Third Highest Number of S&P 500 Cos. Citing “Supply Chain” on Q1 Earnings Calls in Over 10 Years

During each corporate earnings season, companies often comment on subjects that had an impact on their business in a given quarter, or may have an impact on their business in future quarters. Given the concerns in the market about supply chain disruptions, did more S&P 500 companies than normal comment on supply chains during their earnings conference calls for the first quarter?

Searching for Mentions Across Conference Call Transcripts

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 “supply chain” in the conference call transcripts of all S&P 500 companies that conducted earnings conference calls from March 15 through May 19.

Of these companies, 338 cited the term “supply chain” during their earnings calls for the first quarter, which is well above the five-year average of 199. In fact, this is the third highest number of S&P 500 companies citing “supply chain” on earnings calls going back to at least 2010 (using current index constituents going back in time). The current record is 363, which occurred in Q3 2021. In addition, the first quarter also marked the second highest percentage of S&P 500 companies citing “supply chain” on quarterly earnings calls going back to at least 2010 at 73% (338 out of 460).

At the sector level, the Industrials (62) and Information Technology (48) sectors have the highest number of companies that cited “supply chain” on earnings calls for Q1. On the other hand, the Materials (93%) and Industrials (91%) sectors have the highest percentages of companies that cited “supply chain” on their Q1 earnings calls during this period.

Impact on Net Profit Margin Expectations

Given the high number of S&P 500 companies that have cited “supply chain” on Q1 earnings calls, have net profit margin expectations for the S&P 500 for Q2 2022 and CY 2022 been revised? The current net profit margin estimate of 12.5% for Q2 2022 is below the estimate of 12.7% on March 31, while the current net profit margin estimate of 12.6% for CY 2022 is also below the estimate of 12.7% on March 31.

The first quarter was one of the most challenging periods yet related to supply chain disruptions, increased costs, and persistently high inflation. -Walmart (May 17)

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