CEOs and CFOs Talk Inflation and Bottlenecks

We're most of the way through third-quarter reporting season, and there's a pair of intertwined topics that have gotten more airtime on earnings calls than any other: Inflation and supply chains. Company executives are boasting about a strong demand environment, but worrying about being able to secure the materials, labor, and transportation they need to get their goods and services to their customers. Many are paying up to secure supply, and passing those costs along.

Here are a few excerpts from S&P 500 companies' third-quarter earnings calls on those subjects:

Apple (AAPL) CEO Tim Cook, Oct. 28:

For this quarter, we think that the primary cause of supply chain-related shortages will be the chip shortage. It is affecting pretty much most of our products currently.

General Electric (GE) CFO Carolina Dybeck Happe, Oct. 26:

Consistent with the broader market, we are experiencing inflation pressure, which we expect to be limited for the balance of 2021. Next year we anticipate a more challenging inflation environment...Our shorter-cycle businesses felt the impact earliest, while our longer-cycle businesses were more protected, given expanded purchasing and production cycles.

Yum! Brands (YUM) CFO Chris Turner, Oct. 28:

U.S. labor availability remains tight across most industries, driving wage inflation and staffing challenges that have resulted in a small number of our stores limiting operating hours, particularly during the early morning and late-night dayparts.

General Motors (GM) CFO Paul A. Jacobson, Oct. 27:

We do have that commodity inflation, but we still remain convicted about our ability to be able to offset either that through productivity or through some of the pricing actions that we've seen.

Chipotle Mexican Grill (CMG) CFO John R. Hartung, Oct. 21:

We believe we've got pricing power really better than almost anybody if not everybody in the industry. So, we'll be very patient. We're not going to cover inflation that hits in one quarter or another immediately, but we will carefully consider in the fourth quarter what action we will take.

Fastenal (FAST) CEO Daniel Florness, Oct. 12:

The product and shipping cost inflation is not just high, it's brutally high. The chaos and the impact, not just from a financial perspective, but from a toll it takes on our human capital is immense

Sherwin-Williams (SHW) CEO John Morikis, Oct. 26:

We are aggressively combating raw material inflation with significant pricing actions across each of our businesses. We implemented multiple price increases in the quarter. We will continue to do so as necessary.