Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg Business Wait inside from the reporters and
Speaker 2: editors who bring you America's most trusted business magazine, plus
Speaker 2: global business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 3: All Right, folks, this is certainly our world.
Speaker 4: We are focusing so much on the politics, the geopolitical
Speaker 4: of our world right now, certainly the last few weeks.
Speaker 4: But we are also in the midst of earning season,
Speaker 4: and we're also in the midst of a market where
Speaker 4: you've got Wall Street getting a bit of a reality
Speaker 4: check after our disappointing start of that megacap earnings season,
Speaker 4: some concerns over the AI frenzy. Having said that while
Speaker 4: the major market averages, we are seeing a fair amount
Speaker 4: of selling today. One name that's definitely standing out is
Speaker 4: Mattel Shares, a mateller up about nine and a half
Speaker 4: percent today after the toymaker reported second quarter just at
Speaker 4: earnings per share that came in ahead of Wall Street estimates.
Speaker 4: Analysts were also positive on the results, highlighting the company's
Speaker 4: gross margin performance, which Morgan Stanley said had remained impressive.
Speaker 4: Second quarter revenue, it was declined to one point zero
Speaker 4: eight billiy did miss the one point one billion average
Speaker 4: of estimates compiled by Bloomberg by just a little bit.
Speaker 4: But we want to get into the quarter of the business.
Speaker 4: So much that's going on back with us. As Xinon cries,
Speaker 4: he's Mattel chairman and CEO. As a reminder, Mattel has
Speaker 4: the brands Barbie, Fisher Price, Hot Wheels, American Girl and
Speaker 4: many more. And I feel like in this very heavy environment, Einon,
Speaker 4: we are grateful to talk about the business of toys.
Speaker 4: Having said that, we are so delighted to have you back.
Speaker 4: Welcome back, How are you?
Speaker 5: Thank you, Carol, thank you, Tam.
Speaker 2: Great to be here now.
Speaker 4: I would say we would be remiss in this heavy
Speaker 4: environment that we want to just talk a little bit
Speaker 4: about the environment. You've been to the White House. We
Speaker 4: have talked politics with you. Before you are from Israel.
Speaker 4: We've talked with you many times side attack last October,
Speaker 4: Prime Minister Benjamin Netanyahoe before that joint session of the
Speaker 4: US Congress. As a CEO, how are you navigating all
Speaker 4: of this? How are you thinking about the GEO politics
Speaker 4: that continues to be a part of our world today.
Speaker 5: Well, of course, this is an important part of our
Speaker 5: life these days, especially for me as an Israeli. I
Speaker 5: keep thinking about the hostages and pray for the release
Speaker 5: as soon as possible.
Speaker 6: What about when it comes to today's speech by net
Speaker 6: and Yahoo? Is this something that's on your radar? It's
Speaker 6: the fourth time that he's addressed Congress, the first time
Speaker 6: that he's been in the United States since the war began.
Speaker 6: As somebody from the country, how is it on your radar?
Speaker 5: Of course, it's on my radar. I haven't seen it,
Speaker 5: to be honest. I've been talking to our investors all
Speaker 5: morning following our earning. But it's something I tend towards
Speaker 5: later today, and so I'm sure we'll catch up with
Speaker 5: everything that we said in Congress today and the reactions
Speaker 5: in America, in Israel and around the world.
Speaker 4: All Right, one more questions on politics, the US race,
Speaker 4: which you know has consumed our world, all of the
Speaker 4: country the last three weeks, the November outcome. Does it
Speaker 4: matter for you as someone who runs a company, a
Speaker 4: well known, publicly iconic brand, global company, does it matter
Speaker 4: who's in the White House? Come November for you.
Speaker 5: Of course, we are following everything very closely the election
Speaker 5: process leading up to the November elections. But as a company,
Speaker 5: we have a long standing history of working with all
Speaker 5: government leaders around the world, not just in the US,
Speaker 5: and we are focused on executing our strategy and confident
Speaker 5: that we can work with everyone across the political spectrum.
Speaker 6: How would your strategy in unchanged if we saw former
Speaker 6: President Trump return to the White House and continue to
Speaker 6: see perhaps an even harsher stance towards China increased tariffs
Speaker 6: for example, that he's talked about, how would that affect
Speaker 6: your business.
Speaker 5: Well? As a company, our job is to design a
Speaker 5: flexible organization that can respond and react to market changes.
Speaker 5: And I'm not commenting specifically about terriffs or China, but
Speaker 5: in general, this is what we do as a company.
Speaker 5: We have a very strong supply chain, a very versatile
Speaker 5: business model, and we are designed to be able to
Speaker 5: respond to changes in the market in supply chain or
Speaker 5: a consumer taste for that matter. And this is something
Speaker 5: that we've done a really good job at over the
Speaker 5: last few years to create a flexible and responsive organization
Speaker 5: that can can adjust and operate in different types of environments.
Speaker 6: You know on what is flexible and responsive mean in
Speaker 6: terms of geography, where is your supply chain now in
Speaker 6: terms of in China versus other parts of the world,
Speaker 6: like how much of your products that are sold around
Speaker 6: the world are made in China versus other countries.
Speaker 5: In China we make less than a half of our
Speaker 5: product today. The industry average is about eighty to eighty
Speaker 5: five percent, so we're indexed meaningfully less in the industry.
