Firms rising extra cautious about delta variant, earnings calls present


A sign describes entry restrictions at a JLL office in the Aon Center in Chicago, Illinois, USA on Thursday, June 24, 2020.

Christopher Dilts | Bloomberg | Getty Images

When the reporting season started in earnest in mid-July, few companies asked questions or mentioned the Covid Delta variant.

That changed when new Covid-19 cases increased and the Centers for Disease Control and Prevention changed their stance on masks for vaccinated people, according to a CNBC analysis of call logs of the revenue.

Between July 13 and Thursday, 142 companies in the S&P 500 out of 410 companies that reported their quarterly earnings mentioned the Delta variant by name or answered a question about it in their earnings calls. Only 15% of those mentions came before July 27, the same day the CDC said fully vaccinated people should wear masks in areas with high indoor transmission rates. New Covid cases also rose steadily as the highly contagious Delta variant became the dominant strain of the virus in the USA

The US reports a seven-day average of more than 109,000 new cases as of August 5, nearly 28% more than a week ago, according to Johns Hopkins University.

For the most part, executives said their companies did not see a significant impact on their business with the rise in new cases.

Becton, Dickinson & Co., a medical technology company, was one of the few to report changes in consumer behavior and told analysts that fewer elective surgeries have been performed in some US states in recent weeks due to the variant. For the week ending August 1, 72% of beds in intensive care units in the United States were occupied, according to Johns Hopkins data.

But some companies with a more global footprint say it’s a different story outside of the US.

“An uneven recovery from the pandemic and an increasing delta variant in many countries around the world have shown us once again that the road to recovery will be a winding road,” said Apple CEO Tim Cook at the company’s conference call on April 27th. July.

Booking Holdings, the parent company of Kayak and OpenTable, said bookings were down 22% in July compared to 2019, a bigger drop than the 13% drop in June.

“In Europe, we noticed a reduction in overnight stays in several of our most important countries, including Germany, France and Italy,” said Booking CFO David Goulden on Wednesday at the company’s conference call.

Other companies reported supply chain disruptions as Covid cases accelerated in Asia and Europe. For example, rail operator Norfolk Southern said the Delta variant is affecting its suppliers in Southeast Asia.

“We have a couple of factories that source parts from Southeast Asia and due to manufacturing issues there, they had to bring forward scheduled production shutdowns later this year,” said chief marketing officer Alan Shaw on the company’s conference call on July 28th. “And that has now had an impact on our production and our volumes.”

The Delta variant has also led some companies to release more conservative projections, although most companies said they don’t expect any further lockdowns in the US.

Abiomed, a medical device maker, told analysts on its conference call Thursday that the lower end of its full-year revenue forecast sees “some persistent unevenness” from the variant, even though the company raised its outlook.

Beyond Meat, which is not part of the S&P 500, said restaurant operators are more conservative with their food orders due to the uncertainty created by the Delta variant, as well as work-related challenges.

“For us, the main feature of the third quarter, and our forecast is simply a lack of visibility,” said CEO Ethan Brown on Thursday.


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