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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined today by our CEO, Bill Crager; and CFO, Pete D'Arrigo.\nSuch comments are not guarantees of future performance, and therefore, you should not put undue reliance on them.\nWe also will be discussing certain non-GAAP information.\nI know these continue to be challenging days with uncertainty all around us regarding our economy, our society, so many families concerned about the health of their loved ones and millions of families worried about their financial well-being.\nAt Envestnet, we have been incredibly busy as our clients have depended on us more than ever to help them navigate this period of time.\nSomehow, after months of working in a new way, it feels like business as usual despite these very unusual circumstances, we've been able to deliver and adapt to the demands of this extraordinary time on behalf of our clients.\nWe've also been able and been successful in securing new and expanded relationships, delivering solid financial performance and executing on our strategic roadmap.\nI'm incredibly proud of our team for their amazing resilience and commitment to our long-term vision.\nEnvestnet vision is clear: to be the leading provider of financial wellness solutions and services in North America.\nGiven the accelerated reliance on cloud-based solutions such as what we offer and the number of firms, advisors, partners and consumers that interact with our network today, the stage is set for where we have been headed.\nA new standard for personal financial advice is emerging, and we are driving it.\nThrough our data initiative and platform modernization efforts, we are working to create a fully configurable platform that works effectively both in an end-to-end ecosystem and in smaller app sized pieces.\nBy leveraging Envestnet's digital environment, deploying what we do will become increasingly friction-free and enable our clients to deliver essential advice in ways that they've traditionally engaged their clients and importantly, also an evolving digital model that meets the expanding expectations of consumers.\nAnd with the use of APIs, we can take advantage of emerging distribution opportunities through which they can deploy our digital solutions.\nDemand for these solutions is accelerating.\nWhat we are doing here is important.\nIt will recreate how the infrastructure for financial wellness will be delivered in the future.\nThe addressable market opportunity we see ahead of us is substantial, and we are investing to capitalize on it.\nWe will build, partner and when it makes sense to, we will acquire as we integrate the best capabilities that enable our customers' success.\nOur second quarter financial results exceeded our expectations, and our outlook for the remainder of the year has improved.\nPete will provide all the details on that in a little bit.\nBut first, let me provide some examples of the progress we're making across our business as we execute against our roadmap.\nIn our wealth solutions business, we continue to demonstrate the many levers we have for growth.\nWith our land and expand strategy that has worked for the better part of 15 years, our focus has mainly been on the first part of that, adding advisors and accounts to the platform in ways they want to be served by us by investment.\nWe've been very successful in doing that.\nToday, we have more than 103,000 financial use advisors using the Envestnet wealth technology.\nThose advisors oversee more than 12 million accounts with $3.8 trillion assets supported by our platform.\nBut we're beginning to see how our expanded integrated solutions and services create more value for our existing relationships.\nUltimately, data-driven digital engagement is the foundation of everything we do and everything we provide to our clients.\nData informs the financial plan.\nA recommendation engine prescribes tangible next steps an advisor and their clients can take.\nThese steps are all integrated with a variety of financial wellness solutions.\nThis includes investments, insurance credit and other elements, which advisors and clients can act on immediately, all in one-scale and tested platform.\nHighlighting the value of advice is even more important in this virtual world.\nOur next to actions, data insights, elevate the advisor's value proposition by handing the advisor's relevant points of contact with their clients.\nThis is how we expand the value we provide to our clients and deliver on our financial wellness vision.\nOur MoneyGuide financial planning business is an excellent example of how this is working.\nFinancial planning is the cornerstone for financial wellness.\nMoneyGuide, which we acquired just last year, had its best quarter in its history.\nRevenue and profitability are at its highest levels yet.\nWe continue to innovate, making financial planning more accessible and easier to leverage for millions of consumers through the tens of thousands of advisors that are using our planning software each and every day.\nWe now have over 200 integrations, and we continue to see success in renewing, expanding and cross-selling existing enterprise relationships, while we're also establishing new ones.\nRecently, a client of ours, Citizens Bank, signed an additional schedule for unlimited retirement block use for approximately 4,000 personal bankers and on their public website for consumers to access directly.\nThis is an example of how we are deploying these upsized planning components.\nWe're also seeing a large uptick in the number of RIAs leveraging MoneyGuide solutions.\nSales to independent advisors, those who are not associated with a large broker-dealer or enterprise, were up 23% in the second quarter over last year.\nWe're implementing our app size MyBlocks to integrate tightly into our solutions.\nThis changes the ballgame from the app to answers, to the ability to click and execute, these easy deploy blocks illustrate the powerful, disruptive advancement that integration drives for us.\nRelated to this is how we are paving the way to unlock additional opportunities within our installed base.\nBoth our insurance and credit exchanges continue to add product providers, shelf space at Envestnet clients and access to thousands of advisors.\nBoth are integrated within the Envestnet platform and volume is beginning to ramp-up.\nIn June, we officially launched the Advisor Services Exchange, which enables critical services, including access to capital to RIAs, which is incredibly timely given the backdrop of this current environment.\nAnother area where data and technology has differentiated us is how we are growing high-value fiduciary solutions that are increasingly being adopted by our clients.\nA few data points to highlight.\nThe number of advisors who are using our tax and impact overlay solutions grew 16% since just this past December, and overlay accounts grew 19%.\nAnd our impact portfolios are also growing as investors seek to align their social and moral priorities with their investments.\nAdvisers using these solutions are up 12% and impact portfolio accounts are up 18% since the end of just last year.\nQuantitative portfolios, our first direct indexing solution, also experienced higher usage, with 23% more advisors using these solutions in 33% more accounts also since the end of 2019.\nWe're also making progress selling managed account solutions to our Tamarac installed base of RIAs.\nSeveral large firms, including a top 20 RIA, according to Barron's, are transitioning a meaningful amount of their managed account assets to our platform as they seek an operationally efficient way to migrate to model-traded UMAs.\nIn our Envestnet Yodlee business, revenue also outperformed in the second quarter.\nThis period of time highlights why Yodlee is the industry-leading provider of high-quality, secure data aggregation and analytics solutions.\nWhile COVID has been disruptive for many industries, financial institutions, specifically retail banks and wealth management firms, are increasingly embracing digital solutions, which their depositors and investors are accessing more frequently check in on their financial information.\nWe're also seeing an acceleration of data access agreements being executed between banks and our Yodlee business.\nTo date, we've secured open banking agreements with half of the top 10 U.S. banks.\nWe're actively engaged with 25 banks at the moment and expect to have 10 more agreements executed by the end of the year.\nOver the past year, we've also significantly enhanced our aggregation platform, modernizing our core architecture so that FinTech developers could easily utilize our comprehensive yet streamlined API platform.\nSo far this year, Envestnet | Yodlee has more than doubled the FinTech signings compared to last year as some customers have moved from incumbent aggregators.\nThe momentum here is definitely encouraging.\nAs we have updated in prior quarters, our investment manager analytics offering continues to face challenges in the market due to the proliferation of alternative data sources and resulting pricing pressure for new and renewal business.\nBut we're bullish on the value embedded within consumer spending trends that can be gleaned from the data coming into our aggregation platform.\nJust this week, we launched something called Insights Solutions.\nThis is a hyper-personalization capability for financial institutions.\nThrough APIs, the new solution enables financial service providers to provide experiences that engage customers proactively across their financial wellness and financial planning channels.\nThey also empower firms to unlock the value of data to support more informed decision-making, accurate customer segmentation and actionable guidance that they're providing to their clients.\nAdditionally, this quarter, the Federal Reserve Bank of Chicago is now a customer of Envestnet | Yodlee.\nThey'll be leveraging our spending insights, along with data from other providers to inform their economic research and policymaking.\nLast quarter, I shared our thoughts on the future, key themes that are driving the industry as we get through this COVID period.\nThe perspective guides us as we think about Envestnet's role in shaping the future and supporting our clients.\nA few weeks ago, we launched the advisor's playbook for leading clients forward, a guide in supporting website covering these key themes.\nWe also launched our virtual Advisor Summit in place of our in-person annual client conference.\nThrough both of these, thousands of advisors and home office participants engage with us in our content, and we've had great feedback.\nThe feedback has been tremendous, setting our industry thought leadership and how valuable it is, particularly during these times.\nThese are excellent resources to understand how we're helping lead the industry forward.\nUncertainty presents the opportunity for innovation.\nAnd today, there is a future that is emerging.\nEnvestnet is helping our clients and millions of households navigate the current environment as they seek answers to these critical emotional questions that they're asking.\nLike, what should I do?\nAnd will my family be OK?\nA role on answering these questions is to enable a new advice model for the industry that embraces the future, and we are well on our way.\nEverything we do is driven by our technology and data capabilities.\nThey are the conduit to every service and every solution that we offer, our opportunity to expand relationships with our current customers, our installed base, if you will, has never been greater.\nWe believe that opportunity will grow as we firmly establish this ecosystem for financial wellness.\nToday, I'm going to review the second quarter and update our outlook for the rest of the year.\nOur second quarter results were quite strong, meaningfully exceeding our expectations.\nAdjusted revenue for the quarter was $235 million, well above the guidance we provided.\nAsset-based revenue was better despite the impact of the market sell-off in March.\nFavorability was primarily driven by product mix, including the increased use of our overlay and direct indexing solutions that Bill mentioned earlier.\nWe also saw modest favorability in subscription and professional services revenue across our business, again, relative to our expectations.\nCost of revenue was modestly above our guidance, driven by the outperformance in asset-based revenue.\nHowever, most of the revenue favorability flowed through to adjusted net revenue as our overlay and direct indexing solutions, there are no direct cost of revenue.\nOur operating expenses overall were in line with expectations, which had assumed lower levels of activity such as reduced near-term hiring and travel expenses, as examples.\nAs a result, our adjusted EBITDA of $55.8 million was up 29% compared to last year.\nThis translated to similarly strong performance and adjusted earnings per share of $0.59, 28% above last year.\nSo what does this mean for margins and our longer-term outlook?\nThe current environment has created larger swings in our asset-based revenue than normal due to the sizable market fluctuations in the first half of the year.\nThe effect of the market, while negative a quarter ago, was meaningfully positive during the second quarter, leading to an increased outlook for asset-based revenue in the back half of the year compared to our expectations set out in our last earnings call.\nHowever, the market at June 30 was still not back to beginning of the year levels, and our AUMA was down around $22 billion from the beginning of the year.\nSpecifically, second quarter market action was a positive $60 billion in AUMA, offsetting a good portion of the negative $82 billion in the first quarter.\nToday's guidance assumes a market-neutral outlook based on market levels as of June 30.\nAdditionally, with stay-at-home orders and travel restrictions in place in all states where we have offices and with all of our employees working remotely and not traveling, our operating expenses have been lower.\nWe've assumed that pandemic-related circumstances will continue to impact our expenses in the near term, particularly in the third quarter.\nWe're assuming a modest increase in business activity as we head into the fourth quarter.\nHowever, we recognize that normal will mean something new in the future.\nWith these assumptions, we would see a sequential increase in some operating expenses between the third and fourth quarter.\nAnd our guidance reflects these increases, and this assumption is the primary reason behind the relatively flat adjusted EBITDA implicit between the third and fourth quarter in today's updated guidance.\nAt some point in the future, business activity will start to pick up, and our expenses will return to some higher level, likely between where they are now and where they were pre-COVID.\nWe are already considering how our business should be organized and how we will manage expenses in the future.\nOur goal is to further align the organization with our strategy, and we are taking short-term action while evaluating the longer-term organizational framework.\nFor example, in the second quarter, we closed nine smaller offices across the U.S. with all of those employees permanently working remotely, and we are assessing our optimal geographic footprint for the long term.\nHaving seen the effectiveness of remote working for certain groups, we are exploring how to operate more in a hub-like fashion.\nOver the next several years, we still expect to drive our adjusted EBITDA margin into the mid- or upper 20s, but in the current environment, the path to that will have some variability quarter-to-quarter.\nFor the full year 2020, we are raising our top and bottom line expectations.\nThis is driven primarily by the favorable market action during the second quarter, and this quarter's outperformance relative to our guidance.\nWe now expect adjusted revenue for the year to be between $977 million and $980 million, up 7% to 8% year-over-year.\nAdjusted EBITDA to be between $221 million and $223 million, up 14% to 15% year-over-year.\nAnd adjusted earnings per share to be between $2.28 and $2.31.\nTurning to the balance sheet.\nWe ended June with $92 million in cash and debt of $620 million.\nOur net leverage ratio at the end of June was 2.3 times EBITDA, down from 2.6 at the end of March.\nWith $225 million available on our revolver and positive cash flow generation, we are comfortable that we have the liquidity and flexibility as we balance managing the business in the current environment with continuing to invest in growth opportunities, both organically and through strategic activities.\nAnd at this point, I will Bill for his closing remarks.\nRecently, I've been thinking a lot about progress.\nLast week, we celebrated the 10-year anniversary of our IPO.\nDuring the 10 years after our founding extraordinary people, many who still work in Envestnet today, transformed an idea into a business, into a company that ultimately was traded on the New York Stock Exchange.\nThat's an incredible journey.\nWe accomplished a lot in our first 10 years.\nBut after we rang the bell, we did not stop.\nWe had more to do.\nDuring these past 10 years, we've experienced tremendous growth, both organically and through acquisition as we established investment as an industry leader.\nLast week, as we reached that milestone, Jud Bergman was very much on my mind.\nHe is every day, but especially last week.\nThere's a great picture of him, Pete and myself as the first trade cross the wire.\nWe traded up one step.\nAnd as you can tell by the photograph we've included in the material, it was a big one.\nI'm grateful for each step that we have the opportunity to take together.\nWe covered amazing ground.\nBut there's so much more for us to do, and that brings us to today.\nI mentioned earlier that despite these extraordinary and disruptive days, there is a future that is emerging.\nWe are driving hard to push this future.\nAs we outlined in our viewpoint for the industry, data and technology, the idea that all advisors need to become digital is essential and the comprehensive integrated advice that households will receive in the future will come from the experts, and that's the network of financial advisors and firms that we're incredibly fortunate to work with.\nBut they will be more and more supported by technology that helps them provide insights that powers and engages consumers as they achieve their financial goals.\nThis is where we live.\nWe are on our way to establishing the ecosystem that can make financial wellness a reality for everyone.\nA cloud-based model where advisors and their clients can tackle the financial questions that are big and small, make the decision and execute it in the platform.\nWe're fulfilling a vision that positively impacts millions and millions of families.\nWe have work to do, but I am incredibly excited about what these next 10 years will bring for us.\n",
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"content": "q2 adjusted earnings per share $0.59.\nsees q3 adjusted net income per diluted share $0.59.\nsees fy 2020 adjusted net income per diluted share $2.28 - $2.31.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we discuss our results, I encourage you to review the cautionary statement on slides 2 and 3 for our customary disclosures.\nFurther information can be found in our regular SEC filings.\nBill and Pete will provide a company update as well as an overview of the company's second quarter 2021 results.\nPlease limit yourself to one question plus one follow-up.\nYou may get back into the queue if you have additional questions.\nIt is good to speak with everyone today and I'm excited to report our second quarter results.\nI will start by providing some highlights from the quarter.\nOur strong performance is a reflection of our market leadership, where we serve more clients than ever before and those clients are engaging with us in more ways given the breadth and essential relevance of our offerings.\nI will also review our strategy and progress toward creating the most impactful and comprehensive financial wellness, ecosystem of data, technology and solutions that powers our industry.\nEnvestnet achieved strong adjusted revenue growth of 23% in the quarter and 70% year-to-date.\nOur new guidance reflects the stronger than expected first half of the year as well as an improved outlook for the second half of 2021.\nThis growth was enabled by our market leading position and the scale we have achieved and this is a market position we continue to expand.\nI believe this is important to note our position and ability to create scale, creates unique leverage for Envestnet as we drive our strategic plan forward.\nThe number of advisors on the Envestnet platform is now almost 108,000 with 14 million accounts that make up $5.2 trillion in assets.\nOur data aggregation business serves over 500 million aggregated accounts each day.\nOur MoneyGuide financial planning business continues to be the market leader in the industry while Envestnet tamp services also stands atop the podium as the market leader.\nWe have the largest network of services, solutions and third-party providers and we continue to grow these options for our clients.\nNew accounts are being opened at a faster pace and we are averaging well more than 10,000 new accounts every week.\nWe added several new customers during the second quarter including notable firms such as security.\nAs we also continue to add services to the firms, we serve today.\nOur exchanges are activating more and more advisors, financial planning continues to add exciting new features, we've rolled out to our existing clients and in our RIA business, we are seeing momentum adding manage accounts to a growing number of firms.\nWhile our footprint continues to grow, total meaningful metrics such as asset per advisor, accounts per advisor and adjusted revenue per advisor.\nWe are operating at significant scale as well.\nDuring the second quarter, we serviced almost 15 million trades and completed 1.8 million service requests.\nWe're also generating more than 8 million data driven recommendations a day for our clients to better connect and better serve all of their clients.\nAs we mentioned on Investor Day, we are on our way to 10 million recommendations a day by year-end and over a billion, a day by 2025.\nThese proof points are unique to Envestnet market position and enable us to advance our vision and pursue the growth strategy we have discussed on earlier calls.\nI believe these are very clear leading indicators and as we continue to execute the future for Envestnet is brighter than it's ever been.\nOver the past several months, we have laid out a straightforward and executable strategy and we are driving progress toward enabling ecosystem that powers our industry.\nNo one has the strength of platform user base and leadership position that we have and it is a significant differentiator position in Envestnet to continue its leading position and drive the company toward achieving our mission and our stated financial goals.\nThis scale combined with our cloud-based infrastructure and unparalleled data and solution set opens up the growing opportunity for us.\nWe are making important progress in bringing the pieces together in a frictionless, intelligent and connected ecosystem, so that the advisor and the consumer sees a much clearer and much more powerful view of their money in one place while at the same time, our customers have easier access to the entirety of our offerings to help them serve their clients more completely.\nOur platform and ecosystem is the industry standard for how advisors engaged digitally with their clients today and it will be the standard for how they serve their clients into the future.\nDigital transformation is the most powerful of several macro trends we benefit from and by capturing the lead here, we create a virtuous environment that opens, more and more opportunity for our company.\nIn addition to the digital transformation that is occurring, we continue to benefit from and also power several important industry trends.\nThese include the growth of fee-based advice even faster growth of managed accounts and the hyper growth of personalization services like direct indexing, tax overlay and impact investing.\nAs you overlay these trends across the current business that we serve today, which is $5.2 trillion in assets.\nWe believe we can increase our revenue by roughly 10 basis points on average on 10% to 15% of this asset base.\nThis creates a significant and growing revenue opportunity, which given our advanced market engagement strategy, we are increasingly identifying, engaging and executing all and our opportunity will continue to grow given these macro trends given our strong market position and given the significant capabilities that we have.\nWith that in mind, our leadership team has a laser sharp focus on three key drivers of revenue growth.\nWe will capture more of the existing addressable market by supercharging our platform to leverage our comprehensive data and solutions set.\nThis opportunity is large and it is sitting directly in front of us.\nNext, we are leading and modernizing the digital engagement marketplace by extending our cloud-based migration, which allows us to connect the best of Envestnet for a truly seamless customer experience.\nAnd lastly, we are opening the platform for expansion.\nOur developer portal enables over 625, third party FinTechs to leverage APIs embedding our capabilities and data into their environments.\nThis usage has grown by 1700% since the beginning of January 2020.\nAt the same time, we are opening Envestnet's ecosystem for more third-party providers, all of which will drive users and engagement ultimately accelerating our revenue growth and our opportunity.\nI want to double-click on capturing more of the existing addressable market and why we are very confident given the early progress that we're beginning to see.\nYou see, we have a differentiated engagement strategy, there is powered by the visibility and understanding we have given our data model.\nThis prioritize the use cases, the target large, identifiable, addressable pools of opportunity for Envestnet, which also deepen the relationships between advisors and their clients.\nWe have the broadest number of solutions available to our advisors.\nOur data driven recommendations, drive increased adoption and increased adoption and increased solutions provide more data to improve the recommendations that we make.\nWe are accelerating growth utilizing the data in the ecosystem and removing friction from the tasks required for advisors to use and access our solutions.\nAnd we are adding to our solutions during the second quarter, we introduced several new products that continue to build out our offering to the advisor and ultimately to the individual consumer.\nWe've been piloting the new client portal with several large customers and early feedback has been incredibly positive.\nWe also added services such as residential real estate with the credit exchange in our recently launched alternatives exchange, which we launched in July, a collaboration between investment UBS and I capital deliver a curated set of alternative investments in Envestnet clients via end-to-end digital platform.\n2021 represents investment charting the course for advancing a tremendous opportunity for our industry to better serve its consumers.\nWe are a catalyst for this future and this is a moment for us to apply our efforts and taking advantage of the position that we have, and the strategy that we have created and the opportunity for sustained and accelerated growth.\nEnvestnet organization is locked in on executing on this.\nToday, I'm going to review our second quarter results and then provide an update on our revised guidance for the first quarter and the full year.\nOur second quarter results continue to demonstrate the strengths in our business model, positive dynamics from the first-half of the year we expect to carry into the third and fourth quarter, which are reflected in our updated full year outlook.\nAdjusted revenues for the second quarter grew 23% to $289 million compared to the second quarter of last year, adjusted EBITDA grew 27% to $71 million compared to the second quarter of last year.\nAdjusted earnings per share was $0.67.\nTurning to the balance sheet; we ended June with approximately $370 million in cash and debt of $860 million.\nThe debt consists of our outstanding convertible notes maturing in 2023 and 2025.\nOur $500 million revolving credit facility was undrawn as of June 30, making our net leverage ratio at the end of June 1.8 times EBITDA.\nTurning to our investment initiatives; I want to reiterate our expectations.\nWe continue to expect the investments to account for roughly $30 million of operating expense during the year.\nWe are making good progress on the hiring front, the impact of which is reflected in our updated guidance.\nWe expect the investments to ramp up throughout 2021 with most of the impact in the second half of the year and annualizing to a run rate of approximately $40 to $45 million in 2022, growing at the same rate of operating expenses thereafter.\nAdditionally, we continue to expect to begin to generate faster revenue growth in 2022 as we create a better more streamlined ecosystem, which elevates our value proposition to existing clients and expands our total addressable market.\nAdjusted EBITDA to be between $61 million and $63 million as we further ramp up the investments and earnings per share to be $0.58 per share.\nFor the full year, we are again raising our outlook to reflect the strength of the first half of the year.\nFor the full year, we expect adjusted revenues to be between $1.169 million and $1.174 million, up 17% to 17.5% compared to 2020.\nAdjusted EBITDA to be between $253 and $257 million, representing growth of 4% to 6% for the full year, and earnings per share to be between $2.30 and $2.35, which is $0.31 higher than the original guidance we gave back in February.\nAdding some detail about our revenue outlook for the second half of the year to highlight some of the drivers of our revenue growth trends.\nFirst, our wealth business has performed increasingly well year-to-date.\nDuring the second quarter, we completed the merger of two-like clients moving significant assets from an asset based relationship to a subscription-based pricing model.\nWhile this doesn't hit the way, we have reported reclassifications in the past, it is an effect of reclassification.\nIf we adjusted for this, the second quarter was ahead of even the first quarter in terms of net new flows from existing business.\nFurther, our significant asset base benefited from favorable capital markets adding to our forecast of revenue growth.\nSecond, our data and analytics segment has grown subscription revenue around 4% in the first-half of the year compared to the first-half of last year.\nWe expect this business to see improving revenue growth in the second-half of the year.\nAs we continue to execute on our strategy in the coming years and begin to benefit from the investments were making now, we will capture more of the opportunity we've identified positioning us to attain our longer-term targets of mid-teens growth in revenue and adjusted EBITDA margin of 25% by 2025.\nWe are pleased with the progress we're making and are focused on the execution of our strategy.\nThe opportunity to be the leader of the ecosystem that powers the industry.\nThe ecosystem that connects data, technology and solutions to enable the intelligent financial life and is differentiated from every other provider as a fully connected, open architecture, hyper-personalized, wealth management platform.\nAs the industry leader, we will continue to enable the digital transformation that our clients need from us.\nOur roadmap is very clear.\nWe are capturing more of the addressable market opportunity with our data in our solutions.\nWe are modernizing the digital engagement marketplace to reduce friction and land more clients and we're opening up our platform to accelerate growth.\nWe will continue to execute on that roadmap and it will continue to create greater value for each and every one of our stakeholders.\n",
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"content": "qtrly adjusted earnings per share $0.67.\nsees q3 adjusted net income per diluted share $0.58.\nsees fy adjusted net income per diluted share to be $2.30 - $2.35.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined today by our CEO, Bill Crager; and CFO, Pete D'Arrigo.\nSuch comments are not guarantees of future performance, and therefore, you should not put undue reliance on them.\nWe also will be discussing certain non-GAAP information.\nI hope that you and your families have remained safe and healthy during these last months.\nAnd also that maybe you had the chance to catch up on your sleep after that sleepless selection night earlier this week.\nIn such a dramatic and disruptive time period, it is noble to begin with the progress we're making.\nSuch mission is to make Financial Wellness a reality for everyone.\nThat is our purpose.\nWe have a clear strategy to achieve that mission which we've spoken about in prior calls.\nHere, we bring together our data solutions with our market-leading technology and network to the broadest set of solutions available.\nIn doing so, we are creating the ecosystem that connects all the capabilities and components of Financial Wellness that buys value for our customers.\nAnd our customers well, they are financial services firms and the advisors who work for them.\nThey're also FinTech companies.\nAnd there are also new opportunities in new markets where they're embedding financial services into offerings, all of which makes us accessible to tens of millions of consumers.\nEnvestnet is uniquely positioned to achieve the mission And we have spent these extraordinary months executing on our strategy and our progress has been meaningful.\nThe business continues to perform very well in the current environment, with our third quarter financial results exceeding our expectations.\nAs we head toward the end of the year, I'm incredibly pleased with the progress we are making.\nWe focused -- we've invested in key parts of our business and we are attacking areas of opportunity.\nEnvestnet has the scale, the footprint, the capabilities in the organization to continue to drive the future of financial advice.\nWe are the market leader.\nWe are winning share, and we also are expanding the solutions that we offer to the marketplace.\nToday, our Wealth Solutions business supports $4.1 trillion in assets, in nearly 13 million investor accounts.\nAnd our data and analytics infrastructure is unmatched with more than 17,000 data sources, 450 million linked consumer accounts and more than 33 million users in the most recent quarter.\nOur Planning and Wealth platform is used by more financial advisors in the United States than any other provider.\nIn fact, 17 of the 20 largest banks in the U.S. work with Envestnet.\n47 of the 50 largest wealth management and brokerage firms work with us.\n3,000 RIA firms, including many of the nation's largest and more than 500 FinTech companies rely on investment to help them meet the growing demand and expectations from their customers.\nWhether you are in Rhode Island and you're accessing us, you're on your phone with your bank's offering of our MyBlocks that's integrated with our Yodlee data to help manage your credit card, your credit card debt or you're sitting with your advisor in Arizona to plan your estate in the transition of generational wealth, Envestnet's offerings are reaching further touching more users and creating more deeply integrated financial experiences.\nWhat's emerging is a powerful network effect.\nWhen we are powering it, we're generating it.\nAs manufacturers put more products on our shelves or services, they become more valuable.\nAnd they can address more customer needs.\nThis attracts more sellers to the ecosystem.\nAnd more sellers drive more users connected to more consumers.\nMore consumers means more financially well people who seek more services and products to meet their needs into the future.\nOur focus has been on execution and executing on behalf of our customers.\nare identifying what drives our customers' success and then making it easy for them to deploy our offerings, on providing the most modern and integratable platform, on prioritizing investing in the most critical success stories for our customers and organizing our talent and resources to the right metrics as we drive value through this ecosystem.\nWe have aligned our investments during this year to help us meet our clients' needs and the opportunities that they see, things like modernization of the platform and our move to the cloud.\nOur value-add fiduciary solutions are exchanges enhancing user experiences and building consumer-facing technologies and engaging the marketplace with a much more cohesive go-to-market organization.\nThe opportunity for us to invest is greater now than perhaps it ever has been before.\nWe see areas where we have the ability to lean in and drive long-term value, and we will continue to invest in these areas.\nWhy is it greater now?\nBecause we are seeing how the marketplace and our clients are responding to these integrated offerings how they're using data to power and differentiate our solutions to drive long-term value.\nIt is long-term value for them, our clients, for their customers, but is also long-term value for investment.\nWe are seeing meaningful progress in advisors adopting our higher-value fiduciary solutions.\nOn last quarter's earnings call, we highlighted success with our tax and impact overlay solutions, our impact in ESG investment portfolios in our direct indexing products.\nAdvisers continue adopting these solutions in the third quarter.\nWe continue to see accelerated use of our overlay solutions and a 35% year-to-date increase in use of our direct index portfolios.\nThe growth and adoption of these solutions is impressive, highlighting the contribution to our consistent revenue outperformance that we've experienced this year.\nWe are exploring how we can move deeply integrate these solutions into a seamless execution environment in making these solutions available to a broader base of investors.\nIn our data and analytics business, the work we've done to modernize our developer portal, to drive growth in the FinTech channel continues to bear fruit.\nYear-to-date, we've seen more than a tripling in the number of FinTech deals.\nOur paid user count has increased 28% versus last year, driven by new logos and user growth in both our financial institutions and our FinTech channels.\nAnd we continue to strengthen our relationship with leading financial institutions by signing additional data sharing agreements.\nAnd while it does not translate to meaningful revenue growth next year, it does position us to lead industry's open finance movement and represent broader distribution opportunities for our Financial Wellness solutions.\nWe are developing and deploying new solutions for our installed base of customers.\nAn important example of new solutions is our exchange offering, something I've talked about on past calls.\nI'm going to spend a minute here to explain to you kind of how the insurance exchange works and why it's so important.\nWe started the insurance exchange with a team of industry experts, folks who sense the scope of opportunity inside our ecosystem and utilize their expertise to leverage and accelerate disruptive advisor-focused technology.\nWe enrolled manufacturers in the vision and they invested time and money to help identify the marketplace needs and accelerate our go-to-market implementation.\nToday, 10 insurance carriers among the the largest providers representing more than half of the variable annuity market in the U.S., while they're participating in the exchange.\nWe are now creating shelf space for the offering by contracting with broker-dealers, contracting with RIAs to provide their advisors with access.\nAnd we're engaging with those advisors and training those advisors on the capabilities and the processes, and advisors now are starting to utilize these very powerful tools.\nThat usage begets production.\nThat production drives engagement from the carriers and also from our clients and ultimately drives revenue for investment.\nFrom here, we have a base, we have a foundation.\nFrom here, what comes is additional insurance products that can be sold and managed through the very same types, with the same firms, the same advisors into the same consumers who have a additional need.\nD.A. Davidson will be leveraging Envestnet's insurance exchange to the fullest extent.\nThey will be converting their entire annuity business to the platform, and they will be processing all of their fee-based and commission-based annuities via the Envestnet Insurance Exchange.\nAnd we expanded our relationship with Dynasty Financial Partners last quarter as the firm recently made the investment credit exchange available to their partner firms, allowing them to have broad access to prequalified lending solutions.\nThese are just two examples of notable wins in our effort to drive meaningful long-term results from our exchange solutions with more to come in insurance, in credit, in advisor services and other exchanges that we have planned for the future.\nWe have spent most of the year -- much of the year, aligning the organization to drive our strategy forward.\nFunctions are now organized across all business lines to facilitate internal and external communication and to bring to bear the full capabilities of our company.\nOver the years, we've developed and acquired the leading expertise in our industry.\nAs we brought Envestnet's talent together, we've continued this culture of innovation.\nWe are complementing the incredible talent inside the organization with valuable perspective and experienced leadership to further scale our business and help us achieve our mission.\nRecently, we have named new senior leaders into the company and these include Dana Daria as our Co-Chief Investment Officer.\nDana joins us from Symmetry Partners.\nDonna Peoples is our Chief Relationship Officer; Donna was most recently the Chief Client Officer at FIS and previously served as Chief Customer Officer for AIG.\nShe also has experience at an emerging conversational AI company named Type stream.\nBob Copela has been named as our new Chief Technology Officer.\nHe began on Monday.\nAnd he joins us from Cision, a software-enabled as a service provider who served as their Chief Information Officer.\nHe also held technology leadership roles at Bloomberg, Thomson Financial and McGraw Hill.\nDana, Donna and Bob are great additions to the Envestnet team, and I'm very much looking forward to the progress they will help us make.\nEnvestnet people have always engaged the big challenges to create significant opportunity.\nStarting a business during a recession with a card table and dial-up modem, building a technology platform that supports one out of every three financial advisors in the United States, building a network of data connectivity that powers individual's understanding of their money, scaling and infrastructure to support extreme market volatility in trading volumes during the pandemic while working remotely.\nI'm confident as we navigate the uncertainty caused by this pandemic, we will continue to engage the challenges, and we will continue to create significant opportunity.\nWe are making the investments to ensure we use our market position to continue to press the opportunities that we see.\nWe're enhancing existing capabilities.\nWe're integrating new solutions We're driving further adoption of our ecosystem, and we're supporting and growing our customers as they power Financial Wellness to millions and millions of consumers.\nToday, I'm going to review our results for the third quarter, update our outlook for the fourth quarter and provide context for our thinking about 2021.\nConsistent with what we've been experiencing since the pandemic began in March, our third quarter results were quite strong, meaningfully exceeding expectations.\nAdjusted revenue for the quarter was $253 million, well above the guidance we provided as we saw outperformance in asset-based and subscription-based revenue as well as professional services.\nAsset-based revenue benefited from favorable net flows, continued adoption of higher-value fiduciary solutions like our tax and impact overlay and direct indexing solutions as well as a favorable market on accounts that bill monthly and on the average daily balance during the quarter.\nSubscription-based revenue performed well, driven by higher usage in the Data and Analytics segment with our financial institution and FinTech customers.\nOperating expenses overall came in around $5 million lower than our expectations for the quarter.\nWhile we had already assumed lower operating expenses due to COVID-related restrictions on things like travel, we saw even more favorability than anticipated in the quarter as we saw lower-than-projected expenses associated with slower hiring, medical, marketing and travel.\nAs a result, our adjusted EBITDA of $67.6 million was up 24% compared to last year.\nThis translated to similarly strong performance in adjusted earnings per share of $0.72, 20% above last year.\nWe are raising our fourth quarter revenue outlook from our prior expectations as we expect our asset-based revenue to benefit from stronger-than-expected net flows and a favorable market in the third quarter, both of which contributed to higher billable values at September 30.\nWe also expect our adjusted EBITDA and earnings per share to improve in the fourth quarter relative to our August guidance, despite a meaningful sequential increase in operating expenses compared to the third quarter.\nAs a result of our outperformance in the third quarter and this improved outlook for the fourth quarter, we are raising our top and bottom line guidance for the full year of 2020.\nWe now expect adjusted revenue for the year to be between approximately $991 million and $993 million, up 9% year-over-year.\nAdjusted EBITDA to be between $238 million and $239 million, up 23% to 24%, and we are raising adjusted earnings per share to be between $2.51 and $2.53.\nTo add some context to the full year, our EBITDA, EBITDA margin and earnings per share this year are meaningfully higher than we expected at the beginning of the year, with revenue growth expected at 9% and EBITDA growth expected at 23% to 24%.\nThat level of margin expansion is beyond expectations.\nExpense management and pandemic-related circumstances have lowered expenses significantly and unsustainably for the long-term.\nThis expense favorability gives us an opportunity to assess many elements of our business, like our office footprint, given our successful work-from-home transition and the need for travel at the levels we did in 2019 and before, allocating some of that spending into the product, technology, engineering and organizational initiatives Bill mentioned.\nWe are looking at how we better drive our strategy to position us for long-term value creation.\nOver the next several years, we target returning to double-digit growth in revenue while driving our adjusted EBITDA margin into the mid- to upper 20s.\nIn any given year, we may make more or less progress toward those targets.\nNext year is a prime example of the variability we may experience from period to period.\nWhile we are not yet providing specific guidance for 2021, we expect that adjusted revenue will grow in the mid- to high single digits, embedded in that expectation is high single-digit growth in wealth revenue and low to mid-single-digit growth in the Data and Analytics segment.\nAs our expenses return to a more normal level over the course of 2021 and as we continue to invest in our long-term growth, its likely operating expenses will grow at a faster rate than revenue next year.\nHowever, when combining the performance we expect in 2020 with an early look at 2021, the average growth rate in adjusted EBITDA exceeds our revenue growth rate over that 2-year period from 2019, on track with our long-term margin targets.\nTurning to the balance sheet.\nWe ended September with $363 million in cash and debt of $863 million, including the convertible notes we issued in August.\nOur net leverage ratio at the end of September was 2.1 times EBITDA, down from the 2.3 times at the end of June.\nAnd the proceeds from our recent convertible note issuance enabled us to pay off the amount that was outstanding on our revolver.\nSo now the revolver is entirely undrawn.\nWith $500 million available on the revolver, meaningful cash on the balance sheet and positive cash flow generation, we are comfortable that we have the liquidity and flexibility as we balance managing the business in the current environment with continuing to invest in growth opportunities, both organically and through strategic activities.\nThe future of consumer financial services is an integrated experience that connects the person's daily financial lives to their long-term financial goals.\nPeople will access financial information and make decisions in new ways.\nYes, absolutely more digital engagement.\nThat's for sure, but also relying more and more on accessible expert advice to guide them.\nWe are seeing this play out during this COVID disrupted period of time.\nEnvestnet is best positioned, and we are investing in capabilities and talent to make sure we take advantage of this opportunity.\nWe have work to do, but the progress we are making is meaningful.\nWe're on our way to establishing the ecosystem that can make Financial Wellness, a reality for everyone.\nAnd this is a cloud-based model where advisors and their clients can access capabilities to tackle the financial questions, both big and small, make a decision and then seamlessly execute on it.\nWe are very encouraged by our progress, and we are very excited about what we see ahead of us.\n",
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"content": "q3 adjusted earnings per share $0.72.\nsees fy adjusted earnings per share $2.51-$2.53.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we discuss our results, I encourage you to review the cautionary statement on Slides 2 and 3 for our customary disclosures.\nFurther information can be found in our regular SEC filings.\nBill and Pete will provide a Company update, as well as an overview of the Company's third quarter 2021 results.\nDuring the Q&A, please limit yourself to one question plus one follow-up.\nYou may get back into the queue if you have additional questions.\nEnvestnet achieved strong adjusted revenue growth of 20% for the quarter and 18% year-to-date.\nOur new guidance reflects an improved outlook for the full year 2021.\nYou'll hear more about our results from Pete following my opening comments.\nOur commitment to our vision and strategy continues as we create the financial wellness ecosystem that enables the future of advice and makes possible an intelligent financial life.\nThere is excitement about what we're doing inside the Company, and in the marketplace.\nWe are driving innovation.\nWe are threading technology into everything we do.\nWe are using data to elevate incredible insights to our clients and our partners.\nWe are continuing to add to our industry-leading marketplace of solutions.\nYou see, Envestnet is differentiated from every other provider as a fully connected, open architecture, hyper-personalized partner that is paving the way for the future of our industry.\nWe are executing on our roadmap and it is absolutely resonating with our clients.\nWe previously shared our strategy with you and outlined the steps to accelerate growth by, first, capturing more of the addressable market.\nWe're already a market leader with $5.4 trillion in platform assets, but we can deliver consistently higher revenue growth by deepening our relationships, and offering new and better solutions to our over 108,000 financial advisors and our growing roster of more than 625 fintech firms.\nSecondly, we are modernizing the digital engagement marketplace.\nEnvestnet continues to innovate and implement meaningful enhancements to our cloud-based API-driven platform.\nThis will improve user experience and create new opportunities for revenue growth.\nAnd finally, establishing our open platform as the driver of the ecosystem.\nThere are more connections to more developers and more firms continue to expand and vitalize our environment.\nOver the past quarter, we saw an increase in participants across both our data business and our wealth business.\nEnvestnet is also capitalizing on a number of compelling trends that accelerate our progress.\nLet's start with demand for technology and automation that is absolutely increasing across the board, and this is all ages, all generations, from baby boomers to Gen Z. Another very important trend has to do with open banking.\nOpen banking leverages technology to deliver consumer permissioned, highly personalized services and solutions.\nEvery fintech and financial Institution will need open banking capabilities to compete in the future.\nWe believe that Yodlee powers the most advanced global functionality for open banking.\nThis is an accelerating advantage for our clients and their consumers.\nWe also continue to benefit from the growth of fee-based advice and the even faster growth of managed accounts.\nWe are outpacing the industry.\nOver the last five years, Envestnet AUM/A organic growth rate has exceeded the managed account industry each and every year by approximately 500 basis points.\nWe're also seeing a meaningful growth of personalized services like direct indexing, like impact investing, and a heightened interest in tax services.\nLoss trend, clearly data is incredibly valuable.\nEnvestnet has assembled a significant dataset.\nWe have also strategically built data solutions that bring insight and actionable intelligence, which is a unique and substantial advantage for our Company.\nThese trends create a remarkable opportunity for Envestnet, and we are well positioned to take advantage of them.\nWe now have $5.4 trillion in assets across 108,000 advisors, an increase of $240 billion in assets over the last quarter.\nWe continue to see assets moving from AUA to AUM.\nWe also continue to see new account opening accelerate.\nWe are now opening more than 20,000 new accounts every week.\nWe've also added several new large financial institutions over the quarter, which has helped us reach a total of 17.3 million accounts that we serve.\nIn addition, the average number of accounts per advisor on our platform grew 9% year-over-year.\nAdvisors are serving more and more of their clients using our technology and our solutions.\nWe're also leading in areas that are super-important and they're growth drivers for our clients today.\nThese are personalized services like direct index portfolios, like sustainable investing strategies, which have grown by 86% year-over-year showing the increasing focus on ESG and impact investing.\nThere is also tax management services.\nAnd let me just spotlight our offering here.\nWe are using our rich internally generated data to identify advisors with accounts that would specifically benefit from our tax overlay offering.\n19 new firms have enabled tax overlay to their advisors, and several hundred advisors used tax overlay for the first time since June 1.\nThis includes several new large enterprises using our tax services.\nThere are also emerging activities that are exciting like our embedded investing effort.\nThis opens up access to our capabilities for millions of millions of additional consumers.\nThese services are promising -- are making promising progress as we engage more deeply with our clients in a bevy of new prospects.\nWe are investing in our leading technology to connect the best of Envestnet, enabling advisors to serve the entirety of their clients' financial lives.\nThere are many exciting developments making their way to market.\nIn September, we piloted our next generation proposal tool with over 100 clients of ours.\nThe feedback has been overwhelmingly positive.\nThe result of taking a customer-focused approach and working with them to design an even better technology solution.\nWe continue to expand industry-leading set of solutions we provide powered by and integrated into our technology and data.\nWe recently announced a partnership with YieldX.\nYieldX is a fintech that offers cutting-edge tools to advisors, helping them build more efficient fixed-income portfolios.\nThis partnership complements the capabilities of Envestnet's Insurance Exchange.\nBy combining YieldX and the Envestnet Insurance Exchange and other really important steps that we are taking, we are assembling the industry's leading marketplace of income and protection solutions.\nWe are creating the centralized source that enables advisors to offer the most comprehensive end-to-end solutions for income and protection, which is an essential need for retiring individuals.\nThere is real momentum in our efforts, as the Envestnet Insurance Exchange recently surpassed $1 billion in insurance assets served.\nYou may have noticed Envestnet in the media this past quarter.\nWe recently launched a new campaign aimed at our industry with the tag line fully vested.\nThe initial response has been significant with a tenfold increase in digital traffic, validating our alignment with our clients, and how they see the future of advice and how Envestnet is powering it.\nWe are growing awareness of the solutions we offer, creating familiarity with our brand and setting the stage for future offerings.\nWe have made progress on our strategic roadmap.\nWe are executing in all areas of our business, and we are delivering strong financial results.\nPete is going to provide more detail for you now.\nToday, I'm going to review our third quarter results and then provide an update on our guidance for the fourth quarter and revised guidance for the full year.\nOur third quarter results continue to demonstrate the strengths in our business model.\nWe expect the momentum from the first nine months of the year to carry through the fourth quarter.\nAdjusted revenues for the third quarter grew 20% to $303 million, compared to the third quarter of last year.\nAdjusted EBITDA was down 2% to $66 million, compared to the third quarter of 2020, outpacing our expectations for the quarter, and at the same time, reflecting the impact of our investment initiatives.\nAdjusted earnings per share was $0.61.\nQuickly on the balance sheet, we ended September with approximately $394 million in cash, and debt of $860 million.\nOur net leverage ratio at the end of September was 1.7 times EBITDA.\nTurning to our investment initiatives, I want to reiterate the expectations we've set forth earlier in the year.\nWe continue to expect the investments to account for roughly $30 million of operating expense this year.\nWe are making good progress on the hiring front, the impact of which is reflected in our third quarter results and our updated guidance.\nWe expect the impact of the investments to step up in the fourth quarter.\nWe continue to expect the accelerated investments to annualize to a run rate of approximately $45 million in 2022, at which point they should be completely in our expense base and grow at the same rate of our operating expenses thereafter.\nAdditionally, we continue to expect sustainable faster organic revenue growth over the longer term as we create a better more streamlined ecosystem, which elevates our value proposition to existing clients and expands our total addressable market.\nBut to summarize, for the fourth quarter, we expect adjusted revenues to be between $310 million and $312 million, up 17% to 18% compared to the fourth quarter of 2020.\nAdjusted EBITDA to be between $54 million and $55 million as we further ramp up the investments, and earnings per share to be $0.49.\nFor the full year, we are again raising our outlook to reflect the strength of the first nine months of the year and improved outlook for the fourth quarter.\nWe expect adjusted revenues to be between $1,177 million and $1,179 million, up approximately 18% compared to 2020.\nAdjusted EBITDA to be between $259.5 million to $260.5 million, representing growth of 7% for the full year, when the midpoint of our initial expectation for EBITDA was to be down around 5%.\nEPS for the full year to be $2.41, which is $0.40 higher than the midpoint of our original guidance back in February.\nAdding some detail about our revenue outlook to the fourth quarter of the year to highlight some of the drivers, first, our wealth business has performed well year-to-date.\nNet flows into assets under management and administration, excluding conversions in the first three quarters of the year were the highest in our history, nearly double the flows from the first three quarters last year.\nFurther, our significant asset base benefited from favorable capital market valuations adding to our forecast of revenue growth.\nSecond, our data and analytics segment has grown subscription revenue around 4% in the first nine months of the year, compared to the same period last year.\nWe expect this business to see improving revenue growth in the fourth quarter.\nAs we continue to execute on our strategy in the coming years and benefit from the investments we're making now, we will capture more of the opportunities we've identified, positioning us to attain our longer-term targets of $2 billion of revenue, and adjusted EBITDA margin expanding into the 25% range by 2025.\nOur year-to-date results are strong and we intend to close out the year capitalizing on this momentum by leveraging our scale, our technology, our market position, and another incredible asset that we have, Envestnet's people.\nEnvestnet has a team of dedicated individuals who deeply understand the needs of our industry and the needs of our clients.\nThis team is leaned into our mission and leaned into the work we are doing to establish Envestnet as the ecosystem that connects data, technology, and solutions to enable the intelligent financial life.\nAs the industry leader, we continue to innovate and drive the digital transformations that our clients want.\nOur strategy remains clear.\nWe will capture more of the addressable market opportunity with our data and solutions.\nWe are modernizing the digital engagement marketplace, and we are opening up our platform to accelerate future growth.\nI'm very pleased with the progress Envestnet is making.\nEnvestnet is differentiated from every other provider as a fully connected, open architecture, hyper-personalized partner that is paving the way for the future of our industry.\nWe will continue to execute, and we will create greater value for each and every one of our Company stakeholders.\n",
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"content": "q3 revenue rose 20 percent to $303.1 million.\nqtrly adjusted earnings per share $0.61.\nsees adjusted net income per diluted share $0.49 for q4.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined today by our CEO, Bill Crager; and CFO, Pete D'Arrigo.\nSuch comments are not guarantees of future performance, and therefore, you should not put undue reliance on them.\nWe also will be discussing certain non-GAAP information.\nAs we look back on 2020, we recognize how hard a year it was for so many people.\nThe pandemic impacting every single person's life, and for so many, in devastating in tragic ways.\nWe honor the incredible work of healthcare workers and the frontline workers who have shown such brave resilience and dedication over these months.\nWhile the difficult and practical implications of the pandemic have played out, a digital rumble began to shake across the economic landscape.\nCloud-based companies like Envestnet engaged from the first moment, leveraging our service and support infrastructure to help our clients navigate these disrupted times.\nWe also spent the year paving the way toward an exciting and accelerated digital future.\nLast year, we took swift action to ensure the safety of our employees.\nWe met the extraordinary demands of the year managing historic account and trade volumes as we grew the company and improved the way we served our clients.\nWe added a net 1.5 million accounts last year, completed 15 million service tasks and executed an incredible 76 million individual trade orders.\nThis was executed by our team as we worked remotely and while our clients worked remotely.\nWe completed a significant and important initiative to streamline our organizational structure and add leadership talent, which positions us to operate more as one Envestnet, both internally and also for the marketplaces that we serve.\nAnd despite the headwinds created by March market values, we grew impressively, delivering very solid financial results.\nWe reported just shy of $1 billion in revenue, which is 10% higher than a year ago, and adjusted EBITDA grew 26% compared to 2019.\nAnd importantly, we chartered the course for advancing a tremendous opportunity for our industry to better serve its customers, further expanding our strategic purpose, developing a bold investment plan to capture the sizable opportunity before us as we make financial wellness a reality for everyone.\nOver our history, Envestnet has been very successful in anticipating, investing in and driving the future.\nWe began 20 years ago as a TAMP, a turnkey asset management platform, a category we invented, and we continue to lead by a substantial margin.\nOver time, our capabilities expanded.\nWe unbundled our own investment solutions from the core technology, enabling advisors in powerful new ways, opening access to the industry's largest marketplace of investment solutions and strategies.\nWe launched the first unified managed account, the UMA, bringing multiple investment strategies into one brokerage account, improving how advisors at optimize asset allocation and tax efficiency within client portfolios.\nThis powerful integration of technology with investment product made it far easier for advisors to deliver portfolio strategies while to help drive down the costs for end investors.\nWe forged an integrated future of data and planning-centric advice for advisors to deliver to their clients.\nOur acquisitions of Yodlee in 2015 and MoneyGuide in 2019 were critical as we evolved into an industry-leading integrated wealth platform.\nImpact investing, overlay solutions, direct indexing, integrated access to credit insurance, and just announced this week, trust services, the scope of what we are doing, the progress we are making in each of these areas and the growth potential they represent for us are very important to note.\nThe scale, capabilities and how we utilize data are significant competitive differentiators for us, and we plan to build on it.\nEnvestnet is proud to work with thousands of firms, including 17 of the 20 largest U.S. banks, 47 of the 50 largest wealth management and brokerage firms, over 500 of the largest RIAs and hundreds of fintech companies.\nWe are the industry leader in wealthtech, supporting more than 106,000 financial advisors, 13 million investor accounts and more than $4.5 trillion in assets.\nWe have the scale and infrastructure to grow from here.\nOur consumer financial data aggregation capabilities are unmatched: 17,000 data sources, 470 million connected accounts, which grew by over 62 million last year, 35 million users, and also in the past year, nearly three million households that benefited from a financial planning experience using our award-winning software.\nWe and our customers, financial services firms and the advisors who work for them, are improving the financial lives of millions of people.\nThis has enabled us to become the financial wellness ecosystem powering the industry into the future.\nWe are using modern technology to create linkages and building out a network that becomes an evolving system, ever-adapting, ever-engaging, ever-improving connections that the consumer defines the batteries of and will call upon when, where and how they choose.\nThis is a bigger vision, one that will provide our customers the super power to engage in intelligent, holistic servicing of the consumer's financial life.\nThat's why we're accelerating our investments in the ecosystem.\nThese investments, which I've been referencing for the past few earnings calls, are in three areas.\nFirst, we are making major enhancements to our already strong capabilities on behalf of our existing customers.\nWe're making it easier for them to work with us, easier for them to leverage all that we offer, eliminating friction from the process.\nFor instance, we're providing an integrated trading environment that will bring together the feature sets of investment, FolioDynamix and Tamarac into a singular tool.\nAdvisers will have the entire universe of investment strategies and solutions just a click away.\nWe're also digitizing and hyperpersonalizing more of the end consumer experience with more use of data, intelligence and insight.\nThe second area is data.\nData is embedded in all that we do.\nWe've been redefining the way data is used to create better intelligence, insight and guidance for advisors to help their clients.\nNobody else has a data engine quite like this.\nEnvestnet can connect the data from a person's daily financial transactions with our market-leading financial planning capability, which we've broken down into powerful, focused financial apps that tie into a financial strategy, and with a click, advisors can then execute on it.\nWe're using more and more of the intelligence in our data to drive recommended actions.\nFor example, our recently launched recommendations engine addresses the individual's needs against the backdrop of an extraordinary data set.\nWe are seeing promising evidence as firms use the data to grow faster and discover new opportunities within their existing customer base.\nDigital experience is the third area of investment for us.\nWe are on the cusp of making this intelligent, connected financial life in reality with our innovative digital environment for end consumers, powerfully taking the parts of the financial life and bringing them together in an extraordinary and accessible experience.\nWe will empower advisors to offer this as the financial center for their clients in a powerful way that they have not experienced before.\nThis is just the start of the progress that we are making.\nWith investment at the center of the financial wellness ecosystem, we can engage with future partners in incredibly value-creating ways.\nOur strategy opens a network of potential partnerships that expands far beyond our current marketplace beyond our walls, an existing network of investment managers, insurance companies, lenders, banks, custodians, broker-dealers and RIA firms.\nAn example could be in healthcare or even in personal wellness.\nWe'll also open our platform and inspire third-party developers who can create new apps, addressing emerging marketplace needs and/or utilizing our infrastructure to engage underserved parts of the financial services market.\nIn doing so, we gain access to millions of consumers.\nWe can improve their financial lives by deploying Envestnet solutions through a broader network of fintech companies and nontraditional outlets that are utilizing embedded finance as part of their strategy, while providing the essential bridge back to full-service advice within our advisor community.\nAs the orchestrator of this large and growing ecosystem, the revenue potential for us is significant.\nWhile life changed over the course of the last year, in many ways, it also sped up.\nWe sped up as well.\nTrends that have been emerging for years are accelerating at a faster pace, more digital, more intelligent, more consumer-driven.\nConsumer expectations have grown so quickly, whether it's a grocery delivery, mortgage approval or the ability to open and fund a new investment account.\nAnd we are leading our industry in helping our customers meet the expectations of consumers now and into the future.\nI wrote about this in a white paper that we published earlier this week called, The Intelligent Financial Life.\nOur supplemental deck includes a link.\nI encourage you to read it and watch the related video.\nIn a nutshell, here's what it says.\nToday, most people have two distinct financial lives, how they interact with their money each day and then how they plan for their money into the future.\nNeither of these connects with each other, resulting in a complex challenge for the individual, oftentimes leading to extraordinary stress in their lives.\nThe white paper was a call to action for our industry, a playbook for more deeply engaging and impacting the financial lives of consumers while unlocking tremendous opportunities for companies that enable this.\nWhat's required to empower this intelligent financial life is an interconnected ecosystem that brings it all together for the consumer.\nWe, Envestnet, are uniquely positioned to deliver on the intelligent financial life by leaning into our ecosystem, expanding the ability for Envestnet and other participants in our vast and growing network to deliver what the consumer is demanding and to capitalize on this large and quickly growing opportunity.\nThe outcome of this strategy is connecting people with their money and empowering more impactful decisions in ways financial consumers have not experienced before.\nFor Envestnet, it means a broader reach into the market, faster revenue growth as the model is utilized and more operating leverage from our increasingly scaled infrastructure, yielding a higher profitability in the long run.\nThe opportunity to create value for all participants in our ecosystem is massive and growing.\nWith Envestnet at the center of it, we can curate, connect and orchestrate everything that can impact the consumer's financial life, empowering advisors and firms to reach deeper into relationships, doing more, adding value, creating growth.\nWith our industry-leading footprint and capabilities, there is no better firm positioned to capitalize on this opportunity than Envestnet.\nAnd the time to do this is now.\nToday, I'm going to review our results for the fourth quarter and full year and provide context for our 2021 outlook and beyond.\nConsistent with earlier in the year, our fourth quarter results were strong.\nAdjusted revenue for the quarter was $264 million, above expectations, as we saw outperformance across all revenue lines.\nAsset-based revenue benefited from favorable net flows and continued adoption of higher value fiduciary solutions.\nSubscriptions-based revenue performed well, driven by higher-than-expected usage in the data and analytics segment.\nOperating expenses came in consistent with our expectations for the quarter with a relatively low level of spending already factored into our forecast.\nAs a result, our adjusted EBITDA of $65 million was also ahead of expectations, as were our adjusted earnings per share of $0.69.\nFor the full year, adjusted revenue was $999 million, 10% higher than in 2019 despite the significant market pullback in the first quarter of 2020.\nAdjusted EBITDA came in 26% higher than last year at $243 million.\nOur adjusted EBITDA margin for the year was 24.3%, three percentage points above the prior year.\nAs we discussed in the November earnings call, this is not an appropriate starting point as we look forward into 2021 and beyond.\nExpense management and pandemic-related circumstances lowered our 2020 expenses significantly and unsustainably for the long term.\nAround $25 million to $30 million of operating expense favorability can be attributed solely to an operating environment that limited travel, caused delays in hiring and generally reduced spending activity.\nThis is important context as we consider our outlook for 2021.\nAs we built our spending plans for this year, we see three drivers of increase in our operating expenses compared to 2020.\nFirst is what I would call normal expense growth to support the needs of the business today, including supporting additional customer activity as the business grows.\nNormal expense growth typically is lower than our revenue growth as we've proven our ability to expand margin over time.\nThe total increase in this category is around $10 million or a little more than 2% above last year.\nSecond is what I would characterize as a partial restoration of normal spending levels that we experienced prior to the pandemic for certain items.\nIn this category, we've assumed a broad resumption of business activity over the course of 2021, but still at levels below where they were prior to the pandemic.\nIn the second category, we're expecting increases in our travel and entertainment expense and fully restoring our annual marketing spend.\nThis category also represents around $10 million of year-over-year increase in operating expense.\nDepending on how circumstances unfold, some of this expense could be pushed further out if travel remains limited.\nThird is the acceleration of investment spending to capitalize on the sizable opportunity Bill described earlier.\nThese investments will ramp up over the next couple of quarters as we add headcount and other resources in product engineering, marketing and go-to-market activities to accelerate revenue growth in the business longer term.\nIn 2021, these investments account for around $30 million of increased operating expense The spend in these three categories, combined with an increase in our asset-based cost of revenue, will result in our operating expenses growing faster than revenue in 2021 as we noted in November, effectively reversing the temporary margin lift we saw in 2020.\nSpecific guidance for the full year of 2021 includes the following: adjusted revenue growth of 10.5% to 12% compared to 2020.\nThat's approximately $1.10 to $1.12 billion.\nBy segment, this is driven by strong double-digit growth in our wealth business as we continue adding new firms, advisors and accounts to the platform and deploy additional solutions through our installed base.\nWe expect revenue growth in data and analytics to be in line with last year as we see ongoing momentum with financial institutions and fintech firms, while continuing to address pricing pressure in the analytics space.\nBy revenue line item, we expect asset-based revenue to be up nearly 20%, reflecting the strong fundamentals of the wealth business.\nAs usual, our guidance is market neutral to the end of the prior quarter, in this case, December 31.\nSubscription revenue is expected to grow in the low to mid-single digits, and we're expecting a decline in professional services and other revenue as we continue to deemphasize such fees.\nAdjusted EBITDA should be between $225 million and $235 million, slightly below 2020, as the increase in operating expenses will more than offset the contribution from higher revenues.\nAdjusted earnings per share is expected to be between $1.95 and $2.08.\nThis is down from the $2.57 we delivered in 2020 due to the modest decline in adjusted EBITDA and an increase in depreciation expense.\nOur guidance also includes the early adoption of a new accounting standard, impacting how we account for our convertible notes, which will lower earnings per share by $0.20.\nSome additional color on our 2021 guidance and trends we expect to see during the year.\nThis is a big contributor to the EBITDA guidance for the quarter.\nAs we expect to restore spending to more normal levels and ramp up our investment activity, operating expenses should increase somewhat more meaningfully in the second quarter and the second half of the year.\nTurning to the balance sheet.\nWe ended the year with $385 million in cash and a net leverage ratio of two times EBITDA, down from 2.1 at the end of September.\nSimilar to last quarter, our $500 million revolver remains entirely undrawn.\nSo we remain comfortable that we have the liquidity and flexibility to invest in growth opportunities, both organically and through strategic activities without increased risk to our operations.\nAs we support our customers' needs across the ecosystem and begin to benefit from the investments we're making now, we believe revenue growth can accelerate into the mid-teens within the next five years.\nOver time, EBITDA margins should reach the mid- to upper 20s as we continue to benefit from our increasing scale.\nThe age of the intelligent connected financial life is coming, and our industry will need to deliver this to consumers: an interconnected experience that supports the consumer completely from today's spending to tomorrow's plans, fully linked, intelligent and accessible to help them make the best financial decisions when they need it, even when they aren't aware that they do need it.\nConnecting the financial lives of millions of consumers is a massive opportunity.\nIt requires a financial wellness ecosystem, and that is what is emerging here at Envestnet.\nWe are building upon the significant capabilities we offer in the marketplace today.\nWe are positioned to become the core long-term essential provider that helps the industry connect people much more powerfully to their money.\nWith our expertise, data-driven intelligence, leading financial planning tools, integrated capabilities to execute trades, insurance policies, loans, trust and more and a consumer-friendly technology to view everything in one single place, Envestnet is the company that is best positioned to connect consumers' financial lives and make financial wellness a reality for everyone.\nI could not be more excited about this future.\nWith that, Pete and I are happy to take any questions.\n",
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"content": "q4 adjusted earnings per share $0.69.\nsees fy 2021 adjusted net income per diluted share $1.95 - $2.08.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This conference call also contains certain non-GAAP financial measures.\nDefinitions, as well as reconciliation schedules for these non-GAAP measures to comparable GAAP measures can be found on our website at www.\nHere is Bill Thomas.\nEOG is delivering on our free cash flow priorities and our strategy to maximize long-term shareholder value.\nYesterday, we declared a $1 per share special dividend to demonstrate our commitment to returning cash to shareholders.\nCombined with a regular dividend, we expect to return $1.5 billion to our shareholders through dividends in 2021.\nDouble premium, well productivity, and cost reductions are substantially improving our returns and increasing our ability to generate significant free cash flow.\nIn order to maximize long-term shareholder value, we will remain flexible as we carry out our free cash flow priorities in the future.\nBy doubling our reinvestment standard, the future potential of our earnings and cash flow performance are the best they've ever been.\nThis quarter, we generated a quarterly record $1.1 billion of free cash flow and earned $1.62 per share of adjusted net income, the second-highest quarterly earnings in company history.\nIn addition, our balance sheet is in superior shape with a peer-leading low-net-debt-to-cap ratio.\nNext, Ezra will review our capital allocation strategy in more detail, Billy will go over our operational performance, and Tim will cover our financial performance before I make a few closing remarks.\nYesterday's dividend announcement is just the latest in a long line of achievements that demonstrate the value of EOG's fundamental strategy of returns-driven capital allocation, including the impact of permanently raising our investment return hurdle rate for the second time in five years.\nIn 2016, during the last downturn, we established our premium investment strategy which requires a 30% direct after-tax rate of return at $40 oil and $2.50 natural gas.\nThe premium investment strategy drove a step-change in our capital efficiency and resulting financial performance.\nIt is the reason we entered 2020 in a position of operational and financial strength, which enabled us to generate positive adjusted net income and free cash flow in a year of unprecedented oil volatility and prices that averaged just $39.\nThis year, we increased the return hurdle once again, doubling it to 60% at $40 oil and $2.50 natural gas.\nSustainable improvements in our inventory of drilling locations and continued progress in exploration have paved the transition of double premium.\nHalf our current inventory earns at least two times the premium return hurdle rate we established back in 2016.\n5,700 double-premium locations is more than 10 years' worth of inventory at our current pace of drilling and is more than we had when we made the transition of premium five years ago.\nJust like we did with our premium inventory, we are confident we can replace our double-premium locations faster than we drill them through line of sight and through additional cost reductions that will increase the returns of existing inventory, and through exploration.\nA number of innovations which Billy will discuss in a moment are being piloted across our operating areas and will sustainably drive down both well costs and operating costs as we implement them throughout the company.\nOur exploration program is focused exclusively on prospects that will improve on that 60% median return.\nIn fact, our anticipated return on the current slate of new exploration plays is more than 80%.\nTo see the impact of our premium returns-focused capital allocation strategy, a closer look at our corporate financial performance is required.\nAs we replace our production base by drilling locations with higher well level returns, the price required to earn 10% return on capital employed continues to fall.\nPrior to establishing premium, EOG required oil prices upwards of $80 to earn a 10% ROCE.\nAs the premium strategy matured, the oil price needed to earn 10% ROCE came down and averaged just $58 the last four years.\nFor 2021, that price is just $50 and we're not stopping there.\nWe expect it will continue to fall as our well level returns improve.\nThe impact of reinvesting at higher returns is also showing up in our free cash flow performance.\nWe more than doubled the dividend over the last four years and improved our balance sheet, reducing net debt by nearly $3.\nAs a result, net debt to total capital at the end of last year was just 11%.\nBut our future financial performance potential is the real prize.\nOur first-quarter results are a preview of what we are aiming for.\nOver the coming years, we expect reinvesting in our current inventory of high-return wells will continue to lower the corporate decline rate and compound the value of our low-cost operating structure.\nThe result leads to higher margins and generates even more free cash flow, providing us tremendous opportunity to create long-term shareholder value.\nWe believe when we look back in a few years, it will be viewed as the catalyst for another step-change improvement in EOG's financial performance.\nOur fundamental strategy of returns-driven capital allocation remains consistent, and consistency is key.\nPrioritizing reinvestment in high-return projects is the driver behind the steady improvements we've made year after year.\nAs a result, we are now in a position to follow through on our commitment to return additional free cash flow to shareholders.\nLooking ahead, you can expect our priorities to remain consistent.\nInvesting in high returns, generating significant free cash flow to support a sustainable and growing dividend while maintaining a strong balance sheet, followed by opportunistic return of additional free cash flow to investors, and bolt-on acquisitions.\nThe first quarter of the year was about execution.\nWe exceeded our oil target, producing more than the high end of our guidance range because wells that were offline due to the winter storm Uri recovered a bit faster than expected.\nAs a result, our first-quarter daily production declined just 3% compared to the fourth quarter last year.\nOur capital for the quarter came in under our forecasted target by 6%, mainly due to improvements in well costs across the company.\nThe savings realized during the first quarter are in addition to the tremendous 15% reduction last year.\nEOG is on track to reduce well costs another 5% this year despite some potential inflationary pressure as industry activity resumes.\nSimilar to previous quarters, these results are driven through innovation and efficiency gains in each phase of our operation.\nA closer look at our operations will help explain why we are confident we can once again lower well costs.\nOur drilling teams are consistently achieving targeted depths faster with lower cost.\nThe constant focus on daily performance and reliability of the tools and technical procedures is creating this continual drive toward lower cost.\nSome of the benefits this year stem from larger groups of wells per pad simply requiring less rig move cost per well and increasing efficiencies like offline cementing.\nThe larger well pads also complement our completion operations through the increased ability to utilize the technique we call super zipper.\nWe began our initial experiments with this technique back in 2019 and it has since advanced to consistently deliver the expected well results at lower cost.\nWe have also learned that super zipper is particularly well-suited to optimize the efficiencies of our five electric frac fleets.\nHowever, conventional spreads gain efficiencies as well.\nThis practice involves using a single spread of pressure pumping equipment to complete four more wells on a single pad.\nWe split the equipment's capacity in half, simultaneously pumping on two wells while conducting wireline operations on the remaining wells.\nWe piloted and perfected as zip-a-zipper logistics in our Eagle Ford play, and the collaboration between operating areas has accelerated its adoption throughout the company.\nAnd in cases where a minimum of four wells cannot be physically be located on a single pad, the engineering teams are working to develop new techniques where we can still utilize this improved completion practice.\nCompletion costs are also benefiting from reduced sand and water costs through our integrated self-sourcing efforts.\nThe savings we realized by installing water-reuse pipelines and facilities saves about 7% of well costs compared to third-party sourcing and disposal.\nLonger term, we expect water reuse and disposal infrastructure will continue to lower lease operating expense in each area as well.\nLease operating expenses also benefited from lessons learned through the pandemic this last year.\nThe number of wells one lease operator can maintain has increased by as much as 80% by optimizing the use of innovative software designed and built by EOG.\nThe software prioritized lease operator activity throughout the day using our mobile and real-time software infrastructure.\nOur experience last year inspired a number of new ideas to further high-grade the lease operator's work activity throughout the day, which we believe may continue to expand productivity in a -- in day-to-day field operations.\nEach of our operating -- active operating areas functions as an individual incubator to test out new ideas, many of which have -- are a homegrown innovation from EOG employees and rolled out companywide if successful.\nThat's one of the primary reasons our well-cost improvements every year are never one silver bullet, but a list of small to medium-sized individual improvements across all elements of total well costs that result in sustainable cost reduction.\nAs a result of the innovation spreading throughout the company to reduce capital and operating costs, I have strong confidence that the cost structure and capital efficiency of the company will continue to improve.\nHere's Tim to review our financial position.\nYesterday's special dividend announcement marks another milestone in the growth of EOG's profitability and cash flow.\nWe achieved this milestone through the disciplined execution of a consistent, long-term, return-focused strategy for capital allocation, supported by a strong balance sheet.\nOver time, this strategy has produced increasing amounts of free cash flow.\nThe top priorities for the allocation of that free cash flow remain sustainable dividend growth and debt reduction.\nThe shift to premium in 2016 drove a significant improvement in returns, profit margins, and cost, enabling the significant increase in dividend over the last four years.\nSince 2017, the dividend has grown from $0.67 per share to a $1.65 per share.\nNow, an annual commitment of almost $1 billion.\nGoing forward, our goal is to continue growing the regular dividend.\nWe have never called for suspending the dividend and we remain committed to its sustainability.\nWith the shift to double premium, we're now focused on making another step-change improvement, and the results of those efforts will guide future common dividend increases and the potential for special dividends.\nSince the shift to premium, we have also retired bond maturities totaling about $2 billion with plans to retire another $1.25 billion in 2023 when the bond matures.\nNet debt to total capitalization was 8% at the end of the first quarter.\nA strong balance sheet with low debt has been at the heart of EOG's strategy throughout our existence.\nIt's not just conservatism, it's about creating a strategic advantage.\nOur superior balance sheet enables us to acquire high-return assets at bottom-of-cycle prices where their exploration acreage like the Eagle Ford or for the new plays we're working on today, bolt-on acquisitions, our companies like the -- like Yates acquisition five years ago.\nA strong balance sheet also gives us the financial strength to be a partner of choice in our operations, whether it is with marketing or export agreements, service providers, or even other companies in other countries unlocking new plays.\nStrong balance sheet extends to ensuring ample liquidity, which we have also secured with no near-term debt maturities, $3.4 billion of cash on hand, and a $2 billion unsecured line of credit.\nNow, EOG is positioned to address other free cash flow priorities by returning additional cash to shareholders.\nThe $1 per share special dividend falls through -- these consistent long-tailed priorities.\nAt $600 million, the special dividend is a meaningful amount while also aligning with our other priorities.\nAfter paying the special dividend, we will have $2.8 billion of cash on hand, a full $800 million above our minimum cash target.\nThis is a healthy down payment on the $1.25 billion bond maturing in two years.\nGoing forward, our free cash flow priorities remain unchanged.\nWe'll continue to monitor the cash position of the company, oil and gas prices, and of course, our own financial performance.\nAs excess cash becomes available in the future, we will evaluate further special dividends, or at the right time, opportunistic share repurchases or low-cost bolt-on property acquisitions.\nI think it goes without saying you should expect us to avoid expensive corporate M&A.\nYou can count on EOG to continue following our consistent strategy to maximize long-term shareholder value.\nNow, here is Bill to wrap up.\nIn conclusion, I would like to note the following important takeaways.\nFirst, true to the EOG culture, our employees have fully embraced doubling our investment hurdle rate.\nAs we drill more double premium wells, we expect our performance will continue to improve.\nOur decline rate will flatten, our break-even oil price will decline, our margins will expand, and the potential for free cash flow will increase substantially.\nSecond, while our new double premium hurdle rate alone will drive significant improvement, it represents just one source: we never quit coming up with new ways to increase productivity and lower cost.\nInnovative new ideas and improved technology are developing throughout the company at a rapid pace and will continue to result in even higher returns in the future.\nAnd finally, our special dividend this quarter, we are demonstrating our commitment to generating significant free cash flow and using that free cash to improve total shareholder returns.\nWe are more excited than ever about the future of EOG and our ability to deliver and maximize long-term shareholder value.\nAnd now, we'll go to Q&A.\n",
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"content": "q1 adjusted earnings per share $1.62.\nqtrly adjusted net income per share $1.62.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This conference call also contains certain non-GAAP financial measures.\nDefinitions, as well as reconciliation schedules for these non-GAAP measures to comparable GAAP measures can be found on our website at www.\nEOG is focused on improving returns.\nResults from the first half of the year are already reflecting the power of EOG shift to our double-premium investment standard.\nOnce again, we posted outstanding results in the second quarter.\nWe delivered adjusted earnings of $1.73 per share and nearly $1.1 billion of free cash flow, repeating the record level of free cash flow we generated last quarter.\nOur outstanding operational performance included another beat of the high end of our oil production guidance, while capital expenditures and total per-unit operating costs were below expectations.\nWe are delivering exceptional well productivity that continues to improve.\nIn addition, even though the industry is in an inflationary environment, EOG continues to demonstrate the company's unique ability to sustainably lower cost.\nOur performance clearly proves the power of doubling our reinvestment hurdle rate, double premium requires investments to earn a minimum of 60% direct after-tax rate of return using flat commodity prices of $40 oil and $2.50 natural gas.\nI'm confident our reinvestment hurdle is one of the most stringent in the industry and a powerful catalyst to drive future outperformance across key financial metrics, including a return on capital employed and free cash flow.\nAs double premium improves our potential to generate free cash flow, we remain committed to using that cash to maximize shareholder value.\nThe regular dividend, debt reduction, special dividends, opportunistic buybacks and small high-return bolt-on acquisitions are our priorities.\nIn the first half of this year, we reduced our long-term debt by $750 million and demonstrated our priority to returning cash, significant cash to shareholders with a commitment of $1.5 billion in regular and special dividends.\nWe also closed on several low-cost, high potential bolt-on acquisitions in the Delaware Basin over the last 12 months.\nYear-to-date, we have committed $2.3 billion to debt reduction in dividends, which is slightly more than the $2.1 billion of free cash flow we've generated.\nLooking ahead to the second half of the year and beyond, our free cash flow priorities and framework have not changed.\nAs we generate additional free cash, we remain committed to returning cash to shareholders in a meaningful way.\nWe are focused on doing the right thing at the right time in order to maximize shareholder returns.\nOver the last four years, we've made huge progress reducing our GHG and methane intensity rates, nearly eliminating routine flaring and increasing the use of recycled water in our operations.\nWe are focused on continued progress toward reducing our GHG emissions in line with our targets and ambitions.\nThis quarter, we announced a carbon capture and storage pilot project, which we believe will be our next step forward in the process of reaching our net-zero ambition.\nKen will provide more color on this and other emission reduction projects in a few moments.\nDriven by EOG's innovative culture, our goal is to be one of the lowest costs, highest return and lowest emission producers playing a significant role in the long-term future of energy.\nNow, here's Ezra to talk more about how our returns continue to improve.\nWhile we announced our shift to the double-premium investment standard at the start of this year, the shift has been underway since 2016 when we first established our premium investment standard of 30% minimum direct after-tax rate of return using a conservative price deck of $40 oil and $2.50 natural gas for the life of the well.\nIn the three years that followed, our premium drilling program drove a 45% increase in earnings per share, a 40% increase in ROCE in an oil price environment nearly 40% lower compared to the three-year period prior to premium.\nIn addition, premium enabled this remarkable step change in our financial performance, while reinvesting just 78% of our discretionary cash flow on average, resulting in $4.6 billion of cumulative free cash flow.\nThe impact from doubling our investment hurdle rate from 30% to 60% using the same conservative premium price deck is now positioning EOG for a similar step change to our well productivity and costs, boosting returns, capital efficiency, and cash flow.\nDouble premium wells offer shallower production declines and significantly lower finding and development costs, resulting in well payouts of approximately six months at current strip prices.\nThe increase in capital efficiency resulting from reinvesting in these high-return projects is increasing our potential to generate significant free cash flow.\nThis year, we are averaging less than $7 per barrel of oil equivalent finding cost.\nAdding these lower-cost reserves is continuing to drive down the cost basis of the company, and when combined with EOG's operating cost reductions is driving higher full-cycle returns.\nLooking back over the last four quarters, EOG has earned a 12% return on capital employed with oil averaging $52.\nWe are well on our way to earning double-digit ROCE at less than $50 oil, and it begins with disciplined reinvestment in high-return double-premium drilling.\nWhile EOG has 11,500 premium locations, approximately 5,700 are double-premium wells located across each of our core assets.\nWe are confident we can continue to grow our double-premium inventory through organic exploration, improving well cost and well productivity and small bolt-on acquisitions, just like we did with the premium over the last five years.\nIn the past 12 months, through eight deals, we have added over 25,000 acres in the Delaware Basin through opportunistic bolt-on acquisitions at an approximate cost of $2,500 per acre.\nThese are low-cost opportunities within our core asset positions, which, in some cases, receive immediate benefit from our existing infrastructure.\nPremium and now double premium established a new higher threshold for adding inventory.\nExploration and bolt-on acquisitions are focused on improving the quality of the inventory by targeting returns in excess of the 60% after-tax rate of return hurdle.\nEOG's record for adding high-quality, low-cost inventory predominantly through organic exploration is why we do not need to pursue expensive large M&A deals.\n2021 is turning into an outstanding year for EOG.\nOur exceptional well level returns are translating into double-digit corporate returns and our employees continue to position EOG for long-term shareholder value creation.\nHere's Billy with an update on our operational performance.\nOur operating teams continue to deliver strong results.\nOnce again, we exceeded our oil production target, producing slightly more than the high end of our guidance, driven by strong well results.\nIn addition, capital came in below the low end of our guidance as a result of sustainable well cost reductions.\nWe have already exceeded our targeted 5% well cost reduction in the first half of 2021.\nWe now expect that our average well cost will be more than 7% lower than last year.\nAs a reminder, this is in addition to the 15% well cost savings achieved in 2020.\nWe continue to see operational improvements outpace the inflationary pressure in the service sector.\nAverage drilling days are down 11%, and the feet of lateral completed in a single day increased more than 15%.\nWe are utilizing our recently discussed super-zipper completions on about one third our well packages this year and expect that percentage to increase next year.\nIn addition, our sand costs are flat to slightly down year-to-date.\nWe have line of sight to reduce the cost of sand sourcing and processing and expect to start realizing savings in the second half of 2021 and into 2022.\nWater reuse is another source of significant savings, and we continue to expand reuse infrastructure throughout our development areas.\nFinally, we have renegotiated several of the expiring higher-priced contracts for drilling rigs and expect to see additional savings the remainder of this year and next.\nWe also use the strength of our balance sheet to take advantage of opportunities to reduce future costs in several areas.\nAs an example, last summer, we prepurchased the tubulars needed for our 2021 drilling program when prices were at their lowest point.\nEOG is not immune to the inflationary pressures we're seeing across our industry.\nAs a reminder, 65% of our well costs are locked in for the year, and the remaining costs we are actively working down through operational efficiencies.\nAs usual, we have begun to secure services and products ahead of next year's activity, with the goal of keeping well cost at least flat in 2022.\nBut as you can rest assured that with our talented and focused operational teams, our ultimate goal is to always push well cost down each year.\nThe same amount of air freight is being placed on reducing our per-unit operating cost, with the results showing up in reduced LOE, driven mainly by lower workover expense, reduced water handling expense and lower maintenance expenses.\nSavings are also being realized from our new technology being developed internally to optimize our artificial lift.\nWe have several new tools that help us reduce the amount of gas lift volumes required to produce wells without reducing the overall production rate.\nThese optimizing tools not only reduce costs, but also help reduce the amount of compression horsepower needed, which ultimately reduces our greenhouse gas footprint as well.\nThese and other continual improvements are a great testament to our pleased but not satisfied culture.\nThis quarter, we can also update you on our final ESG performance results from last year.\nWe reduced our greenhouse gas intensity rate 8% in 2020, driven by sustainable reductions to our flaring intensity.\nOperational performance in the first half of this year indicates promise for future -- further improvements to our emissions performance in 2021, putting us comfortably ahead of pace to meet our 2025 intensity targets for GHG and methane and our goal to eliminate routine flaring.\nAchieving these targets is the first step on the path toward our ambition of net-zero emissions by 2040.\nWater infrastructure investments also continue to pay off.\nNearly all water used in our Powder River Basin operations last year was sourced from reuse.\nFor companywide operations in the U.S., water supplied by reuse sources last year increased to 46%, reducing freshwater to less than one-fifth of the total water used.\nThese achievements and other, along with the insight into ongoing efforts to improve future performance will be detailed in our sustainability report to be published in October.\nWe are starting to fill in the pieces on the road map to get to net-zero by 2040.\nHere's Ken with the details.\nEarlier this year, we announced our net-zero ambition for our Scope 1 and Scope 2 GHG emissions by 2040.\nOur ambition is aggressive but achievable and we expect it will be an iterative process requiring trial and error.\nThis approach mirrors how we develop an oil and gas asset.\nWe pilot creative applications of existing and new technologies to determine the most effective solutions to optimize efficiencies by minimizing costs and maximizing recoveries of oil and natural gas.\nHere, we are aiming to maximize emissions reductions.\nWe then apply the successful technologies and solutions across our operations where feasible.\nOur net-zero strategy generally falls into three categories: reduce, capture or offset.\nThat is, we are focused on directly reducing emissions from our operations, capturing emissions from sources that can be concentrated for storage and offsetting any remaining emissions.\nReducing emissions intensity from our operations is a direct and immediate path to reducing our carbon footprint.\nOur approach is to invest with returns in mind and seek achievable and scalable results.\nWe made excellent progress in the last four years through initiatives to upgrade equipment in the field, invest in pilots using existing and new technologies and leverage our extensive big data platform to automate and redesign processes to improve emissions efficiencies.\nAs a result, since 2017, we have reduced our GHG intensity rate 20%, our methane emissions percentage by 80% and our flaring intensity rate by more than 50%.\nWe recently obtained permits to expand the successful pilot of our closed-loop gas capture project, which prevents flaring in the event of a downstream interruption.\nWe designed an automated system that redirects natural gas back into our infrastructure system and injects the gas temporarily back into existing wells.\nThe project requires a modest investment to capture a resource that would have otherwise been flared and stores it for further -- for future production and beneficial use.\nThe result is a double-premium return investment that reduces flaring emissions.\nOur wellhead gas capture rate was 99.6% in 2020 and roll-out of additional closed-loop gas capture systems will help capture more of the remaining 0.4%.\nTurning to our efforts to capture CO2.\nWe are launching a project that will capture carbon emissions from our operations for long-term storage.\nThis project is designed to capture and store a concentrated source of EOG's direct CO2 emissions.\nWe believe we can design solutions to generate returns from carbon capture and storage by leveraging our competitive advantages in geology, well and facility design and field operations.\nOur CCS efforts are directed at emissions from our operations, and we are not currently looking to expand those efforts into another line of business.\nWe will provide updates on our pilot CCS project as it progresses.\nEOG is also exploring other innovative solutions for GHG emissions reductions.\nOver the past 18 months, we have deployed capital into several fuel substitution projects to power compressors used for natural gas pipeline operations and natural gas artificial lift.\nCompressors are the largest source of EOG's stationary combustion emissions.\nBy replacing NGL-rich field gas with lean residue gas, EOG can reduce the carbon intensity of the fuel which lowers CO2 emissions and improves engine efficiency.\nUsing lean residue gas also earns a very favorable financial return by recovering the full value of the natural gas liquids versus using those components as fuel.\nAnother fuel substitution test we conducted recently was blending hydrogen with natural gas.\nWhile it is still in the early stages, we are analyzing the test data to evaluate the emissions reductions that would be possible from this blended fuel at an operational and economic scale.\nWe're very excited about this part of the business, just like cost reductions, well improvements or exploration success.\nThis is a bottom-up-driven initiative.\nEOG employees thrive on this type of challenge.\nWe create innovative solutions and apply technology to solve problems, improve processes and optimize efficiencies while generating industry-leading returns.\nThe EOG culture has embraced our 2040 net zero ambition, and we are focusing our efforts to minimize our carbon footprint as quickly as possible.\nNow, here is Bill to wrap up.\nIn conclusion, I'd like to note the following important takeaways.\nFirst, by doubling our reinvestment standard, the future potential of our earnings and cash flow performance are the best they've ever been.\nResults from the first half of this year demonstrate the power of double premium and the beginning of another step change in performance.\nSecond, EOG is not satisfied.\nWe are committed to getting better.\nSustainable cost reduction and improving well performance are driving returns and free cash flow potential to another level.\nAt the same time, the same innovative culture that is driving higher returns is also improving our environmental performance.\nThird, our commitment to returning cash to shareholders has not changed.\nAs we have already demonstrated, returning meaningful cash to shareholders remains a priority.\nAnd finally, as Ezra transitions into the CEO role, I could not be more excited about the future of the company.\nThe quality of our assets and the quality of this leadership team are the best in company history, all supported by EOG's talented employees and unique culture that continues to fire on all cylinders.\nThe company is incredibly strong and our ability to get stronger has never been better.\nThe future of EOG is in great hands.\nNow, we'll go to Q&A.\n",