Speaker 5: And we continue to diversify manufacturing footprint. This is not
Speaker 5: necessarily in response to any political risk, but as a company,
Speaker 5: our job is to create that flexibility. So we continue
Speaker 5: to diversify our manufacturing footprint, our own factories and some
Speaker 5: of the vendors that we work with across across different
Speaker 5: geographist to make sure that we have the right capabilities
Speaker 5: and still the ability to mobilize resources and adjust to
Speaker 5: opportunities as well as any changes in cost structure, in
Speaker 5: tariffs and capabilities that we are looking to continue to
Speaker 5: add to strengthen our capability our offering.
Speaker 4: All right, so as promised, let's get to the quarter.
Speaker 4: Let's get to the business. So talk to us about
Speaker 4: the quarter that was in the outlook. Tell us about
Speaker 4: where you are feeling real strength, where you're feeling some challenges.
Speaker 5: Well, this was a good second quarter and a good
Speaker 5: second half of first half of Mattel with significant growth,
Speaker 5: margin expansion, and improved profitability. We continue to strengthen our
Speaker 5: balance sheet and more than double free cash flow in
Speaker 5: the trailing twelve month. The industry performed better than anticipated,
Speaker 5: better than we anticipated, and Mattel gained share globally in
Speaker 5: the second quarter and the first half. And you talked
Speaker 5: about it before, Carol and Tim, I believe we spoke
Speaker 5: about how we continue to position the company for growth.
Speaker 5: We expect to grow in the second half of the
Speaker 5: year and reiterated a fullier guidance for the company. Looking ahead,
Speaker 5: we expect to outpace the industry, continue to gain more
Speaker 5: share in twenty twenty four, and grow sales and earnings
Speaker 5: in twenty twenty five.
Speaker 4: So talk to us about some of the different brands.
Speaker 4: Fisher Price launching something I grew up with, Big Time
Speaker 4: launching its new line Fisher Price would recently. How is
Speaker 4: that being received by retailers and by consumers and do
Speaker 4: you anticipate that this could be maybe a really top
Speaker 4: seller come the holidays.
Speaker 5: Fisher Price is such an incredible brand. It will be
Speaker 5: celebrating its ninety fourth anniversary this year. Fisher Price grew
Speaker 5: eleven percent in the second quarter, reflecting the early success
Speaker 5: of our new strategy, which is working well. We expect
Speaker 5: Fisher Price to grow in the second half to grow
Speaker 5: for the full year, driven by a new line of
Speaker 5: the wood segment that you mentioned that we're now expanding globally,
Speaker 5: more core lines product that are growing, and new franchises
Speaker 5: that we're adding to a little people collector. The brand
Speaker 5: is just is so much part of culture and has
Speaker 5: great trust by parents and families. We in terms of
Speaker 5: performance in the category, outperformed the industry gain share in
Speaker 5: the infant toddler in preschool category in the second quarter
Speaker 5: and the first half and was the number one with
Speaker 5: Mattel was the number one toy company globally in the category.
Speaker 6: You know, and what about hot wheels? Gross billings growth
Speaker 6: and gross billings for hot wheels was relatively weak in
Speaker 6: the second quarter. Give us an idea of the catalyst.
Speaker 6: Tell the investing audience about the catalyst for a rebound
Speaker 6: for the holiday selling season and if there are any new
Speaker 6: products or advertising come in to help push it.
Speaker 5: Hotwords is another incredible brand. Hot Wheels is on track,
Speaker 5: on track for its seventh consecutive record year, seventh consecutive
Speaker 5: record year. We couldn't be more excited and confident about
Speaker 5: where hotwitods is growing. It grew in the second in
Speaker 5: the second quarter five percent, with more activation planned for
Speaker 5: the second half. We're growing the adult collector line and
Speaker 5: more adult product. We brought any distribution globally for Hotweels
Speaker 5: specifically as well as the rest of the portfolio, and
Speaker 5: we expect to accelerate growth in the RC and skate
Speaker 5: lines and of course have another season of Hot Wheels
Speaker 5: Let's Race on Netflix that is launching this fall. So
Speaker 5: great product activated by more content and just a great
Speaker 5: line by Hot Wheels on track for its seventh consecutive
Speaker 5: year of growth.
Speaker 4: All right, so Hot Wheels for guys and gals or kids,
Speaker 4: boys and girls, but also Barbie for boys and girls
Speaker 4: whoever wants it. But let's talk Barbie, which is another
Speaker 4: one of the iconic brands, you know, and I'm certainly
Speaker 4: of Mattel Barbie brand. I'm looking at the second quarter right,
Speaker 4: sales held back by a six percent decline in global
Speaker 4: buildings for the company's flagship flagship doll segment, which includes
Speaker 4: bar Be Toughier over your comparisons in the second half,
Speaker 4: did the movie, what are you continuing to see in
Speaker 4: terms of the impact that that has had on the
Speaker 4: Barbie line, and do you expect the brand to return
Speaker 4: to growth maybe next year.
Speaker 5: Barbie is an incredible brand that never sits still, and
Speaker 5: the movie expanded the audience even more. As you would imagine,
Speaker 5: Barbie was the number one doll property globally and continued
Speaker 5: to gain share in the second quarter this year. We're
Speaker 5: celebrating Barbie's sixty fifth anniversary with multiple activations and a
Speaker 5: new brand campaign that we're launching in the fall. We're
Speaker 5: launching also new segments supported by more shelf space in
Speaker 5: the second half, so Barbie will have even more reach
Speaker 5: in the marketplace. We're launching new offering for adult collectors
Speaker 5: as well as we did for Hot Wheels, and there
Speaker 5: will be more content on Netflix targeting the kid's audience.
