get a better sense of trends in the company’s sales growth without the influence of new stores opening or failed stores closing.

Same-store sales growth is typically reported in the earnings release, and you can often find it in the Management Discussion & Analysis of the 10-Q, too. We pulled comparable-store sales growth for Target ($TGT), shown in Figure 3, below.

Yet again, we see that sales growth was doing OK until mid-2022 when inflation flared up, and then faltered through most of 2023. Only earlier this year did comparable-store sales rebound, when inflation had largely receded. 

What will Target’s comparable-store sales growth be for Q3? Ask us again in a few weeks, when the company files. 

You can explore other nooks and crannies of disclosure, too. For example, Macy’s ($M) reports same-store sales broken out by stores the company actually owns and those where Macy’s simply licenses the brand name to other owner-operators. Williams Sonoma ($WSM) breaks out revenue by specific store brands it owns. See Figure 4, below.

Other retailers report breakouts of products sold, although that’s more usually seen in the full 10-Q rather than the earnings release. 

All of it, however, is promptly collected and indexed by Calcbench! Just use our Disclosures and Footnotes Query page to dive into the data as deeply as you want, for as many retailers and you want. We have the data!

So says the Calcbench Earnings Tracker, which we use during earnings season to collect financial disclosures as companies file their latest earnings releases with the Securities and Exchange Commission. We first turned on the tracker for Q3 2024 earnings last week; as of this week we now have data on more than 2,300 firms crunched and ready for your analysis.

Figure 1, below, shows the headline data.

That 7.3 percent decline in net income might seem alarming, but the drop is thanks to two huge, one-time items from Johnson & Johnson ($JNJ) and Intel ($INTC):

• J&J reported a massive gain one year ago when it sold off its stake in Kenvue Corp. ($KVUE) for $21.7 billion. That gain didn’t recur in Q3 2024, so even though J&J reported $2.7 billion in net income this quarter, that’s down roughly 90 percent from the $26.03 billion the company reported one year ago. 

• Intel reported a $5.6 billion restructuring charge for Q3 2024, along with various other losses. So Intel’s bottom line for this quarter is a stunning $16.64 billion net loss, compared to $297 million in net income one year ago.

If you drop Intel and J&J from our sample, then the remaining 2,300 firms saw net income increase by 3.5 percent compared to one year ago. See Figure 2, below.

Just goes to show that you should always dig deeper into the data for better insight. You’ll find lots if you look.

Meanwhile, we can also see that most major financial metrics moved into positive territory this week, including capex, opex, inventory, assets, liabilities, and cost of revenue. One week ago most of those categories were still lower than the year-earlier period. See Figure 3, below.

Calcbench will continue to update our earnings tracker at the end of every week for the next few weeks, as quarterly reports flood into the database. 

If Calcbench subscribers wish to get their hands on the template we use for this analysis, so you can conduct your own experiments at home, use this link to the file. 

Please note that it will only work with an active Calcbench subscription. If you need an active subscription (and who doesn’t, really, when swift access to real-time data is so important?), contact us at us@calcbench.com.

First example: the inventory turnover ratio, a crucial performance metric. Calcbench tracks that!

The inventory turnover ratio measures how many times a company “turns over” (that is, sells and replenishes) its inventory in a given period. You calculate it by dividing the cost of goods sold into the average inventory for a given period. A higher number is considered good, since it typically means you’re selling goods at a brisk pace. (Although it can mean you’re not stockpiling enough inventory, too.) 

But why bother with all that math yourself? Calcbench tracks inventory turnover from its Bulk Data Query page. Simply build the peer group of companies you want to research, select the periods you want to study, and then scroll down to the performance ratios listed at the bottom of the page. Inventory turnover is listed under the liquidity ratios group.

For example, we selected 15 notable retailers, including Abercrombie & Fitch ($ANF), Costco ($COST), Ross Stores ($ROST), Target ($TGT), and Walmart ($WMT). Then we tracked the average inventory turnover for the whole group for the last 10 quarters. See Figure 1, below.