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"content": "q2 adjusted earnings per share $1.73.\nincreased full-year well cost reduction target to 7% from 5%.\noverall crude oil equivalent prices increased slightly in q2 versus q1.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our featured speakers today are Mark Parrell, our President and CEO; Michael Manelis, our Chief Operating Officer; and Bob Garechana, our Chief Financial Officer.\nWhether working on-site performing essential maintenance or concierge duties, whether you're engaging remotely with prospects using our new touchless leasing process, or whether you are working from home in the many corporate roles that make Equity Residential hum, you are keeping our company rolling.\nNow turning to our business.\nThe best way I can describe it in the last seven weeks is resilient.\nIn April, we collected in our residential business about 97% of the cash that we would usually collect.\nWhile no part of our country's economy will be immune from the coming recession, we feel that our portfolio of properties, populated with residents having average annual household incomes of $164,000 and often employed in technology and other knowledge industries, will fare relatively well.\nOur operations team has also shown resiliency.\nWhen the pandemic hit in full force in mid-March, Michael Manelis and his team quickly pivoted, and over a few week period, adjusted our leasing and service operations dramatically.\nOn the leasing side, Michael and his team were able to quickly create a touchless process that made our customers comfortable to lease.\nAnd on the service side, we focused on essential maintenance tasks and cleanliness, which helped our existing residents feel safe and comfortable living with us through this pandemic.\nMichael will give you more details about all of this in a minute.\nWhen the lockdowns were initially announced, we saw our leasing activity decline significantly, but demand has since picked up, as we noted in the release.\nWe see our recent pickup in demand as a further indication that our properties and markets will remain attractive places to live for our target demographic.\nAll in all, we think our people and our properties have been resilient, with the capital R going through this crisis.\nWe have further fortified our already strong balance sheet, as Bob Garechana will describe in a moment.\nWe are also preparing in earnest for our properties to operate with fuller staffing as lockdowns across the country are relaxed.\nWe will keep in mind the safety of our employees and residents as we reengineer our business.\nEquity Residential has historically performed well in these downturns, and we would expect this to be no exception.\nWe are optimistic that we will perform well operationally given these circumstances and that we will find opportunities to add high-quality assets for our platform as the economy works its way through this recession.\nFinally, we did withdraw guidance in the release.\nWe are unable to estimate with precision the continuing impact of the pandemic and the timing and character of the reopening process on our business.\nIt makes it impossible for us to give you the high-quality estimates of where our business might go in the near-term that you're used to receiving.\nWe did provide a significant amount of information on April's preliminary results and hope that is helpful.\nSo today, I'm going to provide a quick recap of operations over the past 45 days.\nPrior to the COVID-19 pandemic, we were off to a very good start for the year.\nOur occupancy was ahead of expectations, and we were well positioned for the primary leasing season.\nAnd then COVID-19 hit, causing us to adjust our operations to this new unprecedented challenge.\nLet me start by acknowledging the dedication and hard work of our employees during these unprecedented times.\nThey inspire me with their ability to quickly adjust operations while keeping an intense focus on our customers, properties, themselves and their families.\nShelter-in-place was mandated by governors in our markets in early to mid-March.\nFor us, this means that our more than 150,000 residents began staying at home 24 hours a day, seven days a week.\nIn response to shelter-in-place, we made some key changes to our operations.\nWe closed our common area amenities, we increased cleaning frequency, we quickly modified our website and our artificial intelligent E-Lead responses to pivot the entire sales process to virtual leasing.\nCapturing video content and conducting the sales process via video conversations allowed the business to continue uninterrupted.\nThis process would have normally taken us several months to accomplish.\nWe also locked the office doors to encourage social distancing but kept the business running as we implemented shift rotations of the staff to reduce the number of employees coming to the property.\nWhen we look back to March 15, we saw our traffic and applications drop 50% compared to the same period in 2019.\nThat being said, we continued to receive over 375 new applications each week through the end of March, which we see as a validation of the new leasing process.\nWith reduced traffic coming through the front door, our focus has been on keeping current residents in place.\nWe are currently offering residents the option to renew without increase.\nOverall, retention in April and May has improved as we are now renewing in the mid- to upper 60% range, which is a 300 basis point improvement from last April and an almost 800 basis point improvement from last May.\nNew York is having the strongest renewal percents of nearly 70% for March, April and May.\nDespite this good retention, our overall occupancy since March 31 has declined by 130 basis points.\nWe expect the occupancy impact to be the most pronounced in the second quarter, setting a new base from which we hope it will improve as shelter-in-place orders are lifted.\nLet me share some color on the performance in April.\nAt the beginning of April, we began to notice an improvement in demand, with both traffic and leasing activity rebounding by almost 30% and actually now trending on par with last year.\nIn fact, we had over 900 applications last week, which is a significant improvement compared to the 375 that we were averaging in late March and very encouraging for us.\nGiven the activity in the last 45 days, we would like to see that volume grow even more to help offset the lower demand that we experienced in March and to match the increased volume of applications that we usually get in May.\nWhat is clear is that our high-quality, well-located portfolio continues to attract future residents.\nWhile the pandemic is certainly a deterrent, people have life reasons that require them to move like changes in jobs or partners.\nOn Page 13, we reported the first quarter and included April monthly pricing statistic by market.\nI would remind everybody this is only one month of data, and that longer periods of time are usually required to show definitive trends.\nMark mentioned the strength and quality of our resident base.\nThis is evident by the fact that we received a very strong 97% of the cash collections in April relative to our March collections.\nThis resilience delivered 5.4% delinquency, which is quite good given these unprecedented circumstances.\nNotably, Seattle and Denver were our markets with the lowest delinquency at below 3% and Los Angeles was the laggard close to 8%.\nThe rest of our markets were centered around the average.\nWe have also taken a cut at looking at property type.\nAnd in most of our markets, our garden-style or more suburban assets have experienced higher delinquency than our mid-rise, high-rise more urban locations.\nAs we move through the continued disruptions created by COVID-19, we remain strategic in our pricing efforts.\nSitting here today, our base rents are down 4% compared to the same week last year.\nLet me give you some color on notable markets.\nOverall, our strongest market is Seattle, which has shown great resilience, with limited delinquency and the best overall revenue growth performance in the portfolio.\nNew York is a bit of a mixed story.\nOn one hand, it has the strongest retention of any market, but it has also not shown the signs of recovery that other markets have with traffic and applications.\nLong term, we expect the New York market to benefit from low new supply and technology firms expanding their presence in the city.\nWe are hoping leasing activity will improve as the hard-hit New York area gets through the worst of the pandemic.\nFinally, we started 2020 anticipating that Los Angeles would have a very challenging year given the new supply pressure.\nCOVID will definitely add to this.\nDespite recent improvements in applications, we expect this market to remain challenged with meaningful pricing pressure that will continue as supply is delivered.\nSo where do we go from here?\nWell, we're now in the early stages of preparing our properties for the new normal.\nWe expect things to shift over time.\nRight now, the new normal is going to be focused on increased deep cleaning standards at the properties; adjustments to the layout of common areas, including fitness and lounges to accommodate social distancing; balancing the capabilities of virtual leasing with the need to engage with our customers; and ultimately, staggering work shifts to ensure that we limit the number of employees on-site at any given time.\nThese are challenging times, but our business is resilient, and our teams are positioned to deliver.\nStarting with our new disclosures.\nWe've modified our disclosures to help better present our business and where it stands today.\nWe do so by providing April operational and collection statistics, by breaking out our same-store performance between residential and nonresidential, a practice that we would expect to continue as the performance from our main residential business, which makes up approximately 96% of total revenues, is likely to diverge meaningfully in the upcoming quarters for our much smaller nonresidential business.\nThis includes modifying the schedules on Pages 10 through 12 of the release.\nAnd finally, by providing an update on liquidity and balance sheet information.\nIn order to accomplish this, we've defined a number of key terms in the back of the release.\nWe hope that these definitions will provide specificity and clarity to our disclosure.\nPart of the new disclosure includes a breakout of nonresidential operations for our same-store portfolio.\nThis is a modest component of our business at 4% of total revenues and consists mostly of ground floor retail and public nonresident parking at our well-located apartment communities.\nGround floor retail makes up about 2/3 of this 4%, with public nonresident parking making up the rest.\nAs you would suspect, a good portion of the retail tenants that rent our space have been significantly impacted by shelter-in-place orders.\nThis is evidenced by the 58% April collection rate for all retail that we disclosed, which, while certainly below what we would have hoped, may be higher than many other retail landlords.\nThe drugstores, bank branches and national chains that occupy a good portion of these spaces have, for the most part, continued to pay rent, while local small business owners have struggled.\nWith nonresident parking, we've seen an approximately 30% decline in parking volume for April, given the lack of public events and increased work-from-home arrangements.\nWe suspect that this may recover as shelter-at-home orders are eventually lifted.\nFinally, a few highlights on our balance sheet.\nWe ended the first quarter with an incredibly strong net debt to normalized EBITDA of 4.9 times and nearly $1.8 billion in liquidity under our revolving credit facility.\nSubsequent to quarter end, we improved this already strong position by closing on a very attractively priced 2.6% or $195 million 10-year GSE loan and by closing on the sale of an asset in the San Francisco Bay Area.\nWith these steps, we sit here today with over 84% of our total NOI unencumbered, about $150 million in commercial paper outstanding and readily available liquidity of over $2.2 billion under our revolving credit facility, which does not mature until 2024.\nThis liquidity is more than sufficient to address our modest level of anticipated development spend, minimal debt maturities in 2020 and to address our next significant debt maturity, which isn't until December of 2021.\nOur balance sheet is in excellent condition to weather the storm and take advantage of opportunities should they present themselves.\n",
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"content": "equity residential withdraws full year 2020 earnings guidance.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our featured speakers today are Mark Parrell, our President and CEO; Michael Manelis, our Chief Operating Officer; and Bob Garechana, our Chief Financial Officer.\nAlec Brackenridge, our Chief Investment Officer, is here with us as well for the Q&A.\nAlso, as Marty mentioned, we are pleased to have Alec Brackenridge, EQR's Chief Investment Officer, available during the Q&A period.\nFor those of you who do not know Alec, he's a 28-year veteran in this company.\nHe literally started work here the day we went public in 1993 and took over as our CIO in 2020.\nAs you can see from the release, he and his team have done exceptional work of late on the transactions side.\nAll of our operating metrics continue to improve at a faster rate than we assumed earlier in the year.\nWe are seeing demand levels well above 2019 in all our markets.\nAnd this has allowed us to continue growing occupancy, while at the same time raising rates.\nThis resulted in the company materially raising annual same-store revenue, NOI and normalized FFO guidance.\nWhile our quarter-over-quarter same-store revenue and NOI results remained negative, the decline was less than what we expected, and our sequential same-store revenue and NOI showed positive growth for the first time since the pandemic began.\nAs we have discussed on prior calls, improvement in our reported quarter-over-quarter same-store numbers will lag the recovery in our operating fundamentals as we work these now higher rents and lower concessions through our rent roll.\nWe believe that our business is set up for an extended period of higher-than-trend growth beginning in 2022 as we recapture revenue loss due to the pandemic and continue to benefit from strong demand and growing incomes in our target demographic.\nAlso, the more diverse portfolio we are creating should improve long-term returns and dampen volatility going forward.\nOn the investment side, we are active buyers and sellers in the second quarter and expect to continue being active capital recyclers.\nConsistent with what I've said on prior calls, we are allocating capital to places that are attractive to our affluent renter base, including the suburbs of our established coastal markets as well as Denver and our two new markets of Austin and Atlanta.\nWe are making these trades with no dilution, even given higher pricing levels for the properties we are targeting because we are able to sell our older and less desirable properties at low cap rates and at prices that exceed our pre-pandemic value estimates.\nEarlier this month, we reentered the Texas market after an 11-year absence by acquiring two well-located new assets in Austin, Texas.\nThese properties are located in a desirable area with high housing costs that is equidistant between Downtown Austin and the Domain Hub on the north side.\nWe acquired these two properties for $96 million, and approximately, a 3.9% cap rate and about $195,000 per unit.\nWe expect to acquire a mix of urban and suburban assets in the Austin market.\nDuring the second quarter and in July, we acquired two properties in Atlanta.\nSkyHouse South in Midtown for $115 million with a 3.6% cap rate.\nThis is a deal we did previously disclose.\nAnd a few days ago, we acquired a second property in Atlanta in the bustling Midtown West neighborhood.\nWe acquired this new property for $135 million, and it is about half occupied.\nAnd once it completes lease-up, we expect it will stabilize at a 4.1% cap rate.\nWe also continued adding to our Denver presence by purchasing an asset in the suburban Central Park area of Denver for $95 million.\nThis property is located just west of the large and growing Fitzsimons medical campus and draws residents attracted to its access to abundant outdoor amenities.\nWe expect this property, which is also in lease-up currently, to stabilize at a 4.2% cap rate.\nWe're also pleased to add to the portfolio of property each in the suburbs of Boston and Washington, D.C. The Boston property is located in Burlington, Massachusetts, and is a new asset that we acquired for $134.5 million at a 4.1% cap rate.\nThis property is in a difficult-to-build suburb of Boston with high single-family housing costs and good access to high-paying jobs.\nThe D.C. asset is located in Fairfax, Virginia, and is a 2016 asset that we acquired for $70 million at a 4.3% cap rate.\nThis property is well located with both good highway and good metro access and proximity to the growing job base in Northern Virginia.\nBoth the Burlington and Fairfax assets are located in submarkets, where our existing assets have performed particularly well.\nYear-to-date, we have bought $645 million of properties and expect to close on another $850 million in acquisitions, a good number of which are in various states of advanced negotiation by the end of the year.\nWe'll fund these buys with an approximately equivalent amount of dispositions, mostly from California of older and less desirable assets, which we sold or are under contract to sell at significantly above our pre-pandemic estimate of value.\nWe've put into service and began leasing our newly developed property in Alameda island, a short ferry ride to the city of San Francisco.\nBuilt on the side of a former naval base, this property has terrific views of the skyline and an evolving restaurant and bar scene that we think is attractive to our clientele.\nOver the next few months, we'll complete our other two current development projects, including the Alcott in Central Boston, the largest development project in the company's history.\nEarly leasing efforts on this project and our development project in Bethesda, Maryland, are going well.\nAnd our current estimates are that these three projects will stabilize at a development yield of approximately 5%, considerably higher than prevailing acquisition cap rates.\nThese properties will be meaningful contributors to NFFO starting in late 2022.\nWe see development as a good complement to our acquisition activities as we spread more of our footprint to the suburbs of our established markets as well as to our new markets.\nWe expect a significant amount of our development activity going forward to be done through joint venture arrangements.\nThis allows us to leverage our partners in place sourcing and entitlement teams in locations like our new markets where we do not currently have a development presence.\nYou're doing an exceptional job during this particularly busy leasing season, and we're all very proud and grateful.\nAs evidenced by our revised guidance, the pace of recovery has been very strong.\nLet me highlight a few of the overall trends.\nSo first, we continue to see very good demand for our apartment homes.\nOur national call center in Ella, our AI leasing agent, are responding to record high levels of inbound interest for our apartments, which is converting into high volumes of self-guided tours.\nThis overall level of demand continues to drive applications and move-in activity that is exceeding move-out, and ultimately, is delivering stronger-than-expected recovery in occupancy.\nPortfoliowide, physical occupancy is currently 96.5%, which is back to 2019 levels.\nSan Francisco and Seattle are still trending slightly below 2019, and Southern California markets are slightly above.\nAt this point, we expect to run the portfolio above 96% through the remainder of the third quarter.\nThis strength in occupancy is allowing us to push rate and drive revenue growth.\nOverall, we are more than halfway through the typical peak leasing season, and the momentum has been very strong, providing us the opportunity to raise rates, reduce concessions and grow occupancy.\nThese fundamentals are delivering RV recovery.\nFrom March to December of 2020, pricing trend, which includes the impact of concessions, declined approximately $500 per unit.\nFrom January 2021 to today, pricing trend has grown $660, and is now not only above prior year levels in all markets but every market, except for San Francisco is also above 2019 peak pricing trend levels.\nToday, the portfolio is approximately $100 higher per unit than our peak 2019 levels.\nOur priority has been to test price sensitivity in every market by raising rates and reducing both the value and quantity of concessions being granted.\nAt the end of the first quarter, about 20% of applications were receiving on average four weeks in concessions.\nAs of July, we are now running with less than 3% of our applications receiving on average just over two weeks, and we expect this to continue to drop-off even further.\nTo give you perspective, the total dollar of concessions granted peaked in the month of February at just north of $6 million for the same-store portfolio.\nFor July, we will be at $1.5 million for the month, and August should be less than $750,000.\nLast week, only 12 properties had any concessions being offered.\nThe percent of residents renewing has stabilized around 55%, which is very much in line with historical averages but below the record high 60% levels that we had in 2019 and early 2020.\nAs we progress through the remainder of the year, our focus will continue to be to push rates in our markets and manage our renewal negotiations.\nBoth markets are recovering nicely with concession use nearly nonexistent in our New York portfolio and declining rapidly in San Francisco.\nNew York is seeing stronger demand right now, and we think it is primarily due to greater clarity around employer return-to-office plans.\nNew York employers, particularly the banks and financial firms have called their employees back to the office, and you could feel it in the economic activity in many areas of Manhattan.\nWe see it in our portfolio after nine consecutive weeks of record application volume.\nIn San Francisco, however, the return to office and reopening is a little more ambiguous.\nEmployers have been slower to call employees back in, with many initially targeting after Labor Day.\nAdding to the uncertainty in San Francisco is the reintroduction of strong recommendations for indoor masking and some delays in reopening, which were announced last week.\nThe situation in San Francisco is likely to lead to a delayed leasing season in that market and a slower full recovery of occupancy.\nThat said, occupancy is 95.4% today in San Francisco and is growing as is pricing trend.\nAt this pace, we expect the San Francisco pricing trend to be back to pre-pandemic levels by the end of the third quarter.\nMeanwhile, we are seeing some indicators that we could see an extended leasing season with a second wave of demand in New York, Boston and Seattle.\nOur leasing teams in these markets have been dealing with prospects that are looking for move-in dates in late August and September and hearing from them that these moves are in connection with their need to be back in the office, or in the case of Boston, back on campus.\nThis demand is more robust than historical patterns, which could suggest an extended peak leasing season in those markets, and matches up nicely with our lease expirations, which are more weighted toward the back of the year than usual.\nFinally, I want to take a minute and give you an update on the government assistance program for renters.\nAs we've discussed on previous calls, approximately $50 billion in rental assistance for those impacted financially by the pandemic was made available in the various relief bills.\nWe are laser-focused on accessing the rental relief funds and are working very closely with our eligible residents to apply for this relief.\nProcessing to date has been relatively slow in our markets, but we were able to recover approximately $5 million in the quarter.\nBob will provide some color on our expectations for collections for the remainder of 2021 in his remarks.\nThis pace of recovery would not be possible without them, and they remain relentless in taking care of each other and serving our customers.\nAs Michael just discussed, the recovery is well underway and is exceeding our prior expectations for the same-store portfolio.\nThe continued strong operating momentum from this leasing season has led us to raise our annual same-store revenue guidance from negative 6% to negative 8% to negative 4% to negative 5%, an improvement at the midpoint of 250 basis points.\nStrong expense controls and favorable real estate tax outcomes, which I will talk about in a moment, also allowed us to reduce our same-store expense guidance range to an increase of 2.75% to 3.25%, resulting in an NOI range of negative 7.5% to negative 8.5%, which is a 400 basis point improvement at the midpoint relative to our prior guidance.\nDrivers of our revenue guidance increase of 250 basis points are roughly 150 basis points of improving operating fundamentals that Michael just outlined; 60 basis points or $15 million for the full year in related lower bad debt, primarily due to anticipated rental assistance collections; and the remaining 40 basis points is due to improved performance in our nonresidential business.\nBefore I move on to expenses, a quick comment on our bad debt assumptions.\nThe back half of the year has about $10 million of additional assumed rental assistance collections on top of the $5 million we've already received.\nWe feel very confident about this amount because we either received it in July, or after some real digging, can see that it is far along in the approval process.\nThere are other resident accounts being worked on, but they are not as far along.\nGiven the lack of transparency and the relative slow processing speed to date, it is difficult to handicap how much will successfully get processed and whether we will receive these funds in 2021 or it will spill over into 2022.\nOn the expense side, we have also seen improvements versus prior expectations, which led us to center the midpoint of expense guidance at 3%, which was the low end of our prior guidance range.\nThis reduction is in part due to the modest growth experienced in second quarter 2021 even with a really challenging comparable period from second quarter of 2020.\nWhile some expense categories experienced a typically high percentage growth change quarter-over-quarter due to this comparability issue, overall expenses were less than originally anticipated.\nKey categories driving the current period and anticipated full year lower were real estate taxes and payroll.\nReduction in growth expectations for real estate taxes is primarily driven by lower than forecasted accessed values in some key markets.\nLower payroll growth expectations are primarily driven by our progress in optimizing staffing utilization as well as higher-than-usual staffing vacancies.\nWe expect that 2021 will be our third consecutive year of low payroll growth, having delivered a three-year average below 1%, while keeping other controllable expenses like repairs and maintenance in check.\nAs a result of these same-store guidance changes, we raised the midpoint of our normalized FFO from $2.75 to $2.90.\nA couple of closing comments on the balance sheet and debt capital markets.\nWith the impact of the pandemic on our operations increasingly in the rearview mirror, it is clear that our balance sheet has held up remarkably well.\nDespite unprecedented pressure on operations, our credit metrics have remained well within our stated net debt-to-EBITDA leverage policy of between 5.5 times to 6.5 times.\nThe debt capital markets are also incredibly attractive at the moment for issuers like us.\nThis creates opportunities to term out commercial paper with treasuries and credit spreads at or near record lows, the potential of which has been incorporated into our revised guidance range.\n",
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"content": "sees fy 2021 same store noi change down 8.5% to down 7.5%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A replay for today's call will be available on our website for a seven day period beginning this evening.\nToday's call may also contain non-GAAP financial measures.\nSince we last reported in July, we have seen a fundamental shift in the natural gas market.\nCurrent world events demonstrate the critical importance that natural gas will play in our energy future.\nNatural gas futures for 2022 through 2026 have rallied approximately $0.75, which has translated to a meaningful increase to our near-term free cash flow projections.\nWorld events have underscored the important role that natural gas plays in the world's energy ecosystem, not only in reliability and costs, but in meeting our global climate goals.\nWhat we are witnessing in Europe and Asia is a crisis borne out of an undersupplied traditional energy sources, one that highlights the dislocation between the perceived good intentions of addressing climate change through policies of elimination and how these policies play out in the real world.\nWe are unfortunately seeing the predictable outcomes of an underinvestment in traditional energy resources with both continents having to ration energy in hopes of maintaining sufficient supply to make it through the winter.\nWhile defenders of these policies may claim that these events are isolated in transitory, we believe they are chronic symptoms due to a structural underinvestment in traditional energy resources.\nAnd unfortunately, but yet predictably, we are seeing the adverse environmental ramifications of this, as just a couple of weeks ago, China has announced that it's rethinking the pace of its energy transition and ramping up coal production.\nThis is not the way to address climate change.\nAs one of the largest exporters of natural gas, the United States needs to recognize the role it plays, not only in the solution, but also the problem.\nThe solution is American shale.\nWe are fortunate to be one of the few countries in the world that has an abundance of energy resources and more so in abundance of the lowest cost, lowest emissions energy resources that is exportable, namely Appalachian natural gas.\nDuring the shale boom, technological breakthroughs, investor support and the innovation and efforts of American natural gas workers translated American shale into low-cost, reliable, clean power, replacing high emissions coal and laying the foundation for solar and wind to play a supporting role with the results being the U.S. leading industrialized countries in emissions reductions.\nThis model is replicable on a global stage, but only if the United States takes on a leadership role.\nFor example, if we were to replace only China's new build coal power plants with natural gas, we would eliminate approximately 370 million tons of CO2 equivalent per year.\nThat number is roughly equivalent to the emissions reduction impact of the entire U.S. renewable sector, which leads to the problem.\nThe problem is that the United States and advocates for policies of elimination have failed to understand the key role that American shale plays in the global energy ecosystem.\nThe United States represents about 1/4 of global natural gas supply.\nAppalachia alone represents almost 10%.\nWhat that means is that global demand has looked all around the world and, instead, we need almost 1/10 of our natural gas coming from Appalachia.\nRegrettably, we've canceled multiple pipelines in the last several years, LNG facilities have stalled, capital has been pulled out of the system, all the while demand has grown, and now we're seeing the results.\nU.S. natural gas and more specifically, Appalachian natural gas has the opportunity to provide affordable, reliable, clean energy to the world.\nBut to do that, we need support in building more infrastructure.\nA failure to support pipeline and export infrastructure would effectively advocate the leadership role that the United States is poised to play in addressing global climate change to countries that likely do not have the resources or political desire to do so.\nNow to talk more about the gas macro specifically and how it is impacting our business.\nThere are a number of bullish trends for the global natural gas market that we believe underpin a long-term structural change of the curve.\nFirst, severe underinvestment in supply across all hydrocarbons and associated infrastructure over the past few years has contributed to a global scarcity of accessible traditional energy sources.\nSecond, Solar and wind have reached enough scale in global power markets that their intermittency is driving structural volatility, driving demand for reliable energy sources like natural gas to stabilize the grid.\nThird, environmental pressures and governmental regulations on infrastructure have limited the ability for energy to go where it is needed most, creating market inefficiencies and restricting investments across the space, limiting the ability of producers to react to supply demand imbalances.\nAnd fourth, a continued focus on low-cost, reliable and clean energy sources has increased the prominence of the role of coal-to-gas switching as one of the most impactful, actionable and speedy opportunities for significant progress in reducing global emissions.\nThese are the main reasons that global natural gas prices rose over $20 per dekatherm during the quarter, with the back end of the futures curve having also revved nearly $1 in the past six months.\nThey are also why we see structural change in the curve sticking.\nWhile we have been vocal about our bullish view of natural gas prices for some time, the speed of the current price escalation came sooner than we anticipated.\nOur reasons for hedging 2022 production at the levels we did while continuing to keep 2023 exposure open is simple: We believe that regaining our investment-grade rating and reducing absolute debt levels best positions EQT shareholders to fully capture these thematic, long-term tailwinds in the commodity.\nAs you look across the energy sector, it's clear that traditional energy companies are being valued at a steep discount.\nWe believe this is principally a result of views on a long-term sustainability of traditional energy sources impacting terminal value.\nWe believe that markets have overshot in this regard, especially so as it pertains to natural gas.\nAnd that events like the current global energy crisis, in particular, as to how they are contributing to a step backwards in our efforts to address climate change, we will make this readily apparent to policymakers and investors alike.\nAnd we believe that at that time, there will be a rerating within the sector, principally concentrated on companies like ours that are differentiated in their sustainability, both financially and on an ESG basis.\nNow I'd like to give an update on our free cash flow projections.\nThe structural shift in the commodity curve, along with some hedge repositioning in 2021 and 2022, have had a positive and material impact on our free cash flow projections.\nIn 2021, we are now expecting to deliver approximately $950 million in free cash flow generation.\nIn 2022, our preliminary estimates are $1.9 billion, with 65% of our gas hedged.\nAs our hedges roll off in 2023, we see free cash flow generation potential growing even further to approximately $2.6 billion, equating to an approximate 30% free cash flow yield for a company that expects to be investment grade, highlighting how robust the free cash flow generation is from our business.\nIn addition to the shipping commodity market, we have several other factors driving improved free cash flow generation, including our contracted gathering rate declines, more efficient land capital spending, shallowing base declines and FTE optimization, which we have just announced.\nAs such, we are updating our 2021 through 2026 cumulative free cash flow projection to over $10 billion, a 40% increase since our July estimate and materially above our current market cap.\nThis extensive free cash flow generation provides us with the ability to return a substantial capital to shareholders while simultaneously enhancing our balance sheet.\nAnd as previously mentioned, we think there is still running room.\nFurther, this structural gas price improvement has solidified our execution of shareholder-friendly actions in 2022, which we intend to formally announce before the end of 2021.\nWhile we are acutely aware of the investor appetite for return of capital, one of the key considerations as we finalize our plans is leverage management.\nHowever, we want to be clear that attaining investment grade or a certain leverage target is not a precondition to initiating shareholder returns.\nWith our hedge position and strong free cash flow, we can accomplish both debt reduction and shareholder returns as we create our debt retirement glide path.\nThis business is capable of returning tremendous amount of capital to shareholders while maintaining optimal leverage.\nBottom line is we are projected to have approximately $5.6 billion in available cash through 2023.\nAnd if 100% of that cash was allocated to shareholder returns, we would still be left with leverage of sub 1.5 times.\nThose are some very compelling stats, and we look forward to executing on this robust capital allocation strategy in the very near term.\nI'll briefly cover our third quarter results before moving on to some strategic and financial updates.\nSales volumes for the second quarter were 495 Bcfe, at the high end of our guidance range.\nOur adjusted operating revenues for the quarter were $1.16 billion.\nAnd our total per unit operating costs were $1.25 per Mcfe.\nDuring the third quarter of 2021, we incurred several onetime items totaling approximately $116 million, which impacted our financial results and free cash flow generation.\nFirst, we purchased approximately $57 million of winter calls and swaptions to reposition our hedge book to provide upside exposure to rising fourth quarter '21 and all of 2022 prices, which I'll discuss in more detail in a moment.\nSecond, we incurred transaction-related costs, mostly from Alta of approximately $39 million.\nAnd finally, we incurred approximately $20 million to purchase seismic data covering the area associated with the Alta assets, which hit exploration expense.\nOur third quarter capital expenditures were $297 million, in line with guidance.\nAdjusted operating cash flow was $396 million.\nAnd free cash flow was $99 million.\nRising commodity prices and actions taken to unwind fourth quarter hedge ceilings have resulted in an increase to our fourth quarter free cash flow expectations of approximately $200 million.\nBut at the midpoint, we expect fourth quarter sales volumes to be 525 Bcfe, total operating cost of $1.25 per Mcfe, capital expenditures of $325 million and free cash flow generation of $435 million.\nTurning to some more strategic items, I'd like to discuss the actions taken during the third quarter to optimize our firm transportation portfolio.\nFirst, we successfully sold down 525 million a day of MVP capacity, which when combined with 125 million a day previously sold down, amounts to approximately 50% of our original capacity.\nThe terms are governed by an Asset Management Agreement, pursuant to which EQT will deliver and sell certified, responsibly sourced gas to an investment-grade entity for a six year period.\nEQT will manage the capacity and retain access to the premium Southeast markets, while the third-party entity will be responsible for all financial obligations related to the capacity.\nThis transaction meaningfully reduces our firm transportation costs.\nGoing forward, we believe that retaining our remaining $640 million a day of MVP capacity provides appropriate diversity to our transportation portfolio.\nAnd we do not intend to sell down any additional capacity at this time.\nDuring the quarter, we were also successful in securing 205 million a day of Rockies Express capacity, with access to the premium Midwest and Rockies markets.\nAs part of the agreement, the parties agreed to significantly discount the reservation rates during the first 3.5 years of the contract, which results in a material uplift to price realization and margins during that period.\nIn the aggregate, we expect these arrangements to lower our go-forward firm transportation costs by approximately $0.05 per Mcfe, while simultaneously improving realized pricing.\nAdditionally, we are currently working on several smaller firm transportation optimization deals, which, if executed, are expected to further enhance margins and price realizations.\nFurthermore, our RSG program is ramping up.\nThe six year, 525-million-a-day contract, we believe represents the largest RSG transaction done in the marketplace and highlights the accelerating end market demand for low methane intensive natural gas.\nI'll now move on to some hedging activity initiated during the quarter, which effectively unlocked upside exposure to rising prices.\nSince the end of the second quarter, we have seen the Henry Hub contract price appreciate, backed by modestly tightening U.S. fundamentals and rising volatility.\nCouple that with energy shortages occurring around the world, we believe the U.S. could see extreme price events this winter.\nBy early August, we have revised our hedge positioning to one that participates in more upside while still locking in the necessary cash flows for progressing back to investment grade.\nIn essence, we removed approximately 28% and 13% of tax for ceilings for the balance of 2021 and all of 2022 and lowered our floor percentages by 11% and 9%, respectively.\nWe were able to do this by purchasing a significant number of winter call options at very attractive prices and strike levels that are currently in the money.\nThese call options maintain our downside protection, capitalize on rising volatility and open our portfolio to increase realizations.\nIn addition to our winter call options, we also purchased swaps in 2022 by taking advantage of the backwardation in the market to purchase swaps at points on the curve we felt to be undervalued.\nThis is expected to allow us to capture stronger pricing in 2022 well after we are through the winter.\nThese actions resulted in a onetime cost of approximately $57 million in the third quarter and approximately $18 million in the fourth quarter, with the current market value sitting at well over three times the execution cost.\nFor our 2023 hedge book, which sits at under 15%, we expect to hedge with a more balanced and opportunistic approach as we have reduced debt and achieved our investment-grade metrics in 2022.\nAt a high level, we envision a lower hedge percentage, utilizing structures that enable upside participation to capture our anticipated long-term appreciation of natural gas prices and increased volatility.\nLast, we remain relatively unhedged on our liquids volumes for 2022 and 2023 at less than 15%, which represents about 5% of our volumes and 7% of our revenues.\nMoving on to a quick update of leverage and liquidity.\nPro forma the full year impact of Alta and the removal of margin postings, our year-end 2021 leverage sits at 1.8 times and is expected to decline to 0.9 times by year-end 2022 and 0 leverage by year-end 2023 without the impact of shareholder returns.\nIf you add all our free cash flow through 2023, plus the $700 million in current cash margin posting, we are looking at $5.6 billion in cash available for shareholder returns and leverage management.\nSo we have the ability to retire substantial debt, achieve optimal leverage and provide robust returns to our shareholders.\nStay tune for a more formal framework before year-end.\nAs of September 30, our liquidity was $1.2 billion, which included approximately $0.7 billion in credit facility borrowings largely related to margin balances tied to our hedge portfolio.\nAs of October 22, our margin balance sits at approximately $0.4 billion and our liquidity will end October at around $1.5 billion.\nWith respect to margin postings, we've been able to manage these nicely by working with our hedge counterparties, many of which are also [Indecipherable] revolver.\nWe continue to make progress on lowering our letters of credit postings under the credit facility, which dropped approximately $0.1 billion during the third quarter to $0.6 billion, and it declined another $0.1 billion through October 22.\nFrom mid-2020, we have effectively cut our letters of credit in half from approximately $0.8 billion to an anticipated $0.4 billion by year-end 2021.\nAnd as a final reminder on liquidity, virtually all margin postings and letters of credit go away when we achieve investment-grade rating.\nWe are one notch away from IG with all three agencies.\nAnd when combined with the structural gas macro tailwinds and EQT's robust free cash flow profile, we believe it's only a matter of time until we regain our investment-grade rating.\nThese include: one, the compelling and structural positive momentum driving the gas macro backdrop, setting up robust and sustained free cash flow generation; two, the announcement of a shareholder return framework that is right around the corner; three, an investment-grade rating that is on the horizon, further driving increased free cash flow generation and improved liquidity; and lastly, our modern approach and ESG leadership will continue to drive sustained, long-term value creation for all of our stakeholders in the sustainable shale era.\n",
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"content": "qtrly sales volumes of 495 bcfe, at high end of guidance.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before I hand it over to Gary to discuss the second-quarter financials, I'll make a few comments on the current state of the company as well as our outlook for the future in light of the COVID-19 crisis.\nGiven how much the world has changed since our last earnings call three months ago, I think it's important to share with you the details of how we're managing the business through this unprecedented time.\nAs the pandemic spread across the globe during February and March, and as economic impacts started being felt in some of our businesses, we did what we do best: we took decisive action.\nThe actions we've taken have a clear and precise focus, which is protect our strong financial condition, to secure the financial well-being of the company and to support business continuity.\nThese measures will allow us to weather the storm while continuing to support our long-term strategy for profitable growth.\nIn the past, we've shown our operational excellence and our ability to effectively manage costs to meet challenging market demands.\nThis challenging time will be no different as we're actively addressing today's business pressures by using all the tools at our disposal.\nThe beauty of these current cost reduction initiatives is they're being done and implemented with minimal cost to achieve, thereby maintaining our flexibility to ramp up quickly should demand increase as customers, communities, and countries reopen their economies.\nBottom line is we're controlling what is within our control and focusing on the near term without losing our vision for the future.\nI hope our comments today will leave investors with three clear messages about ESCO going forward: our diverse portfolio of strong, global businesses serving a wide range of nondiscretionary end markets provides us with the strength and resilience to continue to support our long-term growth outlook.\nNumber two, our strong balance sheet and significant financial liquidity will allow us to effectively manage through this crisis and maintain the company's financial health and well-being.\nAnd finally, our deep and experienced leadership team has managed through and overcome many challenges in our 30-year history.\nAnd I'm confident that we will emerge from this extraordinary time as an even stronger company.\nToday, we have a very clearly defined priorities.\nFirst and foremost is the health and safety of our employees and our families, followed by a commitment to meet the needs of our customers and suppliers.\nBoth of these will help support the business today and secure our future during this uncertain time.\nESCO will benefit from the fact that we have developed leading positions in various niche markets with a set of unique and highly technical products and solutions specifically designed to meet our customers' needs, which makes it difficult to be replaced by alternative sources.\nOur continued investment in new products across all three segments and our staff of highly skilled engineering talent will continue to create new opportunities to provide value to our customers, which will drive our long-term growth.\nI firmly believe that our future will rise as our customers' communities recover and spending returns to more normal levels.\nTo close out my comments before I hand it over to Gary, as we face the immediate and ensuing economic fallout of COVID-19, I believe we're well-positioned to navigate the short-term challenges in front of us.\nI'm confident that our fundamental approach to operating our business and our solid liquidity will be the cornerstone of our continued long-term success.\nOur employees are our most important asset.\nAnd Vic will close out today's call with his current view related to our future and our end markets.\nAs Vic noted in his comments, our liquidity position is of the utmost importance to us during this challenging time.\nI'm extremely pleased with where we stand today by having nearly $700 million of dry powder at our disposal between cash on hand and available credit capacity, while carrying a modest leverage ratio of 0.92.\nI wish I could tell you that we saw this economic prices coming late in 2019 when we extended our five-year credit facility out to the year 2024 and we increased our debt capacity by an additional $50 million at lower rates, or when we sold the Technical Packaging business and generated over $190 million of gross proceeds to significantly improve our cash and debt positions, but we didn't see it coming.\nWe did not anticipate a pandemic as we executed both of these liquidity enhancements as these were part of our normal financial strategy.\nBut I'm sure glad we did these things as they have bolstered our current financial position.\nI'll touch on a few Q2 highlights from the release.\nSales increased 5%, led by our Aerospace & Defense segment growing $16 million or 20% driven by the addition of Globe's submarine businesses, coupled with strong aerospace sales at PTI and Crissair, and higher space sales at VACCO.\nQ2 A&D sales came in approximately $3 million ahead of plan.\nTest sales were relatively flat as a result of a three-week shutdown of our Chinese manufacturing facility in February, coupled with the timing delays as several installation sites where personnel access was restricted due to COVID.\nDomestic chamber sales were relatively strong and on-plan during the quarter, which nearly offset the installation site issues.\nUSG sales were down due to the timing of various project deliverables as several large utility customers, both domestic and international, realigned their short-term maintenance and spending protocols to focus on uninterrupted power delivery during the global crisis.\nEntered orders clearly were a bright spot in both Q2 and year-to-date, where we booked $466 million of new business and ended March with a record backlog of $565 million, which is up 25% from the start of the year.\nOur DoD business, led by our participation on the Block V contract for additional Virginia Class submarines, was the clear winner.\nDuring Q2, we generated $34 million of cash from continuing operations with free cash flow of $23 million, which is 127% free cash flow conversion to net earnings during the quarter.\nQ2 and year-to-date adjusted EBITDA improved from prior year, with Q2 reflecting a 17.4% margin despite the lower contribution from USG, which is our highest margin segment.\nAnd finally, Q2 adjusted earnings per share was $0.68 a share, down slightly from the $0.71 a share delivered in Q2 of 2019, which resulted from the noted COVID impact.\nTo set the table for the balance of 2020, the COVID-19 global pandemic has introduced considerable uncertainty around the extent and duration of today's economic circumstances, which makes it difficult to predict how our future operations will be affected using our normal forecasting methodologies.\nAnd as a result of this uncertainty, we're withdrawing our previously issued full-year guidance and will not provide guidance for Q3 at this time.\nTo add some color to Vic's comments on our cost savings actions, we are clearly focused on the right things, and we are pulling on all reasonable cost levers to maintain and optimize our cash flow and liquidity.\nOur focus is to prudently cut our deferred costs in the short term and focus on those costs which do not have a negative outcome, impacting our ability to meet increasing demand or growth in the future.\nI will offer some qualitative comments about our end markets, but I will emphasize that today's situation is very fluid, and there are many unknowns so my comments today may change materially in the future.\nWe recently completed a thorough review of our individual businesses as part of our April planning meetings to better frame our expectations of the impact of COVID-19 across and within our various operating units.\nStarting with the Aerospace & Defense segment, we expect to see a slowdown in commercial aerospace deliveries over the balance of the year.\nAnd it's too early in the cycle to determine the sales and EBIT impact from the current industry downturn as it relates to future build rates and airline passenger miles.\nWe are working with all of our aerospace customers to get a better picture of their demand and requirements over the coming quarters, but the situation continues to evolve daily.\nOur defense contract within Aerospace & Defense, both military aerospace and navy products, is expected to remain strong given its current backlog and the urgency of expected platform deliveries.\nOur aerospace supply chain partners continue to deliver necessary parts and services to us.\nAnd in some cases where we see some weakness, we are working on bringing some of these products and services back in-house, such as machining and other capabilities we can replicate as a safety net.\nWe also did see this weakness in the aerospace market as an opportunity for ESCO.\nSo we find suppliers or competitors experiencing financial or operational stress during this crisis, we may be able to provide assistance about your partnering or through an acquisition at a reasonable price.\nOur Test business is expected to remain relatively solid over the balance of the year given the strength of its backlog and the strength of its served markets, including medical shielding and 5G and its related communications technologies.\nWe expect USG's customer spending softness to continue through the next few months as they come out of their summer testing protocols and return to their more normal buying patterns.\nOnce some of the social distancing guidelines get sorted out and utility service personnel can return to their normal site visit routines, we expect our service business to return to normal as it has been essentially on hold for the past few months.\nUtilities have money spend, and I'm certain that spending will return in the near future as maintenance spending cannot be delayed indefinitely without creating significant risk to grid safety, efficiency, or regulatory compliance.\nThe critical need to maintain, repair and improve the utilities' aging infrastructure is not reduced by this pandemic crisis.\nOn a positive note, I'm really pleased with USG's pipeline of new products and solutions, especially related to the software security and the related asset hardening solutions.\nWe introduced several new solutions at the Doble conference in March.\nAnd from customer feedback, both there and after the show, these products are being enthusiastically received.\nMoving on to M&A.\nPrior to COVID, we had a couple of actionable opportunities well down a path to completion, and we'll continue to evaluate several other -- and we're continuing to evaluate several other actionable deals in the pipeline.\nWhen the time is right, we will take action on these opportunities to grow our businesses than we have in the past.\nOur Board is supportive of our M&A strategy and our current balance sheet provides us with plenty of liquidity to allow us to add to our existing portfolio.\nIn summary, we delivered a strong first half of the year.\nAnd for the balance of the year, our plan is to hunker down while dust settles, work hard to control our costs while maintaining our critical workforce, develop contingency plans for multiple scenarios, and look for opportunities to leverage our infrastructure.\nWe will survive and prosper.\nI'll now be glad to answer any questions you have.\n",
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"content": "esco suspends previously issued fiscal year 2020 guidance.\nq2 adjusted earnings per share $0.68.\nfrom a liquidity perspective, we are in a really solid position.\nnot changing its dividend payment plan.\nsuspending its previously issued fiscal year 2020 guidance.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We undertake no duty to update or revise any forward looking statements whether as a result of new information, future events or otherwise.\ntechnologies.com under the link, Investor Relations.\nSo we're hearing from Chris in a few minutes.\nIn addition to that, we've got Dave Schatz here with us, who had recently replaced Alyson as our General Counsel.\nSo before we get into the details of the quarter, I'd like to start off by introducing and welcoming Chris Tucker.\nHe joined us a few weeks ago as the newest member of our executive management team.\nChris will be serving as Senior Vice President and Chief Financial Officer replacing Gary who previously announced his retirement.\nChris comes to us from Emerson, where he served in numerous financial leadership roles with increasing responsibilities over the years.\nHe also led their Investor Relations Group for several years.\nIt's great to join all of you today.\nI just wanted to take a minute, give a brief introduction to myself, before we jump into details of the Q2 performance.\nAs you know, I'm joining ESCO from Emerson, where I spent the last 24 years of my career.\nEmerson is a great company and I'd a great experience there.\nI started off in the Corporate Accounting and Finance team back in 1997 and finished up as the Group CFO for one of the few business platforms.\nAnd of course, there were several important stops in between those two bookends.\nDuring my time there I had a chance to work on a variety of operational issues, business development opportunities and overall value creation strategies.\nI also lead the Investor Relations efforts for a few years during my tenure there, which was a good bit of training for calls like we're doing right now.\nMy prior experiences have put me in a strong position as I transitioned to this new role.\nI'm very excited to be part of this team here at ESCO.\nGary has been extremely helpful as we've worked together over the last few weeks and everyone from the corporate staff, to the Board of Directors has been collaborative and great to work with.\nESCO is really great company and has a lot of exciting initiatives going on really across all the businesses.\nI'm excited to be here and start building on Gary's legacy of strong financial leadership as we move into the future.\nWe'll look forward to working with you.\nI'd be remiss, if I didn't mention today's COVID environment.\nAnd how we continue manage and around this impact, on our aerospace consulting businesses.\nI think our results demonstrate we're succeeding.\nSince beginning of the pandemic, our primary goal is remain the same.\nProvide a safe working environment and protect the health of our employees.\nAnd today, we're really encouraging our staff to fully vaccinated, for the benefit of all.\nOur solid operating results in Q2 and for the first six months of the year, coupled with our increasing liquidity, demonstrate that the measures we've taken over the past 12 months have significantly mitigated COVID impact on earnings.\nAnd I believe will it allow us to continue successfully navigating through this challenge.\nOur previous cost reduction actions, along with our enhanced focus on operational efficiency will benefit ESCO going forward as things continue to move forward in more normal state.\nAnd I'm confident that our disciplined approach to operating business will result in continued success, throughout the balance of the year.\nWhile Gary will provide the financial details, I'll offer some top level commentary to set the tone.\nOur Q2 and year-to-date, AMD sales were significantly lower than prior year, due to COVID impact at commercial aerospace.\nOur portfolio diversity allowed us to mitigate this headwind, as we're able to hold our ESCO consolidated adjusted EBITDA constant at $31 billion in Q2, compared to pre-COVID Q2 results from last year.\nAdditionally, we were able to increase our fiscal 21 year-to-date adjusted EBITDA and adjusted earnings per share from a prior year, despite a 6% decrease in sales.\nThis improvement is delivered by solid contributions from other operating units and as a result of favorable sales mix, and meaningful cost reductions across the company.\nFrom the segment level, there are several positives to report.\nWithin AMD we're seeing signs of recovery in commercial aerospace.\nThis past year board is continued increase, and more airlines are adding idle aircraft back into service.\nOur navy and space businesses remain strong and well funded.\nAnd our outlook for, near-term growth opportunities continue to materialize in both of these areas.\nOur test business continues to outperform, as we saw sales growth in both Q2 and year-to-date, with increasing margins, as our project execution remained solid.\nWe expect this outlook remain positive, driven by the strength of the serve markets, including 5G.\nour USG business are reporting a solid for Q2 than originally projected report a solid first half of the year, from both the sales and adjusted EBIT perspective.\nUSD delivered an adjusted EBITDA margin of 26% for the first six months of the year, up from approximately 22% in the prior year's first half.\nThis is a result of year-end spending cash in our first quarter, along with our lower cash and cost base.\nOverall, the fundamentals of our portfolio are strong, and our goal remains the same to create long-term shareholder value.\nAs we continue navigating through what we hope, is the near-end of COVID.\nOur number one financial priority remains the same, increasing and maximizing our liquidity to position us for future M&A growth, and increased investment in new products and solutions.\nWe have a rock solid balance sheet today.\nAnd we are poised to use it to our advantage.\nI'll highlight the significant cash we've generated this year, as we've set a record for cash flow during the first half is the highest in our history.\nWe delivered free cash flow conversion at 134% of net earnings for the first six months.\nClearly our working capital initiatives are producing solid results.\nToday, we have approximately $760 million of liquidity at our disposal between cash on hand and available credit capacity, while carrying a modest leverage ratio 0.23.\nWe fully realize that while this is a positive metric, it is not the ideal capital structure given the historically low cost of debt, and with that said, we're committed to putting our balance sheet to work.\nOne of our primary objectives in the near-term is to add leverage to fund acquisitions, with our focus directed at bringing on new businesses that provide an ROIC well in excess of our cost of capital.\nAs we believe this return spread is a cornerstone of value creation.\nIn the release, we call about a couple of discrete items, which are described in detail and are excluded from the calculation of adjusted EBITDA and adjusted earnings per share in both years presented, so I will not repeat them here.\nI'll now touch on a few comparative highlights noted in the release.\nWe beat the consensus estimate of $0.55, as we reported Q2 adjusted earnings per share of $0.59 cents of share.\nThis compares to $0.68 of share in the prior year Q2.\nConsidering Q2 of this year was influenced by the COVID operating environment, I'm pleased to report that we've delivered adjusted EBITDA of $31 million in the current period, which is equal to the $31 million we reported last year in Q2 pre-COVID.\nMore impressively, this was achieved despite the noted sales decline in Q2 that Vic mentioned earlier.\nOur Q2 adjusted EBITDA margin increased at 19% from 17% last year.\nYear-to-date our adjusted EBITDA increased over $60 million with an 18% margin up from 17% prior year today.\nOver the past year, we took several cost reduction actions across the company, and as a result, we were able to increase our Q2 and year-to-date gross margins to 38.1% and 38.7%, respectively.\nWe reduced our Q2 and year-to-date SG&A spending by 3% in both Q2 and year-to-date periods compared to prior year.\nThese favorable outcomes were achieved, despite including the acquisition of ATM in October, which has not yet at full operating capacity during its transition to Crissair.\nAnd it was done despite our continued spending on R&D, and new product development.\nAmortization of intangibles and interest expense both decreased, while tax expense as a percent of pre-tax income increased in Q2 and the first half as we had several large tax strategies implemented last year, which benefited the 2020 competitive rates, but were not repeated in the current year.\nQ2 orders were solid as we booked $176 million in new business and ended the quarter with a backlog of $522 million with a book-to-bill of 106%.\nA bright spot worth mentioning was the order volumes recorded in our commercial aerospace businesses, which grew their backlog $7 million during the quarter.\nAs we move through the balance of the year, I'll remind you that our DoD businesses led by our participation on the Block V contract for additional Virginia class submarines, where we booked several large orders during fiscal 2020 will be delivering products against those orders, which are multi-year programs, which will mathematically reduce the optics of our book-to-bill.\nConsistent with our November communications and from a directional perspective, we can point to several areas where we see positive momentum.\nOur commercial aerospace and utility end markets are showing some degree of customer stabilization, which supports our current outlook suggesting a movement toward continue to recover in the second half of fiscal 2021.\nThe increasing distribution of the COVID-19 vaccine is anticipated to benefit and accelerate the recovery of commercial air travel and utility spending, with customers resuming more normal buying patterns.\nWhile we solidly beat Q2, and are ahead of our original plan at the halfway point, we still expect the second half of 2021 to be slightly favorable in comparison to the second half of fiscal 2020, given the various elements of recovery that we are anticipating.\nWe expect to show growth in fiscal 2021 adjusted EBITDA, adjusted earnings per share as compared to fiscal 2020.\nWith an adjusted EBITDA reasonably consistent with that was which was reported in 2019.\nIf we complete any additional acquisitions during the year, it is expected that these would contribute to the expectations I've just mentioned.\nSince that touched on quite a few of my thoughts or my commentary I'll offer a few qualitative comments about our end markets and our expectations for the balance of the year.\nStarting with our A&D segment, as I mentioned, we're seeing some signs of modest recovery in commercial aerospace.\nWe expect continued softness over the next three months.\nWe're starting to see stabilization in the OEM build rates and increase in airline passenger traffic and flight miles.\nJust as we saw in Q1, the defense portion of our A&D business is and will remain strong for the foreseeable future, given our backlog and platform positions.\nWe also see the current situation, the aerospace market as an opportunity for ESCO, as we've been made aware of some situations where other suppliers or competitors are not fulfilling their customer requirements.\nAnd those customers have reached out to us to see if we can step down and satisfy their demands.\nOur Test business delivered another really solid quarter by beating our internal expectations and delivering the EBIT margin of 13%.\nTest outlook remained solid, given the diversity of its serve markets.\nAs I noted on the previous call, when USG had a really strong first quarter, we expected USG sales to be down in Q2, before returning to more normal levels in the second half of the year.\nAnd that's what we've seen.\nBut the positive is increased margin contribution USG delivered in Q2 in year-to-date compared to prior year.\nWe've recently visited with our USG management teams and I remain pleased with the enthusiasm surrounded their new products and solutions, and we continue to see energies and markets improving as the investments in renewable energy are increasing in both wind and solar.\nOur solar revenues have been growing far better than anticipated, and we expect that trend to continue.\nMoving on M&A, we continue to evaluate several opportunities and we expect to take action on these opportunities to grow our businesses as we have in the past.\nOur board is extremely supportive of our M&A strategy and our current balance sheet provides us with plenty of liquidity to allow us to add to our existing business.\nTo wrap up, we delivered a solid second half and first quarter from both the cash flow and earnings standpoint.\nAs we move through the second half of our fiscal 2021, Our plan is to continue to focus on the fundamentals and look for opportunities to leverage our existing cost structure through M&A, to create additional operating efficiencies, ensure we're well positioned for long-term success.\nSo with that, I'll be happy to take any questions.\n",
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"content": "q2 adjusted earnings per share $0.59 excluding items.\ncontinues to see tangible signs of recovery that point to a solid outlook for back half of year.\nesco technologies - second half of 2021 is expected to compare favorably to second half of 2020 given anticipated elements of recovery.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: technologies.com under the link, Investor Relations.\nWith the ongoing challenges from COVID, we continue to see great efforts and contributions from everyone across the Company, and for that, I'm very appreciative.\nSince the beginning of the pandemic, our primary goals remain the same, provide a safe working environment and protect the health of our employees and today we continue to encourage our staff to get fully vaccinated for the benefit of everyone.\nThere were a few challenges in the third quarter, but overall, the Company continues to perform well.\nCash generation year-to-date has been excellent.\nWe have teams focused on the working capital initiatives around the Company and there is still room for improvements as we move forward.\nThis will be a long-term value creation tool for ESCO.\nOur previous cost reduction actions, along with our enhanced focus on operational efficiency will benefit ESCO going forward as our end markets continue moving toward a more normalized level of activity and I'm confident that our disciplined approach to operating the business will result in continued success as we move into fiscal 2022.\nWhile Chris will provide the financial details, I'll offer some top level commentary to set the tone.\nWhile our year-to-date A&D sales continue to be lower than prior year due to COVID's impacts on commercial aerospace, our portfolio diversity allowed us to mitigate this headwind as our year-to-date consolidated adjusted EBITDA margins are only down slightly compared to prior year-to-date margins.\nThis performance was driven by solid contribution from our other operating units as a result of a favorable sales mix and meaningful cost reductions across the Company.\nFrom a segment level, there are several positives to report.\nWithin A&D, we're seeing signs of recovery in the commercial aerospace as passenger boardings continue to increase and more airlines are adding idle aircraft back in the service.\nSales from our commercial aerospace customers were still down in the third quarter as a recovery in the sectors have been a bit slower than we anticipated.\nUS domestic travel has picked up but it's still slightly below 2019 levels.\nThose of you who've been to an airport lately are probably surprised, but this is what the TSA statistics show.\nIt's important to understand that the business travel remains soft and air travel in Europe and overall international travel are still well below 2019 levels.\nThe good news is that we're starting to see order activity increase in the third quarter and our overall A&D segment orders increased by more than 40% compared to last year's third quarter.\nAdditionally, our navy and space businesses remain strong and well-funded and our outlook for near-term growth opportunities continue to materialize in both of these areas.\nOur test business continues to be steady.\nWe have a good order input on a global basis and we're actively managing material inflation and transportation issues as they arise.\nWe expect test outlook to remain positive driven by the strength of the served markets, including 5G, medical and automotive.\nOur USG business continues to outperform from a profitability perspective with year-to-date adjusted EBIT margins of 19.4% compared to 15.1% last year.\nThe renewables business and energy has performed well in 2021, while the orders from billables utility customers have been a bit soft.\nWe did see sales growth from delve over approximately 8% in the quarter, we have not yet seen demand return to pre-pandemic levels.\nWe feel great about the long-term outlook for the USG business and are very excited about the announcements today regarding closing two acquisitions.\nOur agreement to acquire Altanova had been announced back in May, and we were able to get the deal closed in July 29.\nThis business brings exciting new product offerings to our USG business and also significantly increases our global footprint.\nAdditionally, we announced today the purchase of Phenix Technologies.\nThis is also an exciting business, it further enhances a product offering of our USG Group and provides greater access to the commercial and industrial markets.\nWe've had initial meetings with the teams for both of these businesses.\nI'm very encouraged by the quality of the people and their enthusiasm to join ESCO.\nWe are confident these will be strong additions to ESCO and USG's portfolio that will drive future sales and earnings growth.\nSo overall, the fundamentals of our portfolio remain strong.\nThe second half sales outlook is a bit behind initial projections but orders have started to increase and we feel good about the growth outlook for 2022 and beyond.\nI'll start by briefly touching on a few comparative highlights.\nSales in the third quarter grew by 5% with A&D up 1.8%, USG up 12% and Test growing 4.6%.\nThis has been the first quarter in 2021 where we saw sales growth from all three segments.\nAdjusted EBIT margins were 12.7% in the quarter compared to 14.2% in the prior year quarter.\nThe margin decline was driven primarily by the operational efficiencies and inventory write-offs at Westland.\nIn the quarter we did become aware of some issues at Westland.\nThey've experienced several challenges related to new product development programs, which led to increased production cost and product quality issues.\nNo bad product were sent or billed to customers, but we did have charges recorded in the quarter of $2.1 million and year-to-date charges of $4.4 million.\nThe first and second quarter charges represent corrections to our previously reported financials and going forward, our 2021 year-to-date numbers will be updated to reflect these amounts.\nWe have started work immediately to get the production issues fixed into address cost issues within the business.\nThere are strong synergies between Westland and our Global subsidiary and we have already begun the work to bring these businesses together under one leadership structure.\nWe have a strong outlook for this business and are committed to driving significant improvements as we move forward.\nAdjusted earnings per share came in at $0.67 per share in the quarter below prior year $0.76 per share.\nAdjusted pre-tax dollars were down 2.5% compared to prior year Q3 and we had an exceptionally low tax rate in prior year Q3 which further reduced EPS.\nSegment highlights in the quarter are as follows, A&D did see a return to sales growth in the quarter.\nThe Navy business grew by over 20%, which more than offset declines in the commercial aerospace sales of approximately 10%.\nWhile the commercial aerospace sales were down, we did see the rate of decline improve and we are seeing signs that the business is beginning to rebound.\nMargins for A&D were down driven by the issues at Westland.\nUSG saw growth of 12% in the quarter.\nThe renewables business was very strong.\nThe Utility business did grow in Q3, but it is not return to pre-pandemic levels adjusted EBIT margins were 18.3% in Q3 compared to 14.8% in the prior year Q3.\nThe strong improvement is driven by leverage on the sales growth and benefits from prior cost reduction activities.\nThe test business grew 4.6% in the quarter, continued steady performance from this group, margins were down in the quarter due to mix and timing issues.\nYear-to-date, operating cash flows of over 40%.\nWe continue to see great results from our focus on driving balance sheet improvements, the teams across the Company continue to work multiple strategies for operating capital improvement and the results are very good.\nSome programs driving this performance include negotiating performance-based payments, in our A&D and test segments, this has had a significant impact as it oftentimes results in new orders being cash-positive throughout the life of the contract.\nOther efforts include adjusting safety stock levels and extending payment terms.\nYear-to-date, our adjusted EBITDA was nearly $91 million with a 17.8% margin compared to 18% in the 2020 year-to-date.\nOver the past year, we took several cost reduction actions across the Company that have allowed us to hold margins during this down sales environment.\nExamples here include closure and consolidation of facilities, the move of manufacturing content to our Mexico facility and ongoing make/buy [Phonetic] programs.\nAmortization of intangibles and interest expense decreased while tax expense as a percent of pre-tax income increased in Q3 and year-to-date as we had several tax strategies implemented last year which benefited the 2020 competitive rates.\nOrders were a good story in Q3 as entered orders were strong.\nWe booked $203.8 million of new business in the quarter ended with a backlog of $539 million and a book to bill of 112%.\nThis represents 29% growth compared to prior year Q3, strength in orders came from all three segments with A&D orders increasing 44%, USG increasing 10% and Test increasing 28%.\nAs we continue navigating through what we hope is the near end of COVID, our number 1 focus remains the same increasing and maximizing our liquidity to position us for future M&A growth and increased investment in new products and solutions.\nWe have a strong balance sheet today and are excited about the recent acquisitions that Vic mentioned earlier.\nWe still have ample capacity for further acquisitions and we obviously continue to invest in the core business to enhance our organic growth profile.\nOur significant cash generation this year is a testament to this focus on liquidity.\nWe have delivered free cash flow conversion at 118% of net earnings for the first nine months.\nAs mentioned above, we have clear momentum in our working capital initiatives.\nI did want to talk for a minute about the Q4 guidance.\nIn the release we did provide Q4 guidance.\nThis is the first quarter that has included guidance since COVID began.\nThe guidance for Q4 is a range of $0.73 to $0.78 per share.\nThe sales levels in Q4 are key issue as we think about the guidance and this range is predicated on a sales level in the range of $190 million to $200 million.\nIn the last three months, we have reduced the Q4 sales outlook for the commercial aerospace businesses and also for the utility businesses.\nThe commercial aerospace backlogs are beginning to build that we see those more drivers for 2022 as opposed to Q4.\nFor the utility space, we are seeing some growth compared to prior year, but not to the levels we had previously anticipated.\nThe long-term outlook for both of these markets continues to be positive and we feel good about our positioning as we look toward 2022.\nWe also want to be clear that this outlook excludes any impact from the acquisitions that were announced today.\nWe will have sales and earnings impacts from those transactions, but they are not yet quantified and are therefore not included in the guidance that is provided.\nSince I touched on quite a few of my thoughts earlier in my commentary, I'll just offer a few more comments before we move into Q&A.\nAs Chris mentioned, we are a little softer than planned here in the back half of the year for the commercial aerospace and Doble's utility market.\nThis doesn't change our long-term commitment to these markets.\nWe feel great about our end market exposure and our diverse portfolio allows us to manage through periods like this.\nOutside these markets, we see a lot of growth opportunities in A&D for the military, aerospace, navy and space end markets.\nInvestments in renewable energy market continue to drive very strong performance for our NRG business and test business seeing a lot of opportunities for telecom, automotive, and medical markets.\nWe just finished up a Board meeting in Boston last week and during those meetings, we took the time to visit the Doble and Globe operations.\nWe had a great set of meetings and really exciting interactions with the teams at the operating units.\nAt Doble, we did a full update of the USG segment.\nThe team has made great progress updating the product line across the business from renewable focus products at NRG to the new F8 launch Doble.\nIt's great to see the innovation happen inside that business as our customers start spending again and will be ready to support.\nThis also provided a chance to update our Board on Phenix and Altanova acquisitions.\nSo you could first hand see the excitement around these transactions.\nAfter visiting the Doble headquarters, we took the Board to visit the Globe facility.\nThis was another great visit.\nThe team at Globe has done an exceptional job driving tremendous growth with the Navy Surface hull treatment product line.\nThe team has worked very hard to master a difficult manufacturing process.\nThey really roll and it's fun to see a winning team in action.\nWe had full couple of days in Boston and accomplishing all of this, but it was time well spent.\nSo with that, and I think we're ready for some Q&A.\n",
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"content": "esco technologies inc - q3 gaap earnings per share $0.57 and adjusted earnings per share $0.67.\nq3 gaap earnings per share $0.57 and adjusted earnings per share $0.67.\nq3 sales rose 5 percent to $181 million.\nsees q4 adjusted earnings per share $0.73 to $0.78.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll also discuss the status of reopening the West Coast economies and related factors concluding with an overview of the West Coast apartment transaction markets and investments.\nOur second quarter results were ahead of our initial expectations entering the year, as the economic recovery from the pandemic occurred faster than we expected.\nWith a strong economy and high vaccination rates, we are now confident that the worst of the pandemic-related impacts are behind us.\nAs noted on previous calls, our strategy during the pandemic was to maintain high occupancy and scheduled rent, both necessary for rapid recovery.\nTo that end, net effective rent surged during the second quarter, along with year-over-year improvement in occupancy, other income and delinquency.\nThe recovery and net effective rents continued unabated in July and we are now pleased to announce that July net effective rents for the Essex portfolio have now surpassed pre-pandemic levels with our suburban markets leading the way.\nWhile the downtowns are improving, but still generally below pre-pandemic levels.\nObviously these higher rents will be converted into revenue as leases turn and Angela will provide additional details in a moment.\nHaving passed the midpoint of 2021 and looking forward, we made a second set of positive revisions to our West Coast market forecast, which can be found on page S-17 of the supplemental.\nDriving the changes is an increase in 2021 GDP and job growth estimates to 7% and 5%, up from 4.3% and 3.2% respectively from our initial forecast.\nAs a result, we now expect our average 2021 net effective rent growth to improve to minus 0.9% from minus 1.9% from the beginning of the year.\nTo put this into perspective, consider that our net effective rents were down about 9% year-over-year in Q1 2021.\nGiven our current expectation of minus 0.9% rent growth for the year, year-over-year net effective market rents are now forecasted to increase about 6% in the fourth quarter of 2021.\nCash delinquencies were up modestly on a sequential basis at 2.6% of scheduled rent for the quarter and well above our 30-year average delinquency rate of 30 to 40 basis points.\nThe American Rescue Plan of 2021 provides funding for emergency rental assistance, which was allocated to the stage for distribution to renters for pandemic-related delinquencies.\nDuring the second quarter, collections of delinquent rents from the American Rescue Plan were negligible as the pace of processing reimbursements has been slow, since the program launched in March.\nWe expect that to improve in the coming months.\nWe expect delinquency rates to return to normal levels over time as more workers enter the workforce and eviction protections labs on September 30 in both California and Washington.\nOnly about $7 million of the $55 million in delinquent rent shown on page S-16 of the supplemental has been recorded as revenue.\nGiven uncertainty about the timing of collections, no additional revenues are contemplated in our financial guidance.\nEven with the approved job and economic outlook, the reopening process was gradual through the second quarter, with full reopening declared in mid-and late June for California and Washington respectively.\nThe unemployment rate was still 6.5% in the Essex markets as of May 2021 underperforming the nation.\nThrough Q2 we have regained about half of the jobs lost in the early months of the pandemic.\nEmployment in the Essex markets dropped over 15% in April 2020 and while job growth in our markets outpaced the nation in the second quarter, we are still 7.9% below pre-pandemic employment, compared to 4.4% for the U.S. overall.\nWe see the gap is an opportunity for growth to continue in the coming months, as we benefit from the full reopening of the West Coast economies.\nWe believe that many workers that exited the primary employment centers during pandemic-related shutdowns and work from home programs, will return as businesses reopen and resume expansion that was placed on hold during the pandemic.\nAs we proceed through the summer months, we edge closer to the targeted office reopening dates set by most large tech employers in early September.\nAs recent reports about Apple and Google suggest, the COVID-19 Delta variant could lead to temporary delays in this reopening process.\nOur survey of job openings in the Essex markets for the largest tech companies continues to be very strong as we reported 33,000 job openings as of July, a 99% increase over last year's trough.\nNew venture capital investment has set a record pace this year with Essex markets once again leading with respect to funds invested providing growth capital that supports future jobs.\nGenerally economic sectors that sell before this during the pandemic, are now positioned for the strongest recovery and the reopening process led by restaurants, hotels, entertainment venues, travel and so many.\nReturn to office plans, which remain focused on hybrid approaches will continue to draw employees closer to corporate offices.\nGiven that many workers won't be required to be in the office on a full-time basis, we expect average new distances to increase.\nAs we highlight on page S-17.1 of our supplemental, this transition has already started in recent months as our hardest hit markets in the Bay Area once again experienced net positive migration from beyond the NorCal region.\nIn particular, since the end of Q1, the submarket surrounding San Francisco Bay have seen positive net migration that represents 18% of total move-outs over the trailing three months compared to minus 8% a year ago.\nThese inflows are led by residents returning from adjacent metros, such as Sacramento and the Monterey, Peninsula as well as renewed flow of recent grads -- graduates arriving from college towns across the country, a notable positive turnaround from last year.\nIn Seattle CBD, we've seen similar or even stronger recent inflows and we're likewise experiences -- experiencing a strong market rent recovery.\nOn the supply outlook, we provided our semi-annual update to our 2021 forecast on S-17 of the supplemental with slight increases to 2021 supply as COVID-related construction delays shifted incremental yields from late 2020 into 2021.\nWe expect modestly fewer apartment deliveries in the second half of 2021 with more significant declines in Los Angeles and Oakland.\nWhile it is still too early to quantify recent volatility in lumber prices and shortages for building materials may impact construction starts and the timing of deliveries in subsequent years.\nMultifamily permitting activity in Essex markets also continues to trend favorably, declining 200 basis points on a trailing 12 month basis as of May 2021 compared to the national average, which grew 230 basis points.\nMedian single family home prices in Essex markets continued upward in California and Seattle, growing 18% and 21% respectively on a trailing three-month basis.\nThe escalating cost of homeownership combined with greater rental affordability from the pandemic have increased the financial incentive to rent.\nWe suspect these trends will continue given muted single family supply and limited permitting activity and I believe these factors will be a key differentiator for our markets in the coming years compared to many U.S. markets with greater housing supply.\nTurning to apartment transactions, activity is steadily accelerated since the start of the year, with the majority of apartment trades occurring in the low-to-mid 3% cap rate range based on current rents.\nGenerally investors anticipate a robust rate recovery, especially in markets where current rents are substantially below pre-pandemic levels.\nWith the recent improvement in our cost to capital, we have turned our focus once again to acquisitions and development while remaining disciplined with respect to FFO accretion targets.\nWith respect to our preferred equity program, we continue to see new deals, although the market is becoming more competitive.\nLower cap rates from pre-pandemic levels have produced higher-than-anticipated market valuations, which in turn has resulted in higher levels of early redemption.\nThat concludes my comments.\nMy comments today will focus on our second quarter results and current market dynamics.\nWith the reopening of the West Coast economy, the recovery has generated improvements in demand and thus pricing power.\nOur operating strategy during COVID to favor occupancy while adjusting concessions to maintain scheduled rents enabled us to optimize rent growth concurrent with the increase in demand resulting in same-store net effective rent growth of 8.3% since January 1 and most of this growth occurred in the second quarter.\nA key contributor of this accomplishment is the fantastic job by our operations team in responding quickly to this dynamic market environment.\nWhile market conditions have improved rapidly, during our second quarter -- driving our second quarter results to exceed expectations.\nI would like to provide some context for why sequential same-property revenues declined by 90 basis points compared to the first quarter.\nThe two major factors that drove the decline were 50 basis points of delinquency and 50 basis points in concessions.\nDelinquency in the first quarter was temporarily lifted by the one-time unemployment disbursements from the stimulus funds.\nAs expected in the second quarter, delinquency reverted back to 2.6% of scheduled rent versus the 2.1% in the first quarter.\nOn concessions, the nominal amount increased from higher volume of leases in the second quarter relative to the first quarter of this year.\nTo declare concessions in our markets have declined substantially and are virtually none existent except for select CBD markets.\nOur average concession for the stabilized portfolio is under one week in the second quarter compared to over a week in the first quarter and over two weeks in the fourth quarter.\nAlthough concessions have generally improved in the second quarter, they remain elevated ranging from 2.5 to 3 weeks in certain CBDs such as CBD, LA, San Jose and Oakland.\nGiven the extraordinary pandemic-related volatility in once in concessions over the past year and a half.\nI thought it would be insightful to provide an overview of the change in net effective rents compared to pre-COVID levels.\nAs of this June, our same-store average net effective rents compared to March of last year was down by 3.1%.\nSince then, we have seen continued strength and based on preliminary July results, our average net effective [Indecipherable] are now 1.5% above pre-COVID levels.\nit is notable that this 1.5% portfolio average diverged regionally with both Seattle and Southern California up 5.8% and 9.3% respectively while Northern California has yet to fully recover with net effective rents currently at 8% below pre-COVID levels.\nOn a sequential basis, net effective rents on new leases have improved rapidly throughout the second quarter and preliminary July rent increased 4.7% compared to the month of June, led by CBD San Francisco and CBD Seattle, both up about 11%.\nNot surprisingly, these two markets were hit hardest during the pandemic, and are now experiencing the most rent growth.\nMoving on to office development activities, which we view as an indicator of future job growth and accordingly housing demand.\nIn general, the areas along the West Coast with the greatest amount of office developments have been San Jose and Seattle.\nCurrently San Jose has 8.1% of total office stock under construction and similarly Seattle has 7.7% of office stock under construction.\nNotable activities include Apple leasing an additional 700,000 sqft and LinkedIn announced recent plans to upgrade our existing offices in Sunnyvale.\nIn the Seattle region, Facebook expanded their Bellevue footprint by 330,000 sqft and Amazon announced 1400 new web services jobs in Redmond.\nWe expect in the long-term areas with higher office deliveries such as San Jose and Seattle will have capacity for greater apartment supply with our impacting rental rates.\nWhile these normal relationships were disrupted during the pandemic, we anticipate conditions to normalize in the coming quarters.\nLastly, as the economic recovery continues to gain momentum, we have restarted both our apartment renovation programs and technology initiatives including actively enhancing the functionality of our mobile leasing platform and smart rent home automation.\nI'll start with a few comments on our second quarter results, discuss changes to our full year guidance, followed by an update on our investments and the balance sheet.\nI'm pleased to report core FFO for the second quarter exceeded the midpoint of the revised range we provided during the NAREIT conference by $0.08 per share.\nThe favorable results are primarily attributable to stronger same property revenues, higher commercial income and lower operating expenses.\nOf the $0.08, the $0.03 relates to the timing of operating expenses and G&A spend, which is now forecasted to occur in the second half of the year.\nAs Angela discussed, we are seeing stronger rent growth in our markets than we expected just a few months ago.\nAs such, we are raising the full year midpoint of our same-property revenue growth by 50 basis points to minus 1.4%.\nIt should be noted, this was the high end of the revised range we provided in June.\nIn addition, we have lowered our operating expense growth by 25 basis points at the midpoint, due to lower taxes in the Seattle portfolio.\nAll of this resulted in an improvement in same property NOI growth by 80 basis points at the midpoint to minus 3%.\nYear to date, we have revived our same-property revenue growth at the midpoint, up 110 basis points and NOI by 160 basis points.\nAs it relates to full year core FFO, we are raising our midpoint by $0.09 per share to $12.33.\nThis reflects the stronger operating results, partially offset by the impact of the early redemption of preferred equity investments, which I will discuss in a minute.\nYear-to-date we, have raised core FFO by $0.17 or 1.4%.\nTurning to the investment markets.\nAs we've discussed on previous calls, strong demand for West Coast apartments and inexpensive debt financing has led to sales and recapitalization of several properties underlying our preferred equity and subordinated loan investments resulting in several early redemptions.\nDuring the quarter, we received $36 million from an early redemption of a subordinated loan, which included $4.7 million in prepayment fees, which have been excluded from Core FFO.\nYear-to-date, we have been redeemed on approximately $150 million of investment and expect that number to grow to approximately $250 million by year-end.\nThis is significantly above the high end of the range we provided at the start of the year.\nHowever, this speaks to the high valuation apartment properties are commanding today which is good for Essex and the net asset value of the company.\nAs for new preferred equity investments, we have a healthy pipeline of accretive deals and we are still on track to achieve our original guidance of $100 million to $150 million in the second half of the year.\nAs a reminder, our original guidance assumed new investment would match redemptions during the year.\nHowever, the timing mismatch between the higher level of early redemptions coupled with funding of new investments expected later this year has led to an approximate $0.10 per share drag on our FFO for the year.\nMoving to the balance sheet, we remain in a strong financial position due to refinancing over 1/3 of our debt over the past year and a half taking advantage of the low interest rate environment to reduce our weighted average rate by 70 basis points to 3.1% and lengthening our maturity profile by an additional two years.\nWe currently have only 7% of our debt maturing through the end of 2023.\nGiven our laddered maturity schedule, limited near term funding needs and ample liquidity, we are in a strong position to take advantage of opportunities as they arise.\n",