Speaker 5: Barbie has consistently gained global share and continue to strengthen
Speaker 5: its position as the leader in the dolls category. And
Speaker 5: you know, Carol, Yeah, very few brands have the cultural
Speaker 5: relevance as Barbie, and we couldn't be more confident about
Speaker 5: the incredible franchise. But this incredible franchise and where it
Speaker 5: will go from here, well.
Speaker 4: I have to tell you on in the newsroom earlier
Speaker 4: this morning, a bunch of us, I will say, all women, Cec,
Speaker 4: myself and Elizabeth having a conversation. I was kind of
Speaker 4: very much into Barbie, but I also talked about American Girl,
Speaker 4: where my daughter was kind of all over it, and
Speaker 4: so was Cec and Elizabeth. Anyway, we talked for a
Speaker 4: while about this. I am curious about American Girl where
Speaker 4: it still fits into your portfolio because it's interesting, it
Speaker 4: has evolved, and we kind of went back to the
Speaker 4: beginning of the brand when it before it was even owned.
Speaker 3: By you guys, about that.
Speaker 4: It really, you know, taught young individuals, young women, young
Speaker 4: girls about history, and you know they were very much
Speaker 4: tied to it. Now you've got a gap American Girl,
Speaker 4: You've got Disney collaborations. What's the thinking around American Girl.
Speaker 5: American Girl is a valued asset within the Mattel portfolio
Speaker 5: with significant fan base and great product. American Girl grew
Speaker 5: for the second quarter in a row, and we saw
Speaker 5: how American Girl is outpressing the industry in the large
Speaker 5: old category and the overall dull category, especially in the
Speaker 5: eighteen inch dolls and was up double digit. We saw
Speaker 5: the flapship flagship stores up, especially the new store in
Speaker 5: LA that was a high double digit. And we continued
Speaker 5: to optimize the rettled footprint to make sure that we
Speaker 5: are creating a holistic, omni channel experience for fans. And
Speaker 5: as you say, part of the success is how we
Speaker 5: evolved the brand and how we infuse brand purpose but
Speaker 5: also cultural relevance. And this is part of our secret
Speaker 5: sauce on the Mattel Playbook and how we continue to
Speaker 5: stay relevant and take brands that are timeless and make
Speaker 5: them timely and reach and engage consumers today and touch
Speaker 5: fans everywhere, touch their heart and mind and do things
Speaker 5: that really matter in society and engage fans at an
Speaker 5: emotional level.
Speaker 4: I have to ask you, I know there's been a
Speaker 4: Wall Street Barbie. I don't know that there's been an
Speaker 4: American Girl who works in investment banking. But having said that,
Speaker 4: a report on Monday that you guys have received a
Speaker 4: takeover approach from El Catterton, the private equity firm backed
Speaker 4: by LVMH. You've come out and said that you believe
Speaker 4: you the company can achieve a higher market value if
Speaker 4: it continues as an independent company. Are you open first
Speaker 4: of all, have they approached you and are you open
Speaker 4: to doing a deal?
Speaker 5: Well, as you would expect, we don't comment from the speculation.
Speaker 3: It's just now in. It's just you and me, so.
Speaker 5: Just between us, just between and the three of us.
Speaker 5: What I can say is that we're very confident in
Speaker 5: Motel strategy and our ability to create long term shareholder
Speaker 5: value as a stand alone company. This is what we're doing.
Speaker 5: You're seeing it in the quarter, you're seeing it at
Speaker 5: the start of this year, and you're seeing it since
Speaker 5: the start of the ten around in twenty eighteen. It's
Speaker 5: in the numbers. It's in our growth in top line
Speaker 5: by a billion dollars. It's how we continued to improve
Speaker 5: our adjusted growth margin by almost one thousand basis points
Speaker 5: and guided to a higher number another one hundred to
Speaker 5: one hundred and fifty points this year. Adjusted IBIDAH grew
Speaker 5: seven and a half times since we started the ten around,
Speaker 5: and our free cash flow went from a negative three
Speaker 5: hundred and twenty five million dollars to more than seven
Speaker 5: hundred million dollars at the end of last year. And
Speaker 5: of course we are now investment grade. It's a very
Speaker 5: weak puls So it's.
Speaker 4: Not just about price, maybe a better price.
Speaker 5: Well, it's about creating long term shareholder value and we
Speaker 5: are well positioned to build on our multi year trajectory
Speaker 5: and continue to execute our strategy and expect the share
Speaker 5: price to reflect this over time.
Speaker 7: What would make you do a deal?
Speaker 5: Well, broadly speaking, we are here to create long term
Speaker 5: shareholder value and we do it in every day. This
Speaker 5: is what we focused on and we consistently execute and
Speaker 5: deliver on the strategy. That's what we focused on, and
Speaker 5: we believe that we create that value, long term shareholder
Speaker 5: value as a standalone company.
Speaker 4: So to that point, Lina Dunham, stepping away from the
Speaker 4: poly pocket movie, what are your plans for that brand
Speaker 4: and tell us what's the next you know, big screen
Speaker 4: and you know, I think you guys have a ton
Speaker 4: of projects in the works.
Speaker 3: What can we look forward.