Notice that inventory turnover was sky high in early 2021, when everyone was flush with pandemic stimulus payments and we had nothing to do except spend it. Then came inflationary pressures in 2022-23, and inventory turnover fell; then inflation receded, and the turnover ratio has been clawing its way back up.

Bullwhip Effect

Another favorite metric of ours is something known as the “bullwhip effect.” This is defined as a rising ratio of inventory to sales, which theoretically is a harbinger of prices about to go downward; the retailer has too much stuff on hand, so it needs to slash prices to get them sold. The result is a sudden plunge in prices, like the crack of a whip.

We first wrote about the bullwhip effect in May 2022, when the rate of inflation was near its peak. Inflation then did start to decelerate and drift downward, but not to any great extent. We revisited the bullwhip effect in November 2022, and found that the inventory-to-sale ratio was still rising.

Now let’s take one more look. See Figure 2, below, which shows inventory-to-sales ratio for the same 15 major retailers we mentioned above.

OK, interesting. Now watch what happens when we add quarterly U.S. inflation rates (as reported by the website Trading Economics.)

Hmmm. Now we see that the rising inventory-to-sales ratio in the first half of 2022 did presage a decline in inflation, which arrived in latter 2022 and early 2023. What’s especially interesting is that the ratio rose again in the first half of 2024. 

Does that mean more price declines by early 2025? And if so, would those declines be driven by recession and falling consumer demand? 

We don’t know yet. Stay tuned for that Q3 earnings data.

That has been on our mind at Calcbench lately as the Q3 earnings reports come flooding in. Lots of companies announced restructuring programs one or two years ago when inflation and high interest rates were exerting severe pressure, so a fresh set of filings is always a good time to see whether those original restructuring announcements lived up to their promise.

One good example is Colgate-Palmolive ($CL). In early 2022, Colgate announced a restructuring plan that the company expected to complete by mid-2023, and would cost somewhere between $200 million to $240 million. 

Things didn’t quite go according to that plan. According to Colgate’s most recent quarterly report, filed on Oct. 25, the restructuring plan didn’t finish until this summer, one full year later than originally forecast. The program did cost $225 million, smack in the middle of the $200 million to $240 million range estimated in 2022; but Colgate spent $67 million on the restructuring plan in the first nine months of 2024. See Figure 1, below.

So yes, Colgate nailed the cost estimate; but it missed its timeline goals. On the other hand, the company’s revenues, gross profit, operating profit, pretax income, and net income are all up 12 to 20 percent compared to Q3-2022 numbers. (See Figure 2, below.) Food for thought as you prepare for Colgate’s next earnings call.

Other Presentations of Restructuring

Other companies are less user-friendly when disclosing their restructuring efforts. For example, in January 2024 Newell Brands ($NWL) announced a restructuring plan that would (a) cost $75 million to $90 million; and (b) be “substantially completed” by the end of the year. That disclosure, however, was tucked away in narrative form in a Restructuring footnote; if you didn’t know to read the footnotes closely, you wouldn’t see it otherwise.

Newell filed its third-quarter report on Oct. 25. It did provide an update on those restructuring charges, but again they were tucked away in narrative form in the Restructuring footnote; no easy-to-read presentation in a table like what Colgate provides.

Once you start reading, you find that Newell spent $42 million on its restructuring plan in the first nine months of this year. The company also reaffirmed that its total spending on the plan should be $75 million to $90 million, so one could reasonably expect that restructuring charges will be roughly $40 million in Q4. (That is, $42 million subtracted from $82 million, which is midway between $75 million and $90 million.)

That seems like Newell is shoving a lot of restructuring costs toward the end of its one-year timeline: $42 million across the first nine months of the year, and upwards of $40 million in the final three. What should a financial analyst make of that? We don’t know, but the data is there for you to do the math and ask more precise questions. 

When Restructuring Is Every Day

We also give an honorable mention to Procter & Gamble ($PG), the $84 billion consumer products giant, for plainly stating that it has “an ongoing annual level of restructuring-type activities,” which routinely run into the hundreds of millions — but P&G does not include those costs in any non-GAAP adjusted earnings metric. 