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"content": "essex increases full-year 2021 guidance.\nraised midpoint of full-year same-property revenues to high-end of prior guidance range.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Angela Kleiman and Barb Pak will follow me with comments, and Adam Berry is here for Q&A.\nI will provide an overview of our third quarter results, our initial operational outlook for 2022, apartment market conditions and then conclude with the regulatory environment.\nOur third quarter results exceeded expectations, reflecting substantial improvement in West Coast economic conditions and housing demand.\nNet effective market rents are now 6.4% above pre-COVID levels and it's notable that we've exceeded pre-COVID market rents despite having recovered only about 63% of the jobs lost during the pandemic.\nAs a result of improving market conditions, we reported quarterly core FFO of $3.12 per share, $0.08 per share above both our sequential results and guidance provided last quarter.\nThis is the first of likely many quarterly sequential improvements in core FFO.\nSouthern California continues to deliver the strongest growth with net effective rents up 17.2% compared to pre-COVID while Northern California is still down 5.2%.\nReturn to office delays at many tech companies and slower job growth compared to other West Coast areas were factors in the pace of recovery for Northern California.\nOverall, September job growth in the Essex markets was 5.2%, substantially above the U.S. average of 4%.\nTurning to our outlook for 2022.\nWe published our initial market rent estimates on page S-17 of our supplemental package.\nWe are expecting 7.7% net effective rent growth on average in 2022 with Northern California the notable laggard in 2021 forecasted to lead the portfolio average in market rent growth next year.\nA key assumption driving our outlook for 2022 is the return to a predominantly hybrid office environment occurring over the first half of the year, supporting our 2022 job growth outlook and our expectation that the West Coast markets will resume their long-term outperformance versus U.S. averages.\nOur confidence in the Bay Area recovery next year is partially driven by rental affordability following a year of solid income growth, lower effective rents and exceptional growth in single-family home prices.\nMedian for-sale home prices are up 17% in California and almost 16% in Seattle, making for-sale housing more costly relative to rental housing and often impeding the transition from renter to homeowner.\nFinally, despite large increases in for-sale housing prices, our expectation for the production of for-sale housing in 2022 remains very muted at only 0.4% of the single-family housing stock.\nWe previously noted that many large tech companies in our markets have delayed their office reopenings as a result of the Delta variant this fall, which we believe is the primary factor in the slow recovery of Northern California compared to other Essex markets.\nNevertheless, recent tech company announcements regarding office expansion, open positions in the Essex markets and new commitments to office space all support our belief that the leading employers remain fully committed to a hybrid office-centric environment on the West Coast.\nPage S-17.1 of our supplemental highlights recent investments by large tech companies which have continued throughout the pandemic and include Apple's 550,000 square foot recent expansion in Culver City, their new 490,000 square foot tech campus that will soon begin construction in North San Jose and a recent acquisition of five office buildings with a total of 458,000 square feet in Cupertino.\nGoogle last quarter received needed approvals for its planned 80-acre campus near Downtown San Jose and YouTube's 2.5 million square foot campus in San Bruno was just approved by the city last week.\nWe continue to track the large tech companies hiring in terms of open positions and job locations, giving us confidence that we continue to grow alongside the most dynamic sector of the U.S. economy.\nOur most recent survey of open positions indicates 38,000 job openings in the Essex markets for the 10 largest tech companies, up 9,000 jobs or 26% as compared to the first quarter of 2020.\nStrong economic growth on the West Coast is further supported by venture capital investments which achieved new highs in Q3 '21 of $72 billion, of which 44% was directed to organizations in the Essex markets.\nTurning to our supply outlook for 2022, we are expecting 0.6% housing supply growth for the full year, including 0.9% growth for the multifamily stock which is manageable relative to our expectations for job growth of 4.1% in 2022.\nOverall, our West Coast markets will remain well below the national rate of new housing supply growth and especially compared to the rapid accelerating pace of housing deliveries across many low-barrier markets next year.\nLonger term, residential building permits in Essex markets saw a modest 3.5% increase on a trailing 12-month basis, which is favorable compared to the U.S. where permits have increased 13.6% compared to one year ago.\nWhile our markets often temporarily underperform the national averages during recessions, we remain disciplined in our approach to capital allocation, including the cadence of housing supply deliveries with permitting data supporting our West Coast thesis.\nTurning to the apartment transaction market.\nWe continue to see strong demand from institutional capital to invest in the multifamily sector along the West Coast as evidenced by increasing transaction volume and cap rates in the mid-3% range.\nApartment values across our markets are up approximately 15% on average compared to pre-COVID valuations.\nThe company has recently seen more development opportunities, and we were able to purchase two commercial properties in the third quarter, one located in South San Francisco that we expect to become a near-term apartment development opportunity and another in Seattle that we will begin to entitle for apartments while earning an attractive 6% going-in yield with a high-quality tenant.\nBarb will discuss a new co-investment program in a moment, which is strategically important given our preference not to issue common stock at the current market price.\nFinally, the California statewide eviction moratorium ended September 30.\nHowever, a few meaningful local jurisdictions have extended their separate eviction prohibitions.\nThe net result is that a significant portion of our portfolio remains subject to eviction moratoria and other regulations that will slow the pace of scheduled rent growth in 2022.\nFortunately, the Federal tenant relief program has come to the aid of many of our residents, although the reimbursement process continues to be slow and requires a significant coordination and support from the Essex team.\nI am grateful for this extensive team effort.\nFirst, I'll start by expressing my appreciation for our operations team as we are in the midst of a strong recovery, our team has been busier and working harder than ever.\nOur third quarter results reflect a combination of the operating strategy implemented early in the pandemic and a healthy recovery in net effective rents that began in the second quarter as California and Washington finally reopened from the pandemic shutdowns.\nAs you may recall, in the second quarter of 2020 when the pandemic-mandated shutdowns halted our economy, Essex quickly pivoted to a strategy that focused on maintaining high occupancy and coupon rents with the use of significant concessions.\nNow over a year later, as our markets recover, we are starting to see the benefits of this strategy flow through our financial results.\nIn the third quarter, same-property revenue -- same-property revenues grew by 2.7%, which is primarily attributable to a reduction in concessions compared to the previous period.\nBy primarily utilizing concessions last year, we were able to limit the in-place rent decline to only 1.1% in the third quarter.\nThe benefit of this strategy is also coming through our sequential revenue growth, which increased 3.2% this quarter from the second quarter.\nWith the market volatility we experienced over the past year, this is an extraordinary result and positions the company well going forward.\nFrom a portfoliowide perspective, market conditions remain strong compared to a year ago as demonstrated by the 12.6% blended net effective rent growth in the quarter.\nIn addition, rents relative to pre-COVID levels have continued to improve, further enhanced by a delay to the typical seasonal slowdown in all our markets.\nTurning to some market-specific commentary from north to south.\nRents and jobs in the Seattle region have had a strong recovery with net effective rents up 8.3% compared to pre-COVID levels and year-over-year job growth of 5.5% in September.\nNew supply continues to be largely concentrated in the CBD, which is less impactful to Essex because 85% of our Seattle portfolio is located outside of CBD.\nLooking forward to 2022, as outlined in our S-17 of the supplemental, total housing supply deliveries for the region is expected to decline compared to 2021, and we anticipate job recovery to continue, led by Amazon, which recently announced plans to hire over 12,000 corporate and tech employees in Seattle.\nAs such, we are forecasting market rent growth of 7.2% in 2022.\nMoving down to Northern California, which is our only region where net effective rents remain below pre-COVID levels.\nGreater job loss and apartment supply deliveries caused net effective rents to fall further in Northern California since the onset of the pandemic.\nIn addition, the job recovery in Northern California has been at a slower pace than our other regions, with only 4.4% year-over-year improvement compared to a 5.2% for the entire Essex portfolio as of September.\nWe believe this is partly driven by the more owner mandates delaying normal business activities.\nApartment supply, particularly in San Mateo and Oakland CBD are also presenting challenges for nearby properties, leading to financial concessions for stabilized properties for -- of over a week in these markets in September.\nOn the other hand, we anticipate that Northern California will be our best-performing region in 2022, with market rent growth forecast of 8.7% on our S-17.\nAs Mike discussed, we expect hybrid office reopenings to continue, which will drive additional job growth and healthy demand for apartment units.\nWith similar level of supply delivery expected in 2022 as this year, we are optimistic that Northern California is in its early stages of its recovery.\nLastly, on Southern California.\nRent growth has continued to improve in the third quarter, and net effective rents in September are 17.2% above pre-COVID levels.\nAs we have mentioned in the past, Southern California is a tale of two markets, the urban areas in the downtown L.A. versus the more suburban communities, which have generally outperformed.\nIn June, L.A. rents were still below pre-COVID levels, but as of September, they are now 6.8% above.\nWhile Orange County, San Diego and Ventura have achieved rents between 17% to 30% above pre-COVID levels.\nJob growth in Southern California continues to progress well, up 5.9% in September as the region's economy continues to reopen and recover.\nWith the exception of the Downtown L.A. area where concessions averaged one week in September, the rest of our Southern California market has demonstrated solid fundamentals with no concessions recognized in September.\nWe expect Southern California strong rent growth to continue in 2022, led by Los Angeles, which has just begun to recover the jobs lost during the COVID recession.\nApartment supply in the region is forecasted to increase next year compared to this year and could present pockets of interim softness counterbalanced by a continued favorable job to supply ratio across the region.\nAs you can see on our S-17 market rent growth for Southern California of 7.1%, we anticipate this region to perform at a comparable level as Seattle.\nWith this backdrop of stable occupancy amid a favorable supply demand relationship, our portfolio is well positioned for the continued growth.\nI'll start with a few comments on our third quarter results, discuss changes to our full year guidance, followed by an update on investments and the balance sheet.\nI'm pleased to report core FFO for the third quarter exceeded the midpoint of our guidance range by $0.08 per share.\nThe favorable outcome was due to stronger operating results at both our consolidated and co-investment properties, higher commercial income and lower G&A expense.\nDuring the quarter, we saw an improvement in our delinquency rate, which declined to 1.4% of scheduled rent on a cash basis compared to 2.6% in the second quarter.\nThe decline is attributable to an increase in income from the Federal tenant relief programs that were established to repay landlords for past due rents.\nYear-to-date through September, we have received $11.6 million from the various tenant relief programs, of which $9.5 million was received in the third quarter.\nGiven the increased pace of reimbursement, we began to reduce our net accounts receivable balance in order to maintain our conservative approach to delinquencies and collections.\nAs a result of the strong third quarter results, we are raising the full year midpoint for same-property revenues by 20 basis points to minus 1.2%.\nAs should be noted, this was the prior high end of our range.\nThere are two factors I want to highlight as it relates to our fourth quarter guidance.\nFirst, as Angela discussed, we are seeing strong rent growth in our markets.\nWhile there will be a small benefit to the fourth quarter, the vast majority of the benefit from higher rent growth won't be felt until 2022 when we have the opportunity to turn more leases.\nSecond, our fourth quarter guidance assumes we continue to receive additional government reimbursements for past due rents and contemplates a continued reduction in our net accounts receivable balance.\nThus, we expect our reported delinquencies as a percent of scheduled rent to be above our cash delinquencies, which is consistent with the third quarter reported results.\nAs it relates to full year core FFO, we are raising our midpoint by $0.11 per share to $12.44.\nThis reflects the better-than-expected third quarter results and changes to our full year outlook.\nYear-to-date, we have raised core FFO by $0.28 or 2.3% at the midpoint.\nTurning to the investment markets.\nDuring the quarter, we raised a new institutional joint venture to fund acquisitions as we believe this is the most attractive source of capital today to maximize shareholder value.\nThe new venture will have approximately $660 million of buying power, a portion of which is expected to be invested by year-end.\nAs I discussed on our last call, we are seeing an elevated level of early redemptions of our preferred equity investments due to strong demand for West Coast apartments and inexpensive debt financing, which is leading to sales and recapitalization.\nFor the year, we expect redemptions to be around $290 million.\nRoughly 40% of these redemptions are expected to occur in the fourth quarter.\nGiven the current environment, we could see continued elevated levels of early redemptions in 2022.\nIn terms of new preferred equity and structured finance commitment, we are on track to achieve our 2021 objectives as outlined at the start of the year.\nYear-to-date, we have closed on approximately $110 million of new commitments.\nAs a reminder, it typically takes three to six months post closing to fund our commitments given they tend to be tied to development projects.\nMoving to the balance sheet.\nAs we expected, we are starting to see an improvement in our financial metrics, driven by a recovery in our operating results.\nIn the third quarter, our net debt-to-EBITDA ratio declined from 6.6 times last quarter to 6.4 times.\nWe believe this ratio will continue to decline through growth in EBITDA over the next several quarters.\nWith limited near-term debt maturities and ample liquidity, we remain in a strong financial position.\n",
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"content": "q3 core ffo per share $3.12.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Jeff Kotkin, Eversource Energy's Vice President, Investor Relations.\nSpeaking today will be Joe Nolan, our new President and Chief Executive Officer; and Phil Lembo, our Executive Vice President and CFO.\nAlso joining us today are John Moreira, our Treasurer and Senior VP for Finance and Regulatory; and Jay Buth, our VP and Controller.\nWe hope that all on the phone remain healthy and that your families are safe and well.\nI'm looking forward to meeting many more of you over the coming years and sharing my optimism and enthusiasm for Eversource's future and excellent investment thesis.\nI'm grateful to the Eversource Board of Trustees and to Jim for allowing me to lead an incredibly dedicated and high-performing organization.\nIn approving these Executive level changes, the Eversource Board is signaling its confidence in our long-term strategy that focuses on our core regulated business with an exciting investment in offshore wind.\nWe are in a world where customer service, safety, and reliability have never been more important.\nWe will never forget that we would not be in the business without our 4.3 million customers; they are our top priority.\nCustomers pay the bills and they deserve the reliable and safe utility service that we must provide.\nOver the coming decades the tens of billions of dollars we will invest in our energy and water delivery systems will be critical in helping New England prepare for a clean energy future, and we expect to be a central catalyst to that clean energy transition.\nBut first, I need to address our Company's relationship with Connecticut.\nWe have thousands of employees in Connecticut, who work hard each day to provide our 1.7 million natural gas, water, and electric customers with the most reliable and responsive service possible.\nDuring emergency situations, which we have had far too often over the past year, due to the historic storm levels, they are working up to 16 hours a day for as many days as it takes to ensure that our customers have their service restored promptly and safely, even in a pandemic.\nSo I cannot tell you how painful it was for me to read certain elements of the Tropical Storm Isaias decision that was released on April 28th.\nIt did not reflect the hard work of our dedicated employees in a company I've been chosen to lead.\nOur customers, PURA, and our company all want the same thing, great service each and every day of the year.\nAnd, when there is a strong event power restoration as safely and quickly as possible.\nThe women and men of Eversource work hard each and every day to meet these expectations.\nThe PURA auto [Phonetic] on storm response clearly identify the areas for improvement.\nWe know we have to work to not only our response plan but also on our relationship with PURA.\nThis was apparent from the April 28 decision in a subsequent notice of violation.\nI can assure you that we hear this loud and clear and already doing all we can to improve on both accounts.\nTurning to our clean energy initiatives.\nYou are probably aware of the climate legislation that Massachusetts Governor Baker signed into law earlier this spring.\nAmong many elements, the law will allow each of the state's utilities to build up to 200 -- 280 megawatts of solar generation, NSTAR Electric will be able to increase its level of solar generation in rate base from 70 megawatts to 350 megawatts.\nAs Phil mentioned during our year-end earnings call, we have budgeted approximately $500 million for this initiative from 2022 to 2025.\nThe other item with a direct impact on us is a 2,400 megawatts expansion of Massachusetts offshore wind authorization from 3,200 megawatts to 5,600 megawatts.\nThis expansion will help me [Phonetic] to stay at the forefront of offshore wind development in the United States.\nAs you can see on Slide 2, there are now more than 10,000 megawatts of unawarded offshore wind authorizations in Southern New England and New York, with Massachusetts set to award up to 1,600 megawatts later this year.\nIn fact, Massachusetts RFP was just issued on Friday of last week.\nOur offshore wind partnership with Orsted is very near and dear to my heart.\nSince I'm always seeing that relationship and worked closely with our partner in recent years, it is an important element of our clean energy growth strategy.\nAnd we have had a number of positive offshore wind developments already this year.\nStarting with Slide 3 in early January, the Bureau of Ocean Management or BOEM released its draft environmental impact statement on South Fork project.\nComments received by late February, and we expect to see a final EIS way this summer.\nBOEM is scheduled to rule on our final federal permits for that project in January of 2022.\nAssuming that the January data is met, we expect to begin construction early next year and complete the project in late 2023.\nAdditionally, in late March, The New York Public Service Commission approved the necessary New York state sighting permit for the project, while the local town and trustees of East Hampton approved the local real estate rights required for the project.\nTurning to Revolution Wind.\nLate last month BOEM released a schedule for reviewing the 704 megawatt project.\nThe schedule calls for a final environmental impact statement to be issued in March of 2023 and for a final decision on construction and operating plan by the end of July 2023.\nThe release of that schedule represents a significant step forward with this project.\nRevolution Wind and South Fork are two of only three projects in the Northeast, that have achieved that milestone.\nOver the coming months, we and Orsted will be reviewing the BOEM and the state of Rhode Island permitting process to develop a projection for the Revolution Wind construction schedule.\nFinally, we expect to receive BOEM review schedule for our 924 megawatt Sunrise Wind project later this year.\nWe continue to make significant progress in preparing for the commencement of construction.\nOver the past couple of months, we have announced agreements with two critical ports that will serve as staging grounds for construction.\nNew London, Connecticut will serve as a hub for turbine construction and Providence, Rhode Island will be the center for foundation construction.\nEnormous economic benefits will accrue to these communities, as a result of their role in our construction activities, including hundreds of direct jobs.\nWe are also very encouraged by the extremely positive signs we see from Washington.\nPresident Biden has underscored his support for offshore wind construction along the Atlantic seaboard and has marshaled multiple members of his cabinet to support it.\nThe goal was to have about 30,000 megawatts of offshore wind turbines operating in the U.S. by 2030.\nWe expect to be a significant contributor to that output through our partnership with Orsted.\nAlready more than 1,750 megawatts are under contract to serve load in Connecticut, New York, and Rhode Islands.\nAgain, I look forward to speaking with many of you at the AGA Virtual Conference later this month.\nNow, I will turn over the call to Phil.\nSo I'll start with Slide number 4 and noting that earnings were $1.06 per share in the first quarter, compared with earnings of $1.01 per share in the first quarter of 2020.\nResults for both years included after-tax costs associated with our recent acquisition of the assets of Columbia Gas, Columbia Gas of Massachusetts and that's $0.02 per share this year and $0.01 per share in 2020.\nResults for our Electric Distribution and Natural Gas Distribution segment showed the most significant changes year-to-year.\nElectric Distribution earned $0.27 per share in the first quarter of this year, compared with earnings of $0.39 per share in the first quarter of 2020.\nLower results were driven by a couple of principal factors.\nThe first is that we recorded a charge of $30 million or $0.07 per share, primarily to reflect customer credits of $28.4 million and an additional penalty of $1.6 million to be paid to the state of Connecticut.\nThese credits relate to a Notice of Violation that Connecticut regulators announced last week, as a result of our performance in restoring power following the catastrophic impact of Tropical Storm Isaias last August.\nThe docket established by PURA to review the penalty is scheduled to run through mid-July of this year.\nAdditionally, Electric Distribution results were negatively affected by approximately $20 million of higher storm-related expenses in the first quarter of 2021 and that's compared to a pretty quiet and warm first quarter in 2020.\nAnd in fact, in this quarter, we experienced 31 separate storm events across our three states versus fairly limited activity in Q1 of 2020.\nSo, by contrast, our Natural Gas Distribution segment showed a sharp increase in earnings because it's now about 50% larger than it was a year ago.\nIt earned $0.43 per share in the first quarter of 2021 compared with earnings of $0.26 per share in the first quarter of 2020.\nImproved results were due primarily to the addition of Eversource Gas of Massachusetts, which earned $0.14 per share in the quarter.\nIn addition, we had higher revenues at NSTAR Gas and Yankee Gas and these were partially offset by higher O&M and depreciation expense.\nI should note that the transition process for Eversource Gas of Massachusetts continues to progress extremely well.\nAs we continue to migrate off of NiSource business systems and onto Eversource platforms, reducing costs and improving service.\nTo date, more than 80% of the business processes have been transferred to Eversource from NiSource's, great progress has been made.\nEversource ownership of the distribution system is being well received by customers, communities, and employees, and we continue to meet or exceed the financial and operational targets we'd set for ourselves.\nOn the Electric Transmission segment, we earned $0.39 per share in the first quarter of 2021, compared with $0.38 per share in the first quarter of 2020.\nImproved results were driven by a higher level of investment in transmission facilities and this was partially offset by dilution of additional shares issued.\nOur Water Distribution segment earned $3.6 million in the first quarter of 2021, compared with earnings of $2.1 million in the first quarter of last year.\nImproved results were due largely to lower interest expense and lower effective tax rate.\nAs you may have noticed, last month Aquarion announced an agreement to purchase a small investor-owned water system that is based in Connecticut, but also serves portions of Massachusetts and New Hampshire.\nNew England service company, as it's called, serves about 10,000 customers in the three states and has rate base of about $25 million.\nThis acquisition is consistent with the growth strategy we've discussed for our water delivery business.\nAnd assuming timely regulatory approvals, we expect to close the transaction by the end of this year and for it to be accretive right away in 2022.\nAs you probably noted in our news release and you can see on Slide 5, we are reaffirming our long-term earnings-per-share growth rate in the upper half of the 5% to 7% range.\nHowever, we modified our current year 2021 earnings guidance to reflect the customer credits I mentioned earlier.\nWe now project earnings per share toward the lower end of the $3.81 to $3.93 range and this includes the $0.07 per share impact of the credits.\nOn the regulatory side.\nWhile our primary operating companies don't have any base rate reviews pending, we have several regulatory dockets open in Connecticut and I'll summarize the status of a few of them.\nIn addition to the penalty I described previously, PURA also identified a 90 basis point reduction in our authorized distribution ROE.\nThis is likely to be addressed in the current CL&P interim rate decreased proceeding.\nGiven the revised schedule the PURA released last week, we believe any ROE reduction would take -- would not take place or take effect until October 1st of this year.\nTo help you size that impact currently, CL&P's authorized ROE is 9.25% and we have approximately $5 billion of rate base at CL&P.\nAlso, on April 28th, PURA finalized an interim decision on the recovery of certain tracked cost by CL&P.\nThis decision would result in a number of changes to those track cost that would be implemented on June 1st, with other modifications deferred until October 1st.\nThe interim decision implemented a number of positive modifications to an early draft and we appreciate PURA making those decisions -- making those changes in its decision.\nPURA also continues to review several other dockets, including potential for grid modernization initiatives, including AMI electric vehicle programs and storage.\nAnd the status of the major open PURA docket is listed in an appendix to our slides.\nTurning from Connecticut to Washington.\nWe were disappointed last month in the developments around the ongoing notice of proposed rate making concerning incentives that FERC is granted for many years to utilities that participate in regional transmission organizations or RTOs.\nFERC will be taking comments and replies on the proposed changes over the next several weeks before deciding on a final order.\nI would expect that the New England transmission owners and others will file comments opposing the change, which some see as being inconsistent with the Energy Policy Act of 2005 and with President Biden's focus on building out the nation's electrical infrastructure to bring more clean-energy resources to market.\nAs a helpful rule from a 10 basis point reduction in our transmission ROE effects consolidated earnings by about $0.01 per share.\nIn terms of financings, we completed $450 million of debt issuances so far this year, primarily to pay off maturities at Eversource parent and at the Aquarion in Connecticut -- Aquarion company in Connecticut.\nWe've not issued any additional equity this year other than through our ongoing dividend reinvestment and employee incentive programs.\nHowever, as you know and we've stated in the past, we continue to expect to issue approximately $700 million of new equity through some sort of after market program and that would occur at various points in time over our forecast period.\nIn terms of our operations, we've gotten off to a very strong start this year.\nElectric reliability continues to be in the top quartile of the industry versus our peers.\nThrough March, our above-average safety record improved even further with fewer employee injuries than we experienced in the first quarter of 2020.\nAll three of our natural gas utilities are outperforming on their emergency response requirements and Aquarion's water quality is solidly exceeding its target.\n",
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"content": "compname reports q1 earnings per share of $1.06.\nq1 earnings per share $1.06.\nreaffirmed projected long-term earnings per share growth rate in upper half of range of 5 to 7%.\nestimates it will earn toward lower end of 2021 recurring earnings per share guidance of $3.81 to $3.93 per share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Jeff Kotkin, Eversource Energy's Vice President for Investor Relations.\nThese factors are set forth in the news release issued yesterday.\nAdditionally, our explanation of how and why we use certain non-GAAP measures and how those measures reconciled to GAAP results is contained within our news release and the slides we posted last night and in our most recent 10-K and 10-Q.\nSpeaking today will be Joe Nolan, our President and Chief Executive Officer; and Phil Lembo, our Executive Vice President and Chief Financial Officer.\nAlso joining us today are John Moreira, our Treasurer and Senior Vice President for Finance and Regulatory; and Jay Buth, our Vice President and Controller.\nWe hope that all on the phone are safe and well, and we look forward to seeing many of you in person next week at the EEI conference.\nFirst, I want to discuss last week's Northeast, which impacted approximately 525,000 customers across our service territory.\nOur Eastern Massachusetts customers sustained the greatest damage with more than 450,000 customers impacted.\nThat's over 35% of Eversource's customers in Eastern Massachusetts.\nThis storm was far less damaging in Connecticut, Western Massachusetts and New Hampshire.\nSo as we wrapped up the restoration in those areas, we were able to quickly redeploy resources to the Southeastern Massachusetts, Cape Cod in Martha's Vineyard, areas that took the brunt of the storm.\nOur internal resources were supplemented by hundreds of crews from outside the region, and we were able to essentially complete the work over this past weekend.\nThis experience underscores the benefits of a large T&D organization, one where resources can be shifted based on the greatest need.\nLast year, it was Connecticut.\nLast week, it was Massachusetts.\nNext time it might be in New Hampshire.\nWe have 9,300 dedicated employees, all focused on providing the best possible experience for our customers.\nLessons we learned last year in Connecticut, particularly regarding communication with municipalities have been vigorously applied this year.\nOur customers and community leaders have certainly noticed our enhancements, and we have received many positive comments on our storm response.\nWhen storms have threatened us and recall that we have had glancing blows from three tropical storms this summer in last week's events that I described at the beginning of my comments, I have been at the center of the action from before the storm hits into the lost of our customers has power restored.\nI believe that's critical for us to be out front, visible, transparent and collaborative during these major events, something that has been difficult to do as we all work in a remote pandemic restricted environment for the last 18 months.\nNext, I want to discuss our Connecticut rate settlement.\nIn News reports, Governor Lamont, Attorney General William Tong and state leaders were quoted as saying that the settlement provides customers with some well-deserved relief in the short term, greater local control and oversight and an improved customer experience.\nPhil will discuss settlement specifics in a moment, but we are very grateful to PURA for the opportunity to move forward on a positive note.\nSettling critical regulatory and legal disputes was a necessity to reset our relationship with key Connecticut stakeholders.\nWe all want the state to move ahead on addressing critical energy and climate issues.\nAnd the outstanding disputes have the potential to delay some of this important work.\nSince becoming CEO this past spring, my top priority has been to strengthen our relationship Ins' Connecticut.\nI've met regularly with key state policymakers as well as business leaders and customers, underscoring our commitment to the state with the largest number of Eversource employees live and work.\nThis will continue to be a strong focus for me going forward.\nEversource is fully committed to providing each and every one of our 4.3 million electric, natural gas and water customers across New England with exceptional service.\nWith Connecticut temporary rate docket now behind us, we can move on to other important topics, where progress has been hindered by the drain in time and resources devoted to strong ESA ES and the interim rate reduction, supporting the build-out of electric vehicle infrastructure, incenting the construction of customer-owned energy storage, installing AMI.\nThat is the clean energy future, and we will work together with our customers in policymakers to get there.\nI'm going to cover some very positive developments in recent months concerning our offshore wind partnership with Orsted.\nYou can see the status of our current projects on slide three.\nEach has advanced since our last earnings call.\nTo start, our smaller projects, South Fork, has received its final environmental impact statement, and we expect a record of decision to be posted later this month.\nBOEM's project website anticipates a decision on South Fork's construction and operating permit or COP in January of 2022, and we anticipate construction beginning early next year.\nWe continue to expect commercial operation of the 12 turbines, 130-megawatt project by the end of 2023.\nIn August, we announced that Kiewit will commence construction of the project substation this month in Texas, and that we expect it to be installed in the summer of 2023.\nMoving to the 704-megawatt Revolution Wind project that will deliver clean power to Connecticut and Rhode Island.\nBOEM continues to anticipate a COP decision in July of 2023, which would support a 2025 in-service date.\nState siting hearings have commenced.\nFinally, our largest project, Sunrise Wind, which will supply 924 megawatts to New York.\nWe are looking for federal agencies to complete their final reviews in late 2023, a schedule that would support a late 2025 in-service date.\nLast week, we announced that Sunrise will be the first offshore wind project in the United States that will utilize high-voltage direct current technology.\nHVDC offers advantages over AC technology when used over long distances.\nIn Sunrise, we'll have an approximately 100-mile submarine transmission cable from offshore energy production area to the grid connection in Brookhaven, Long island, New York.\nWe continue to project mid-teens equity returns for these three projects.\nThe Biden administration continues to show significant support for offshore wind in both words and actions, targeting 30,000 megawatts of offshore turbines by 2030.\nWe view our partnerships to ocean tracks off of Massachusetts as the best offshore wind sites on the Atlantic seaboard.\nOur leases are in close proximity to both the New England and New York markets.\nThey enjoy strong offshore winds, particularly in the winter, and they have modest ocean depths.\nThey can hold at least 4,000 megawatts of offshore wind turbines, far more than the approximately 760 megawatts we currently have under contract.\nWe continue to exercise strong fiscal discipline in using the remaining offshore acreage that we have leased from the federal government.\nWe did not bid into Massachusetts September RFP for up to 1,600 megawatts of offshore wind.\nCurrent Massachusetts bidding rules discourage imaginative bid packages, Governor Baker and some Massachusetts policymakers are now recognizing that Massachusetts is not benefiting from the same level of economic development as states that place greater emphasis on infrastructure and supply chain development.\nAs such, the governor recently filed legislation that would eliminate the state's current price cap.\nIn Rhode Island, we are constructing a service vessel in the state.\nIn Connecticut, we are partnering with the state on more than $200 million upgrade of the New London State Pier.\nThe Pier will become the premier site in the entire Northeast for staging offshore wind development.\nOnshore construction is underway, which you can see from either I-95 or Amtrak's nearby Boston to New York line.\nIn New York, I joined members of the Governor Hochul's administration last month and announcing the largest single offshore wind supply chain contract award in New York to support the Sunrise project.\nThe local company, Riggs Distler, will construct advanced foundation components at the port on the Hudson near Albany.\nIt is just the latest commitment we have made to New York, which also includes basing an offshore wind maintenance hub in Port Jefferson.\nWe have an excellent relationship with New York policymakers, and that is where most of our currently contracted offshore wind capacity is headed.\nWe look forward to bidding into future RFPs, with our strong mix of sites, skill sets, discipline bidding strategies and offsets vast offshore wind experience will make us a formidable contender in any competition that takes a broad look at the benefits of shore winds.\nI'll start with our results for the quarter slide four.\nOur GAAP earnings were $0.82 per share for the quarter, including the $0.19 charge associated with the Connecticut electric rate settlement and the $0.01 charge relating to our integration of Eversource gas of Massachusetts.\nOverall, we experienced improved operating results at the electric transmission and distribution segments and lower results at the natural gas and water segments as well as the parents and other.\nOur electric transmission business earned $0.40 per share in the third quarter of 2021 compared with earnings of $0.36 in the third quarter of last year, reflecting a higher level of necessary investment in our transmission facilities.\nOur electric distribution business, excluding charges related to the Connecticut rate settlement, earned $0.62 per share in the third quarter of 2021 compared with earnings of $0.60 in the third quarter of 2020.\nHigher distribution revenues were partially offset by higher O&M, depreciation, interest and property taxes.\nStorm-related expenses remain a headwind for us, costing us $0.01 a share in the third quarter of 2021 compared to the same period in 2020 and a total of $0.05 a share more in 2021 than last year on a year-to-date basis.\nOur natural gas distribution business lost $0.06 per share in the third quarter of 2021 compared with a loss of $0.04 in the third quarter of 2020.\nGiven the seasonal nature of customer usage, natural gas utilities tend to record losses over the summer months, our natural gas segment now -- our natural gas segment loss is now about 50% larger as a result of the acquisition of Columbia Gas of Massachusetts assets back in last October.\nAnd as you recall, we now refer to that franchises as Eversource Gas of Massachusetts.\nSo Eversource Gas of Massachusetts lost about $0.03 per share in the quarter.\nIt had no comparable amount in the third quarter of 2020.\nI think it's important to point out here that given this is the first full year for our Eversource Gas of Massachusetts or EGMA franchise, modeling its quarterly earnings contribution has varied widely across street estimates, at least the ones that I've seen.\nJust to some investors underestimated the $0.14 per share positive contribution from EGMA in the first quarter.\nI believe there may have been some underestimate of EGMA losses in the third quarter.\nAs I said, EGMA lost $0.03 in the quarter, and it was not part of the Eversource family in the third quarter of 2020.\nI'd say going forward with a year's track record behind us, I'm sure that the estimates will better reflect the earnings pattern we have for that franchise going forward.\nOur water distribution business, Aquarion, earned $0.05 per share in the third quarter of 2021 compared with earnings of $0.07 in the third quarter of 2020.\nThe lower results were due primarily to the absence of the Hingham, Massachusetts water system that we sold at the end of July of 2020.\nThe $17.5 million that we earned at our water segment in the third quarter of 2021 is more on -- a more normalized level for that segment.\nOur parent and other earned $0.01 per share in the third quarter of 2021 compared with earnings of $0.03 in the third quarter of 2020.\nLower earnings were primarily due to a higher effective tax rate.\nOur consolidated rate was 24.8% in the third quarter of 2021 compared with 23.7% in the third quarter of 2020.\nTurning to slide five.\nYou can see that we have reiterated the $3.81 to $3.93 earnings per share guidance that we issued in February.\nThat range excludes the $0.25 per share of charges related to our Connecticut settlement and storm-related bill credits that we recognized in the first quarter of this year as well as the transition costs related to the integration of the former Columbia Gas of Massachusetts assets into the Eversource system.\nAlso, we project long-term earnings per share growth in the upper half of the range of 5% to 7% through 2025.\nExcluding the impact of the positive impact that we expect from our offshore wind projects.\nThat growth is largely driven by our $17 billion five-year capital program and continued strong operational effectiveness throughout the business.\nFor reference, our five-year capital forecast is shown in the appendix.\nAnd through September 30, our capital expenditures totaled $2.3 billion.\nFrom the financial results, I'll turn to our recently approved Connecticut settlement on slide number six.\nEarlier, Joe provided you with an overview.\nI'll just add a few additional details.\nThe settlement calls for $65 million in rate credits to CL&P customers over the course of December of 2021 in January of 2022.\nAnd that's about -- in total, $35 per customer over the two months for the typical residential customer.\nIt provides another $10 million of shareholder pay benefits to customers who are most in need of help with their energy bills.\nFurther, as part of the settlement, we will withdraw our superior court appeal of the $28.4 million total storm-related credits that customers first saw in their bills in September of 2021.\nSo these customers will continue.\nThey'll continue to flow back to customers through August of next year.\nAs prior of the settlement, the 90 basis point indefinite reduction of CL&P's distribution ROE will not be implemented.\nAdditionally, the current 9.25% ROE and capital structure will remain in effect.\nThis will avoid an appeal of the interim rate reduction and will withdraw the pending appeal of the 90 basis point reduction.\nCL&P cannot implement new base distribution rates before January one, 2024.\nPriorities to the settlement agreed that this review satisfies the statutory requirement in Connecticut that all-electric and natural gas distribution company rates be reviewed once every four years.\nThat's to determine whether they're just unreasonable.\nSo as a result, the next statutory mandated review would be in late 2025.\nSince CL&P's last distribution rate case was effective in May of 2018, the actual -- the company's actual ROEs have generally ranged between 8.6% and 9%, with the latest reported quarter at 8.6%.\nThere are some tracking mechanisms that will allow us to recover costs associated with certain new investments over the coming years, such as those to improve reliability or implement grid modernization initiatives, but we will not be able to obtain any additional revenues to offset higher wages, employee benefits costs, property taxes and other inflationary items.\nWe'll continue to provide superior service to our nearly 1.3 million CL&P customers will also be effectively managing our operations.\nIt will certainly be a challenge, but one, I know that our entire CL&P and Eversource team is up to meeting.\nFrom the Connecticut settlement, I'll turn to our various grid mod, AMI, electric vehicle initiatives in Connecticut and Massachusetts.\nOn October 15, CL&P filed a final electric vehicle program designed documents for PURA review and approval, including a proposed budget and program implementation plan for residential managed charging.\nPURA will conduct a review process with a final decision targeted for December the eight.\nThe program is planned to launch January one of 2022, and will support the state's target of having at least 125,000 electric vehicles on the road by the end of 2025.\nIn terms of AMI, in Connecticut, CL&P is preparing to file an updated proposal based on a straw proposal from Pier to have all our customers on AMI by the end of 2025.\nTo date, we'll need to replace more than 800,000 meters over the next -- to do that, we'll have to replace over 800,000 meters over the next several years.\nAltogether, moving CL&P fully to AMI would involve a capital investment of nearly $500 million we estimate in meters and communication related technologies.\nIn Massachusetts on slide eight, as we mentioned on our July earnings call.\nWe've submitted nearly $200 million grid modernization plan to regulators for the 2022 through 2025 period.\nThe vast majority of that investment would be capital.\nWe expect a ruling on the entire program by the second quarter of 2022.\nOur Massachusetts AMI program is now being evaluated by the Massachusetts Department of Public Utilities, with a decision expected in 2022.\nIt would involve about $575 million of capital investments over multi-years from 2022 through 2027.\nAnd like Connecticut, would provide significant customer service, reliability, energy efficiency, grid modernization and demand management improvements.\nAlso in Massachusetts, the DPU is evaluating an extension of our electric vehicle program.\nThe extension would provide investments of nearly $200 million over the next four years, with about $68 million being capital investments.\nWe currently expect a decision on this by mid-2022.\nTurning to slide nine.\nWe've been receiving regular questions over the past couple of months about the impact of higher natural gas prices on this winter's electric and natural gas supplies and prices.\nSo I'll first start with supplies.\nFirst, what do we have to supply?\nOur three natural gas distribution companies are required to have access to enough natural gas to be able to serve our firm customers on the coldest day in the last 30-year period.\nSo we accomplished that through a combination of firm capacity contracts across multiple interstate pipeline systems and through storage, both inside and outside of our service territory.\nOur regulators in Connecticut and Massachusetts have had the foresight to allow us to maintain significant in region LNG storage in Waterbury, Connecticut.\nAnd Hopkinton and Acushnet, Massachusetts as well as various facilities that we purchased as part of the Columbia gas of Massachusetts transaction.\nAlthough, these facilities provide us with -- altogether, these facilities provide us with storage connected to our distribution system of nearly 6.5 billion cubic feet.\nOur regulators have also permitted us to acquire additional firm delivery capacity that was added to the Algonquin system in recent years through the AIM and Atlantic Bridge expansion projects.\nWe've also acquired additional firm capacity on the Tennessee and Portland pipelines.\nSo from a reliability standpoint and supplies, we consider ourselves very well prepared for the winter.\nIn terms of price, our natural gas sources include a combination of stored gas, where the price has been fixed and pipeline gas from Marcellus Shale basin that is price based on NYMEX related indices.\nBecause our firm pipeline capacity, we are able to purchase at the Marcellus related price, not at the New England Citygate price.\nYou can see on the slide that we have in our deck, that there's significant difference in pricing between the two.\nNonetheless, even the Marcellus price is higher this year.\nAnd as of now, we expect the commodity portion of natural gas bills to be approximately 20% higher than last winter's extremely low levels due to COVID, prices were pretty low last year and well below levels we experienced a decade ago after Hurricane Katrina struck the Gulf of Mexico and Louisiana.\nOverall, including the distribution charge, we expect natural gas heating bills will be up about 15% on average.\nThat's about $30 a month to the average for a typical heating customer compared to last winter.\nAnd that's an average across our three natural gas distribution companies.\nWhile a 15% increase is significant it is far less than the -- more than 30% increase that propane heating customers are facing and really a 60% increase that's out there for home heating oil as the alternatives for customers.\nOf course, a primary determinant of the total bill is usage, right?\nThe autumn has been quite mild here in New England, thus far, and natural gas usage has been particularly low.\nNonetheless, a bitly cold month of December or January could cause natural gas cost to increase.\nRecognizing the stress that this situation could place on customers.\nWe've suggested to our regulators that we spread out the recovery of certain charges in our distribution portion of our bill to moderate the potential bill impacts where possible.\nWe're also taking additional proactive steps and working closely with regulators so that customers understand the current price environment and take actions to address it.\nWe're intensifying our communications to be sure customers understand the bigger picture macro factors affecting natural gas bills.\nAnd we are urging customers to take advantage of our nationally recognized energy efficiency programs and leverage payment options that we have available.\nSo on the electric side, it's a bit different.\nNatural gas power plants are on the margin in New England year-round, really, except for the coldest days of the year.\nSo rising natural gas prices are significantly affecting power prices.\nBetween 60% and 65% of our electric load is bought by customers directly from third-party suppliers.\nFor the 35% to 40% of our load that continues to buy through our franchises, Connecticut Light & Power, NSTAR Electric and Public Service in New Hampshire, this is mostly residential load and customers will see higher prices, but they are partially protected by the fact that we contract for power in multiple tranches throughout the year.\nSo lower cost tranches from our purchases earlier in 2022 will offset some of the higher priced tranches that we purchased more recently.\nDue to wintertime natural gas constraints in New England, our customers normally see $0.015 to $0.02 per kilowatt hour increase in their retail electric prices in January, an increase that usually reverses as we move into the summer.\nThis January customers in Massachusetts and Connecticut elected to experience an additional $0.02 to $0.03 increase due to higher gas prices driving power production.\nThis would be an additional $20, $25 per month for a typical residential customer compared with last winter.\nOur New Hampshire customers, the rates remain in effect until February, so there's really no impact at this stage for our New Hampshire customers.\nWhile the vast majority of our residential customers do not use electricity for space heating, we recognize that any increase in energy bills add stress to the household budget.\nAnd we've redoubled our efforts again to urge customers to take advantage of the more than $500 million that we have available on energy efficiency initiatives that we provide customers throughout our states each year.\nI should note that similar to natural gas prices, wholesale electric prices were extremely low in 2020.\nIn fact, they were at a 10-year low.\nSo the percentage increase is -- that we're reporting here comes off some very low base numbers from last year.\nAs a reminder, increases and/or decreases in the energy component of our electric bills, our pass-throughs dollar-for-dollar pass-throughs, we earn nothing on providing the procurement service for customers.\n",
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"content": "compname reports q3 earnings per share $0.82.\nq3 earnings per share $0.82.\ntoday reaffirmed its previously disclosed 2021 earnings per share (eps) projection of $3.81 to $3.93 per share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As we have done on our past calls, we'll be taking questions at the end of Craig's comments.\nWe will start on page 3 with recent highlights and first I'd just say we had a terrific quarter and we're significantly increasing our full year guidance as you saw.\nOur teams have just done an outstanding job of managing through this dynamic market environment, which is reflected in our strong results.\nQ1 adjusted earnings per share of $1.44 were solid 15% percent increase year-over-year and 18% above the midpoint of our guidance.\nOur Q1 revenues of $4.7 billion were up 0.5% organically, which was well above the high end of our guidance range of down 3%.\nThis outperformance was driven primarily by the two electrical segments as well as our vehicle business.\nWe also posted a Q1 record for segment margins of 17.7%.\nAnd looking at our incrementals, we generated $73 million of higher profits despite having $97 million of lower revenues.\nThis was the result of we'd say strong execution, ongoing improvements in the cost structure from the multi-year restructuring program that we announced in the second quarter of 2020 as well as closely managing price and inflation in the quarter.\nOur cash flow was also very strong.\nOur adjusted operating cash flow increased by 42% and our adjusted free cash flow increased by 62%.\nAnd we had another successful quarter of M&A, closing three deals.\nWe're also making good progress toward the closure of the previously announced acquisition of Cobham Mission Systems as well as the divestiture of Hydraulics.\nAnd finally, we recently announced the agreement to acquire 50% of Jiangsu YiNeng meaning electric's busway business in China, an important part of our growth strategy for the Asia Pacific region.\nHaving been quite busy on the M&A front, we thought it'd be helpful to provide a summary of these three recent deals.\nWe covered Tripp Lite and Cobham Mission Systems acquisitions in some depth on the investor meetings, but each of these three deals here certainly advanced our strategic growth objectives and our electrical business.\nFirst, Green Motion, based in Switzerland, it expands our capabilities in the electrical charging market where we expect to see significant growth over the next decade linked to energy transition.\nTheir proven charter designs and advanced power management capabilities, billing software are valuable additions to our existing energy storage and power distribution offerings that support our view of everything as a grid.\nWe also closed our previously announced investment in HuanYu.\nHuanYu is based in China and provides a strong portfolio of products that will open up significant growth opportunities in our business throughout Asia Pacific.\nThey make cost-effective circuit breakers and contactors and that give us access to Tier 2 and Tier 3 markets in Asia Pacific.\nAnd finally, last week we were pleased to announce the agreement to acquire 50% of Jiangsu YiNeng electric busway business in China.\nYiNeng's strong busway capabilities in China combined with YiNeng's broad portfolio of products will really position us well to participate in the high growth data center, industrial and high-end commercial segments and allowing us to pull through related electrical products.\nThe HuanYu and YiNeng transactions, I'd also add, significantly expand our addressable market in China and in Asia Pacific, certainly allowing us to accelerate our growth rate in the region.\nMoving to page 5, we summarize our Q1 financial results and I'll just note a couple of points here.\nFirst, acquisitions increased sales by 1% but this was more than offset by the divestiture of Lighting which reduced sales by 5.5%.\nYou'll recall that we sold the Lighting business in March of 2020.\nSecond, segment margins of $831 million were 10% above prior year and this is despite a 2% decline in total revenue.\nThis is largely the result that I'd say of solid execution, restructuring savings and really our ability to effectively manage price and inflation during the quarter.\nWe expect the inflation impact to worsen certainly in Q2, but we will more than fully offset this for the full year.\nAnd lastly, our adjusted earnings of 577 million, up 12% and when combined with our lower share count, we delivered a 15% increase in our adjusted EPS.\nTurning to page 6, you see the results for our Electrical Americas segment.\nRevenues were up 2% organically driven by strength in data centers, residential and utility markets which offset weakness in industrial and commercial markets.\nThe acquisition of Tripp Lite and PDI added 2% of revenues while the divestiture of Lighting reduced revenues by 14%.\nOperating margins, as you can see, increased sharply, up 330 basis points to 20.5%, a quarterly record.\nAnd as you can see, profits were $24 million higher on significantly lower revenues.\nThese results once again were driven by good execution, cost savings and really favorable mix due to the divestiture of Lighting.\nWe're also pleased with the 11% orders growth in the quarter.\nThis was driven by once again strength in data center and residential markets.\nOur backlog was actually up 23% versus last year and due to ongoing strength in once again data center and residential markets.\nWe were also encouraged to see some very large orders in select commercial markets, perhaps a sign here that these markets too are beginning to turn positive.\nAnd while it's difficult to judge, we do think the order strength could have been due to some concern about some of the supply chain shortages that you certainly have been reading about.\nNext on page 7, we show the results for our Electrical Global segment.\nWe posted a 5% organic growth with 5% favorable impact from currency largely due to the weaker dollar.\nOrganic revenue growth was driven by strength in data centers, residential and utility markets, you can see the pattern here.\nWe also delivered 250 basis point increase in operating margins and posted a new Q1 record of 17%.\nOur incremental margins in the segment were also strong, more than 40% and were also driven by good cost control measures, saving from actions taken from our multi-year restructuring program.\nOrders grew 7% in the quarter, and like sales, the primary contributors to the growth came from data centers, residential and utility markets.\nAnd I say dragged down by the earlier COVID-related declines, orders declined 12% -- 5% on a rolling 12 month basis.\nAnd lastly here, our backlog was up 17% versus last year, driven by the same three end markets.\nMoving to page 8, we summarize our Hydraulics segment.\nRevenues increased 11% with strong 9% organic growth and 2% positive currency impact.\nOperating margin stepped up significantly to 15%, a 420 basis point improvement over last year.\nAnd our Q1 orders were also very strong, up 53% driven primarily by strength in mobile equipment markets.\nAs we anticipated, Danfoss did receive conditional regulatory approval from the EU to acquired the Hydraulics business, which is an important step in the process and this sale is still expected to close in the second quarter here.\nTurning to page 9, we have the financial results for our Aerospace segment.\nRevenues were down 24%, including 26% organic decline driven by the continued downturn in commercial aviation.\nCurrency, as you can see, added 2% to revenues.\nAnd as you can also see, operating margins were down 310 basis points to 18.5%, down, but still at very attractive levels overall.\nOur team, I give them a lot of credit, they moved quickly to flex the business and we're able to really deliver better than normal decrementals margins of approximately 30%.\nOrders were down 36% on a rolling 12-month basis, once again due to the ongoing downturn in commercial aerospace markets.\nHowever, I would add on a sequential basis, we are starting to see some improvement as orders were up 14% from Q4.\nAnd lastly, our previously announced acquisition of Cobham Mission Systems remains on track and we expect the transaction to close at the beginning of Q4 2021, this year.\nNext on page 10, we show the results of our Vehicle segment.\nAs you can see, revenues increased 9% and were much stronger than anticipated.\nThe strongest growth came from global commercial vehicle markets and from the Chinese light vehicle market.\nJust is a point of reference here, NAFTA Class 8 production was up some 12%.\nOperating margins also improved significantly here to 17.3%, another quarterly record and a 380 basis point increase with incremental margins of nearly 60%.\nThe strong margin performance was driven certainly by increased volume and also from savings from the multi-year restructuring program that we've undertaken.\nAnd despite volumes that were still below pre-pandemic levels, this business is approaching our target segment margins of 18%.\nSo making very strong progress in our Vehicle segment.\nAnd one additional noteworthy development in this segment was the introduction of the new automated transmissions for the heavy-duty truck market in China through our Eaton-Cummins JV.\nThis product, I'd say, is already getting great traction and seeing strong growth in the market.\nTurning to page 11, we summarize our eMobility segment.\nHere, revenues increased 15%, 13% organic and 2% from currency.\nWe experienced solid growth in global vehicle markets, which was driven here both by high and low voltage products.\nOperating margins were a negative 8.4% as we continued to invest heavily in R&D.\nAnd as I've reported in the past, we continue to manage I'd say a really robust pipeline of opportunities.\nOf note, in Q1 we secured a multi-year agreement with a leading global automotive customer to buy our next-generation brake -- circuit protection technology for battery electric vehicles.\nThis award represents $33 million in material revenue sales and we hope to be awarded additional vehicle platforms using the same technology.\nThis win, I would say, it really does highlight the strength of our electrical pedigree and now we're able to leverage the strength to grow in the eMobility market.\nAnd on slide 12, we've updated our organic revenue guidance for the year.\nAs you can see, we're significantly increasing our organic revenue growth for the year with our strong Q1 results.\nWe're optimistic about the remainder of 2021.\nOur strong order book and growing backlog persist that markets and market demand is really increasing and improving across most of our end markets.\nWe now expect overall Eaton organic growth to be up 7% to 9% and this is up from 4% to 6% previously.\nAnd while we're experiencing some supply chain issues, we have confidence in our team's ability to manage through these temporary challenges.\nAs you can see, we've kept our forecast for Aerospace unchanged.\nVehicle has increased by 600 basis points.\nElectrical Global has increased by 400 basis points and all other segments have increased by 300 basis points.\nEncouragingly, I'd say here about our Electrical segment, we're seeing higher than expected demand across all of our markets with the exception of utility and that market remains in line with our original outlook which was for mid single-digit growth.\nSo really strong performance in the Electrical segment.\nMoving to page 13, we show our updated segment margin guidance for the year where we're also significantly increasing our guidance.\nFor Eaton overall, we're increasing segment margins by 50 basis points at the midpoint with a range of 17.8% to 18.3% and we've raised our margin guidance in each of our segments with the exception of Aerospace and eMobility which are unchanged.\nCompared with our original guidance, we expect to deliver better incremental margins for sure on this higher volume.\nI'd also note that for the full year, we continue to expect net price versus inflation to be neutral.\nAnd on page 14, we have the balance of our 2021 guidance.\nWe're raising our full year adjusted earnings per share by $0.50 to $5.90 to $6.30, a midpoint of $6.10 and this is a 9% increase over our prior guidance and a 24% increase over 2020.\nWith our recent M&A activities, we now expect a net 4% headwind from acquisitions and divestitures, down from our prior outlook of 8%.\nI'd say it's also worth noting here that our segment margin guidance of 18.1% to 18.5% is 190 basis point increase at the midpoint over 2020 and will be an all-time record.\nIt's also, just as a point of reference, above our pre-pandemic margins of 17.6% which we posted in 2019, which was also an all-time record.\nSo we're off to a strong start and I'd say well on our way to achieve our longer-term target of getting to 21% segment margins.\nThe remaining components of our full-year 2021 guidance remain unchanged.\nAnd lastly for Q2, our guidance is as follows.\nWe expect to be between $1.45 and $1.55 on earnings for organic revenue to be up 24% to 28% and for segment margins to come in between 17.5% and 17.9%.\nAnd if I could, just finally, on page 15, I'll wrap up with a kind of high-level summary of why we think Eaton remains an attractive long-term investment and I begin with first, our intelligent power management strategy really does position us to capitalize on these key secular growth trends that we've talked about for the last couple of years, electrification, energy transition and digitalization.\nAnd we're gaining traction here in all of these areas with a number of new wins.\nOur technology solutions, including our Brightlayer platform are being well received by customers.\nAs a result, we continue to expect higher than historical organic growth rate for the company over the next five years.\nWe're reaffirming our view that 4% to 6% outlook looks very much in hand.\nThis accelerated growth plus our, what I call, proven ability to deliver margin expansion will allow us to deliver on average 11% to 13% earnings per share growth per year over the next five years.\nWe will also continue to deliver very strong free cash flow, which provides the optionality to invest in organic growth, to add strategic acquisitions and to return cash to shareholders.\nAnd our commitment to ESG remains strong.\nWe will continue to develop sustainable solutions for our customers, for our own businesses and then certainly for the environment that we all share.\nGiven our time constraint at only an hour today, really appreciate if you guys can limit your opportunity to just one question and a follow-up.\n",
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"content": "eaton corp q1 operating profit rose 8% to $332 mln.\nq1 operating profit rose 8 percent to 332 million usd.\nquarterly adjusted earnings per share $1.44.\ncompname says raising adjusted earnings per share guidance for 2021 to $6.10 at midpoint, up 24 percent over 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As we have done on our past calls, we'll be taking questions at end of Craig's comments.\nThere are also outlined in our related 8-K filings.\nWe will start on Page 3, with recent highlights from the second quarter and as you can imagine, I'm extraordinarily pleased with the way our teams have executed in the midst of this pandemic in the economic downturn.\nWe've done a good job of keeping our employees safe, have delivered for our customers and certainly generated exceptional cash flow, all while flexing our costs at record rates.\nOur results, while also of last year, certainly, in absolute terms, were better than expectations and we continue to make an important investments for the future.\nQ2 earnings on a per share basis were $0.13 on a GAAP basis and $0.70 on adjusted basis, which excludes $0.20 of charges related to acquisitions and divestitures and $0.37 related to the multi-year restructuring program that we just announced.\nOur Q2 revenues were $3.9 billion, down 22% organically.\nAs we noted on our Q1 earnings call, April was down approximately 30%, this was followed by slightly better volumes in May and then relatively strong finish in June, which was down, let's call it low double-digits.\nAnd in fact, I mean, this has a point of maybe amplification, our Electrical business in the Americas, in Europe and Asia, all posted low-single digit organic growth in revenue in the month of June.\nAnd so once again, our Electrical businesses are remaining very resilient in the face of this pandemic an economic downturn.\nSegment margins were 14.7%, down 110 basis points from Q1 and our detrimental margins were at 25%, 5 points better than our guidance of 30%.\nOnce again a good indication of how well our teams have done in controlling the elements that are really within our control.\nHowever, recognizing that some of our businesses could be looking at a slow and certainly what you could call it, prolong recovery, we announced a multi-year restructuring program of $280 million, including $187 million charge in Q2.\nThese actions will reduce structural cost for sure and are targeted in those end markets, including commercial aerospace, oil and gas, NAFTA Class 8 truck and North America and European light vehicle markets, where these markets have been certainly highly impacted.\nThe other clear highlight for the quarter was our operating cash flow, which was $757 million and free cash flow of $667 million.\nBoth very strong results and which gives us the ability to really reaffirm our free cash flow guidance of $2.3 billion to $2.7 billion and a midpoint of $2.5 billion.\nSo teams continue to do great in converting on cash as well.\nFinally, as most of you know, we made an important announcement during the quarter regarding sustainability and our commitment to 2030 sustainability goals.\nI thought it'd be helpful just to put this announcement in the context in order to show you how it fits within the broader strategic framework of the company, which we do on Page 4.\nI think, simply stated at Eaton, sustainability really is at the core of our mission.\nWe talk about our mission being to improve the quality of life in the environment.\nAnd certainly, that means, sustainability.\nIn fact, if you think about all of our value propositions with customers, they're built around creating safe, reliable and efficient solutions, let's call them sustainable solutions and so as we oftentimes say, what's good for the environment is good for Eaton.\nWe believe that meaningful efforts to support the environment are fundamental to how we create value for customers and it certainly plays where we think Eaton should play a leadership role.\nSustainability, as we think about it, really presents growth opportunities to help our customers solve their business goals and to this extent and have been so subjective, we've laid out 10-year plans that include investing $3 billion in R&D to create sustainable products over this period of time.\nThis will also include reducing our emissions from our installed base of products and upstream sources by some 15%.\nJust to maybe give you an example of where we think this really fits with our overall strategy, sustainability really is about capitalizing for Eaton on secular growth trends, around electrification for sure, across all of our businesses and also in energy transition.\nSustainability, I'd tell you is also an important part of how we run the company on a day-to-day basis.\nSince 2015, we reduced our absolute greenhouse gas emissions by some 16% and we're certainly on track to deliver our 2025 targets.\nBy 2030, we now have committed to achieve science-based targets of 50% reduction of greenhouse gas emissions from 2018 levels.\nAnd finally, to achieve these goals, we obviously have to continue to work on building a workforce that's engaged and passionate about making a difference.\nSo this will continue to be a large project for the company overall.\nSo hopefully, that's provided just a little context in terms of why we think sustainability is such an important initiative for Eaton and how we're going to convert on that and turn it into accelerated growth for the company.\nNow turning to Page 5, we summarize our Q2 financial results and I noticed a couple of things on this page.\nFirst, acquisitions increased sales by 2%, this was more than offset by the 8% impact from divestitures and also we had negative currency impact of negative 2%.\nI'd also remind you that we now recognize all charges related to acquisitions, divestitures and restructuring at corporate rather than at the segment level.\nAnd we did it because we would hope would make it easier for you to do your forecast by quarter, by segment without the volatility that comes with these types of one-time charges.\nNext on Page 6, we show our results for Electrical Americas.\nRevenues down 29%, 9% decline organic revenue,19% impact from M&A and this was primarily the divestiture of the Lighting business and a small impact from negative currency as well of 1%.\nOperating margins increased 130 basis points to 20.7% and these margins were certainly favorably impacted by the divestiture of Lighting, but also our teams did a great job of controlling costs to really counter the impact of the economic impact of COVID-19.\nThis combination resulted in a very strong decremental margin performance, up 16%.\nSo this segment continues to prove to be highly resilient when you look at margins, but also when you look at orders and backlog.\nOrders increased 2.1% on a rolling 12-month basis with strength in residential and utility in data centers.\nAnd of note here, our data center orders actually were up some 7% on a rolling 12-month basis.\nAnd lastly, our bookings remain strong.\nThey were up 11% versus last year.\nTurning to Page 7, we have our results for the Electrical Global segment.\nRevenues were down 16% with 14% decline in organic revenues and 2% headwind from currency.\nOperating margins here declined some 160 basis points, but to a very respectable 16% and decremental margins here were also very well managed, coming in at 26%.\nOrders declined 4.6% on a rolling 12-month basis, but with most of the significant declines coming, as you would expect in global oil and gas markets and in industrial markets.\nSo, not an unexpected result with respect to where we saw strength and weakness.\nAnd lastly, our backlog for Electrical Global increased 2% on a year-over-year basis.\nOn Page 8, we summarized our Hydraulics segment.\nFor Q2, revenues were down 32%, with a 30% decline organically and a 2% currency impact.\nOperating margins were 9% and orders for the quarter were down 33.7% year-over-year and this was driven really by weakness in both OEMs and the distributor channel both.\nWe continue to work closely with Danfoss in completing the customary closing conditions and regulatory approvals and I would tell you that Danfoss organization remains excited about owning the business.\nWe do however now expect the transaction to close at the end of Q1 next year.\nThe delay as you can imagine, due to the COVID-19 impact, which has impacted the pace of some of the regulatory approvals that we expect.\nOn Page 9, we summarize results for the Aerospace segment.\nRevenues declined 27% with a negative 35% in organic growth offset by 8% increase from the acquisition of Souriau.\nOperating margins declined to 14.8% and really this is due to lower sales, but also the acquisition of Souriau also had a dilutive impact on margins.\nOrders declined 12.8% on a rolling 12-month basis with particular weakness in the quarter, as you would expect in commercial OEM and aftermarket, it is worth noting, I would tell you though that orders for the military aftermarket were up 13% on a rolling 12-month basis.\nBacklog was down 5% year-over-year overall.\nCertainly, as everyone here understands the commercial aerospace markets are grappling with significant declines in passenger demand and this is impacting our business and certainly impacting both the OEM and the aftermarket.\nNext on Page 10, we summarize the results for the Vehicle segment.\nRevenues declined 59%, 52% of which was organic in addition to the divestiture of the Automotive Fluid Conveyance business which impacted revenues by 4%, we had 3% negative impact of currency.\nThe decrease in organic sales was really driven by I'd say, widespread customer plant shutdowns due to COVID-19, which really resulted in lower Class 8 OEM production as well as continued weakness in light vehicle production.\nJust once again, it's a little bit more color on this one, during Q2, most of light and commercial OEMs had shutdowns at range between six and eight weeks.\nThese shut downs, which really began, let's say in late March, occurred throughout the month of April and extended into mid-May and so many of our customers were shut down for almost half the second quarter.\nBut production is now certainly beginning to come back online.\nGlobal light vehicle market production was down 55% in Q2 and Class 8 OEM build was down from 70% in Q2.\nWe now project NAFTA Class 8 production to be 175,000 units for the year, which is down slightly from our prior forecast 189,000 units.\nBut still down some 49% from 2019.\nThis steep reduction and certainly -- this sudden reduction in OEM production led to operating margins of a negative 6.4%, but I would add, this business has once again done a great job managing decrementals and despite this tremendous reduction in revenue delivered a respectable decremental margin of 33%.\nNot surprisingly, and much needed, we do expect better market conditions in the second half and our business will be well positioned to participate in this recovery.\nMoving to Page 11, we have our eMobility segment.\nRevenues were down 33%, all of which was organic.\nOrganic margins of negative 3.6% -- excuse me, operating margins of negative 3.6% primarily due to lower volumes and a particular weakness in the legacy internal combustion engine platforms.\nAnd once again, the ongoing increase in R&D expenditure.\nWe continue to be enthused by the way, about the long-term potential of the business and and quite frankly, have seen nothing but upward revisions in the expectation for the penetration of electric vehicles.\nAnd so a market that we still think will be very attractive long-term.\nWe're very well positioned once again with the common technology platforms that we're creating, leveraging the strength in our core Electrical business.\nA good example of this idea of everything becoming more Electric is one of the recent wins that we've had with the truck OEM, a $21 million program for export power inverter where major commercial truck customer and so, in almost every aspect of our business there is more electrical content and we're well positioned once again through this particular segment to participate in that growth.\nOverall, we've won programs with a value of approximately $500 million of mature-year revenue.\nOn Page 12, we show the details of our plans to accelerate and I'd say, expand our restructuring actions.\nAnd I say accelerate because for the most part, we're pulling forward a number of the restructuring ideas that we would have done anyway.\nGiven the economic implications of the pandemic, we naturally have a greater sense of urgency and also more capacity to take on these projects.\nWe announced the $280 million multi-year restructuring program, as I noted, designed to eliminate structural costs and we've taken charges of $187 million in Q2 and then we expect to see additional cost of $93 million realized through 2022.\nJust to characterize those additional dollars, we'd expect to deliver over the next three years some $33 million of charges in the second half of this year, $55 million in 2021 and $5 million in 2022.\nWe would expect to realize $200 million of mature-year benefits from these actions once they are fully implemented and we think full year implementation is 2023.\nApproximately two-thirds of these costs are in our Industrial businesses, principally, Vehicle and Aerospace and the remaining one-third is with our Electrical sector, particularly with an emphasis on our oil and gas business that will report through our Electrical Global segment.\nNaturally, we're focused on those businesses serving in the end markets that are more severely impacted by the pandemic.\nAnd then, turning to Page 13, we do our best to provide Q3 outlook on revenues versus last year and while you can imagine that all these markets will be stronger than what we realized in Q2, this is really a year-over-year growth for Q3 versus last year.\nFor Electrical Americas, we expect organic revenues to be between down 2% and up 2%, so essentially flat.\nWith strength in residential, utility, data centers offsetting weakness in industrial markets.\nFor Electrical Global, our current view is organic revenues will decline between 10% and 14% with strength in Asia-Pacific.\nAnd data center markets offset by declines in Europe and once again, in the oil and gas market.\nFor Aerospace, we expect organic revenues will be down between 28% and 32% with continued strength in Military offset by really significant declines in all of the commercial markets.\nAnd Vehicle, we project revenues will decline between 30% and 34%.\nSome markets are still very weak in absolute terms, but these markets will be up significantly from Q2.\nAnd for eMobility, we expect declines of between 13% and 17%, once again pressured from legacy internal combustion engine platforms.\nAnd lastly, for Hydraulics, we think market will be down between 23% and 27%.\nFreight in overall, we're estimating Q3 revenues to be down between 13% and 17%, and so an improvement versus Q2, which was down some 20%, but still on absolute terms, where markets are still in decline.\nMoving to Page 14, here we provide our best look at guidance for Q3 and some commentary on the full year, but for Q3, we expect organic revenues to decline between 13% and 17% and this really does include what we know about July, where we saw low double-digit declines.\nWe've elected not to provide full year revenue guidance given the kind of the ongoing uncertainty around the pandemic and its impact on markets in Q4.\nAs many of you aware, we are still dealing with the pandemic in various regions, the U.S. and around the world, we're still seeing a growth in the number of cases and so we're still living in this period of uncertainty.\nWe do think Q2 will be the trough for organic revenue declines and barring second wave of the pandemic, Q4 should be better than Q3.\nFor Q3 and full year, we expect decremental margins of between 25% and 30% and for Q3, we expect our tax rate on adjusted earnings to be between 15% and 16%.\nWe're maintaining our free -- 2020 free cash flow guidance, the range of $2.3 billion to $2.7 billion and I would note that this range does in fact, include now the impact related to the multi-year restructuring program that we announced, and that was not in our prior guidance.\nAs a point of reference, in the first half, just to give you some comfort around our ability to deliver this number, we generated some 35% of our $2.5 billion midpoint, that's in our free cash flow guidance and this number is very consistent with our performance over the last five years.\nAnd so we do tend to be a bit back half loaded.\nWe're providing new guidance for share buybacks and we're seeing between $1.7 billion and $1.9 billion for the year.\nAnd recall that we repurchase $3 billion of shares in Q1 with the proceeds in the lighting sales.\nWe continued to deliver free strong -- strong free cash flow and we now plan to buyback between $400 million and $600 million of our share is half of the year.\nNumber one, ensuring that we continue to move the company in the direction of becoming what we see as an intelligent power management company, that takes advantage of important secular growth trends and we talked about them being electrification, energy transition, LTE connectivity and blended power.\nSo these trends are continuing and despite whatever temporary hiccups we're experiencing, we think long-term it's the right place to be.\nBy doing so, we're working on creating a company that's going to deliver better secular growth and better growth through various cycles, higher margins and with much better earnings consistency.\nOur long-term goals have not changed, it include 2% to 3% organic growth, 20% segment margins, 8% to 9% earnings per share growth and $3 billion a year of free cash flow, and with our strong cash flow we'll continue to be focused and disciplined in how we deploy it.\nBy investing in organic growth as a top priority, delivering top quartile dividends and ongoing program of share buyback and then actively managing our portfolio, while being a disciplined acquirer.\nSo we continue to remain excited by the Eaton's story, I hope you are as well.\nBefore we start our Q&A of our call today, I do see that we have a number of individuals in the queue with questions, so I appreciate if you can limit your opportunity just to one question and a follow-up.\n",
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"content": "compname says q2 sales fell 30%.\nq2 sales fell 30 percent to 3.9 billion usd.\nq2 earnings per share 0.13 usd.\nqtrly organic sales were down 22 percent.\nexpect restructuring program to deliver mature year benefits of $200 million when fully implemented in 2023.\n2020 full year free cash flow guidance reaffirmed at $2.3 billion to $2.7 billion.\nadjusted earnings per share of $0.70 for q2 excluding charges.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Yan Jin, Eaton's Senior Vice President of Investor Relations.\nAs we have done on our past calls, we'll be taking questions at the end of the Craig's comments.\nWe'll start on page three with highlights for the quarter and by noting that our team delivered record results in Q3 despite kind of the well-publicized supply chain challenges in this environment.\nWe had strong execution across all of our businesses and as we focused on controlling what we could control.\nAnd as you can see, we posted an all-time record for adjusted earnings per share of $1.75.\nSupply chain constraints did have an impact on our revenue, but we still posted 8% growth in the quarter.\nAnd for the third quarter in a row, we delivered record segment margins at 19.9% in Q3.\nIt was an all-time record and an increase of 230 basis points over prior year.\nOn top of record margins, we're also pleased with our incremental margins, which were 46% in the quarter, due to actions that we took to mitigate inflationary costs, the portfolio changes that we have undertaken, and savings from restructuring programs.\nWe did have a bit of help from favorable mix as well in the quarter.\nAnd while revenues were lighter than expected in our Electrical Americas segment, we're very pleased to see the strength in orders and the growing backlog.\nOverall demand remains very strong.\nFor the Electrical businesses overall, orders were up 17% on a rolling 12-month basis, and our backlog was up more than 50%, another all-time record.\nNext, on page four, we summarize our Q3 results, and I'll notice a few points here.\nFirst, on 9% revenue growth, we increased our operating profit by 23%, which reflects strong operating leverage and benefits from our portfolio actions.\nSecond, our acquisitions increased revenues by 7%, which was fully offset by the sale of Hydraulics.\nWe're naturally pleased to have replaced the Hydraulics revenue with a collection of businesses that are, I'd say, higher growth, higher margin, and have more earnings consistency.\nAnd last, our margins of 19.9% were well above our guidance range of 19% to 19.4% as our team did an outstanding job of executing despite the lower-than-expected revenues.\nMoving to page five, we have the results of our Electrical Americas segment.\nRevenues were up 9%, including 1% organic and 8% from the acquisition of Tripp Lite.\nOrganic sales growth was driven by strength in data centers and residential markets, partially offset by weakness in large industrial projects and sales to utilities.\nAs I mentioned earlier, revenues were impacted by supply chain constraints.\nOur Electrical Americas segment suffered from the general supply chain constraints that we're all feeling, but was actually disproportionately impacted by a few unique suppliers who are especially impactful to this business.\nWe're naturally addressing these and other supply challenges and expect to do better in Q4.\nOperating margins continue to be strong at 21.7% and were up 40 basis points from Q2.\nThis is consistent with our expectations, and we're doing a good job of getting price to offset inflation.\nI'd say the biggest highlight in this segment is the continued growth in orders and in backlog.\nOn a rolling 12-month basis, orders were up 17% organically, and this was an acceleration from up 13% in Q2.\nThe strongest segments were utility and residential markets and the backlog is up more than 50% from last year and up 9% from Q2.\nBoth, I'd say, are encouraging signs and support our expectations that the missed shipments will simply be pushed into future quarters.\nTurning to page six.\nWe summarize our Electrical Global segment results, which I'd say were just strong across the board.\nOrganic growth was 18% with broad strength in really all end markets and currency added 1%.\nWe also posted all-time record operating margins of 20.1% and had very strong incremental margins of nearly 40%.\nThe margin performance was driven by volume leverage, strong cost control, and savings once again from restructuring actions.\nOrders were very strong, up 17% organically on a rolling 12-month basis, with particular strength in the quarter in industrial, commercial and institutional markets.\nLike our Americas segment, the backlog is up more than 50% and at record levels.\nBefore we move to the industrial businesses, here's the way I'd summarize the performance of our electrical businesses.\nWhen you add the two together, they delivered solid organic growth of 8%, built a sizable backlog, which strengthens our outlook for future quarters and they improved margins by 110 basis points.\nSo on balance, I'd say, a very strong set of quarterly results for our Electrical businesses.\nMoving to page seven.\nWe have the financial results of our Aerospace segment.\nRevenues were up 38%; 4% organic and 33% from the acquisition of Cobham Mission Systems and 1% from currency.\nOrganic growth was primarily due to higher sales in commercial markets partially offset by weakness in military markets.\nOperating margins were 22%, up 350 basis points from last year and 100 basis points sequentially.\nThis strong performance gives us confidence that as aerospace markets continue to recover, we'll meet or exceed the 24% margin targets that have been set for this segment.\nIn the quarter, we also had strong organic incremental margins, which were driven by favorable mix, primarily from the growth of commercial aftermarket business and as a result, once again from savings from the restructuring actions that we've taken.\nAnd by the way, Q3 was the first full quarter where Cobham Mission Systems were part of the company, and we're very pleased with the financial performance of the business and the integration process is going very smoothly.\nAs we look to the future, we're seeing encouraging signs of recovery in this segment with both orders and backlog now trending positively.\nOn a rolling 12-month basis, orders were up 4%, primarily with strength in the business segment and our backlog has increased by 5%.\nNext on page eight, we have the results of our Vehicle segment.\nOrganic revenues increased 11% with solid growth in North America Class A truck business and strength in South America that more than offset the weakness in North America light vehicle markets.\nAnd as you're all well aware, light vehicle production has been severely impacted by supply chain constraints.\nOperating margins were 18% and we generated very strong incremental margins of more than 50%.\nIn addition to strong execution, we also had some favorable mix in the quarter.\nSpecifically of note, North America, the truck business benefited from strong aftermarket, where sales were up some 40% and attractive aftermarket margins.\nAnd our North America light vehicle motor business also benefited from favorable mix as customers prioritize programs with more of our content, more full-sized pickups and SUVs and fewer small cars.\nSo good mix, good volume growth and savings from the multiyear restructuring program all contributed to very strong quarterly operating results here.\nTurning to page nine.\nYou'll see the financial results of our eMobility segment, where revenues increased 6% organically.\nLight vehicle business, customer production levels were reduced by supply chain constraints here as well.\nAnd given the nature of the products that we sell in this segment, they were more significantly impacted by the semiconductor shortages that we've all read about.\nAs a result, our backlog is up significantly here.\nOperating margins were a negative 9.5%, once again due to heavy R&D investments and start-up costs associated with new programs.\nWe continue to be pleased with the progress in this business, which is one program is worth nearly $600 million of mature year revenue.\nAnd we expect to see a significant ramp up in revenues in 2023, which positions us well to achieve our long-term revenue target of $2 billion to $4 billion by 2030.\nOn page 10, we provide an update at our organic growth and operating margins for the year.\nWith supply chain constraints in Q3 continuing into Q4, we now expect overall organic revenue growth of 9% to 11% for 2021.\nFor Electrical Americas, we expect 5% to 7% growth.\nAnd you'll note the implied guidance for Q4 is actually 7% to 9%, which is a solid step-up from the 1% in Q3.\nOrganic revenues in Aerospace are expected to be roughly flat with strength in commercial markets being offset by weakness in military markets.\nAnd the other segments had some minor reductions in revenue as well, but just minor.\nDespite slightly lower organic revenue growth outlook, we're increasing our operating margin guidance by 20 basis points from 18.6% to 19%.\nAnd I'd note that with this guidance, we're on track to generate strong incremental margins of approximately 40% for 2021, which we see naturally is outstanding performance given the current inflationary environment.\nMoving to page 11.\nWe have the remaining items of our guidance for the year.\nWe expect full year adjusted earnings per share between $6.59 to $6.69.\nAt the midpoint, this represents 35% growth over 2020.\nWe're also delivering significant margin improvement, up 240 basis points from last year at the midpoint of our increased margin guidance.\nSo I'm pleased that we have strong operating performance in the face of what we call store supply chain challenges and the businesses are doing well.\nNext, given more active M&A activities, we now expect share repurchase to be between $375 million and $425 million.\nAnd lastly, our Q4 guidance includes earnings between $1.68 and $1.78, organic revenue growth between 7% and 9%, and segment margins between 18.8% and 19.2%, an increase of 160 basis points at the midpoint versus prior year.\nSo overall, once again, a strong 2021 with solid revenue growth, strong orders and good execution, allowing us to deliver record margins.\nNext, on page 12, we did want to provide some preliminary assumptions for our end markets for 2022.\nAnd as you can see, we're expecting attractive growth in nearly all of our markets with very good growth in data centers and industrial facilities in our Electrical business and our Commercial Aerospace business, and certainly, in all Vehicle markets.\nWe'll provide more detailed color on organic revenue growth assumptions when we provide our 2022 guidance in February, but we did want to share some of our preliminary thinking here.\nWe would also expect to see carryover benefits from pricing actions taken, which should also help our year-over-year growth next year.\nAnd lastly, on page 13, we provide just some summary thoughts here.\nAnd I'd say, first, I'm proud of the record quarter results and particularly our strong margin performance.\nOur team has demonstrated that we can manage through a challenging operating environment, supply chain constraints, inflationary pressures, and still improve margins and EPS.\nAnd the long-term secular growth trends of electrification, energy transition and digitalization are playing out just as we expected or maybe even better.\nWe also see 2021 as a transformative year for Eaton in terms of portfolio management.\nWe're a higher-growth, higher-margin and less cyclical company today.\nAnd with strong year-to-date performance, we're well on our track to deliver a very strong 2021 with double-digit organic revenue growth and 35% adjusted earnings per share growth.\nAnd I'd also add, we have great momentum going into the Q4 and into next year.\nWe have strong order growth.\nWe have a full backlog, and many of our end markets are poised for recovery.\nAnd you'll recall that at the beginning of the year, we set medium-term targets of 4% to 6% organic revenue growth annually, 400 to 500 basis points improvement in margins and 11% to 13% annual growth in adjusted EPS.\nAnd so evaluating our progress about one year in, I'd say that we're running ahead of expectations.\n",