Speaker 5: To as we're very excited by the progress we're seeing
Speaker 5: in our film strategy. Mattel Films. Of course, the Barbe
Speaker 5: movie is set the scene, but there's so much more
Speaker 5: and we currently have sixteen projects in the making. We
Speaker 5: recently announced a release date for Masters of the Universes
Speaker 5: would be June fifth of twenty twenty six. We announced
Speaker 5: a new director for Matchbox and a new movie for
Speaker 5: Months de High at Universal with the Kiva Goldsman, a
Speaker 5: two time Oscar winning writer and producer. So there's a
Speaker 5: lot that is going on with everything at Mattel Films.
Speaker 5: The Polypocket project is progressing. Lily Collins is still attached
Speaker 5: and we're very excited about how this movie is shaping up,
Speaker 5: as well as the rest of the films. Late that again,
Speaker 5: it's all about It's all about collaborating with leading filmmakers
Speaker 5: to make standout quality movies based on our iconic brands
Speaker 5: that will resonate in culture and appeal to global audiences.
Speaker 3: Eno and Ken wants to know, does he get a movie?
Speaker 3: Does he get a movie?
Speaker 5: Well, of course, we continue to look for opportunities to
Speaker 5: engage bands every way we can, and one day maybe
Speaker 5: you will have a movie as well.
Speaker 3: I'm open, I'm going to count on you.
Speaker 6: Maybe you can help me with the hot wheels on
Speaker 6: your desk, but you gave it to you gave it
Speaker 6: to my son.
Speaker 4: Little cameos in movies courtesy of Bloomberg Programming. You know,
Speaker 4: thank you as well. A lot on your plate, so
Speaker 4: appreciate all the time. You always give us a fine
Speaker 4: for us. Great to check in with you you on
Speaker 4: cries of course, folks. He is the CEO and chairman
Speaker 4: of Mittel, joining us. As we said, Mattel shares are
Speaker 4: up nine percent. They're up almost sixteen percent this week,
Speaker 4: fifteen percent pop on Monday, courtesy of some you know,
Speaker 4: maybe that chatter.
Speaker 7: Deal chat chat. How does that sound?
Speaker 2: You're listening to the Bloomberg Business Week podcast. Listen live
Speaker 2: each weekday. He's starting at two pm Eastern on Apple
Speaker 2: car Play and Android Auto with the Blomberg Business Ad.
Speaker 2: You can also listen live on Amazon Alexa from our
Speaker 2: flagship New York station jo Say Alexa playing Bloomberg eleven thirty.
Speaker 6: Our next guest is the CEO of the largest company
Speaker 6: that you've probably never heard of and less you work
Speaker 6: in the industry. Burns and McDonald is an engineering, architecture, construction,
Speaker 6: and environmental and consulting firm that plays in just a
Speaker 6: ton of industries. We're talking aviation, infrastructure, healthcare, military construction,
Speaker 6: consumer product manufacturing, food and beverage production, oil, gas, chemicals,
Speaker 6: renewable energy, telecommunications, and more.
Speaker 4: Kind of the economy in a snapshot, it's one hundred
Speaker 4: percent employee owned. They've got more than seventy offices in
Speaker 4: the US and around the world. Needless to say, Leslie
Speaker 4: Duke has a good idea and she's probably got a
Speaker 4: great idea of how economies tim around the world are doing.
Speaker 6: Welcome Leslie Duke, CEO of Burns and McDonald based in
Speaker 6: Kansas City, but joining us here in our Bloomberg Interactive
Speaker 6: Brokers studio.
Speaker 7: How are you very good.
Speaker 8: Tim Thank you so much for having me.
Speaker 9: It's good to be here with you both today and
Speaker 9: I look forward to visiting with I think some very
Speaker 9: interesting things going on in the energy and data center markets.
Speaker 8: It's a really fascinating time.
Speaker 6: Yeah, we talk a lot about energy and data centers
Speaker 6: because data centers are using so much energy. We're going
Speaker 6: to get to that in just a minute. But I
Speaker 6: want to start big picture because, as I mentioned, you
Speaker 6: guys play in everything, so you have a really good
Speaker 6: understanding of how economies around the world are doing at
Speaker 6: a high level. What are you seeing out there specifically
Speaker 6: in the US.
Speaker 9: Sure, we're mostly domestically focused, so I think I have
Speaker 9: a pretty good pulse on the US marketplace. Things are
Speaker 9: busy in the infrastructure business. We're soliciting and receiving a
Speaker 9: lot of work. Still, I think there was a little
Speaker 9: bit of a slow down in the second quarter would
Speaker 9: be what I would feel. Maybe a little into first quarter,
Speaker 9: we're back to a nice rhythm of work coming through
Speaker 9: our doors.
Speaker 8: Construction has been robust.
Speaker 9: Throughout and a lot of people ask me about the
Speaker 9: election and how that's impacting our business, and we do
Speaker 9: think there's some finance that slowed down. People are kind
Speaker 9: of waiting on some things, but generally speaking, there's.
Speaker 8: Still a lot to do.
Speaker 9: So some of the funding that's come out of the
Speaker 9: government recently, the IJA and IRA funding has really fueled
Speaker 9: a lot of projects in our industry.
Speaker 7: And so that's been good for business.
Speaker 9: It has been great for business, and I think that
Speaker 9: it's also you know, we're a little bit of a
Speaker 9: counter economy business as it is, so we're resilient in
Speaker 9: that way. But I think that then there are these
Speaker 9: other business renewable energy, or data centers that are coming
Speaker 9: in at a time where other things may be slowing down.
Speaker 9: And when you have the diversity Burns and mac does,
Speaker 9: you are able to swing your workforce over and start
Speaker 9: to respond to things that are very very hot right now.
Speaker 9: And we certainly are seeing that across the board when
Speaker 9: it comes to both.
