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Loews Corporation
CEO : Mr. James S. Tisch

Quarterly earnings growth(YoY,%)

Period	Revenue	Operating Income	EPS	Release Date
2022 Q4	6.8% YoY	-100.0%	12.3%	2022-10-31

Jim Tisch says,

Executive Changes at Loews Hotels

• Jon Tisch to become Executive Chairman of Loews Hotels, and Alex Tisch to assume the role of President and CEO from January 1, 2023.
• Alex Tisch oversaw the development of Loews Hotels’ 800-room property in Kansas City and was integral in developing key partnerships.

Third Quarter Financial Results

• Loews Hotels reported $77 million of adjusted EBITDA for the third quarter, up $18 million compared to the third quarter of 2021.
• Loews Hotels reported $261 million of adjusted EBITDA for the nine-months ending September 30, which is higher than the company’s pre-COVID full-year 2019 adjusted EBITDA of $227 million.
• CNA’s core income of $213 million during the third quarter includes $87 million in pre-tax catastrophe losses related to Hurricane Ian.
• CNA reported an underlying combined ratio of 91.1 during the third quarter.

Loews Arlington Hotel and Boardwalk Pipelines

• Construction continues on schedule and on budget for the nearly 900-room Loews Arlington Hotel, slated to open in the first quarter of 2024.
• Boardwalk Pipelines continues to perform well and grow revenue, with the appeal of litigation currently pending in the Delaware Supreme Court.

Share Repurchases and Altium Acquisition

• Loews repurchased approximately 3.5 million shares of common stock for $193 million from July 29 until the date of the call.
• Year-to-date, Loews bought back 4.5% of its outstanding shares for $652 million.
• Altium completed the $270 million acquisition of Plastic Industries in the second quarter, funded with $150 million of equity and $120 million of debt.

Possible Changes to Earnings Call Format

• Loews Hotels is considering simply posting a transcript and discontinuing the call in the future, welcoming feedback on this option.

Jane Wang says,

Net income and earnings per share

• Net income for Q3 2022 was $130 million, compared to $220 million in the previous year.
• Earnings per share for Q3 2022 were $0.54 per share, compared to $0.85 per share in the previous year.

CNA’s performance

• CNA contributed a net income of $150 million to Loews in Q3 2022, compared to $229 million in the previous year.
• CNA’s year-over-year decline was primarily due to lower net investment income from LPs and common stocks, partially offset by higher earnings from the fixed income portfolio.
• LPs and common stocks together returned negative 2.1% during Q3 2022, compared to a positive 3.8% return in previous year’s Q3.
• CNA’s Life & Group segment showed proactive management of its long-term care business with a net reserve release of $25 million.

Boardwalk’s performance

• Boardwalk contributed EBITDA of $192 million in Q3 2022, compared to $184 million in the previous year.
• Revenues increased due to recently completed growth projects, higher re-contracting rates, and higher utilization of its pipeline and storage assets.
• The decrease in net income from $38 million in last year’s third quarter to $34 million this quarter was driven by higher depreciation expense from recently completed projects and $5 million impairment due to the retirement of an old asset.

Loews Hotels’ performance

• Loews Hotels’ adjusted EBITDA grew from $59 million in previous year’s Q3 to $77 million in Q3 2022.
• Occupancy increased from 71.5% in last year’s third quarter, to 84.7% this quarter.
• Loews Hotels’ net income was $25 million in Q3 2022, compared to $13 million in the previous year, driven by robust leisure demand, a significant pickup in group travel, and the return of business travel.

Share repurchases and cash flow

• Loews repurchased an incremental 4.8 million shares of Loews at a cost of $268 million, bringing the total year-to-date share repurchases to 11.2 million shares at a total cost of $652 million.
• CNA paid $97 million in dividends to Loews in Q3 2022, and $778 million year-to-date, consisting of three regular quarterly dividends of $0.40 per share, and a special dividend of $2.00 per share.
• Loews had $3.2 billion in cash and short-term investments at the end of Q3 2022.

Q & A sessions,

Loews Hotels’ strategy

• The strategy is based on two core pillars: catering to group travel at high-quality destinations and developing and operating hotels immersive destinations.
• The first pillar focuses on hotels with 300-plus keys and ample meeting space that also will offer a unique experience to attract group and transient customers alike.
• The second pillar focuses on immersive destinations with built-in demand generators like the Universal Orlando partnership that has been highly successful, spanning more than two decades and currently including eight hotels, with 9,000 rooms.

Fed’s tightening process

• The Fed started to steadily increase the Fed funds rate and shrink its balance sheet, and expectations of another 125 basis point rate increase in the next two months.
• The increase in mortgage rates means that the monthly cost of buying a new home has more than doubled in the past 10 months, leading to a significant reduction in home prices, and the fall in the number of housing starts will continue to accelerate, all leading to a weakening GDP.
• As a result of tightening by the Fed, commodity prices are declining, and the easy part of the Fed’s tightening process will be complete by the end of the year.

Inflation and the economy

• The rate increases in the past year will translate into a slower economy and likewise a reduction in the inflation rate.
• Other sectors of the economy will react negatively to higher interest rates as well.
• My guess is that the end of the lag is almost upon us, and we will see weaker GDP numbers in the coming quarters, alongside slowing inflation as measured by the CPI.
• Economic growth will be negative for a few quarters, but unemployment will remain below 5%, leading to a full employment recession.

Fed’s future moves

• The big question for everyone is whether the increases in short rates in 2022 will be enough to quell inflation or whether the Fed will feel it has to continue to raise short rates in 2023, and they may pause at the beginning of ’23 to assess the effects of their 400 basis point increase in short rates.
• The Fed should make clear that it is pausing the move to higher short rates to evaluate the economy for a few months before possibly resuming tightening if necessary.