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"content": "quarterly operating profit rose 7 percent to 402 million usd.\nqtrly sales increase consisted of 8% growth in organic sales.\nfor full year 2021, company now expects organic growth of 9-11%, compared to a previous estimate of 11-13%.\nsees q4 2021 adjusted earnings per share to be between $1.68 and $1.78.\nsales in q3 of 2021 were $4.9 billion, up 9% from q3 of 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will begin today with comments from Entergy's Chairman and CEO, Leo Denault; and then Drew Marsh, our CFO, will review results.\nIn an effort to accommodate everyone who has questions, we request that each person ask no more than two questions.\nManagement will also discuss non-GAAP financial information.\nToday, we are reporting quarterly results that keep us firmly on track to meet our financial commitments.\nThird quarter adjusted earnings were $2.45 per share.\nWith good visibility into the rest of the year, we are narrowing our 2021 guidance range and $5.90 through $6.10 per share and expect to achieve 2022 and 2023 results in line with our outlooks.\nFurther, we are extending our outlooks to include 2024 and see our steady predictable growth of five percent to seven percent continuing through this period.\nAdditionally, we achieved the milestone of raising our dividend by six percent and aligning with our earnings growth.\nThis happened on the schedule we previously communicated and represents another commitment met.\nWe have developed a more resilient business.\nAnd despite $65 million of nonfuel revenue losses in the third quarter due to Hurricane Ida, we are maintaining our financial commitments.\nOur resiliency provides stability that is valuable to all of our stakeholders, particularly customers and owners.\nThe quarter was heavily impacted by Hurricane Ida, which made landfall as a strong category for hurricane bringing powerful destructive wins across New Orleans, Baton Rouge and beyond.\nOur coastal communities were particularly hard hit by both strong winds and storm surge.\nIda disrupted the lives and businesses of many of our customers and communities and Entergy was there to help when they needed us.\nWe gathered a restoration force of 27,000, our largest ever, representing Entergy employees, contractors and mutual assistance crews from 41 states across the country.\nFurther gratitude goes to our employees who worked restoration despite their own homes being damaged by Ida.\nThey epitomize what it means to put our customers first.\nI never cease to be amazed by the dedication and effectiveness of the many restoration workers who step away from their lives for weeks at a time to help our customers and communities get their lives and livelihoods back up and running again.\nDespite Ida's wins creating significant damage and destruction across our power grid with close to one million peak outages, our team restored customers at a rapid pace.\nIn just over a week, we had roughly half of all customers restored.\nMetro areas like New Orleans and Baton Rouge saw restoration essentially completed by day 10.\nWithin three weeks, more than 98% of all affected customers were restored.\nAnd it's easy to lose sight of the fact that this restoration was successfully accomplished while dealing with the effects of the pandemic.\nEntergy also helped our customers and communities throughout the recovery process by developing -- or deploying 165 commercial scale generators to power critical community infrastructure like medical facilities, gas stations, grocery stores, municipal water systems and community cooling centers in advance of power being restored.\nIn addition to restoration work, Entergy's employees contributed countless hours to their communities and Entergy shareholders committed $1.25 million to help affected communities rebuild and recover.\nWhile power has been restored to customers who can safely take it, our job is not finished.\nWe are committed to minimizing the effects of Ida on our customers' bills.\nWe will work with our regulators to seek securitization of Ida storm costs, which is a proven and low-cost means of recovery.\nFurther, we are coordinating with key officials and stakeholders, including Louisiana Governor Edwards, The City Council of New Orleans, Louisiana Public Service Commission, Louisiana Congressional Delegation and the Biden administration to seek federal support that could offset the cost of our customers for Ida in the 2020 storms.\nThere is widespread alignment among state and local leaders on the compelling case that Louisiana has to obtain federal support.\nWe are fully aligned with this perspective.\nTo be clear, any federal funding that Entergy utilities obtain will reduce the customer obligation dollar for dollar.\nWe're also committed to mitigating the impacts of future storms.\nEntergy has made significant transmission and distribution investments, nearly $10 billion over the last five years, which made our system more resilient.\nWe've seen those new investments perform well under the most challenging conditions.\nWind damage to our transmission structures, for example, has occurred most almost exclusively to older structures built to prior standards.\nIt has become clear that major weather events of all types are occurring more frequently and with greater intensity.\nHurricane Laura made landfall as the strongest storm to hit the Louisiana Coast since 1856.\nThen exactly 12 months later, Hurricane Ida hit with almost equal force.\nOur resilient standards and asset programs have never been static, and we've continued to evolve them.\nAnd as I mentioned, our investments are working as designed.\nHowever, the uptick in severity and frequency of storms is compelling us to take a fresh look at how we can make our system more resilient, including the pace at which we can achieve it.\nEven prior to Ida, we are actively deploying multiple options along the resiliency scale, particularly for our service areas south of I-10 and I-12, which has the greatest exposure to hurricane-strength winds and flooding.\nEvaluating these resiliency options needs to be done under future climate scenarios.\nAnd we are taking into account important considerations such as customer affordability and sufficiency of materials and skilled labor.\nThis customer-driven investment will be significant, and we will work collaboratively with our regulators and other stakeholders to determine the optimal path forward.\nComing back to the quarter, I would like to highlight that despite dealing with a major storm, the business continued to run well without missing a beat.\nWe've made great progress in several open proceedings.\nFirst, Entergy Arkansas filed a unanimous settlement for its formula rate plan, and the Arkansas Commission has agreed to cancel the hearing and take up the settlement based on the filed testimony, which is positive.\nNew rates in Arkansas will be implemented in January.\nIn New Orleans, we recently implemented rates at the level that reflected all adjustments proposed by the council's advisors so there are no further proceedings there.\nWe also are pleased to note that Entergy Arkansas reached a settlement with key customers of its Green Promise tariff filing.\nIf approved, this tariff will enable us to offer green solutions to meet the growing sustainability demands of our customers.\nAnd we're making progress on other open proceedings.\nIn Entergy Louisiana, its FRP rates went into effect.\nEntergy Arkansas received approval for the West Memphis Solar project.\nEntergy Texas reached an unopposed settlement on its 2020 storm cost filing.\nAnd Entergy Texas also filed for approval of the Orange County Advanced Power Station.\nAnd the Louisiana 2020 storm recovery and securitization process remains on track.\nWe continue to make progress on decarbonizing our fleet.\nWe've announced five gigawatts of solar in our supply plan through 2030 with a goal of doing more.\nAnd an update to our supply plan and renewables growth will be provided next week at EEI.\nIn addition to healthy meeting -- in addition to helping meet decarbonization goals, the cost of renewable resources relative to conventional resources continues to trend favorably, and renewable resources provided an important edge against rising and volatile natural gas prices.\nWe will provide more details around our latest resource plans at EEI.\nLast quarter, I discussed ways in which Entergy can help our industrial customers meet their sustainability goals.\nWhile many have expressed long-term goals like net-zero by 2050, even more have developed shorter-term interim goals that will require action by the end of the decade.\nClean electrification is one of several important tools that our industrial customers have as a means to achieve their objectives.\nClean electrification provides a great opportunity for load growth and will require significant capital investment in renewable generation, transmission and distribution.\nThe load growth that comes with electrification will help pay for incremental customer-centric investments.\nWe'll have more to discuss regarding the opportunity we have to help our customers meet their sustainability objectives next week at EEI.\nWhile it is important to discuss these longer-term growth opportunities, I want to make sure we don't lose sight of the very solid based investment plan that we have in front of us.\nOver the next three years, we have a $12 billion capital plan that is designed to deliver reliability, resilience and improve customer experience and environmental and cost efficiency benefits to our customers.\nWhen paired with our well-defined regulatory constructs, our plan will deliver five percent to seven percent adjusted earnings per share growth for our owners over the next three years.\nThat's a very solid base plan.\nAnd beyond this strong foundation, these other opportunities in renewable generation, clean electrification and resilience acceleration will serve to extend our runway of growth throughout the rest of the decade.\nWe look forward to continuing the conversation with you at the EEI Financial Conference.\nNow Drew will review the quarterly results.\nToday, we are reporting solid results even with the challenges from Hurricane Ida.\nSummarized on Slide five, our adjusted earnings per share was $2.45, slightly higher than a year ago.\nWe continue to execute our strategy, and we are firmly on track to meet our commitments.\nIn fact, with three quarters of the year behind us, we are narrowing our guidance range to $5.90 to $6.10.\nWe're also affirming our outlooks and extending the outlook period through 2024, and we recently raised our dividend to align with our adjusted earnings per share growth rate.\nTurning to Slide six.\nOur investments to improve customer outcomes continue to drive growth.\nThat includes rate changes to recover those investments as well as associated new operating expenses.\nIndustrial billed sales were 10% stronger than a year ago.\nWe saw increases across most segments with the largest increases in primary metals, petrochemicals, transportation, industrial gases and chlor-alkali.\nThis reaffirms the strength of our industrial customer base.\nAnd in a world with supply chain constraints and higher energy prices, our industrial customers' businesses remain strong and competitive.\nThese industrial sales were strong despite Hurricane Ida.\nOverall, across all classes, we estimate that third quarter revenues were approximately $65 million lower as a result of Ida.\nHurricane Laura's impact on third quarter 2020 was approximately half of that.\nOther O&M was higher this quarter as planned.\nThis is partly due to higher costs for distribution operations, including reliability costs, higher expenses in our power generation function and higher health and benefit costs.\nMoving to EWC on Slide Seven.\nYou'll see results were slightly lower than a year ago.\nThe key driver was the shutdown and sale of Indian Point.\nOperating cash flow for the quarter is shown on Slide Eight.\nThe quarter's result is about $300 million higher than last year.\nThe increase is due largely to improved collections from customers, including collections associated with investments to benefit customers and Winter Storm Uri.\nThis was partially offset by expenditures related to higher natural gas prices.\nSlide nine summarizes our credit and liquidity.\nWe expect to maintain our current credit ratings, and we continue to expect to achieve targeted rating agency credit metrics as storm restoration spending is securitized and we retire storm-related debt.\nI'll take a minute to discuss our balance sheet, beginning with a quick update on Hurricane Ida on Slide 10.\nOver the past several weeks, we've refined our cost estimates, and we've shaved $100 million off the upper end of the range.\nThe total cost is now expected to be $2.1 billion to $2.5 billion.\nWe've also updated our estimate of the nonfuel revenue loss to $75 million to $80 million, the lower half of our previous range.\nWhile our net liquidity, including storm reserves remained strong at $4 billion, we are also working to ensure timely storm cost recovery.\nThat starts with a successful restoration effort and proceeds through two avenues.\nFirst, Entergy Louisiana amended its 2020 storm filing to request an additional $1 billion to provide early liquidity for Hurricane Ida costs.\nAnd in Texas, we reached a settlement on the 2020 storm cost filing and that is now before the PUCT.\nSecond, we have improved the efficiency of our storm invoice processing to accelerate our filings and ultimately, cost recovery.\nWe plan to complete financing for the 2020 storms by early next year and Ida by the end of next year.\nAnd our work isn't over, we'll continue to identify ways to further reduce business risk.\nAs Leo highlighted, we are looking forward to a conversation with our customers, retail regulators and other stakeholders about how we best accelerate and implement a strong resilience plan.\nWe have already hardened more than half of our critical transmission and distribution structures along the Gulf Coast to standards implemented after Katrina and Rita, continue to move the bar higher by reevaluating current standards using the latest weather data.\nIn addition, a comprehensive resilience plan needs to include the strategic placement of assets to allow higher-risk communities to recover more quickly.\nFor example, MicroGrid's Distributed Energy Resources and the deployment of generators, Leo highlighted to certain critical customers and the aftermath of storms could be very helpful in supporting communities as they recover.\nI go into more depth on this in our conversations with EEI.\nIn addition to physical resilience, our regulators know the importance of a healthy credit at the operating companies to support customers.\nAnd they have put in place time-tested cost recovery mechanisms such as securitization and storm reserves to support that need.\nWe are fortunate that in looking to recover the 2020 and 2021 storm costs, we are starting with some of the lowest rates in the country.\nWe have significant electrification growth potential that could help pay for incremental customer-centric investments and future storm costs.\nAll of these will support our credit as our regulators and key stakeholders aligned with us around a strong, resilient acceleration plan.\nIn addition, we continue to execute on the exit of EWC, and we're less than a year from completing our plan.\nThe resulting improvements were recognized by S&P last fall through our improved business risk profile and by Moody's, just this past quarter through changes to our rating thresholds.\nThose changes remain in place and our ratings reflect future storm risk.\nAs a result, we were able to reduce our 2021 to 2024 equity need.\nCombined with our ATM transactions, our future equity need is more than 50% lower than the $2.5 billion communicated at Analyst Day last year.\nMoving to Slide 11.\nWe have a clear line of sight on the remainder of the year.\nAnd for the third year in a row, we are narrowing our adjusted earnings per share guidance.\nIn this case, for 2021 to $5.90 to $6.10.\nWe are also affirming our longer-term outlooks of five percent to seven percent adjusted earnings per share growth and extending the 2024.\nOur confidence in our solid base plan continues to grow, and a key expression of that confidence is the dividend.\nFor the last several years, we've discussed our goal to align our dividend growth with our adjusted earnings per share growth.\nOur Board of Directors recently declared a $0.06 increase in our quarterly common dividend, which is now $1.01 per share.\nThat's a six percent increase as planned.\nWe expect to continue this growth trend going forward, obviously, subject to Board approval.\nThat's good news for our owners to provide the capital needed to meet our customers' evolving needs.\nToday, we are executing on key deliverables, and we have a solid base plan to meet or exceed our strategic and financial objectives.\nIn less than a week, Leo, Rod and I will be imported to meet with many of you in person for the first time in almost two years.\nWe'll provide our typical updates on considerations for next year's earnings expectations and will provide our preliminary three-year capital plan, including a positive update on our expectation for renewables.\nWe'll also talk about the significant long-term customer-centric investment beyond our current outlooks from renewables, clean electrification and acceleration of our system resilience.\nWe're excited about these opportunities ahead and look forward to talking to you about all of it at EEI.\nAnd now the Entergy team is available to answer questions.\n",
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"content": "q3 adjusted non-gaap earnings per share $2.45.\nnarrowed its 2021 adjusted earnings per share guidance to a range of $5.90 to $6.10.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These statements are based on our current beliefs, as well as certain assumptions and information currently available to us and are discussed in more detail in our quarterly report on Form 10-Q for the quarter ended September 30, 2021, which we expect to be filed tomorrow, November 4.\nI'll also refer to adjusted EBITDA and distributable cash flow, or DCF, all of which are non-GAAP financial measures.\nYou'll find a reconciliation of our non-GAAP measures on our website.\nI'd like to start today by looking at some of our third quarter highlights.\nWe generated adjusted EBITDA of $2.6 billion and DCF attributable to the partners of Energy Transfer, as adjusted, of $1.3 billion.\nOur excess cash flow after distributions was approximately $900 million.\nOn an incurred basis, we had excess DCF of approximately $540 million after distributions of $414 million and growth capital of approximately $360 million.\nOperationally, our NGL transportation and fractionation and NGL refined products terminals volumes reached new records during the quarter largely driven by growth in volumes, beating our Mont Belvieu fractionators and Nederland Terminal.\nAs the market continues to recover, we are well-positioned to benefit from increasing demand and higher margins.\nSwitching gears to an update on the acquisition of Enable Midstream Partners, which will provide increased scale in the Mid-Continent and Ark-La-Tex regions and improved connectivity for our natural gas and NGL transportation customers.\nWe expect the combination of energy transfers and enables complementary assets to allow us to provide flexible and competitive service to our customers as we pursue additional commercial opportunities utilizing our improved connectivity and increased footprint.\nAs a reminder, we expect the combined company to generate more than $100 million of annual run rate cost synergies, and this is before potential commercial synergies.\nWe continue to believe that the transaction will close before the end of the year.\nI'll now walk you through recent developments on our growth projects, starting with our Cushing South pipeline.\nIn early June, we commenced service to provide transportation for approximately 65,000 barrels per day of crude oil from our Cushing terminal to our Nederland terminal, providing access for Powder River and DJ Basin barrels to our Nederland terminal being an upstream connection with our White Cliffs Pipeline.\nThis pipe is already being fully utilized.\nAnd as we mentioned on our last call, we are moving forward with Phase 2, which will increase the capacity to 120,000 barrels per day.\nPhase 2 is expected to be in service early in the second quarter of 2022 and is underpinned by third-party commitments.\nAs a reminder, minimal capital spend is required for this phase.\nNext, construction on the Ted Collins link is progressing and is now expected to be in service late in the first quarter of 2022.\nThe Ted Collins link will give us the ability to fully load and export unblended low-gravity Bakken and WTI barrels out of the Houston market, showcasing Energy Transfer's unique ability to provide a net Bakken barrel to markets along the Gulf Coast.\nNow turning to our Mariner East system.\nWe have commissioned the next significant phase of the Mariner East project, which brings our current capacity on the Mariner East pipeline system to approximately 260,000 barrels per day.\nYear-to-date, NGL volumes through the Mariner East pipeline system and Marcus Hook terminal are up 12% over the same period in 2020.\nWe are awaiting the issuance of a permit modification for the conversion of the final directional drill to an open cut, which will allow us to place the final segment of Mariner East into service in the first quarter of 2022.\nOur Pennsylvania Access project, which will allow refined products to flow from the Midwest supply regions into Pennsylvania, New York and other markets in the Northeast, will begin moving refined products this winter.\nNow for a brief update on our Nederland terminal.\nAs a reminder, with the completion of the remaining expansions of our LPG facilities at Nederland, earlier this year, we are now capable of exporting more than 700,000 barrels per day of NGLs from our Nederland terminal.\nAnd when combined with our export capabilities from our Marcus Hook terminal, as well as our Mariner West pipeline, which exports ethane to Canada, our total NGL export capacity is over 1.1 million barrels per day, which is among the largest in the world.\nAt our expanded Nederland terminal, NGL volumes continued to increase during the third quarter, including export volumes under our Orbit ethane export joint venture, which has remained strong.\nYear-to-date through September, we have loaded more than 16 million barrels of ethane out of this facility.\nAnd in total, our percentage of worldwide NGL exports has doubled over the last 18 months to nearly 20%, which was more than any other company or country for the third quarter of 2021.\nLooking ahead, we expect our total NGL export volumes from Nederland to continue to increase throughout next year.\nIn addition, demand for supply to refineries remain strong, and our crude oil storage at Nederland is fully contracted.\nAt Mont Belvieu, we recently brought on a 3 million-barrel high-rate storage well, which takes our NGL storage capabilities at Mont Belvieu to 53 million barrels.\nAnd our Permian Bridge project, which connects our gathering and processing assets in the Delaware Basin with our G&P assets in the Midland Basin was placed into service in October and is already being significantly utilized.\nThis project allows us to move approximately 115,000 Mcf per day of rich gas out of the Midland Basin and to operate existing capacity more efficiently while also providing access to additional takeaway options.\nIn addition, it can easily be expanded to 200,000 Mcf per day when needed.\nLastly, in July, we announced the signing of a memorandum of understanding with the Republic of Panama to study the feasibility of jointly developing a proposed Trans-Panama gateway pipeline.\nWe believe this project would create the most liquid and attractive LPG supply hub in the world and are excited about the opportunity it presents.\nNow for an update on our alternative energy activities, where we have continued to make progress on a number of fronts.\nIn September, we entered into a 15-year power purchase agreement with SB Energy for 120 megawatts of solar power from its Eiffel Solar project in Northeast Texas.\nThis is the second solar project we are participating in and these agreements provide a good fixed price per megawatt hour on a generated basis.\nSo we only pay for power actually generated and delivered to us.\nWe're also continuing to explore several opportunities for solar, wind, and forestry carbon credit projects on our existing acreage in the Appalachian region.\nIn particular, we're continuing to jointly pursue solar and wind development on the Energy Transfer track in Kentucky with a large utility company, and we are in discussions with other large renewable energy developers.\nOn the carbon capture front, our Marcus Hook project looks financially attractive based upon preliminary cost estimates and design feasibility studies.\nThis project would involve capturing CO2 from the flue gas and delivering it to customers for industrial applications and is used in food and beverage industries.\nWe're also pursuing several carbon projects related to our assets, including projects involving the capture of CO2 from processing plants for use in enhanced oil recovery or sequestration.\nWe continue to believe that our franchise will allow us to participate in a variety of projects involving carbon capture or other innovative uses as we continue to reduce our carbon footprint.\nLastly, we expect to publish our annual corporate responsibility report for our website shortly.\nNow let's take a closer look at our third quarter results.\nConsolidated adjusted EBITDA was $2.6 billion, compared to $2.9 billion for the third quarter of 2020.\nDCF attributable to the partners as adjusted was $1.31 billion for the third quarter, compared to $1.69 billion for the third quarter of 2020.\nWhile we saw higher volumes across the majority of our segments, including record volumes in the NGL and refined products segment, these benefits do not offset the significant optimization gains in the third quarter of 2020 related to our various optimization groups, as well as the onetime $103 million gain in our midstream segment.\nIn addition, the third quarter of 2021 included higher utilities and other winter storm Uri-related expenses.\nOn October 26, we announced a quarterly cash distribution of $0.1525 per common unit or $0.61 on an annualized basis.\nThis distribution will be paid on November 19 to unitholders of record as of the close of business on November 5.\nTurning to our results by segment, and we'll start with the NGL and refined products.\nAdjusted EBITDA was $706 million, compared to $762 million for the same period last year.\nHigher terminal services and transportation margins related to the increased throughput on our Nederland and Mariner East pipelines in the third quarter of 2021 were offset by a $55 million decrease in our optimization businesses at Mont Belvieu and in the Northeast, as well as increased opex and G&A.\nNGL transportation volumes on our wholly owned and joint venture pipelines increased to a record 1.8 million barrels per day, compared to 1.5 million barrels per day for the same period last year.\nThis increase was primarily due to increased export volumes feeding into our Nederland terminal from the initiation of service on our propane and ethane export projects, higher volumes from the Eagle Ford region, as well as increased volumes on our Mariner East and Mariner West pipeline systems.\nAnd our fractionators also reached a new record for the quarter with an average fractionated volumes of 884,000 barrels per day, compared to 877,000 barrels per day for the third quarter of 2020.\nThroughout 2021, we have continued to add volumes to our system and are well-positioned to capture additional volumes and capitalize on new opportunities as demand improves.\nFor our crude oil segment, adjusted EBITDA was $496 million, compared to $631 million for the same period last year.\nThe improved performance on our Bakken and Bayou Bridge pipelines as a result of recovering volumes in the third quarter of 2021 did not offset approximately $100 million of onetime items in the third quarter of 2020.\nIn addition, we had approximately $20 million in other optimization reductions, as well as increased opex and G&A expense year-over-year.\nFor midstream, adjusted EBITDA was $556 million, compared to $530 million for the third quarter of 2020.\nThis was largely the result of a $156 million increase related to favorable NGL and natural gas prices, as well as volume growth in the Permian and the ramp-up of recently completed assets in the Northeast, which were partially offset by a decrease of $103 million due to the restructuring and assignment of certain contracts in the Ark-La-Tex region in the third quarter of 2020.\nGathered gas volumes were 13 million MMBtus per day, compared to 12.9 million MMBtus per day for the same period last year due to higher volumes in the Permian, Ark-La-Tex and South Texas regions.\nPermian Basin volumes continue to be strong and Midland inlet volumes remained at/or near record highs.\nAs a result, we are already utilizing our Permian Bridge project to enhance the efficiency of our processing in the area by moving some volumes over to our Delaware Basin processing plants.\nIn our Interstate segment, adjusted EBITDA was $334 million, compared to $425 million for the third quarter of 2020 primarily due to contract expirations at the end of 2020 on Tiger and FEP, as well as a shipper bankruptcy on Tiger and lower demand on Panhandle and Trunkline partially offset by an increase in transported volumes on Rover due to more favorable market conditions.\nAnd for our intrastate segment, adjusted EBITDA was $172 million, compared to $203 million in the third quarter of last year.\nThis was primarily due to lower optimization volumes as a result of third-party customers shifting to long-term contracts from the Permian to the Gulf Coast and lower spreads, as well as an increase in operating expenses, which were largely offset by increased transportation volumes out of the Permian and an increase in retained fuel revenues and storage margin.\nWhile it impacted us over the comparison period, the additional long-term contracting of third-party customers from the Permian to the Gulf Coast is expected to benefit us going forward as the Waha to Katy basis differential has tightened significantly.\nTo reduce volatility within our earnings and protect us from falling basis differentials, like we saw from the third quarter of 2020 to the third quarter of 2021, we have strategically taken steps to lock in additional volumes under fee-based long-term contracts, which are exceeding current differentials.\nNow turning to our 2021 adjusted EBITDA guidance.\nOur full year 2021 adjusted EBITDA remains $12.9 billion to $13.3 billion.\nAs a reminder, this range excludes any contributions from the announced Enable acquisition.\nAnd moving to a growth capital update, for the nine months ended September 30, 2021, Energy Transfer spent $1.08 billion on organic growth projects, primarily in the NGL refined products segment, excluding SUN and USA Compression capex.\nFor full year 2021, we continue to expect growth capital expenditures to be approximately $1.6 billion, primarily in the NGL refined products, midstream, and crude oil segment.\nAfter 2022 and 2023, we continue to expect to spend approximately $500 million to $700 million per year.\nNow looking briefly at our liquidity position.\nAs of September 30, 2021, total available liquidity under our revolving credit facilities was approximately $5.4 billion, and our leverage ratio was 3.15 times per the credit facility.\nDuring the third quarter, we utilized cash from operations to reduce our outstanding debt by approximately $800 million.\nAnd year-to-date, we have reduced our long-term debt by approximately $6 billion.\nWe have done a lot of heavy lifting over the last few years as we work to accelerate our debt reduction, improve our leverage, and best position ourselves to return value to our unitholders.\nWe expect to generate a significant amount of cash flow in 2022, and paying down debt continues to be our top priority.\nAdditionally, our strong performance in 2021 opens the door for the potential to begin returning value to our unitholders in the form of distribution increases and/or buybacks beginning next year.\nDuring the third quarter, we continue to see volumes recover across several of our systems, as well as improve fundamentals.\nIn addition, our Nederland and Mariner East expansion projects drove record volumes in our NGL and refined products segment, and we expect total NGL exports to grow throughout 2022.\nOverall, our assets continued to generate strong cash flow, which allowed us to internally fund our growth projects and further reduce debt in the third quarter.\nWe remain committed to maintaining and improving our investment-grade rating and continue to place a significant amount of emphasis on capital discipline, deleveraging, and maintaining financial flexibility.\nWe continue to be excited about the acquisition of Enable, and we believe we will be able to use our enhanced footprint to improve efficiencies and pursue new commercial opportunities.\nHow we participate in the evolving energy world is a key focus, and we continue to make progress on a number of our alternative energy projects, which we can enhance and effectively grow our energy franchise with preliminary cost estimates looking favorable.\nOperator, please open the lineup for our first question.\n",
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"content": "for full year of 2021, et expects its adjusted ebitda to be $12.9 billion to $13.3 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These statements are based on our current beliefs as well as certain assumptions and information currently available to us and are discussed in more detail in our annual report on Form 10-K for the year ended December 31, 2021, which we expect to be filed this Friday, February 18.\nI'll also refer to adjusted EBITDA and distributable cash flow, or DCF, both of which are non-GAAP financial measures.\nYou'll find a reconciliation of our non-GAAP measures on our website.\nI'd like to start today by looking at some of our fourth quarter and full year 2021 highlights.\nFor the full year 2021, we generated adjusted EBITDA of $13 billion, which was a significant increase over 2020 and in line with our expectations.\nDCF attributable to the partners of Energy Transfer, as adjusted, was $8.2 billion, which resulted in excess cash flow after distributions of approximately $6.4 billion.\nOn an incurred basis, we had excess DCF of approximately $5 billion after distributions of $1.8 billion and growth capital of approximately $1.4 billion.\nOn January 25, we announced a quarterly cash distribution of $0.175 per common unit or $0.70 on an annualized basis, which represents a 15% increase over the previous quarter and represents the first step in our plan to return additional value to unitholders.\nOperationally, we moved record volumes through our NGL pipelines and NGL refined products terminals for the full year 2021, primarily driven by growth in volumes through our Nederland terminal and on our Mariner East pipeline system.\nIn addition, NGL fractionation volumes reached a new record during the fourth quarter, largely driven by growth in volumes leading our Mont Belvieu fractionators.\nAt our Nederland terminal, we completed expansions in early 2021 that brought our companywide total NGL export capacity to more than 1.1 million barrels per day which we believe is the largest in the world.\nOn December 2, 2021, we completed our acquisition of Enable Midstream Partners, which provides increased scale in the Mid-Continent and Ark-La-Tex regions and improved connectivity for our natural gas, crude oil, and NGL transportation customers.\nThe combination of Energy Transfer's and Enable's complementary assets will allow us to continue to provide flexible reliable and competitive services for our customers as we pursue additional commercial opportunities utilizing our improved connectivity and expanded footprint.\nWe continue to expect the combined company to generate more than $100 million of annual run rate cost savings synergies, of which we expect to achieve 75 million in 2022.\nIn addition, we are in the process of identifying and evaluating a number of commercial and operational synergies that are expected to enhance the operational capabilities of our systems by capitalizing on improved efficiencies and increasing utilization and profitability of our combined assets.\nBefore moving to a growth project update, I want to briefly touch on the recent winter weather conditions seen across many of our assets.\nThis bout of winter weather was less severe and significantly less disruptive than winter storm Uri last year, and commodity prices remained much more stable throughout as a result.\nAs we always do, we have procedures in place to provide layers of protection and risk mitigation, including engineering controls and winterization processes and preplanning and prepositioning of resources to assure, we are able to respond when needed.\nOur extensive experience with operating pipelines, processing plants and storage facilities combined with a significant amount of preparation allows us to operate reliably throughout extreme weather conditions, and this is due to the consistent and extraordinary efforts of our employees.\nI'll now walk you through recent developments on our growth projects.\nStarting with Mariner East Pipeline system.\nConstruction of the final phase of the Mariner East pipeline is complete and commissioning is in progress which will bring our total NGL capacity on the Mariner East pipeline system to 350,000 to 375,000 barrels per day, including ethane.\nEnergy Transfer's Mariner East pipeline system now includes multiple pipelines across the state of Pennsylvania, connecting the prolific Marcellus and Utica shales to markets throughout the state and the broader region, including Energy Transfer's Marcus Hook terminal on the East Coast.\nFor full year 2021, NGL volumes through the Mariner East pipeline system and Marcus Hook terminal are up nearly 10% over 2020.\nWith our expanded network, we will see volumes continue to grow.\nIn our Pennsylvania Access project, which allows refined products to flow from the Midwest supply regions into Pennsylvania, New York, and other markets in the Northeast started flowing refined products in January.\nAt our expanded Nederland terminal, NGL volumes continued to increase during the fourth quarter, including export volumes under our Orbit ethane export joint venture, which have remained strong.\nFor the full year 2021, we loaded nearly 26 million barrels of ethane out of the facility.\nFor 2022, we expect to load a minimum of 40 million barrels of ethane and project this to increase to up to 60 million barrels for 2023.\nWe also expect our LPG export volumes at Nederland to continue to grow in 2022.\nAnd in total, our percentage of worldwide NGL exports has doubled over the last two years, capturing nearly 20% of the world market, which was more than any other company or country exported during the fourth quarter of 2021.\nAt Mont Belvieu, we recently brought online a 3 million-barrel high-rate storage well, which increases our total wells to 24 and our NGL storage capabilities at Mont Belvieu to 53 million barrels.\nTurning to our Cushing south pipeline.\nIn early June, we commenced service on the 65,000 barrels per day crude oil pipeline, providing transportation service from our Cushing terminal to our Nederland terminal, which also provides access for Powder River and DJ Basin barrels to our Nederland terminal via an upstream connection with our White Cliffs pipeline.\nThis pipe is already being fully utilized.\nAnd as we mentioned on our last call, we are moving forward with phase 2, which will nearly double the pipeline's capacity to 120,000 barrels per day.\nPhase 2 is expected to be in service by the end of the first quarter of 2022 and is underpinned by third-party commitments.\nAs a reminder, minimal capital spend was required for this phase.\nNext, construction on the Ted Collins link is progressing and is now expected to be completed late in the first quarter of 2022.\nThe Ted Collins link will increase market connectivity for our Houston terminal.\nIt will also give us the ability to fully load and export WTI barrels as well as low gravity Bakken barrels out of the Houston market, demonstrating Energy Transfer's unique capability to provide a neat Bakken barrel to markets along the Gulf Coast.\nOur Permian Bridge project, which connects our gathering and processing assets in the Delaware Basin with our G&P assets in the Midland Basin, was placed into service in October and continues to be significantly utilized.\nThis project allows us to move approximately 115,000 Mcf per day of rich gas out of the Midland Basin and to utilize available processing capacity more efficiently, while also providing access to additional takeaway options.\nIn addition, an expansion is underway, which will bring the top line's total capacity to over 200,000 Mcf per day in the first quarter of 2022.\nAnd due to significantly increased producer demand, we now plan to build a new 200 MMcf per day cryogenic processing plant in the Delaware Basin.\nThe Grey Wolf plant is supported by new commitments and growth from existing customer contracts and is expected to be in service by the end of 2022.\nIn addition, to provide incremental revenue to our midstream segment, once in service, the volumes from the tailgate of the plant will utilize our gas and NGL pipelines for takeaway, providing three revenue streams.\nNow in order to address the growing need for additional natural gas takeaway from the Permian Basin, we are diligently evaluating a takeaway project that would utilize existing Energy Transfer assets along with new build pipeline providing producers with firm capacity to the premier markets of Katy, Carthage, Gilles, and Henry Hubs.\nThis pipeline project would include the construction of a new approximately 260-mile pipeline from the Midland Basin to our existing 36-inch pipeline Southwest of Fort Worth, parallelly existing right of way.\nFrom there, it would interconnect with our existing assets with available capacity for delivery through our vast pipeline network to markets at Carthage as well as the Katy, Beaumont, and the Houston Ship Channel and other markets along the Gulf Coast, including deliveries to the Gilles and Henry Hub.\nWe view this project as an ideal solution for natural gas growth out of the Permian Basin that we can complete much more quickly than our competitors' options at significantly less cost about following an existing right of way along the majority of the route.\nIn addition, it is aligned with our strategy of identifying and repurposing underutilized assets in order to maximize the value of our uniquely positioned existing asset base.\nCustomer discussions are underway as we pursue this project.\nGiven the proposed route and our ability to utilize existing assets, we believe we could complete construction of project in two years or less once we have reached FID.\nTurning to the Gulf Run Pipeline, which will be a 42-inch interstate natural gas pipeline with 1.65 Bcf per day of capacity.\nGulf Run is backed by a 20-year commitment from Golden Pass LNG and will provide natural gas transportation between the Haynesville Shale and the Gulf Coast, connecting some of the most prolific natural gas-producing regions in the U.S. with the LNG export market.\nPipeline construction is underway and is expected to be completed by the end of 2022.\nLastly, in July of 2021, we announced the signing of a memorandum understanding with Republic of Panama to study the feasibility of jointly developing a proposed Trans-Panama Gateway Pipeline.\nWe anticipate working closely with Panama to successfully bring this project to fruition.\nPanama's geographic location and favorable investment climate make this an attractive project.\nWe continue to believe this project will create the most liquid and attractive LPG supply hub in the world and are excited about the opportunity it presents.\nNow for an update on our alternative energy activities.\nIn January of 2022, we announced that we expanded our Alternative Energy Group through the hiring of a vice president of alternative energy.\nThis role is responsible for developing alternative energy and carbon capture projects for Energy Transfer, along with various ESG initiatives, including the development of carbon capture offset programs that are accretive to our operations.\nIn addition to the two solar projects we announced in 2021, we are also continuing to explore several opportunities for solar, wind, and forestry carbon credit projects on our existing acreage in the Appalachian region.\nWe remain in discussions with other large renewable energy developers.\nOn the carbon capture front, we continue to pursue our carbon capture project at Marcus Hook that would involve capturing CO2 from the flue gas and delivering it to the customers for use in the food and beverage industries.\nThis project looks financially attractive based upon preliminary cost estimates and design feasibility studies.\nWe are also pursuing several carbon projects related to our assets, including projects involving the capture of CO2 from processing and treating plants for use in enhanced oil recovery for sequestration.\nWe continue to believe that our franchise will allow us to participate in a variety of projects involving carbon capture or other innovative uses as we continue to reduce our carbon footprint.\nLastly, we published our annual corporate responsibility report to our website in December.\nNow let's take a closer look at our fourth quarter results.\nConsolidated adjusted EBITDA was $2.8 billion, compared to $2.6 billion for the fourth quarter of 2020.\nDCF attributable to the partners, as adjusted, was $1.6 billion for the fourth quarter, compared to $1.4 billion for the fourth quarter of 2020.\nFor the fourth quarter, we saw higher transportation volumes across all of our segments, including record volumes in the NGL and refined products segment as well as a $60 million adjusted EBITDA contribution from the acquisition of Enable for the month of December.\nOn January 25th, we announced a quarterly cash distribution of $0.175 per common unit or $0.70 on an annualized basis.\nThis distribution will be paid on February 18 to unitholders of record as of the close of business on February 8.\nThis distribution represents a 15% increase over the previous quarter and represents the first step in our plan to return additional value to unitholders while maintaining our leverage ratio target of four to four and a half times debt to EBITDA.\nFuture increases to the distribution level will be evaluated quarterly with the ultimate goal of returning distributions to the previous level of $0.305 per quarter or $1.22 on an annualized basis while balancing our leverage target, growth opportunities and unit buybacks.\nTurning to our results by segment and starting with NGL and refined products.\nAdjusted EBITDA was $739 million, compared to $703 million for the same period last year.\nThis was primarily due to higher transportation and terminal services margins related to increased throughput at our Nederland terminal in the fourth quarter of 2021 as well as increased fractionation in refinery services margin.\nNGL transportation volumes on our wholly owned and joint venture pipelines increased to a record 1.9 million barrels per day, compared to 1.4 million barrels per day for the same period last year.\nThis increase was primarily due to increased export volumes feeding into our Nederland terminal from the initiation of service on our propane and ethane export projects, higher volumes from the Permian and Eagle Ford regions as well as increased volumes on our Mariner East pipeline system.\nAnd our fractionators also reached another record for the quarter.\nWith average fractionated volumes of 895,000 barrels per day compared to 825,000 barrels per day for the fourth quarter of 2020.\nFor our crude oil segment, adjusted EBITDA was $533 million, compared to $517 million for the same period last year.\nThis was primarily due to higher crude oil transportation volumes out of the Permian Basin improved volumes through our Nederland terminal and improved performance on our Bakken and Bayou Bridge pipelines as a result of recovering volumes in the fourth quarter of 2021 and the addition of the Enable assets.\nFor midstream, adjusted EBITDA was $547 million, compared to $390 million for the fourth quarter of 2020.\nThis was primarily due to a $147 million increase related to favorable NGL and natural gas prices.\nIn addition, our midstream segment also benefited from growth in the Permian, South Texas, and Northeast, and the acquisition of the Enable assets in December 2021.\nGathered gas volumes were 14.8 million MMBtus per day, compared to 12.6 million MMBtus per day for the same period last year due to higher volumes in the Permian, South Texas, and Northeast regions as well as addition of the Enable assets in December of 2021.\nPermian Basin volumes continue to be strong and Midland volumes remain at or near record highs.\nAs a result, we are expanding our Permian Bridge project and constructing our new Grey Wolf processing plant in the Delaware Basin.\nIn our interstate segment, adjusted EBITDA was $397 million, compared to $448 million in the fourth quarter of 2020.\nWhile volumes are beginning to improve, we did experience contract expirations at the end of 2020 on Tiger and FEP.\nAnd due to very mild temperatures throughout the Midwest, we experienced lower demand on our Panhandle and Trunkline systems during the fourth quarter.\nHowever, these decreases were partially offset by increases on Rover and Tiger due to more favorable market conditions and to significant volume growth out of the Haynesville.\nThese results also include the Enable assets in December of 2021.\nWe have seen steady growth recently in the interstate segment with the fourth quarter up more than 10% over the third quarter of 2021 even without the impact of Enable.\nFor our Intrastate segment, adjusted EBITDA was $274 million, compared to $233 million in the fourth quarter of last year.\nThis was primarily due to increased firm transportation volumes from the Permian and South Texas, the recognition of certain revenues related to winter storm Uri and an increase in retained fuel revenues due to higher natural gas prices as well as the addition of the Enable assets in December of 2021.\nNow turning to our 2022 adjusted EBITDA guidance.\nWith expectations for continued strong performance from our existing business as well as the addition of the Enable assets, we expect our full year 2022 adjusted EBITDA to be $11.8 billion to $12.2 billion.\nAnd moving to our 2022 growth capital expenditures.\nWe expect growth capital expenditures, including expenditures related to the recently acquired Enable assets to be between 1.6 billion and $1.9 billion, balanced primarily across the midstream NGL refined products and interstate segments.\nThis number includes approximately $200 million of 2021 planned capital that has been deferred into 2022 as well as growth capital related to the recently acquired Enable assets, in particular, Gulf Run pipeline.\nIn addition, this includes newly approved projects in the Permian Basin that support growing natural gas production through new gathering and processing capacity, improved efficiencies and reduced emissions.\nThese projects include construction of a new processing plant optimization of the Oasis pipeline and modernization and debottlenecking of the existing system.\nThe majority of these new projects are expected to provide strong returns and be completed at a six times multiple on average.\nNow looking briefly at our liquidity position.\nAs of December 31, 2021, total available liquidity under our revolving credit facility was slightly over $2 billion, and our leverage ratio was 3.07% for the credit facility.\nDuring the fourth quarter, we utilized cash from operations to reduce our outstanding debt for approximately $400 million.\nAnd for full year 2021, we reduced our long-term debt by approximately $6.3 billion.\nWe expect to generate a significant amount of cash flow in 2022, which will be strategically allocated in a manner that best positions us to continue to improve our leverage, invest in the growth of the partnership and return value to our unitholders.\nAs we approach our leverage target range, we have taken our first steps toward returning additional capital to our equity holders through distribution growth, which we will continue to evaluate on a quarterly basis.\nIn addition, we have increased our growth capital spend, as I mentioned earlier on the call, with this capital focused on strong returning projects that will be in service in less than 12 months.\nAnd we expect to continue to pay down debt throughout the year with excess cash flow from operations.\nDuring the fourth quarter, we continue to see volumes recover across many of our systems, including another record quarter for volumes in our NGL and refined products segment.\nLooking ahead, we are excited about the opportunities in front of us.\nWe will continue to explore and implement commercial synergies around the recently acquired Enable assets.\nAnd we continue to see growth across our NGL business segment, driven by increasing demand, both domestically and internationally.\nWe have entered 2022 with a much stronger balance sheet than 2021, and we'll continue to place emphasis on financial flexibility and pay down debt in 2022 while continuing to position ourselves to return value to our unitholders.\nGiven the volume growth expected out of the Permian Basin, we have some attractive new projects underway that will address new demand, enhance the efficiency and flexibility of our existing asset base, and generate attractive returns above our target threshold.\nWe also continue to make progress on the alternative energy front, which can further enhance and effectively grow our Energy franchise.\nOperator, please open the line up for our first question.\n",
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"content": "outlook for 2022 adjusted ebitda which is expected to range between $11.8 billion and $12.2 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I hope everyone is staying healthy and safe.\nJoining me on the call today is Walter Ulloa, chairman and chief executive officer; and Chris Young, chief financial officer.\nWe appreciate you joining us for Entravision's first-quarter 2021 earnings call.\nEntravision posted strong results for the first quarter with net revenue of $148.9 million, up 132% year over year.\nOn a pro forma basis including Cisneros Interactive revenue in our prior-year results, revenue increased 43% over the first quarter of 2020.\nGrowth during the quarter was driven by our core broadcasting businesses excluding political, along with the continued strong performance of our digital segment.\nWe are pleased to see our underlying businesses continue on an upward course, since a pandemic-driven lows in 2020.\nEach of our businesses is now firmly on the path to recovery.\nAnd our first-quarter results give us confidence and an optimistic outlook for the balance of 2021.\nAdjusted EBITDA totaled $14.2 million for the quarter, which is up 47% from the prior-year period.\nOn a pro forma basis, accounting for Cisneros Interactive, adjusted EBITDA increased a solid 35% year over year.\nFrom an expense management perspective, we continue to operate as a much more efficient business.\nOur lean cost structure is helping propel our company forward as macroeconomic conditions continue to improve.\nChris Young, our CFO will speak further about our first-quarter expenses later in today's call.\nNow let's take a look at our segment performance for the quarter.\nOur television division generated $36.1 million for the first quarter, down 8% compared to the prior year, primarily due to lack of non-returning political revenue compared to the first quarter last year, excluding $5.3 million of non-returning television political spend in the first quarter of 2020.\nCore television advertising increased by 3%.\nWith national advertising revenues increasing by 4% and local advertising revenues up 1%.\nStrength in core television revenues in the first quarter was driven by growth in services, up 13%, healthcare improved 23% and groceries and finance were up 11% compared to the prior-year period.\nAuto, our largest television advertising category decreased 1% year over year.\nAlthough the auto category did face some supply chain issues during the quarter.\nWith more Americans heading back on the road, we anticipate this to be a short-term disruption to our auto performance.\nApproximately 16 million cars are forecasted to be sold in the United States this year, which equals an increase in cars sold off almost 10% over the last year.\nConsumer demand for auto definitely remained strong.\nIn terms of television ratings for winter 2021 or Univision television stations finished ahead of or tied with their Telemundo competitor among adults 18 to 49 for early local news in 12 of the 17 markets where we have head-to-head competition with Telemundo.\nFor late local news, we finished ahead of our or tied our Telemundo competitors in 11 of the 17 markets where we have head-to-head competition.\nDuring a full week, our Univision and UniMás television stations have a cumulative audience of 4.4 million people ages two-plus across all of our markets, compared to Telemundo 3.5 million people ages two-plus.\nWe have 26% more viewers in Telemundo, in our Univision and UniMás television footprint, which is 4% higher than the November 2020 range release.\nTurning to our digital operations, digital revenues total $101.5 million for the first quarter, compared to $13.3 million in the prior-year period, an increase of 661%.\nDigital revenues represented 68% of total revenues for the company in the first quarter.\nThe primary driver of this growth was our acquisition of majority interest in Cisneros Interactive in the fourth quarter of 2020.\nOn a pro forma basis, our digital revenues increased 90% compared to the prior-year period.\nOther drivers of growth for our digital unit in the first quarter were our U.S. local advertising solutions business, up 21% and Smadex are global programmatic and performance product grew its revenue 21% compared to the first quarter of 2020.\nEntravision continues to provide our clients, brands, and marketers, the best platforms, the strongest reach, and complete advertising campaign transparency.\nOur highly proficient digital sales operation now serves more than 4600 clients each month in 21 countries.\nNow let's turn to your audio segment.\nOur audio revenues for the first-quarter 2021 totaled $11.3 million, a decrease of 4% year over year.\nLocal audio revenues decreased 10% year over year, while national audio revenues were up 9% year over year, excluding radio political spending $1.1 million the prior-year period, core radio revenues increased 6% versus the first quarter of 2020.\nIn the 12 markets where we subscribe to Miller Kaplan Data for total spot revenue, we outperformed the market by 13 points in total revenue combined.\nWe outperform the total market in 10 of the 12 markets to which we subscribe.\nThis includes exceptional performance in three of our top radio markets.\nOur Los Angeles radio cluster beat the market by 23 points.\nOur Phoenix radio stations outperformed the market by 15 points, and our McAllen radio cluster surpassed the market in total spot revenue by 31 points.\nThese three markets are all Top 10 U.S. Hispanic markets.\nIn terms of advertising categories, services remain our largest category representing 42% of total audio revenue.\nServices improved 22% year over year.\nAuto, our second-largest ad category declined 36% for the quarter as compared to the first quarter of 2020.\nAs with television, radio, auto ads were impacted by supply chain issues during the quarter, which had a larger impact on tier two and tier three auto dealer spending across all our radio markets.\nOur audio division rates remain very strong, and as more people increase their driving time, we should see these rates improve even more.\nto 7 p.m. for the winner measurement period among Hispanic adults 18 to 49 and Hispanic adults 25 to 54, including ties.\nOverall, we have an outstanding 2021 first-quarter performance.\nWe believe that our first-quarter earnings results will provide strong momentum for renovations throughout the year.\nAs Walter discussed revenue for Q1 2021 totaled $148.9 million, an increase of 132% from the first quarter of 2020.\nWhen comparing on a pro forma basis and including Cisneros Interactive's revenue in 2020.\nresults, revenues were increased 43% year over year.\nFor our TV division, total ad and spectrum-related revenue was $26.4 million, down 11% at year over year, excluding political core ad and spectrum-related revenue was up 9% year over year.\nRetransmission revenue totaled $9.6 million and was up 1% year over year.\nFor our digital division, digital revenues totaled $101.5 million, up 661% year over year.\nWhen comparing on a pro forma basis and including Cisneros Interactive's revenue in our 2020 results, digital revenues increased 90% year over year.\nLastly, for our audio division revenues totaled $11.3 million, down 4% over the prior-year period, excluding political core audio revenue was up 6% over Q1 of last year.\nAs we spoke to our last quarters call during the second half of 2020, we took strategic steps to limit our expenses due to market conditions.\nFollowing a strong finish to the year we were pleased to fully reinstate all employee salaries to pre COVID levels.\nAnd while salaries have been reinstated, we were able to maintain most of the remaining expense guts in 2021.\nSG&A expenses were $13.9 million for the quarter, an increase of 2%, compared to the $13.6 million in the year-ago period.\nExcluding the Cisneros acquisition SG&A expenses were down 19%.\nDirect operating expenses totaled $26.6 million in Q1 of 2021, down slightly from $26.7 million in Q1 of 2020.\nExcluding the Cisneros acquisition direct operating expenses were down 9% year over year.\nFinally, corporate expenses for the quarter increased 5% to a total of $7.2 million, compared to $6.8 million in the same quarter of last year.\nThe primary driver of corporate expense was audit-related expense and salary expense.\nDuring the first quarter, our share buyback remained on hold.\nWe also maintained a dividend at $0.250 and continue to eliminate expenses at the operating and corporate level been secondary to serving our core media businesses.\nWe will continue to evaluate our buyback and dividend each quarter, which will be at the discretion of our board of directors.\nLooking forward, we expect that our operating expenses excluding the digital cost of goods sold and corporate will be up approximately 3% in the second quarter as compared to the first quarter of this year.\nExcluding expenses related to Cisneros, operating expenses are expected to be approximately flat compared to the first quarter of this year.\nConsolidated adjustment EBITDA totaled $14.2 million for the first quarter, up 47% compared to the first quarter of last year.\nOn a pro forma basis, accounting for the Cisneros acquisition, adjusted EBITDA was up 35% year over year.\nThis was a strong quarter of EBITDA generation despite the lack of political revenue.\nEntravision's 51% portion of Cisneros interactive adjusted EBITDA represented a $3 million contribution to our total EBITDA in the first quarter.\nStrong free cash flow has been a cornerstone of Entravision's business and supported our ability to grow both organically and through acquisitions without the need to take on leverage.\nWe expect this high free cash flow conversion rate to continue for the foreseeable future.\nEarnings per share for the quarter in 2021 were $0.06, compared to a loss of $0.42 per share in the same quarter of last year.\nNet cash interest expense was $1.4 million for the first quarter compared to $1.9 million in the same quarter of last year.\nCash capital expenditures for Q1 totaled $1.8 million compared to $2.7 million in the prior year.\nCapital expenditures for the year are expected to be approximately 8 million.\nTurning to our balance sheet, which remains very strong.\nCash and marketable securities as of March 31, totaled $165.7 million, total debt was $214.5 million, net of $75 million of cash and marketable securities on the books are total leverage as defined in our credit agreement was 2.15 times at the end of the first quarter.\nNet of total accessible cash and marketable securities, our total net leverage was one turn of EBITDA.\nTurning to our pacings for the second quarter of 2021.\nAs of today, our TV advertising business is pacing 44% over the prior-year period with core TV, excluding political pacing at a plus 55%.\nOur digital business, including revenue from Cisneros Interactive is pacing plus 900%, factoring in Cisneros revenue generated in Q2 of last year, our digital business on a pro forma basis is pacing plus 115%.\nLastly, our audio business is pacing plus 84% with core audio, excluding political pacing plus 103%.\nAll-in our total revenue compared to last year is pacing at a plus 360%, pro forma on Cisneros acquisition, our total revenue is currently pacing at a plus 87%.\nA majority investment in Cisneros Interactive has performed strongly since the closing of the acquisition in the fourth quarter of last year.\nAnd we are excited to continue to expand and enhance our digital offerings.\nWe're also very optimistic about Entravision's continued growth given the overall improvement of macroeconomic conditions.\nWith a more streamlined cost structure, we will continue to operate our businesses more efficiently while at the same time delivering high-quality and dynamic services, content, and products to our customers.\nWe appreciate your continued support of Entravision.\n",
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"content": "q1 revenue rose 132 percent to $148.9 million.\nqtrly net income per share attributable to common stockholders, basic and diluted$0.06.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Hallie Miller, Evercore's Head of Investor Relations.\nThese factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe continue to believe that it is important to evaluate Evercore's performance on an annual basis.\nAs we have noted previously, our results for any particular quarter are influenced by the timing of transaction closings.\nWhat a difference a year makes.\nThis time last year, we were in the early stages of the global pandemic.\nThere was uncertainty about the science and trajectory of the virus and there was no visibility on vaccines.\nThe economic environment was weak, and the pace and shape of an economic recovery was unclear.\nWith so much uncertainty and the weak economic environment and outlook, most of our clients turned inward to focus on operations, liquidity and in many cases, restructuring, while restructuring activity was -- and strategic activity was paused.\nFrom an operational perspective, I don't think any of us expected to spend the remainder of 2020 and a good portion of '21 working predominantly remotely.\nFast forward one year and we've made tremendous progress.\nMonetary and fiscal stimulus helped stabilize the economy, and financial markets and the recovery is well under way.\nVaccine distribution is gaining momentum and as a firm, we are actively planning for a gradual return to our offices over the next several months.\nAnd our business is robust, as we continue to act as an advisor to clients on strategic financial investment and capital initiatives.\nThe momentum we experienced through the first half of last year has continued into the first quarter.\nOur results, which represent our best first quarter ever, reflect our team's client focus, the breadth of capabilities that we can offer and the continued favorable environment for M&A and capital raising activity.\nTransactions announced in the second half of 2020 and some even earlier moved toward completion during the quarter and translated to revenues.\nWe've also realized revenues from transactions announced and closed within the first quarter and it benefited from increased demand for activist defense advice over the past several months.\nCapital advisory, both public and private, has continued its strong contribution.\nThe breadth of our equity capital markets capabilities, including IPOs and follow-ons, convertibles and SPACs has enabled us to participate in a meaningful way in the sustained strong levels of market issuance.\nIn the first quarter, we participated in nearly 40 public market transactions that raised more than $22 billion in total proceeds.\nIn Private Capital Advisory, GP-led transactions remained strong during the quarter and we have seen a strong recovery of volumes in new capital needs.\nIn the face of economic recovery and strength in M&A and capital raising, classic restructuring activity has slowed and is concentrated among key sectors and issuers that have not rebounded as quickly as some others have.\nOur Equities business, Evercore ISI, has continued to stay connected and engaged with our clients and has provided valuable research insight and sales and trading execution.\nAnd solid performance drove AUM growth in our Wealth Management business.\nWe continue to focus on expanding coverage of key industries and building out our capabilities.\nAnd we are benefiting from Kristy Grippi joining us earlier this year as our new Head of ECM, as well as other strategic adds we've made on our ECM team.\nWith the key ingredients for M&A activity in place, a positive economic outlook, strong equity markets and available credit, high CEO confidence and continued private equity activity, the momentum for strategic activity continues and the desire for capital raising persists.\nSeveral of our key markets continue to be busy and our backlogs are strong.\nThe strategic merger market accelerated in the first quarter.\nGlobal and US announced M&A dollar volume increased 95% and 164% respectively compared to the first quarter of 2020 and increased 3% and 13% respectively from a strong fourth quarter.\nIn ECM, the desire for capital raising remained strong, though we have seen a cooling off in the SPAC underwriting market over the past several weeks.\nOur investments in SPAC capabilities have positioned us well to serve many new clients, though we remain selective in our participation in underwriting opportunities.\nWe continue to see activity and shareholder advisory and activist defense.\nThe number of new activist positions in the US reached its highest level in more than two years at the end of 2020 and activists are focusing on larger targets.\nOn the private capital advisory side of things, we are seeing accelerating activity in both capital raising for new funds as well as secondary and GP level activity.\nIn short, we feel continuing momentum in our business and we are excited by the prospects we see in front of us.\nOur broad capabilities have positioned us well to offer more services to clients as they execute on their priorities.\nLet me now turn to our financial results.\nWe achieved record first quarter adjusted operating income, adjusted operating margin, adjusted net income and adjusted earnings per share driven by solid revenue growth and good operating leverage.\nFirst quarter adjusted net revenues of $669.9 million grew 54% year-over-year.\nFirst quarter advisory fees of $512.1 million was 43% year-over-year.\nBased on current consensus, estimates and actual results, we expect to maintain our number-four ranking on advisory fees among all publicly traded investment banking firms for the last 12 months and to grow our market share relative to these same firms.\nWe also continued to narrow the gap between us and the number-three ranked firm on a latest 12-month advisory revenue and market share basis.\nOur first quarter underwriting fees of $79.3 million more than tripled year-over-year.\nAs we said last quarter, this business experienced a step-up in 2020 as the demand for capital raising increased substantially and the expansion of our capabilities and enhanced sector coverage enabled us to work on diverse assignments for clients.\nWe've continued to broaden our participation across sectors, which we believe is helping us grow our business.\nWhile healthcare still represents the largest portion of revenues, TMT and Industrials more than tripled their combined portion of revenues in the first quarter compared to full year 2020.\nFirst quarter commissions and related revenue of $53.5 million decreased 4% year-over-year as volumes declined relative to the elevated levels in the first quarter of 2020.\nFirst quarter asset management and administration fees of $17.8 million increased 16% year-over-year on higher AUM, which was $10.6 billion at quarter end, an increase of 11% year-over-year.\nTurning to expenses, our adjusted compensation revenue for the first quarter is 59%.\nFirst quarter non-comp costs of $72.7 million declined 12% year-over-year.\nOur non-compensation ratio for the first quarter is 10.9%.\nBob will comment more on our non-comp expenses in his comments.\nFirst quarter adjusted operating income and adjusted net income of $201.8 million and $162.5 million increased 145% and 181% respectively.\nWe delivered a first quarter adjusted operating margin of 30.1% and a first quarter adjusted earnings per share of $3.29 increased 172% year-over-year.\nFinally, we continued to execute on our capital return strategy.\nWe returned $275.3 million to shareholders during the quarter through dividends and the repurchase of 1.9 million shares.\nAnd we achieved our commitment to offset the delusion associated with our annual bonus RSU grants through share repurchase in the first quarter.\nOur Board declared a dividend of $0.68, an increase of 11.5%.\nWe expect to continue our annual reassessment of the dividend each April.\nOur Board also approved a refresh of our share repurchase authority to $750 million.\nWe will resume our historical policy of returning cash not needed for investment in our business to our shareholders through additional share repurchases.\nOur first quarter results clearly demonstrate that we are operating at a higher level than the level at which we have operated historically as measured by any financial metric; revenues, operating income, net income, earnings per share, operating margins and Senior Managing Director productivity and Advisory.\nWhile our operating margins clearly are benefiting modestly from the decline in travel and entertainment due to the pandemic, the strength in the other financial metrics is indicative of a real uptick in our business.\nOur diverse capabilities and the more balanced mix of our business contributed to our record first quarter results, the third best quarter in our firm's history as well as to the record fourth quarter and full year results last year.\nOn top of our strong financial performance, we sustained our number-one league table ranking in the dollar volume of announced M&A transactions both globally and in the US among independent firms for the last 12 months ending March 31 and in the first quarter of 2021.\nAnd we advised on the two largest M&A transactions announced in the first quarter.\nAdditionally, while not first quarter events, we have prominent roles on the two biggest tech announcements this year, both of which were announced in April.\nWe served as the lead advisor on Grab's $40 billion IPO buyer, a SPAC merger, the largest tech merger this year, the largest SPAC merger in history and the largest pipe issued in conjunction with a SPAC merger at a little over $4 billion.\nAnd we also served as the sole advisor to Nuance on its pending $19.7 billion sale to Microsoft, the second largest tech merger this year.\nThese are franchise-defining transactions for our clients and for Evercore and are reflective of the breadth of our capabilities and the strength of collaboration and teamwork across the firm.\nOur underwriting business continues to perform well and produced its third best quarter ever.\nWhen we first acquired ISI almost seven years ago, we identified one of the most important opportunities created by that transaction to be our ability to increase our underwriting revenues to perhaps $75 million to a $100 million of revenue per year over the ensuing few years.\nIt unquestionably took a little bit longer than we initially expected to get to that level of revenue annually, but we have definitely seen a real step function increase in this business.\nIn fact, three of the past four quarters, including the first quarter of 2021, where in just one quarter, within that $75 million to a $100 million target that we had set for the full year.\nActivity in backlogs and underwriting continued to be strong, and we remain focused on building out this business strategically so that we can continue to serve the needs of our clients without any use of our balance sheet.\nNeedless to say, our revenue aspirations for this business have grown materially.\nThe first quarter also saw a number of significant transactions in the convertible debt space, which we launched in the third quarter of 2020, including our first sole book-run convertible offering and an active book-runner position on a biotech convert.\nThese transactions are indicative of the breadth and diversity of our platform and our capacity to meet increasingly diverse client needs.\nOur investments in ECM have earned us a place in the top 20 for underwriting revenue as estimated by Dealogic when bot deals are excluded.\nWe continue to believe that we have runway here and we are focused on systematically gaining share as we have done in Advisory historically.\nThe breaking into the Top 10 currently seems challenging given our aversion to block trades and our independent balance sheet light approach.\nActivity in our Private Capital Advisory businesses.\nOur secondaries advisory business, which we call PCA; our primary fundraising business, which we call PFG; and our real estate fund-raising in secondaries business, which we call RECA continues to be strong as volumes increased meaningfully during the quarter.\nOur success in this area is driven by the strength of our client relationships and our superb execution track record, including our unique success executing transactions done solely through remote communication.\nIn restructuring, the team's activity level and footprint are resetting back toward historical levels as the economy and debt market liquidity have meaningfully improved.\nThe team continues to work through assignments started in 2020 and is also focused on new liability management, private financing and conventional restructuring assignments in sectors that are still stressed by the pandemic.\nIn equities, client connectivity and engagement continue to be strong as our macroeconomic and fundamental analysts continue to provide valuable insights to institutional clients.\nOur team also has continued to meet high client demand for our robust virtual conferences, webinars and corporate access events.\nThe investments that we have made in our platform to support our ECM franchise including convertibles performed well during the quarter and are natural capability extension for us.\nAnd we continue to expand our sector coverage with Mark Mahaney's launch on Internet stocks earlier this month.\nAnd as we've always said, we will continue to look for senior impactful analysts who will serve our clients and contribute to the growth of this business.\nFinally, our Wealth Management business continue to grow AUM as long-term performance has remained very solid and as we have continued to provide important advice to our client.\nLet me now turn to discuss some of our priorities for the remainder of the year.\nAs we think about the rest of the year, we are focused on several important items.\nFirst, we are intensely focused on continuing to position our business for sustaining long-term growth by number one, providing outstanding advice and execution of our clients as we continue to advise them on their most important strategic financial and capital decisions; number two, by continuing to enhance our coverage of the most significant client groups, including our initiatives around the Evercore 100 and financial sponsors; number three, investing to further deepen and broaden our capabilities by continuing to build out certain industry groups, geographies and product capabilities.\nSecond, we are focused on planning for our return to our offices globally with the health and safety of our employees and their families paramount as we develop and execute our plans.\nThird, we are highly focused on integrating diversity, equity and inclusion and sustainability more completely into how we conduct our business and how we hire, train and mentor our talent.\nAnd finally, we are focused on operating with financial discipline and delivering strong returns to our shareholders, returning excess cash not needed for growth investments to our shareholders through dividends and share repurchases while maintaining a strong and liquid balance sheet.\nWe are actively recruiting A-plus and A talent in advisory to our team, and we continue to have many conversations with talented individuals in key sectors and geographies, including TMT, fintech, biopharma, healthcare, consumer, financial sponsors, and Europe.\nEqually important is our long-term commitment to attracting, recruiting, mentoring and promoting talented professionals and promoting them to Senior Managing Director from within.\nWe strongly believe that in-person collaboration, training and mentorship are crucial to our culture and our apprenticeship model.\nThese experiences are most effective when we are together and contribute to the development of our future leaders, which is why we are so focused on our return to office over the next several months.\nWe are pleased to be sustaining advisory Senior Managing Director productivity that is at a materially higher level than our long-term average.\nHowever, we are finding, probably due to the pandemic, that it is taking new hires and new internally promoted Senior Managing Directors a little longer, perhaps a year or so longer, to reach full productivity.\nFortunately, this longer ramp time means that we have more partners who will contribute to our future growth.\nThe first quarter results and achievements that John and I have summarized and really are results over the past year could not have happened without the dedication, teamwork, collaboration and commitment of our entire team.\nEvery single one of our employees has stepped up to the challenges of the past year plus and there have been many such challenges.\nWe very much look forward to bring our teams back together in person soon, so that we can continue to build and strengthen the culture that has been the foundation of our success.\nBeginning with GAAP and some related metrics.\nFor the first quarter of 2021, net revenues, net income and earnings per share on a GAAP basis were $662 million, $144 million and $3.25 respectively.\nOur GAAP tax rate for the first quarter was 16.1% compared to 25.8% for the prior year period.\nThe appreciation in the firm's share price upon vesting of employee share-based awards above the original grant price positively affected our effective tax rate on both the GAAP and adjusted basis.\nOn a GAAP basis, our share count was 44.5 million shares for the first quarter.\nThe share count for adjusted earnings per share was $49.4 million for the quarter.\nFocusing for a moment on non-compensation costs, as John noted, we continued to generate significant operating leverage, in part due to lower non-compensation costs.\nFirmwide non-compensation costs per employee were approximately $40,000 for the first quarter, down 9% on a year-over-year basis.\nThe decrease in non-compensation costs per employee versus last year primarily reflects lower travel and related expenses.\nAs we continue to evolve toward more normal operations, including returning to our offices and engaging in person with our clients, costs associated with recruiting, travel, entertainment and other expenses are expected to increase.\nCommissions and Related Fees has been renamed to Commissions and Related Revenues and now includes riskless principal profits, which were previously in Other Revenue including interest and investments.\nThe reclassified revenue principally represents the spread income earned from riskless principal transactions in convertibles and other fixed income securities.\nFinally, focusing on the balance sheet, two points.\nOn March 29th, we issued $38 million of aggregate principal amount of unsecured senior notes with a 1.97% coupon through a private placement.\nWe used the proceeds from the notes to refinance senior notes that matured on March 30th.\nAnd finally, at the end of the quarter, we held $411 million in cash and cash equivalents and $873 million in investment securities down from year-end due to compensation-related payments and strong return of capital.\nOperator, if you could open the line?\n",
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"content": "compname reports record first quarter 2021 results increases quarterly dividend to $0.68 per share.\ncompname reports record first quarter 2021 results; increases quarterly dividend to $0.68 per share.\nqtrly earnings per share $3.25.\nqtrly adjusted earnings per share $3.29.\nqtrly adjusted net revenues of $669.9 million increased 54%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Hallie Miller, Evercore's Head of Investor Relations.\nJoining me on the call today are Ralph Schlosstein, and John Weinberg, our Co-Chairman and Co-CEOs; and Bob Walsh, our CFO.\nAt this time, it is uncertain how long our business will be negatively affected by COVID-19 and the associated economic and market downturn.\nThese factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe continue to believe that it is important to evaluate Evercore's performance on an annual basis.\nAs we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings.\nLet me start by saying that it is a pleasure to be doing my first call with John as Co-Chairman and Co-CEOs of Evercore.\nOur new titles formalize what we have been doing for several years already, and along with Roger, whose role has not changed at all, contrary to some reports in the press, we greatly look forward to a very successful future for Evercore.\nI am sure you will agree that the challenges of the past quarter have been myriad and significant.\nFirst, the rapid spread of COVID-19 pandemic drove lockdowns around the world and has inspired a race to develop diagnostics, treatments and vaccines.\nThe pandemic and lockdown then gave rise to an unprecedented global economic downturn, record levels of unemployment and in response, fiscal and monetary stimulus that has been applied with unprecedented size and rapidity.\nFinancial markets became predictably volatile, first down and then up, but they currently are reasonably healthy, in stark contrast to the health of the real economy.\nAnd in the midst of all this, a much needed call for a higher level of equality and social justice in our society, and a significantly greater commitment to diversity and inclusion in the workplace.\nMy partnership with John and Roger, and more broadly the culture within our Firm, has helped us navigate this challenging environment and to stay focused on both our clients and our people.\nBefore I comment on our results, I want to provide an update on how, we as a Firm, have responded to these events in the first half from both an operational and a business standpoint.\nThe vast majority of our team continues to work remotely that we are beginning to return to working in some of our offices.\nThis transition back to the office, in contrast to our move to working remotely, is happening at a measured pace consistent with local government directives designed to protect the communities in which we work, and our own policies to protect our people and their families.\nWe have embraced new technologies that allow us to communicate with our clients and our colleagues, despite our physical distance and we remain focused on the needs of our clients, helping them by leveraging our broad and diverse capabilities.\nThis focus has resulted in a number of things.\nFirst, M&A assignments that made strategic sense before the downturn have continued to be announced, or if announced, have been completed.\nCapital raising and assignments, both in the equity and debt markets have been occurring at levels dramatically higher than that at any time in our history.\nAnd we have seen an unprecedented surge of restructuring and refinancing transactions often on a highly expedited basis.\nAnd finally, on our invest -- on our research and in our Wealth Management business, a greater engagement with investing clients than at any time in our history.\nJohn will cover our performance in greater detail in his remarks.\nFollowing the tragic events in Minnesota, we also saw a much needed call for a higher level of social justice and more extensive commitment to diversity and inclusion in the workplace, in the US and elsewhere, a call that we strongly embrace.\nWe have taken the time to reflect on calls for social justice and have thought hard about racism and prejudice that's still persist in our society today.\nWe have come away with the awareness and commitment that we need to strengthen our own diversity and inclusion efforts here at Evercore.\nWe are a market leader for our business accomplishments and we will expand the same energy and focus on our diversity and inclusion initiatives, not just to make ourselves better, but to try and have a more positive impact on our communities and the world in which we live.\nAs we look to the second half of the year, we are following a set of operating principles that are very similar to those that we discussed with you three months ago.\nFirst, we remain committed to ensuring the health, wellness and safety of our team and their families, and to achieving our diversity and inclusion goals.\nSecond, our teams are focused on addressing the immediate needs of our corporate, institutional investor and wealth management clients, while helping them be better positioned for the eventual economic recovery.\nThird, we are sustaining our operating infrastructure to support flexible and efficient working arrangements as we plan and implement our return to office on a thoughtful and disciplined basis.\nAnd finally, we remain committed to maintaining our strong and liquid balance sheet.\nOur results for the second quarter and the first half reflect both the momentum that we had in M&A before the onset of the pandemic, and our ability to pivot to meet our clients' changing needs in currently challenging economic and financial markets.\nAs a general matter, previously announced M&A transactions continued toward completion and the broader advisory capabilities that we have built and strengthened over the last several years have allowed us to continue to serve our clients on their most pressing financial and strategic issues.\nLet me turn specifically to the numbers.\nSecond quarter adjusted net revenues of $513.9 million, decreased 4% versus the second quarter of 2019.\nFor the first six months of 2020, adjusted net revenues of $948.9 million, decreased 1% versus the prior year.\nAlthough our revenues from Investment Banking, that is advisory fees, underwriting fees and commissions, increased by 2% versus the prior period.\nSecond quarter advisory fees of $336.5 million declined 24%, compared to the second quarter of 2019, which was an unusually strong quarter.\nIn fact, our third best quarter for advisory fees in our history.\nAdvisory fees for the six months of 2020 were $695.6 million, a decline of 10%, compared to the prior year period.\nWe expect our market advisory share -- our market share in advisory fees, among all publicly reported firms, on a trailing 12-month basis to be 8.2%, compared to 8.3% at year-end 2019.\nSecond quarter underwriting fees of $93.6 million, increased more than 450%, compared to the second quarter of 2019.\nUnderwriting fees in the second quarter were higher than our underwriting fees for all of 2019, which was a record year in underwriting fees for us.\nFor the first six months of the year, underwriting fees were $114.7 million, an increase of more than 160% versus the prior year period.\nThird quarter underwriting fees are already off to a strong start and we are working hard to sustain this momentum.\nCommissions and related fees of $54.1 million, increased 11% versus the second quarter of 2019.\nFor the first six months of 2020, commissions and related fees of $109.5 million, increased 21% versus the prior year period.\nAsset management and administration fees from our consolidated businesses were $15.2 million, an increase of 4%, compared to the second quarter of 2019.\nFor the first six months of 2020, asset management and administration fees from our consolidated businesses were $30.5 million, an increase of 5% from the prior year period.\nTurning to expenses, our compensation ratio for the second quarter is 65%, and our compensation ratio for the first six months of 2020 is 63.6%.\nA word of explanation about the compensation ratio, the 63.6% accrual in the first half reflects, as it has in past years, an estimate for the full-year compensation ratio, which includes an estimate for 2020 incentive compensation.\nGiven the uncertainty about revenues for the remainder of the year and the uncertainty about the level of market compensation for our younger employees in 2020, we have significantly more uncertainty about the full-year compensation ratio than at this time in prior years.\nOur intention is to pay our younger employees at market rates as we always have, and to pay our more senior employees in a way that fairly balances the short-term and longer-term interests of our shareholders.\nThe short-term interest being higher earnings this year and the longer-term interest being keeping the team together that has produced more than $2 billion of revenue in 2018 and 2019 and investing in new talent for our future growth.\nSo, we are doing our best to have our six-month compensation ratio be within the range of possible outcomes for the full-year, although the uncertainty about both revenues and market compensation for our employees is considerably higher than in prior years.\nNon-compensation costs of $77.1 million in the second quarter declined 11% from the second quarter of 2019.\nFor the first six months, non-compensation costs of $159.9 million, declined 4%.\nBob will comment on this further in his remarks.\nAdjusted operating income and adjusted net income of $102.7 million and $71.8 million, declined 26% and 29%, respectively, and adjusted earnings per share of $1.53, declined 26%, all versus the second quarter of 2019.\nFor the first six months of 2020, adjusted operating income, and adjusted net income of $185.3 million and $129.6 million, declined 21% and 29%, respectively, and adjusted earnings per share of $2.74, declined 27% versus the prior six-month period.\nWe remain focused on our capital return and management strategy.\nYear-to-date, we returned $206 million to shareholders through dividends and repurchase of 1.9 million shares at an average price of $76.22.\nWe have offset the dilution associated with equity grants for the year.\nSo any additional share repurchases in 2020 will be dependent on our second half revenues and earnings, balanced by our intention to maintain our strong liquidity position.\nOur Board declared a dividend of $0.58, consistent with prior quarters, and reflective of our results for the quarter.\nOur Board and management will continue to evaluate the dividend on a quarterly basis, as the effect of the pandemic on revenues becomes more clear.\nAlthough the current expectation, absent any extraordinary steep decline in revenues and a significant reduction in our cash position, is that our current dividend will be maintained.\nThe volatile market environment has created opportunities across products, geographic regions, and industry sectors.\nAs the quarter began, merger activity was muted as clients managed through the dislocation of the sudden impact of the COVID-19 pandemic.\nWe were fortunate to have the opportunity to assist our clients with broad-based debt advisory assignments, equity issuance, as well as advising them on restructuring challenges.\nOur restructuring group has been especially busy.\nWe believe opportunities to assist our clients will continue as accommodative credit markets are giving companies time to address their liquidity needs and recover.\nWe believe there is significant opportunity in several sectors, including energy, consumer, retail and industrials.\nIn the capital markets, there has been extensive opportunity to assist clients in raising capital in both the debt and equity markets, in both the private and public arenas.\nWe had our strongest period ever in equity underwritings, and while we do not participate materially in public debt capital raises, we had the opportunity to assist clients on a number of innovative liability management assignments.\nThe momentum in our debt advisory and equity capital markets businesses has continued into the third quarter.\nPrivate capital transactions for sponsors slowed considerably in the beginning of the quarter, but it's picked up more recently as issuers have become comfortable conducting diligence virtually.\nActivism assignments similarly slowed early in the quarter, but the pace of business has started to recover more recently.\nInvestor clients remains focused on financial markets throughout the quarter, both institutional and wealth management, and trading activity remained high.\nSignificantly, during the quarter, the level of announced M&A activity slowed dramatically, as clients appropriately turned inward driving many of the activities I just summarized.\nAnnounced M&A volumes were down 41% in the first six months of 2020, and the number of announced transactions is down 15%.\nThe second quarter was particularly weak, announced global M&A volumes were down more than 50%, compared to last year's second quarter and the number of announced transactions declined 29%.\nSeveral of the key conditions necessary for a healthy M&A market were absent in the most -- in most sectors of the economy during the quarter and remain generally absent today.\nHowever, the basis of recovery may be forming.\nThe equity markets are currently strong for many sectors.\nAccess to financing and readily available capital and credit began to improve throughout the quarter.\nAnd CEO confidence began to slightly improve as the quarter closed, but granted from a low pace.\nDialogues and discussions with clients around strategic opportunities have begun to slowly pick up during the last few weeks and processes involving financial sponsors are beginning anew.\nI am, for the moment, guardedly optimistic about the merger market overall.\nWhen the markets began to show sustained stability, CEO confidence will grow, which will drive an increase in strategic activity.\nUntil then, we will continue to actively communicate and engage with our clients to help them navigate the current challenges and to be there with them during the eventual recovery.\nLet me now turn to our performance in Investment Banking.\nOur revenues during the second quarter and first six months of 2020 held up well despite increasingly challenging conditions.\nWe sustained our number one ranking for volume of announced M&A transactions over the last 12 months, both globally and in the US among independent firms.\nAmong all firms, we are once again number four in the US in announced volume over the last 12 months, and we ranked number three among all firms in the US based on number of transactions for the first six months of 2020.\nWe continue to work hard to increase our share of the market.\nWe were pleased to continue to advise on some of the most important M&A assignments of the first half, including three of the 10 largest global M&A transactions, and four of the five largest M&A transactions in the United States.\nOur restructuring and debt advisory teams are extremely busy.\nOur US restructuring team has worked on the same number of assignments in this first half as it did for the entire year of 2019.\nWe are pleased that we ranked number one among all firms in number of announced restructuring deals and number of completed restructuring deals in the US in the league tables for the first half of the year, and we've been involved in seven of the 10 largest bankruptcies by total actual liabilities year-to-date.\nThese accomplishments stem from our model of integrating our restructuring and debt experts, and our industry-focused bankers.\nOur deep expertise in restructuring and debt matters was central to our ability to work with a number of large new client.\nTwo recent examples include we were an advisor to Boeing on a $25 billion offering of senior notes, and an advisor to Ford on its $8 billion debt financing.\nDeep expertise was also a catalyst for our work in specialized markets, for example, PIPEs, where we advised on four of five announced PIPE deals before the financing markets reopened.\nOur underwriting business has performed extremely well in the market.\nWe served as an active bookrunner or co-manager on six of the 10 largest IPOs in the first half of 2020.\nWe completed our largest ever active bookrun transaction when we advised PNC on the secondary offering of its 22% stake in BlackRock.\nAt the time of the announcement, this deal was the largest deal year-to-date.\nWe advised Danaher on its upsized $3.1 billion offering which was split between common stock, and convertible preferred stock.\nAnd we were an active bookrunner on select quote [Phonetic], the first non-healthcare IPO in the COVID environment.\nWhile these large assignments contributed meaningfully to our quarterly results, we also participated in many more transactions across a broad range of sectors, demonstrating our ability to work in diverse areas and markets.\nAnd while issuance is up across the board, we also more than doubled our overall share in the first six months, compared to the same period last year.\nOur shareholder advisory and activism defense and our private capital advisory businesses and assignments are already in progress and we move toward completion in many.\nWe are proud to advise on the first-ever proxy contest, to have decided in a virtual annual meeting.\nIt was a successful outcome for our client, and our Private Funds Group completed the first fully virtual fund-raise, which was oversubscribed and attracted both current and new investors.\nIn our equities business, our connectivity with investor and advisory assignment remains elevated as they have become to rely on us for valuable insights during a period of significant market dislocation and our traders continue to help our clients execute in volatile markets.\nOur people have responded to the challenges of the current environment and have served our clients with distinction.\nThe results I just summarized are testament to their teamwork and their commitment to our clients and to one another.\nWe will remain open to opportunistically adding other high-quality individuals who can bring value to our clients.\nFinally, as we look toward the second half of the year, we are aware of the many headwinds and uncertainties ahead.\nDespite the challenges of working apart, our results so far in 2020 demonstrate the power of a team working extremely well together with a consistent focus on clients.\nIt is this kind of collaboration that defines us.\nAnd it's a key ingredient to our ongoing success.\nI very much and looking forward to continuing to lead Evercore through this downturn and eventual recovery in partnership with Ralph, and of course, Roger.\nI truly believe that our best opportunities are ahead of us, and I'm excited by the prospects and direction of our Firm.\nStarting with our GAAP results.\nFor the second quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $507.1 million, $56.4 million, and $1.35, respectively.\nFor the first half of 2020, net revenues, net income and earnings per share on a GAAP basis were $934 million, $87.6 million, and $2.08, respectively.\nConsistent with prior periods, our adjusted results exclude certain items that principally relate to our acquisitions and dispositions and also include the full share count associated with those acquisitions.\nSpecifically, we adjusted for costs associated with the vesting of Class J LP Units, granted in conjunction with the ISI acquisition.\nFor the first half, we expensed $1.1 million related to the Class J LP units.\nThe Class J LP units have been fully expensed.\nOur adjusted results for the quarter also exclude certain items related to the realignment strategy that began in the fourth quarter of 2019.\nAs we noted last quarter, we expect to incur separation and transition benefits and related costs of approximately $38 million, $8.2 million of which was recorded as special charges in the second quarter of 2020.\nThese charges are excluded from our adjusted results.\nYear-to-date, we have recorded $30.3 million as special charges related to the realignment initiative.\nAs we mentioned on our last call, we have entered into an agreement with the leaders of our business in Mexico to purchase our broker-dealer there, which principally provides investment management services.\nCompletion of this sale is subject to regulatory approval.\nWe have requested that approval in June and closing is expected to occur shortly after approval is granted.\nWe continue to review additional opportunities in smaller markets.\nThese opportunities could result in further charges in 2020 if pursued to completion.\nAnd separately, we completed the sale of a Trust business, which was part of the ECB during the second quarter.\nOur adjusted results for the quarter and first six months also excluded special charges of $0.4 million and $1.9 million, respectively, related to accelerated depreciation expenses.\nTurning to other revenues.\nSecond quarter other revenue increased compared to the prior-year period, primarily as a result of gains of $15.5 million in the investment funds portfolio, which is used as an economic hedge against a portion of our deferred cash compensation program.\nOther revenues for the first six months of 2020 decreased versus the prior year, primarily reflecting a net loss of $6.8 million on this investment fund portfolio.\nThis amount will, of course, fluctuate and a significant market rebound during the quarter drove the quarterly gains.\nWhile the quarter gain -- though the quarter gains were not enough to more than offset the first quarter market decline.\nWith regard to non-compensation costs.\nFirmwide non-compensation costs per employee were approximately $43,000 for the second quarter, down 13% on a year-over-year basis.\nThe decrease in non-compensation costs per employee versus last year primarily reflects lower travel and related expenses and professional fees.\nAs we mentioned on our last call, we began a thorough review of our non-compensation costs before the COVID-19 pandemic.\nWe continue to adapt our operations in response to the current downturn and remain focused on reducing our non-compensation costs, including cutting non-essential costs related to travel, research and subscriptions, and deferring certain capital projects, so we are well positioned throughout the downturn, as well as into the inevitable recovery.\nOur GAAP tax rate for the second quarter was 24.5%, compared to 24.8% in the prior-year period.\nOn a GAAP basis, the share count was 41.9 million for the second quarter.\nOur share count for our adjusted earnings per share was 47 million shares, down versus the prior-year period, driven by share repurchases and a lower average share price.\nFinally, with regard to our financial position, we hold $1 billion of cash and cash equivalents, and approximately $100 million in investment securities as of the end of the quarter, as we had transitioned nearly all liquid assets to cash and cash equivalents in the first half.\nOur current assets exceed current liabilities by approximately $950 million.\nAs Ralph noted, we continue to monitor our cash levels, liquidity, regulatory capital requirements, debt covenants and all of our other contractual obligations regularly and carefully.\nWe'd now be pleased to answer any questions.\n",