Speaker 4: When you do a project, though, I mean, how long
Speaker 4: does it go on for? So it kind of gives
Speaker 4: you a certain amount of lead time. Right when you
Speaker 4: say that, you guys are kind of counter you know,
Speaker 4: the economy in terms of what's going on the cycles.
Speaker 3: Give us an idea, like remind us.
Speaker 9: Sure, you know, it depends on the project. So there's
Speaker 9: some that are pretty quick hitters. Data for an, for example,
Speaker 9: is very fast moving. They can they can build a
Speaker 9: data center in less than two years now.
Speaker 3: Because it's basically a box with a bunch of machines.
Speaker 8: A box and a bunch of machines.
Speaker 9: Now they get electricity, that's right, They need power in
Speaker 9: that electricity. Yeah, that's exactly right. And power is really
Speaker 9: I mean, we laugh a lot about it, but it
Speaker 9: is becoming extremely constrained because the need is growing. The
Speaker 9: hyper scale is real. So the scarcity of places in
Speaker 9: the United States that can actually attract hyper scale is shrinking,
Speaker 9: so it's harder and harder to find a place you
Speaker 9: can put a hyper scale data.
Speaker 4: Is that constraining the development of data centers right now?
Speaker 3: The build out it is.
Speaker 9: Changing the way that they're looking at how they need
Speaker 9: to get ahead of it. So I think there's a
Speaker 9: much broader look at how to approach data and power,
Speaker 9: including owning it themselves. So data may not wait on
Speaker 9: an electric utility today, and they may start to own
Speaker 9: their own power island off grid, maybe use the grid
Speaker 9: for reliability and backup power.
Speaker 8: But not primary generation.
Speaker 9: So I think the data centers are being extremely creative
Speaker 9: right now what they're willing to consider in the way
Speaker 9: that they keep this business going. It's fast paced, it's
Speaker 9: not slowing down. It's highly competitive. They can't afford in
Speaker 9: some cases to wait for the utility processtive. The regulatory
Speaker 9: hurdles are real, and so those are things that are
Speaker 9: really headwinds to data if data doesn't take charge, and
Speaker 9: so then you've got utilities are like, hey, we don't want.
Speaker 8: To lose that load.
Speaker 9: We want to continue to attract businesses into our business,
Speaker 9: and so they're upping the ante. They're trying to bring
Speaker 9: power faster.
Speaker 4: But is it helping them to build that renewable power
Speaker 4: faster because we have seen folks, whether I think it's
Speaker 4: an Amazon and some others like if they need they
Speaker 4: obviously need the data centers, and then they're linking up
Speaker 4: with those who have, you know, access to the renewable
Speaker 4: power side.
Speaker 9: Sure, I think you know, we've never been busier and renewable,
Speaker 9: and so the renewable business is all utilities are pivoting
Speaker 9: to a greener future and a carbon free future. So
Speaker 9: that's been a part of our business here in recent
Speaker 9: years that has really motivated a lot.
Speaker 8: Of business for us.
Speaker 9: All of big data is interested in green energy. So
Speaker 9: when they are ahead of it and they have capacity
Speaker 9: in that, then it follows suit that data is going
Speaker 9: to be attracted to them. And then we do see
Speaker 9: a resurgence of natural gas coming in to do some
Speaker 9: backup power. Bridge fuel is what we tend to call it,
Speaker 9: where we know it's going to take longer to get
Speaker 9: some of the bigger clean fuel, the baseload generation that
Speaker 9: can be built to grind it until you get it right.
Speaker 9: So I think natural gas is the solution for that.
Speaker 9: And I even think that you see data accepting.
Speaker 8: That to some degree.
Speaker 9: And it used to be kind of a polarizing political issue.
Speaker 9: Both sides of the aisle are saying, yes, we get
Speaker 9: it to stabilize and have reliable power. We've got to
Speaker 9: accept that natural gas is going to get us there.
Speaker 9: And some of the things like you know, modular reactors,
Speaker 9: small modular action.
Speaker 7: We love.
Speaker 9: SMR is a technology, but the runways long right it's
Speaker 9: going to take.
Speaker 6: The problem is we haven't seen any of them built
Speaker 6: to fruition at this point.
Speaker 9: That's right, it's a it's an unproven and and you know,
Speaker 9: even just take the regulatory process, well, how patient is
Speaker 9: data going to be? And so they have to have
Speaker 9: a solution today that can get them what they need
Speaker 9: as soon as they can get it. They need to
Speaker 9: have power to interconnect to, but they have the investment
Speaker 9: dollars that could kick start that. And I think that
Speaker 9: we're finding some interesting conversations going on with the long
Speaker 9: term picture, because this is the beginning, I mean with
Speaker 9: with we're talking about AI, but it's e commerce, it's
Speaker 9: cloud computing, it's it's so many things, and so this is,
Speaker 9: this is a trajectory that they're they're in the long
Speaker 9: game for and so I think you're gonna see short game,
Speaker 9: long game, natural gas, short game, and then we'll see
Speaker 9: what emerges in the long game for cleaner carbon free solutions.
Speaker 8: I'm real excited about the possible.
Speaker 7: Do you think that?
Speaker 6: And you said, you know, support for a bridge fuel
Speaker 6: to get us to greener future is bipartisan. No question
Speaker 6: though that Republicans are more supportive of fossil fuels.
Speaker 7: We saw that just last.