That’s the way it’s supposed to be, according to earnings quality purists. A company can make a non-GAAP adjustment to earnings to exclude one-time restructuring charges; but if the company keeps declaring such one-time restructuring programs year after year, that’s not cool.

So here we have P&G, which does incur substantial restructuring charges: $659 million in 2023; $329 million in 2022; and a whopping $886 million in third-quarter 2024 alone, according to its most recent filing. The company does not, however, pass off those recurring charges as one-time cost barfs that deserve a non-GAAP adjustment. Good for them. 

Other companies have pushed the envelope on restructuring charges in the past. For example, in 2020 we noted that Jabil Inc. ($JBL) launched one restructuring program after another in the 2010s, and even had multiple restructuring programs at the same time. 

Way back in 2016, we noted that Hewlett-Packard ($HP) announced a restructuring program in 2012 that was supposed to cut 29,000 jobs, and cost $3.7 billion. By the time that program ended three years later, the final numbers were 55,000 job cuts and $5.5 billion in costs.

So you have to watch restructuring programs closely. How they start at the beginning and what they are by the end can often be two different things.

The headlines are that Boeing ($BA) reported a $6.2 billion loss on the quarter, compared to a $1.6 billion loss from the year-ago period. Operating cash flow also turned negative, which is why new CEO Kelly Ortberg recently said the company will likely shell shares and take on new debt to raise $25 billion in new capital. Lord knows the company needs it.

That said, Boeing is not solely a maker of commercial aircraft. The company is also one of the world’s largest defense contractors and a provider of aviation services. So how are each of those operating segments performing lately?

Figure 1, below, tells the tale. 

As you can see, the commercial aircraft segment is certainly down from prior periods — but that’s largely driven by a surge in revenue from late 2022 into 2023, which was a rebound from terrible revenue numbers in 2020 and 2021 when the pandemic hammered the airline industry. Hence the trend line (in light blue) tilts upward. 

Meanwhile, Boeing’s defense segment has, on average, held its own over the 11 quarters. The services division has done the same too. 

That revenue stability still isn’t enough, of course. It’s not growth, and it’s nowhere near enough to offset Boeing’s costs from legal settlements, pay raises for striking workers, and whatnot — but it ain’t nothing, either.

On the other hand, if Boeing wants to return to growth, it needs to deliver more planes, defense systems, and service contracts. Figure 2, below, shows the company’s total order backlog for all three.

OK, that’s… well, we don’t know what this is; we’re just the data people. But Figure 2 does show that Boeing has a huge backlog, up 37.7 percent from the start of 2022 to today. If Boeing can start delivering on those back orders, revenue should increase. 

The grand question, then, is whether CEO Ortberg can revive Boeing’s dysfunctional culture and operations before he burns through that $25 billion in newly raised capital. If he succeeds, the backlog declines, revenue rises, and Boeing's balance sheet can get more lean and healthy. If not, brace for more turbulence.

OK, technically that’s two questions jammed together, but that’s precisely our point. If you want a glimpse into broader economic trends, one good way to do that is to study how cautious the Wall Street titans are with their lending business.

For starters, we looked at the quarterly provisions for loan losses for Bank of America ($BAC), Citigroup ($C), JP Morgan ($JPM), and Wells Fargo ($WFC) since the start of 2022. See Figure 1, below.

Those numbers fluctuate quite a lot, but the overall trend is clearly upward. That means the banks have been setting aside more money each quarter for loans that might go sour. 

(And for the eagle-eyed among you, that’s not a typo — Wells Fargo did report a negative provision number at the start of 2022. That means Wells adjusted its total provisions downward because its loan portfolio was doing so well.) 

Does that broad upward trend mean Wall Street’s financial picture is getting more gloomy? From Figure 1 alone, that’s hard to say. Yes, the banks are setting aside more money to cover bad loans, but they’re also extending more loans at the same time; we can’t analyze one variable independently from the other.

Loss Provisions Against Revenue

So we dug further into the data. Using our Multi-Company page, we also pulled the banks’ quarterly revenue, and then divided loan-loss provisions into that number. For example, see Figure 2, below, which shows the result for JP Morgan.