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"content": "compname reports quarterly dividend of $0.58 per share.\ncompname reports second quarter 2020 results; quarterly dividend of $0.58 per share.\nqtrly net revenues of $507.1 million decreased 5%.\nqtrly diluted earnings per share $1.35.\nqtrly adjusted earnings per share $1.53.\nevercore - m&a activity remains limited, uncertainty and market volatility have led to delays or, in some cases, terminations of transactions in quarter.\nin conjunction with employment reductions, expects to incur separation & transition benefits and related costs of about $38 million.\n$30.3 million of separation and transition costs has been recorded as special charges in first six months of 2020.\nobserved initial decline in equity underwriting activity during early stages of covid-19 pandemic.\nrestructuring, debt advisory and capital markets advisory businesses remain very active.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Hallie Miller, Evercore's Head of Investor Relations.\nJoining me on the call today are John Weinberg and Ralph Schlosstein, our Co-Chairman and Co-CEOs; and Bob Walsh, our CFO.\nThese factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe continue to believe that it is important to evaluate Evercore's performance on an annual basis.\nAs we have noted previously, our results for any particular quarter are influenced by the timing of transaction closings.\nWe began our last earnings call commenting on what a difference a year had made.\nAnd as we sit here today, not only are things dramatically different from a year ago, but things are also somewhat better than even three months ago.\nOver the past three months, we have witnessed a material improvement in the global economy, in global markets and in Evercore's business.\nThe rollout of COVID-19 vaccines accelerated in the U.S. and in many countries around the world during the quarter, and we experienced a decline in new daily cases in areas where vaccination rates are high.\nWe are grateful for the progress being made against the pandemic, but we also are cognizant that there are many around the world who have not been as fortunate to date and are in earlier stages of overcoming this pandemic.\nAnd while we are encouraged by the progress being made overall, we continue to monitor the new COVID variants, the ongoing vaccine rollout in the U.S. and other parts of the world and the data on infection rates, which unfortunately seem to be rising right now, particularly in areas with lower vaccination rates.\nWe have delivered strongly for our clients over the past 17 months advising them on their most important strategic, financial and capital requirements during one of the most uncertain and volatile periods of our lifetimes.\nAnd we produced extraordinary financial results for our shareholders.\nAnd while we achieved a lot while operating as a predominantly remote firm, we are genuinely energized by the reopening of our offices that began toward the end of the second quarter.\nWe remain firmly committed to our culture of in-office collaboration, apprenticeship and mentorship, and we look forward to bringing our teams back to the office over the next several weeks and months.\nThat said, we have learned a lot about operating flexibly over the past 17 months, and we are committed to integrating more flexible work arrangements into the way we work going forward.\nAs the macroeconomic environment continued to strengthen throughout the quarter, our business did as well.\nOur results, which represent the best first half in our history, reflect the breadth and diversity of our capabilities, our team's relentless client focus and the continued favorable environment for M&A and capital raising.\nAnd while we continue to believe that we are in the early stages of the next M&A up-cycle, we are mindful that the resurgence of the virus in certain geographies, the outlook for inflation in interest rates and potential regulatory scrutiny and tax changes could affect the trajectory and the length of that up-cycle even though there is absolutely no evidence of that today.\nHigh levels of announced M&A transaction volume continued during the quarter.\nThe total dollar volume of announced M&A increased 17% sequentially as the number of transactions increased 7% and the average deal size increased 10%.\nIn fact, the second quarter represents the fourth straight quarter to surpass up $1 trillion in announced M&A activity and the first time ever the trailing 12 months activity exceeded $5 trillion.\nAnd large transactions are making a significant comeback compared to this time last year.\nThis continued high level of activity led to record second quarter revenues and is adding yet again to our already strong backlogs.\nAll of our capital advisory businesses, public and private debt and equity, continue to be meaningful contributors to our firmwide results.\nWhile the hot market for equity issuance cooled a bit during the quarter, it still remains well above historical averages.\nThe investments that we have made in our ECM capabilities and our enhanced sector coverage enable us to participate in a wide array of assignments across many sectors and to take an increasingly large role in these assignments.\nIn the private capital advisory businesses, momentum in capital raising for financial sponsors continued and secondary market activity remained high, particularly activity related to single asset and multi-asset continuation funds.\nTraditional restructuring opportunities have been more limited, given the strength of the economic recovery, the strong availability of credit and the positive environment for M&A and capital raising.\nBut our team is adapting to meet client needs, working with financial sponsors and creditors on liability management and debt advisory assignments, though admittedly not as busy as they were in July of last year.\nOur equities business, Evercore ISI, continues to produce and deliver high-quality research and service to our clients, and we continue to make investments in our platform.\nThe team delivered a solid quarter, in line with its historical 3-year quarterly average, as the impact of lower volatility and trading was partially offset by investments we have made to support our clients more broadly, particularly in converts and agency options.\nAnd solid performance continues to drive assets under management growth in our Wealth Management business.\nWe continue to add talent in all parts of the firm, providing the fuel for future growth.\nAnd John will talk more about this in his remarks.\nWe look forward to working with Celeste as she helps to drive the next stage of our firm's growth.\nLet me now turn to our financial results.\nWe achieved record second quarter and first half adjusted net revenues, adjusted operating income, adjusted operating margin, adjusted net income, adjusted earnings per share, driven by continued revenue growth and strong operating leverage.\nSecond quarter adjusted net revenues of $691.2 million grew 34% year-over-year.\nYear-to-date, adjusted net revenues of $1.36 billion increased 43% compared to the prior year period.\nSecond quarter advisory fees of $561.4 million grew 67% year-over-year.\nYear-to-date advisory fees of $1.07 billion increased 54% versus the prior year period and represent the first time that we have exceeded $1 billion in advisory revenues for the first half of the year.\nOur trailing 12-month advisory fees exceeded $2 billion for the first time in our history.\nBased on current consensus estimates and actual results, we expect to maintain our number 4 ranking in advisory fees among all publicly traded investment banking firms for the last 12 months and to grow our market share relative to these firms.\nIn the first half of the year, we also continued to narrow the gap between Evercore and the number 3 ranked firm in terms of trailing 12 months advisory fees.\nOur efforts to solidify further our position as the leading independent investment bank and to compete with firms larger than us have been recognized by clients and by industry observers as we were recently selected by Euromoney to be North America's best bank for advisory in 2021, and that was among all firms, not just among the independent firms.\nSecond quarter underwriting fees of $48 million declined 49% year-over-year, but excluding two sizable fees during the second quarter of 2020, one from PNC BlackRock and one from Danaher, underwriting fees were essentially flat year-over-year.\nYear-to-date, underwriting fees of $127.3 million increased 11% versus the prior year period, even including the PNC BlackRock and Danaher fees.\nWhile there was a slowdown in equity issuance during the quarter, largely driven by fewer SPAC IPOs, demand for capital raising continues to be strong more broadly.\nThe breadth of our capabilities and enhanced sector coverage have enabled us to work on diverse assignments for clients, and our second quarter underwriting revenues include engagements from seven different sectors.\nSecond quarter commissions and related revenue of $50.7 million declined 7% year-over-year as both volumes and volatility were lower relative to the elevated levels in the second quarter of 2020.\nYear-to-date commissions and related revenues of $104.3 million declined 5% versus the prior year period.\nYear-to-date revenues are 6% higher than the first half average of the prior three years, which includes the extreme volatility during the first half of last year.\nSecond quarter asset management and administration fees of $19 million increased 25% year-over-year as quarter end AUM were $11.1 billion, an increase of 23% year-over-year, principally related to positive investment performance and market appreciation.\nYear-to-date asset management and administration fees of $36.8 million increased 21% versus the prior year period.\nOur adjusted compensation ratio for the second quarter and year-to-date is 59%.\nThis reflects our current best judgment on compensation for the year, recognizing both the factors that may affect revenues in the second half of the year and the current pressures on market compensation for our industry.\nAs always, we will reassess our compensation ratio at the end of the third quarter and again at year-end and make adjustments then, if appropriate.\nSecond quarter noncompensation costs of $73.1 million declined 5% year-over-year.\nOur noncompensation ratio for the second quarter is 10.6%.\nYear-to-date noncompensation costs of $145.8 million declined 9% versus the prior year period, and Bob will comment more on noncomp expenses in his remarks.\nSecond quarter adjusted operating income and adjusted net income of $210 million and $154 million increased 105% and 115%, respectively.\nYear-to-date adjusted operating income and adjusted net income of $412 million and $316.5 million increased 122% and 144%, respectively.\nWe delivered a second quarter operating margin of 30.4% and second quarter adjusted earnings per share of $3.17, an increase of 107% year-over-year.\nYear-to-date adjusted margin is 30.3% and adjusted earnings per share of $6.47 increased 136% versus the prior year.\nFinally, we continue to execute our capital return strategy, and we resumed our historical policy of returning cash not needed for investment in our business to our shareholders through share repurchases and, of course, dividends.\nWe returned $221 million to shareholders during the quarter through dividends and the repurchase of 1.4 million shares.\nYear-to-date, we returned nearly $500 million through dividends and the repurchase of 3.3 million shares, a record level of capital return for our shareholders.\nWe achieved our commitment to offset the dilution associated with our annual bonus RSU grants through share repurchases in the first quarter.\nSo these additional repurchase in the second quarter represent discretionary buyback activity that shrinks the shareholder base.\nOur dividend -- our Board declared a dividend of $0.68.\nOur second quarter and first half results reflect the breadth and diversity of our capabilities supported by a positive macroeconomic environment for strategic merger activity, capital raising and investing.\nBoth strategics and financial sponsors have been driven to transact as they are focused on growth opportunities, technological disruption and the role of ESG.\nAnd with the key ingredients for M&A strengthening, the volume number and size of announced transactions increased during the quarter.\nIn this robust environment, our teams have been busy working on a variety of assignments globally for our clients.\nWe sustained our number 1 league table ranking in dollar volume of announced M&A transactions in the U.S. among independent firms for the 12-month period ending June 30.\nOur high level of activity is translating to our financial results.\nWe achieved a third straight quarter of advisory revenues greater than $500 million.\nAnd as Ralph mentioned, we surpassed $1 billion in the first half advisory revenues for the first time with strong contribution across capabilities globally, including M&A, capital advisory and strategic defense and shareholder advisory.\nWe have prominent roles on some of the biggest announcements of the year, including serving as the lead advisor to Grab on its $40 billion SPAC merger, the largest SPAC merger in history and serving as the sole advisor to Nuance on its pending $19.7 billion sale to Microsoft.\nAnd we worked on a greater number of assignments and grew our average fee size in the first half compared to the first half of last year.\nOur industry-leading strategic defense and shareholder advisory team continues to be extremely busy and is currently advising companies representing $1.5 trillion in market value in activist defense.\nThis is an important capability for us because many of our defense clients subsequently turned to us for advice on strategic matters.\nOur underwriting business had a solid quarter, and activity and backlogs in this business continue to be strong.\nWe participated in a number of significant transactions across a variety of sectors during the second quarter, including 31 transactions that raised nearly $10 billion in total proceeds across seven sectors.\nAnd of the ECM transactions that we participated in during the quarter, 60% were as an active bookrunner, including in consumer lead left bookrunner on Post Holdings SPAC; in biopharma active bookrunner on Centessa Pharmaceuticals IPO; and in e-commerce active bookrunner on 1stDibs IPO.\nAnd we participated in our first direct listing for ZipRecruiter as their financial advisor.\nAs we mentioned last quarter, our investments in our ECM platform have earned us a place in the top 20 for underwriting revenue as estimated by Dealogic for the 12-month period ending June 30 for deals listed on the U.S. exchanges, excluding bought deals.\nWe are focused on strategically gaining share and working our way toward the top 10, which is currently comprised of banks that use their balance sheets to win underwriting business.\nGiven our strategic approach to SPAC underwriting, we believe we can consistently gain share without the volatility that others, who work highly dependent on SPACs, may experience.\nActivity in our private capital advisory groups, our secondaries advisory business and our primary fundraising business continued to be very strong.\nOur success in this area is driven by our strong client relationships and our outstanding track record.\nIn restructuring, many companies and sectors continue to take advantage of the strong economic recovery and access to capital to restructure out of court.\nOur team continues to work through previous engagements and is focused on liability management assignments and partnering with our debt advisory team for private financing activity.\nWe continue to believe that there could be a longer tail to the restructuring cycle as certain sectors and companies take longer to recover.\nIn equities, while volumes and volatility moderated from their pandemic highs across the street, we remain engaged with our clients and focused on producing and delivering high-quality research and service for them.\nOur corporate access team was especially busy in the quarter and ran three flagship conferences, including our inaugural TMT Conference, our 13th annual macro investment conference and our 2nd Annual Consumer & Retail Summit, each with hundreds of institutional investors participating.\nWe also arranged highly topical full-day thematic events that were well attended by clients.\nOur newer capabilities, including options and convertibles, continued to perform well during the quarter as well.\nFinally, assets under management and our Wealth Management business finished the quarter at $11.1 billion as long-term performance remains solid and net new business continued to be positive.\nWe also made several hires for this team, including a National Director of Wealth Planning and a Director of Trust Services.\nLet me now turn to discuss some of our priorities going forward, including our initiatives focused on long-term growth.\nWe continue to believe that there is substantial opportunity to grow our investment banking business through a combination of maintaining our high current levels of activity, the continued seasoning of ramping SMDs as they work toward full productivity and broadening our footprint and our client coverage through strategic hiring.\nThe breadth and diversity of our platform positions us well to participate meaningfully in the current M&A and capital raising environment.\nWe also have more than 30 SMDs on our platform that have either joined or been promoted within the last three years that represent additional opportunities for growth as they continue to ramp to our high levels of productivity.\nAnd we continue to focus on expanding our capabilities, enhancing our sector and geographic coverage and improving our coverage of the most significant client groups.\nThe expansion of our underwriting capabilities has driven significant revenue growth, and there continues to be meaningful growth opportunities, as I mentioned just a few minutes ago.\nOn the advisory side, we believe that there is significant opportunity to expand our coverage model so that we can continue to grow both revenues and our share of fees.\nOur efforts to fill in the white space are focused on effectively covering large multinational firms and financial sponsors and enhancing our sector and geographic coverage, including the four techs, biotech, fintech, greentech and TMT, pharma and consumer and U.K. and Europe.\nAs we move into the second half of the year, we remain focused on adding talented individuals to our firm as we seek continued growth.\nWe're actively recruiting highly talented individuals to our team, and we continue to have many conversations with senior level candidates in the capabilities, sectors and geographies that can contribute to our growth objectives.\nCompetition for the caliber of talent we are recruiting is always high, and our dialogues with senior level recruits continue to be elevated.\nHistorically, we've added four to eight advisory SMDs per annum, and we continue to believe that we will be at or near the high end of that range and perhaps above it.\nIn addition to the two senior advisory directors who joined us earlier this year, we have three committed advisory senior managing directors who will join us over the next several months, strengthening our coverage of the healthcare, fintech and our coverage of financial sponsors.\nIn addition to hiring at the most senior levels, we are building out our teams at all levels to meet the demands of the industry and the elevated pace of activity.\nAnd we -- as we add to our teams, we are also focused on returning to our offices globally with the health and safety of our employee as our top priority, and we developed plans to meet that need.\nWe have seen a steady increase of in-person attendance over the summer months, and we look forward to up to a more full return in September.\nWe also continue to make meaningful progress on our ESG initiatives and diversity, equity and inclusion.\nIn May, we published our inaugural Sustainability Report and launched our dedicated DE&I web page.\nAnd just last week, we held two day of understanding events associated with our commitment as signatories of the CEO action pledge.\nWe look forward to continuing to have candid dialogue around DE&I and inspiring change across our firm globally.\nLastly, we remain committed to operating our firm with financial discipline and delivering strong returns to our shareholders, returning excess cash not needed for investments in our business or to fund prior deferred compensation arrangements to our shareholders through dividends, share repurchases, while maintaining a strong and liquid balance sheet.\nWe very much look forward to bringing our teams back together in person so that we can continue to build and strengthen the culture that has been the foundation of our success.\nAs always, let's begin with our GAAP results.\nFor the second quarter of 2021, net revenues, net income and earnings per share on a GAAP basis were $688 million, $140 million and $3.21, respectively.\nYear-to-date, net revenues, net income and earnings per share on a GAAP basis were $1.35 billion, $285 million and $6.46, respectively.\nDuring the quarter, G5 Holdings, our former affiliate in Brazil, repaid their outstanding note to us for approximately USD12 million, enabling us to financially exit our relationship there.\nThe settlement resulted in a gain of $4.4 million, which we have excluded from our second quarter 2021 adjusted net revenues.\nOur GAAP tax rate for the second quarter was 22.1% compared to 24.5% in the prior year period.\nYear-to-date, our GAAP tax rate is 19.2% compared to 25% in the prior year period.\nOn a GAAP basis, the share count was $43.7 million (sic) [43.7 million] for the quarter and $44.1 million (sic) [44.1 million] for the first half.\nOur share count for adjusted earnings per share was 48.5 million for the quarter and 49 million for the first half.\nFocusing on noncompensation costs.\nWe continued to generate significant operating leverage in part due to lower noncompensation expense.\nFirmwide noncompensation costs per employee were approximately $39,000 for the second quarter, down 8% on a year-over-year basis.\nThis level of noncompensation costs per employee contrasts to our 3-year quarterly average measured from 2017 to 2019 of approximately $47,000 per employee.\nNot surprisingly, the decrease in costs per employee versus last year primarily reflects lower travel expense.\nAs we look ahead, we expect expenses on a per head basis to begin to increase as we continue to evolve toward more normal operations, including returning to our offices, traveling to engage an in-person dialogue and meetings with our clients and recruiting and onboarding senior talent, which we expect in the second half of the year.\nWe do expect, however, some cost efficiency as we move forward as we utilize the technologies that enabled us to work so effectively over the past 16 months.\nLooking at our balance sheet.\nAs of June 30, we held $1.5 billion in cash and cash equivalents and investment securities, up from the prior quarter as our balance sheet grows throughout the year, as we accrue for compensation obligations that will be paid in the first quarter of next year.\nAs we have said before, we hold cash and investment securities to fund our obligations and commitments.\nCash and investment securities at the end of the quarter support the minimum level of capital required to operate our businesses, including regulatory capital requirements, accrued comp that is both on the balance sheet and committed but not yet expensed and, of course, earnings that were earned in the second quarter that have not yet been returned to shareholders.\nFinally, in closing for me and before we turn to questions, as Ralph noted and most of you know, this is my final earnings call with Evercore.\nThe past 14 years as the CFO of Evercore have been an exciting and challenging journey.\nThere have been several lively ones.\nWe have built a strong team over the years, a team that makes these calls easy for John, Ralph and me and a team that I have been privileged to work with and to lead.\nOur leadership, as are our analysts and investors, remain in very capable hands.\n",
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"content": "compname posts qtrly diluted earnings per share $3.21.\ncompname reports record second quarter 2021 results; quarterly dividend of $0.68 per share.\nevercore inc - qtrly diluted earnings per share $3.21.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Hallie Miller Evercore's, Head of Investor Relations.\nJoining me on the call today are Ralph Schlosstein, and John Weinberg our Co-Chairman and Co-CEOs and Bob Walsh, our CFO.\nThese factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe continue to believe that it's important to evaluate Evercore's performance on an annual basis.\nAs we've noted previously, our results for any particular quarter are influenced by the timing of transaction closings.\nIt's hard to believe that this is our third earnings call, for which we are not all together in the same conference room.\nFor today's call, John is in our offices in New York City, it's his week in the office and I am in my office in North Salem, New York and Bob is with our traders in our office in New Jersey.\nOur business thrives on in-person collaboration and teamwork, and while we have been quite effective and successful over the last seven-plus months, operating out of 1800 offices around the globe we certainly recognize that our business and our culture operate best when we are physically together.\nThat certainly is our ultimate goal once the virus is no longer a factor in our lives, but in the interim, we remain committed to serving our clients with distinction and to collaborating with one another, as we implement a gradual return to office around the world.\nThe first nine months of this year have been volatile, and have had significant challenges and uncertainties, but there also have been many opportunities to advise our clients on their most important, strategic and financial needs.\nThe strategic investments we have made to broaden and diversify our capabilities over the past several years have enabled us to serve our clients on a wide array of strategic and financial matters and resulted in solid quarterly and year-to-date results demonstrating both to our clients and our shareholders that Evercore very much is in all-weather firm that can produce good results in a wide variety of environments.\nThere unquestionably are still uncertainties ahead; the upcoming US election, Brexit, the path of the virus and the disparity between the financial market recovery and the real economic recovery with so many of our fellow Americans, Europeans and others around the globe still unemployed or with their small businesses shuttered.\nHowever, as we see the market for merger activity improve, and we continue to see robust activity in capital advisory, restructuring, underwriting and research and trading, we have never been more confident in our ability as a firm to help our clients achieve their most important strategic financial and capital objectives.\nBefore I comment on our financials, I want to provide a brief update on how Evercore has broadly responded to the events of this year and on what we are focused going forward.\nAs I mentioned, we are beginning to implement a very deliberate and thoughtful return to our offices around the globe.\nOur transition back is occurring at a measured pace and follows all local government guidelines designed to protect communities in which we work.\nThe health and safety of our employees and their families remains our paramount consideration, and the return of any individual has been of their own choice.\nMost of our colleagues, continue to work remotely and we anticipate that this will be the case for a reasonable period of time, probably measured in quarters rather than months.\nWe remain focused on pivoting to meet the needs of our clients and leveraging our broad and diverse capabilities to advise them, and the changing economic and financial environment.\nThe result is as follows: new M&A activity is being announced, in addition to the pre-downturn matters that have begun to reengage.\nWe are seeing continued momentum occurring in our capital advisory business both helping clients raise equity privately and publicly and advising clients on debt opportunities.\nRestructuring and refinancing transactions are continuing and we are having constant dialog with our clients about their future financing needs.\nAnd finally, we are experiencing strong engagement with investors looking for Research and our Wealth Management clients seeking strong financial advice.\nNon-M&A activity, including underwriting has been a distinct opportunity during the past several months and has become an increasingly important part of our business in the current environment.\nWe've been able to support clients to enhance their liquidity, raise investment capital and shore up their balance sheets.\nWe are particularly proud of our CAPS product, which is designed to be an alternative to SPACs which we originated during the quarter and which we are in the early stages of building our convertible securities capability, including enhancing our distribution capabilities and our origination team.\nThere was a significant increase in M&A announcements in the third quarter and that momentum seems to be continuing in the fourth quarter.\nDespite the many potential uncertainties which I outlined earlier as we look forward to the remainder of 2020 and into 2021, our backlogs are strong and we look forward to continuing our momentum in 2021 and in finishing this year strongly, and of course, we remain committed to maintaining our strong and very liquid balance sheet.\nLet me now turn to our results.\nWe are quite pleased with our results for the third quarter and first-nine months of 2020 as the diversity of our capabilities and the entrepreneurial spirit of our team, allowed us to deliver revenues that are essentially flat year-over-year.\nBelow average M&A transactions in March, April, May, June affected our third quarter advisory results.\nHowever, as you have seen, announced global M&A volumes nearly doubled in the third quarter compared to the second quarter and increased 38% compared to last year's third quarter in the US.\nIn the US, announced M&A volumes increased more than three-fold versus the second quarter and increased 55% compared to last year's third quarter.\nEach of the three months of the third quarter both global and US announced M&A transaction volumes were higher than the monthly average of the last two years and in September, global announced monthly volume surpassed $450 billion for only the second time in the past few years.\nThird quarter adjusted net revenues of $408.5 million and year-to-date adjusted net revenues of $1.36 billion were both flat versus the prior year periods.\nAs revenues from capital advisory, restructuring, underwriting and commissions and related fees largely offset the decline in revenues from lower M&A activity.\nThird quarter advisory fees of $271.2 million declined 16% year-over-year and year-to-date advisory fees of $966.8 million declined 11% compared to the prior year period.\nBased on the current consensus estimates and actual results, we expect our market share of advisory fees among all publicly reporting firms, on a trailing 12-month basis to be 8.3% compared to 8.1% at the end of June and 8.3% at year-end 2019.\nThird quarter underwriting fees of $66.5 million increased more than 275% year-over-year, and the year-to-date underwriting fees of $181.2 million nearly tripled versus the prior year period.\nThe diversification of our underwriting business has contributed to a real step up in momentum.\nNow, we continued to invest in broadening our industry coverage and our product capabilities.\nWe are working hard to sustain this momentum in the fourth quarter and have a meaningful and diversified pipeline of IPOs follow-ons and convertible securities.\nThird quarter commissions and related fees of $43.9 million declined 6% year-over-year as the heightened volume and volatility of the first six months of the year subsided.\nYear-to-date commissions and related fees of $153.4 million increased 12% versus the prior year period.\nAsset management and administration fees were $16.6 million in the third quarter and $47.1 million for the year.\nTo date, an increase of 11% for the nine months and 7% -- I'm sorry, 11% for the quarter and 7% for the 9 months.\nTurning to expenses, our adjusted comp ratio for the third quarter and the first nine months of 2020 is 63.6%, the 63.6% accrual for the first nine-months reflects, as it has in past years our estimate for the full year compensation ratio, which includes an estimate of 2020 incentive compensation.\nThis year, however, as we have pointed out on previous earnings calls there is higher level of uncertainty than in prior years about both the full-year revenues and full year market compensation.\nThird quarter non-compensation costs of $71 million declined 18% year-over-year and year-to-date non-compensation costs of $230.9 million declined 9% versus the prior period.\nThird quarter adjusted operating income and adjusted net income of $77.7 million and $52.6 million declined 8% and 13% respectively and adjusted earnings per share of $1.11 declined 12% versus the third quarter of 2019.\nYear-to-date, operating income and adjusted net income of $262.9 million and $182.2 million declined 18% and 25% respectively and adjusted earnings per share of $3.85 declined 23% versus the prior period.\nWe remain committed to our historical capital return strategy in which we return earnings not needed in our business to shareholders through dividends and share repurchases.\nGiven our solid results for the first nine months of the year, we have -- which have resulted in good cash flow generation.\nWe are beginning to turn to that pre-COVID strategy.\nConsistent with that view, our Board declared a dividend of $0.61 a $0.03 per quarter increase which is a 5% increase from the prior quarter.\nWe plan to return to our normal reassessment of the dividend in April of 2021, and to begin to restart our practice of returning our cash earnings that are not required in the business to investors through share repurchases.\nBob will provide additional detail on our cash position in his remarks.\nWe continue to see opportunities to further build out our capabilities and to expand geographically and we are building a pipeline of senior level A+ talent positions.\nWe also remain highly focused on developing and promoting our high talent professionals from within the firm.\nFinally, we are especially proud of Evercore ISI's most recent showing in Institutional Investors Annual All-America Research Survey where we were recognized as the top ranked independent firm by a wide margin for the seventh year in a row and ranked number two or number three among all firms, large or small, depending upon how you count.\nEd Hyman Evercore ISI's Founder and Chairman was awarded the number one position in economics, a recognition he has earned 40 times.\nFurthermore, Evercore ISI claimed a record 39 individual positions and tied its 2019 record of 36 team positions.\nAfter several months of muted merger activity immediately following the onset of the global pandemic I believe that absent a negative event which could certainly happen, we are in the early stages of a recovery as many of the key conditions necessary for a healthy M&A market continue to improve.\nThe equity markets are strong for many sectors, access to financing and readily available credit remains, CEO confidence continues to improve and there appears to be greater stability in the markets.\nAs a result of these improving conditions, we are seeing increased opportunities to serve our clients across multiple industry sectors globally.\nIn financing, we have found multiple opportunities to help advise our clients in both equity and debt capital raises.\nDespite the rapid government stimulus at the onset of the pandemic and the swift recovery in the credit markets, we expect restructuring and refinancing activity to stay elevated as leverage remains high across all sectors, especially those that are distressed.\nOur restructuring group remains busy and continues to work through assignments and advise clients in sectors most hard hit by the pandemic.\nPrivate Capital transactions for sponsors have increased and active assignments are beginning to reemerge, again as well.\nWhile we are not yet back to pre-COVID levels, we are encouraged by the current pace of activity.\nReturning to our investor clients, both institutional and wealth management clients remain focused on the evolving financial markets during the quarter and we continue to provide valuable research insights and wealth management advice.\nWe expect this focus to continue, particularly as we head into the year end.\nTrading activity in the third quarter however has not been as high as the first six months of the year, as volatility has subsided.\nI'm optimistic about the trajectory of the merger market overall, and I am pleased with our capital raising performance and our restructuring and debt advisory teams that have stepped up over these months.\nLet me now turn to our performance in Investment Banking.\nI'm encouraged to see activity levels with both corporate clients and financial sponsors broadly increasing across our platform in many sectors.\nAs announced, M&A activity increased during the quarter, we sustained our number one league table ranking for volume of announced M&A transactions over the last 12 months, both globally and in the US, among independent firms.\nAmong all firms we were once again number four, in the US in announced volume over the last 12 months.\nAs I said, our restructuring and debt advisory teams remain busy.\nOur US restructuring group has already completed more transactions year-to-date than in all of 2019 and has been involved in nine of the 15 largest bankruptcies by total liabilities year-to-date.\nWe believe there will be further opportunities to advise our clients throughout what we expect to be an elongated restructuring cycle.\nThe team continues to do a great job partnering with and leveraging the expertise of our industry-focused bankers.\nIn shareholder advisory and activism defense and our Private Capital Advisory businesses, origination activity is beginning to pick up momentum.\nThere has been a pickup in unsolicited activity and we are pleased to be the financial advisor to CoreLogic, which is the biggest hostile situation at the moment.\nOur Private Funds Group has successfully adapted to the virtual environment and has been a leader in this space, successfully completing virtual fund raises for both existing clients and new clients where the relationship has been developed entirely in remote environments.\nOur equity capital markets business is performing extremely well.\nWe continue to gain momentum, and we are maintaining our focus on building our team.\nWe served as an active book runner or co-manager on six of the 11 largest US IPOs in the first nine months of 2020 and we played a key role in 30 underwriting transactions in the third quarter alone.\nWe are very proud to have served as the sole book runner -- our first US book run mandate ever on Executive Network Partnering Corporation's $360 million CAPS IPO.\nThis unique CAPS offering was pioneered, structured and developed here at Evercore and brings innovation to the increasingly popular SPACs market.\nClients continue to look opportunistically to raise capital and we are pleased with the breadth of the conversations and activity we are experiencing across a broad range of sectors including healthcare, financials, technology and energy.\nWe also continue to invest in broadening the business and building out the convertible origination team with important strategic hires.\nAlthough it is still early days for us in the convertible space, we have served as an active book runner for Helix Energy Solutions Group's $200 million convertible bond offering during the quarter.\nIn our equities business our Investor and Corporate clients continue to rely on us for valuable macro and fundamental insights and our traders continue to help our clients execute in volatile markets.\nAs Ralph mentioned earlier, we are very proud of the team's institutional investor results.\nI am very much encouraged by the current pace of activity and the momentum we are experiencing in our business.\nLet me begin with a few comments on our GAAP results.\nFor the third quarter of 2020 net revenues, net income and earnings per share on a GAAP basis were $402.5 million, $42.6 million and $1.01 respectively.\nFor the first nine-months of 2020, net revenues, net income and earnings per share on a GAAP basis were $1.3 billion, $130.2 million and $3.09 respectively.\nOur adjusted results exclude certain items related to the realignment strategy that began in the fourth quarter of 2019.\nAt this juncture, we are finalizing all of the required communications that remain and are associated with the realignment strategy and we are working hard to complete its execution by year-end.\nUltimately, we expect to incur separation and transition benefits and related costs of approximately $43 million which reflect a modest increase in the cost for our prior estimate.\nDuring the third quarter of 2020, we recorded $7.3 million as special charges, which are excluded from our adjusted results.\nYear-to-date we have recorded $37.6 million of special charges related to the realignment initiative.\nAs we mentioned earlier this year, we have entered into an agreement with the leaders of our business in Mexico to purchase our broker-dealer there, which principally provides investment management services.\nCompletion of this sale is subject to regulatory approval, which was submitted in June and is expected to occur shortly after that approval is received.\nIn addition, leaders from our advisory business in Mexico announced earlier this month that they are departing Evercore to form a new strategic advisory firm TACTIV, which we will partner with under a new strategic alliance.\nWe believe this alliance model best positions the team in Mexico to address client needs and build a diverse and growing array of capabilities.\nOur adjusted results in the third quarter and first nine months of 2020 also exclude special charges of $0.1 million and $2.1 million respectively related to accelerated depreciation expense.\nTurning to other revenues; in the third quarter other revenues increased compared to the prior-year period, primarily as a result of a gain of approximately $8 million on the investment funds portfolio which is used as an economic hedge against a portion of our deferred compensation program.\nOther revenues for the first nine months of 2020 decreased versus the prior-year period, primarily reflecting a net gain of $1 million from this portfolio compared to $9.2 million for the first nine months of 2020.\nOf course, this amount fluctuates as market values move and the continued strength of the market during the quarter, drove this quarter's gains.\nFocusing on non-compensation costs, firmwide non-compensation costs per employee approximated $39,000 for the quarter, down 17% on a year-over-year basis.\nThe decrease in non-compensation costs per employee versus last year primarily reflects lower travel and related costs and lower professional fees.\nAs we continue to evolve toward more normal operation, costs associated with travel, professional fees and some other expenses will begin to recur.\nOur GAAP tax rate for the third quarter was 23.5% compared to 28% for the prior year period.\nOn a GAAP basis, our share count was 42.3 million shares for the third quarter, our share count for adjusted earnings per share was 47.4 million shares.\nWrapping up and looking at our financial position, we held $1.1 billion of cash and cash equivalents at approximately $100 million of investment securities or $1.2 million of liquid assets as of September 30, 2020.\nBy comparison, at September 30, 2019 we held approximately $305 million at cash and cash equivalents and $620 million of investment securities or $920 million of liquid assets.\nAs we have discussed in the past, we hold cash and investment securities both for operations and to fund our deferred compensation obligations.\nAt the outset of the downturn, we shifted our holdings to a highly liquid portfolio, reducing expenditures and buybacks to maximize our financial flexibility.\nWe plan to begin to reestablish our longer-term investment portfolio, so that funds held to satisfy our deferred compensation obligations as well as a portion of our permanent capital base, generate a greater return.\nThis investment strategy will result in shifting funds to investment securities relative to cash and cash equivalents.\nWe continue to monitor our cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations, including deferred compensation regularly, and as Ralph noted, we will begin to return cash earnings not needed to support these needs -- to our investors.\nJust a couple of comments before we go to questions.\nSecond, during our last call, we talked about the importance of diversity and inclusion at Evercore.\nWe remain committed to pursuing our diversity and inclusion goals and I'm proud to share that during the quarter, we added diversity and inclusion as a stand-alone core value.\nWe are committed to holding ourselves both as individuals and as a firm, accountable in this important area and we look forward to continuing to make progress.\nFinally, as Ralph and I shared with our employees during a recent virtual town hall that we conducted while socially distanced in the office we are all very much focused on finishing the year strongly and preparing for 2021.\nWhile there are still uncertainties ahead, we have never been more optimistic about the strength, breadth and diversity of our platform to help our clients regardless of the environment.\nNow, I'd like to invite you to ask questions.\n",
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"content": "compname reports third quarter 2020 quarterly diluted earnings per share $1.01.\ncompname reports third quarter 2020 results; increases quarterly dividend to $0.61 per share.\nqtrly diluted earnings per share $1.01.\nq3 revenue $402.5 million versus $402.2 million.\nqtrly adjusted diluted earnings per share $1.11.\ncash position and balance sheet continue to remain strong, and capital return strategies remain on track.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Hallie Miller, Evercore's Head of Investor Relations.\nThese factors include, but are not limited to, those discussed in Evercore's filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe continue to believe that it is important to evaluate Evercore's performance on an annual basis.\nAs we have noted previously, our results for any particular quarter are influenced by the timing of transaction closings.\nIt's hard to believe that when we reported our 2019 earnings at this time last year, everything was \"normal\".\nThe past 12 months, however, have been anything but normal.\nSo, please indulge me a brief review of the year.\nWhen faced in mid-March with two simultaneous crises, a global pandemic and the sharpest economic downturn in decades, our entire business and way of life was disrupted.\nOur clients' needs changed rapidly and many of their strategic initiatives, particularly their M&A plans, were placed on hold.\nCorporate leaders and financial sponsors became focused almost exclusively on cost control, reducing capital spending, increasing liquidity, amending debt covenants and strengthening their balance sheets.\nAnd while most previously committed M&A transactions were complete, this strategic M&A activity essentially stopped.\nLater in the second quarter, as fiscal and monetary stimulus stabilized the debt and equity markets, we helped client capitalize on the opportunity to build liquidity and in certain cases to initiate large restructuring and recapitalization transactions.\nThese balance sheet and liquidity focused assignments, which drove demand for capital raising advice and execution in both the equity and debt markets, dominated our advisory services in the second quarter and into the beginning of the third quarter.\nAs the third quarter evolved, strategic and M&A discussions began to resume.\nDespite the sharp decline in M&A activity, which lasted several months starting the beginning of March, our revenues were essentially flat year-over-year through the first nine months.\nSo, how did this happen?\nFirst, over the last few years, we have made significant investments that have materially broadened the services that we can provide to our clients.\nWe acquired ISI, which materially enhanced our research, underwriting and distribution capabilities.\nWe greatly strengthened our restructuring team by adding five new SMDs globally, dramatically enhanced our equity underwriting team, we enhanced our private capital raising capabilities for both sponsors and public and private companies, we strengthened our debt advisory capabilities, we added the best activist defense and shareholder engagement team in our entire industry and we added best-in-class capabilities in corporate restructuring, split offs, spins, Morris Trust, reverse Morris Trust, etc.\n, and best-in-class capabilities in SPAC capital raising and SPAC merger advice.\nSo, first, first nine months of 2020, we demonstrated that we have in place best-in-class capabilities to advise our clients in widely varied environments.\nAnd second, we demonstrated that our team has the talent and the entrepreneurial spirit to deploy these capabilities rapidly in support of our clients.\nIn the latter half of 2020, the M&A market began to recover meaningfully.\nLocal and US M&A volume increased 92% and 163% respectively compared to the first half and the number of global and US deals increased 18% and 16% respectively.\nStill, for the year, M&A volume was down [Technical Issues].\nAnd in the US, the largest M&A market for all firms, and for Evercore particularly, M&A volume was down 21%.\nThe recovery in M&A, coupled with continued momentum in the broader advisory capabilities that I just described, led to a spectacular fourth quarter by any measure and fueled the many records that we achieved as a firm in 2020.\nThe point of this review is simple.\nIn 2020, we proved that while M&A is still our largest source of revenue, our capabilities to advise our clients and to be paid for that advice is much broader than many of our shareholders and many of our analysts -- and perhaps even we -- would have anticipated.\nSo, while there clearly is some cyclicality in various parts of our business, we truly are very much an all-weather firm that can advise clients on their most important strategic, financial and capital needs in widely varied environments and a firm that can generate significant revenues by providing that advice to our clients in widely varied environments, all the while sticking religiously to our fee-only, no capital risk business model.\nAs we begin 2021, M&A dialogs and strategic activity discussions are strong.\nGrowth companies continued to access the public markets for capital.\nFinancial sponsors and other private businesses are seeking capital and acquisitions in the private and public markets and institutional investors continue to value high quality research, investment analysis and advice.\nSo, as we enter 2021, our momentum continues to be significant in all of our businesses.\nThe level of activity of our teams is high and our backlogs remains very strong.\nWhile there certainly still are challenges related to the pandemic and the economy and all of us at Evercore most certainly have enormous empathy for those in our society who have not been as fortunate as we have been, we begin 2021 in a very strong position.\nAs we look forward, we continue to focus on long-term and trusted relationships with both current and prospective clients determined to advise them on their most important strategic, financial and capital decisions.\nWe are planning for our eventual return to our offices globally, with the health and safety of our team paramount as we develop these plans.\nWe are focused on maintaining our strong culture that is grounded in our core values and in collaboration, both of which are hugely important contributors to our many accomplishments in 2020.\nWe, of course, are actively pursuing opportunities to add talent strategically throughout the firm and we are optimistic about our ability to recruit this talent.\nWe see significant opportunities to continue to grow our business, both by expanding our coverage of key sectors and geographies and by deepening our product capabilities.\nAnd we are committed to continuing to operate with financial discipline, delivering strong returns to our shareholders, while maintaining a strong and liquid balance sheet and resuming our historical approach of returning any excess capital to our shareholders through dividends and share repurchases.\nLet me now turn to our financial results.\nWe achieved record fourth quarter and full-year adjusted revenues, adjusted operating income, adjusted net income and adjusted EPS, driven by extremely strong revenue growth and good operating leverage.\nFourth quarter adjusted net revenues of $969.9 million grew 45% year-over-year and full-year adjusted net revenues of $2.33 billion grew 14% compared to 2019, the highest annual revenues in our history.\nFourth quarter advisory fees of $790 million grew 40% year-over-year and full year advisory fees of $1.76 billion grew 6% compared to 2019 and also were the highest in our history.\nBased on current consensus estimates and actual results, we expect to maintain our number 4 ranking on advisory fees among all publicly traded investment banking firms and we also expect to grow our market share among these firms.\nImportantly, our growth in 2020, combined with declining advisory revenues at the three top bulge bracket firms, resulted in a nearly 50% reduction in the gap between us and the number 3 ranked firm and we narrowed the gap between Evercore and the number 1 and number 2 firms as well.\nFourth quarter underwriting fees of $95 million and full-year underwriting fees of $276.2 million each more than tripled year-over-year.\nThis business experienced the true step up in 2020, in large part due to the expansion of our capabilities that allowed us to work on a variety of assignments for our clients, including IPOs, follow-ons, convertibles, SPACs and caps, as well as the more prominent role we play in virtually all transactions with which we were involved.\nFourth quarter commissions and related fees of $52.4 million increased 1% year-over-year and full year commissions and related fees of $205.8 million increased 9% compared to 2019.\nFourth quarter asset administration fees of $20.1 million increased 20% year-over-year and full-year asset management and administration fees of $67.2 million increased 11% compared to 2019.\nTurning to expenses, our adjusted compensation rate for the fourth quarter is 52.3% and for the full year is 58.9%.\nFourth quarter non-compensation costs of $85.8 million declined 12% year-over-year.\nAnd full-year non-compensation costs of $316.7 million declined 10% versus [Technical Issues].\nFourth quarter adjusted operating income and adjusted net income of $376.4 million and $277.4 million increased 110% and 113% respectively and adjusted earnings per share of $5.67 increased 108% versus the fourth quarter of 2019.\nFull-year operating income and adjusted net income of $639.3 million and $459.6 million increased 28% and 23% respectively and adjusted earnings per share of $9.62 increased 25% versus 2019.\nWe produced a full-year adjusted operating margin of 27.5%, roughly 300 basis points of margin expansion compared to 2019.\nFinally, we remain committed to returning excess capital to our shareholders.\nOur Board declared a dividend of $0.61 and we will resume our normal annual reassessment of that dividend in April.\nWe remain committed to offsetting the dilution of our upcoming bonus RSU grants and RSU grants to new hires through share buybacks.\nAnd we will resume our historical policy of returning excess earnings not reinvested in the business to our shareholders through dividends and share repurchases.\nBob will comment later on our GAAP results and provide additional detail on our balance sheet.\nOur results demonstrate clearly that we are a leader in virtually every business in which we participate and our strength in the fourth quarter in particular contributed significantly to the many records we set for the full year as a firm.\nWe sustained our number one League Table ranking for volume of announced M&A transactions both globally and in the US among independent firms in 2020 and are advising on 4 of the 10 largest US M&A transactions in 2020.\nIn the fourth quarter, we realized revenues from many assignments that we started earlier in the year.\nAnd we participated in a number of announced transactions that will close in the future.\nThis includes advising AstraZeneca on its acquisition of Alexion which was announced in the fourth quarter and is the largest healthcare deal and the largest cross-border deal since the onset of the pandemic.\nOur restructuring team ranked number 2 in the League Tables for number of announced US transactions in 2020.\nWe believe that our restructuring franchise is even stronger than the League Table indicates due to our diversified business base of working with both debtor and creditor clients, as well as working on both in-court and out-of-court restructurings.\nOur restructuring business can deliver service and advice far beyond the traditional Chapter 11 bankruptcy advice and many companies called on us in 2020 for our liability management and financing capabilities.\nWe believe activity levels will remain elevated as certain sectors and companies continue the slow and taxing recovery from the pandemic induced downturn.\nOur equity capital markets business performed exceptionally well in 2020 and we expect to continue to benefit from the sustained strong market for equity issuance.\nWe continue to see strong results from our ongoing investment in this business, which has diversified our capabilities and has led to both fee-paying events and larger transactions.\nIn 2020, we participated in more than 100 equity and equity-linked transactions that raised nearly $70 billion in total proceeds.\nAdditionally, both sponsor and corporate clients increasingly have looked at Evercore to play a significant role in their capital raising.\nWe increased both the number of active book run and book run assignments in 2020 with our growth in active book run assignments outpacing our growth in book run assignments.\nOur investments in SPAC capabilities have positioned us well to serve many new clients as they navigate this active market.\nWe are also encouraged by early results from our investment in convertible debt underwriting and sales and trading, including our first ever sole book run convertible transaction that took place just last week.\nOur capital advisory group had a phenomenal year.\nOur team advised on more than $30 billion of deals in GP and LP-led transactions, increased significantly in the second half of the year, and we continue to raise primary capital successfully for these clients.\nIn fact, the team has an impressive virtual fundraising track record, closing more funds virtually than anyone else in the industry.\nWe continue to see broad growth opportunities in these areas.\nIn defense and shareholder advisory where campaigns were down in 2020, we continued to experience very strong demand for our market-leading activism advisory practice.\nWe advised on the defense of the largest US hostile takeover attempt and successfully advised on the defense of two of the largest proxy fights.\nActivist activity continues to build as activists increase their positions in companies.\nIn equities, our team of top institutional investor ranked macroeconomic and fundamental analysts provided valuable insights to our clients throughout this volatile year.\nWe also continue to make investments in our platform to support our ECM franchise, which enables us to execute at a very high level on a significant number of transactions, with increasingly important roles.\nFinally, our wealth management business grew AUM past the $10 billion mark for the first time in 2020 and provided important investment advice to clients in a challenging environment.\nWe are pleased with these many accomplishments.\nYet, we remain focused on continuing this momentum in 2021 and beyond.\nLet me now turn to discuss our opportunities for future growth.\nOur expanded advisory and underwriting capabilities provide the foundation for our growth in the future and plenty of opportunity to grow remains.\nWe believe that there are two main elements to our future growth.\nFirst, further expanding our coverage model, and second, deepening and broadening our capabilities.\nOur continued efforts with the Evercore 100, our program to expand service to targeted large cap nationals and multinationals, our dedicated coverage of financial sponsors and investing in talent to grow in areas of whitespace with the addition of A plus talent will all facilitate our expanded coverage model.\nThere are many areas of untapped geographic and sector potential and we are actively seeking to add talent in those areas where we believe we can deepen our coverage, including TMT, FinTech, pharma, consumer, financial sponsors, large cap multinationals and Europe.\nWe continue to have many conversations with talented professionals to strengthen these important areas of coverage.\nThese additions enhance our advisory capabilities on complex, large cap corporate realignments and our capital markets [Indecipherable] business.\nWe look forward to additional talent announcements in 2021 as we resume a more normalized recruiting process.\nEqually important to recruiting externally is our focus on long-term commitment to attracting recruiting and mentoring talented junior individuals and promoting from within.\nThese individuals contribute to our ability to be a self-sustaining from.\nWe are pleased to announce that we promoted three managing directors to senior managing director in January, strengthening our advisory coverage of healthcare and restructuring and our equities coverage of healthcare services and technology.\nDeepening and broadening our capabilities, the second element of our growth plan further enables our bankers to collaborate with others across the firm to meet the strategic, financial and capital needs of our clients.\nEvercore acted as a lead financial advisor and the sole debt advisor to this transaction.\nIn addition, people from M&A and advisory as well as equity capital markets and hedging all contributed to the advice.\nWe continue to focus on broadening and diversifying our capabilities, so that we can deepen client relationships, participate in a broader range of activities and earn a greater share of fees that clients pay to their advisor on any given transaction.\nWe've built a truly world-class ECM, underwriting and advisory business and we are excited to have Kristie join us to lead this business through its next stage of growth.\nOur 2020 results demonstrate that the breadth and diversity of our capabilities drives deeper relationships with clients and helps with building new client relationships.\nOur investments in both the SPAC and convertible markets are just two recent examples of investments that have enabled new opportunities to advise clients.\nWe believe that the significant opportunities remain to provide additional services to our current client base and to attract new clients.\nOur broader capabilities have supported our industry-leading advisory SMD productivity.\nWe anticipate that, as these capabilities become more broadly utilized by our clients and our fee share increases, our market-leading productivity will be sustained or even enhanced.\nThe results and achievements that Ralph and I have summarized could not have happened without the dedication, teamwork, collaboration and commitment that our people demonstrated throughout one of the most uniquely challenging years many of us have ever experienced.\nWe are deeply grateful for their extraordinary effort.\nNow, let me pass the call over to Bob.\nLet's kick off with our GAAP results.\nFor the fourth quarter of 2020, net revenues, net income and earnings per share on a GAAP basis were $927 million, $220 million and $5.02 respectively.\nFor the full year, net revenues, net income and earnings per share on a GAAP basis were $2.3 billion, $351 million and $8.22 respectively.\nAs has been the case historically, our adjusted results exclude certain items related to the realignment strategy that began in the fourth quarter of 2019 and which was completed in the fourth quarter of 2020.\nIn total, we incurred separation and transition benefits and related costs of approximately $45 million, which reflect a modest increase in the costs from our prior estimate of $43 million.\nDuring the fourth quarter of 2020, we recorded approximately $4 million of special charges, which are excluded from our adjusted results.\nIn the fourth quarter, we completed the sale of our broker-dealer business in Mexico to its management team and we completed the transition of our advisory business in Mexico to a strategic alliance with TACTIV, a newly performed strategic advisory firm founded by the former leaders of our advisory business.\nThere, there is a loss of approximately $31 million for the year included in other revenue that is related to our transition in Mexico.\nOur adjusted results for the fourth quarter and full-year 2020 also exclude special charges of $1.3 million and $3.3 million respectively related to accelerated depreciation expense and $1.7 million related to the impairment of assets resulting from the wind down of our Mexico business.\nTurning to taxes, our GAAP tax rate for the fourth quarter was 23.2% compared to 21.7% in the prior-year period.\nOur GAAP tax rate for the full year was 23.7% compared to 21.2% in the prior period.\nAnd on a GAAP basis, the share count was 43.9 million for the fourth quarter and 42.6 million for the full year.\nOur share count for adjusted earnings per share was 48.9 million for the fourth quarter and 47.8 million for the full year.\nFirmwide non-compensation costs per employee were approximately $47,000 for the fourth quarter and $172,000 for the full year, each down 9% and 11% on a year-over-year basis respectively.\nThe decrease in non-compensation costs per employee versus last year primarily reflects lower travel and related expenses.\nAs we continue to evolve toward more normal operations, costs associated with travel, recruiting and other expenses will begin to increase.\nFinally, focusing on our balance sheet.\nOur strong year-end balance sheet reflects the strength and momentum of the recovery in the latter part of the year.\nAs of December 31, we held approximately $830 million in cash and cash equivalents and $1.1 billion in investment in securities.\nAs is always the case at this time of year, a meaningful portion of our liquidity will be used to fund upcoming cash bonus payments, payments related to prior-year deferred compensation awards that are vesting currently, tax obligations related to compensation awards including relating to the net settlement of restricted stock units that vest in the first quarter.\nLonger term, we are holding investment securities to fund payment obligations relating to deferred compensation awards that will vest in the future and to meet liquidity and regulatory capital requirements.\nAs of December 31, we have made commitments to pay more than $450 million related to future cash payment obligations under our long-term deferred compensation programs and these payment obligations exist at various dates through 2024.\nThese payments are, of course, subject to satisfaction of established investing requirements.\nThis number will change in the first quarter as prior awards will vest and be paid out and new awards relating to 2020 compensation will be granted.\nThe actions taken in 2020 strengthen our balance sheet significantly.\nAnd as Ralph and John have noted, put us in a position to return free cash earnings generated from operations to investors, consistent with past practice.\n",
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"content": "compname reports quarterly adj earnings per share of $5.67.\ncompname reports full year 2020 results; record fourth quarter and full year revenues; quarterly dividend of $0.61 per share.\nevercore inc - q4 u.s. gaap and adjusted net revenues of $927.3 million and $969.9 million, respectively.\nevercore inc - qtrly earnings per share $5.02.\nevercore inc - qtrly adjusted earnings per share $5.67.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Just after the close of regular trading, Edwards Lifesciences released third quarter 2021 financial results.\nThese statements include, but aren't limited to, financial guidance and expectations for longer-term growth opportunities, regulatory approvals, clinical trials, litigation, reimbursement, competitive matters, and foreign currency fluctuations.\nFinally, a quick reminder that when using the terms underlying and adjusted, management is referring to non-GAAP financial measures.\nOtherwise, they're referring to GAAP results.\nLet me begin by expressing appreciation for our global teams who have been highly engaged throughout the pandemic.\nWe're also pleased that our supply chain remained resilient during these challenging times to meet the needs of the patients we serve.\nTurning to results, third quarter total Company sales of $1.3 billion increased 14% on a constant-currency basis versus the year-ago period.\nStrong mid-teens growth was driven by our innovative platforms, although lower than our July expectations due to the significant impact COVID had on U.S. hospitals.\nAlthough we experienced encouraging signs of patient confidence and continued willingness to seek medical care in July, the Delta variant had a significant impact on hospital resources during the last two months of the third quarter, especially in the U.S. Despite the pronounced impact of the Delta variant in the U.S. in Q3, we're encouraged by the recent decline in hospital COVID admissions.\nWe believe some procedures were unfortunately deferred in the third quarter.\nAnd based on what we saw in Q2, we expect many of these patients who deferred treatment in Q3 will be treated in the future.\nWe continue to expect total Company sales growth to be in the high teens for the full year.\nIn TAVR, third quarter global sales were $508 and $58 million dollars, up 14% on an underlying basis versus the year-ago period.\nWe estimate global TAVR procedure growth was comparable with our growth in the third quarter.\nGlobally, our average selling price remained stable.\nIn the U.S., our TAVR sales grew 12% on a year-over-year basis and we estimate that our share of procedures was stable.\nGrowth was broad-based across both high and low volume centers.\nAs you might expect procedure volumes in Q3 were affected by seasonality and varied by geography and even by hospital, as patients and providers turn their focus again to the pandemic.\nOur TAVR sales in July benefited from encouraging signs of continued recovery from the pandemic, however procedures were negatively impacted in the last two months of Q3 due to the significant impact Delta had on hospital resources.\nOutside the U.S. in the third quarter, our sales grew approximately 20% on a year-over-year basis, and we estimate total TAVR procedure growth was comparable.\nWe continue to be encouraged by strong international adoption of TAVR, broadly, in all regions.\nAnd despite the impact of Delta, the TAVR market in Europe showed relative resilience with strong growth in procedure volumes.\nGrowth was broad-based across Europe and driven by continued strong adoption of our SAPIEN three Ultra platform.\nWe were pleased with the growth rate considering that in Q3 of 2020 centers in Europe had already recovered from pandemic lows.\nLonger-term, we see excellent opportunities for continued OUS growth, as we believe global adoption of TAVR therapy remains quite low.\nIt's worth noting that recently, published guidelines from the European Association of Cardiothoracic Surgery not definitively recommend TAVR for patients over the age of 75.\nThe acknowledgment by the Surgical society the TAVR is preferred for those over 75 is a significant development.\nWe believe these guidelines represent an important long-term opportunity and although transcatheter valves have been commercially available for over a decade in Europe, it remains clear that there is still a large, unmet need for this therapy.\nStrong TAVR adoption continued in Q3 in Japan.\nAs expected, we received reimbursement approval in Q3 for treatment of patients at low surgical risk.\nWe remained focus on expanding the availability of TAVR therapy throughout this country, driven by the fact that AS remains a significantly under-treated disease among this large elderly population.\nAt the upcoming TCT meeting, there's a planned late-breaking update on the economic outcomes of PARTNER three at two years.\nIn summary, based on October procedure trends, we expect Q4 growth for TAVR to be similar to Q3.\nWe continue to expect underlying TAVR sales growth of around 20% in 2021.\nWe remain as confident as ever, about the long-term potential of TAVR because of its transformational impact on the many patients for suffering from aortic stenosis and because many remained untreated.\nThe long-term potential reinforces our view that this global TAVR opportunity will exceed $7 billion by 2024, which implies a low double-digit compound annual growth rate.\nNow, turning to TMTT, we've made meaningful progress across all our platforms with over 6000 patients treated to date, to transform treatment and unlock the significant long-term growth opportunity.\nWe remain focused on three key value drivers.\nA portfolio of different shaded therapies, positive pivotal trial results to support approvals and adoption, and favorable real-world clinical outcomes.\nThis quarter we progressed on the enrollment of five pivotal trials across our portfolio to support therapies for patients suffering from mitral and tricuspid regurgitation.\nWe are gaining experience with a PASCAL precision platform as part of our class trials, and physician feedback continues to be positive.\nWe look forward to presenting randomized data from the class 2D pivotal trial next year and remain on track for the U.S. approval of PASCAL for patients with DMR late next year.\nThis important milestone will mark a transition from large single-arm studies through significant pivotal trial results that support approval and adoption and will be the first of several key datasets from our class of trials.\nWe continue to treat patients with both of our mitral -- our transcatheter mitral replacement therapies through the ENCIRCLE pivotal trial SAPIEN M3 and MISCEND study of EVOQUE Eos.\nWe are ramping up enrollment with our novel EVOQUE tricuspid replacement therapy as part of the TRISCEND II Pivotal Trial.\nThese processing transfemoral therapies are critical for many patients without treatment options today and exemplify the importance of a comprehensive portfolio.\nAs we continue to expand our body of clinical evidence, we look forward to presenting meaningful data at TCT and PCR London Valves next month.\nIn addition, 30-day outcomes for mitral repair with PASCAL from our Miclast, post-market clinical follow-ups study of over 250 patients.\nWe also anticipate several live case demonstrations of our differentiated therapies.\nTurning to the financial performance in TMTT, despite the impact of Delta in summer seasonality, global sales of $22 million were driven by the continued adoption of PASCAL in Europe.\nAs we expanded commercially, we continue to experience high procedural success rates and excellent clinical outcomes for patients.\nAnd we remain committed to employing our high-touch clinical support model.\nWe are pleased with our level of site activation during the quarter.\nWe continue to expect to achieve our previous full-year guidance of $80 million to $100 million and estimate the global TMTT opportunity to triple to approximately $3 billion by 2025.\nAnd we're pleased with our progress toward advancing our vision to transform the lives of patients with mitral and tricuspid valve disease.\nIn Surgical Structural Heart, third quarter global sales were $217 million, up 6% on an underlying basis versus the year-ago period.\nDespite the Q3 resurgence and COVID cases we were encouraged to see continued SABR procedure growth across most regions.\nWe remain encouraged by the steady global adoption of Edwards RESILIA tissue valves, including INSPIRIS RESILIA aortic valve, the KONECT RESILIA valves conduit and our MITRIS RESILIA mitral valve.\nThis advanced tissue treatment is increasing supported by growing body of real-world evidence as demonstrated at the European Association of Cardiothoracic Surgeons annual meeting earlier this year.\nRegistry data confirmed excellent real-world outcomes with INSPIRIS RESILIA in patients under the age of 60.\nAs patients increase their awareness of surgical valve choices, we believe that they are learning about the durability potential of RESILIA and engaging with their positions to choose this technology.\nIn summary, we have confidence that our full year 2021 underlying sales growth will be in the mid-teens for Surgical Structural Heart, driven by market growth and adoption of our premium technologies.\nWe continue to believe the Surgical Structural Heart market that we serve will grow mid-single-digits through 2026.\nIn Critical Care, third quarter global sales were $213 million up 17% on an underlying basis versus the year-ago period.\nGrowth was driven by contributions from all product lines led primarily by strong HemoSphere capital sales in the U.S.\nOur True Wave disposable pressure monitoring devices used in the ICU remained in demand due to the elevated hospitalizations in the U.S. and demand for products used in high-risk surgery also grew year-over-year in addition to demand for the ClearSight non-invasive finger cup used in elective procedures.\nIn summary, we continue to believe the Critical Care will grow revenue in the low double-digit range in 2021.\nWe remain excited about our pipeline of Critical Care innovations as we continue to shift our focus to smart recovery technologies designed to help clinicians make better decisions for their patients.\nToday, I'll provide additional perspective on the third quarter, along with how we anticipate the rest of the year may unfold and some color on what to expect at the investor conference on December 8th.\nTotal sales in the third quarter grew 14% on an underlying basis over the prior year.\nAs indicated earlier, this strong sales growth is lower than we expected in July before the U.S. Delta surge.\nEarnings in the quarter of $0.54 met our expectations as COVID -related constrained spending more than offset lower-than-expected sales.\nAs Mike mentioned, based on the improving trends with the Delta variant.\nAnd our October procedure trends, we're projecting total Q4 sales of between 1.30 billion and 1.38 billion.\nA as it relates to each product line, we are forecasting fourth quarter TAVR sales of $850 million to $910 million and still have the potential to reach underlying TAVR sales growth of around 20% for the full-year 2021.\nWe're also maintaining our previous ranges for TMTT, Surgical Structural Heart, and Critical Care.\nWe continue to expect our full-year adjusted earnings per share guidance at the high-end of $2.07 to $2.27 with fourth-quarter adjusted earnings per share of 53 to 59 cents.\nAnd now I will cover additional details of our third quarter results.\nOur adjusted gross profit margin was 76.3% up from 75.5% in the same period last year when we experienced substantial costs responding to COVID, the improvement was also driven by a more profitable product mix, partially offset by a negative impact from foreign exchange.\nLike most companies, we are seeing signs of inflation, generally, in things like some of the raw materials we use in production, as well as shipping and logistics.\nWith that said, some of the extraordinary costs we incurred when COVID hit last year have lessened.\nAnd the net result is no material impact to our gross profit margin performance or guidance for 2021.\nMore broadly, we're continuing our investments to ensure that our supply chain is strong and resilient and capable of delivering life-saving products for our patients.\nWe continue to expect our 2021 adjusted gross profit margin to be between 76% and 77%.\nSelling general and administrative expenses in the third quarter were $364 million or 27.8% of sales compared to $307 million in the prior year.\nThis increase was primarily driven by personnel-related costs and increased commercial activities compared to the COVID impacted prior year.\nWe are planning a sequential ramp up of expenses in the fourth quarter as COVID related restrictions continued to subside.\nWe still expect full-year 2021 SGNA expenses as a percentage of sales excluding special items to be 28% to 29%.\nResearch and development expenses in the quarter grew 22% over the prior year to $238 million or 18.2% of sales.\nThis increase was primarily the result of continued investments in our transcatheter innovations, including increased clinical trial activity.\nWe are planning to increase these expenses in the fourth quarter as we invest in developing new technologies and generating evidence to expand indications for TAVR and TMTT.\nFor the full-year 2021, we continue to expect R&D expenses as a percentage of sales to be 17% to 18%.\nOur reported tax rate this quarter was 13% or 13.9%, excluding the impact of special items.\nThis rate included a 320-basis point benefit from the accounting for stock-based compensation.\nWe continue to expect our full-year rate in 2021, excluding special items to be between 11% and 15%, including an estimated benefit of four percentage points from stock-based compensation accounting.\nForeign exchange rates increased third quarter reported sales growth by 70 basis points for $8 million compared to the prior year.\nAt current rates, we continue to expect an approximate $70 million positive impact, or about 1.5%, to full-year 2021 sales, compared to 2020.\nForeign exchange rates negatively impacted our third quarter gross profit margin by 30 basis points compared to the prior year.\nAnd relative to our July guidance, FX rates positively impacted our third quarter earnings per share by less than a penny.\nFree cash flow for the third quarter was $471 million, defined as cash flow from operating activities of $532 million less capital spending of $61 million our year-to-date free cash flow was $1.1 billion.\nThe strong cash flows are a reflection of our exceptional portfolio of patient-focused technologies that are generating returns from previous investments, which allows us to fund future internal and external opportunities.\nWe continue to maintain a strong and flexible Balance Sheet with approximately $3 billion in cash and investments as of September 30th.\nAverage shares outstanding during the third quarter were 632 million and we continue to expect our average diluted shares outstanding for 2021 to be at the lower end of our 630 to 635 million guidance range.\nWe have approximately $1.2 billion remaining under the share repurchase program.\nBefore turning the call back over to Mike, I'll make a quick comment about our outlook for 2022.\nIt's premature to offer detailed guidance today, but we will provide 2022 financial guidance at our Investor Conference on December 8th.\nIn general, in 2022, we're planning on less disruption from COVID, as we assume the resumption of more normalized sales and earnings growth, we will provide guidance for gross profit and operating margins, as well as more visibility into any potential impact from changes in corporate tax rates.\nAnd with that, I'll pass it back to Mike.\nWe're very pleased with our strong year-to-date performance despite the headwinds associated with the pandemic.\nAnd as patients and clinicians increasingly choose transcatheter valve therapy, we remain optimistic about the long-term growth opportunity.\nWe are committed to aggressively investing in our focused innovation strategy, because we believe there is a broad group of patients still suffering from Structural Heart disease and the pandemic's impact will wane.\nWe remain confident that the innovative therapies resulting from our investments will continue to drive strong organic growth in the years to come.\nAnd as you heard from Scott earlier, our 2021 Investor Conference will take place on Wednesday, December 8th, here at our headquarters in Irvine, California.\nEither way, we really hope you can be a part of it.\nIn addition to our 2022 financial guidance, you'll hear more about Edwards focused innovation strategy and our comprehensive and exciting product pipeline.\nFor more information, please visit the Investor Relations section of the Edwards website at ir.\nAs a reminder, please limit the number of questions to one, plus one follow-up, to allow for broad participation.\nIf you have additional questions, please reenter the queue, and management will answer as many participants as possible during the remainder of the call.\n",
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"content": "compname says qtrly sales grew 15% to $1.3 billion.\nqtrly sales grew 15% to $1.3 billion; underlying sales grew 14%.\nq3 earnings per share was $0.54.\nfull year 2021 sales, earnings per share guidance range unchanged.\nqtrly tavr sales of $858 million, up 15% on a reported basis.\ntavr sales negatively impacted in last two months of q3 due to significant impact covid had on hospital resources.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Just after the close of regular trading, Edwards released fourth quarter 2021 financial results.\nThese statements include, but aren't limited to: financial guidance and expectations for longer-term growth opportunities; regulatory approvals; clinical trials; litigation; reimbursement; competitive matters; and foreign currency fluctuations.\nFinally, a quick reminder that when using the terms underlying and adjusted, management is referring to non-GAAP financial measures.\nOtherwise, they are referring to GAAP results.\nWe're proud of our performance in 2021.\nAlthough hospitals continue to be impacted by COVID, it was a year of significant milestones and investment for Edwards and our teams were relentless.\nIn TAVR, we made important strides in executing our long-term strategy.\nIn particular, we invested in increasing awareness, pursued further therapy expansion and advance new technologies.\nWe completed enrollment of the EARLY-TAVR trial, an important pivotal study studying the treatment of severe aortic stenosis patients before their symptoms develop.\nSeparately, we initiated enrollment in our PROGRESS trial for moderate AS patients, and we received FDA approval for our ALLIANCE pivotal trial to start our next-generation TAVR technology, SAPIEN X4.\nIn TMTT, we achieved our significant 2021 milestones as we continue to make meaningful progress on advancing our three key value drivers: a portfolio of pioneering therapies for patients; positive pivotal trial results to support approvals and adoption; and favorable real-world clinical outcomes.\nWe are pleased to have treated over 3,000 patients in 2021 with our differentiated portfolio of TMTT therapies, gaining valuable learnings through both our clinical and commercial experiences.\nEach of our platforms demonstrated promising outcomes and clinical performance.\nI'm also pleased to announce that we completed enrollment of our CLASP IID pivotal trial in 2021, an important milestone that keeps us on track for U.S. approval late this year.\nIn Surgical Structural Heart, we extended our leadership position through the adoption of our premium technologies.\nWe also implemented valuable additions to our smart monitoring advancements in critical care.\nMost importantly, in 2021, even more patients benefited from Edwards' life-saving technologies than ever before.\nI'm also proud to say that throughout the year, our employees remain dedicated to keeping our commitments to patients and to one another.\nDespite the ongoing pandemic that fueled global challenges, our employees found innovative ways to support hospital procedures and to ensure our ability to supply our life-saving therapies was not impacted.\nAnd through their efforts, we were able to get our technologies into the hands of our trusted partners around the world so they could serve their patients.\nNow I'd like to cover several 2021 financial highlights before I get into the quarterly details.\nIn 2021, we are pleased to achieve all of our key financial expectations.\nUnderlying sales increased 18% to $5.2 billion, driven by balanced organic sales growth in each region.\nWe achieved 19% growth in adjusted earnings per share, while also increasing R&D, 19%.\nThe significant increase in R&D and infrastructure investments this year helped strengthen our long-term outlook.\nAnd as you heard at our investor conference last month, we are as convinced as ever about the tremendous opportunity we have to enhance patients' lives and bring significant value to the healthcare system.\nTurning to our financial results.\nFourth quarter sales of $1.3 billion increased 13% on a constant currency basis versus the year ago period.\nGrowth was driven by our portfolio of innovative technologies, although at the lower end of our October expectations due to the pronounced impact of Omicron on hospital resources in December, especially in the U.S. Full year 2021 global TAVR sales of $3.4 billion increased 18% on an underlying basis versus the prior year.\nDespite intermittent challenges associated with the pandemic throughout the year, sales were in line with our original guidance of 3.2 to 3.6 billion and were driven by increased awareness of the benefits of TAVR therapy with our SAPIEN platform.\nIn the fourth quarter, our global TAVR sales were $872 million, an increase of 13% on an underlying basis, with impressive strength outside the U.S.\nWe estimate global TAVR procedure growth was comparable with our growth.\nAnd globally, average selling prices were stable as we maintained our disciplined pricing strategy.\nIn the U.S., our TAVR sales grew 10% year over year in the fourth quarter, and we estimate that our share of procedures was stable.\nAs previously mentioned, the Omicron variant had a noticeable impact on hospital resources in December as cases were postponed or limited in a number of hospitals.\nGrowth in the U.S. was highest in small- to mid-volume centers, which are helping provide access to a broader population of aortic stenosis patients.\nOutside the U.S., in the fourth quarter, our sales grew approximately 20% year over year on an underlying basis, and we estimate total TAVR procedure growth was comparable.\nWe continue to be encouraged by the strong international adoption of TAVR broadly in all regions.\nIn Europe, Edwards' growth was in the mid-teens, and we estimate that our competitive position was stable.\nGrowth was broad-based across the region.\nIt's worth noting that a recent cost-effectiveness study demonstrated that TAVR with SAPIEN 3 was economically dominant when compared to surgical aortic valve replacement in treating French patients with severe symptomatic aortic stenosis who are at low surgical mortality -- who are at low risk of surgical mortality.\nWe're also encouraged by the recently published guidelines from the European Association of Cardiothoracic Surgery, which now definitively recommend TAVR for patients over 75.\nWe believe both of these developments represents an important long-term opportunity to bring TAVR therapy to even more patients in need.\nSales growth in Japan was also strong, where therapy adoption is still relatively low.\nSeveral important milestones were achieved in Q4.\nFor the first time, the number of TAVR procedures performed in Japan was comparable with the surgical aortic valve replacements.\nFurthermore, in each prefecture in Japan, there is now at least one hospital offering SAPIEN.\nFollowing the recent reimbursement approval for the treatment of patients at low surgical risk, we remain focused on expanding the availability of TAVR therapy throughout the country.\nLonger term, we see excellent opportunities for continued OUS growth as we believe global adoption of TAVR therapy remains quite low.\nIn addition to our geographic expansion of our TAVR therapies, we remain focused on indication expansion.\nIn Q4, we completed enrollment of our EARLY-TAVR pivotal trial, which is focused on the treatment of asymptomatic AS patients.\nSeparately, we initiated enrollment in PROGRESS, an important pivotal trial for moderate aortic stenosis to determine the optimal time to treat patients who have this progressive disease.\nWe believe that some patients may benefit from earlier treatment before they have symptoms or before their AS becomes severe, rather than risking irreversible damage to their heart as the disease progresses.\nWe also took steps to advance our innovative product portfolio.\nIn Q4, we received FDA approval for our ALLIANCE pivotal trial to study our next-generation TAVR device, SAPIEN X4.\nAdditionally, in Q4, we received FDA approval to use SAPIEN 3 with our Alterra adaptive pre-stent for congenital heart patients.\nThis should result in a quality of life improvement and a reduction in the number of procedures that these younger patients will require over their lifetime.\nIn summary, despite a slower-than-expected start to the year, we continue to anticipate 2022 underlying TAVR sales growth of 12 to 15%, consistent with the range we shared at our December investor conference.\nOur outlook assumes COVID-related challenges early in 2022, turning to more normalized growth environment as headwinds from Omicron subside and hospital resource constraints stabilize.\nWe remain confident in this large global opportunity will double to $10 billion by 2028, which implies a compounded annual growth rate in the low double-digit range.\nAs I mentioned, in the fourth quarter, we completed enrollment of our CLASP IID pivotal trial, and we remain on track to present data in the second half of 2022.\nThis important milestone keeps us on track for U.S. approval late this year of PASCAL for patients with degenerative mitral regurgitation.\nWe also continue to expect European approval of our next-generation PASCAL Precision System later this year.\nAt the PCR London Valves conference in Q4, PASCAL 30-day outcomes from our MiCLASP post-market approval study of more than 250 patients in Europe were presented.\nThe data highlighted safe and effective MR reduction in a post-market setting.\nWe also progressed on the enrollment of our CLASP IIF pivotal trial for patients with functional mitral disease.\nIn mitral replacement, we continue to expand our experience with both our transcatheter mitral replacement therapies through the ENCIRCLE pivotal trial for SAPIEN M3 and the MISCEND study for EVOQUE Eos.\nEarly experience with these sub-French transfemoral therapies increase our confidence in both platforms.\nTurning to transcatheter tricuspid therapies, results from the TRISCEND study were presented at the Annual TCT Conference in November and demonstrated that early patient outcomes with the EVOQUE tricuspid were favorable and sustained at six months.\nWe are encouraged by the procedural success rates and also the significant TR reduction and sustained improvements in quality of life measures experienced by these patients.\nWe continue to make meaningful progress in enrolling our two tricuspid pivotal trials the tri cusp -- the TRISCEND II pivotal trial for the EVOQUE system and the CLASP IITR pivotal trial with PASCAL in patients with symptomatic severe tricuspid regurgitation.\nWe anticipate a late 2022 approval of EVOQUE tricuspid in Europe and remain committed to providing solutions for these patients that have very poor prognosis and few treatment options today.\nTurning to the sales performance of TMTT.\nFourth quarter revenue of $25 million grew sequentially from the third quarter as we saw increased adoption of the PASCAL system despite the negative COVID impact in December.\nFull year 2021 global sales more than doubled to $86 million.\nAs we continue to expand the availability of PASCAL to more centers in Europe, we are pleased with the excellent outcomes for patients supported by our high-touch model.\nWe look forward to continuing our progress toward advancing our vision to transform the lives of patients with mitral and tricuspid valve disease in 2022 with the milestones that we outlined in our recent investor conference.\nDespite the COVID impact so far this year, we continue to expect TMTT sales of 140 to $170 million for 2022.\nWe estimate the global TMTT opportunity will grow to approximately $5 billion by 2028, and we remain committed to bringing our groundbreaking portfolio of therapies to patients with these life-threatening diseases.\nWe are confident our portfolio strategy positions us well for leadership.\nIn Surgical Structural Heart, full year global sales were $889 million, up 15% on an underlying basis versus the prior year.\nFourth quarter 2021 global sales of $221 million increased 9% on an underlying basis over the prior year.\nAlthough we saw that hospital staffing shortages continued to worsen throughout the quarter, especially in the U.S., life-saving surgical therapies continue to be prioritized over elective procedures.\nWe're excited about the continued global adoption of INSPIRIS RESILIA aortic surgical valve, the KONECT RESILIA aortic tissue valve conduit and our MITRIS RESILIA valve.\nWe remain encouraged by the growing evidence that supports Edwards RESILIA tissue valves, including two studies being presented at the Society of Thoracic Surgeons Conference this weekend.\nThe COMMENCE study demonstrates excellent hemodynamics of this tissue technology across all aortic valve sizes at five years, while a European economic value study shows a cost reduction with the use of INSPIRIS versus mechanical valves.\nIn summary, we continue to expect that our full year 2022 underlying sales growth will be in the mid-single-digit range for Surgical Structural Heart, driven by adoption of our premium technologies and procedure growth.\nEven as TAVR adoption expands, we're excited about our ability to provide innovative surgical treatment options for patients, extend our global leadership, and be the partner of choice for cardiac surgeons.\nTurning to Critical Care.\nFull year global sales of $835 million increased 14% on an underlying basis versus the prior year.\n2021 growth was driven by balanced contributions from all product lines led by HemoSphere sales as capital spending resumed.\nOur TruWave disposable pressure monitoring devices used in the ICU also remained in high demand due to the elevated COVID hospitalizations in both the U.S. and Europe.\nFourth quarter Critical Care sales of $212 million increased 8% on an underlying basis, driven by strong demand for HemoSphere.\nDemand for our broad portfolio of smart recovery sensors also remained robust in the fourth quarter, including ClearSight, our noninvasive finger cuff, which achieved sustained performance at or above pre-COVID levels.\nAs discussed at our recent investor conference, the integration of a full range of technologies creates a unique offering of enhanced recovery tools and predictive analytics capabilities to further strengthen our leadership in hemodynamic monitoring.\nIn summary, we continue to expect mid-single-digit underlying sales growth for 2022, and we remain excited about our pipeline of innovative critical care products.\nToday, I'll provide a wrap-up of 2021, including detailed results from the fourth quarter, as well as provide an update on guidance for the first quarter and full year of this year.\nSales in the fourth quarter increased 12.6% on an underlying basis.\nAdjusted earnings per share was $0.51, and GAAP earnings per share was $0.53.\nOur fourth quarter sales were negatively impacted by the wave of COVID that began late in the quarter, especially in the U.S. Earnings per share in the quarter was below our expectations as it was impacted by weaker-than-expected sales and we accelerated certain spending into the fourth quarter of 2021 that we had planned to incur during 2022, including preparation for TMTT product launches.\nFor the full year 2021, we are pleased with our performance as sales increased 18% on an underlying basis to $5.2 billion and adjusted earnings per share grew 19% to $2.22.\nI'll now cover the details of our results and then discuss guidance for 2022.\nFor the fourth quarter, our adjusted gross profit margin was 76.8%, compared to 75.3% in the same period last year.\nThis increase was primarily driven by a favorable impact from foreign exchange.\nWe continue to expect our full year 2022 adjusted gross profit margin to be between 78 and 79%.\nThis year, our rate should be lifted by a favorable impact from foreign exchange and an improved product mix, partially offset by investments in our manufacturing capacity.\nSelling, general and administrative expenses in the fourth quarter were $424 million or 31.9% of sales, compared to $339 million in the prior year.\nThis increase was driven by the resumption of medical congresses and commercial activities compared to the COVID impacted prior year, as well as the addition of personnel in preparation for new product launches.\nWe continue to expect full year 2022 SG&A as a percent of sales, excluding special items, to be between 28 and 30%.\nResearch and development expenses in the quarter grew 19% to $233 million or 17.5% of sales.\nThis increase was primarily the result of continued investments in our transcatheter innovations, including increased TMTT clinical trial activity.\nFor the full year 2022, we continue to expect R&D as a percentage of sales to be in the 17 to 18% range as we invest in developing new technologies and generating evidence to support TAVR and TMTT growth.\nDuring the fourth quarter, we recorded an $18 million net reduction in the fair value of our contingent consideration liabilities, which benefited earnings per share by $0.03.\nThis gain was excluded from the adjusted earnings per share of $0.51 I mentioned earlier.\nThis reduction reflects an accounting adjustment associated with reduced expectations of making a future milestone payment for a previous acquisition.\nOur reported tax rate this quarter was 10.9% or 12.7%, excluding the impact of special items.\nThis rate included an approximate 3 percentage point benefit from the accounting for stock-based compensation.\nOur full year 2021 tax rate, excluding special items, was 12.6%.\nWe continue to expect our full year rate in 2022 to be between 11 and 15%, which includes an estimated benefit of 3 percentage points from stock-based compensation accounting.\nForeign exchange rates decreased fourth quarter reported sales by approximately 1% or $10 million compared to the prior year.\nAt current rates, we now expect an approximate $100 million negative impact or about 2% to full year 2022 sales as compared to 2021.\nForeign exchange rates positively impacted our fourth quarter gross profit margin by 140 basis points compared to the prior year.\nFree cash flow for the fourth quarter was $284 million, defined as cash flow from operating activities of $374 million, less capital spending of $90 million.\nFull year 2021 free cash flow was $1.4 billion, up from $734 million in 2020.\nWe continue to expect full year 2022 free cash flow to be between 1.2 and $1.5 billion.\nIn 2022, we expect our cash flow will be reduced by approximately $200 million due to a change in tax regulations involving the timing of the deductions for research and development expenses.\nTurning to the balance sheet.\nWe have a strong balance sheet, with approximately $1.5 billion in cash, cash equivalents, and short-term investments at the end of the year.\nConsistent with our practice of opportunistically repurchasing shares, we purchased approximately $100 million during the fourth quarter.\nWe still have remaining share repurchase authorization of $1.1 billion.\nAverage shares outstanding during the fourth quarter were $632 million, relatively consistent with the prior quarter.\nWe continue to expect average diluted shares outstanding for 2022 to be between 630 and $635 million.\nBefore turning the call back over to Mike, I'll finish with financial guidance for 2022.\nDespite a slow start to the year associated with Omicron's impact on hospital resources, we are planning for conditions to gradually improve and therefore, are maintaining all of our previous sales guidance ranges for 2022.\nFor total Edwards, we continue to expect sales to grow at a low double-digit rate to 5.5 billion to $6 billion.\nFor TAVR, we expect sales of 3.7 to $4 billion.\nAnd for TMTT, we expect sales of 140 to $170 million.\nWe expect Surgical Structural Heart sales of 870 to $950 million and Critical Care sales of 820 to $900 million.\nFor full year 2022, we continue to expect adjusted earnings per share of $2.50 to $2.65.\nFor the first quarter of 2022, we project total sales to be between 1.27 and $1.35 billion and adjusted earnings per share of $0.54 to $0.62.\nAnd with that, I'll pass it back to Mike.\nSo in conclusion, we're proud of the significant progress we made in 2021, advancing new transformational therapies and delivering strong financial performance.\nWe expect continued growth and progress in 2022.\nWe are enthusiastic about the continued expansion of catheter-based therapies for the many structural heart patients still in need, which positions us well long-term success.\nAs the global population ages and cardiovascular disease remains the No.\n1 largest health burden, we believe the opportunity to serve our patients will nearly double between now and 2028.\nWe are confident that our patient-focused innovation strategy can transform care and bring value to patients and the healthcare system.\n",