Speaker 6: Week at the RNC and the conversation around that from
Speaker 6: the speeches. Are you concerned that if Republicans do retake
Speaker 6: the White House, green energy and investment in green energy
Speaker 6: will get pushed back, will slow down.
Speaker 9: I'm not, you know, And do I think it could
Speaker 9: create a bit of a change. Sure, regulatory it always matters.
Speaker 9: But the truth is is that the consumers committed to it,
Speaker 9: and companies are committed to it.
Speaker 8: Our utilities are committed to most.
Speaker 9: Of name dates that they want to have their goals
Speaker 9: met by. They're all marching quickly towards those goals, striving
Speaker 9: to get there. Those things are resilient to the politics
Speaker 9: of the time. Time and so I do believe you're
Speaker 9: going to see it continue. And even during the Trump administration,
Speaker 9: we never saw larger growth in solar than we did
Speaker 9: during his term as president, and that's just because of
Speaker 9: this tenacious appetite for clean energy that the world has.
Speaker 9: So I don't see that slowing down. And I think
Speaker 9: that there's a more pragmatic approach in some ways to
Speaker 9: renewable energies, in needing some backup, reliable power to make
Speaker 9: sure that you can continue to invest in renewables and
Speaker 9: it not become disruptive.
Speaker 3: Because of your vantage point.
Speaker 4: As Tim said, you know, largest company probably never heard of,
Speaker 4: but you probably should have heard it because of the
Speaker 4: different types of industries you play into. What about your
Speaker 4: business and what you are seeing do you think might
Speaker 4: surprise the Bloomberg audience.
Speaker 9: I think probably how much of the value stream we're
Speaker 9: involved in.
Speaker 8: Everybody knows us.
Speaker 9: We're number one in power, we're number two in data
Speaker 9: as an engineer construction company, so everybody that does know
Speaker 9: Burns a Mac knows us there. But I would say
Speaker 9: most people would probably be surprised at how far upstream
Speaker 9: we go in the consultancy side of studying the power
Speaker 9: grids in the United States, really helping utilities and other
Speaker 9: interconnect companies come into the right power purchase agreements. You know,
Speaker 9: we're very much in the permitting side of air and
Speaker 9: land permitting, so we really have a perspective that that
Speaker 9: really is ahead of what's coming in our consultancy group,
Speaker 9: we call it our eighteen ninety eight and co. That's
Speaker 9: the year we were found at, one hundred and twenty
Speaker 9: six years ago. But I think that's always a little
Speaker 9: surprising to people that haven't tapped into that brain of
Speaker 9: Burns and Max.
Speaker 6: Not to be confused with an offshoot of the Kevin Costner.
Speaker 9: Exactly, not very confusing the website.
Speaker 6: Yeah, it's not, you know, the Dutton family. It's not
Speaker 6: an offshoot of the Dutton family. I do want to
Speaker 6: know about revenue, where the revenue comes from in terms
Speaker 6: of private industry customers coming after you, your customers who
Speaker 6: are in private sector versus municipalities, states and the federal government.
Speaker 8: Sure, it's a great question.
Speaker 9: I'll start with the last and say, you know, municipalities
Speaker 9: in the federal government, they've really you know, found funding
Speaker 9: in some of the recent government action, and so there's
Speaker 9: a pretty robust amount of government work coming out, so
Speaker 9: we see a lot going on there.
Speaker 8: We see an.
Speaker 9: Enormous amount of work in manufacturing.
Speaker 8: That's a.
Speaker 9: Broad bucket of business, but it gets real surgical when
Speaker 9: you start looking at it. It's reshoring of products that
Speaker 9: we learned we needed to build here in the US.
Speaker 3: Is that continuing?
Speaker 7: It is?
Speaker 8: It is continuing.
Speaker 9: We really you can see it in land prices in
Speaker 9: the right places. Logistic companies are really seeing, you know,
Speaker 9: land prices go up. So manufacturing is real. And then
Speaker 9: even like in our refining space, the focus on renewable
Speaker 9: fuels and you know feedstock that's renewable and so some
Speaker 9: of that is super interesting. I think people would be
Speaker 9: really thrilled at the work that's being done there and
Speaker 9: the amount of time and energy going into trying to
Speaker 9: reframe the game. And I think airlines are at the
Speaker 9: tip of that. They really are very interested, very mindful
Speaker 9: of the environment around us, and they're trying to figure
Speaker 9: out how they can pivot to renewable fuels. So there's
Speaker 9: exciting things going on in any microcosm of our.
Speaker 8: Markets.
Speaker 9: But when you really look closer what's.
Speaker 8: Driving it, it's not that dissimilar.
Speaker 9: And so people are focused on trying to clean things
Speaker 9: up and get things regulated, and I believe in a
Speaker 9: carbon free future that is possible if we keep down
Speaker 9: this road.
Speaker 8: And so I think it's exciting times.
Speaker 3: Some would say we don't have a choice. It's are
Speaker 3: based on what's going on.
Speaker 4: Hey, Leslie, just got about thirty seconds left here, because
Speaker 4: you have such a great window into so much of
Speaker 4: what's going on, and I know you say you're kind
Speaker 4: of counter to the economy or what's going on. Potentially
Speaker 4: any signs of slow down recession give us an idea
Speaker 4: we are bloomberg.
Speaker 8: We always like you know, you.
Speaker 9: Know, we we are not seeing significant slow down, and
Speaker 9: so you know, we I think if we see headwinds,
Speaker 9: it's in some of the procurement streams. Some of the
Speaker 9: global procurement that we do is seeing continued strife and difficulty.