Long story short, this chart tells you that for every dollar of revenue JP Morgan brings in the door, it sets aside 7 cents as provisions for loan losses. That set-aside happens right at the start, before JP Morgan spends its revenue on anything else — like, ya know, running the business. 

Let’s also remember that the 7 cents per dollar for possible loan losses is up from only 5 cents per dollar at the start of 2022. In relative terms, that’s an increase of 40 percent. 

So what does that mean? Is JP Morgan making loans to riskier customers, and prudently setting aside more provisions for loan losses? Or are existing customers sputtering, and the bank is prudently planning for the worst? 

Banks as a Whole

We can also widen the lens a bit to look at Wall Street banks as a whole. For example, Figure 3, below, shows loan loss reserves against revenue for 10 large banks, looking at the past three quarters. 

From that perspective, JP Morgan looks more like an outlier; most of the other banks have kept their loan loss provisions relatively steady. Or, for those of you who prefer to compare loss reserves against assets, we humbly offer Figure 4, below. 

Our point is simply that astute analysis of the banking sector is complex. You need to compare multiple variables against each other, ideally over time; and then compare those answers against multiple banks. 

The good news is that Calcbench has that data, so you can get digging quickly and easily. Or if you have a more complicated project and want advice, drop us a line at us@calcbench.com and tell us what’s on your mind!

Not the ‘Walking Dead’ type, of course, although that was a great show. We’re talking about zombie companies — firms that have such anemic growth and high debt costs that all they can afford to do every year is pay the interest on their debt. They have no other cash to invest in the business and get themselves growing briskly again, so they lurch from one fiscal year to the next, devoting all their operating income to debt service.

How many such companies exist these days? How long have they been zombies? And most importantly, how much longer could they exist as zombies? 

That question has been on Calcbench’s mind since the Federal Reserve cut interest rates in September. If the Fed keeps cutting rates, it will get easier for firms to refinance that debt, especially if they racked up the debt in 2022 or 2023 when interest rates were high. Maybe zombies will come back into fashion.

To find the answers, we first searched all firms with more than $100 million in revenue in 2023 and then asked: how many of them had interest expense in 2023 that exceeded operating income? 

We found nearly 800 firms that fit the profile, including some very large names: Bausch Health Cos. ($BHC), Carnival Corp. ($CCL), PG&E Corp. ($PCG), and National Steel ($SID), to name a few. 

Walking Dead?

One company fitting the zombie profile is Bausch Health, a pharmaceutical company making various treatments for dermatology, gastrointestinal, and neurology disorders. Despite making at least $8 billion in annual revenue since 2015, Bausch’s annual interest expense has exceeded operating income the entire time. See Table 1, below.

What does zombie status mean for share price? Well, consider that Bausch shares hit an all-time high of $236 in July 2015. They have marched steadily downward ever since, and today trade at around $6.50 — and have been $6 to $8 for most of the last two years. 

On the other hand, we also have companies like cruise giant Carnival Corp., where interest expense has exceeded operating income for three years running. But is the zombie label really fair for Carnival? 

After all, the pandemic devastated cruise lines in 2020. They had to take on debt to survive, and reviving operations to pre-pandemic norms was always going to take years. 

For example, compare these key disclosures from 2019 and 2023 in Table 2, below.

OK, the 2023 numbers are kinda gross, but there’s value there. Revenue is up, and operating income isn’t peanuts. This is a company that suffered a single, unforeseeable disruption and is living with the consequences — an economic heart attack, if you will, rather than the economic emphysema that has hobbled Bausch for years. Then again, both patients are still not in good health no matter what the cause.

Speaking of Debt… 

You cannot analyze zombie companies without also considering the source of all their debt. After all, those debt levels drive the interest payments that push a company into zombie status — so where did that debt come from? How long will the payments last? 

We can research those details in the debt disclosure footnote that companies file, which of course is readily available from the Calcbench Disclosures and Footnotes Query page. (Don’t forget our series on debt disclosures, published last year.) 