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"content": "compname says q4 sales grew 12% to $1.33 billion, up 13% on an underlying basis.\nq4 sales grew 12% to $1.33 billion, up 13% on an underlying basis.\nfy 2022 financial guidance unchanged.\nq4 earnings per share was $0.53; q4 adjusted earnings per share was $0.51.\nqtrly tavr sales of $872 million, up 12%.\ntavr sales negatively impacted in last several weeks of q4 due to impact omicron had on hospital resources in u.s.\nco is reaffirming 2022 sales guidance for all product groups.\nsees q1 total sales between $1.27 and $1.35 billion, and q1 adjusted earnings per share of $0.54 to $0.62.\nbelieve that opportunity to serve our patients will nearly double between now and 2028.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: To access it, please go to www.\nThe world is unanimous about the first half of calendar 2020 being extremely challenging to navigate, especially with regard to the pandemic and its effect on our communities.\nThese unique circumstances have required our team members to adapt how they work regarding how we serve our customers, how we operate efficiently and simply how we take care of each other.\nThe focus and successful implementation of these items are certainly reflected in our first fiscal quarter results, results which represent an all-time quarterly high watermark for the company.\nOur results this quarter reflect success in both our growth strategy and in our operational execution.\nThe integration of Kosmos Cement acquisition proceeded on schedule.\nI'm proud to say that for the first time in Eagle's history, we sold over 2 million tons of cement during the quarter.\nOur cement operations performed well.\nRecent strategic investments to extend our capabilities to satisfy customer requirements are paying off.\nA good example of this is our expansion of grinding capacity at our Sugar Creek plant.\nCement demand has remained strong across all of our markets.\nWe are fortunate to operate in states where construction has largely been uninterrupted by COVID.\nWe're focused on economically resilient and less cyclical U.S. Heartland geographies.\nWe continue to shape our heavy side portfolio with both strategic sales and acquisitions.\nOur sale of Western Aggregates and Mathews Ready Mix northern California reflected in this quarter's results was a strategic decision to divest in an asset outside our network.\nThis asset was previously replaced through an acquisition in northern Nevada aggregates and ready mix asset located in better proximity to our Nevada Cement operations.\nThe northern Nevada asset is fully integrated into our system now and is operating very well.\nThis quarter, our Wallboard business showed that geography matters.\nOur Wallboard shipments were up 7% over the same quarter a year ago.\nThis is in an environment where national shipments were down about 5%.\nI want to emphasize this is primarily a reflection of our strategic geographic positioning and long-term attractive markets and our strong operational execution.\nRegarding our previously announced Republic Paperboard facility expansion project, the first step of equipment installation and integration is now complete and is giving us increased supply to meet our customer demand.\nThe major cash investment is now behind us for this project.\nAs for fac sand, we have fully idled the facilities to minimize the cost impact and preserve value for future use.\nAs previously announced, we continue to explore alternatives for this business.\nIn the current market conditions, we recognized there are significant uncertainties about the sustainable level of demand.\nCOVID is uncertain and public policy is uncertain.\nSecond wave risks are real, cautioned and certainly warranted.\nAt Eagle, we keep our eyes on the Verizon as well on the road in front of us and there is every reason to believe this period of uncertainty will pass and give way to a healthy runway for our construction materials business.\nI am encouraged that policymakers have reacted aggressively with unprecedented monetary and fiscal measures.\nU.S. house prices are increasing, mortgage rates are low, credit spreads are narrowing, commodity prices are advancing, every week there is a chance of more scientific breakthroughs in both therapeutics and vaccines.\nWhen the economic reopening is completed, economic activity could have another bounce, particularly with the lagging response of U.S. monetary stimulus at work.\nThe bottom line is, I do not know when this period of uncertainty will pass, but I'm confident that it will.\nEagle is prepared to navigate this period of uncertainty regardless of the duration, just as the company did when it profitably navigated through the longest construction recession in U.S. history.\nWe will continue to be cautiously optimistic, but internally, we will continue to confine capital spending until a clearer picture emerges.\nOur resilience as a company is certainly greatly enabled by the strong cash flow characteristics of our businesses.\nIn this regard, it's worth noting that this quarter, our net leverage declined by $150 million for March 31st and total liquidity improved to over $450 million at June 30th.\nNow, let me turn to the topic of our planned separation of the two businesses.\nWe still have more to executing the separation, which at this moment has been delayed by COVID uncertainties.\nI do not have an update today on timing and won't until there is some increased visibility that we are pass the potentially more disruptive effects of this pandemic.\nI can say that our conviction about the separation remains intact and we have every intention of completing the separation.\nThat's all for me as far as introductory remarks.\nFirst quarter revenue was a record $428 million, an increase of 15% from the prior year.\nThis increase reflects contribution from the Kosmos Cement Business we acquired in March and improved cement and wallboard sales volume.\nExcluding the recently acquired businesses and the effects of the business we sold in northern California, revenue improved 2% from the prior year.\nFirst quarter diluted earnings per share were $2.31, an improvement of 146%.\nMost notably, this year's first quarter results benefited from a sizable gain on the sale of our northern California businesses.\nBoth quarters also includes the impact of business development expenses.\nExcluding these and other non-routine items, first quarter adjusted earnings per share improved 39%.\nTurning now to segment performance.\nThis next slide highlights the results of our Heavy Materials sector, which includes our Cement, Concrete and Aggregates segments.\nRevenue in the sector increased 30%, driven primarily by the contribution from the recently acquired Kosmos Cement Business and a 7% increase in like-for-like cement sales volume.\nOperating earnings improved 62%, again reflecting a contribution for Kosmos and improved sales volume as well as lower diesel prices in our concrete operations.\nIn addition, given the concerns around having contractors onsite during the COVID-19 pandemic, we adjusted the timing extents of our cement maintenance outages and delayed approximately $6 million of maintenance costs from the first quarter into the second and third.\nMoving to the Light Materials sector on the next slide.\nFirst quarter revenue in our Wallboard and Paperboard business was up slightly, as improved Wallboard sales volume was partially offset by lower Wallboard prices and lower Paperboard sales volume.\nQuarterly operating earnings in this sector declined 8% to $44 million, as improved Wallboard earnings were offset by higher recycled fiber costs and the inefficiencies of starting up the paper mill after the expansion project in March.\nThe earnings impact from start-up was approximately $2 million and by the end of the quarter, our operating efficiencies at the mill were much improved.\nHere in July, the mills has been setting production speed records.\nIn the Oil and Gas Proppants sector, revenue was down 93% and we had an operating loss of $1 million.\nThe business came under increasing pressure in this spring and early summer as lower oil prices further reduced drilling and hydraulic fracturing activity.\nDuring the quarter, we significantly curtailed our operations to minimize operating costs and preserve the value of the assets.\nThis next slide provides summary of cash flow information.\nDuring the first quarter, operating cash flow improved 88% to $95.3 million, reflecting strong earnings and disciplined working capital management.\nTotal capital spending improved or increased to $26 million, as we completed several projects initiated last year and purchased land in Oklahoma, which will provide our two Wallboard plants with over 20 million tons of additional shifts and reserves.\nWe continue to expect total capital spending in a range of $60 million to $70 million for fiscal 2021.\nAlso during the quarter, we received the proceeds from the sale of our northern California businesses on April 17th.\nFinally, I'll look at our capital structure.\nGiven the ongoing pandemic-related uncertainty, we are continuing to fortify our balance sheet and liquidity.\nAt June 30th, our net debt to cap ratio was 55% and we had a $199 million of the cash on hand.\nOur net debt to EBITDA leverage ratio was 2.5 times and total liquidity at the end of the quarter was $459 million and we have no near-term debt maturities.\nWe received our IRS refund in early July, which has further improved our balance sheet and liquidity post quarter.\nWe will now move to the question-and-answer session.\n",
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"content": "q1 earnings per share $2.31.\nq1 revenue $428 million versus refinitiv ibes estimate of $383.4 million.\nremain committed to separation, although timing is uncertain.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Michael Haack.\nI'll begin today with some perspectives about our business environment, one that is continuing to improve.\nResidential construction represents the most important single demand driver for us, driving around 80% of the demand for Gypsum Wallboard and about 30% of the demand for cement.\nThe outlook for housing starts, especially single-family starts, which are particularly important for wallboard demand, remain strong.\nAs long as mortgage interest rates stay in the lower quartile by historic standards, this should be largely sustainable.\nAs we have been underbuilding against underlying demand in the U.S. for over a decade.\nThis underbuilding has led to a record shortage of homes at the same time that household formations have been increasing.\nRepair and remodeling is a very important component of residential construction, and it is healthy component of the underlying demand engine.\nWith a financial boost from recent federal stimulus and strong house price appreciation, homeowners are continuing to invest in the upkeep and improvement of their homes.\nHomeowners also seem to be undertaking larger discretionary renovations, ones in many cases were deferred during the pandemic uncertainties.\nPeople are buying homes in record numbers, and I should emphasize where availability allows.\nAnd the knock-on effect for repair and remodel is significant.\nWhether it's getting a home in tiptop condition to sell or personalizing the home after purchase, there is a demand relationship between home buying and repair and remodeling.\nIt was notable that President Biden said this month that he planned to make an historic investment in affordable housing by building and rehabilitating more than 2 million homes.\nThe National Association of Realtors said that there is a cumulative demand-supply gap of 6.8 million homes.\nThe loss of the existing units through demolition, natural disaster, or functional obsolescence has contributed to this shortfall along with the underproduction of new housing units.\nThese intentions, if acted upon, represent upside to our already robust outlook for Gypsum Wallboard.\nCement demand is driven most heavily by infrastructure.\nImplementation will further challenge U.S. cement supply in many parts of the U.S., which is already straining to meet current demand.\nIt is also important to emphasize, as I have in the past, that the lion's share of funding for infrastructure comes from states, not federal government.\nThere was quite a bit of concern about state budgets being impacted by the pandemic, but as we shared in the prior earnings calls, our analysis of sources of state funding suggest the impact would not be as great as some feared, especially in the U.S. heartland states in which we operate.\nAs it turned out, state and local revenues are in fact healthy.\nAt Eagle, we remain virtually sold out of our manufactured cement.\nOur entire U.S. heartland system is now starting to tension more than it has over the last decade.\nI'd emphasize that our cement volumes this quarter were slightly impacted by wet weather and not by the lessening of demand.\nThe point of this is that the demand picture is robust today for both of our businesses.\nThe factors driving this strength should be sustainable at least through the mid-term.\nThat is the demand side.\nNow let me spend some time on the supply side.\nI want to start the supply side discussion with some comments I made in the last earnings call as I think they are important to reiterate.\nThe first item is around the diminishing supply of synthetic gypsum in the eastern half of the U.S.\nThis is due to less burning of coal as power plants change fuel sources from coal to natural gas and from the outright closure of coal-fired power plants.\nWith a diminishing supply of synthetic gypsum, existing synthetic wallboard plants will be limited in their ability to fully utilize their current capacity, increase current, or build new capacity.\nConversely, almost all of Eagle's plants have many decades of raw material supply, which are primarily owned natural gypsum deposits.\nWe are largely insulated from the direct effects of this diminishing synthetic gypsum trend while our plants are also in a position to indirectly benefit from the supply dynamics that this trend creates.\nAnd this way, it is notable that the gypsum wallboard industry is increasingly looking more like the cement industry.\nThe second point we discussed in the last call was around the significant regulatory and capital barriers to U.S. cement capacity expansion, whether it be existing facilities or through the construction of new ones.\nThis is why in the face of increasing demand and with industry capacity now nearing full utilization, clinker capacity in the number of cement kilns has not only not expanded since 2010 but since the clinker capacity and the number of cement kilns has actually been reduced in the U.S. Against this backdrop, high-cost imports are increasingly required to serve U.S. coastal markets.\nEagle is well positioned in the heartland of the U.S. away from the coast, and here too Eagle will be positively impacted from this trend.\nThese imports also carry with them a much larger carbon footprint than even the most inefficient domestic cement producers.\nThis carbon footprint is not only from their in-country manufacturing processes but also from the logistics associated with delivering their product to their end-use customer.\nIt is worth a reminder that Eagle operates some of the most modern and efficient plants in the U.S. and all of our plants operate within established stringent U.S. environmental limits.\nIf you'd like to learn more about our ambitious cementitious materials agenda and our role in creating a net-zero carbon future, I'd invite you to review our recently released Environmental and Social Disclosure Report featured on our website.\nAt Eagle, we are exceptionally well positioned to take advantage of opportunities that this current business environment provides us.\nOur balance sheet is strong, giving us substantial financial firepower when growth opportunities arise.\nWe have also restarted our share repurchase program and completed the issuance of 2.5% 10-year senior notes that will further strengthen Eagle's capital structure.\nIn short, as we stated in past quarters, favorable demand outlooks, constrained U.S. manufacturing supply capability, and limited practical substitutes for our products in both of our businesses add up to a very bright future for Eagle Materials.\nFirst quarter revenue was a record $476 million, an increase of 11% from the prior year.\nThe increase reflects higher wallboard and cement sales prices as well as increased wallboard and paperboard sales volume.\nFirst quarter earnings per share was $2.25.\nThat's a 3% decrease from the prior year.\nHowever, the prior year included a $0.93 per share gain from the sale of our Northern California businesses.\nTurning now to segment performance.\nThis next slide shows the results in our Heavy Materials sector, which includes our cement and concrete and aggregates segments.\nRevenue in the sector increased 3% driven by the increase in cement sales prices.\nThe price increases range from $6 to $8 per ton and were effective in most markets in early April.\nThese price increases were partially offset by lower cement sales volume, which was largely the result of heavy rainfall in Texas and reduced inventory levels across our cement network.\nOperating earnings increased 3%, again reflecting higher cement prices, which were partially offset by higher maintenance spending in the first quarter of fiscal 2022.\nHowever, this year we completed full outages at each facility during the quarter, which increased maintenance spending during the quarter.\nThe impact in the shift in timing and extent of the outages was approximately $10 million.\nMoving to the Light Materials sector on the next slide.\nRevenue in our Light Materials sector increased 25%, reflecting higher wallboard sales volume and prices.\nOperating earnings in the sector increased 51% to $67 million, reflecting higher net sales, prices, and volume, partially offset by higher input costs, namely recycled fiber costs and energy.\nHowever, wallboard margins improved to 38% versus 32% in the prior year.\nLooking now at our cash flow, which remained strong.\nDuring the first quarter, operating cash flow increased 17% to $111 million, reflecting strong earnings and disciplined working capital management.\nCapital spending declined $12 million.\nAnd as Michael mentioned, we restarted our share repurchase program during the quarter and returned $62 million to shareholders during the quarter, which equated to approximately 426,000 shares.\nFinally, a look at our capital structure.\nEagle's June 30th capital structure remained about flat with year-end.\nAnd at June 30th, our net debt to cap ratio was 34% and our net debt to EBITDA leverage ratio was 1.2 times.\nWe ended the quarter with $307 million of cash on hand.\nSubsequent to the quarter, we completed the refinancing of our capital structure, which included issuing $750 million of 10-year senior notes with an interest rate of 2.5%, extending our bank credit facility five years, paying off the bank term loan, and retiring our 2026 senior notes.\nThe results of these actions provide Eagle with a low-cost, long-dated capital structure with significant liquidity.\nWe'll now move to the question-and-answer session.\n",
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"content": "q1 earnings per share $2.25.\nq1 revenue $476 million versus refinitiv ibes estimate of $464.6 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Michael Haack.\nTo access it, please go to www.\nThese statements are subjects to risks and uncertainties that could cause results to differ from those discussed during the call.\nI'm pleased to be able to report another consecutive quarter of record revenue and net earnings growth, along with further strengthening of our balance sheet.\nLet me begin with four important facts: first, our earnings per share was up 20%, which I'm sure you appreciate, is no small feat in this pandemic environment; second, we shipped an all-time record 2.2 million tons of cement during the quarter; third, we shipped the second quarter record 720 million square feet of Wallboard; and fourth, and most importantly, we achieved these results safely.\nNow let's turn to the outlook for each of our businesses.\nLet me start with Cement.\nCement volumes were up 23% for the quarter and up 28% for the fiscal year, reflecting the overall strength across all of our organic markets.\nSome on the call may not realize that state and local budgets account for the lion's share of infrastructure funds, not the federal government.\nState and local budgets have been stretched during this pandemic, but state DOT budgets have remained resilient to date.\nA significant portion of local government funds is property taxes.\nIt is worth noting that property values actually have been rising considerably through this pandemic.\nSales taxes represent another significant portion of the pie.\nAnd as you know, retail sales have rebounded, and retail sales are now, in fact, above pre-pandemic levels.\nGasoline taxes have rebounded as well with the increase in miles driven.\nThe states will be under undeniable pressure since expenditures have been rising as well as revenues.\nEach state will face different challenges and different urgencies with their infrastructure's priorities.\nThe states with the largest negative funding variances from their five-year averages, are states, largely outside our footprint, such as Washington, Oregon and some Northeastern and Southeastern states.\nMany of our Heartland geographies are faring better.\nWe anticipate that demand over the longer-term should be positive, especially with the added potential contribution from the federal government for infrastructure funding at some point.\nI do not want to discount that there is also the potential for slower trend growth over the near term, especially with the current significant uncertainties about the overall economy.\nThe reality is that, we at Eagle, are operating at very high levels of capacity utilization today.\nWe are working hard to squeeze out every last bit of Cement capacity to meet the customer's existing demand.\nIf demand were to continue at the pace we have seen, frankly, our production would not be able to grow with it.\nNow let me turn to Wallboard.\nThe South leads the nation in the housing starts, and it is more important than the Northeast, West and Midwest combined in terms of construction activity.\nWe have long belief that the Sunbelt, meaning for us, the lower half of the U.S. and now California is the right place to be it Wallboard through cycles.\nWe have strategically positioned ourselves here due to long-term construction activity, growth and demographic migration trends.\nRecent developments around out migration from the Northeast, Chicago and in California, and the prospects of even higher taxation in some states, is reinforcing our optimism that this is a good long-term strategic position.\nOur Wallboard shipments were up 6% this quarter and were up 6% for the fiscal year, a consistent trend.\nLatest industry data showed industry shipments, up 1% for the quarter.\nWe fared better through the pandemic dip, simply due to our geographic positioning.\nContinued strong housing starts and the latest single-family permits would suggest these trends should remain intact for the foreseeable future.\nThe relationship between single-family starts and Wallboard demand is a close one.\nSingle-family construction utilizes more Wallboard than a multi-family on a per unit basis.\nAgainst this backdrop, we have announced a Wallboard price increase to be implemented next week.\nFinally, let me comment on the status of the planned separation of these two businesses, Cement and Wallboard.\nIndustrial logic for the separation remains intact, as does our intention to complete the separation, but the timing remains uncertain.\nTiming is a factor we must watch closely and carefully evaluate.\nWhile the economy in 2020 trough seems to be in the rearview mirror, the path to normality remains exceptionally and remarkably uncertain.\nBecause of this uncertainty, we have not determined the timing for the split.\nWe will continue to evaluate and watch the market.\nIt should be noted that although, it is not a driver for the decision timing, a distinct benefit of the business remaining together beyond the obvious ability to weather uncertainty as a larger enterprise is the speed of company deleveraging that is occurring.\nThis deleveraging is highly supportive of a successful separation launch and a benefit that should not be underestimated, as we formulate the capital structures and policies around return of cash to shareholders for each business.\nSecond quarter revenue was a record $448 million, an increase of 12% from prior year.\nThis increase primarily reflects contribution from the Kosmos Cement Business, we acquired in March, and organic revenue improved 2%, reflecting increased Cement and Wallboard sales volume.\nSecond quarter earnings per share from continuing operations were $2.16, an improvement of 20%.\nThis benefit related to regulations issued during the quarter to clarify the calculation of certain interest deduction limitations.\nBefore we turn to the segment performance, I'd note that having completed the sale of our Oil and Gas Proppants business during September, the current and prior period financial results of that business have been presented separately as discontinued operations on the income statement and balance sheet.\nLet's look at our Heavy Material results for the quarter, highlighted on the next slide.\nThe Heavy Materials sector includes our Cement, Concrete and Aggregates segments.\nRevenue in this sector increased 15%, driven primarily by the addition of the recently acquired Kosmos Cement business.\nOrganic cement sales volume and prices improved 1% and 4%, respectively.\nOperating earnings also increased 15%, again, reflecting the addition of the Kosmos Cement Business.\nAs we discussed last quarter, because of COVID-19, we delayed certain planned cement plant maintenance outages until our second quarter, which resulted in approximately $5 million of higher maintenance costs this quarter compared with the prior year period.\nMoving to the Light Materials sector on the next slide.\nSecond quarter revenue in our Wallboard and Paper business was up 1%, as improved sales volume was partially offset by lower Wallboard prices.\nQuarterly operating earnings in this sector declined 1% to $48 million, again reflecting lower Wallboard sales prices, partially offset by increased volume.\nLooking now at our cash flow, which remains strong.\nDuring the first six months of the year, operating cash flow increased 94%, reflecting earnings growth, disciplined working capital management and the receipt of the majority of our IRS refund.\nCapital spending declined to $41 million, and we continue to expect capital spending in the range of $60 million to $70 million for fiscal 2021.\nFinally, a look at our capital structure.\nWe continue to prioritize debt reduction as a primary use of cash at this time, and the preservation of financial flexibility in line with pandemic-related uncertainties.\nAt September 30, 2020, our net debt-to-cap ratio was 48% and our net debt-to-EBITDA leverage ratio was two times.\nTotal liquidity at the end of the quarter was over $700 million, and we have no near-term debt maturities.\nWe'll now move to the question-and-answer session.\n",
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"content": "compname reports q2 earnings per share $2.16 from continuing operations.\nq2 earnings per share $2.16 from continuing operations.\nq2 revenue $448 million versus refinitiv ibes estimate of $445.7 million.\nremain committed to separation.\ncontinue to make preparations to ensure that two businesses are well-positioned for separation.\ntiming of separation remains uncertain given effects of covid-19 pandemic.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Michael Haack.\nLet me start my comments today by stating that this was another very good quarter for Eagle Materials.\nFrom a market perspective, we are well-positioned U.S. Heartland cementitious materials producer, and we are a national scale U.S. Gypsum Wallboard producer.\nFrom the people perspective, we have a talented team that understands their markets and make great decisions.\nSimply put, this is a very good time to be in each of our businesses.\nThis is not just due to current conditions, but because the outlook for both businesses looks favorable.\nI'll spend some time today on the macro backdrop as it provides some context to our favorable outlook.\nCOVID vaccination hesitancy, lingering supply chain issues and federal budget uncertainties and have weighed on economic momentum.\nOffsetting these issues are job growth and consumer spending.\nIn 2021, we are seeing some of the strongest job creation in U.S. history and strong consumer spending growth.\nSupply side headwinds are likely to pose less of a challenge in 2022, allowing for healthy industrial production growth as a monumental backlog of orders are gradually cleared.\nHousing construction, which is an important driver for both of our businesses, and especially for Wallboard, continues to enjoy strong demand.\nWith healthy household balance sheets, low interest rates and relative affordability by historical standards, we see good headroom for continued trend growth.\nIn this regard, it should be noted that housing activity is especially strong in the Southern U.S.\nThis is important for Eagle as this is where most of our plants reside, and this region represents more housing starts than all other regions in the U.S. combined over this past year.\nThere is a positive knock-on effect from robust housing demand for repair and remodeling, which we expect will continue to grow at a mid- to high single-digit pace through 2022.\nIn Cement, the key wildcard remains infrastructure spend.\nMost of the funding today comes from the states.\nThe states in our footprint generally have healthy balance sheets, driven by increased receipts from property and sales taxes.\nThe national discussion has focused on federal infrastructure spend.\nFederal infrastructure funding will happen someday and is certainly necessary.\nWhen it does happen, it will intensify the supply demand dynamics of Cement.\nCommercial construction activity looks promising for pickup.\nAnd again, regional strength in leading indicators favor the Midwest in the South, aligned with our U.S. Heartland footprint.\nIt is also worth noting that the U.S. shift toward renewables is very constructive for Eagle.\nWind farm construction is concrete intensive.\nIf you look at the map of planned wind projects and advanced development for projects under construction, it aligns well with our Cement plants.\nCement imports will be increasingly required this cycle to meet demand as strong market conditions are leading to very high effective rates of capacity utilization in domestic plants.\nThese imports will come at a cost in both our higher intensity carbon footprint and in price as the Baltic Dry Index is up 135% from a year ago and is at a 10-year high.\nNow let me speak to volume, pricing and cost trends for each of our two businesses.\nFirst, let's discuss volume.\nFortunately, we still have some capacity headroom in Wallboard.\nHowever, the recent supply chain disruptions experienced by homebuilders is no doubt delaying the construction of some homes and pushing the demand up to the right.\nOnce these log jams clear, we expect to be even busier.\nOur high cement utilization has been well chronicled.\nWe are virtually sold out and operating full tilt.\nWe are working closely with customers to meet their needs.\nAs demand increases, there are limits to how much more volume growth we can squeeze out of our cement system, unless, of course, we could expand our system through acquisitions.\nQuality U.S. cement plants that meet our strategic criteria are admittedly hard to come by, and we are patient investors, which is why a balanced approach to share repurchases when quality assets are not available makes so much sense for a company like Eagle.\nYou can see in this quarter, we purchased approximately $185 million of Eagle stock.\nWe know our assets and know their value.\nTo reduce our carbon intensity at the cementitious product level and to service our customers with additional volume, it is our ambition to ramp up our limestone cement product offerings.\nOver time, this has the potential of literally creating another cement plant worth of product for sale for us, when fully implemented across our system.\nSome aspects in realizing this ambition are not within our control, such as DOT approvals, but we are seeing good progress here and are encouraged.\nOver the next three years, we expect to move the needle meaningfully on this initiative.\nMoving on to pricing.\nCement prices have not yet recovered as much as most of other building materials in this cycle.\nWe have announced double-digit cement price increases effective January one across the majority of our network.\nAs for Wallboard, pricing is most strongly driven by demand, and demand has been strong as evidenced by our 33% year-on-year increase in Wallboard prices.\nI suspect it may raise the question in some people's minds as to whether we are nearing the peak for this cycle.\nIf our demand outlook is correct, I think we are not.\nThere has been a lot of discussion about cost headwinds, in many cases, exaggerated by supply chain disruption.\nLet me put this in perspective for Eagle.\nWe own and control virtually all of our raw materials.\nIn some sense, one might say we already purchased the raw material with our investments and reserves decades ago, and by doing so, have mitigated a supply chain issue concerning raw material.\nEnergy inputs are important.\nWe often get asked about hedging.\nWe are currently hedged for approximately 50% of our natural gas needs through the remainder of our fiscal year at slightly under [$4 per million], which should help us manage our cost swings.\nNatural gas is the primary fuel used in our Wallboard business.\nThe spike in OCC costs this summer were material this last quarter.\nBut as we've said many times, pricing mechanisms in our sales contracts allow us to pass on higher OCC prices, albeit on a lag of one to two quarters.\nOutbound freight in Wallboard is also important, and we saw a 14% increase in freight costs this quarter.\nHowever, the good news is that freight costs seem to have plateaued during the summer.\nLet me close my remarks with an update we are proud to share as it aligns with our environmental and social disclosure report we published on our website.\nIt is a recent noteworthy development on one of our long-term initiatives that has to do with carbon capture.\nWe were notified on October seven that Chart Industries, a technology development leader in this area, has received a significant funding award from the U.S. Department of Energy to conduct an engineering scale test to advance point source carbon capture, with a specific mandate to conduct this research at our Sugar Creek cement plant.\nChart Industries' cyrogenic carbon capture technology was recognized by researchers at MIT and Exxon as the most cost competitive among highly effective carbon capture systems.\nOur role in this endeavor is to provide technical support and operational data during the development and execution of the project.\nI want to emphasize that even with successful outcome, there are many other dates and hurdles to ultimate adoption, including transport and storage.\nBut this is an important and significant step on the path to net carbon zero future.\nSecond quarter revenue was a record $510 million, an increase of 14% from the prior year.\nThe increase reflects higher sales prices and sales volume across each business unit.\nSecond quarter diluted earnings per share from continuing operations was $2.46, a 14% increase from the prior year.\nAnd adjusting for our refinancing actions during the quarter, adjusted earnings per share was $2.73, a 26% improvement.\nTurning now to our segment performance.\nThis next slide shows the results in our Heavy Materials sector, which includes our Cement and Concrete and Aggregate segments.\nRevenue in the sector increased 5%, driven by the increase in cement sales prices and sales volume.\nThe price increases range from $6 to $8 per ton and were effective in most markets in early April.\nOperating earnings increased 13%, reflecting higher cement prices and sales volumes as well as reduced maintenance costs.\nConsistent with the comments we made in the first quarter, and because we shifted all of our planned cement maintenance outages to the first quarter, our second quarter maintenance costs were about $4 million less than what they were in the prior year.\nMoving to the Light Materials sector on the next slide.\nRevenue in our Light Materials sector increased 28%, reflecting higher Wallboard sales volume prices.\nOperating earnings in the sector increased 39% to $67 million, reflecting higher net sales prices, which helped offset higher input costs, mainly recycled fiber costs and energy.\nLooking now at our cash flow, which remains strong.\nDuring the first six months of the year, operating cash flow was $262 million, a 27% year-on-year decrease reflects the receipt of our IRS refund and other tax benefits in the prior year.\nCapital spending declined to $27 million.\nAnd as Michael mentioned, we restarted our share repurchase program and our quarterly cash dividend this year and returned $259 million to shareholders during the first half of the year.\nWe repurchased approximately 1.7 million shares or 4% of our outstanding.\nAt the end of the quarter, 5.6 million shares were available for repurchase under the current authorization.\nFinally, a look at our capital structure.\nEagle maintains a strong balance sheet, access to liquidity and a well-structured debt maturity profile.\nDuring this quarter, we completed the refinancing of our capital structure, which included issuing $750 million of 10-year senior notes with an interest rate of 2.5%.\nWe extended our bank credit facility five years, paid off our bank term loan and retired our 2026 senior notes.\nWe'll now move to the question-and-answer session.\n",
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"content": "compname reports q2 earnings per share $2.46.\nq2 adjusted earnings per share $2.73 from continuing operations.\nq2 earnings per share $2.46.\nq2 revenue rose 14 percent to $510 million.\nq2 adjusted earnings per share $2.73.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: To access it, please go to www.\nFirst is the health, safety and well-being of our employees.\nThe second is being responsible citizens and good neighbors in the communities in which we do business.\nAs it relates to COVID-19 these two could not be more closely related.\nRegarding our safety response to COVID-19, we have been proactive in establishing protocols and processes that protect the safety and health of our employees, customers and business partners.\nThis early action has enabled us as an essential business to remain open safely in all locations.\nWe are fortunate in that we operate and serve the U.S. heartland and Sun Belt states, own and control our local raw material inputs and have a fully domestic supply chain.\nAnd most importantly, in this situation, virtually everywhere we operate construction has been deemed essential allowing us to make and sell our products, which brings me to our earnings this quarter.\nWe entered the quarter with a strong momentum in terms of demand across our markets.\nWe did not experience much business interruption for our fourth fiscal quarter in our markets.\nPosting record quarterly revenue should be no surprise for this reason.\nIn the case of COVID-19, geography matters.\nIn these unprecedented times rather than trying to predict the unpredictable, our emphasis is on deployment of rapid feedback groups.\nThis involves being in intimate contact with our local operations as they navigate in this environment.\nWe are a local business in many ways and can react quickly to any market changes as they occur.\nWe have successfully navigated severe cycles before and some would say we have an unrivaled track record in this regard.\nWe navigated through the longest and deepest construction recession in U.S. history and made money every year, which very few in our space can claim.\nWe are well prepared to respond quickly as issues arise.\nRight now, part of our preparedness strategy is to conserve cash and strengthen our already strong balance sheet.\nOut of an abundance of caution, we announced during the quarter that we suspended our dividend.\nI want to emphasize and be very clear that suspending the dividend was part of a comprehensive plan of managing cash through this environment.\nThis plan also entails internal -- curtailing nonessential capital expenditures, share repurchases, controlling inventory levels and a host of other prudent measures.\nIt is timely and coincidental from a cash strategy standpoint that we have made some progress in our program of portfolio shaping.\nWe announced this quarter the sale of a non-core ready-mix and Aggregates assets in California.\nThe sale of these assets is the result of a long-term effort that emerge where alternatives ownership value exceeded operating value for us.\nWe also were able to sell our frac sand distribution business during the quarter and we continue to explore alternatives for the remaining frac sand business.\nWe fully expect that the uncertainties around COVID-19 and its effects on the economy will be released over time.\nWe are well-prepared to capitalize on opportunities in construction materials that will arise in the wake of these uncertain times.\nWe are three times larger on the Cement side of the business than we were a decade ago.\nWe have built a strategic network of plants and terminals in the U.S. heartland.\nThe latest addition was the recently acquired Kosmos Cement plant that we began operating as an Eagle plant in March.\nOur Wallboard business has attained unrivaled prominence for low-cost production and customer satisfaction.\nIn March we completed the equipment installation to expand the capacity of Republic Paper.\nWe will finalize all aspects of the installation over this summer when travel reopens but we are already seeing the benefits of this new equipment through added capacity.\nOur balance sheet is strong and we are poised to emerge from this uncertain time with the wins at our back.\nIn this regard, I think it is important that we not underestimate the power that already announced monetary and fiscal government stimulus will create for our businesses.\nConstruction has led the way to recovery in so many prior cycles and may well lead the way again.\nOur U.S. infrastructure needs are well chronicled one way or another roads and bridges will be built and repaired.\nLow interest rates make homes more affordable and we are not building at the pace that matches household formation and replacement needs.\nThere are many reasons to remain constructive about the long-term.\nWe still look forward to the separation of the two businesses, but currently have no updates on timing for that transaction.\nThat's all for me as far as an introductory remarks.\nFiscal year 2020 revenue was a record $1.5 billion, up 4% from the prior year reflecting increased Cement sales volume and pricing, improved Wallboard and Paperboard sales volume and the addition of two businesses acquired during the year.\nThe acquired businesses contributed approximately $32 million of revenue during the year.\nRevenue for the fourth quarter improved 11% to $315 million reflecting a very strong end to our fiscal year.\nAnnual diluted earnings per share improved 14% to $1.68.\nFor fiscal 2020 diluted earnings per share includes the effect of a significant tax benefit related to the CARES Act, business development related expenses and the effect of an outage linked to the expansion of our paper mill.\nExcluding these non-routine items, annual earnings per share improved 10%.\nThe CARES Act enabled us to use the tax assets generated primarily by the Kosmos acquisition and carried back to recover taxes paid in prior years at higher tax rates than we pay today.\nThe fourth quarter earnings per share comparison is also affected by many of these same non-routine items.\nAdjusting for them consistently each year Q4 earnings per share would have increased by 45%.\nTurning now to our segment performance, this next slide shows the results in our Heavy Materials sector, which includes our Cement, Concrete, and Aggregates segments.\nAnnual revenue in the sector increased 17% driven primarily by an 11% improvement in Cement sales volume, improved pricing in both Cement and Concrete and the results of the Concrete and Aggregates business we acquired in August of 2019.\nOperating earnings increased 12% again, reflecting the improvement in sales volume and pricing.\nMoving to the Light Materials sector on the next slide, annual revenue in our Light Materials sector declined 4% as improved Wallboard and Paperboard sales volume was offset by an 8% decline in Wallboard sales prices.\nAnnual operating earnings declined 12% to $190 million reflecting lower net sales prices, partially offset by higher sales volume.\nThe Light Materials annual results also reflect the impact of two extended outages at our paper mill to tie in new equipment.\nThe impact of the outage on the annual results was approximately $4.5 million.\nIn the Oil and Gas Proppants sector annual revenue was down 44% and we had an operating loss of $15 million.\nThis business has come under increasing pressure in recent months as lower oil prices further reduced drilling and hydraulic fracturing activity and we continue to adjust our operations to minimize operating costs.\nIn late March, we sold the distribution business of the Proppants sector and we continue to explore alternatives for the remaining mining business.\nOperating cash flow during fiscal 2020 increased 14% to $399 million.\nTotal capital spending declined to $132 million.\nIn early March, we completed the acquisition of the Kosmos Cement business funding the purchase through a term loan syndicated through our existing bank group.\nDuring fiscal 2020 Eagle returned approximately $330 million to shareholders through share repurchases and dividends.\nIn fiscal 2021 we expect capital spending to decline nearly 50% to a range of $60 million to $70 million.\nAnd as we previously announced and Michael highlighted, we have suspended share repurchases and future dividends.\nFinally, a look at our capital structure; at March 31, 2020, our net-debt-to-cap ratio was 60% and we had $119 million of cash on hand.\nOur net-debt-to-EBITDA leverage ratio was 2.9 times.\nTotal liquidity at the end of the quarter was nearly $300 million and we have no near-term debt maturities.\nIn April, we announced the sale of our Concrete and Aggregates business in Northern California for $93.5 million.\nThese proceeds combined with the tax refund stemming from our NOL carryback and operating cash flow further improves our liquidity position going forward.\nWe'll now move to the question-and-answer session.\n",
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"content": "limiting capital spending to critical projects only.\neagle materials - taking additional steps such as suspending share repurchases and future dividends.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Michael Haack.\nOne, related to the Board's decision to remain a combined company and the other to the reinstatement of our quarterly cash dividend.\nTo access it, please go to www.\nI'll begin today with some perspectives on the quarter, the fiscal year and our outlook.\nOur latest results represent a culmination of a decade of sustained topline growth for the company.\nWhile our bottom line has grown by more than 20 fold.\nIn every respect, fiscal 2021 was an extraordinary year for Eagle Materials.\nOur resilient business model and our team's commitment to Eagle's vision and strategic priorities have enabled us to achieve record financial results, integrate the largest acquisition in the company's history, operate all facilities safely during COVID, and quickly rebound from a historic winter storm.\nThese results would not be possible without the extraordinary talented and dedicated employees of Eagle Materials.\nWe have long emphasized the favorable cash flow characteristics of Eagle Materials, and this was never more clearly illustrated then during this year.\nAnd in fact, we were able to repay the entire $665 million purchase price of the Kosmos acquisition during the fiscal year, providing us with significant balance sheet firepower and financial flexibility going forward.\nA few additional strategic items that I would like to highlight are around our completion of the expansion of our vertically integrated paper mill and some portfolio shaping.\nThe paper mill expansion added 20% additional capacity, allowing Eagle to set a monthly production record for Wallboard paper in March.\nThe expansion will also provide cost and value benefits that we expect to realize longer-term.\nThe business portfolio shaping involve the divestiture of Eagle's profit business and other non-core assets in Northern California.\nWe found buyers where alternative ownership value exceeded operating value for us.\nWith regards to operations.\nI'm especially pleased with our safety performance in this disruptive pandemic year.\nProgress on our relentless focus on safety was confirmed by our leading and lagging safety indicators.\nOur safety culture has never been stronger with leading indicators of safety observations increasing by 114%, resulting in all of Eagle's businesses outperforming industry metrics yet again, and this gap is widening.\nAnother important topic that we are very excited about is our progress on our environmental and social agenda.\nWe will post an updated environmental and social disclosure report to our website this quarter and it will give a more comprehensive and granular expression of our ESG agenda and to our progress, both of which were a source of pride for us.\nESG is well integrated into our strategic planning and investment decision-making process at Eagle.\nLet me now turn to some specifics around our demand outlook and why we believe the underlying demand fundamentals in our markets will continue to be strong -- see strong volume and pricing strength like we saw during the second half of our fiscal year.\nResidential construction and repair and remodeling are very closely related and are important demand drivers for Eagle Materials.\nThese two items drive approximately 80% of the demand for Gypsum Wallboard and about 30% of the demand for cement.\nIn this regard, the outlook for housing starts, especially single-family starts, which are particularly important for Wallboard demand is strong.\nWe have been under building against underlying demand in the U.S. for over a decade.\nThis under building has led to a record shortage of homes, at the same time that household formations are expanding.\nAs long as mortgage interest rates stay in the lower quartile by historic standards, this demand growth should be largely sustainable through the mid-term.\nNow turning to cement.\nApproximately half of cement demand is from investments in infrastructure.\nImplementation will further challenge U.S. cement supply in many parts of the U.S., which is already straining to meet current demand.\nIt is also important to remember that the lion's share of funding for infrastructure comes from states, not the federal government.\nThere was quite a bit of concern about state budgets being impacted by the pandemic, but as we shared in our prior earnings calls, our analysis of sources of state funding suggested the impact would likely not as be as great as some feared, especially in the U.S. heartland states in which we operate.\nIn fact, remarkably, state and local tax revenue grew by 1.8% in 2020.\nThis is largely because state and local personal income tax receipts rose 3.4% and state and local property tax receipts were up 3.9%.\nOn top of the tax revenues, states were provided federal grants as part of President Biden's American rescue plan.\nFinally, non-residential demand is the smallest demand driver for Eagle.\nWe have seen strong demand in distribution centers, warehousing and data centers, but overall this area has been less certain.\nAs America continues to reopen after COVID, we expect this demand driver to continue to strengthen.\nThe point of this is that the demand picture is robust for both of our businesses.\nThe factors driving the strength should be sustainable at least through the mid-term.\nMoving from the demand side to the supply side, we have been talking from some years about the diminishing supply of synthetic gypsum in the eastern half of the U.S.\nThis is due to less burning of coal as power plants change fuel sources from coal to natural gas and from outright closure of coal-fired power plants.\nWith a diminishing supply of synthetic gypsum, existing synthetic Wallboard plants will be limited in their ability to fully utilize current capacity, increase current capacity or build new capacity.\nConversely, almost all of the Eagle's plants have many decades of raw material supply, which are primarily own natural gypsum deposits.\nWe are largely insulated from the direct effects of this diminishing synthetic gypsum trend, while our plants are also in a position to indirectly benefit from the supply demand dynamics that this trend creates.\nIn this way, it is notable that the Gypsum Wallboard industry is increasingly looking more and more like the cement industry.\nWith respect to our cement business, there are significant regulatory and capital barriers to the U.S. cement capacity expansion, whether it be at existing facilities or through the construction of new ones.\nIn face of the increasing demand and with industry capacity now nearing full utilization, clinker capacity in the number of cement kilns has not only not expanded since 2010, but clinker capacity in the number of cement kilns has actually been reduced in the U.S.\nThis trend is why imported cement will increasingly be required, but is increasingly expensive with rising Baltic freight index rates.\nImported cement also carries a much larger carbon footprint than locally produced cement because of the ocean freight and logistics required to get it to the point of views.\nEagle is well positioned in the heartland of the U.S., away from the seaboards, and here too the company will be affected largely indirectly in a positive way by these trends.\nIn short, favorable demand outlooks, constrained U.S. manufacturing supply capability and a limited practical substitutes for both businesses add up to a very bright future for Eagle Materials.\nWith this backdrop, I would be remiss if I did not spend a little time on our pricing initiatives.\nWith regards to Wallboard, subsequent to the quarter, we implemented a price increase effective in April and have announced a further price increase for June.\nFor cement, we have implemented a price increase in April across our network and announced a second price increase in Texas for mid-summer.\nWe are continuing to see growing demand in our other markets and we'll update you on future calls on any further price increases we implement later in the year.\nAnd I'm here because I would like to share some perspectives around this decision.\nMuch has transpired since the separation announcement that has caused the Board to reevaluate the separations merits.\nFirst, the size and financial strength of the combined company with its diversified asset base geographic diversity and robust balance sheet have provided great comfort stability and value to our shareholders, employees, customers and suppliers during an unprecedented and uncertain time.\nSecond, given the continued consolidation of the industries in which we participate and the company's rigorous examination of a number of strategic alternatives since the announcement of the proposed separation, it has become clear that a combined company with greater financial scale and flexibility will be better positioned to pursue key strategic growth options and enhance shareholder value.\nThird, since the announcement of the proposed separation, the company has streamlined its business portfolio, including the divestiture of its Oil and Gas Proppants business and other non-core assets.\nThere is no question that the company is exceedingly well positioned and is performing as well as at any time in it's history.\nBoth major business segments continue to post industry-leading metrics on just about every measure.\nAs a shareholder, I cannot be more pleased with the position of the company.\nWhile the Board will continue to evaluate the merits of a separation on a periodic basis as we have in the past, it is concluded in consultation with external advisors that the combined company is in the best position to create long-term shareholder value.\nThis is -- this was an important decision for Eagle and for the Board, and one that was very carefully considered.\nA second decision that the Board has made relates to our quarterly cash dividend.\nThis decision is important one in the context of our capital allocation priorities, which I might add, remain unchanged.\nWe have three capital allocation priorities.\nThe first to growth investments that meet our strict financial returns criteria and which falls squarely within our strategic focus boundaries.\nThe second investment priority is organic improvement investments.\nThese are investments to maintain our facilities in like new condition, strengthen the low-cost producer positions, and to ensure the long-term sustainability of our operations.\nThe third priority is the return of cash to shareholders.\nAnd this has been primarily through share repurchases.\nIn fact, over the past three years we have invested just over $625 million in share repurchases and dividends.\nThis compares with nearly $700 million in growth acquisitions and $300 million inorganic improvement investments over that same time period.\nCurrently, over 7 million shares remain under the current repurchase authorization.\nNow let me turn to the quarterly cash dividend decision.\nPandemic uncertainties urged an abundance of caution broadly around capital allocation at Eagle until we could regain confidence around the sustainability of the recovery.\nAs part of that cautiousness, we suspended our quarterly cash dividends.\nOur confidence in the sustainability of the recovery is now high, while our cash position is very healthy.\nAs such, I would like to announce that we are reinstating our quarterly cash dividend of $0.25 per share on our common stock.\nThe dividend will be payable on July 16, 2021 to shareholders of record at the close of business on June 18, 2021.\nThis amount represents a 150% increase over the quarterly dividends that had been paid preceding the suspension.\nWe're very pleased to be able to make this decision on behalf of our shareholders.\nThe reinstatement of the dividend reflects Eagle's strong operational and financial performance, our confidence about the resilience of the business and our commitment to reward shareholders.\nOur strong balance sheet, combined with the robust cash flow outlook allows us to pay this dividend, while very importantly, preserving the financial flexibility to continue to grow and improve Eagle and create long-term shareholder value.\nWith that, now let me pass the baton over to Craig for the regular business of the earnings call with the discussion about the financials.\nFiscal Year 2021 revenue was a record $1.6 billion, up 16% from the prior year.\nThe increase was driven by contribution from the acquired Kosmos Cement business and increased cement and Wallboard sales volume and pricing.\nThe Kosmos Cement business contributed approximately $176 million of revenue during the year.\nRevenue for the fourth quarter was up 12% to $343 million, reflecting a very strong end to our fiscal year.\nAnnual diluted earnings per share increased 46% to $7.99, reflecting the contribution from the Kosmos Cement business, improvement in the organic businesses, and a gain of approximately $0.98 per share on the sale of our Northern California businesses during the first quarter.\nThe fourth quarter earnings per share comparison was affected by the CARES Act, which generated a $37 million or $0.76 per share benefit in the prior year period.\nThis year's fourth quarter financial results were affected by the disruption of winter storm, Irene.\nPrior to and during the storm, we brought down operations at all our Oklahoma and Texas facilities.\nThis was done in a controlled manner to ensure the safety and security of our employees, communities and assets.\nI commend our manufacturing teams for their focus as these facilities ultimately lost utilities, including electricity and natural gas.\nFortunately, we avoided significant damage to our critical equipment and our operations were fully restored by late February.\nThe total financial impact from the winter storm was approximately $12 million during the fourth quarter.\nMost of the impact resulted from higher variable costs, namely higher energy.\nHowever, we also had negative fixed cost absorption, freeze related to repairs and restart costs.\nOn the flip side, we were able to curtail other operations and sell a portion of our natural gas commitments to offset these higher costs.\nThese offsets were included in other non-operating income.\nTurning now to segment performance.\nLet's look at Heavy Materials results for the year highlighted on the next slide.\nThis next slide shows the results in our Heavy Materials sector, which includes our Cement and Concrete and Aggregates segments.\nAnnual revenue in the sector increased 19%, driven primarily by the acquired Kosmos Cement business and higher cement sales volume and pricing.\nThis was partially offset by the divested Concrete and Aggregates business results in the prior year.\nOperating earnings increased 27%, again reflecting the acquired business and increased sales volume and pricing.\nAnd margins improved 140 basis points to 23%.\nAs I mentioned earlier, our Cement and Concrete operations in Oklahoma and Texas were negatively affected by winter storm, Irene.\nThe impact of this sector was approximately $6 million and mostly reflects higher energy costs.\nAs Michael mentioned previously, we recently implemented cement price increases across our entire cement network.\nThe price increases range from $6 to $8 per ton and were effective in most markets in early April.\nMoving to the Light Materials sector in the next slide.\nAnnual revenue in our Light Materials sector increased 5%, reflecting improved Wallboard sales volumes and prices.\nAnnual operating earnings increased 2% to $193 million, reflecting higher net sales prices, partially offset by higher input prices, namely recycled fiber costs and the impact of starting up the paper mill after the expansion project.\nAs with the Cement business, our Wallboard plant and paper mill in Oklahoma experienced production curtailments and significant spikes in energy during the February winter storm.\nThe biggest impact was at our paper mill, which was fully curtailed for the week, and during the shutdown process experienced escalating energy costs.\nAgain, as Michael highlighted, subsequent to the quarter, we implemented a Wallboard price increase in early April and announced another price increase last week for early June.\nLooking now at our cash flow, which remained strong.\nDuring fiscal 2021, operating cash flow increased 61% to $643 million, reflecting earnings growth, disciplined working capital management and the receipt of our IRS refund.\nMeanwhile, capital spending declined to $54 million.\nThe increase in our cash balance combined with debt reduction enabled us to repay the entire Kosmos Cement purchase price during fiscal 2020.\nin fiscal 2022, we expect capital spending to increase to a range of $95 million to $105 million as we restart several projects that were delayed because of the COVID-19 pandemic.\nAnd finally, a look at our capital structure.\nDuring the year, we prioritized debt reduction as a primary use of cash, providing us significant financial flexibility in light of pandemic-related uncertainties and potential opportunities.\nAt March 31, 2021, our net debt to cap ratio was 36%, down from 60% at the end of the prior year, and our net debt to EBITDA leverage ratio was 1.3 times.\nWe ended the year with $264 million of cash on hand and total liquidity at the end of the quarter was approximately $1 billion, and we have no near-term debt maturities.\nWe'll now move to the question-and-answer session.\n",
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"content": "q4 revenue $343 million versus refinitiv ibes estimate of $333.6 million.\ndecision to remain a combined company.\ndecided not to pursue proposed separation of eagle materials.\naverage net cement sales price for quarter increased 2% to $112.77 per ton.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We are off to a great start in 2020.\nThe strong fundamentals we discussed on our fourth quarter call not only continued, but actually accelerated as we move through the first three months of the year.\nSame-store occupancy remained at all time highs for Extra Space with sequential growth in January and February at a time of the year when occupancy normally declines.\nOccupancy increased further in March, ending the quarter with the year-over-year positive delta of 480 basis points.\nOur elevated occupancy has given us significant pricing power, which has also accelerated during the quarter with achieved rates increasing from 10% in January to well into the teens by the end of March.\nThese trends fueled same-store revenue growth of 4.6% despite a 110 basis point drag on revenue growth from lower year-over-year late fees.\nWe had excellent expense control with 0.2% decrease in same-store expenses.\nThe result with same-store NOI growth of 6.5% a sequential acceleration of 310 basis points from Q4 and year-over-year core FFO growth of 21%.\nWith fundamentals holding and performance comps becoming much easier in the upcoming months, we expect continued acceleration in revenue growth through the second quarter.\nOur concern of a dramatic increase in vacates has not materialized and now we are into our busy leasing season when demand is typically strongest.\nWe believe that vacate risk to our elevated occupancy has likely been postponed until the end of the summer or even into the fall.\nTurning to external growth.\nThe acquisition market continues to be expensive and we remain disciplined but opportunistic.\nYear-to-date, we've been able to close or put under contract a little over $300 million in acquisitions.\nThese are primarily lease-up properties and several of the properties came from our bridge lending program.\nLooking forward, we anticipate the majority of additional acquisitions to be completed in joint ventures and we have plenty of capital to invest if we find additional opportunities that create long-term value for our shareholders.\nWe were very active in Q1 on the third-party management front, adding 61 stores in the quarter, which includes the previously announced JCAP stores.\nOur growth was partially offset by dispositions.\nWe have only sold to other operators at prices we viewed as unattractive to the region.\nWhile this trend presents a headwind, we still expect solid growth in our third-party management platform for the year.\nAs I said on our last call, we are mindful of the risks we face.\nThese include difficult fourth quarter operational comp, a tight labor market and new supply and state of emergency orders in certain markets.\nThat said, current fundamentals are the strongest we have seen in some time.\nAnd our team is prepared to use all our available tools to optimize performance.\nOur first quarter outperformance coupled with steady external growth and the improving 2021 outlook allow us to increase our industry-leading annual guidance $7.5 at the midpoint.\nI would now like to turn the time over to Scott.\nAs Joe mentioned, we had a good first quarter with accelerating same-store revenue growth driven by all-time high occupancy and strong rental rate growth to new customers.\nLate fees and other income continue to be down and partially offset rental income, but we will lap this comp in the second quarter, which will enhance same-store revenue growth.\nExisting customer rate increases will also provide a tailwind in the second quarter since they were paused during much of Q2 2020.\nWe delivered a reduction in same store expenses despite property tax increases of 6.9% and repairs and maintenance increases of 20% due to higher year-over-year snow removal costs.\nThese increases were up and were offset primarily by savings in payroll and marketing.\nWe believe payroll savings will continue throughout the year, albeit perhaps at lower levels due to wage pressure in certain markets.\nMarketing spend will depend on our use of this lever to drive topline revenue growth, but it should also remain down for the year.\nCore FFO for the quarter was $1.50 per share, a year-over-year increase of 21%.\nSame-store property performance was the primary driver of the outperformance with additional contribution from growth in tenant insurance income and management fees.\nAs we announced during the quarter, Moody's issued Extra Space a BAA2 credit rating, our second investment grade credit rating now providing us access to the public bond market.\nWe continued to strengthen our balance sheet during the quarter through ATM activity and an overnight offering, which combined for net proceeds of $274 million.\nWe sold 16 stores into a joint venture and obtained debt for that venture, resulting in cash proceeds to Extra Space of $132 million and an ownership interest of 55%.\nWe plan to add a third partner to this venture in the second quarter, which will reduce our ownership interest to 16%.\nOur equity and disposition proceeds reduced revolving balances and we ended the quarter with net debt to EBITDA of 5.1 times lower than our long-term debt target of 5.5 times to 6 times.\nLast night, we revised our 2021 guidance and annual assumptions.\nWe raised our same-store revenue range to 5% to 6%.\nSame-store expense growth was reduced to 2% to 3%, resulting in same-store NOI growth range of 6% to 8%, a 175 basis point increase at the midpoint.\nThese improvements in our same-store expectations are due to better-than-expected first quarter performance, relaxed legislative restrictions in certain markets, and better-than-expected resilience in storage fundamentals as the vaccine rolls out.\nWe raised our full year core FFO range to be $5.95 to $6.10 per share, a $7.5 increase at the midpoint.\nWe anticipate $0.14 of dilution from value-add acquisitions in C of O stores, $0.02 less than previously reported due to improved property performance.\nWe are excited by the strong performance year-to-date, as well as the acceleration we see heading into the second quarter.\n",
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"content": "q1 ffo per share $1.50 excluding items.\nsees ffo per share $5.95 - $6.10 for 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before I turn to the results, I want to take a moment and congratulate the entire Extra Space team.\nOne of our goals for this year was to get to 2021 stores in the year 2021.\nAnd we've achieved that, which is a great thing.\nWhen I first started with Extra Space, we had 12 stores and it's incredible to see the exceptional growth of this company, the value we've created for our shareholders.\nI'm also happy to announce that we recently published our 2020 sustainability report with disclosures and information related to the company's environmental, social and governance initiatives.\nI invite our listeners to review the report on the Sustainability page of our Investor Relations website.\nHeading into this quarter -- I'm sorry, heading into the second quarter, our management team had high expectations due to our record high occupancy levels, significant pricing power and a relatively easy 2020 comparable, and actual performance far exceeded these elevated expectations.\nSame-store occupancy set another new high watermark at the end of June at 97%, which is incredible, as you consider the diversification of our national portfolio.\nThe elevated occupancy led to exceptional pricing power with achieved rates to new customers in the quarter over 60% higher than 2020 levels.\nWhile this is inflated by an artificially low prior year comp, achieve rates were over 30% greater than 2019 levels and accelerated through the quarter.\nIn addition to the benefit from new customer rates, we have continued to bring existing customers closer to current street rates as more of the state of emergency rate restrictions are lifted throughout the country.\nOther income is no longer a drag on revenue due to late fees improving year-over-year and actually contributed 20 basis points to revenue growth in the quarter.\nAnd finally, higher discounts, primarily due to higher rates were offset by lower bad debt.\nThese drivers produced same-store revenue growth of 13.6%, a 900 basis point acceleration from Q1, and same-store NOI growth of 20.2%, an acceleration of over 1,300 basis points.\nIn addition, our external growth initiatives produced steady returns outside of the same-store pool, resulting in FFO growth of 33.3%.\nTurning to external growth.\nThe acquisition market continues to be, in our view, expensive.\nGiven the pricing we are seeing in the market, we have listed an additional 17 stores for outright disposition, which we expect to close during the back half of 2021.\nWe continue to be actively engaged in acquisitions, but we remain disciplined.\nYear-to-date, we have been able to close or put under contract acquisitions totaling $400 million of Extra Space investment.\nThese are primarily lease-up properties and several of the properties came from our Bridge Loan Program.\nWe have increased our 2021 acquisition guidance to $500 million in Extra Space investments.\nLooking forward, many of our acquisitions will be completed in joint ventures, and we have plenty of capital to invest if we find additional opportunities that create long-term value for our shareholders.\nWe were active on the third-party management front, adding 39 stores in the quarter and a total of 100 stores through the first six months.\nOur growth was partially offset by dispositions where owners sold their properties.\nIn the quarter, we purchased 11 of these stores in the REIT or in one of our joint ventures.\nOur first half outperformance coupled with steady external growth and the improved outlook for the second half of 2021 allowed us to increase our annual FFO guidance by $0.50 or 8.3% at the midpoint.\nWhile we still assume a seasonal occupancy moderation of approximately 300 basis points from this summer's peak to the winter trough, the moderation will begin from a higher starting point than we previously expected.\nAs a result, we assume minimal impact on revenue growth from the negative occupancy delta in the back half of the year.\nOur guidance assumes moderating but still strong rate growth for the duration of 2021, which should result in another great year for Extra Space Storage.\nI would now like to turn the time over to Scott.\nAs Joe mentioned, we had an excellent quarter with accelerating same-store revenue growth driven by all-time high occupancy and strong rental rate growth to new and existing customers.\nCore FFO for the quarter was $1.64 per share, a year-over-year increase of 33.3%.\nProperty performance was the primary driver of the beat with additional contribution coming from growth in tenant insurance income and management fees.\nDespite property tax increases of 6%, we delivered a reduction in same-store expenses in the quarter.\nThese increases were offset primarily by 13% savings in payroll and 31% savings in marketing.\nOur guidance assumes payroll savings will continue throughout the year, however, at lower levels due to wage pressure across the U.S. Marketing spend will depend on our use of this lever to drive top line revenue, but it should also remain down for the year.\nIn May, we completed our inaugural investment-grade public bond offering, issuing $450 million in 10-year bonds at 2.55%.\nAccess to the investment-grade bond market provides another deep capital source at low rates and will allow us to further extend our average maturities.\nOur year-to-date dispositions, equity issuances and NOI have resulted in a reduction in our leverage.\nOur quarter end net debt-to-EBITDA was 4.8 times, giving us significant dry powder for investment opportunities since we generally target a range of 5.5 to 6 times on this metric.\nLast night, we revised our 2021 guidance and annual assumptions.\nWe raised our same-store revenue range to 10% to 11%.\nSame-store expense growth was reduced to 0% to 1%, resulting in same-store NOI growth of 13.5% to 15.5%, a 750 basis point increase at the midpoint.\nThese improvements in our same-store expectations are due to better-than-expected achieved rates, higher occupancy and lower payroll and marketing expense.\nWe raised our full year core FFO range to be $6.45 to $6.60 per share, a $0.50 or 8.3% increase at the midpoint.\nDue to stronger lease-up performance, we dropped our anticipated dilution from value-add acquisitions and C of O stores from $0.14 to $0.12.\nWe're excited by our strong performance year-to-date and the success of our customer acquisition, revenue management, operational and growth strategies across our highly diversified portfolio.\n",
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"content": "compname reports q2 ffo per share $1.64.\nq2 ffo per share $1.64 excluding items.\nqtrly ffo attributable to common stockholders and unit holders of $1.64 per share.\nqtrly core ffo $1.64 per share.\nsees 2021 ffo and core ffo of $6.45-$6.60.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And Joe, you may be on mute.\nOperator, do we have Joe's line connected.\nCan you hear me now?\nYes, we hear you now.\nI hope everyone and their families remain healthy and that your 2021 is off to a good start.\nIn my 35 years in real estate, I can't remember another year with as many positive and negative twist and turns in such a short period of time as we saw in 2020.\nThe range of emotions I felt from March, when I was worried about the daily safety of our employees and customers; to April, when I wondered when rental demand in our sector would return; to September, when we saw some of the strongest occupancy and rental rate fundamentals in our Company's history are hard to describe.\nI am proud of our team's resilience in how well they responded to 2020's unprecedented challenges.\nOur team's efforts together with our balanced portfolio, sophisticated platform and innovative external growth efforts yielded a great result in the fourth quarter.\nWe ended the year with same-store occupancy of 94.8%, an all-time year-end high for Extra Space.\nOur elevated occupancy has given us significant pricing power, which we have experienced since August and a return to positive same-store revenue growth in the fourth quarter of 2.3%, a 380 basis point acceleration from the third quarter.\nWe also had excellent expense control with a 0.6% decrease in same-store expenses, resulting in 3.4% NOI growth in the quarter.\nOur return to positive NOI gains coupled with strong external investment activity yielded core FFO growth of 16.5% in the quarter.\nDespite the challenges of the year, the fourth quarter was full of accomplishments, including completion of two preferred equity investments totaling $350 million, $147 million in acquisitions, $168 million in bridge loan closings, the addition of 44 stores to our management platform, and receipt of NAREIT's Leader in the Light award, recognizing Extra Space for its sustainability efforts.\nThis is the first time a storage company has received this award.\nWhile we are excited about the accomplishments of 2020, we are even more optimistic about how our efforts have positioned us for 2021.\nRentals continue to be steady and vacates continue to be muted.\nWe are heading into 2021 with the highest occupancy we have ever experienced at this time of year and expect rental rates to remain strong.\nWe have already added 51 third-party management stores in 2021 and our acquisition, management and bridge loan pipelines are robust.\nBut we are also mindful of the risks we face.\nWe recognize that current or potential government regulations could impede same-store revenue and expense performance.\nWe believe that vacates may eventually return to more normal levels and we recognize that the challenges related to new supply have not subsided completely and will continue to suppress rate growth in many markets.\nAs in the past, our team is prepared to use all our available tools to optimize performance in the face of any risks which materialize.\nIn short, despite significant turbulence, we had a very successful 2020 and look forward to an even better 2021.\nWe continue to execute on our strategy to maximize shareholders' long-term value and to deliver the results our shareholders have come to expect from Extra Space Storage.\nI would now like to turn the time over to Scott.\nAs Joe mentioned, we had a great fourth quarter with reaccelerating same-store revenue growth driven by all-time high occupancy and strong rental rate growth to new customers.\nLate fees and other income continue to be lower year-over-year and partially offset rental income, but we saw improvement in both line items from levels experienced in the third quarter.\nWe lowered expenses in all controllable expense categories in the quarter and despite property tax increases of 6.4%, we still delivered a reduction in same-store expenses overall.\nThis resulted in same-store NOI growth of 3.4%.\nCore FFO for the quarter was $1.48, a year-over-year increase of 16.5% and well above consensus estimates.\nOur same-store performance was the primary driver of the outperformance with additional contribution from growth in tenant reinsurance income, management fees, and interest and investment income.\nWe continue to evolve our balance sheet to reduce secured debt and increase the size of our unencumbered pool.\nOur efforts resulted in Moody's issuing Extra Space a BAA2 credit rating on January 28th, our second investment grade credit rating now providing us access to the public bond market.\nWe are excited to add another capital option to finance future growth, reduced total cost of debt, and further ladder our maturities.\nAt year-end, we had higher than normal revolver balances and variable rate debt due to the elevated capital activity that took place in the fourth quarter, including settling our convertible notes, completing preferred equity investments, and closing substantial bridge loan and acquisition volume.\nA significant portion of these transactions were temporarily funded by draws on our revolving lines.\nWe are comfortable doing so -- we were comfortable doing so knowing we were actively issuing on our ATM, had pending bridge loan sales and are recapitalizing stores into a JV, which bring our revolver balances down to historical levels.\nLast night, we provided guidance and annual assumptions for 2021 with ranges that are wider than previous -- than in previous years to address some of the uncertainty related to COVID-19 and its impact on customer behavior and government regulation.\nOur new same-store pool includes a total of 860 stores, which is essentially flat with last year.\nThe number of new stores added to the pool was generally offset by sites removed due to disposition or redevelopment.\nWe anticipate the changes in the same-store pool will benefit our 2021 same-store revenue growth by approximately 20 basis points.\nSame-store revenue is expected to increase 4.25% to 5.5%, driven by higher occupancy in the first half of the year and elevated rates in new and existing -- to new and existing customers.\nSame-store expense growth is expected to be 3.5% to 4.5%, primarily driven by higher property tax expense.\nOur revenue and expense guidance results in same-store NOI growth range of 4.25% to 6.25%.\nThe acquisition market continues to be expensive and we will remain disciplined but opportunistic.\nWe expect to do significant acquisition volume and plan to close a number of transactions with joint venture partners.\nOur guidance assumes $350 million in Extra Space investment, approximately $180 million of which is closed or under contract.\nWe also expect to close approximately $400 million of bridge loans and plan to retain 20% to 25% of those balances or approximately $100 million in 2021.\nWe have plenty of capital to invest if we find additional opportunities that create long-term value for shareholders and we will be creative as we deploy capital in the sector.\nOur full year core FFO is estimated to be between $5.85 and $6.05 per share.\nWe anticipate $0.16 of dilution from value-add acquisitions or C of O stores, down $0.04 from 2020.\nAs Joe mentioned, 2020 has been a memorable year for Extra Space.\nWe are excited to turn the page and are already on our way to a very strong 2021.\n",
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"content": "q4 ffo per share $1.48.\nreported same-store occupancy of 94.8% as of december 31, 2020, compared to 92.4% as of december 31, 2019.\nqtrly core ffo per share $1.48.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining us today will be our Chief Executive Officer, Dennis Gilmore; and Mark Seaton, Executive Vice President and Chief Financial Officer.\nThe year is off to a great start with our core businesses achieving strong financial results.\nOur outlook remains optimistic based on market trends, and we are confident that 2021 will be another good year.\nToday, I'll focus my remarks on the progress we are making on a number of key strategic initiatives as well as our venture investment program.\nMark will then provide details on the first quarter results.\nA transformation is well under way in the real estate sector, as paper intensive processes convert to digital.\nFirst American is investing the time, expertise and capital to continue to lead the change within the title and settlement industry.\nWe continue to make significant investments in technology across all of our major businesses to enhance the customer experience through digital solutions.\nMany of these efforts are now finding success in the marketplace.\nIn our commercial business, we've launched ClarityFirst, a platform that enables a streamlined closing process and provides greater transparency and efficiency relative to conventional methods.\nWe believe this is the first end-to-end digital solution for commercial real estate transactions.\nSince the nationwide rollout in June, we have facilitated over 60,000 commercial transactions.\nEndpoint is another example of First America's commitment to innovation.\nA digital start-up that we've launched in Seattle in 2019 to reimagine the closing experience has captured a 2% market share in that area.\nEncouraged by our success, we've recently entered six new markets, and we plan on growing to 20 markets by the end of the year.\nIn addition to providing a digital consumer experience, Endpoint is redesigning the closing process, and we anticipate significant productivity gains versus today's traditional settlement transactions.\nNot only are we deploying new digital tools to reimagine the customer experience, we are accelerating our investment in data, we need to enhance our long-term competitive position.\nOur data business has grown steadily over the last ten years.\nYears ago, we set out to create a world-class property data company.\nToday, we have the industry's most comprehensive and accurate property data, including title plant information.\nIn 2020, our data business exceeded $100 million of pre-tax earnings, a significant milestone.\nA number of years ago, we set out to automate the manual data entry process.\nWe currently hold 11 patents covering OCR and data extraction, which has facilitated us to caption over 60% of our data in a fully automated manner.\nWe expect this percentage to continue to grow in the future.\nThis technology has allowed us to vastly increase the amount of data we capture.\nWe are currently capturing virtually every data point on 5 million documents per month.\nToday, we have 500 title plants, which is the largest data repository in the industry to support title underwriting decisions.\nBecause of our patent extraction process, we have started the journey to add an additional 1,000 title plants on a go-forward basis.\nIn short, we are leading the effort when it comes to property data.\nOne benefit of having a strong data foundation is that it feeds automation of our title production.\nToday, 96% of our Company's refinance transactions run through our automated underwriting engine.\nBased on our own risk profile, we've achieved a fully automated underwriting decision on 50% of those orders, and we are semi-automated on additional 40%.\nGiven the success we've had with refinance automation, we have turned our attention to the purchase transactions.\nAll of these initiatives, whether related to closing data or title production, will improve the experience of our customers and our own productivity, which is why we have dedicated the necessary talent, capital and focus to lead the title and settlement industry in the digital era.\nTurning to our venture strategy.\nSince 2019, we've invested $225 million in venture-backed companies in the proptech ecosystem.\nThese investments give us insight into the high growth technology companies, and most of which have become strategic partners.\nNot only have these investments added value from a strategic perspective, but they are providing financial upside as well, and Mark will elaborate further in his comments.\nVenture investments have continued to be a component of our capital allocation strategy.\nWe believe the strategic and financial value of these investments to our shareholders will be attractive over the long term.\nAdditionally, I'm pleased to announce that we were recently named a Fortune 100 Best Company to Work For, for the sixth consecutive year.\nAmid the challenges of 2020, we never lost sight of the fact that our employees are the key to our Company's success.\nIn closing, I'm very confident that 2021 will be another great year for First American.\nWe're pleased to report excellent results this quarter.\nWe earned $2.10 per diluted share.\nIncluded in this quarter's results were $0.46 of net realized investment gains.\nExcluding these gains, we earned $1.64 per diluted share.\nI'll start with our title business.\nRevenue in our Title segment was $1.9 billion, up 45% compared with the same quarter of 2020.\nAll three of our major markets; Purchase, Refinance and Commercial, were favorable this quarter.\nPurchase revenue was up 27%, driven by a 15% increase in the number of closed orders, coupled with an 11% increase in the average revenue per order.\nRefinance revenue climbed at 79% relative to last year and was flat relative to the fourth quarter, as refinance closings continued to be elevated as a result of low mortgage rates.\nNotably, Commercial showed its first year-over-year revenue increase since the pandemic.\nCommercial revenue was $163 million, a 2% increase over last year.\nA number of large transactions closed at the end of the quarter, signaling the overall strength in the commercial environment.\nOn the agency side, revenue was a record $845 million, up 41% from last year.\nGiven the reporting lag in agent revenues of approximately one quarter, we are experiencing a surge in remittances related to Q4 economic activity.\nOur information and other revenues were $275 million, up 32% relative to last year.\nThis line item represents revenue from a collection of business lines that are not premium or escrow related and therefore, not risk-based.\nThe largest component of information and other is revenue from our data and analytics business, which totaled $89 million, a 17% increase from last year.\nInvestment income within the Title Insurance and Services segment was $43 million, down 29%, primarily due to the impact of the decline in short-term interest rates on the investment portfolio and cash balances, partially offset by higher interest income from the Company's warehouse lending business.\nIn our Title segment, pre-tax margin was 17.1%.\nExcluding the impact of net realized investment gains, pre-tax margin was 14.1%, a record for the first quarter.\nI'll note that we've lowered the loss rate 100 basis points to 4% this quarter.\nThis brings our loss rate in line with where we booked prior to the pandemic.\nBy booking at 5% in 2020, we added $52 million to our IBNR.\nGiven relatively low claims activity, significant levels of home equity, rising home prices and a strengthening economy, we elected to lower the loss rate this quarter.\nTurning to the Specialty Insurance segment.\nPretax earnings totaled $6 million, down from $13 million in 2020.\nOur home warranty business, which accounts for 75% of the revenue for the segment, continued to see growth in the top line.\nRevenue was up 11% over last year.\nImportantly, revenue in our direct-to-consumer channel increased 18%.\nWe continue to see elevated claims largely as a result of people spending more time at home.\nOur property and casualty business posted a loss of $7 million this quarter.\nThe wind down of our property and casualty business is progressing on schedule with policies beginning to non-renewal in May.\nBased on our current plan, we expect at least 50% reduction in our policies in-force by the end of the year.\nThe effective tax rate for the quarter was 23.4%, in line with our normalized tax rate of 23% to 24%.\nWith respect to the information security incident, the SEC and New York Department of Financial Services matters remain ongoing.\nWe continue to believe that they, along with all other matters relating to the incident, will be immaterial from a financial perspective.\nTurning to capital management, we repurchased $65 million of stock at an average price of $52.86 during the quarter.\nSince March of 2020, we've repurchased $203 million of stock, which is close to the amount of our annual dividend to stockholders.\nWe have not repurchased shares thus far in the second quarter.\nHowever, as we referenced on our last earnings call, we intend to be more active with share repurchases in the future.\nAs Dennis mentioned in his remarks, we've invested a total of $225 million in venture-backed companies.\nOur largest investment was in OfferPad, an iBuyer that is now party to a merger with Supernova Partners Acquisition Company, who last month announced that the value of the aggregate equity consideration to be paid to OfferPad's stockholders and option holders will be equal to $2.25 billion.\nIf the transaction is consummated at that valuation, we would expect to book a gain later this year of approximately $237 million on our $85 million investment.\nAdditionally, this quarter, we recorded $42 million of gains related to other venture investments, including in Side [Phonetic] a real estate SaaS company that serves high-performing agents, teams and brokers.\nWe remain optimistic about our 2021 outlook.\nAlthough refinance orders have declined, corresponding to an increase in mortgage rates, the purchase and commercial markets continue to grow.\nOur claims experience is favorable and the general improvement in the economy to tail into our business.\n",
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"content": "q1 earnings per share $2.10.\nq1 revenue rose 43 percent to $2.0 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining us today will be our Chief Executive Officer, Dennis Gilmore; and Mark Seaton, Executive Vice President and Chief Financial Officer.\nAll of our core businesses are producing strong financial results and we are optimistic that 2021 will be an outstanding year for First American.\nToday I will focus my comments on the progress we are making on a number of key strategic initiatives, and Mark will then provide details on our second quarter results.\nThe process of buying a home is complex and involves multiple parties.\nFirst American sits at the center of the transaction, coordinating among realtors, lenders and consumers to protect the integrity of the process.\nAs the transactions become increasingly digital, First American is focused on leveraging our unique property data and technology to enhance the customer experience which make the process more efficient and secure for all parties.\nFirst American's data assets and process expertise provide a unique competitive advantage.\nLast quarter, we announced our initiative to expand our title plants from 500 to 1500.\nBy building an additional 1000 plants our databases will cover approximately 80% of all real estate transactions.\nWe've made significant progress since our launch, we are currently up to 850 plants and are on track to achieve our goal of 1500 by the year end.\nThese additional plants are currently being built on a go-forward basis and will accrue significant benefits to us in the years to come as our historical content becomes deeper and richer.\nDue to our patented extraction process, First American is in a unique position to build these plants at a fraction of our historical cost.\nPlus we are now capturing virtually every data point on 7.5 million documents per month up than 5 million last quarter, data that can be leveraged to automate title underwriting decisions and geographic areas that were previously done manually.\nIn addition to our data leadership, we are focused on developing digital solutions to improve the customer experience.\nAcross the enterprise, we are developing next-generation cloud-based technology to make it even easier for our customers to do business with us.\nFor example, our direct division recently launched IgniteRE, a platform that provides real estate professionals with enhanced productivity tools and enables them to manage transactions from open to close with buyers, sellers and settlement agents with secure environment.\nIgniteRE and ClarityFirst, which we discussed last quarter, are two examples of technology investments we've made to strengthen our competitive edge and more will follow.\nBoth platforms make it easier to work with us and expand our customer relationships.\nTo support our technology initiatives, we acquired a 130 product managers, designers and engineers so far this year.\nThese critical hires reflect our commitment to expand our position as the industry leading innovator.\nTurning to our venture strategy.\nSince 2019, we've invested $260 million in venture-backed companies in the proptech ecosystem.\nThese investments give us insight into a high growth technology companies, most of which have become strategic partners.\nIn addition to providing strategic benefit they are contributing to profits as well.\nVenture investments will continue to be a component of our capital allocation strategy.\nIn closing, I'm confident that 2021 will be another strong year for First American.\nAll of our core divisions are performing well and we have a healthy pipeline of business heading into the second half of the year.\nOur balance sheet is strong and our strategy of focusing on data and technology to enhance the customer experience will continue to succeed.\nWe're pleased to report excellent results this quarter.\nWe earned $2.72 per diluted share.\nIncluded in this quarter's results were $0.59 of net realized investment gains.\nExcluding these gains, we earned $2.13 per diluted share.\nI'll start with our title business.\nRevenue in our Title segment was $2.1 billion, up 44% compared with the same quarter of 2020 due to the strength of the purchase and commercial markets.\nPurchase revenue was up 66% driven by a 43% increase in the number of closed orders coupled with a 16% increase in the average revenue per order.\nCommercial revenue was $223 million, a 104% increase over last year.\nLarge transactions have resumed as we closed 54 transactions in the U.S. with premiums greater than $250,000, up from just 12 last year.\nThis year, we expect a record year in our commercial business.\nRefinance revenue declined 23% relative to last year as the rise in mortgage rates that occurred during the first quarter put pressure on second quarter closings.\nOn the agency side, revenue was a record $905 million, up 51% from last year.\nGiven the reporting lag in agent revenues of approximately 1 quarter, we are experiencing a surge in remittances related to Q1 economic activity.\nOur information and other revenues were $298 million, up 31% relative to last year.\nRevenue growth was primarily due to higher demand for the Company's title information products in our data and analytics, commercial and loss mitigation business lines.\nInvestment income within the Title Insurance and services segment was $47 million, up 10%, primarily due to higher interest income from the company's warehouse lending business and higher average balances in the company's investment portfolio, partially offset by the impact of the decline in short-term interest rates on the company's tax deferred property exchange and escrow balances.\nIn our Title segment, pre-tax margin was a record 19.1% excluding the impact of net realized investment gains, pre-tax margin was 15.3%.\nTurning to the Specialty Insurance segment.\nPretax earnings totaled $20 million, up from $7 million in 2020.\nRevenue in our home warranty business totaled $108 million, up 10% compared with last year.\nPretax income in our home warranty business was $14 million, a decline of 13% in part due to elevated claims expense.\nOur property and casualty business generated a pre-tax income of $6 million this quarter.\nIncluded in this quarter's results were the $12 million gain on the sale of our agency operations.\nAt the end of the second quarter our policies in force have declined by 22% at the beginning of the year and we expect a 70% decline by year-end.\nThe full wind down of the property and casualty business is on track to be completed in the third quarter of 2022.\nThe effective tax rate for the quarter was 24% in line with our normalized tax rate.\nCash flow from operations was $253 million in the second quarter, down from $344 million in the prior year, due primarily to the deferral of estimated tax payments allowed by taxing authorities during the height of pandemic in 2020.\nWith respect to this information security incident, as we previously disclosed, we reached a settlement with the SEC for $487,616.\nThe New York Department of Financial Services matter remains ongoing.\nWe continue to believe that it along with all other matters relating to the incident will be immaterial.\nAs Dennis mentioned in his remarks, we've invested a total of $260 million in venture-backed companies.\nThis quarter we recorded a $44 million gain related to our investment side, a real estate SaaS company that serves real estate agents, teams and brokers.\nOur largest investment has been in OfferPad an iBuyer that is now party to a merger with the SPAC, which recently announced that the value of the aggregate equity consideration to be paid to OfferPad stockholders and option holders will be equal to $2.25 billion.\nAt that valuation, we would expect to book a gain of approximately $237 million on our $85 million equity investment.\nWe expect this merger to close later this year.\nDue to the growth of our venture portfolio, we have expanded disclosures in our Form 10-Q, which we expect to file later today.\nThese disclosures will include the cost, unrealized gains and carrying amount of our non-marketable equity securities, as well as information on concentration of these securities.\nWe remain optimistic about our 2021 outlook.\nAlthough refinance orders have declined corresponding to an increase in mortgage rates, the purchase and commercial markets remain strong.\nOur claims experience is favorable and the general improvement in economy to tailwind into our business.\n",