Speaker 9: Electronics in particular, we are really struggling. And by the way,
Speaker 9: the world is electrical. I say, the world is run
Speaker 9: by electrical engineers. They just haven't figured it out yet.
Speaker 9: But everything is becoming electrified. And so you look at cars.
Speaker 9: We talk about that all the time, but it's not
Speaker 9: just that it's automation in every walk of our lives,
Speaker 9: and those things are really struggling in a global economy,
Speaker 9: and the logistics of electronics is still something that we're
Speaker 9: struggling to meet demand, and it is the long lead
Speaker 9: items on all of our projects, regardless of industry and marketplace.
Speaker 6: Leslie really appreciate you joining us. Leslie, CEO of Burns
Speaker 6: and McDonald based in Kansas City. Here in our Bloomberg
Speaker 6: Interactive at Brokers Studio.
Speaker 4: I'm brother Marc, a journal How about you let me drive?
Speaker 2: Oh no, no, no no, who's gone to drive?
Speaker 5: Honey? Please, I'll do the riding gravel.
Speaker 1: Let's wat I want to drive.
Speaker 2: It's good question.
Speaker 7: This is the drive to the globe.
Speaker 2: Dot com think we'll buy around each other down on
Speaker 2: Bloomberg Radio.
Speaker 3: All right, everybody TikTok as I like to say.
Speaker 7: Is it TikTok?
Speaker 4: It is all right, man, I'm not going on. As
Speaker 4: you know, there's about twelve minutes left in today's trading session.
Speaker 4: Charlie just breaking down the trade. We are hovering neuro
Speaker 4: lows of the session, so that means three point three
Speaker 4: percent lower on the Nasdaq, one hundred two point two
Speaker 4: percent lower on the S and P five hundred, one
Speaker 4: point two percent lower on the Dow Jones Industrial Average.
Speaker 4: Just rehear hashing those numbers because we haven't seen it's
Speaker 4: kind of selling in some time. In fact, if you
Speaker 4: look at the Nasdaq one hundred, last time we saw
Speaker 4: we were down this much. This is I guess, the
Speaker 4: most in terms of a decline since October of twenty
Speaker 4: twenty two. So yeah, not quite two full years, but
Speaker 4: getting the close about.
Speaker 3: One and a half or so.
Speaker 6: S and P only up fourteen percent so far this
Speaker 6: year only.
Speaker 4: And listen, mark go up, markets go down right, and
Speaker 4: some say buying opportunity or not? Or is it a
Speaker 4: reset like this is? But we're still kind of earlyish
Speaker 4: in earnings.
Speaker 6: Yeah, I think it's fair to say. Let's see what
Speaker 6: Nevill Javari has to say. Zequity portfolio manager at all
Speaker 6: Spring Global Investments. They've got about five hundred and seventy
Speaker 6: billion dollars in assets under management. Usually he's hanging out
Speaker 6: just outside of Washington, DC, but he's joining nothing going
Speaker 6: on there. Don't go to Paris right now, and maybe
Speaker 6: you know, if you don't want to go to see
Speaker 6: the Olympics, and maybe stay out of Washington if you
Speaker 6: want a game going. Yeah, there certainly is Neville good
Speaker 6: to have you with us. What do you make of
Speaker 6: what of the way that Carol described the environment is it?
Speaker 6: Is it a buying opportunity now? At the same time,
Speaker 6: we are just at the start of earning season, and
Speaker 6: boy that mag seven. The two stocks that reported yesterday,
Speaker 6: Alphabet and Tesla, certainly put in a different kind of
Speaker 6: tone in the market today.
Speaker 1: Yeah, thanks for having me, Tim, Thanks for having me Carol.
Speaker 1: I think what you're seeing is a little continuation of
Speaker 1: what started in the postmarket last afternoon when both Tesla
Speaker 1: and Alphabet reported. I think there may have been a
Speaker 1: little bit of AI fatigue that's sort of playing out today.
Speaker 1: I think Alphabet's print and guide was pretty solid, really
Speaker 1: good numbers, margins were good, they raised guidance. It was
Speaker 1: a solid print, There was a solid guide. I think
Speaker 1: the one thing that sort of concerned investors and led
Speaker 1: to the sell off was the fact that they talked
Speaker 1: about that the investments that they were making thus fall.
Speaker 6: Yeah, the CAPEK spending in AI were not paying off,
Speaker 6: and that timeline is being pushed further to the right.
Speaker 6: You think that's more of a concern than the mess
Speaker 6: on YouTube at revenue. I think YouTube revenue well.
Speaker 1: I think I think Alphabet's doing what Alphabet has done historically,
Speaker 1: right and search and ad, and then yet YouTube was weak.
Speaker 1: And then sort of the concern was the spending on
Speaker 1: the capex that was spent on AI, where you weren't
Speaker 1: having quite the return that boat management. And then investors
Speaker 1: looked at and said, yeah, maybe this has pushed out
Speaker 1: a little bit to the right. And then you're seeing
Speaker 1: that play out today with some of the other hyperscalers,
Speaker 1: you're seeing it in big cap tech, and you're seeing
Speaker 1: it sort of play through in the market this afternoon.
Speaker 4: So I mean, how are we supposed to as investors?