On June 30, 2023, Bausch disclosed that one of its subsidiaries was acquiring a business called Xiidra (plus a few other small businesses) from Novartis, for a total price of $2.5 billion. Then came this telling detail: Bausch “intends to finance the $1.75 billion upfront cash purchase price with new debt prior to closing.” 

Ah ha! That’s why Bausch needed this $1.4 billion note! 

We kept searching, and found another filing from Sept. 11, 2023, that disclosed the terms of that $1.4 billion note. The complete story is this, excerpted straight from the 8-K:

On June 30, 2023, Bausch + Lomb obtained commitments in respect of a $1,750 million 364-day bridge facility (the “Bridge Facility”), the proceeds of which, if such Bridge Facility were utilized, would have been used to finance all or a portion of the Acquisition (including related costs). In lieu of incurring indebtedness under the Bridge Facility amount on September 29, 2023, Bausch + Lomb incurred $1,900 million, in aggregate principal amount of indebtedness, consisting of: (i) $1,400 million aggregate principal amount of 8.375% Senior Secured Notes due October 2028 (the “October 2028 Secured Notes”) and (ii) $500 million in principal amount of new term B loans with a five-year term to maturity (the “September 2028 Term Facility”). Borrowings under the September 2028 Term Facility, together with a portion of the October 2028 Secured Notes, were used in connection with the Acquisition and effective September 29, 2023, the Bridge Facility was canceled.

One important question here is whether the $1.4 billion loan is callable — that is, whether Bausch could call the loan early and pay off the entire amount, to rid itself of that interest expense early. We found nothing that said Bausch can. 

That’s an important point to ponder as the Federal Reserve starts cutting rates again. It’s possible that Bausch might be able to refinance this debt at a lower rate; but if the loan isn’t callable, that path is foreclosed. Bausch the zombie will need to lumber onward.

The keyest of key performance metrics in the airline industry is a non-GAAP metric known as TRASM, or total revenue per available seat mile. We quickly found Q3 TRASM in today’s earnings release, at 20.58 cents per mile.

Chart Delta’s TRASM over time, and you get Figure 1, below.

At first glance Q3 TRASM might seem underwhelming since it’s trending downward from Q2 and is a fair bit below the year-ago period, when it was 21.15 cents — but wait!

Remember that CrowdStrike IT disaster back in August? The one that grounded Delta flights for days? That disruption was so far-reaching that Delta had to include an explanatory note about the outage in today’s press release. The outage was so severe that it actually pushed TRASM down for the quarter by a material amount.

Specifically, Delta said the outage pushed down TRASM by 1.1 “points.” If one assumes that a point is the same as cents, then third-quarter TRASM would have been 21.6 cents (the 20.58 cents reported + 1.1 more) in some parallel universe where the CrowdStrike disaster never occurred.

By the way, Delta also reported $170 million in costs related to the outage, mostly from refunding customers for canceled flights or compensating them in cash and loyalty points. Except, the outage also forced Delta to cancel 7,000 flights, which led to a fuel savings of $50 million. 

So if you net all that out, the CrowdStrike mess actually cost Delta only $120 million in Q3. (We assume there will be more costs in the future from civil lawsuits, regulatory probes, and other grief related to the meltdown.)

Anyway, Q3 earnings season has taken flight! You are now free to move about the Calcbench databases, seeing what else companies are reporting.

Let’s start with this week’s filings. Conagra filed an earnings release for its fiscal first-quarter 2025, which ended on Aug. 26. That release included the following:

• Net sales decreased by 3.8 percent; and organic net sales decreased 3.5 percent.

• Operating margin declined by 247 basis points to 14.4 percent. 

• EPS rose 44.8 percent to $0.97 (good), but adjusted EPS fell 19.7 percent to only $0.53 (bad). 

And as icing on the cake, Conagra forecast that organic net sales for fiscal 2025 would be flat to 1.5 percent compared to 2024. 

Then we noticed that Lamb Weston (“seeing possibilities in potatoes,” its motto says) also filed an earnings release for its fiscal first-quarter 2025, happening in the same period. Those disclosures weren’t any better:

• Net sales declined 1 percent, to $1,654 million.