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"content": "first american financial q2 earnings per share $2.72.\nq2 earnings per share $2.72.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining you today from First Bancorp are Aurelio Alemain, President and Chief Executive Officer; and Orlando Berges, Executive Vice President and Chief Financial Officer.\nIt was a very important quarter for our corporation and I would like to go over some key highlights and then expand in certain matters.\nFirst of all, we're extremely pleased with -- that we completed our strategic acquisition by closing the Santander transaction on September 1.\nThis transaction not only solidifies our position in the island, but strengthens our competitiveness in commercial, retail as well as residential.\nOn the economic front, definitely the relief fund from the pandemic combined with 2017 hurricane funds being deployed have bolstered liquidity in our market and will continue to drive economic activity.\nWe'll touch on that.\nOn the balance sheet side, even following the completion of the acquisition we truly sustain a fortress balance sheet, our liquidity reserve capital levels are among the highest in the banking sector.\nCore performance was strong for the quarter.\nWe generated $28.6 million of net income.\nPretax pre-provision was $77 million with only one month of earnings from the acquired operations and loan originations were strong at $971 million for the quarter.\nWe basically increased originations in all categories through the quarter.\nTotal deposits, excluding brokered and government, increased to $12.5 million.\nAnd finally, our capital ratios remain among the highest in the banking sectors and capital actions remain a priority as we see the economic environment stabilizing.\nNow let's cover more closely a few of these items on Slide 6, starting with Slide 6.\nLet's talk about the transaction.\nDefinitely, it was a long time in the making.\nAnd as you see, we really improved our market position in all key areas.\nAs you recall, the transaction was announced back in October 2019, and closing and completing was impacted by the COVID pandemic, definitely.\nBut since then, some of the deal metrics have improved from announcement.\nWe still expect 35% earnings per share accretion to consensus estimates.\nThe revised TBB at closing is estimated at 4%, lower than our original estimate.\nAnd we expect less than two years of earnback now.\nThis improvement is driven by slightly smaller loan portfolio, additional reserve delivered at closing and the rate marks due to the rate environment.\nWhile cost savings are estimated at $48 million, we definitely work harder to see the areas that we can achieve more.\nBut we're also focused on growing the franchise.\nSo it's a balancing act as we move forward and achieve our goals of being more efficient and increased market share.\nI think together, we have an excellent team and we're working diligently to integrate and to turn on the growth engines as opportunities comes in the economy.\nI want to touch on the integration.\nWe made a lot of progress on the first 45 days.\nIntegration is under way.\nIn those 45 days, we completed the conversion and integration of the mortgage business, the insurance agency and several administrative functions.\nThe plan is to complete the integration process by the end of the second quarter 2021.\nAnd these do consider -- remember that we continue to operate under COVID limitation and distancing, and obviously a process of this magnitude takes time.\nWe also announced this month as part of the program -- as part of the synergies and integration, we announced a voluntary separation program that provides an opportunity for early retirement to approximately 160 employees of the combined institutions.\nThis program will be executed over the next three quarters, starting in the fourth quarter.\nOther potential synergies identified include the opportunity of consolidating eight to 10 branches.\nDefinitely, the incremental utilization of digital channels could drive other efficiencies.\nBut again, we don't want to hamper our potential to grow our market share with the now expanded market distribution that we have.\nSo we'll continue to move and report on this effort.\nNow let's move to Slide 7.\nThe new combined balance sheet is solid and well diversified.\nThe $2.6 billion acquired loan portfolio definitely complements ours nicely and the deposit books improves our funding.\nNow the loan-to-deposit ratio stands at 78%.\nAnd obviously, we have an expanded customer base to cross-sell and move to other products.\nLet's move to Slide eight to talk about the economy.\nI think in the quarter, we clearly saw the correlation of the reopening in our markets and the trends of economic recovery was clearly reflected in the third quarter.\nRemember that in the case of Puerto Rico, we had some severe tightening in the second quarter, and some of those rules were relaxed later.\nWe're still operating under certain lockdowns.\nBut the -- I think the market has reacted very well to the situation and getting used to operate under that scenario.\nImportantly, to support this economy, there is still over $60 billion of pandemic and hurricane relief.\nSo those are numbers that are big for this economy and there's a lot of going on regarding reconstruction.\nThose funds are being deployed and they're definitely showing the liquidity and activity.\nEmployment figures continue to turn positive.\nRecent numbers as of August are 92% of August 2019.\nSo definitely, there's a recovery on the employment side.\nFrom the perspective of our client base, 100% of our corporate clients are operating and close to 99% of the business banking clients have reopened well.\nThere are sectors that are more sensitive.\nThe hospitality industry continued to reflect lower occupancy, but got improving trends.\nOur hotel portfolio, it's below typical occupancy level and San Juan airport traffic is low, closer to 50%.\nAnd as we are all aware, these are the segments that are more sensitive and will require longer recovery period.\nSo we continue to closely monitor.\nOn the other hand, from the business activity perspective, lending activity for the quarter was near pre-pandemic levels and digital activity is up significantly.\nRetail lending for the quarter was very strong for both auto and mortgage lending and actually it came above pre-pandemic levels.\nSo we are optimistic with the recovery and the possibilities of additional stimulus, but we are also vigilant to the fact that potential economic hurdles could come if there is a need to implement additional restrictions for COVID in the future.\nSo we have to be watchful.\nPlease now let's move to Slide 9.\nWe wanted to give you an update on the relief programs trend.\nThe relief trends are actually positive.\nThe graph show the peaks and lows over the last six months, actually since March, of the different regions and products.\nI think we see a positive trend during the quarter -- or actually, after the quarter closes.\nOur active moratoriums were reduced to only 0.8% of the portfolio, less than 1%.\nThis is as of October 21.\nI think so far the post-moratorium payment performance is positive with 98% of commercial clients current and 94% of retail as of October 21.\nIt's important to note that this data reflects only the due dates prior to October 21 regarding the payment patterns.\nSo we have to wait until the end of the month to see the final trend.\nWe do have a segment of the commercial portfolio that belongs to the industries that I mentioned, the more sensitive ones, such as hospitality, retail and entertainment that could need additional support through a longer stabilization period.\nThose are being evaluated under the potential modification of terms provided by the Section 14 of the CARES Act.\nSo please let's go to Slide 8.\nHere we have how -- the trend of the balance sheet, where we -- how we compare to peers and definitely post acquisition, our liquidity level, reserve coverage and capital position.\nThey really give us opportunity with the -- we're positioned well to take advantage of any growth opportunity.\nWe definitely will be good stewards of our capital position, and again, capital deployment opportunities remain a priority once our economic environment stabilizes.\nLet's move to Slide nine for a moment.\nI wanted to talk about and show you the trends of core metrics.\nObviously, this graph shows the trends and the positive impact of the acquired operation.\nWe generate the incremental PPNR and net income with only one month of earnings contribution for the core operations.\nAnd again, the enhanced funding profile should help us driving additional revenues.\nLoan origination, as I mentioned, were solid for the quarter, you look at the level.\nAnd digital adoption rates continued to improve during this pandemic.\nWe will continue to work harder now with more clients and more distribution points to improve our level of service to all our customers.\nI have to say that I'm really proud of my team and what we have been able to accomplish so far, managing the pandemic challenges, and we're definitely excited for the future growth prospects of our institution.\nAnd we're also excited to show our patient investors what we are able to accomplish.\nAs Aurelio made reference to, net income for the quarter was $28.6 million or $0.13 a share compared to $21 million last quarter.\nIf we break down the components, you can see that corporation's legacy core business achieved a net income of $44.3 million, which mostly it's a result of reductions in the required provision for credit losses.\nLast quarter, we had a provision of $39 million as compared to $8 million this quarter.\nDuring the quarter, the improvements on macroeconomic projected variables in most portfolios, except for the commercial real estate, as well as some changes in portfolio balances led to this reduction.\nThe acquired Santander operation contributed $3.5 million of after-tax net income.\nThat excludes the one CECL adjustments, which I'll touch upon.\nThese results include the impact of the amortization of the fair value marks on all the assets and liabilities and the amortization of the resulting intangibles.\nFor example, one of -- few other things that had impact -- if we look at the investment portfolio, Santander had a U.S. treasuries -- a large U.S. treasuries portfolio that after March resulted in a portfolio of yields only 15 basis points.\nSince then, we decided that to improve margin to sell this portfolio and reinvest it in other securities according to our policies, which yield around 94 basis points, which will improve going forward some of the yield.\nOn the other hand, amortization of some of the other discounts and intangibles resulted in about $1 million improvement in net interest income from the combination of loan and deposit, preliminary fair value adjustments that have been booked.\nIf we look at other -- at the other components of transactions, some large ones that were in the quarter, the first one would be the CECL I made reference to.\nCECL requires that in the case of a business combination, we set up an allowance for credit losses on top -- on non-purchased credit deteriorated loans on top of or in addition to any kind of fair value measurement.\nThis resulted in a recognition of an allowance of almost $39 million for the quarter in addition to those fair value marks.\nThe non-purchased credit deteriorated portfolio, it's about $1.7 billion after marks.\nDuring the quarter, we also decided to sell around $160 million of MBS that were experiencing significant prepayments, and that resulted in a gain of about $5.1 million from the transaction and it's being reinvested again in other instruments.\nMerger and restructuring costs, Aurelio mentioned some of it.\nDuring the quarter, we had $10.4 million, which compares to $2.9 million in the last quarter, which was mostly legal and financial consulting piece as well as some conversion-related cost as we prepare for the conversion.\nSo far, we have incurred about $25 million in expenses related to the transaction over the last few quarters.\nAnd during the fourth quarter, we expect to have some amounts associated with the voluntary separation program that Aurelio mentioned as well as costs associated with branch and other consolidations as we finalize decisions on those processes.\nFinally, the other large item.\nWe did have an analysis -- completed an analysis of the DTA now including the Santander operation, and that resulted in the reversal of approximately $8 million of deferred tax asset valuation allowance we had on the books.\nNet interest income for the quarter was $148.7 million, which is $13.5 million higher than last quarter.\n$14 million of that was the Santander operation.\nOn the other hand, the legacy FirstBank operation had a reduction of $500,000 in interest income as compared to last quarter.\nAnd here, reduction in rates, obviously, accelerated.\nPrepayments on the investment portfolio has been large.\nHigher proportion of cash and investment securities to total earning assets have resulted in a reduction in the NIM on FirstBank.\nLast quarter, we had 4.22% of NIM that you saw in our prior release.\nThat number is down to about 3.94% this quarter.\nBreaking down some of the components.\nCommercial loan repricing was about four basis points of the reduction, but the much higher proportion of cash and investment securities as well as the large prepayments and the alternative for reinvestment affected by 18 basis points more that margin.\nSantander on a stand-alone was about -- the margin was about 3.89% considering the purchase accounting adjustments, and that combined with FirstBank ended up with a 3.93% margin that you see on the release.\nNoninterest income improved to $29.9 million.\nThe $9 million -- this $9 million increase includes $5 million in the gains on sales that I made reference to before, of securities that I made reference to.\nWe had $3.4 million increase in revenue from mortgage banking activities.\nMostly or all of it, it's related to sales of residential mortgage.\nThis quarter, we had a much active -- much more active quarter on originations than what we had in the second quarter and ended up selling $98 million more in conforming paper than we did last quarter resulting in that revenue increase.\nAlso, the reopening of businesses, as we have seen on the quarter, seen a much higher level of credit and debit card activity, which improved -- that includes ATM, merchant fees and some of the other components, that improved fee income by about $2.8 million in the quarter.\nAnd then the improvement we had in deposit service fees associated with the Santander transaction that brought in $1.1 million of additional deposit fees to the operation.\nOn the expense side, expenses were $107 million.\nThat includes $10.7 million in expenses for the acquired Santander operation and a $96.8 million for the FirstBank legacy operation.\nThis $96 million is $7 million higher than the 89 -- almost $90 million we had last quarter.\nAs I mentioned, the merger and restructuring costs for the quarter were $10.4 million, which is $7.5 million higher than last quarter, basically created most of the increase.\nBut in the quarter, we -- if we exclude this, FirstBank was $86.4 million of expenses.\nCOVID-related expenses were about $1 million this quarter, which is down about $2 million from last quarter.\nBut other expenses -- obviously, as we saw improvements in volume of transactions and improvement in fee, we also have some higher expenses associated with that volume of business in those debit and credit card transactions.\nThe allowance for credit losses has increased significantly.\nAs of September 30, the allowance for loans and leases only was up $65 million to $385 million as compared to June.\nMostly it's due to the initial allowance for credit losses required to the Santander operation.\nIf we look at total allowance for credit losses including unfunded commitments and debt securities, that's up to $403 million.\nThis quarter, as I mentioned before, we recorded about $38 million in allowance for credit losses in total.\n$37.5 million of that is related to loans.\nThat build up -- that allowance associated with the portfolio.\nAnd in addition, for PCD loans or purchased credit deteriorated specifically, we established a 20 -- almost $29 million allowance, which represents the fair value marks on this loan, which CECL requires that -- what is commonly referred to as a gross up, that the loans represented gross and the discount represented in the allowance.\nThose two combined were about $65 million.\nThe ratio of the allowance for credit losses on loans -- to total loans was 3.25% at September, slightly down from 3.40% we had at June, but a very significant coverage if we consider that we added a large amount of portfolios, that a large part of it is also mark-to-market and fair value mark-to-market and has been discounted.\nOn a non-GAAP basis, if we exclude the PPP loans, which don't carry much reserve, the ratio of the allowance to total loans was 3.38% as compared to 3.55% last quarter.\nAsset quality remained good in the quarter.\nNon-performance are down $10.5 million, $293 million.\nMost of the reduction happened on the OREO portfolio, which decreased $7.3 million.\nMostly sales were completed in the quarter.\nMigrations to nonperforming were higher this quarter.\nAs moratoriums expire, we start getting back to levels of more -- to the normal levels that we were seeing before.\nAnd we are in a position to continue to pursue some of the foreclosure processes that were put on hold for a couple of quarters as we provided those moratoriums to customers.\nThe inflows were $18.4 million this quarter, which is $10 million higher than last quarter.\nCapital ratios remained really strong.\nAs you can see, even with the impact of the acquisition, we still have Tier one ratios of 17%.\nThe leverage ratio, I think that's important to mention.\nYou see it's about 13% for the quarter.\nBut we only had Santander operation for one month in the quarter, so average assets were less.\nIf we were to normalize and assume the full quarter of average assets, that ratio will be closer to 11%, just over that.\nAnd that was -- we expect that it's still very significant with the acquisition of $5-plus million in assets in the quarter.\n",
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"content": "compname reports q3 earnings per share $0.13.\nq3 earnings per share $0.13.\nnet interest income increased by $13.5 million to $148.7 million for q3 of 2020, compared to $135.2 million for q2 of 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining you today from First BanCorp.\nare Aurelio Aleman, president and chief executive officer; and Orlando Berges, executive vice president and chief financial officer.\nLet's start by moving to Slide 4.\nWe closed 2021 with another record quarter for the company, clearly reflecting the strength of the franchise and also combined with the improved economic backdrop in our operating markets.\nDuring the quarter, we generated $73.6 million in net income or $0.35 per diluted share and importantly, I think a record $104.9 million in adjusted pre-tax pre-provision income.\nAsset quality continued to trend the improvement trend that we had during the year, now non-performing assets reaching a decade low of 0.76% as a percent of total assets, driven by repayment of several non-accrual loans and REO sales and obviously less migration.\nThe ratio of the ACL for loans and finance leases to total loans decreased to 2.43% during the quarter driven by combined factors such as reduction in the residential mortgages as well as reductions associated with improvement in macroeconomic factors and their impact on qualitative reserves.\nIn terms of expenses, the efficiency ratio continued to trend down now to 52%.\nI have to say this is a historical low compared to 53% registered during the third quarter.\nOn the capital front, we continued executing our capital plan, returning capital to shareholders.\nDuring the fourth quarter, we raised the common dividend by 43% to $0.10 per share.\nWe repurchased 4.6 million common shares amounting to $63.9 million.\nAnd we also executed the announced redemption of $36.1 million of outstanding preferred shares.\nHappy to say that we ended the year with a very strong capital position, 17.8% common equity Tier-1, leaving ample room for further capital deployment initiatives during 2022.\nLet's move to Slide 5 to provide some detail on the deposit and loan performance.\nThe loan portfolio slightly decreased in the quarter by $75 million, mostly driven by $73 million reduction in SBA PPP loans.\nAlso, we have four -- we experienced four large commercial repayments of relationships from Florida and Virgin Islands, which amounted to $125 million.\nAnd we also experienced a reduction of $112 million in the residential mortgage loans that sit in the portfolio.\nThese reductions were partially offset by, I would have to say, quite strong auto and commercial origination both in Puerto Rico and Florida.\nAnd despite this slight repayment, the commercial portfolio grew by $59 million, turning the corner, hopefully, as we continue to move on into 2022.\nLoan originations for the fourth quarter were also quite strong with $1.4 billion, including credit card utilization activity.\nIt's really the best quarter we have had this year, again with strong originations in Puerto Rico and Florida.\nAnd to say that we closed the year with a very strong pipeline, actually the stronger pipeline coming into the first quarter of the year.\nDefinitely, loan portfolio balances remain impacted by excess liquidity and these pay downs.\nI think with rate markets moving up, this should diminish.\nOn the other hand, loan originations continue to be strong.\nAnd we're very focused on our strategy for growing the portfolios centered around increasing consumer and commercial books while continue to focus in the conforming residential mortgages that as we have done over the past year.\nIn terms of deposits, core deposits continued to grow, but as expected, at a slower pace compared to prior quarters.\nOver the next few quarters, we expect a reduction of approximately $150 million of government deposits from the recent bankruptcy settlement.\nThat should happen probably second quarter, I will say.\nExcluding brokered and government deposit, core deposit did register an increase of $64 million during the quarter.\nI'd like to take an opportunity, before handing the court to Orlando to provide a summary of the year, so let's move to Slide 6.\nDefinitely, the core results for the company reflect the transformational progress that we have in multiple fronts in 2021.\nWe generated $281 million of net income or $1.31 per diluted share compared to 102.3 in prior year.\nWe registered a 30% increase in adjusted pre-tax pre-provision income.\nAnd we grew total loan originations and renewals by 20%, excluding PPP and credit card activity when compared to 2020.\nI think moreover, new money, commercial and originations, including closed and unfunded commercial and construction loans grew by 50% when compared to prior year.\nI think it's important to comment that over 75% of the construction loans that we already made in 2021 are expected to partially fall in 2022.\nSo they did not fund it in 2021.\nAnd importantly, during the year, we returned capital equivalent to 112% of earnings, again in the form of repurchase of common, redemption of preferred and dividends.\nKey to the efficiency ratio, we completed the timely integration of the acquired operations during the year.\nWe executed on all the operational efficiencies that were planned as part of the transaction and did achieve the established financial targets of the transaction.\nAgain, the transaction allowed us to expand our footprint, strengthen our leadership position in the market in Puerto Rico.\nImportantly, we have invested significantly in our digital capabilities.\nThe pandemic triggered an accelerated adoption of digital channels, which did continue to grow significantly, digital engagement improving across all our digital functionalities.\nWe also, during the year, reengineered the auto lending origination process by deploying a fully digital platform to our dealer network, allowing us to offer a complete digital experience.\nI have to say that additional investments in technology and digital operations are planned for 2022 in order to continue improving our competitive position in an increasingly digital environment, which we have great progress in 2021.\nOn the macro front, we are in the initial stages of a growth cycle in Puerto Rico.\nThe recent announcement of the resolution of the debt restructuring process should allow for the government to focus their efforts toward supporting economic growth initiatives and capitalizing on a large amount of obligated disaster relief funds that need to be deployed.\nLike other jurisdiction, COVID cases increased recently, driven by the Omicron variant.\nHowever, our quite high vaccination rate provides for an important safety net to withstand any impact in the healthcare infrastructure and economic activity.\nWe are confident that the positive backdrop in our operated that should result in increased loan demand in 2022.\nAurelio mentioned, we had very strong 2021 results.\nNet income was $281 million, $1.31 a share.\nThat good results included improvements of $130 million in net interest income and $10 million increase in other non-interest income.\nRemember that the Santander operation, the acquisition was completed on September 1, 2020.\nSo we had four months of Santander versus this year we had the full year.\nAnd as he also mentioned, it reflected on pre-tax pre-provision improvement, significant improvements.\nWe went from about $300 million in 2020 to $392 million in 2021, so a significant pickup.\nFourth quarter results were also very strong.\nWe also made reference to $73.6 million in net income, $0.35 a share.\nThe provision for the quarter was in fact the net benefit.\nWe had a $12.2 million benefit, very similar to the $12.1 million we had in the third quarter.\nAnd again, it's overall driven by improvements in macroeconomic variables, which is both the actual and the expected and I'll touch a little bit more on the reserve later on.\nThe expenses for the quarter were $2.6 million lower than in the third quarter.\nHowever, we had an increase in income tax expense, with a higher level of income resulted in a change in or an increase in the mix of taxable to exempt income.\nAnd effective tax rates went up by 7 basis points for the full year, resulting in an increase in taxes on the -- throughout the year.\nNet interest income for the quarter was $184.1 million.\nIt's slightly lower than last quarter, but margin improved 1 basis point to 3.61%.\nThe yield on the portfolio, the GAAP yield on the portfolio was 6.34% for the quarter, very similar to the 6.33% we had last quarter.\nAnd loans, if we look at the mix of earning assets, loans continue to represent approximately 55% of average interest-earning assets.\nThe overall cost or the cost of interest-bearing deposits, excluding broker, it's now 30 basis points, which is 3 basis points lower than last quarter.\nWe look at what's happening now, the recent increase in market rates will provide us an increase in yields for variable rate loans.\nApproximately 40% of our commercial portfolio is tied to LIBOR and another 19% is tied to prime.\nAnd we have already seen a little bit of pickup on three-month LIBOR, which is the main variable that is used.\nThe other factor, significant factor, is the reinvestment of maturing securities should also provide some pickup.\nIf we look at current rates versus what we were reinvesting, we foresee an increase of somewhere between 40 and 50 basis points on reinvested money as compared to the fourth quarter.\nClearly, this doesn't mean that the whole portfolio will go up by this amount, but will help in start getting that overall yield of the portfolio up.\nIf we assume the mix of interest-earning assets remaining at these levels and the trend -- the expected trend on interest rates, we do foresee some increases in margin in the next few quarters.\nHowever, as Aurelio mentioned, we had the reduction in the mortgage portfolio as we continue to originate much higher percentage of conforming paper.\nTherefore, margin mix gets a little bit affected.\nNon-interest income for the quarter was fairly similar, slight increase as compared to the third quarter.\nWe had increases in fee income and service charges on the assets, which was offset by some decreases in the revenue of mortgage banking activities.\nWe ended up selling less of the conforming portfolio based on the level of originations that we had done in the prior quarter.\nOn the expense side, expenses for the quarter were $111 million -- $100.5 million, which compares to $114 million in the third quarter.\nIn the fourth quarter, merger expenses were $1.9 million.\nOur costs what remains, which is mostly related to four additional branch consolidations that we'll be completing during the first half of 2022.\nLast quarter, merger and restructuring expenses were $2.3 million.\nAnd at this point, we basically have completed everything related to merger expenses.\nThere shouldn't be any component of this going forward.\nOverall, as you all know, expense levels have been decreasing in the last couple of quarters as conversion- and integration-related expenses have been eliminated and we have continued to achieve or implement the savings from the integration of the acquired operation that we have discussed in the past.\nHowever, in reality, expense levels have been running at a lower clip than what we expected to be a normalized level.\nAnd two main factors, one of the main one has been the level of personnel vacancies that we have had throughout the last few quarters.\nAt this point, we're running twice as high in vacancies from a normal level, in part related to the funding support the government has provided and has created some market shortage.\nTo compensate, we have -- at the end of 2021, we started raising the minimum salary to branch and call center personnel.\nThe impact of that increase will be approximately $1.4 million per quarter starting now in this first quarter of 2022.\nAnd we expect that this increase in minimum salary, combined with some of the other ongoing recruiting efforts, should help bring some back normality due to the vacancy levels.\nOnce vacancy levels are normalized, compensation expense should increase somewhere in the neighborhood of $1.5 million per quarter.\nObviously, we don't expect to achieve these levels until later in the year, most likely toward the end of 2022.\nThe expense levels also, we have had the benefit of the increase in property prices in the Puerto Rico market, which has provided us the opportunity to improve the disposition value of the OREO properties.\nThat has been offsetting OREO operating expenses.\nIn fact, we achieved $2.3 million net gain in OREO in the third quarter and additional $1.6 million net gain this quarter.\nTraditionally, this is not what happens.\nThere is always the operating cost of handling and disposing reprocessed properties, but the market has provided some opportunity.\nThis will be -- realistically this will eventually go back to more normalized levels.\nThe other component in expenses that we are currently in the process of completing -- the reconfiguring centralized facilities to complete the physical integration of all the operating units, that's ongoing, but not completed yet and it's going to take a few months before it's completed.\nAnd also, as we have mentioned in the past, we continue with several technology projects that are underway.\nMost of these costs are not yet reflected in the quarterly expenses.\nThat's why we still believe that on a normalized basis, expenses will be in that $117 million to $119 million range.\nBut clearly, we won't see that until later in the year.\nThe first couple of quarters of 2022 should run at a lower clip.\nEfficiency ratio in the quarter as a result -- that Aurelio made reference was 52%, which is lower than anticipated.\nHowever, even normalized expense levels will take us to our target ratio of 55%.\nSo we feel comfortable on the expense levels and efficiencies achieved, not considering any further improvements in -- on the income side that should also help the ranges.\nOn asset quality, just to touch up on Aurelio made reference to, the non-performing asset decreased by $14 million, as you saw, continued the trend.\nOn NPA, the non-performing assets in total, that stand below 1% at 76 basis points of assets.\nAnd then $6.8 million of that reduction was in nonaccrual commercial construction loans.\nWe ended up selling a $3.1 million non-performing construction loan in Puerto Rico.\nInflows continued to be low.\nThey were $2 million lower than last quarter, $15 million this quarter as compared to $17 million last quarter.\nOn the allowance, Aurelio also made reference to the allowance, at the end of the quarter was $180 million.\nIt's $20 million down from the third quarter.\nLooking at allowance just on loans and finance leases was $269 million, which is $19 million down.\nBasically, the allowance reduction reflects improvement and continue to be projected on macroeconomic variables that are on all the variables that are used to calculate ACL.\nHowever, we are monitoring closely the impact of the Omicron variant.\nThe number of cases have increased significantly, especially that impact on customers in the hotel, transportation and entertainment industry.\nAnd we are considering those as part of the qualitative assessment that we do on the establishment of the reserves.\nThe ratio of the reserve continues to be strong.\nAurelio mentioned that we stand at 2.43% in the last quarter.\nOn the capital front, just to touch it again, we continue with the execution of the capital plan.\nFor the fourth quarter, common stock repurchases and the redemption of the preferred shares were $100 million.\nThroughout 2021, we have repurchased 16.7 million common shares and redeemed the $36 million in preferred, totaling $150 million in capital actions for the year on top of the $65 million that were paid in dividends.\nHowever, even with the execution of the capital strategies, the strong earnings are maintaining our capital ratio significantly well capitalized.\nAs you saw in the chart, Tier-1 common equity moved slightly up from 17.7 at the end of the first quarter, which is just before we started with the capital repurchase to 17.8 at the end of the year.\nAnd Tier-1 capital just decreased 2 basis points from 18% to 17.8%.\nSo we continue to have ample space for capital action, as Aurelio mentioned before.\n",
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"content": "q4 earnings per share $0.35.\nnet interest income decreased slightly to $184.1 million for q4 of 2021, compared to $184.7 million for q3 of 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will also include non-GAAP financial measures.\nNon-GAAP financial measures should be viewed in addition to and not as an alternative for our reported financial results in accordance with GAAP.\nWe were generally pleased with the second quarter results with net income of $23.9 million, earnings per share of $0.24, a pre-tax pre-provision ROA of 1.61% and the core efficiency ratio of 57.2%.\nFirst, provision expense fell to $6.9 million from $31 million in the first quarter, as three non-performing loans were resolved.\nThe second quarter reserve increased from $2 million to $81 million or 1.28% of total loans, excluding PPP loans as we added another $5.5 million in qualitative reserves to reflect the economy and our COVID overlay.\nWe believe that ratio compares favorably to other incurred banks, although our second quarter reserve of $81 million was calculated using the incurred loss model.\nAdding our previously disclosed day-one CECL increase would put reserves into the mid $90 million range.\nThat would put the reserve coverage in the mid-150s, which we believe would compare favorably with CECL banks our size, even with no further reserve build.\nThat's all because of the strong reserve build we did in the first quarter.\nOur first quarter loan deferral figure of $1.1 billion or 17.6% of total loans fell all the way $186 million or 2.7% of total loans as of July 24.\nMost of our deferrals were 90 days and our approach to customers, consumers, and businesses in March and early April shifted from accommodative and customer service oriented to a more credit-oriented approach in May and June.\nThe team is exercising extraordinary oversight with regard to credit.\nThis is warranted particularly if the ongoing reopening of the economy cannot safely continue in the ensuing quarter or two, and as the impact of the initial shorter-term government stimulus dissipates.\nIn the second quarter, our credit and banking teams did a name-by-name commercial loan review and spoke with some 1,600 clients in total.\nBrian Karrip, our Chief Credit Officer will provide more credit commentary shortly.\nSecond, the team helped roughly 5,000 local businesses, preserve roughly 80,000 jobs at a median loan size of only $32,000 through the Payroll Protection Program.\nExcluding $571 million of PPP loans, our portfolio grew 2.7% annualized, driven by record mortgage volumes, strong indirect loan originations and corporate banking growth.\nOur Ohio markets accounted for all of the net new loan growth in the second quarter, further validating our Ohio expansion over the past few years.\nAs an aside, over $20 million in PPP loan fees were wired to First Commonwealth in June from the SBA and will accrete into income in the second half of the year, as we expect that the majority of our PPP loans will be forgiven.\nThird, the net interest margin of 3.29% fell as expected.\nBut after adjusting for the dilutive effects of the PPP loans at 1% and an excess of low-yielding cash on our balance sheet, the NIM of our company was closer to 3.41%.\nJim Reske, our CFO, will provide commentary on margin expenses and other important items.\nFourth, non-interest income of $21.8 million in the second quarter increased some $2.5 million as the company set quarterly records in both mortgage originations and debit card interchange income.\nRegarding the former, some $203 million in mortgage originations, increased gain on sale income from $1.7 million to $4.2 million.\nOn the latter, we added 10% more debit cards with our Santander branch acquisition last year.\nAnd in the second quarter, consumer debit card swipes were up as retailers had a strong preference for cards versus cash.\nThis produced $5.9 million in debit card interchange income, $600,000 more than last quarter.\nFifth, our capital levels remained strong.\nWe have over $200 million of excess capital and together with our ALLL, this would allow us to absorb losses equal to roughly 5% of the entire loan portfolio at once, and still remain well capitalized.\nJim Reske will elaborate on this as well, but we want to enter 2021 and sustain through the year of $51 million to $52 million quarterly non-interest expense run rate.\nAt the onset of the COVID pandemic and after the first Federal Reserve cuts in March, the Executive team started a broad-based initiative dubbed, Project THRIVE, as we focused on one growth, expense and efficiency, NIM, and capital, with the expressed goal of emerging on the other side of the pandemic stronger than ever.\nWe now have two dozen initiatives, some small, some large in the works.\nYesterday, we announced the consolidation of 20% of our branches across our footprint into adjacent offices that will be completed by year-end.\nThis comes at a time that we are setting quarterly company records with online mobile account opening, mobile deposit activity and debit card activity with our new contactless cards.\nIn the ensuing months, we expect to launch our third generation of P2P payments and the fourth generation of an integrated mobile online banking platform after the successful launch of a new treasury management platform for our commercial clients in June.\nCustomer preferences continue to change meaningfully and the COVID crisis has pushed all things digital, well past traditional servicing.\nJust one example; in the second quarter, we opened 992 deposit accounts via our mobile online platform, some three times our first quarter figure, which by the way was not bad.\nOur investment in digital leaves us well prepared for the future.\nLastly, the First Commonwealth team will remain focused on a handful of items that will simply make us a better bank, namely accentuating opportunities to grow our core business and geographies as we continue to build the first Commonwealth brand.\nSecond, realizing efficiencies at a time when margins are compressed and could remain there for the foreseeable future.\nThird, executing a handful of key digital initiatives in the ensuing months and continuing to build competitive advantage on that front.\nAnd lastly, navigating the COVID environment to deliver good, through the cycle credit and net interest margin outcomes for our shareholders.\nI'd like to now turn the time over to Jim Reske.\nCore earnings per share of $0.24 rebounded strongly from last quarter.\nThis brings our trailing four quarter non-core earnings per share average to $0.21, well in excess of our current dividend of $0.11 per share.\nSecond quarter results were driven by relatively positive credit experience and the net interest margin.\nBrian will discuss credit in detail in a moment, so my remarks will be focused on margin, expenses and changes in our loan deferrals.\nThe net interest margin fell from 3.65% last quarter to 3.29%.\nThe primary driver of NIM compression was, not surprisingly, rate resets on the bank's variable-rate loans following the Fed's 150 basis points of rate cuts.\nHowever, there was also a pronounced effect on NIM from the addition of low rate PPP loans and the excess cash on the balance sheet as these loans were mostly disbursed in the customer deposit accounts.\nWe also saw inflows from other sources such as federal stimulus checks.\nAs a result, we had quarter-over-quarter growth in average deposits of $758 million.\nNon-interest-bearing deposits alone increased by $537 million to 29.4% of total deposits, up from 25.3% last quarter.\nThis strong deposit growth resulted in an average of $212 million of excess cash in the quarter.\nIn fact, excess cash peaked at over $480 million in mid-July or nearly 5% of total assets.\nThis of course had a suppressive effect on the NIM.\nWe estimate that the impact of PPP loans and the like amount of associated deposits on NIM to be approximately 12 basis points in the second quarter, which would imply a core NIM of 3.41% for the quarter.\nThat represents 24 basis points of NIM compression, which is within the range of previous guidance, albeit at the higher.\nOur ability to lower deposit costs in the second quarter, helped to blunt the impact of downward rates.\nFor example, the average rate on interest-bearing demand in saving deposits, which had over $4 billion, is our largest deposit category, was cut in half in the quarter from 48 basis points to 24 basis points.\nLooking forward, we still have nearly $800 million of time deposits, at an average rate of 1.51%, which will reprice downward over time and should help offset the impact of negative loan replacement yields, though not completely.\nAs a result, even though we expect some further NIM compression, we believe the pace of compression should slow.\nAdjusting for the impact on NIM from PPP loans and excess cash, we expect the core NIM to drift down to 325 to 335 by year-end.\nTo offset the impact of the low rate environment, we remain firmly focused on continuing our long and successful track record of controlling expenses.\nThe quarter-over-quarter increase of $2.5 million in non-interest expense was strongly affected by the unfunded commitment reserve, which was a negative $2.5 million last quarter but a positive $0.9 million this quarter for a $3.4 million negative quarter-over-quarter swing.\nThe other notable event in NAIE [Phonetic] was about $419,000 of COVID-related expense in the second quarter.\nGoing forward, we expect significant expense reductions from the branch consolidation project, Mike discussed earlier.\nWe expect this and other contemplated expense containment initiatives to enable us to maintain a non-interest expense run rate of between $51 million to $52 million per quarter for the foreseeable future.\nNow, let me provide a few general remarks on our loans and deferrals and how they are trending.\nLast quarter, we reported that deferrals totaled $1.1 billion or 17.6% of total loans as of April 24, the Friday before our first quarter earnings call.\nDeferrals peaked during the quarter at approximately $1.4 billion.\nWe would note that most of our deferrals were for 90-day periods that began in the last week of March and continued through April.\nAs such, the initial 90-day period for most of these loans has been coming to an end only in the last few weeks.\nBut we would encourage caution in drawing conclusions from what is only early experience.\nHowever, as Mike mentioned, as of July 24, last Friday, they remained $186.3 million of loans in deferral status or 2.7% of total loans.\nWhile that reduction is an early positive sign, we firmly believe that it's too early to draw any conclusions until we see more evidence of actual payment history on these loans.\nWe have therefore, increased qualitative reserves held against consumer forbearances by $1.2 million in the second quarter.\nLast quarter, volatility in forecast model gave us pause as to the efficacy of those models, and now volatility continues with the current debate over V, W, U and swoosh recoveries.\nAs I mentioned last quarter, we saw no advantage in CECL adoption at the time and we continue to believe that's the case.\nSo, we have, in fact, allowed us to observe the various industry approach of CECL adoption and refine our models accordingly.\nHowever, even though we are on incurred, as shown on Page 6 of our supplement, we did a significant reserve build in the first half of this year, resulting in a coverage ratio that we believe compares favorably with incurred banks as well as many CECL adopters, and we continue to build qualitative reserves in the second quarter.\nAlthough we're in the early innings of the economic recession, we're pleased with our asset quality trends for the second quarter.\nOur NPLs decreased approximately $3.1 million, improving from 0.93% of total loans in Q1 to 0.88%, excluding PPP.\nReserve coverage of NPLs rose from 133.53% to 145%.\nNPAs decreased $4.5 million from 0.74 of total assets in Q1 to 0.66.\nClassified loans as a percentage of total loans excluding PPP decreased from 1.42% to 1.21%.\nThese improving trends form the backdrop of our approach for loan loss reserve in the second quarter.\nWe continue to build reserves under the incurred loss model by approximately $2.4 million.\nOur allowance of total loans grew to 1.28%.\nProvision for the quarter was $6.9 million, driven by modest loan growth and overall decrease in NPLs of approximately $3.1 million.\nThe decrease in specific reserves of approximately $2.9 million [Technical Issues] changes in our qualitative reserves.\nOur standard qualitatives increased by $3.4 million quarter-over-quarter, reflecting the economic conditions.\nAs Jim mentioned, our COVID qualitative overlay increased by $2.1 million to $9.9 million.\nRecall, from the last quarter, we developed a framework to capture the incremental risk of loss due to COVID.\nThe framework included eight higher risk commercial portfolios.\nAdditionally, we developed consumer overlay based on our internal PD/LGD models to address the risk associated with consumer forbearances.\nWe attribute our solid performance in the quarter to our continued adherence to our credit principles.\nOver the past several years, we've managed concentration risk in both levels, creating granularity in our commercial loan portfolios.\nAs of June 30, we only had 27 relationships over $15 million.\nTo better identify portfolio risk, we have prepared internal industry studies for each commercial real estate segment as well as certain C&I segments, including dealer floor plan and energy.\nOur industry study is a valuable tool to identify and vantage certain portfolio risk.\nAdditionally, we use our industry studies to manage our geographic diversification and diversification with industry sectors.\nOne of our great strengths is that we use our size, speed, and flexibility to our advantage.\nFor example, over the course of the second quarter, we performed a comprehensive loan review, covering approximately 1,600 borrowers and $3.6 billion in commercial loans.\nWe reviewed commercial credits as small as $350,000, so as to better understand COVID-related impacts on our commercial clients and small businesses.\nThe review is founded on the notion that, in this current economic environment, financial statements look at customers through the rearview mirror.\nAnd we want to look through the windshield.\nDuring our loan reviews, we relied on our experience and customer knowledge to evaluate the health of our borrowers on a name-by-name basis.\nThese loan reviews helped us to identify potential risk and to adjust risk ratings accordingly.\n",
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"content": "first commonwealth declares quarterly dividend.\nq2 earnings per share $0.24.\ncompname reports q2 earnings per share $0.24.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will also include non-GAAP financial measures.\nNon-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP.\nNet income in the second quarter of $29.6 million produced core earnings per share of $0.31, a core pre-tax pre-provision ROA of 1.82% and a core efficiency ratio of 53.1%.\nImportantly, pre-tax pre-provision net revenue of $42.9 million was slightly ahead of the consensus estimate, reflecting good underlying second quarter momentum in our key businesses.\nLending rebounded in the second quarter, increasing year-to-date loan growth to 5.3% annualized rate, and that excludes PPP loans.\nThe loan growth was broad-based and although indirect lending and corporate banking led the way, mortgage, branch-based consumer lending and small business all contributed meaningfully.\nOur corporate bank had several big wins and is seeing deepening pipelines.\nBucking national trends, our branch team has originated $209 million in home equity loans year-to-date, which represents a 12% increase year-over-year.\nGeographically, Ohio continues to lead the way with the majority of our loan growth, although PA production remains strong.\nOur regional business model and a focus on execution have been key elements in driving balance sheet and fee income growth.\nWe have also lifted out some talented lenders from large competitors over the last past year.\nConsumer and small business household growth helped fuel noninterest income, which remained strong at $26.1 million, even as mortgage gain on sale income tapered.\nCard-related interchange income at $7.4 million was a quarterly company record by a wide margin.\nAt $2.7 million, trust revenue was a quarterly record as well.\nOur SBA business contributed $1.6 million to gain on sale income and SBA pipelines have never been stronger.\nThis is four quarters in a row of strong contribution by the SBA business.\nImportantly, in this discussion around growth, business conditions in the second quarter in our markets recovered faster than we anticipated, and our business customers are generally positive about the outlook ahead.\nExpenses remain well controlled, and the core efficiency ratio was an impressive 53.21%.\nOver the last six years, First Commonwealth's revenue base has broadened considerably with significant investment in new commercial lending teams, a de novo mortgage business, indirect lending, SBA lending, credit card and new digital platforms to include online loan and deposit account opening.\nWe have expanded -- also expanded our footprint through five strategic M&A opportunities.\nEven as we've made these significant investments and transformed our company, at the forefront of our planning is adhering to the core principle of maintaining positive operating leverage.\nJim will provide important detail in a few minutes.\nBut at a very high level, I believe our NIM is benefiting from our long-term approach to building a diversified loan portfolio that is balanced between commercial and consumer loans.\nAt a time when banks are struggling to deploy excess cash, our consumer loan growth has been strong all year, and our commercial loan growth picked up steam as the second quarter progressed.\nWe like the contribution margin a new consumer loan brings versus having money parked at the Federal Reserve or in investment security.\nAnd we also have the potential of cross-selling a new consumer customer as an added bonus.\nWe're also enthused about the lift-out of an equipment finance team from a larger institution that we recently announced as well as the momentum in our SBA business.\nBoth of these businesses are scalable and will enable our margin to expand by generating high -- higher-yielding assets.\nImportantly, we're very pleased with the adoption of our new digital platform.\nThe second quarter, our active mobile users increased an annualized 22%.\nAdditionally, we continue to bring new capability forward, and we'll be introducing a new mobile mortgage platform in August where our customers can easily apply for and track their mortgage status from anywhere at any time.\nLastly, regarding credit, we feel our asset quality is solid and coupled with improving economic conditions, we expect credit to be a tailwind in the back half of the year.\nAs Mike already mentioned, we were pleased with our financial performance this quarter, especially with regard to loan growth, fee income and expense control.\nHopefully, I can provide you with a little more detail on our NIM, asset quality, fee income and expenses.\nOur net interest margin for the second quarter was 3.17%, down from 3.40% last quarter.\nLoan yields fell by 11 basis points, but we were able to offset most of that by reducing the cost of interest-bearing liabilities by seven basis points.\nBut to understand our NIM, you have to look at the effects of PPP and changes in our asset mix, especially cash.\nFor example, we began the quarter with $479 million in PPP loans.\nBy June 30, that figure had shrunk to $292 million.\nSimilarly, excess cash dropped from $414 million to $189 million over the period.\nThese changes don't come through if you only look at our published average balances, which barely moved.\nEssentially, what happened is this.\nWe started the quarter with a lot of excess cash because of government stimulus programs that took place in the first quarter.\nIn addition, PPP loans were forgiven over the course of the quarter, generating even more cash.\nWe invested some of that excess cash into securities early in the quarter and into strong loan growth toward the end of the quarter.\nTo be more precise, PPP and excess cash had two distinct effects on the margin.\nFirst, the first quarter NIM had the benefit -- excuse me, the first quarter NIM had the benefit of $7.9 million of PPP income, while second quarter PPP income was only $5.5 million.\nSecond, we put excess cash to work by purchasing approximately $300 million of securities in the second quarter.\nThat's better than leaving it sit in cash.\nThose investments will generate about $3.9 million of net interest income annually or about $0.03 per share, but they still yield us than what we were earning on the PPP loans, and it's still a layer of thin margin assets on top of the balance sheet that drags down the NIM.\nBecause of the noise from PPP and excess cash, we have been publishing a core NIM that adjusts for both of those things.\nOur previous guidance was for our core NIM to fall between 3.20% and 3.30%, and our core NIM for the second quarter came in at 3.20%, which was within that range, albeit at the bottom of that range.\nThe reason for that is simple math.\nThe more excess cash we invest in securities, the less cash there is to adjust for in the core calculation.\nThe good news here is that our loan growth in the second quarter was very strong, especially toward the end of the quarter.\nThat should help the margin going forward.\nWe expect to maintain that trajectory for the remainder of the year, which would replace PPP runoff and further soak up excess cash to the benefit of the margin.\nAs a result, we are reiterating our core NIM guidance of 3.25% plus or minus five basis points.\nLet me switch gears now to asset quality and offer a couple of thoughts that may be helpful to you.\nFirst, we realized that deferrals were the number one topic a year ago, but our deferrals have all but disappeared from a peak of over $1 billion during the pandemic to $138 million last quarter to only $59.5 million this quarter or just 88 basis points of total loans.\nSecond, nonperforming loans are just 0.82% of total loans ex PPP, and the reserve coverage of nonperforming loans is 182.9%.\nThese are levels that we believe compare very favorably to peers.\nThird, we just completed our regular semiannual loan review process in which we review every commercial credit in excess of $350,000.\nThis involved a review of about 1,000 relationships totaling $2.4 billion out of a $3.9 billion commercial loan portfolio.\nAt the conclusion of that exercise, there were 0 downgrades to special mention or substandard in the portfolio.\nThe thoroughness of that exercise gives us confidence as we took noted declines in both special mention and classified loans this quarter.\nClassified loans, for example, dropped from $72.3 million to $56.3 million, a level very close to the pre-pandemic level of $52.5 million at the end of 2019.\nFourth, delinquencies, which are sometimes seen as an early warning sign of trouble ahead, not only went down from last quarter, but they are at an all-time low for our bank at just 11 basis points of total loans ex PPP.\nFifth and finally, our reserves remain at 1.50% of total loans ex PPP protecting our capital and our earnings stream going forward.\nAs for fee income, even with mortgage income slowing down a bit in the second half, we anticipate being able to sustain the pace of $26 million to $27 million per quarter in noninterest income for the remainder of 2021 due to favorable trends we are seeing in SBA, swap and trust income.\nNIE came in at $51.5 million in the second quarter, down slightly from $51.9 million last quarter.\nOur previous NIE guidance was $52 million to $53 million per quarter, so we've been comfortably below that.\nWe do, however, expect some expense associated with returning to a more normal work and travel environment, elevated hospitalization expense that we have been seeing, new hires in revenue-producing and credit positions and the new recently announced equipment finance effort, bringing our NIE guidance to $53 million to $54 million per quarter for the remainder of the year.\nFinally, we repurchased 72,724 shares in the second quarter at an average price of $13.95.\nAnd with that, we'll take any questions you may have.\n",
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"content": "first commonwealth declares quarterly dividend.\nqtrly diluted earnings per share $0.31.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will also include non-GAAP financial measures.\nNon-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP.\nThe team and I are pleased with the quarter and we're enjoying playing some offense in our consumer lending businesses.\nOver the last several years, we've made significant investments in our digital capacity, our regional business model to spur growth, our fee businesses and a stronger consumer lending platform.\nThe fruits of these investments are apparent in our third quarter results.\nWith several recent efforts like Project Thrive, we have made these investments while maintaining positive operating leverage and improving our efficiency.\nThird quarter core earnings per share of $0.24 was consistent with last quarter, even as we further increased loan loss reserves.\nThe core efficiency ratio improved to a record low of 54.45% and the core pre-tax pre-provision ROAA strengthened to 1.74%.\nCore pre-tax pre-provision net income was $41.1 million, up some 14% over the second quarter.\nThe Company achieved record quarterly fee income of $26.7 million, an increase of $4.9 million from the previous quarter.\nThis more than offset a $4.4 million increase in provision expense to $11.2 million.\nSeveral important themes continue to unfold, namely, first in the third quarter, credit was solid and we continue to build loan loss reserves to recognize the impact of the pandemic.\nExcluding PPP balances, the allowance for loan losses as a percentage of total loans increased 10 basis points to 1.38%.\nIncluding previously disclosed day one CECL adjustment, the coverage ratio excluding PPP loans would increase to 1.59%, as seen on Page 10 of the earnings supplement.\nThe reserve build was driven by several qualitative factors in our incurred loss model, which Brian will cover during his remarks.\nOur non-performing loans fell from $56 million at the end of the second quarter to $49.7 million at the end of the third quarter.\nOn Page 13 of the earnings supplement, COVID-19 deferrals totaled 2.68%, as of July 24th.\nThose deferrals fell to 17 basis points as of October 23rd or last Friday.\nSimilarly, on Page 12 of the earnings supplement, deferrals on the commercial portfolios most impacted by COVID declined again from 3.4% on July 24th to 14 basis points as of last Friday.\nI believe we are well positioned at this stage of the pandemic with a strong balance sheet that can weather uncertainty.\nNext, third quarter fee income as a percentage of revenue was 28.8%.\nWe are particularly proud of this number as it reflects years of focus and investment, as we've diversified our revenue stream.\nOur third quarter fee income was driven by strength across multiple business lines.\nFirst, interchange income was $6.4 million, up roughly $500,000 over the second quarter.\nThe team's retention of households and execution through its five smaller acquisitions has really borne through here.\nMortgage gain on sale income was $6.4 million with a record quarter of $240 million in production.\nAs an aside, 40% of these loans were not sold and remain on our balance sheet.\nAgain, we de novo-ed our way into this business, just over five years ago.\nDespite a lackluster industrywide small business demand, SBA gain on sale income was $1.4 million, which also contributed to fee income.\nDespite our smaller size in some of our larger metropolitan markets in which we compete, our 2020 SBA origination performance now ranks us number two in Western Pennsylvania and number four in Northern Ohio.\nAlso on the fee income front, trust revenue totaled a record $2.6 million as well.\nThe third theme is loans.\nLoans grew $33 million or 2% on a linked-quarter basis, as the consumer lending business led the way.\nIn commercial lending, however, utilization of lines credit fell some $55 million from 38% at the end of June to 34% at the end of September, as business' investment and working capital utilization has stalled.\nOur mortgage branch based consumer and indirect lending businesses had been robust, even as underwriting standards have been tightened.\nFourth, the net interest margin contracted about 18 basis points to 3.11% in the third quarter, despite respectable loan growth and resilient loan spreads, particularly on the consumer side.\nNet interest income, however, was virtually unchanged, falling only $300,000 to $66.7 million.\nExcess liquidity and negative replacement yields on loans were the primary drivers of the decrease in NIM.\nJim will provide more color here.\nFifth, core non-interest expenses were down $63,000 for the quarter to $52.3 million even -- $52.3 million, even as we continue to invest in our digital platform and tools for our client.\nImportantly, the team launched a new digital platform in mid-September called Banno, which replaced both our online banking and mobile banking platforms.\nThe team also completed the conversion of our larger business customers to our new Treasury Management System.\nWe also added the person-to-person payment option of Zelle.\nThese launches impacted well over 200,000 consumers and small businesses and by all accounts went smoothly.\nThis is a very solid quarter for us.\nCore earnings per share matched last quarter's results even with $6.9 million of reserve build.\nAnd we hit consensus estimates even without any PPP forgiveness.\nThis is a significant point that's easy to overlook.\nWhile our provision expense of $11.2 million came remarkably close to the consensus expectation of $11.1 million, our spread income came in roughly $3.5 million lower than consensus expectations and yet we still hit consensus.\nTo be completely fair, this differential in spread income is likely the result of our own previous guidance that PPP forgiveness would take place in the third and fourth quarter of this year, and as such, it would have been perfectly reasonable to expect third quarter net interest income to benefit from the acceleration of PPP premium amortization.\nIn reality, we had no such PPP forgiveness income in the third quarter.\nInstead, strong fee income made up for the lack of PPP forgiveness income.\nAt this point, we do not expect any significant PPP forgiveness until the first and second quarter of next year.\nOur core earnings figures excluded two non-recurring expense items from our results; $3.3 million of expense associated with a voluntary early retirement program and $2.5 million of expense associated with the branch consolidation effort, both of which have been previously disclosed.\nThese efforts combined with other expense initiatives are expected to help keep non-interest expense flat in 2021, not only by allowing us to continue the reduction in total salary expense that we have benefited from in 2020, due to our hiring freeze, but also by absorbing increases in other expenses as we return to a more normal operating environment.\nBrian will provide commentary in a moment on credit, but I'd like to provide a little more color on a few things before turning it over to Brian.\nFirst, our stated NIM was 3.11%, but was affected by negative replacement yields; a shift in mix toward consumer loans; and most importantly, an average excess cash position during the quarter of approximately $343.3 million or about 4% of average earning assets.\nConsistent with prior disclosure, we calculate a core NIM, excluding the impact of PPP loans and excess liquidity of 3.28% in Q3.\nThe NIM should benefit in the near term from time deposit and other deposit repricing as well as some balance sheet management efforts designed to move excess customer funds off balance sheet, thereby reducing excess cash.\nThese efforts are expected to help offset negative replacement yields and keep the core NIM relatively stable in the near-term.\nOver the course of next year, however, we currently expect the core NIM, ex-PPP to continue a path of modest contraction in the 3.20% to 3.30% range.\nSecond, Mike mentioned that our fee income of $26.9 million was very strong in Q3, up by nearly $5 million from last quarter.\nBecause much of this was driven by mortgage, fee income is expected to seasonally adjust to approximately $24 million to $25 million in the fourth quarter.\nAnd finally, I know Mike already mentioned this, but if you look at Page 10 of the supplement, you will see graphically what we have verbally explained in prior quarters, that even though we delayed the adoption of CECL, the addition of our day one CECL number to our current incurred ALLL results in a reserve of $101.2 million and a reserve coverage ratio of 1.59%.\nI can add that reserve figure is not materially different from our internal parallel CECL runs as of September 30th.\nSo even though facts and circumstances may change before we adopt CECL next quarter, not the least of which is the economic forecast, our cumulative reserve building in 2020 under the incurred model has left us in a very good position ahead of CECL adoption next quarter.\nIt's good to be with you again.\nAs outlined in our investor deck, credit quality was solid for the third quarter in spite of the uncertain economic environment.\nAs expected, delinquencies ticked up modestly due to the run-off of stimulus and the reduction in payment release.\nWe are cautiously optimistic by the improvement in unemployment and the reopening of the economies in Western Pennsylvania and Ohio.\nWe continue to be watchful of our deferral roll off reports to evaluate our borrowers as they resume full payment status.\nNet charge-offs for Q3 were $4.3 million, which includes approximately $1.2 million in consumer charge-offs.\nNet charge-offs annualized were 0.27%.\nOur NPLs improved approximately $6.3 million to $49.7 million, improving to 0.78% from 0.88% of total loans excluding PPP loans.\nThis is the second consecutive quarter for us to report an improvement in NPLs.\nReserve coverage of NPLs rose to 177% from 145%, again excluding PPP loans.\nSimilarly, our NPAs improved $6.7 million to 0.80% of total loan assets from 0.91%.\nWe've conducted yet another loan-by-loan review of the higher risk portfolios and adjusted risk ratings as appropriate.\nOur proactive approach to risk ratings resulted in criticized loans increasing approximately $60 million, while classified loans increased modestly.\nThese trends form the backdrop of our approach for loan loss reserve in the third quarter.\nAs shown in the slide deck, the provision for the quarter totaled $11.2 million, which resulted in a reserve build of $6.9 million under our incurred loss model.\nThe allowance for loan loss as of September 30th totaled $88.3 million as compared to $81.4 million at June 30th.\nThe reserve balance grew to 1.38% excluding PPP loans from 1.28%.\nLet me offer some color related to the reserve build for the quarter.\nNet charge-offs were $4.3 million.\nWe have a slight increase in specific reserves of approximately $500,000.\nOur standard qualitative reserves increased approximately $900,000 quarter-over-quarter, reflecting a mix of economic conditions.\nOur COVID qualitative overlying reserve increased by $4.7 million for Q3 to $14.6 million.\nWe released approximately $1.9 million in consumer reserves due to improving deferral experience as well as improved economic conditions.\nWe increased our high-risk portfolio reserves by approximately $6.6 million, largely due to increases in the overlay reserves for our hospitality and retail portfolios.\nAnd operator, we'll now take questions.\n",
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"content": "q3 revenue $41.1 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will also include non-GAAP financial measures.\nNon-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP.\nThird quarter net income of $34.1 million produced core earnings per share of $0.36, accompanied by core return on assets of 1.43% and core pre-tax pre-provision ROA of 1.79%.\nThis was a very good quarter for First Commonwealth with solid profitability, growth in credit metrics.\nOther headlines for the quarter include first, excluding PPP loan payoffs, we're pleased with loan growth of 8.2% or $132.3 million in the third quarter with ongoing strength in indirect lending, home equity lending, commercial lending and mortgage lending.\nOur growth is broad-based between commercial and retail lending disciplines and has become increasingly granular over the years.\nAs an aside, our loan growth over the first -- over the last two quarters has not yet benefited from higher line of credit utilization.\nSecond, the loan growth and improved margin enabled a $2.4 million quarter-over-quarter increase in net interest income to $70.9 million.\nJim will have more color on the net interest margin.\nThird, non-interest income or fees grew $1.2 million quarter-over-quarter to $27.2 million on the strength of improvement in SBA and mortgage gain on sale income as well as higher wealth management income.\nImportantly, our card-related interchange business generated $7.1 million in fee income.\nOur regional business model has been a strong contributor to fee income growth with better teamwork and collaboration enabling us to deliver a broader set of solutions for our clients.\nFourth, our efficiency ratio increased to 55.27% as core non-interest expense rose some $3.7 million, primarily due to higher personnel expense, including higher incentive accruals based upon increased production, higher wages, particularly in entry level positions driven by inflationary pressure, higher hospitalization expense and then the hiring of the management team of the equipment finance division.\nIt is increasingly clear that we are not immune to expense headwinds in the current environment.\nFifth and importantly on the credit side, we guided last quarter to stronger credit metrics in the second half of the year in 2021.\nThat's exactly what is happening.\nThe third quarter represented our lowest loan charge-offs in nine quarters, a decrease in specific reserves for troubled credits coupled with general improvement in economic conditions led to a provision of just $330,000 down from $5.4 million in the second quarter.\nOur reserves now represent 1.3% of total loans, excluding PPP and a 247% of non-performing loans.\nThe level of non-performing loans improved significantly from $52.8 million in the second quarter to just $38.1 million in the third quarter or 56 basis points of total loans.\nSimilarly, non-performing assets of $39 million at quarter end now stand at 41 basis points of total assets.\nSubsequent to quarter end in early October a $6.9 million troubled credit was resolved and will be reflected in Q4 results.\nOther notable third quarter items follow.\nFirst Commonwealth earned the number one SBA lender ranking in Pittsburgh for the fiscal year ending September 30, 2021.\nThis is a significant accomplishment and reflective of both the talent in the SBA lending team coupled with the partnership enabled by the regional business model alluded to earlier.\nIn the third quarter, we continued to transform our technology to include the selection of a new loan origination system, as well as introducing several new cash management solutions or TM Solutions for our business clients.\nWe continue to be pleased with our adoption of our new mobile banking app, which is growing at an annualized rate of 18%.\nAs we work through our three year strategic plan, I would share three of our six areas of focus that might be most relevant to investors.\nFirst, this accelerates the growth trajectory of our company, and we'll do this primarily through organic, broad-based loan growth across both our commercial and consumer loans.\nSecond, continue to increase digital relevance to drive customer satisfaction, ease of use and brand identity, primarily through the continued investment in customer-facing technology.\nAnd third, anticipate and offset expense pressure to maintain operating leverage over a multi-year horizon.\nI say this because we realize that building new businesses like equipment finance from the ground up will negatively impact operating leverage at first, but can have a powerful impact on operating leverage in the long run.\nRegarding growth, we've received many good questions about our equipment finance efforts, so let me provide an update on our progress.\nAs you recall, we did a lift out from our large -- from a larger bank in June of a Philadelphia team with a 20-year track record of performance.\nAs we enter the business we expect the funds small ticket loans and leases on equipment on a nationwide basis.\nThe group's primary experience has been with essential used commercial equipment diversified across industries and equipment type.\nThe manufacturing, construction and professional service industries represent more than half of their originations by industry.\nPrimary equipment types included utility trucks, highway trucks, machine tools, trailers and manufacturing and packaging equipment.\nA good example of a piece of essential use equipment would be a machine tool like a lathe that a small business needs to run its business.\nWe expect the average ticket size to be about $80,000 and an average term of 60 months.\nBased on the historical performance of this team, we expect yields in the mid-5% range and spreads in the mid-4% range with charge-offs typically ranging from 55 basis points to 75 basis points.\nIf all goes according to plan, we believe that we can generate some $200 million to $250 million of equipment finance assets on our books by the end of 2022 before really hitting our stride in '23 and '24.\nAs Mike already mentioned, we were pleased with our financial performance this quarter.\nHopefully I can provide you with a little more detail on our net interest margin fee income and expenses.\nThe GAAP net interest margin expanded by 6 basis points this quarter to 3.33%.\nNet expansion was driven by strong organic loan growth of just over 8% annualized.\nThe NIM expansion wasn't impacted by PPP.\nTotal PPP income in the third quarter was $5.7 million, up by only $200,000 from last quarter.\nAs of September 30, we had $152 million of PPP remaining on the books with $6.3 million in fee income that remains to be recognized.\nWe expect that most of the remaining PPP balances will be forgiven in the fourth quarter, which should help the GAAP NIM.\nThe core NIM which we calculate to exclude the effects of PPP and excess cash fell from 3.20% last quarter to 3.16% this quarter because we purchased $134 million of securities in the quarter.\nHad we not purchased the securities and just let the money sit in cash, we would have excluded that cash from the core NIM calculation based on the way we calculate it and the core NIM would have dropped by only 1 basis point to 3.19%.\nWe think that the core NIM has bottomed out and should drift upwards from here as we redeploy excess cash into loans.\nOur cost of deposits in the third quarter was down to only 6 basis points.\nI'm pleased to report that our last remaining tranche of high cost deposits totaling $52 million at a cost of 1.65% repriced on October 13 subsequent to quarter end.\nThat alone will save us nearly $1 million a year in interest expense at about a point of NIM.\nWe will reap the benefit of that starting in the fourth quarter.\nWith that behind us, we're down to about $400 million in time deposits remaining at a cost of 36 basis points, three quarters of which will mature by the end of 2022.\nSo while some deposit repricing opportunity remains we are very far along in repricing our entire deposit book leaving us very well-positioned if rates rise.\nWith that in mind, we've taken a hard look at the deposit beta assumptions in our interest rate and risk sensitivity calculations.\nIn light of unprecedented levels of liquidity, we are revising our interest rate risk assumptions to reflect the ability to lag deposit rate increases for the first two 25 basis point rate hikes.\nThe result will be what we believe to be a more accurate picture of our asset sensitivity in the current environment.\nYou'll see this in our IRR tables once we published our 10-Q but to give you a preview a 100 basis point parallel shock will show an increase in the first year net interest income of over 5%.\nThat's roughly double the previous level of sensitivity so we wanted to explain the reason for the change.\nEven without a rate hike however the NIM story in 2022 will be driven by the redeployment of excess cash and loans especially since we believe that deposit balances will remain relatively stable throughout 2022 and any loan growth above cash levels can be funded by cash flow from the securities portfolio.\nThis effectively rotates lower earning assets into higher earning ones.\nThis asset rotation should benefit NIM in 2022 even if rates don't rise and then if rates do rise our asset sensitivity will kick in and expand the margin even further.\nTurning now to fee income; fee income of $27.2 million in the quarter remains a bright spot and seems to be one aspect of our company that is consistently underappreciated.\nThere's been talk of slowdown in mortgage all year but our mortgage gain on sale income actually increased by $400,000 over the last quarter.\nSBA is another fee income engine that continues to gain momentum now that PPP is mostly behind us with SBA gear and sale income up by $700,000 from last quarter to $2.4 million.\nCard related interchange income continues at new record levels for us of approximately $7 million a quarter, and deposit service charges after the off pace for much of the pandemic due to heightened cash levels and customer accounts have returned to more normalized levels.\nTurning to non-interest expense, last quarter, our guidance was $53 million to $54 million, and we came in at $55 million for the reasons Mike described.\nLike many of our peers, we are experiencing expense pressures mostly related to people costs like salaries and benefits.\nWhile there are some normal variability and costs quarter-to-quarter, it's difficult to see NIE falling from current levels.\nFortunately, the pace of our loan growth gives us confidence that our revenue can outpace expense growth.\nFinally, we repurchased 997,517 shares of stock during the third quarter at an average price of $13.35.\nWhile we ended the quarter with approximately $10.3 million remaining of our $25 million share repurchase authorization we are also pleased to announce that our board authorized an additional $25 million share repurchase authorization yesterday.\nWe increased the authorization so that we could have repurchase authority available to redeploy expected excess capital generation in the fourth quarter and into next year.\nAnd with that, we'll take any questions you may have.\n",
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"content": "compname announces q3 earnings per share of $0.36.\ncompname announces third quarter 2021 earnings; declares quarterly dividend and authorization of a $25 million share repurchase program.\nq3 earnings per share $0.36.\ncorp - qtrly net interest income (fte) of $70.9 million increased $2.4 million from previous quarter.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With me in the room today are Mike Price, President and CEO of First Commonwealth Financial Corporation; and Jim Reske, Executive Vice President and Chief Financial Officer.\nFor that portion of the call, we will be joined by Jane Grebenc, Chief Revenue Officer and President of First Commonwealth Bank; and Brian Karrip, our Chief Credit Officer.\nToday's call will also include non-GAAP financial measures.\nNon-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with Generally Accepted Accounting Principles.\nJim Reske, our CFO will provide some detail around fourth quarter earnings in a moment, but first, I'd like to reflect on our progress in 2019 as a Company.\n2019 marked the seventh straight year of growth in earnings per share since the current management team came together.\nWe ended 2019 with core earnings per share of $1.10, which represents 16% compound annual growth from 2012 starting point of $0.40 per share in core earnings.\nIn 2019, we produced $108 million of core net income, a net interest margin of 3.75%, and a core efficiency ratio of 56.9%.\nThe earnings capacity of First Commonwealth continues to grow.\nAdjusted for securities gains in 2018, earnings per share grew by 6.8% in 2019, driven by year-over-year growth of $17.4 million in spread income and $4.7 million in fee income.\nOur momentum as we enter 2020 is good, and I would highlight the following.\nLoan growth of 7% in 2019 were 6% without the acquired loans associated with the 14 branch acquisitions we got from Santander and deposit growth of 13%, helped stabilize the margin at 3.73% in the fourth quarter and continued to meaningfully and granularly grow our company.\nCorporate banking, mortgage, and indirect lending led the way with loan growth.\nTotal deposits grew to $6.7 billion with an average cost of 56 basis points.\nOur deposit base is comprised of 25% non-interest-bearing DDA accounts and another 21% in checking now accounts at a relatively low cost of funds.\nSo, $3 billion or 46% of the deposit total is in transaction accounts, of which 56% are business accounts.\nThe culture of deposit gathering is strong.\nAs an aside, we required -- we acquired roughly $470 million in deposit balances in early September following the acquisition of the Central PA branches from Santander and as of December 31, 2019, had grown those deposits by $22 million.\nDespite the quarter-over-quarter uptick in our provision expense, our credit metrics continue to strengthen as does the credit culture of our company.\nSeveral key credit indicators were at either -- were either at or near historic lows for our Company.\nFor example, net charge-offs of 18 basis points, nonperforming loans to loans at 52 basis points and nonperforming assets to loans at 57 basis points with criticized loans also at an historic low for our Company.\nThe sharp decrease in special mention loans at $48 million in the fourth quarter is particularly encouraging.\nOur ongoing focus on improving granularity, maintaining concentration discipline and increasing geographic diversity leaves the bank well positioned at this stage in the economic cycle.\nOur noninterest income of $85.5 million also was an historic high for our Company and now comprises roughly 25% of our total revenue.\nInterchange income and deposit fee income set internal records for our Company in the fourth quarter.\nExcluding security gains, our average quarterly noninterest income was $21.4 million in 2019, up from $19.9 million per quarter in 2018 and an average of only $16 million per quarter in 2016.\nMoreover, our mortgage, wealth, corporate banking and SBA and insurance businesses have become a meaningful part of our noninterest income momentum.\nAdditionally, our five acquisitions over the last four years have added precious new checking households.\nCore efficiency of 56.9% in 2019, improved year-over-year despite the integration of the Santander branch acquisition and as the interest rate environment pressured margin.\nThat being said, we're ever mindful of the importance of operating leverage, not only in our forecasts and budgets, but also in our actual quarterly results and we pay close attention to that.\nIn short, the bank has a broader base of fee businesses.\nAnd our two key businesses retail and corporate banking are getting better each year and now growing across geographies.\nThese same businesses are led by strong line of business leaders and coordinated through regional presidents who are focused on winning and fulfilling our mission in their respective communities.\nOur credit metrics and balance sheet are stronger, even as we experienced a tougher external environment in 2019.\nFourth quarter core earnings per share came in at $0.27 per share.\nThe return on -- the core return average assets and the core efficiency ratio were 1.29% and 57.23%, respectively.\nMajor fourth quarter headwinds compared to the prior quarter, included additional $2.2 million in provision expense, bringing provision to $4.9 million and an additional $2.1 million in noninterest expense, bringing noninterest expense to $53.3 million.\nProvision expense was impacted by strong loan growth, which added $1.2 million in provision expense compared to last quarter.\nNoninterest expense remained well controlled overall, but was impacted by one-time professional fees, elevated hospitalization expense and a full quarter of expense associated with the acquired Santander branches.\nThe largest portion of the professional fee expense was associated with consulting fees, surrounding the renegotiation of a third-party contract that is expected to result in significant expense savings for the bank.\nFDIC insurance expense was unchanged from last quarter because we used a $616,000 odd credit in the fourth quarter, we have $723,000 in credit remaining for 2020, which we expect to use up in the first half of the year.\nFourth quarter positives included a net interest margin of 3.73%, which when coupled with solid loan growth of 5.6% annualized, produced growth in net interest income to $69.2 million despite a challenging interest rate environment.\nAdditionally, noninterest income excluding securities gains, recorded a quarterly all-time high of $22.5 million.\nA $1.3 million improvement in swap fee income more than offset a seasonal $900,000 decrease in mortgage fee income.\nInterchange income of $5.9 million and deposit service charges of $5.1 million, both grew due to the 10% growth in our total customer base as a result of the successful completion of the acquisition of the Santander branches.\nOur forward guidance remains essentially unchanged.\nWe continue to expect mid-single-digit loan growth in 2019 with deposit growth lagging slightly behind as the newly acquired deposits allow us to maintain discipline in deposit pricing.\nThe margin is expected to compress to the low 3.60s over the course of the year, consistent with our past guidance.\nOur effective tax rate for the fourth quarter was 19.50%.\nAnd with that, we'll take any questions you may have.\n",
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"content": "compname reports q4 earnings per share $0.27.\nq4 earnings per share $0.27.\nincreases quarterly dividend by 10 percent.\ncorp quarterly net interest income $69.2 million versus $65.5 million.\ncorp - expect headwinds from lower interest rate environment going into 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call will also include non-GAAP financial measures.\nNon-GAAP financial measures should be viewed in addition to and not as an alternative for our reported results prepared in accordance with GAAP.\nIn the fourth quarter, net income of $25.7 million drove earnings per share of $0.27, beating the consensus estimate of $0.23 per share.\nCore ROAA and the core efficiency ratio were 1.14% and 56%, respectively.\nOur core pre-tax pre-provision ROAA was 1.76%, due to an increase in the core net interest margin to 3.29% and continued strength in non-interest income driven by mortgage, interchange income, wealth management and SBA.\nFourth quarter loan volumes and commercial C&I lending were soft due to lower utilization of lines of credit and some payoffs.\nThis masked [Phonetic] the strength we saw in the consumer businesses and resulted in a contraction in the overall loan portfolio ex-PPP.\nExpenses for the quarter were up due to higher salaries and benefits, particularly hospitalization expense.\nProvision expense of $7.7 million included a pass-through item of $3.2 million in unfunded commitment expense.\nIt's important to note that we adopted the CECL methodology for the allowance for credit losses in the fourth quarter.\nShifting gears, as we think about the future, we think a lot about our customers' change in behavior.\nThis is why we continue to make significant investments in next-generation technology in 2020 with the new online mobile platform, a new treasury management system, 100% issuance of a contactless debit and credit cards and new P2P solutions like Zelle and real-time payments, and we refreshed our digital account opening, customer experience with the new mobile responsive design.\nIn a year challenged by a global pandemic, these digital tools enabled our customers to bank when, where and how they want it.\nHere is a sampling of some of the growth and changes we've seen.\nDebit card interchange income was up 11% or over $2.3 million year-over-year, driven by robust increase in transactions and dollar volume.\nNew digital deposit account openings were up 189%.\nDigital customer conversations are up 233% from 2019.\nThis interactive conversation feature available through our new online mobile platform lets customers start conversations with us anytime, day or night.\nMobile remote deposit capture users increased 45%.\nImage deposits at ATMs increased 84%.\nVirtual meeting collaboration increased 175% to over 2,600 a month.\nOur leaders are finding ways to keep our employees engaged with each other and with customers.\nAnd then there is our favorable Apple Store rating of 4.8 on our FC Mobile Banking app.\nOur customers are telling us what we're doing wrong and what we're doing right with our mobile app and we listen.\nWe're proud of our progress with our digital strategy over the last several years and particularly in 2019 and 2020.\nHowever, we must continue to improve our user experience in digital new account openings across consumer and business banking.\nJust a few more reflections before I hand it over to Jim Reske, our CFO.\nOn the credit side, we proactively marked our credit early and often while reaching out to our clients in the midst of the pandemic.\nDuring 2020, and per Page 10 in our supplemental deck, we quickly built our loan loss reserve using qualitative overlays.\nIt now stands at 1.61% of total loans ex-PPP and covers fourth quarter non-performing loans of $54.1 million by 187%, the highest coverage figure for the year.\nNPLs or non-performing loans, as a percentage of loans, was 0.80% or 80 basis points and net charge-offs in 2020 were 27 basis points for the year.\nOn Page 13, the increase stems almost entirely from expanding deferrals to a handful of hospitality credits totaling $76 million or 29.6% of that particular portfolio.\nThese types of deferrals are constructive and will enable a handful of our developers through the late innings of this pandemic.\nThese deferrals also tend to come with a quid pro quo to include increased recourse or another -- and credit enhancement on a loan.\nHere again, we feel well-positioned with credit in 2021.\nDuring 2020, we grew our top line some $7 million while our expenses grew only $2 million, net of some restructuring charges.\nThis is yet another year despite formidable interest rate headwinds of positive operating leverage.\nOur full-year core efficiency ratio fell from 56.97% in 2019 to 56.28% in 2020, indicative of the result of the management team.\nWe wielded an internal initiative dubbed Project Thrive to spur revenue growth, improve efficiency, protect margin and optimize capital.\nAmong dozens of initiatives here, we consolidated some 20% of our branches before year-end after starting the process in late March.\nWe also nimbly used the remainder of a previously authorized buyback to purchase 2 million shares at a weighted average of $7.84 per share in the fourth quarter.\nIn 2020, we also had a record year with $94 million in non-interest income, as interchange, mortgage, wealth management and SBA all had record years as well.\nNon-interest income for the fourth quarter was 28% of revenues and was 26% for the entire year.\nEx-PPP, total loans grew $111 million or 2% in 2020 on the backs of strong consumer and mortgage lending and modest growth in small business.\nThis momentum was more than offset by a slight downdraft in CRE lending and a palpable decrease in our C&I portfolio in 2020.\nOnce again, however, our newer Ohio markets found the path for broad-based growth and they now account for 34% of total loans.\nWe are optimistic about our pipelines in early 2021 and our ability to grow meaningfully in 2021.\nIn 2020, we became virtually -- better in virtually every aspect of our business to include each revenue-producing line of business, each geographic region of our Company, our fee businesses, our expense focus, our credit and enterprise risk culture and, lastly, our digital strategy.\nWe are genuinely excited about our prospects for growth in 2021.\nLet me highlight a few things from our fourth quarter financial results before offering some guidance for 2021.\nFirst, fee income was strong in the fourth quarter.\nWe anticipated but did not see a seasonal slowdown in mortgage originations in the fourth quarter.\nFee income was actually suppressed by $1.2 million due to the mark-to-market on a single derivative.\nDespite this, fee income still came in at near-record levels.\nWe talk a lot about mortgage, but we're very pleased to see our wealth businesses coming along nicely compared to where they were a year ago as well.\nSecond, the net interest margin expanded from 3.11% last quarter to 3.28%[Phonetic] this quarter, in part due to our intentional efforts to reduce excess customer cash levels.\nCore NIM expanded by 1 basis point in the quarter from 3.28% last quarter to 3.29% as the cost of deposits continued to come down.\nThird, core non-interest expense was up from last quarter as strong mortgage originations and other activity drove increased incentive expense, while at the same time reduced loan originations in other areas resulted in a slowdown of 1091 [Phonetic] expense deferrals.\nHospitalization expense was up by $600,000 from last quarter and we had a $400,000 expense in the fourth quarter related to the annual true-up of our BOLI liability.\nSo those two items alone accounted for $1 million of the increase in expense from last quarter.\nNow, let's talk about guidance for 2021.\nNote that our assumptions do not yet include another round of PPP and any government stimulus because it's way too early to understand their impact.\nWhile concrete guidance is elusive, hopefully we can provide some helpful thoughts as to what we believe may influence our financial performance in 2021.\nLet's start with loan growth and fee income.\nWe expect fairly robust loan growth next year.\nFor years, our guidance for loan growth has been mid-single digits.\nWe believe that we can be at the higher end of that range this year.\nWe expect that fee income will remain strong through at least the first half of 2021, in particular because we had expected to see some softening of the mortgage refi boom by now, but mortgage originations remain strong.\nFee income in the second half will largely depend upon the extent to which the mortgage refi boom continues.\nNow, for our net interest margin and non-interest expense.\nAs far as we can tell right now, we believe that our core NIM will be approximately 5 basis points on either side of 3.20% in 2021, but many factors could change that number and we'll update you as the year progresses.\nThe NIM is expected to be profoundly affected in 2021 by PPP forgiveness and further stimulus, both of which could leave us with a lot of excess cash to reinvest and PPP round two, which will add more low-margin assets to the books.\nAll of that would suppress the NIM.\nThere are however three \"arrows in our quiver\" that may work to offset some of these NIM pressures.\nFirst, we expect a phenomenon of negative loan replacement yields to soon run its course.\nOur expectation had been that we'd reach neutrality in asset yield in mid-2021, but in the fourth quarter negative replacement yields only brought down the loan portfolio yield by 2 basis points, so we're almost there.\nSecond, on the liability side, we see continued runway for reductions in deposit costs.\nWe have $471.2 million in CDs maturing in 2021 with $289.9 million yielding 1.21% maturing in the first half.\nAnd we also have $129.4 million in money market savings deposits that currently yield 1.22% that will reprice in the first half of 2021.\nThird, and most importantly, our balance sheet remains asset-sensitive.\nThe blended Moody's rate forecast that we use call for a modest steepening of the yield curve this year and more next year, even while short-term rates remain at zero.\nOur NIM would benefit from that scenario.\nTurning now to non-interest expense, we believe core NIE should come in at between $52 million to $53 million per quarter.\nThat's up from $206.4 million in 2020 and from our previous guidance.\nPart of the increase was due to a $2 million to $3 million expected increase in collection and repo expense, but that remains quite unclear, especially if foreclosure, moratoriums and unemployment insurance are extended.\nOne other potential tailwind to expected costs could be the next round of PPP, which will allow us to defer origination expense, potentially lowering non-interest expense.\nThe rest of the increase is more straightforward.\nWe are not hesitating to invest in loan growth talents, including commercial lenders and consumer lending teams, as well as credit and treasury management personnel because we sense growth opportunity as the crisis abates.\nFurthermore, we believe that the work-from-home environment will wind down and corporate travel and client entertainment will resume at some point in the latter half of this year.\nFinally, on a more exciting note, share repurchases will continue.\nAs we announced yesterday, our Board has approved an additional $25 million share repurchase program.\nWe expect repurchase activity to play out relatively slowly over the course of 2021, especially in response to dips in our stock price.\nI'll walk you through some prepared credit comments and then we'll go to Q&A.\nOur strong fourth quarter results underscore the effectiveness of our portfolio management practices, risk management strategies and disciplined credit culture.\nOver the past few years, we tapped the brakes on certain higher risk factors.\nWe selectively reduced certain segments, such as energy, we've adjusted our corporate and consumer loan guidelines to achieve a more moderate risk profile, we improved our portfolio risk through geographic and industry diversification, and we've reduced our concentrations of credit by limiting single transaction exposures.\nOur consumer delinquencies at year-end continue to be very low and were only 2 basis points, I'm sorry our commercial delinquencies.\nOur consumer delinquencies kicked up a bit at year-end to 45 basis points, due to seasonality.\nWe were pleased to see that our investments in the collections team resulted in a favorable comparison to pre-COVID-19, 12/31/19, consumer delinquencies at 54 basis points.\nCriticized loans increased by approximately $114 million, largely due to downgrades in the hospitality portfolio.\nNon-performing loans at year-end totaled $54.1 million, an increase of $4.3 million from the prior quarter.\nWe had a number of smaller credits that we moved to accrual and one hospitality relationship with the balance of approximately $7 million that was moved to non-accrual.\nThe net increase was $4 million in non-performing loans.\nNon-performing loans as a percentage of total loans, excluding PPP, was 0.86% and our allowance for credit losses as a percentage of non-performing loans increased to a healthy 187%.\nNon-performing assets as a percentage of total assets increased from 0.55% in Q3 to 0.62% in Q4.\nNet charge-offs for the fourth quarter came in at $4.8 million.\nNet charge-offs as a percentage of average loans, excluding PPP, was 0.30%.\nGiven the economic conditions, they were generally in line with our internal targets.\nNow, let me provide some color regarding reserves.\nFirst, you should note that we adopted CECL at 12/31/2020 and booked a transition amount of $13.4 million.\nWe utilized certain Moody's models to support our estimates of key economic indicators, including GDP and unemployment.\nAs the economic models -- as the economic uncertainties play out and conditions improve, we might see some tailwinds toward the back half of 2021.\nProvision for Q4 was $7.7 million, including $3.2 million related to the unfunded commitments.\nThe provision reflects our strong credit metrics and improving economic indicators.\nAs noted on Page 10 of the supplemental slide deck, the total qualitative reserve factors increased by a net $8.3 million quarter-over-quarter.\nSpecific to the identified COVID-19-related high risk portfolios, the qualitative reserve is applied for the quarter of $9.1 million.\nCredit carefully considered the five high risk portfolios as outlined on Page 13 of the slide deck.\nThese five portfolios will be evaluated quarterly and reserves will be adjusted accordingly.\nThe reserve build slide in the deck provides a bridge from a 12/31/19 balance of $51.6 million to the year-end reserve of $101.3 million.\nThis is exclusive of the $3.2 million of provision for unfunded commitments.\nReserves to total loans grew to 1.50% of total loans and 1.61% of total loans net PPP loans.\nOverall, we've been conservative in our approach and have solid reserve coverage ratios.\n",
