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71% of S&P 500 Companies Are Citing Negative Impact of Supply Chain on Q3 Earnings Calls


By John Butters  |  October 8, 2021

While the majority of S&P 500 companies will report earnings results for Q3 2021 over the next few weeks, about 4% of the companies in the index (21 companies) have already reported earnings results for the third quarter (through October 7). Given expectations for earnings growth of more than 20% for both the third and fourth quarters, have these companies discussed specific factors that had a negative impact on earnings or revenues for the third quarter (or are expected to have a negative impact in future quarters) during their earnings conference calls?

To answer this question, FactSet searched for specific terms related to a number of factors (e.g. “currency,” “labor,” etc.) in the conference call transcripts of the 21 S&P 500 companies that have conducted third quarter earnings conference calls through October 7 to see how many companies discussed these factors. FactSet then looked to see if the company cited a negative impact, expressed a negative sentiment (e.g. “volatility,” “uncertainty,” “pressure,” “headwind,” etc.), or discussed clear underperformance in relation to the factor for either the quarter just reported or in guidance for future quarters. The results are shown below.

Supply chain disruptions and costs have been cited by the highest number companies in the index to date as a factor that either had a negative impact on earnings or revenues in Q3, or is expected to have a negative impact on earnings or revenues in future quarters. Of these 21 companies, 15 (71%) have discussed a negative impact from this factor. After supply chain disruptions, labor shortages and costs (14), COVID costs and impacts (11), and transportation and freight costs (11) have been discussed by the highest number of S&P 500 companies.sandp500-cos-citing-negative-impact-on-q321-earnings-calls

Companies that discussed “inflation” on their earnings calls were divided into four categories in the chart below: labor costs & shortages, transportation & freight costs, raw material & commodity costs, and oil & gas prices. If these four categories were combined, the total number of companies negatively discussing some form of inflation would be 14.

It is interesting to note that only two companies have discussed a negative impact from foreign exchange, as this factor has been cited as a negative impact by numerous companies in previous years. In fact, 10 S&P 500 companies have cited a positive impact from foreign exchange on their Q3 earnings calls to date.

For a list of the S&P 500 companies that discussed supply chain and other factors on their earnings calls, please click the link below to access the full FactSet Earnings Insight report and see pages 32 - 38 in the report.

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The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.

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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).