• Income from operations declined 34 percent, to $212 million

• Adjusted EPS declined 55 percent to $0.73.

Lamb also announced a restructuring plan that called for closing a production facility in Washington state, temporarily curbing production and schedules in North America, and cutting the workforce (of more than 10,000 employees) by 4 percent. The restructuring plan is expected to result in a pretax charge of $200 million to $250 million.

We follow the food business here at Calcbench because it’s a good indicator of where consumers are financially. If they’re spending less on food, that suggests that either (a) prices are falling; or (b) consumers have less disposable cash to spend on food. Either way, that tells you something about the macro-economic environment.

So we had two food businesses posting distasteful numbers on the same day. Well, what have their peers been saying lately?

One can easily check that by visiting the Company-in-Detail page for whatever firm you’re analyzing; we list that firm’s closest peers in the upper-right corner of the page. Figure 1, below, shows (with a red arrow) the peers we list for Conagra as an example.

Then we cracked open the disclosures for one of those peers: $CPB, otherwise known as Campbell Soup Co. Clicking on the ticker brings you to Campbell’s Company-in-Detail display; from there we jumped to the Disclosure & Footnotes page to pull up Campbell’s most recent earnings release, filed on Aug. 29 to report on its fiscal 2024 year.

Again, underwhelming stuff! Campbell did see net sales jump 11 percent, but that was largely on the back of its $2.9 billion Sovos Brands acquisition, a deal dissected on the Calcbench blog earlier this year. Organic sales, which are a more useful, apples-to-apples comparison, actually decreased by 1 percent.

Further down the earnings release, we saw Campbell’s fiscal 2025 guidance. Net sales are predicted to be up 9 to 11 percent, but again, organic sales are only forecast to rise 0 to 2 percent.

We’re not food industry analysts, so we won’t predict what all this means; but clearly something is going on with large food businesses and anemic growth. You can check that yourself by… 

• Setting up email alerts to receive updates for when food companies you follow file something new;

• Use the Company-in-Detail page for a quick review of the income statement and to find peer firms;

• Use the Disclosure & Footnotes page to dig into the footnotes, where you’ll find disclosures about operating segments, organic growth, future earnings guidance, and more.

Food for thought as we wait for the next crop of earnings releases to arrive.

To help analysts prepare for that deluge of information, Calcbench reminds everyone that we have several earnings analysis templates ready to go, which will automatically capture and report earnings disclosures as your favorite companies and industry sectors file.

For example, we have our pharmaceuticals industry template, which tracks the sales of blockbuster drugs. Each of several pharma industry giants (Merck, Pfizer, Johnson & Johnson) gets their own tab in the spreadsheet, and then each company tab tracks sales of individual drugs that reap $1 billion or more in revenue. 

We also have our airlines industry template, which tracks performance metrics such as revenue per available seat mile (RASM), cost per available seat mile (CASM), ticket revenue, fuel cost per gallon, and more. You can see a summary for all airlines in the current quarter; or historical data per airline with each in their own dedicated tab. 

We are also working on templates for the banking industry, to track deposits and non-performing assets over time, soon to be released to subscribers. And of course, if you have suggestions for other industry templates we should develop, drop us a line at us@calcbench.com any time! We’re happy to collaborate and give you what you need. 

One caveat: the automated population of fresh data into our templates only works if you (1) are a Calcbench professional-level subscriber; and (2) have installed our Excel Add-in. If you need help with either of those requirements, let us know and we’ll walk you through it.

Separately, we also have a bunch of other templates to perform income tax analysis, DuPont ratios, impairments analysis, and more. Those templates also need the Calcbench Excel Add-In to work, but once you have that installed it’s smooth and easy sailing. 

Enjoy your last few days of calm, and stay tuned for lots of Calcbench updates and analysis in another few weeks.

So we wondered: which corporations have the most exposure to China, that they might feel a revenue squeeze if the country continues along its current economic malaise? 

After spending a few minutes in our Segments, Rollforwards, and Breakouts page, we had an answer. Table 1, below, shows the 10 firms with the largest percentage of China-based revenues, based on their most recent annual reports. 