Speaker 4: I mean, this is something I feel like you and
Speaker 4: I talk a lot about. We're so quarter to quarter focus,
Speaker 4: you know. I feel like if you go back six months,
Speaker 4: eight months, you know, last year, if you weren't spending
Speaker 4: on AI, you were kind of smacked down because you
Speaker 4: might be behind the curve. So is it just a
Speaker 4: case of, you know, what's the right balance between spending
Speaker 4: and payoff? Do we not get enough clarity about the
Speaker 4: spending that Google is doing when it's connected to AI,
Speaker 4: and whether or not. It's seeing that return on investment.
Speaker 7: Yeah, I think.
Speaker 1: I think if you look back, or you listen back
Speaker 1: to some of the transcripts and the earnings calls going
Speaker 1: back a year, if you threw the word AI in there,
Speaker 1: it almost helped your stock price rally. So I think
Speaker 1: now you've got.
Speaker 6: Now that you've done it blockchain, remember that six or
Speaker 6: seven years ago.
Speaker 1: You've gotten to a point where investors are starting to
Speaker 1: question how much of this is necessary, how's it playing out?
Speaker 1: And really what are the benefits? Can we absorb this
Speaker 1: in our business, use it, become more productive, become more efficient,
Speaker 1: And I think those questions are starting to bubble up
Speaker 1: a little bit more. And then what Google said, Alphabet
Speaker 1: said last afternoon sort of really set off a greater
Speaker 1: level of scrutiny in these investments around AI.
Speaker 6: Okay, we love having you come on because you brought stocks,
Speaker 6: and just so everybody knows if you bring stocks, if
Speaker 6: you bring stocks, we love you. We like stocks more
Speaker 6: than socks. Okay, ups. Yeah, what a good day to
Speaker 6: talk about ups because yesterday it closed down twelve percent.
Speaker 3: We're stock declining twenty five years.
Speaker 7: You're still bullish though?
Speaker 5: Yeah?
Speaker 1: Oh we like it. I think it was an overreaction.
Speaker 1: There's plenty of good stuff there. They're investing in Network
Speaker 1: of the Future, They've made significant investments in their Frankfort
Speaker 1: hub that's going to tie Europe to Asia. They monetize
Speaker 1: the brokerage business, they're reinstituting a share by back, and
Speaker 1: then you know, a lot of this is digesting the
Speaker 1: costs from the labor union agreement that they signed last year,
Speaker 1: so some of that will be behind them in the
Speaker 1: coming year and they're going to exit the year with
Speaker 1: ten plus percent margins on the domestic side. So there's
Speaker 1: plenty of good stuff out there. I think investors would
Speaker 1: just focus on the fact that expenses were higher than
Speaker 1: where they should be.
Speaker 3: The passion.
Speaker 4: Is it shipping though or smaller and less profitable. Is
Speaker 4: that a worsome or is it just a some of
Speaker 4: it kirls.
Speaker 1: Some of it just because what they said was there
Speaker 1: was a certain type of business owner that was moving
Speaker 1: from next day air to ground, and then there was
Speaker 1: a certain a certain profile that was moving from ground
Speaker 1: to short posts. So yeah, that's going.
Speaker 7: To play out.
Speaker 1: The contract that they signed with the USPS is going
Speaker 1: to be incrementally added to the events it is, and
Speaker 1: it's going to come online at the back half of
Speaker 1: the year and you're going to see those benefits before
Speaker 1: we let you go.
Speaker 3: Gosh, I want to go to Hilton.
Speaker 6: I want to go to Hilton. Yeah, we could do
Speaker 6: Union Pacific. They report tomorrow, but let's do Hilton. It's
Speaker 6: up nineteen percent so far this year. We don't hear
Speaker 6: from them until August. What's going on with Hilton.
Speaker 1: Great franchise asset light model they've been bringing on. They
Speaker 1: have the whole spectrum from sort of the consumer to
Speaker 1: business low end to the luxury portfolio. Business travel has
Speaker 1: actually been a strong point for them. You have people
Speaker 1: going on business trips, staying overnight longer than they did
Speaker 1: so instead of a two night visit, it's now maybe.
Speaker 7: Three or four. We're traveling. We are traveling a lot.
Speaker 3: We are traveling more than we have in a while.
Speaker 7: Yeah.
Speaker 4: Yeah, it's interesting because so it doesn't matter if the
Speaker 4: revenge travel is over.
Speaker 1: I don't think it's over.
Speaker 3: You don't think it's think it's playing out.
Speaker 1: The hybrid work week helps people work in three days,
Speaker 1: remote and being able to travel work.
Speaker 3: For There are a lot of people on business tips.
Speaker 3: Taking like a significant other.
Speaker 7: Really not us? Hell, hold on, hold on, we can
Speaker 7: do that.
Speaker 3: What do they call that when people like.
Speaker 7: They take you, but then you got to take your kids.
Speaker 3: Here's a word for it, to take your heads. Nice
Speaker 3: to have you here.
Speaker 1: Thank you so much for having me.
Speaker 7: Appreciate it. We'll come back. Appreciate it all right.
Speaker 3: Nevill Jabari.
Speaker 4: He's an equity portfolio manager at all Spring Global Investments,
Speaker 4: five hundred and seventy billion dollars in assets under manager,
Speaker 4: joining us right here in our studio.
Speaker 2: This is the Bloomberg Business Week Podcast, a little Apple, Spotify,
Speaker 2: and anywhere else you get your podcast. Listen live weekday
Speaker 2: afternoons from two to five pm Eastern on Bloomberg dot com,
Speaker 2: the iHeart Radio app, tune In, and the Bloomberg Business App.
Speaker 2: You can also watch us live every weekday on YouTube
Speaker 2: and always on the Bloomberg terminal