Are S&P 500 Companies Citing Impact from the Government Shutdown on Q3 Earnings Calls?

During each corporate earnings season, companies may comment on government actions that are having an impact or may have an impact on their business in the current quarter or in future quarters. Given the continuing federal government shutdown, have S&P 500 companies commented on the government shutdown during their earnings conference calls for the third quarter?

The answer is yes. FactSet Document Search (which allows users to search for key words or phrases across multiple document types) was used to answer this question. Through Document Search, FactSet searched for the term “government shutdown” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from September 15 through November 6.

Overall, the term “government shutdown” was cited on 76 earnings calls conducted by S&P 500 companies during this period. This marks the highest number of earnings calls citing “government shutdown” since Q4 2018 (77), and the second-highest number of earnings calls citing “government shutdown” over the past 10 years. On a percentage basis, the term “government shutdown” has been cited on 18% (76 out of 432) on the earnings calls conducted by S&P 500 companies from September 15 through November 6.

At the sector level, the Industrials sector has the highest number (25) and percentage (35%) of earnings calls where the term “government shutdown” was cited. Within the Industrials sector, the Aerospace & Defense (5), Professional Services (5), Machinery (3), and Passenger Airlines (3) industries have the highest number of earnings calls where the term “government shutdown” was cited.

Outside of the Industrials sector, the Information Technology (13) and Financials (12) sectors have the highest number of earnings calls where the term “government shutdown” was cited, while the Information Technology (27%) and Real Estate (23%) sectors have the highest percentages of earning calls where the term “government shutdown” was cited.

What are these companies saying about the government shutdown?

Overall, 29 companies stated or implied that they were seeing little to no impact from the government shutdown at this point in time. However, a number of these companies also stated that they would see or may see a negative impact from the shutdown the longer it continues. As a result, 22 companies stated that they included some impact or potential impact from the government shutdown in their guidance for Q4 or for the full year. Many of these companies stated they were providing a wider guidance range or a more conservative guidance range than normal to account for the uncertainty of the government shutdown.

A list of the 29 companies that stated they were seeing little to no impact from the government shutdown and a list of the 22 companies that included some impact from the government shutdown in their guidance and their comments can be found in Appendix 1 starting on page 36 in the full Earnings Insight report linked below.

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