In news that should surprise nobody, all 10 firms are engaged in the manufacture or design of microchips, industrial equipment, or other technology items with huge demand in China. Qualcomm ($QCOM) in particular has had a majority of its revenue come from China for years. 

Further down the list were lots of other names you’d expect to see here, including Tesla, Apple, Texas Instruments, Analog Devices, DuPont, Otis Worldwide, NVidia, and more. 

We next looked at how China revenues changed for those top 10 firms from 2022 to 2023. Except for Lam Research Corp. ($LRCX) and KLA Corp. ($KLAC), the answers ranged from “eh” to “yuck.” See Table 2, below.

In total we found 75 firms in the S&P 500 that report China revenues as geographic segments. You can conduct your own research on revenue from China (or any other geographic region, for that matter) using our Segments page. 

Simply select Geographic Segment from our drop-down menu of choices, and then start typing “China” in the filter that appears. You’ll see something like Figure 1, below.

(Sharp-eyed observers might notice that 3M Corp. and Advanced Micro Devices both have $3 billion-plus in China revenues, but aren’t on our Top 10 list above. Why not? Because that table ranks companies by percentage of revenue from China; 3M, ADM, and others do make gobs of money from China, but not as a percentage of total revenue.) 

Be warned that some firms have lots of China revenue, but don’t necessarily track China itself as a geographic segment. For example, they’ll roll those revenues into an “Asia” or “Pacific Rim” segment, along with other countries. Sometimes you simply won’t be able to calculate precise China revenues unless you call up the investor relations department and pester them.

Where companies do report China revenue, however — yeah, Calcbench has that. Now the question is what those numbers will be for Q3 results that start arriving in October. 

First let’s look at the income statement itself, in Figure 1, below. We pulled up a few prior first fiscal quarter results for comparison.

OK, the financial performance itself seems solid — but wow, Cintas classifies more than 20 percent of its revenue as “Other.” And that Other segment, whatever it is, went from $468.7 million two years ago to $567.7 million today; that’s an increase of 21 percent. That compares to growth of only 14 percent for Cintas’ uniform and facilities rental segment, which supposedly is the star of the show. 

So exactly what’s in that Other segment? Why is it growing so fast, and what else can we learn about its performance? 

Those answers are easy to find if you know where to look.

To start we went to the Disclosures and Footnotes tool, to find Cintas’ earnings release for its fiscal first quarter. (This was not hard; Cintas filed it at 8:32 a.m. on Wednesday and Calcbench had it indexed within minutes.) Read through the release and you’ll find that the Other segment Cintas lists on the income statement is actually two segments — First Aid and Safety Services, and another other segment labeled “All Other.” See Figure 2, below.

Not only do we have a more precise breakdown of operating segments; we have more granular data for each of those segments. For example, we can now calculate that All Other has an operating margin of 15.7 percent; First Aid and Safety has a margin of 24.3 percent; and Uniform and Facilities Rental has one of 23.1 percent. 

From there you could continue digging. For example, you could use our Export History feature to pull up disclosures from prior periods and assess historical performance. We did that, to compile this chart of All Other’s performance for the last 12 quarters. (Actual performance in blue; trend line in red.)

All well and good, but we still have the question: What is “All Other”? 

For that, we used the Disclosures and Footnotes tool again to open Cintas’ Management Discussion & Analysis section from its most recent annual report. Pretty near the top we found our answer: 

The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ business, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other.

So, direct sales of uniforms and fire protection services; that’s the answer, and you’d only find it by digging into the footnotes. 

So we were delighted when an eagle-eyed researcher — no less than Shiva Rajgopal, head of the accounting department at Columbia Business School — brough an obscure detail to our attention. In its most recent fiscal year, Nvidia’s pretax U.S. earnings exceeded U.S. revenue. Figure 1, below, shows the proof. 

Domestic pretax earnings were $29.49 billion. Domestic revenue was $26.96 billion. That’s less. 

We had never seen something like this before — but in our defense, it’s such a weird concept that we’d never gone looking for it before either. Our first order of business was to use the world-famous Calcbench Trace feature to research exactly what those domestic revenue and EBIT disclosures were all about.

First we traced the $26.96 billion back to the geographic segment disclosure. Figure 2, below, shows that the U.S. market accounted for roughly 44 percent of all Nvidia revenue that year.

Then we traced EBIT, both domestic and foreign. See Figure 3, below.

Interesting, but we’re still stuck on the basic question of how this could even happen. One immediate hunch is that Nvidia had to have some unusually large amount of non-operating income, such as gains from the sale of assets, investments, or one-time extraordinary gains. 

Except, when you look at Nvidia’s segment disclosure of revenue, it’s entirely operating income: $47.4 billion for its AI chips, and another $13.5 billion for graphics chips. So that hunch is incorrect.

Another possibility is that Nvidia had negative operating revenue — again, another weird concept we didn’t much contemplate before, but it’s theoretically possible. For example, if a company has a high amount of returns, refunds, or allowances exceeding gross sales, and also has other forms of income that push EBIT into a positive territory, you could end up with EBIT larger than revenue.

When you study the details, however, Nvidia doesn’t fit that profile either.

How Rare Is This Scenario, Anyway? 

Fully determined to go down this rabbit hole, the Calcbench research team started looking for other examples of EBIT exceeding revenue — and we found them. Still a super-rare scenario, but Nvidia is not alone.

We searched the annual filings of all public filers as far back as 2015, and found 233 instances of this happening. That’s 233 instances out of roughly 80,000 filings, a frequency rate of 0.3 percent. Extremely rare, but definitely a thing.

For example, Moderna ($MRNA) reported such an outcome in 2021: domestic revenue of $6.17 billion, domestic EBIT of $13.11 billion. See Figure 4, below.

Well, hold up. Moderna experienced gigantic revenue growth in 2021 because it launched its covid vaccine that year. Nvidia experienced gigantic revenue growth in 2023 because demand for its AI microchips took off that year. 

Could that be a clue? Is this phenomenon due to sudden global demand for your product, which brings a battalion of tax considerations in tow; and somehow those tax issues lead to domestic EBIT larger than domestic revenue? 

Hmmm. We looked up the tax footnotes for both Nvidia and Moderna, and both are as complicated as a graduate-level finance textbook. 

For example, both companies claimed a benefit in their respective fiscal years for foreign-derived intangible income. That, according to the U.S. Tax Foundation, is income from the use of intellectual property in the United States in creating an export. OK, Moderna used intellectual property in the United States to sell covid vaccines worldwide; Nvidia did the same to sell AI microchips. Figure 5, below, shows the FDII adjustment for Nvidia.

Moderna had a similar FDII adjustment in 2021, although it reported that item as a percentage adjustment (4.7 percent, if you’re curious) to its statutory tax rate; one of numerous adjustments Moderna made as it went from its statutory rate of 21 percent down to an effective tax rate of 8.1 percent. 

We then consulted with a few corporate finance gurus we know, who gave us this consensus answer: it’s about the transfer pricing these companies use as they try to report revenue globally.

For example, say you have sales from U.S. subsidiary A to foreign subsidiary B. Those sales are not recognized as GAAP revenue, but they do create tax revenue and pretax income. If you have enough of those sales (Nvidia selling its chips to foreign subsidiaries, Moderna selling its vaccines), you can generate significant U.S. EBIT — and if you don’t have huge U.S. revenues, yet, the pretax U.S. income can end up exceeding U.S. revenue. 

That also explains another issue we were struggling to reconcile: lots of other large companies also claim that FDII tax adjustment, across a range of industries (Amazon, Netflix, and Mastercard all do, for example), but none of them have domestic EBIT exceeding domestic revenue. Then again, none of them just launched a product with soaring demand globally; they already have large U.S. operations with plenty of U.S. revenue. 

If this all sounds confusing, you’re not alone. One of our gurus said the whole thing is “clear as mud;” others said 10-K financial reporting rules aren’t really designed to address this oddball discrepancy since it’s so rare. 

Regardless, the data itself is there. For financial analysts sleuthing around corporate filings trying to figure out what’s up, Calcbench is an indispensable tool no matter how weird the scenario!