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"content": "q4 earnings per share $0.27.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A copy of which is available on our website at www.\nDuring the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin and free cash flow.\nTo ensure disclosures are consistent, these slides provide the same details as they have historically, and as I've said, are available on the investor relations section of our website.\nWith these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nMollie, can you hear me?\nLet me say I hope everything is well with each of you and that you and your families are healthy and safe.\nObviously, we all know this is an incredibly difficult time for many of us individually, the economy and in fact, for the world as a whole.\nAnd it's an emotional time for many people too.\nUnfortunately, this sort of call is not the sort of back and forth conversation that allows me to check in with each of you personally, but let me just say again, I do hope everything is well with each of you and the people you care deeply about.\nIn a minute, Ajay will share you the specifics of our first quarter.\nLet me, if I may, upfront, make three points that I think might be of interest to you.\nThe first one is to let you know that I believe our team globally is doing a fabulous job, not a perfect job because in this environment, nobody does a perfect job, but a fabulous job of juggling, of adjusting, of modifying in ways so that we can weather this storm and help our clients weather this storm.\nThe second that I'd like to emphasize that there are both puts and takes with respect to the impact of COVID on different parts of our business.\nThere are some places where clients have desperate, urgent needs for immediate help from us, the same time there are places that have been negatively affected of slowdown and probably will be slow for a while.\nThe third point, I believe, is the most important which is that even though there will be puts and takes, none of the puts or takes, in my view, takes away from the underlying strength of this firm, the terrific long-term trajectory we've been on, an incredible trajectory, I believe, over any extended period of time we can stay on.\nSo let me take those three points in turn.\nIn terms of the first point, our key -- I'm sure, many of you have had to and are working through a whole line of issues during this period.\n95% of our people around the world right now are working from home.\nIn some places around the world, people were working from offices, then the offices close, then they work from home, then they went back to the offices and now they're back working from home.\nFor the people working from home, like I'm sure for many of you, it's a challenge.\nWe have to try to collaborate with clients, with each other, and our teams, to drive critical work product, sometimes with tight deadlines with a level and duration of separation that probably none of us have ever had to face before.\nAnd in many places, people are doing that while juggling kids, who are home from school or taking care of sick relatives that live with them or nearby.\nAnd of course, everyone is dealing with stress and worries, worries about themselves, their families, their loved ones.\nI want to communicate that in the face of all that challenge and disruption, I believe our people are doing a fabulous job of supporting our clients, supporting each other, and keeping our business moving ahead.\nI can't give multi examples, but a few.\nOn one assignment, our real estate group worked 23 consecutive days to meet an aggressive deadline to help key players in a mortgage REIT industry avoid liquidation.\nIn Tech, our teams over the last few weeks worked in many cases around the clock with clients to find a way to do secure review of legal documents not in review centers but in home.\nOur teams have implemented new processes for digital forensics to collect and analyze data remotely versus having to go into a company, for example, to crack hard drives and other devices.\nAnd many in our firm have figured out ways to collaborate across FTI as well as with external parties like law firms to do podcast, webinars and other thought leadership to engage our clients on the wide array of challenges now and the future that are being created by COVID-19.\nIn many places, our people have accelerated training, whether it's educating our teams or clients on new legislation like CARES or cross-training to equip folks with the capacity to support areas in which demand is surging.\nAnd then finally, like many of you, we've had people -- I'll just say incredibly creative, way more fun than I am but -- and it's just, it's a delight to see internal connection activities, maintaining morale, promoting the spirit and level of collaboration necessary to succeed.\nLots of people leaning in.\nAnd that's resulting in us maintaining effectiveness and connection during this trying period.\nI hope that gives you a sense, at least, of what our teams are doing to keep this company vibrant, to make us most effective in helping clients.\nThough in many cases have deep needs right now, whether their storm, while also making sure we're engaged with clients who don't currently have work that are going to have needs down the road and position ourselves to best meet those needs.\nBut the result of those activities, I believe, our company is weathering this storm about as well as anybody possibly can.\nHaving said that, second point I want to underscore is that not all of our parts -- not all parts of our firm are currently firing on all cylinders.\nNow some are, some parts of our business, for example, are advising clients who are facing near-term financial crises or liquidity issues or reputational issues.\nAround that sort of work, there's an enormous sense of urgency as you might expect.\nAnd that is creating the need, in some cases, for our people to work incredibly long hours to deliver for our clients.\nAnd we are getting called on for substantial amount of important work like that.\nOn the other hand, one only has to talk to a few law firms to know that there has been recently a significant slowdown on a fair amount of litigation, for our professionals are experts to testify in court and provide courtroom graphics.\nThe fact that the courts are closed in many jurisdictions and litigation is being postponed is a very real effect.\nAnd it's not just litigation that's being affected by COVID right now.\nAll of our businesses, Corp Fin, FLC, Econ, Tech, Strat Coms have service offerings that are focused on supporting major transactions with M&A activity plummeting this quarter and continued economic and political uncertainty out there, those parts of our business have been affected and will likely be affected for some time.\nSo though we have businesses that are incredibly busy, we clearly have seen negative effects of COVID-19 as well.\nWe saw some significant slowdown since some of our businesses tied to litigation and transactions toward the end of the first quarter.\nNot so much throughout the quarter, but toward the end.\nAnd we expect those slowdowns to extend into the second quarter at least, and maybe, maybe beyond.\nI do want to stress what I believe is the key point however and maybe the most important point which is even if we have slowdown in parts of our business, it does not make those parts of our businesses bad businesses or unattractive when one thinks about any medium-term time frame.\nAnd just to make an -- to give an example.\nI think it's the strongest international arbitration practice in the world.\nThat business has had a very slow first quarter which is reflected in some of the economic results which Ajay will talk about, and we're expecting quite a slow quarter in the second quarter as well.\nThat pause in activity doesn't mean that the need for international arbitration services is going away more permanently, nor does it mean that the leading positions that we have around the globe where the caliber of our people has changed because of COVID-19.\nOur people didn't get stupid overnight.\nIt just means we are currently having weaker results than we would normally expect from that business, and they, for a while.\nAnd the same is true for a number of our other litigation and transaction-oriented businesses.\nImportant, longer term, we do not expect litigation or M&A or capital markets activity to be permanently depressed.\nOur experience with respect to litigation, in fact, is to the contrary which is that this sort of crises, ultimately triggers a huge amount of incremental litigation.\nSo though we expect some of these businesses to be affected, impacted in the near term, we have no less confidence in the strength of our positions in those businesses or the ultimate demand for our services in the medium and long term.\nThat leads me to the third point, the final point which is that though there are puts and takes, I do not believe that this pandemic takes away, in any way, from the underlying strength of this firm, the power of the trajectory that we have been on and our ability to stay on that trajectory over any medium or long term.\nAs we talked about a lot on these calls and elsewhere, one never can build a great professional services firm by focusing on quarters anyway.\nIn fact, an individual quarter results is often not a good indication of the long-term trajectory the company is on.\nA great professional services firm is created by having teams of great people who develop and deliver on key propositions, on topics of critical importance to clients.\nNone of that's created over a quarter nor does it get lost over a quarter.\nWe have been, over the last several years, building those capabilities in good quarters and bad quarters, and it is that focus that has allowed the last five years of this company's history to be by far the best years, five years ever.\nWhether this year we had great quarters or not great quarters, we will continue to build this enterprise.\nWe will not sacrifice building this business in any way just to make individual quarters look better.\nIn fact, as we have in the past, if great talent becomes available, this year, even in businesses that happen to be slow in that quarter, and we believe it will help us build the business for future, we will take advantage of that -- those opportunities, the potential disruptions in talent market even if it further dampens a potentially slow quarter.\nThe reason we do this, we intend to do this, it's not only because it's the right way to build a great professional services firm for our people and to create value for shareholders over any extended period of time, it's also because we can.\nThis company has never been as strong as we are today in terms of our client relationships, the breadth of our offerings, the capabilities of our people, the relevance of our brand, the companies that are challenged or in terms of financial strength and balance sheet.\nSo yes, we may, this year, have some puts and takes.\nI do want to underscore the depth of my belief in the power of this company, the terrific job our people have been doing and are doing and the confidence that leaves me with about our ability not only to weather the storm, but diverge from COVID-19 on at least as good a trajectory as we entered this period.\nWith that, let me turn this over to Ajay to give you more details on the quarter.\nAs part of the guidance discussion, I will share our current expectations on how the global COVID-19 pandemic may impact our business.\nSo beginning with the first-quarter results.\nRevenues of $604.6 million were up $53.3 million or 9.7% compared to revenues of $551.3 million in the prior-year quarter.\nWorth noting, while revenues in EMEA and North America increased 22.8% and 8.1% respectively in the quarter, revenues in Asia Pacific which represented 6.6% of our overall revenues in 2019, declined 14.8%.\nThe decline in Asia Pacific was primarily due to COVID-19 related disruptions and associated restrictions which resulted in delayed or postponed client engagements.\nGAAP earnings per share was $1.49 compared to $1.64 in the prior-year quarter.\nGAAP earnings per share included $2.2 million of noncash interest expense related to our convertible notes which decreased earnings per share by $0.04.\nFirst-quarter adjusted earnings per share of $1.53 which excludes the noncash interest expense, compared to $1.63 in the prior-year quarter.\nOur convertible notes had a potential dilutive impact on earnings per share of approximately 433,000 shares and weighted average shares outstanding for the quarter.\nAs our share price on average of $117.71 this past quarter was above $101.38 conversion threshold.\nWorth noting, the trigger for conversion of our convertible notes prior to maturity was not met during the quarter.\nNet income of $56.7 million compared to $62.6 million in the prior-year quarter.\nThe year-over-year decrease in net income was primarily because the 9.7% growth in revenues did not adequately offset increased compensation expense related to the 18 and a half percent increase in head count, higher variable compensation and an increase in SG&A expenses.\nSG&A of $127 million was 21% of revenues.\nThis compares to SG&A of $113.2 million or 20.5% of revenues in the first quarter of 2019.\nAn increase SG&A year over year was primarily related to nonbillable headcount growth, with salary and benefits increases as well as higher real estate and IT expenses.\nFirst quarter of 2020 adjusted EBITDA of $83.2 million compared to $96.1 million in the prior-year quarter.\nOur adjusted EBITDA margin of 13.8% compared to 17.4% in the first quarter of 2019.\nOur first-quarter 2020 effective tax rate of 22 and a half percent compared to 24.1% in the first quarter of 2019.\nexpenses and a favorable adjustment to the valuation allowance on certain deferred tax assets.\nFor the balance of 2020, we now expect our effective tax rate to range between 25% and 27%.\nWorth noting, Q1 of 2020 GAAP and adjusted earnings per share were positively impacted by FX remeasurement gains primarily due to the strengthening of the U.S. dollar and the euro in the quarter as compared to the British pound.\nThis benefited our first quarter of 2020 adjusted earnings per share by $0.07.\nBillable headcount at the end of the quarter increased by 716 professionals or 18 and a half percent compared to the prior-year quarter.\nThe increase is due to growth across all business segments.\nSequentially, billable headcount increased by 156 professionals or 3.5% again with every business segment growing.\nNow, I will share some insights at the segment level.\nIn Corporate Finance & Restructuring, revenues increased 29.1% to $207.7 million compared to the prior-year quarter.\nThe increase in revenues was due to higher demand for restructuring services in North America and EMEA which included revenue contributions from our August 2019 acquisition in Germany and increased demand for our business transformation and transaction services in North America.\nFrom an industry perspective, during the quarter, we experienced particularly strong demand in the TMT and energy verticals.\nAdjusted segment EBITDA of 48.9% or 23.6% of segment revenues compared to $37.4 million or 23.2% of segment revenues in the prior-year quarter.\nSequentially, revenues increased 14.7% driven by higher demand for both our business transformation and transactions and restructuring services in North America and EMEA.\nTurning to forensic and litigation consulting.\nRevenues increased 6.2% to $147.6 million compared to the prior-year quarter.\nThe increase in revenues was driven by higher demand for our data and analytics services as well as increased demand for our disputes and construction solution services in EMEA and North America.\nAdjusted segment EBITDA of $21.2 million or 14.4% of segment revenues compared to $31.8 million or 22.9% of segment revenues in the prior-year quarter.\nSequentially, revenues decreased 1.8% primarily due to engagements being delayed by both court closures and travel restrictions resulting from the COVID-19 outbreak, particularly in Asia.\nOur economic consulting segment reported revenues of $132.1 million which declined 7.1% compared to the prior-year quarter.\nThe decrease in revenues was largely due to the lower demand for financial economics and non M&A-related antitrust services as well as lower realized rates for international arbitration services which was partially offset by a higher demand for M&A-related antitrust services.\nAdjusted segment EBITDA of $12.7 million or 9.6% of segment revenues compared to $24 million or 16.9% of segment revenues in the prior-year quarter.\nSequentially, revenues decreased 13.7% primarily driven by lower demand and realization for our international arbitration services due to arbitration hearings being postponed in light of the COVID-19 pandemic and lower demand for our financial economic services driven by large engagements that were rolling off.\nIn technology, revenues increased 14.4% and to $58.7 million compared to the prior quarter.\nThe increase in revenues was primarily due to higher demand for M&A-related and global cross-border investigation services.\nAdjusted segment EBITDA of $14.5 million or 24.7% of segment revenues compared to $12.7 million or 24.8% of segment revenues in the prior-year quarter.\nSequentially, revenues increased 14%.\nThe increase in revenues was driven by higher demand for M&A-related and litigation services in EMEA and North America.\nStrategic communications revenues increased 1.2% to $58.4 million compared to the prior-year quarter.\nThe increase in revenues was due to higher demand for public affairs services.\nAdjusted segment EBITDA of $8.8 million or 15% of segment revenues compared to $11.5 million or 20% of segment revenues in the prior-year quarter.\nSequentially, revenues decreased 12% primarily due to a $4.4 million decline in pass-through revenues and lower project-based revenues in EMEA and Asia.\nLet me now discuss a few cash flow -- a few key cash flow and balance sheet items.\nAs is typical, we pay the bulk of our bonuses in the first quarter.\nSo net cash used in operating activities of $123.6 million this quarter compared to $102.1 million used in operating activities in the prior-year quarter.\nThe year-over-year increase in use of cash was primarily due to higher annual bonus payments reflecting our record 2019 financial performance and higher salaries related to the increase in headcount which was partially offset by an increase in cash collected resulting from higher revenues.\nDuring the quarter, we spent approximately $50.3 million to repurchase 450,198 shares of our common stock at an average price of $111.73 per share.\nAs of the end of the quarter, approximately $116 million remained available for stock repurchases under our $500 million stock repurchase authorization.\nTotal debt, net of cash, of $143.2 million at March 31, 2020, compared to $137 million at March 31, 2019, and a negative $53.1 million at December 31, 2019.\nThe sequential increase in total debt net of cash was primarily due to cash used in operating activities resulting from bonus payments as well as an increase in share repurchases.\nI am sure you are all more interested in what impact the global pandemic may have on our ensuing quarters and result in guidance for 2020 than in our Q1 results.\nThe pandemic is certainly affecting our business segments, though in different ways.\nFor our restructuring practice and to a lesser degree, currently, for crisis-driven disputes and communication services, it is resulting in a significant tailwind.\nFor other parts of our business, there is at least a deferral of work, if not, a reduction in demand.\nIt is uncertain how long we will have to proceed with shelter-in-place and similar orders and how deep the impact will be on the overall business environment.\nWe have ran several scenarios shaped by our current expectations.\nI will now take you through these expectations.\nWe expect M&A transactions to be deferred and possibly canceled and litigation to be postponed or possibly settled, causing revenues from some of our service offerings in our FLC, economic consulting and technology segments to decrease in the near term.\nAs Steve mentioned, our practitioners are doing a remarkable job serving our clients from home offices.\nHowever, certain essential aspects of what we do are difficult to do from home which may impact revenue adversely.\nSome examples of the delays or pauses that we are experiencing include: in-court expert witness testimony has been delayed due to court closures in many countries; monitorships in certain jurisdictions, where our teams must be physically on-site to perform their analyses, are unable to continue; and there are moratoriums on certain regulatory or other proceedings, such as a 6-month moratorium in certain insolvent trading rules for directors in Australia which means that many companies that would otherwise have filed for insolvency have stayed in business.\nWe also expect travel restrictions to hinder in-person business development.\nConversely, also worth noting, that business travel all but stopped.\nThere is an associated drop in billable and nonbillable travel and entertainment expenditures.\nResulting from these expectations, our outlook in Q2, and perhaps even into Q3, is that the increased demand for our restructuring services may not adequately offset the negative impact on several of our other businesses.\nOur second quarter earnings per share could be well below the level we reported in Q1.\nThough we are currently expecting some weakness in the second quarter, we are not currently expecting that weakness to persist for the entire year for four reasons.\nFirst, the wave of distress and ensuing default continues to grow and will likely continue even beyond the time frame when work that has been paused or deferred resumes.\nAlready, we are seeing increased demand for our restructuring services in several verticals including retail, energy, mortgage REITs, healthcare, airlines, gymnasiums, restaurants, entertainment and entertainment revenues which may further accelerate.\nSecond, our restructuring practice is also able to draw on resources from other areas within our Corporate Finance segment and possibly, to a lesser extent, from other segments to service these engagements.\nThird, though courts may not get fully back to normal, we are anticipating that the current constraints and travel restrictions will not persist at this level.\nAnd fourth, our expertise is needed as distressed transactions, crisis communications, litigation-related to material adverse effect clauses, disputes related to business interruption and investigations arising from improprieties in the face of this pandemic grow.\nAfter running several scenarios based on the above expectations, while there is an increased range of uncertainty and outcomes, for the full-year 2020, we do not see a basis for changing our guidance range at this time.\nWe will evaluate our guidance again after the second quarter when we will have better information regarding how adversely our business as a whole may be impacted and how much of such decline is offset by the increased demand for restructuring and other services.\nBefore I close, I want to reiterate a few key themes that underscore the strength and potential of our business.\nWe have significantly diversified our offerings over the last several years with investments in areas such as non M&A-related antitrust, international arbitration, business transformation, cybersecurity and public affairs.\nWhile some of these adjacencies may be depressed in the short term, we believe that these areas will come out strong as we emerge on the other side of this pandemic.\nOur balance sheet strength gives us the flexibility to allocate capital and create shareholder value in numerous ways, particularly, we are able to attract and retain the world's leading experts in their respective fields.\nAt our core, we help our clients especially in times of dislocation as they navigate their most complex business challenges.\nAs Steve mentioned, this pandemic will undoubtedly result in a new genre of disputes, investigations and conflicts that our experts are well-positioned to assist with and support.\nLastly, we have a world renowned restructuring practice.\nAnd now, even more than in the recent past, our restructuring services are in great demand.\n",
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"content": "q1 earnings per share $1.49.\nq1 revenue $604.6 million versus refinitiv ibes estimate of $603.3 million.\nq1 adjusted earnings per share $1.53 excluding items.\ntoward end of quarter, we began to see effects of covid-19 materialize.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin, and free cash flow.\nTo ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I have said, are available on the Investor Relations section of our website.\nWith these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nI was just checking to make sure I was on -- off mute for a change.\nLet me start with a couple of words on COVID, even though I'm sure all of you, like I, are so sick of the topic and the issue.\nFor those of us in the U.S., I think we can sense at least the beginning of a change in mood.\nAt least for me, it's wonderful to see the rollout of vaccines, and no -- I don't know anybody who doesn't get incredibly excited when we see our friends or our family was getting vaccinated.\nI think on the other hand, I think most of us know, the story is not as true every place around the world.\nWhen I talk to colleagues on the continent of Europe, story feels somewhat aligned, but also somewhat different.\nThere's a lot of frustration about the slowness of the rollout of the vaccine, and it feels very different.\nIt felt very different last week when I talked with colleagues in Latin America and some colleagues in India.\nIf we look at the statistics, I think we see that global cases globally, total cases right now are actually at the highest levels we have ever seen -- the world has ever seen.\nAnd of course, the rollout of the vaccine, though happening around the world, is happening at very different paces depending on where you sit.\nSo the good news, I think, is that we can all, at this point, see a light you can see that light at the end of the tunnel.\nAnd I'm so excited for those of us for whom that light feels close.\nI just want to also share -- say, mine and my colleagues, hearts and thoughts are also with all of those folks, within our firm and within yours for whom the light still feels further away.\nLet me turn to a brighter subject, which is our quarter, our results.\nIt had some positive surprises in it and had some items that one can't count on recurring, which Ajay will talk about.\nBut even normalized for those, it was a terrific quarter.\nI doubt very many people, 10 years ago or even a few years ago, would have thought that in a period where restructuring as an industry is down substantially, and our restructuring business is well off the peak that we saw last year that we would produce a halfway decent quarter but along a quarter like this.\nBut the quarter was spectacular.\nLet me, however, say, something that we discussed many times, quarters are fickle.\nMarkets can fluctuate up and down.\nBig jobs can come and go.\nCases can settle in continuously investments to drive future growth, although critical for the future can negatively impact quarters in the short term.\nQuarters to me, as excited as you can be about a quarter are, in fact, never good measures of performance for this company, good quarter or bad quarters.\nTo me what is much more powerful than this quarter or any quarterly results is the strength of the longer-term trajectory that we have been on and that I believe we are on as well as the reasons for that grade trajectory.\nCompared to 10 years ago -- forget the quarter.\nCollectively, we have managed to build a business that is much more powerful, much more global, much more diverse than it ever has been.\nAnd that's true for the company as a whole, but even within each segment.\nToday, for example, our business, it's more powerful in restructuring than it ever has been, is also much broader, much more powerful, much breadth of experience and capabilities to serve our clients on a broader range of challenges and opportunities than ever.\nYes, it's powerful in restructuring but also in transactions, in the office of the CFO and so many other services, and you can say the same for all of our business segments.\nThe way we've gotten here is the basis for that, the terrific teams, reinvesting in our core, reinvesting behind our good businesses but also looking where our clients have needs and broadening our business, both our offerings and our geographical footprint.\nThose actions and our collective commitment, the best behind great positions and great people, to me, have changed the fundamental trajectory and resilience for this company.\nTo me, we have shown over the past several years that if we do the right thing, if we do the right thing, if we commit to our -- position our business in a right way, if I support great people for long-term sustainable growth, though we can still have bad quarters, for any extended period of time, we control our destiny.\nWe control our destiny in a way that allows us to serve ever more our clients' most important needs across a wider range of circumstances, not just in things like restructuring but in antitrust, in major M&A and cybersecurity and SPACs and public affairs, in global cross-border investigations and it could go on.\nAnd that to me, that growth and capabilities of our people, that ability to extend our firm to innovate is far more exciting and a much more durable basis for excitement and success than any, any given quarter's results.\nSo I'm not going to talk any more about the quarter, Ajay will.\nIt's been so frustrating to see that the light is there at the end of the tunnel, but see how slow it's been approaching in some places.\nThe emotional fortitude that our people have shown during this period that keep our company moving, to keep connected with each other, to remain supportive to each other, dedicated to our clients has been wonderful to see as the CEO but actually equally as much as just a human being.\nI'm delighted to report year-over-year double-digit revenue growth this quarter.\nOn our last earnings call in February, we said that strong M&A activity would favorably impact our economic consulting, technology and strategic communications segments as well as our transactions business within our corporate finance and restructuring segment.\nConversely, we had also expected weakness in demand for our restructuring services.\nBoth trends occurred and were deeper than we anticipated.\nAnd in Forensic and Litigation Consulting, or FLC, the segment which was most impacted by COVID-19 in 2020, we expected continued gradual improvement.\nInstead in the quarter, results rebounded faster than we anticipated as we were able to resume work on many matters where trials were rescheduled or resumed, particularly in North America.\nObviously, we are very pleased with these results.\nFirst quarter of 2021 revenues of $686.3 million were up $81.7 million or 13.5%.\nGAAP earnings per share of $1.84, compared to $1.49 in the prior year quarter.\nGAAP earnings per share included $2.3 million of noncash interest expense related to our convertible notes, which decreased earnings per share by $0.05.\nAdjusted earnings per share of $1.89, which excludes the noncash interest expense, compared to $1.53 in the prior year quarter.\nNet income of $64.5 million, compared to $56.7 million in the prior year quarter.\nThis increase was due to higher operating profits in our economic consulting, FLC, and technology segments, which was partially offset by lower operating profits in corporate finance and restructuring.\nSG&A of $126.5 million was 18.4% of revenues and compares to SG&A of $127 million or 21% of revenues in the first quarter of 2020.\nSG&A was flat year over year, primarily because lower travel and entertainment expenses offset higher costs related to the increase in nonbillable headcount.\nDouble-digit revenue growth and flat SG&A expenses more than offset higher billable headcount-related costs, resulting in first-quarter 2021 adjusted EBITDA of $99.5 million, an increase of 19.5%, compared to $83.2 million in the prior year quarter.\nOur first-quarter 2021 effective tax rate of 23.9%, compared to our tax rate of 22.5% in the first quarter of 2020.\nFor the balance of 2021, we continue to expect our effective tax rate to be between 23% and 26%.\nWeighted average shares outstanding or WASO for Q1 of 35.1 million shares declined 3.1 million shares, compared to 38.2 million shares in the first-quarter 2020.\nFor the quarter, our convertible notes had a potential dilutive impact on earnings per share of approximately 450,000 shares in WASO, as our share price on average of $118.44 this past quarter was above the $101.38 conversion threshold.\nBillable headcount at the end of the quarter increased by 562 professionals or 12.3%.\nThis increase is largely due to 34.9% billable headcount growth in corporate finance and restructuring, which includes both organic hiring as well as the addition of 151 billable professionals from the acquisition of Delta Partners in the third quarter of 2020.\nSequentially, billable headcount increased by 75 professionals or 1.5%.\nNow turning to our performance at the segment level.\nIn corporate finance and restructuring, revenues of $226.2 million increased $18.5 million or 8.9% compared to the prior year quarter.\nAcquisition-related revenues contributed $16 million in the quarter.\nExcluding acquisition related, revenues were essentially flat, primarily because an increase in transaction-related revenues globally was offset by lower demand for restructuring services, particularly in North America.\nAdjusted segment EBITDA of $37.4 million or 16.6% of segment revenues, compared to $48.9 million or 23.6% of segment revenues in the prior year quarter.\nThe year-over-year decrease in adjusted segment EBITDA was due to flat revenues with a 34.9% increase in billable headcount and related compensation expenses and a 10 percentage point decline in utilization.\nTurning to forensic and litigation consulting, revenues of $150.8 million increased 2.2% compared to the prior year quarter.\nThe increase in revenues was primarily due to higher demand for health solutions and investigation services, which was partially offset by a $4.1 million decline in pass-through revenues and lower realized pricing for our data and analytics services.\nAdjusted segment EBITDA of $29.4 million or 19.5% of segment revenues, compared to $21.2 million or 14.4% of segment revenues in the prior year quarter.\nThe increase in adjusted segment EBITDA was primarily due to higher revenues with higher utilization, coupled with a decline in SG&A expenses and direct costs, primarily related to the lower pass-through revenues.\nSequentially, FLC revenues increased $23.6 million or 18.6%, and adjusted segment EBITDA improved $21.8 million, reflecting increased demand across all of our core offerings, including previously backlogged work and a 9 percentage point increase in utilization.\nOur economic consulting segment reported record revenues.\nRevenues of $169.3 million were up 28.1%, compared to the prior year quarter.\nThe increase in revenues was due to higher demand for our non-M&A-related antitrust and M&A-related antitrust services, as well as higher realized pricing and demand for our international arbitration services.\nAdjusted segment EBITDA of $26.6 million or 15.7% of segment revenues, compared to $12.7 million or 9.6% of segment revenues in the prior year quarter.\nThe increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by higher compensation related to an increase in variable compensation and a 9.9% increase in billable headcount.\nIn technology, we also had a record quarter.\nRevenues increased 35.3% to $79.5 million compared to the prior year quarter.\nThe increase in revenues was due to a surge in demand for M&A-related second request services.\nAdjusted segment EBITDA of $21.6 million or 27.2% of segment revenues, compared to $14.5 million or 24.7% of segment revenues in the prior year quarter.\nThe increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation.\nSequentially, Technology revenues increased $20.8 million or 35.5%, and adjusted segment EBITDA improved $11.4 million, primarily due to a large second request engagement.\nStrategic communications revenues increased 3.7% to $60.5 million compared to the prior year quarter.\nDuring the quarter, we experienced increased demand for our public affairs services, which was offset by a $2 million decline in pass-through revenues.\nAdjusted segment EBITDA of $10.4 million or 17.2% of segment revenues, compared to $8.8 million or 15% of segment revenues in the prior year quarter.\nIncrease in adjusted segment EBITDA was primarily due to lower SG&A expenses.\nLet me now discuss a few cash flow -- few key cash flow and balance sheet items.\nAs is typical, we pay the bulk of our bonuses in the first quarter.\nNet cash used in operating activities of $166.6 million, compared to $123.6 million in the prior year quarter.\nThe year-over-year increase in net cash used in operating activities was largely due to an increase in salaries related to headcount growth and higher annual bonus payments, which was partially offset by an increase in cash collected.\nDuring the quarter, we spent $46.1 million to repurchase 421,725 shares at an average price per share of $109.37.\nAs of the end of the quarter, approximately $167.1 million remained available for stock repurchases under our current stock repurchase authorization.\nTotal debt net of cash of $252.8 million at March 31, 2021, compared to $143.2 million at March 31, 2020, and $21.3 million at December 31, 2020.\nThe sequential increase was primarily due to $170 million of net borrowings under our bank revolving credit facility to fund cash used in operating activities primarily for annual bonus payments.\nTurning to guidance, first, let me remind you of the guidance for 2021 we provided in February.\nRevenues of between $2.575 billion and $2.7 billion.\nEPS of between $5.60 and $6.30.\nAnd adjusted earnings per share of between $5.80 and $6.50.\nI believe, at this juncture, it is important that I shared with you why we believe the exceptional strength we have demonstrated in Q1 may not necessarily repeat in subsequent quarters this year.\nFirst, we are, for the most part, a fixed-cost business.\nAs people and real estate represent some of our largest expenditures, these costs are not variable in the short term.\nSo small shifts in revenues have a much larger impact positively or negatively on EPS.\nSecond, we are at our core a large job firm.\nAnd when matters end, they may not immediately be replaced.\nThis quarter, for example, our results were boosted by several exceptionally large engagements that were driven by record levels of M&A activity that may not be sustained through the year.\nIn technology, for example, we had one engagement, which concluded during the quarter.\nThat represented over 20% of of total quarterly segment revenues.\nIn economic consulting as well, we have several large engagements that are expected to conclude during the year.\nEven our restructuring revenue this quarter was boosted by revenue from large matters that began last year and have either now ended or will likely end this year.\nMeanwhile, credit markets remain in an accommodative mode.\nAnd hence, the number of stressed and distressed issues remain low.\nMoody's now expects the trailing 12-month Speculative Grade Global Default Rate to fall to 3.2% by the end of the year, down from 6.8% forecast they provided in December.\nAnd Fitch, which measures defaults by dollar volume now expects a high-yield default rate for the U.S. of 2% by year end.\nThese forecasts point to lower demand for our restructuring services for at least the balance of this year.\nThird, this quarter, we were delighted by results in FLC, our business most negatively impacted by COVID in 2020.\nThat being said, with the continued uncertainty of the pandemic and certain geographies experiencing third and fourth waves of infections, we remain cautious as we may be impacted in certain locations by COVID-19 related court closures and travel restrictions, which can impact our ability to serve our clients.\nFourth, our nonbillable travel and entertainment expenses are typically around 1.5% of revenue.\nAt the moment, this expense is largely nonexistent as travel and entertainment is severely curtailed in most geographies.\nLastly, our fourth quarter is typically our weakest quarter with the holiday season and compensation true-ups at the end of the year.\nIn 2020, our fourth quarter results were exceptional, in part, because of the implementation of a cross-border tax strategy.\nThe more rational expectation would be for a seasonally weaker Q4 as many of our practitioners take well-earned vacations.\nNow with all those risks considered, clearly, the great performance in Q1 gives us a very good headstart for achieving our guidance.\nOnce we have another quarter under our belt, at the end of the second quarter, we will revisit guidance, as is typical, to see if any changes are warranted.\nBefore I close, I want to reiterate a few key themes that underscore the attractiveness of our business.\nFirst, we have demonstrated that we have a tremendous collection of businesses that make us a very resilient company.\nWe are uniquely positioned to support our clients as they navigate their most complex business challenges regardless of business cycle.\nSecond, more than ever, I am convinced that the key to our success is the strength of our people and their relationships, both of which are exceptionally strong.\nThird, our leadership team is focused on driving growth through strong staff utilization.\nAnd finally, our balance sheet is enviable.\nAnd we have demonstrated the ability to boost shareholder value through share buybacks, debt reduction, organic growth, and acquisitions.\n",
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"content": "q1 adjusted earnings per share $1.89.\nq1 earnings per share $1.84.\nq1 revenue rose 13.5 percent to $686.3 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin, and free cash flow.\nTo ensure disclosures are consistent, these slides provide the same details as they have historically, and as I have said, are available on the investor relations section of our website.\nWith these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nAnd Mollie, for once I've got the mute off before you turned it over to me.\nI obviously hope all continues to be well with each of you and all of your loved ones in these complicated times.\nAjay, in a moment, will take you through the details of the quarter.\nExtraordinary efforts over the past few months to support our clients and each other from home and the major efforts over the last few years that have put us in a position such that even in these difficult times, we are seen as highly relevant resources for our clients.\nSo I'd like to start with that, and then with your permission, also share a couple of perspectives on the future, both the inherent near-term uncertainty these days for a number of our businesses, but also the enormous confidence that we have in the medium- and long-term prospects for all of our businesses.\nSo let me start with the results.\nOne way to look at them, a pessimistic way to look at them, is to note that our adjusted earnings per share of $1.32 is down significantly from a year ago.\nAnother way to look at it, however, is to note first that we happen to be cycling an all-time record quarter for adjusted EPS, so the comparison is a difficult one.\nBut second and more important, if you step back and think about it, in the face of COVID, in the face of some parts of our businesses being at record low levels of utilization due to travel restrictions, court closures, and other challenges arising from COVID, and in the face of a substantial amount of extra capacity that was added pre-COVID, we still managed to deliver the fifth best adjusted earnings per share ever in the history of this company and the highest revenue quarter ever.\nSo I am extraordinarily positive about the results and I hope you are too.\nAs we discussed during the last quarter's earnings calls, we expected this to be a slow quarter.\nAnd parts of our business were, in fact, extraordinarily slow.\nObviously, a number of parts of FLC, but in truth, parts of every segment.\nAnd yet overall, we have been able to deliver incredibly solid results.\nSo let me just try to describe a little bit of how that happens.\nIn part, it happens because the markets not only take away, they give.\nThough discretionary spend on consulting services is, of course, down considerably, and as I think you know, deal flow is reduced and courts' closures meant litigation was postponed, the COVID crisis, and resulting economic turmoil created need as well.\nNeed for restructuring, for crisis communication, for crisis litigation support.\nSo some of what we are seeing is simply a major shift in client needs and spend versus simply a reduction.\nSo some of these results are market-driven.\nTo me, what is much more powerful and much more relevant to our long-term efforts to build this enterprise for our people and for you, our shareholders, is to talk about the part of the results that are not due to market forces, but rather due, in recent times to the incredible efforts by our teams to work effectively from home, together with, over the last several years, the efforts of our people to strengthen our position, to extend into new adjacencies and geographies, and to anticipate and deliver on our clients' needs.\nSo I'd like to try to illustrate that duality.\nFirst fin corp, and where you obviously, see incredible second-quarter results, but also into our other businesses in econ and FLC and strat comms and tech as well.\nLet me start with corp fin.\nI think -- I suspect that anyone in restructuring today is busy.\nAnd of course, most of you remember that corp fin 10 years ago in the midst of a market boom had record results.\nSo it's obviously easy to simply say, wow, the markets are up and so is FTI's corp fin business as well.\nFor me, framing this point that way misses critical, powerful points.\nPoints that suggest, though, obviously, we are affected by markets, we are not forks on a wave.\nOver time, we determine our destiny and part of what we are seeing is the markets, but part of what we are seeing is the result of actions that our teams have taken over time, not simply the markets.\nA couple of ways to see that, one way is to recall that corp fin -- our corp fin business was growing and thriving even before this market boom.\nIn fact, during 2018 and 2019, when the restructuring market was hovering around all-time lows, we delivered record revenues, up 17% and 28%, respectively.\nThat was no way we were riding, that was us lifting us.\nIt was the result of our teams' investments and incredible efforts that drove those results.\nEqually as powerful is to not just look at how similar we are in corp fin to where we were 10 years ago, but to look at how we've changed since then, how we've enhanced our positions.\nTen years ago, during the last recession, we already had a powerful, strong corp fin business.\nBut we were primarily a U.S. business at that point in time.\nWe were in London, but we were probably No.\nWe didn't have a German business.\nWe didn't have an Asian or Australian business.\nWe had a smaller business in Latin America, and even in the U.S., we were primarily known as the best creditor rights business.\nWe did, in fact, do company side work, but we were known primarily for our middle-market company side capabilities and tended not to win the big company side cases there.\nFast-forward today, in North America, we are still the No.\n1 creditor rights business.\nBut this year, we've already won three of the biggest company side jobs in North and South America.\nIf you look outside of North America, we are no longer No.\n4 in London, we're now No.\nWe have power on the continent we didn't have 10 years ago with the addition of Andersch in Germany and the addition of other terrific professionals elsewhere in Europe.\nWe have the leading position in Hong Kong, a strengthened practice in Australia.\nAnd now, a leading practice in Latin America with people on the ground in places like Mexico and Brazil.\nAnd that's all before we talk about what we've built in corp fin that goes well beyond restructuring, our practices in OCFO, in transactions, in carve-outs, in performance improvement, in merger integration, etc.\nThere are waves in our business.\nBut what our teams have done is to take a fundamentally strong U.S. business, and rather than sit on it, they've made it fundamentally stronger, turning us into a powerful, global, multidimensional player.\nOur success today reflects not just the markets, but the changes that our teams have driven and that is true for corp fin, but it's also true for our other segments as well.\nI won't be as long-winded on the other segments, but let me touch on them.\nIn strat comms, for those of you who have been long-term shareholders, you may remember that 10 years ago when the recession hit, that business, in large part, melted down.\nNot because we weren't good, but because we -- we were focused on one part, an important part, but a small part of our clients' core needs.\nToday, some parts of this business are also extraordinarily slow, but critically, other parts are soaring.\nWith the result that if you exclude the negative impact from FX and have through revenues and look at strat comm normalized for those, our strat comm revenues are actually up for the first half of 2020.\nAnd I don't know of any other competitor in that industry who can say that.\nSimilarly, if you look at econ, 10 years ago, we already had a fabulous econ business, but it was primarily a fabulous -- fabulous North American business.\nToday, we still have a fabulous business in the U.S., but now, we have a fabulous business in multiple locations around the world.\nAnd as a result, the time when litigation, investigations, and M&A transactions are down, and some have been delayed and travel is restricted, and you can't get to your clients, we have a business that even with some slow parts is overall even more in demand.\nAnd even in FLC, where, as you can see from our results, we have had a drastic decline in revenues in a number of places due to some large jobs rolling off and the effect of the travel restrictions and the delays in litigation and investigations.\nEven there, the breadth of the conversations we are having across multiple dimensions with clients remains robust, reflecting the investments our teams have made to increase the depth and the reach of our offerings, from construction to cyber to investigations to data and analytics in multiple places around the world.\nSo, yes, what you are seeing on the negative and the positive side is somewhat a function of markets.\nMarkets fluctuate up and down and those affect us.\nTo me, what is much more powerful and more durable is the nonmarket-driven pieces, the way our teams have invested to control our destiny, by growing core capabilities that allow us to serve the most important client needs in a wide range of circumstances.\nAnd that to me is a more powerful and the more exciting part of the results you're seeing from this company.\nLet me see if I can tie those observations about the quarter in our history to what we see going forward.\nFirst of all, the most obvious point, but one I have to underscore is something I'm sure you all believe as well is that there is tremendous uncertainty in the world.\nI don't think anyone can definitively say what the impact of COVID will be over the longer term or even in the medium term on things like bankruptcy, M&A, litigation trends, or the economy more generally, or what the specific impact looks in different paces, in Latin America, the U.S., in India, in Asia, the U.K. So I believe we have to recognize there's clearly just a lot of uncertainty in the world, particularly, in the short term.\nAnd so therefore, you can run a lot of scenarios in terms of how our business is going to perform.\nFor us, you could run an incredibly negative scenario.\nYou could say, wow, what would happen if bankruptcies slowed down dramatically in the businesses that are slow, stays slow?\nThat would be a pretty negative scenario.\nWe don't believe that's the most likely scenario.\nAs Ajay will talk about, our current belief is the strong businesses are likely to stay strong.\nAnd our businesses that have been weak so far this year are likely to see a recovery -- a gradual recovery, but a recovery.\nAnd that's how we came to the judgment for the rest of the year that reaffirms our guidance.\nBut we have to underscore the concept of uncertainty here.\nIn these COVID days, in truth, nobody knows the depth and duration of the impact we may see.\nAnd although we have enormous confidence in all of our businesses over any medium term, you could have a scenario where government actions cause a temporary pause on bankruptcies in some places around the world.\nAnd of course, you can always have the random idiosyncratic factors, like, you lose some big jobs instead of winning them.\nSo please recognize, although we are reaffirming guidance, we also are and need to underscore just how uncertain the world is now.\nLet me, therefore, instead talk to what I believe is more important, which is where based on the efforts our team have made and are making, we can drive this business in the medium and longer term.\nBecause over the medium and longer term, I believe markets matter but more at the core.\nWe control our destiny.\nAs we just talked about my experience and I believe our results have shown that if you do the right things over a medium-term period, even though quarters can fluctuate and market conditions fluctuate, through the fluctuations, you build the business.\nSo we focus a lot on making sure we're thinking hard about what the right things are.\nSo let me describe a few of them we talk about.\nFirst of all, not most critically, but importantly, focusing on knowing the difference between a bad business and a good business that happens to be hurt by some temporary factors, exogenous factors.\nWe can't mix that up.\nWe can't take a good business like our FLC business or our EFC business and overreact to temporary exogenous factors.\nSecond, it's about being willing to support those good businesses during slow times, and indeed, invest in them even in slow quarters.\nIn fact, in general, in some slow quarters, it's especially important to be willing to invest in talent because it's oftentimes the case that precisely in slow quarters, the most great talent is available.\nAnd to think about our history here, as we've talked about a few times, some of the most important outside hires we've done have been during slow times in our business.\nWe got terrific cyber capabilities during a period where FLC was slow.\nWe acquired CDG, which augmented our company side capabilities in the U.S. at a time when corp fin was slow.\nAnd as you may have noticed, we just closed the deal with Delta Partners, which is in the non-restructuring part of CF at a period when the non-restructuring part of CF is not booming.\nWe made each of those investments because we could find great talent.\nTalent that we thought would collaborate terrifically with the rest of our firm at those point in time.\nTalent we had confidence in, and it has proven, at least so far in the first two cases, that if you get great talent whenever it is available, over any medium term, it pays for itself, even if at that point in time that business is slow.\nOur core belief, therefore, is, notwithstanding fluctuations in earnings.\nWe always need to be focused on attracting, developing, and betting behind terrific talent, whether it is recruited or it's homegrown.\nMy experience is that if one does that, if we continue to do that, we will continue to do the essence of building a professional services firm.\nBuild great businesses, extend those businesses into new adjacencies, extend our core positions to new places, grow our brand, attract, grow, and retain, and develop great people.\nAnd as a result, be more relevant for your clients and take market share.\nAnd thereby, you build a firm and make sure people proud to be there and attracts other great people.\nAnd through that, ultimately, but also powerfully, delivers for you, our shareholders.\nThat is the path we have been on these past few years, and I believe in the face of COVID, it is even more important path to commit to stay on going forward.\nSo with that, let me turn this over to Ajay to take you through the quarter in more detail.\nBeginning with the second-quarter results.\nAs Steve said, we reported record quarterly revenues and our results were better than we anticipated at the time of our last earnings call.\nConsidering the impact of the COVID-19 pandemic on us, our clients, and our employees, we are very grateful for these results.\nRevenues of $607.9 million were up $1.7 million or 0.3%, compared to revenues of $606.1 million in the prior-year quarter.\nAs expected, our revenue growth year over year was driven by record quarterly performance in our corporate finance & restructuring segment because of the surge in demand for our restructuring services.\nGAAP earnings per share of $1.27 in 2Q '20, compared to earnings per share of $1.69 in 2Q '19.\nAdjusted earnings per share for the quarter were $1.32, which compared to $1.73 in the prior-year quarter.\nThe difference between our GAAP and adjusted earnings per share in 2Q '20 reflects $2.3 million of non-cash interest expense related to our convertible notes, which decreased GAAP earnings per share by $0.05.\nOur convertible notes had a potential dilutive impact on earnings per share of approximately 507,000 shares and weighted average shares outstanding for the quarter as our average share price of $121.03 this past quarter was above the $101.38 conversion threshold price at maturity.\nWorth noting, the trigger for conversion of our convertible notes prior to maturity was not met during the quarter.\nSecond-quarter 2020 net income of $48.2 million, compared to net income of $64.6 million in the prior-year quarter.\nThe year-over-year decrease was largely due to higher compensation, which was primarily related to an 18.2% increase in billable headcount and higher variable compensation, which was partially offset by a decline in SG&A expenses and a lower tax rate.\nSG&A expenses for 2Q '20 of $126.9 million were 20.9% of revenues.\nThis compares to SG&A of $129.9 million or 21.4% of revenues in the second quarter of 2019.\nThe decrease was primarily due to lower travel and entertainment expenses resulting from COVID-19-related travel restrictions, which was partially offset by an increase in bad debt.\nSecond-quarter 2020 adjusted EBITDA of $75.8 million or 12.5% of revenues, compared to $97.2 million or 16% of revenues in the prior-year quarter.\nOur effective tax rate for the second quarter of 23.1%, compared to 24.8% in the prior-year quarter.\nThe 1.7% decline was primarily due to a favorable discrete tax adjustment related to share-based compensation.\nFor the balance of 2020, we expect our effective tax rate to range between 25% and 27%.\nBillable headcount increased by 715 professionals or 18.2%, compared to the prior-year quarter.\nSequentially, billable headcount was up by 65 professionals or 1.4%.\nWorth noting, during the quarter, 66 professionals focused on performance analytics, permanently transferred from our forensic and litigation consulting segment to our business transformation and transactions practice within our corporate finance & restructuring segment.\nNow, I will share some insights at the segment level.\nIn corporate finance & restructuring, record revenues of $246 million increased 29.5%, compared to the prior-year quarter.\nThis terrific growth occurred despite a decline in success fees relative to the extraordinary success fees in the prior-year quarter and lower business transformation and transaction services revenues.\nHigher demand and realization for our restructuring services, which includes revenues related to our acquisition of Andersch AG in August of 2019, resulted in the significant increase in segment revenues.\nWorth noting, during the quarter, we were engaged in some of the largest company and creditor-side restructuring mandates, particularly, in the retail and consumer, energy, automotive, airline, telecom, and financial services sectors.\nAdjusted segment EBITDA of $76.3 million or 31% of segment revenues, compared to $50.5 million or 26.6% of segment revenues in the prior-year quarter as increased revenues more than offset higher compensation related to the 34.7% increase in billable headcount and higher variable compensation.\nOn a sequential basis, corporate finance & restructuring revenues increased $38.3 million or 18.4% as growth in our restructuring practice was partially offset by a decline in demand for our business transformation and transaction services.\nRevenues of $106.4 million decreased 27.1%, compared to the prior-year quarter.\nThe decrease in revenues was primarily driven by lower demand for investigations and dispute services, in part because certain matters were at least deferred due to travel restrictions to client locations, court closures and delays.\nAdjusted segment EBITDA was a loss of $9 million, which compared to adjusted segment EBITDA of $28.2 million or 19.4% of segment revenues in the prior-year quarter.\nThe year-over-year decrease in adjusted segment EBITDA was due to lower revenues with lower staff utilization and higher compensation related -- primarily related to a 9.4% increase in billable headcount, which was only partially offset by a decline in SG&A expenses.\nSequentially, FLC revenues decreased $41.2 million or 27.9% as we experienced lower demand for our investigations, disputes, and data and analytics services.\nIn addition to the COVID-19-related impacts that I previously mentioned as negatively impacting revenues, a few large investigations ended during the second quarter.\nOur economic consulting segment's revenues of $151.5 million decreased 2.6%, compared to the prior-year quarter.\nDespite the impacts of COVID-19, we were able to continue work on large M&A-related antitrust engagements and achieved higher realization.\nThis increased demand for M&A-related antitrust services was more than offset by lower demand for financial economics and non-M&A-related antitrust services, as well as, lower realization for non-M&A-related antitrust and international arbitration services, compared to the prior-year quarter.\nAdjusted segment EBITDA of $21.7 million or 14.3% of segment revenues, compared to $23.3 million or 15% of segment revenues in the prior-year quarter.\nThe year-over-year decrease in adjusted segment EBITDA was due to lower revenues, as well as, higher SG&A expenses, primarily related to an increase in bad debt, which was partially offset by lower variable compensation.\nSequentially, economic consulting's revenues increased $19.4 million or 14.6% due to increased realization and demand for our M&A-related antitrust services.\nIn technology, revenues of $47.1 million decreased 15.4%, compared to the prior-year quarter.\nThe decrease in revenues was primarily due to lower demand for litigation and global cross-border investigation services, in part arising from COVID-19-related delays of investigations and travel restrictions, as well as, lower revenues related to the completion of our transition services associated with the September 2018 Ringtail divestiture.\nAdjusted segment EBITDA of $6.4 million or 13.7% of segment revenues, compared to $12.9 million or 23.1% of segment revenues in the prior-year quarter.\nThe decrease in adjusted segment EBITDA was due to lower revenues and higher compensation, primarily related to a 19.5% increase in billable headcount.\nOn a sequential basis, technology revenues decreased $11.6 million or 19.8% because of decreased demand for global cross-border investigations and M&A-related services.\nRevenues in the strategic communications segment of $56.9 million decreased 3.8%, compared to the prior-year quarter.\nExcluding the impact of FX, the decrease in revenues was primarily due to a $1.9 million decline in pass-through revenues, which include billable travel and entertainment expenses, client event costs, and media buys.\nThe decrease in revenues was partially offset by higher demand for public affairs and financial communications services.\nAdjusted segment EBITDA of $10 million or 17.6% of segment revenues, compared to $10.5 million or 17.7% of segment revenues in the prior-year quarter.\nThe decrease in adjusted segment EBITDA was due to higher compensation, primarily related to a 13.2% increase in billable headcount, which was partially offset by a decline in SG&A expenses.\nSequentially, strategic communications revenues decreased $1.5 million or 2.6%, primarily due to a decline in pass-through revenues, which was largely offset by higher demand for services provided to clients managing through urgent communication projects related to restructuring and financial issues.\nLet me now discuss key cash flow and balance sheet items.\nWe generated net cash from operating activities of $153 million and free cash flow of $147.3 million in the quarter.\nTotal debt, net of cash, decreased $100.1 million year over year from $147.1 million at June 30, 2019, to $47 million at June 30, 2020.\nDuring the quarter, we repurchased 470,853 shares at an average price per share of $108.41 for a total cost of $51 million.\nIn the last 12 months, ended June 30, 2020, we have repurchased 1.27 million shares at an average price per share of $107.78 for a total cost of $137.1 million.\nOn July 28, 2020, our board of directors authorized an additional $200 million for share repurchases.\nAs of July 28, 2020, we have re -- we have purchased 8.2 million shares pursuant to the repurchase program at an average price per share of $54.90 for an aggregate cost of approximately $450.4 million.\nWe have approximately $249.5 million remaining available for share repurchases under the program.\nTurning to our guidance.\nIn several prior quarterly calls, we have shared with you that a small change in revenue for us can have an outsized impact on earnings per share because of the relatively fixed cost nature of our business and associated margins.\nThis cuts both ways as was abundantly evident this quarter in a positive way for our corporate finance segment and a negative way for our FLC segment.\nOur decision to reaffirm guidance for the year, even in this very uncertain time, is based not only on our results to date, but also on several assumptions about the balance of the year.\nFirst, we expect elevated demand for our restructuring services at least for the balance of this year, driven by strong demand in several verticals, including oil and gas exploration, production and drilling, automotive, department stores, financials, telecommunication services, healthcare, airlines, restaurants, and entertainment, and entertainment venues.\nSecond, our guidance assumes an improvement, though very gradual, in utilization for many of our practices across several segments, but in particular, for our FLC segment.\nWe are starting to see virtual depositions and arbitrations being rescheduled and some paused on-site client work starting to resume.\nI caution, though, that this situation is fluid as the majority of our client premises are still not open.\nWe are restricting travel for our employees even where airlines are operating or where cross-border travel is allowed.\nBusiness development is hampered by not being in-person and backups in court proceedings may push certain work into next year.\nThird, we believe this pandemic will continue to result in a new genre of disputes, investigations, and conflicts that our experts are well-positioned to assist with and support.\nOur expertise is needed as distressed transactions, crisis communications, litigations related to material adverse effect clauses, disputes related to business interruption, and investigations arising from improprieties grow.\nFourth, with business travel all but stopped, there is an associated drop in billable and non-billable travel and entertainment expenditures.\nFifth, our guidance is for a finite period, the next two quarters.\nAnd we typically have lower utilization in the fourth quarter as many of our professionals may take time off for the holidays in the fourth quarter.\nThis year, in particular, this impact maybe even more pronounced than usual.\nBefore I close, I want to reiterate a few key themes that underscore the strength and potential of our business.\nThe relative strength and stability of our collective grouping of businesses shined through this quarter.\nDespite a global pandemic, we reported record revenues and reaffirmed guidance.\nWe continue to attract talent because our colleagues are working on the highest profile engagements in their fields across the globe and we believe our investments in talent with higher utilization will drive profitability.\nAs Steve mentioned, over the years, we have both deepened our core capabilities, for example, in EMEA, Asia, and Australia in corporate finance and expanded into adjacencies, such as non-M&A-related antitrust, business transformation, cybersecurity, and public affairs.\nWe continue to believe that these areas will come out strong as we emerge on the other side of this pandemic.\nOur business generates tremendous free cash flow as evidenced by the $100.1 million reduction in net debt over the last 12 months despite us repurchasing $137.1 million worth of our shares over the same time frame and making a well-timed acquisition of a leading restructuring business in Germany.\nOn top of this, our balance sheet strength gives us the flexibility to continue to create shareholder value in numerous ways.\nWorth noting, following the close of the second quarter, on July 1st, 2020, we closed the acquisition of Delta Partners.\nWe believe this acquisition, along with our already very strong position in the technology, media, and telecom vertical, makes us one of the preeminent TMT-focused consulting practices in the world.\nAnd today, we announced a $200 million increase to our share repurchase authorization.\n",
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"content": "compname reports q2 earnings per share $1.27.\nq2 earnings per share $1.27.\nq2 revenue $607.9 million versus refinitiv ibes estimate of $563.9 million.\nq2 adjusted earnings per share $1.32 excluding items.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin and free cash flow.\nTo ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I've said, are available on the Investor Relations section of our website.\nWith these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nWell, I'm sure you've all noticed that it's the end of October and COVID is still with us.\nAnd I'm guessing that's just as troubling for you and as it is for me.\nI think most of us knew during the summer that the evidence suggested there would be a good chance that COVID would still be with us at this point.\nI don't think any of us really expected that it would be completely gone, but I guess it's -- that most of us secretly hoped it would, and at least had some expectations it would be better than it is today.\nOur company, as I'll talk about in a moment, we're in terrific shape.\nWe're not in perfect shape.\nThere's no company during COVID that's in perfect shape, but we are in terrific shape.\nAnd that has only been possible because of the extraordinary efforts by our people, efforts to support clients, to support each other from home, efforts that collectively have put us in a strong position not only to weather COVID, but in my view, to soar coming out of this.\nAnd today, as usual, I will let Ajay take you through the details of the quarter, but let me upfront share a couple of comments: one on the revision to guidance; and secondly, and at least as important, why I continue, notwithstanding that revision, to be so positive about this company's future.\nLet me start with the adjustment to guidance.\nIt is really essentially an adjustment to our expectations about the fourth quarter.\nThe third quarter, though different from expectations and some specifics, did not come out too different from what we expected in aggregate.\nBut at the end of the last quarter, we had hopes that the evolution of COVID will allow for a stronger fourth quarter than we do today.\nSo, let me go into that in a little more detail.\nAs you know, I think, our fourth quarter results are typically our weakest, considerably less strong than the prior three quarters.\nFor example, if you look at the last five years, our fourth quarter earnings per share is roughly two-thirds of our prior three quarters because of holidays and some end-of-year factors.\nThis year, we thought the evolution of COVID might allow for better.\nBack in July, we suspected that COVID would still be here in the fourth quarter.\nBut we, and I'm guessing most of you, did not believe it was going to be as present as it is today.\nAnd therefore, we hoped for a somewhat more rapid unfolding of the opening of courts, more rapid derejudification of the legal system, more of an opening of cross-border travel, all of which, of course, would allow a faster return to normal for some of the businesses that were hurt by COVID.\nWe also thought that if that didn't happen at the speed we hoped for, onto the other side, we would see a continuation of the extraordinary strength we had in our restructuring business in the second quarter.\nWhat has happened in reality is both of these, but unfortunately to a somewhat lesser extent than we had expected.\nFirst, in terms of just the businesses that were negatively affected by COVID, they are in large part starting to come back.\nWe have started to see some signs of improvement in FLC and in other parts of our business that have been affected by travel restrictions and court closures.\nBut that recovery is at a considerably slower pace than we had hoped.\nIt's just not the hockey stick we expected to see begin in the third quarter and continue into the fourth quarter.\nSecond, in terms of the restructurings and bankruptcies, last quarter, if you recall, we talked about the fact that there is uncertainty -- there was uncertainty around that.\nWe talked about how we could, at a scenario where the government actions caused a temporary pause on bankruptcies and restructurings, at least in some parts of our world.\nWe believe then and continue to believe now that the restructuring market is going to be here for a considerable amount of time.\nBut we also understood that there could be waves because of government policies.\nFor example, the aggressive monetary stimulus that we have seen can affect or at least seriously delay bankruptcies and restructuring activity.\nWhat has happened here recently is that market forces began to play out to be more in favor of loose money and against restructuring activity than we had expected, not extraordinarily worse, but around-the-edges worse.\nYou can see that in our third-quarter results, but you can also see it very vividly in external data.\nNotably, if you look at, for example, August and September Chapter 11 filings and defaults, they fell to just over half the level that they were between May and July.\nAnd I think the reason for that is essentially the loose money.\nThe loose money has allowed for an unprecedented issuance of speculative-grade bonds this year and at remarkably reasonable rates.\nIf you look at the rates right now, they are also not too different from where they were pre-COVID, and the spreads compared to March have halved.\nAnd that has made a difference in the third quarter, and it's obviously making a difference at this point in time.\nThe consequence of that is not that our restructuring business is doing poorly.\nTo the contrary, it is still experiencing considerably higher demand than it did pre-COVID, but it is just not as strong as we had hoped and expected back in July.\nAnd it is not as strong enough to offset the slower pace of recovery we are seeing in the other parts of our business.\nSo the combination of COVID being more significant and longer impact on parts of our business and the loose money have a slowing effect on the pace of bankruptcy filings and other restructuring activities, together, means that we just no longer feel confident in an anomalous fourth quarter, a fourth quarter that's higher or as high as the first three quarters of the year.\nAnd if you build in a more typical ratio of fourth quarters compared to prior quarters, you get to the $5.25 to $5.75 range for adjusted EPS, that Ajay will now talk about, as opposed to the $5.50 to $6 that we had before.\nSo we've moved our guidance there.\nThat's all I was going to say on guidance.\nLet me move on to what, I guess, is the next set of questions on many people's minds, which is, so what does that mean going forward?\nHow does that play out?\nAnd I'm guessing there are two versions of that question.\nOne is, how does that play out near term?\nAnd two, does that change the fundamental trajectory of the company longer term?\nLet me talk to both of those with a caveat that perhaps counter-intuitively, it is easier to predict the medium and long term than it is the short term.\nI'm sure that's also pretty counterintuitive, but that's my experience in this business.\nAnd the reason for that is, in the short term, we can be and are buffeted by factors such as those I just described, factors that are external to us, loose money, M&A trends, regulatory activity, etc.\nWhereas my view of our history is that over the long term in this business, over the long term whether we perform or not, is much more of a function to us, of what we do, which is ultimately in our control.\nIf we are well positioned around the core issues our clients are facing, if we have great people with great brands and if we are in the market in an effective way, my experience is, and I think the data show, we grow over any medium term.\nThe factors we can control over the medium term outweigh the short term factors.\nAs a result, in my mind, though, there is uncertainty in the short term.\nI am at least as confident about the long term as when we went into COVID.\nIn the short term, of course, the trends we are seeing this could continue.\nWe are seeing a gradual strengthening of the businesses that are slow now, but it's gradual.\nWe don't see anything that suggests we're going to have -- go backwards, but we also don't see a current acceleration of those trends.\nSo we could be below our long-term expectations for some subsets of our business for a while.\nAnd so of course, the loose money and the government stimulus could continue to erode the strong performance of Corp Fin for a while.\nI should note, however, that, that can reverse itself incredibly fast, for example, with around couple of large bankruptcies or restructurings happening, we win then.\nBut for sure, it is possible that loose money could affect us for a while, notwithstanding our belief that loose money cannot ultimately offset forever the underlying economics of businesses.\nSo absolutely, there are things that are out of our control, and those things could mean there are slowness that continues into the first half of the year.\nBut over any medium or long-term period, one has to believe there's going to be litigation in the world, there's going to be investigations in the world, there are going to be tribunals to try cases.\nJuries will eventually allow -- be allowed once again to sit in the same room at the same point in time.\nThere will be disputes.\nWe will have an M&A activity.\nAnd the underlying economic realities will dictate there are bankruptcies and restructurings.\nSo over any medium term, our results, in my view, will be much less affected by forces outside our control and more dictated by questions like, are we well positioned, are we strengthening our businesses, are we going after the right adjacencies.\nOn the people side, are we retaining the best people, are we developing great people, are we an attractive place for people to join.\nAnd as you know, we felt pretty good about the answers to those questions going into COVID.\nIn terms of the jobs and awards we had won around the world, the list had never been longer or more impressive.\nWe had extended into key new adjacencies that were supporting our business, cybersecurity, business transformation, public affairs and others.\nWe had expanded and enhanced our geographical footprint.\nWe had record numbers of new promotions and our ability to attract senior talent from the outside, as shown by the powerful number of senior hires that we have achieved, had never been as strong.\nAnd a consequence of that, I'm sure you all remember, was unprecedented organic growth for this company in 2018 and '19.\nDouble-digit top line growth that drove record earnings.\nAnd even if one discounts some of that growth as anomalous or a catch-up from prior years or you're having slower growth this year, our multiyear trajectory now for an extended period of time, still calculates it to be an impressive set of numbers.\nImportant this year, notwithstanding COVID and notwithstanding all of its challenges, we have continued to invest between each of those critical levers.\nWe have continued to also support our clients and what are turning out to be high-profile, brand-building assignments.\nThe largest bankruptcies globally, mega deals with antitrust implications, largest investigations happening in different parts around the world, Asia, Germany, the U.S. Companies facing an antitrust cases related to data privacy, and companies at the center of the COVID pandemic working toward a vaccine, among many other high-profile engagements.\nAs a result, we have deepened the most key client relationships in our firm and continue to win industry accolades, from leading The Deal bankruptcy tables for this 12th consecutive year, to having more employees named to who's who on Consulting Experts guide than any other firm globally for the fifth consecutive year, to ALM recently naming us a pacesetter for the financial crisis management, among many others.\nImportantly, in the face of COVID, we have promoted more people this year than ever before.\nOur employee engagement scores are the highest we have ever had.\nOur retention rate is the highest we have ever had.\nAnd our attractiveness to leading experts at other firms that now see FTI as a fabulous platform for advancing their careers, as measured either by the number of hires we've done or probably more currently than not -- our phone is ringing -- has never been higher.\nAs I'm sure you know, not all firms have gotten through COVID as well as we have thus far, and some of our competitors are experiencing other stresses.\nAnd as a consequence, the number of conversations we're having with terrific people whose culture fits with us, who want to join us, is powerful indeed.\nAs a consequence, in the face of this COVID, and we have committed to and achieved record headcount growth, leaving us with a strength of team around the world that I believe is unprecedented in this company's history.\nAs a result, notwithstanding the incredible growth we were experiencing coming into the COVID, today, I feel at least as bullish, if not more, about our prospects coming out of it.\nI'm pleased to report strong third-quarter results.\nMost notably, our Forensic and Litigation Consulting, or FLC segment, delivered strong sequential improvement even with significant opportunity remaining for increased utilization.\nConversely, in the corporate finance and the restructuring segment, bankruptcies ebbed, perhaps in part due to government stimulus benefiting certain industries, which in turn had us reporting revenue in that segment at less than the level reached in the second quarter of 2020.\nUnderscoring our market-leading positions and resiliency, even in the face of a global pandemic, this quarter's revenue of $622.2 million was a record high.\nBoth billable headcount of 5,019 and year-over-year billable headcount growth of 15.8% were records that are giving us ample capacity for future growth and profits.\nLet me take you through the details.\nFor the quarter, revenues of $622.2 million were up $29.1 million or 4.9%,, compared to revenues of $593.1 million in the prior-year quarter.\nOur revenue growth year over year was driven by higher demand in our corporate finance and restructuring and economic consulting segments, which was partly offset by lower demand in our FLC and strategic communications segments and a decline in pass-through revenue as compared to the prior-year quarter.\nGAAP earnings per share of $1.35 in 3Q '20, compared to $1.59 in the prior-year quarter.\nAdjusted earnings per share of $1.54, compared to $1.63 in the prior-year quarter.\nThe difference between our GAAP and adjusted earnings per share in the quarter reflects a $7.1 million special charge, which reduced GAAP earnings per share by $0.14 and $2.3 million of some noncash interest expense related to our convertible notes, which decreased GAAP earnings per share by $0.05.\nThe special charge is comprised of two items.\nFirst, we announced in August that we have leased approximately 120,000 square feet of new space at 1166 Avenue of the Americas, consolidating from approximately 160,000 square feet of space in two offices in New York.\nWe expect to take possession of the space in April of 2021.\nIn advance of this, and given most employees are currently working from home, we have already abandoned 67,000 square feet of space resulting in around $4.7 million in lease abandonment and relocation costs.\nSecond, in the quarter, we took performance-related actions in our FLC segment that resulted in severance and other employee-related costs of $2.4 million.\nAs of September 30, 2020, our weighted average shares outstanding, or WASO, of 37.1 million shares, compared to 37.9 million shares of September 30, 2019.\nWASO includes the potential dilutive impact of our convertible notes, which at the end of this quarter was approximately 337,000 shares.\nWe have more than offset both dilution from our convertible notes and from normal course equity compensation by repurchasing 1.9 million shares over the last 12 months.\nThird quarter 2020 net income of $50.2 million, compared to net income of $60.4 million in the prior-year quarter.\nThe year-over-year decrease was largely because direct costs increased $36.3 million, which was primarily related to 15.8% increase in billable headcount.\nWe also have the $7.1 million special charge and FX remeasurement losses of $3.5 million due to weakening of the U.S. dollar against other major currencies, which, compared to a $2 million gain in the prior-year quarter.\nThese cost increases were only partially offset by higher revenues and a decline in SG&A expenses as well as a lower effective tax rate.\nSG&A expenses in the third quarter of $122.1 million were the 19.6% of revenues.\nThis compares to SG&A of $128 million or 21.6% of revenues in the third quarter of 2019.\nThe decrease was primarily due to lower travel and entertainment expenses, resulting from COVID-19-related travel restrictions and lower bad debt, which was partially offset by an increase in salaries and employee-related expenses driven by the 11% year-over-year increase in nonbillable headcount.\nThird quarter 2020 adjusted EBITDA of $90.9 million or 14.6% of revenues, compared to $92.3 million or 15.6% of revenues in the prior-year quarter.\nOur effective tax rate for the third quarter of 22.3%, compared to 24.7% in the prior-year quarter.\nThe 2.4% decline was primarily due to a favorable discrete tax adjustment related to some share-based compensation.\nBillable headcount increased by 685 professionals or 15.8%, compared to the prior-year quarter.\nSequentially, billable headcount was up by 374 professionals or 8.1%.\nNow I'll share some insights at the segment level.\nIn Corporate Finance & Restructuring, revenues of $236.6 million increased 23.4%, compared to the prior-year quarter.\nThe increase in revenues was primarily due to higher demand and higher realized bill rates for our restructuring services and a full quarter of revenues from our Delta Partners.\nOn July 1 this year, we acquired Delta Partners.\nAnd last year, in August, we acquired Andersch AG.\nAcquisition-related revenues in the quarter were $15.4 million.\nAs a reminder, we consider revenues as acquisition-related for the first 12 months post acquisition.\nAs such, this quarter, one month of Andersch revenues and three months of Delta Partner revenues were considered acquisition-related.\nWorth noting though, from an industry perspective, we experienced the strongest demand in restructuring in airlines, telecom, restaurants, energy, transportation, retail, healthcare, real estate, and media and entertainment.\nAdjusted segment EBITDA of $56.2 million or 23.8% of segment revenues, compared to $48.1 million or 25.1% of segment revenues in the prior-year quarter as higher revenues more than offset an increase in compensation, primarily related to a 36.6% increase in billable headcount and higher variable compensation.\nOn a sequential basis, Corporate Finance & Restructuring revenues decreased $9.4 million or 3.8%.\nAs Steve mentioned, the volume of bankruptcies in the U.S. slowed in July and August, and we experienced a sequential decline in demand for our restructuring services.\nThis decline in restructuring revenues was only partially offset by an increase in revenues in business transformation and transactions, which includes the Delta Partners acquisition.\nIn transactions, we are seeing a good pickup in the activity in healthcare, telecom, media and technology, retail, chemicals and industrials, in particular with our private equity clients.\nSequentially, adjusted segment EBITDA declined more than revenue because of sharply higher headcount-related costs driven by the 18.1% increase in billable headcount.\nSG&A expense also rose because of a onetime adjustment to earn-out accretion expenses related to our Andersch acquisition, and additional employee and infrastructure costs added as part of the Delta Partners acquisition.\nTurning to FLC, our revenues of $119.1 million decreased 16.5%, compared to the prior-year quarter.\nThe decrease in revenues was primarily driven by lower demand for disputes and investigation services, in part because certain matters were at least deferred due to travel restrictions to client locations as well as foreclosures and delays.\nAdjusted segment EBITDA of $13.6 million or 11.4% of segment revenues, compared to adjusted EBITDA of $27 million or 18.9% of segment revenues in the prior-year quarter.\nThe year-over-year decrease in adjusted segment EBITDA was also primarily due to lower revenues with lower staff utilization, which was only partially offset by a decline in SG&A expenses.\nSequentially, FLC revenues increased $12.7 million or 12% as demand rose for our investigations, data and analytics and dispute services.\nNotably, we saw a gradual opening of courts over the course of the quarter, and trial dates are getting scheduled.\nOur adjusted EBITDA increased $22.6 million compared to the second quarter of 2020.\nThis impressive rebound is primarily due to the increase in revenues as well as lower compensation, which included variable compensation accruals and lower bad debt.\nAs I mentioned earlier, during the quarter, we took a special charge within our FLC segment, resulting from severance payments to 16 employees.\nOur economic consulting segment's revenues of $155 million increased 9.4% compared to the prior-year quarter.\nLike last quarter, revenue growth was driven by higher demand and realized bill rates for large M&A-related antitrust engagements.\nOur adjusted segment EBITDA of $25.7 million or 16.6% of segment revenues, compared to $19.4 million or 13.7% of segment revenues in the prior-year quarter.\nThe year-over-year increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by an increase in compensation primarily due to a 15.2% increase in billable headcount and higher variable compensation.\nSequentially, Economic Consulting's revenues increased $3.5 million or 2.3%.\nWe delivered higher revenues in our International Arbitration business as the virtual testimony was introduced more broadly during the quarter.\nAlso noteworthy, we are seeing higher demand for our non-M&A-related antitrust services and higher demand for our financial economics and breach of contract services, driven by an uptick in demand arising from COVID-19-related disputes.\nThis was partially offset by a decline in revenues for our M&A-related antitrust services compared to the second quarter of 2020.\nIn Technology, revenues of $58.6 million increased 2.6% compared to the prior-year quarter.\nThe increase in revenues was primarily due to higher demand for global cross-border investigation and litigation services, which was partially offset by a decline in demand for M&A-related services.\nAdjusted segment EBITDA of $11.9 million or 20.4% of segment revenues, compared to $12.3 million or 21.5% of segment revenues in this prior-year quarter.\nThe decrease in adjusted segment EBITDA was due to higher compensation primarily related to a 13.2% increase in billable headcount.\nOn a sequential basis, Technology revenues increased $11.5 million or 24.4% primarily due to higher demand for our investigation services and a surge in demand for M&A-related second request services.\nRevenues in the strategic communications segment of $53 million decreased $7 million or 11.7% compared to the prior-year quarter.\nThe decrease in revenues was primarily due to lower demand for corporate reputation and financial communications services and a $2.3 million decline in pass-through revenues.\nAdjusted segment EBITDA of $8.4 million or 15.9% of net segment revenues, compared to $12.6 million or 21.1% of segment revenues in the prior-year quarter.\nThe decrease in adjusted segment EBITDA was primarily due to lower revenues.\nSequentially, strategic communications revenues decreased $3.9 million or 6.9%, primarily due to a decline for our restructuring and financial communications services, which had surged during the second quarter with a rush of bankruptcy filings.\nLet me now discuss free cash flow and balance sheet items.\nWe generated net cash from operating activities of $111.6 million and free cash flow of $99.8 million in the quarter.\nTotal debt net of cash of $36.6 million decreased $21.2 million, compared to $57.8 million at September 30, 2019.\nDuring the quarter, we have repurchased 749,315 shares at an average price per share of $110.57 for a total cost of $82.9 million.\nAt the end of the quarter, we had approximately $182.4 million remaining available for share repurchases under our current authorization.\nTurning now to our guidance.\nAt the outset of the pandemic, parts of our business experienced a strong tailwind, particularly our restructuring business, while other parts of our business experienced a strong downdraft from deferral -- from a deferral of work, if not a reduction in demand.\nThe exact trade-offs between these opposing forces was and is uncertain.\nRegardless, we maintained our guidance all through this year.\nNow with three quarters under our belt, we are adjusting our guidance ranges for this 2020 only slightly downwards, with the higher end of our revised ranges still within our original range.\nWe now expect 2020 revenues will range between $2.42 billion and $2.47 billion.\nThis compares to the previous revenue range of $2.45 billion to $2.55 billion.\nWe now expect 2020 GAAP earnings per share will range between $4.93 and $5.43.\nThis compares to the previous GAAP earnings per share range of between $5.32 and $5.82, and includes our third-quarter special charge of $0.14 per share and an estimated noncash interest expense of $0.18 per share related to 2023 convertible notes.\nAnd we now expect 2020 adjusted earnings per share will range between $5.25 and $5.75.\nThis compares to the previous adjusted earnings per share range of $5.50 to $6.\nFirst, we experienced a reduction in the volume of bankruptcies over the last few months compared to the second quarter of 2020.\nAnd our revised guidance assumes a similar level of bankruptcies in the fourth quarter as we had this quarter.\nAs Steve mentioned, in terms of restructuring globally, the pandemic has had an uneven impact on many industries and government subsidies and policies have altered the natural course.\nIn aggregate, in the fourth quarter, we now expect continued distressed situations in oil and gas exploration, production and drilling; healthcare; automotive; department stores; airlines; restaurants; and entertainment and entertainment venues.\nSo the level of such demand is not expected to be as strong as earlier in the year.\nSecond, we delivered strong sequential improvement in our FLC segment.\nWhile there remains significant room for further improvement from higher utilization, we expect such improvement to be gradual.\nOther segments, despite the pandemic, are doing well.\nHowever, we are also approaching year-end and are expecting our employees to take well-deserved vacations with ensuing typical seasonal impact to billings across all segments.\nBefore I close, I want to reiterate a few key themes that underscore the long-term strength and potential of our business.\nFirst, we believe we are the leading in -- the world leader, in restructuring.\nAnd we expect waves of defaults in the coming 12 to 24 months, so timing is uncertain.\nWith our record staff additions in this segment, and as we continue to invest for growth, we are better positioned now to help our clients globally than ever before.\nSecond, we have significantly diversified our offerings over the last several years with investments in areas such as non-M&A antitrust, international arbitration, business transformation, cybersecurity and public affairs.\nNot only are we producing better results in FLC, but also, we are seeing these practices strengthening as we slowly emerge on the other side of this pandemic.\nThird, we believe we are the choice employer in our practice areas and continue to attract talent because our colleagues are working on our highest profile engagements in their fields across the globe.\nFourth, at our core, we help our clients, especially in times of dislocation, as they navigate through their most complex business challenges.\nThis pandemic will undoubtedly result in a new genre of disputes, investigations and conflicts that our experts are already assisting with and supporting.\nAnd fifth, in the last 12 months, we have reduced net debt by $21.2 million while repurchasing $212.2 million worth of our shares, and acquiring Delta Partners, the preeminent technology, media and telecom focused consulting practice.\nOur good business generates tremendous free cash flow and our balance sheet is enviable, giving us the ability to continue to invest for growth and return capital to shareholders.\n",
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"content": "compname reports q3 earnings per share $1.35.\nsees fy 2020 adjusted earnings per share $5.25 to $5.75.\nsees fy 2020 earnings per share $4.93 to $5.43.\nq3 earnings per share $1.35.\nsees fy 2020 revenue $2.42 billion to $2.47 billion.\nq3 revenue $622.2 million versus refinitiv ibes estimate of $623 million.\nq3 adjusted earnings per share $1.54 excluding items.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A copy of which is available on our website at www.\nDuring the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin, and free cash flow.\nWith these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nAnd I think Steve is muted.\nIt wouldn't be a COVID event if somebody wasn't muted.\nSo I'm glad to get that out of the way.\nAs we're saying all the time during COVID, I hope you and your loved ones continue to be safe.\nBut at least now, I'm hoping as well that you and they are beginning to see the light at the end of this tunnel and at the end of the scourge of COVID is within sight.\nAjay, of course, is going to give you the details of this quarter.\nNow Ajay will be careful.\nAnd he will stress that some of these earnings strength this quarter reflect one-time benefits, stuff you can't count on recurring, things like FX, some revenue deferrals being recognized, a lower tax rate, etc.\nBut even normalizing for all that, as far as I can tell, it is a great quarter.\nAnd more important to me and I hope you, it's another in a large number of great quarters, which to me is not a confirmation of onetime things or transient things but of the fundamental strength of this company, what our people are doing every day to build this business in ways that allow us to help our clients navigate, not only their greatest challenges, but in many cases, their greatest opportunities.\nIt's a fabulous quarter.\nI want to be clear, however, it is not that we've turned all of our businesses into businesses that go up in a straight line.\nAs we have talked about many times, each of our businesses and the company as a whole can have huge zigs and zags due to market conditions or the winning or losing of a big job.\nWe're jumping on an opportunity to invest, jumping on an opportunity to invest in a way that can hurt the P&L in the short term but supports future growth.\nAnd even in this great quarter, we saw some of that.\nIf you look at our restructuring business, it continues to face widespread market slowdown around most of the world.\nAnd although we benefited from some legacy cases during the quarter, that business is certainly off in a big way, in a big way from a year or so earlier.\nNow I don't believe anybody thinks this restructuring market has gone away permanently.\nSo we're continuing to invest in that business, but that's the zag.\nSimilarly, in Tech, some of the fuel that ignited the incredible performance in the first half of the year, notably second request activity weakened this quarter.\nWe have enormous confidence in the multiyear trajectory of that business and more important, the people of that team that is driving that multiyear trajectory.\nSo we have, in the face of that slowdown, continued to hire.\nWe increased our head count in that business 12.4% year over year.\nSo even though the revenue went up, the adjusted EBITDA declined.\nThat's just an example of investing to support the business over the medium term, something that we have committed to do and we will continue to do.\nAnd even in FLC, where we have great strength compared to last year, we've had pockets of weakness.\nFor example, Asia because borders remain closed and travel restrictions have been extended, which affected our ability to both deliver certain services and reach clients in the market.\nEven if we do the right things, our business has zigs and zags, and some of them can be pretty bad zags.\nBut what I think we've said many times and what I now believe the data fully support is if we do the right things, although there are zigs and zags, over any extended period of time, each of our businesses are growth engines, not only growth engines, but vital and powerful growth engines.\nThey allow us to deliver on major assignments that make at least me proud and I think many of us proud.\nThey allow us to attract great people to build their brand.\nAnd therefore, though there are zigs and zags, they become zigs and zags around an upward sloping line.\nIt doesn't mean you can't have all the zags come in the same quarter or even the same year, but it does mean that over any extended period of time, the zig zags are around an incredibly powerful upward sloping line.\nNow that line, I assume, is important to you, our shareholders.\nI believe it's equally important for the engine of the firm, our people.\nIt's that upward sloping line that gives us, and I hope to you, the confidence to invest in great people regardless of whether it's a good quarter or not a good quarter for a particular business.\nIt allows us to not do layoffs just because some businesses temporarily slow in a quarter.\nThe strength of conviction we drew on obviously last year and supported our people and is giving us real benefits this year.\nIt allows us to promote people when they're ready to get promoted versus when, oh, the numbers happen to be good.\nIt allows us to hire aggressively when the great talent is available versus when it feels convenient according to the P&L.\nIt allows us to invest in our people's development when they're eager to grow.\nMy experience is when you do that, you build a firm, you build -- take a powerful firm and you make it ever more powerful.\nAnd you create businesses that are global and diverse and effective and vibrant for your clients and for your people.\nMy experience is also when you have great people doing great work who feel supported, you end up with fabulous individuals.\nFabulous individuals who are in an environment where they can develop even further.\nAnd you end up with great people outside your firm who want to join you.\nAnd through that, we create businesses.\nThrough the zigs and zags become sustainable, powerful, resilient, and exciting businesses, and exciting growth engines.\nThat's the journey we have been on.\nIt has been a lot of work.\nIt always is a lot of work.\nThere's always daily things to struggle with.\nA lot of work.\nIt's also been incredibly rewarding.\nThat is a journey we look, this great team that I have the privilege of leading to stay on.\nBeginning with our third quarter results.\nRevenue grew 12.9% with every segment reporting growth.\nAnd we continued making investments in headcount, adding 346 total billable professionals year over year, including 36 senior managing directors.\nEarnings per share were also boosted by FX remeasurement gains and lower weighted average shares outstanding, or WASO, resulting in a 45% increase in GAAP earnings per share and a 31% increase in adjusted earnings per share compared to the prior-year quarter.\nOverall, we are delighted with these results, which exceeded our expectations.\nRevenues of $702.2 million increased $80 million, compared to revenues of $622.2 million in the prior-year quarter.\nGAAP earnings per share of $1.96 in 3Q '21 compared to $1.35 in 3Q '20.\nAdjusted earnings per share for the quarter were $2.02, which compared to $1.54 in the prior-year quarter.\nThe difference between our GAAP and adjusted earnings per share in 3Q '21 reflects $2.4 million of noncash interest expense related to our convertible notes, which reduced GAAP earnings per share by $0.06 per share.\nIn 3Q of '20, we had a special charge of $7.1 million as well as noncash interest expense of $2.3 million, which reduced GAAP earnings per share by $0.14 per share and $0.05 per share, respectively.\nNet income of $69.5 million, compared to $50.2 million in the prior-year quarter.\nThe increase in net income was primarily due to higher revenues, which was partially offset by an increase in compensation, including the impact of a 6.9% increase in billable headcount and higher SG&A expenses.\nFX remeasurement gains this quarter versus losses in the same quarter last year also boosted net income.\nSG&A of $138.6 million or 19.7% of revenues.\nThis compares to SG&A of $122 million or 19.6% of revenues in the third quarter of 2020.\nThe increase in SG&A included higher compensation, outside services expenses, bad debt, software costs, and travel and entertainment expenses.\nThird quarter 2021 adjusted EBITDA of $100.3 million or 14.3% of revenues, compared to $90.9 million or 14.6% of revenues in the prior-year quarter.\nOur third quarter effective tax rate of 21.6% compared to 22.3% in the prior-year quarter.\nOur tax rate for the quarter benefited from discrete tax adjustments related to the release of a valuation allowance on our Australian deferred tax assets because of sustained profitability.\nFully diluted WASO of 35.4 million shares in 3Q '21 compared to 37.1 million shares in 3Q '20.\nOur convertible notes had a dilutive impact on earnings per share of approximately 842,000 shares, included in WASO, as our average share price of $138.83 this past quarter was above the $101.38 conversion threshold price.\nAs I mentioned, billable headcount increased by 346 professionals or 6.9% compared to the prior-year quarter.\nNow I will share some insights at the segment level.\nIn Corporate Finance & Restructuring, revenues of $250.3 million increased 5.8% compared to the prior-year quarter.\nThe increase in revenues was due to higher demand and realization for our transactions and business transformation services, as well as the recognition of deferred revenue, which were partially offset by lower demand for restructuring services.\nAdjusted segment EBITDA of $55.6 million or 22.2% of segment revenues compared to $56.2 million or 28 -- or 23.8% of segment revenues in the prior-year quarter.\nThe year-over-year decrease in adjusted segment EBITDA was due to increased compensation, including the impact of a 6% increase in billable headcount and higher SG&A expenses.\nIn the third quarter, we continued to grow our transactions and business transformation practices globally.\nNot only are we growing these practices, but also we are able especially at junior levels to leverage professionals across practices.\nThis quarter, once again, a number of our junior professionals, who typically would support restructuring assignments, worked on transactions-related engagements.\nOn a sequential basis, revenues increased $19.4 million or 8.4% as the segment benefited from continued growth in our business transformation and transactions businesses and recognition of prior deferred revenue.\nAdjusted segment EBITDA for the third quarter increased $15.5 million.\nRevenues of $145.3 million increased 22% relative to a weak quarter in the prior year.\nThe increase in revenues was primarily due to higher demand for our investigations, disputes, and health solutions services.\nAdjusted segment EBITDA of $16.6 million or 11.4% of segment revenues compared to $13.6 million or 11.4% of segment revenues in the prior-year quarter.\nThe increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by higher compensation, which includes 7.7% growth in billable headcount as well as higher SG&A expenses compared to the prior-year quarter.\nSequentially, revenues decreased $5.5 million, primarily due to lower demand for investigations and health solutions services.\nAdjusted segment EBITDA decreased $1.4 million.\nOur Economic Consulting segment's revenues of $172.5 million increased 11.3% compared to the prior-year quarter.\nThe increase was primarily due to higher demand for non-M&A-related antitrust and financial economic services, which was partially offset by lower demand for our M&A-related antitrust services compared to the prior-year quarter.\nAdjusted segment EBITDA of $29.9 million or 17.3% of segment revenues compared to $25.7 million or 16.6% of segment revenues in the prior-year quarter.\nThe increase in adjusted segment EBITDA was due to higher revenues, which was partially offset by higher compensation, which includes the impact of 5.1% growth in billable headcount.\nSequentially, revenues decreased $10.8 million or 5.9%, which was driven by decreased demand for M&A-related antitrust services, primarily due to the conclusion of a large matter in the quarter.\nIn Technology, revenues of $64.7 million increased 10.4% compared to the prior-year quarter.\nThe increase in revenues was primarily due to higher demand for litigation, investigation and information governance services, which was partially offset by lower demand for M&A-related second request services compared to the prior-year quarter.\nAdjusted segment EBITDA of $7.8 million or 12.1% of segment revenues compared to $11.9 million or 20.4% of segment revenues in the prior-year quarter.\nThe decrease in adjusted segment EBITDA was due to higher compensation, which includes the impact of a 12.4% increase in billable headcount, as our Technology segment continues to make investments in talent, particularly at the senior levels to bolster our capacity and expertise globally across data risk, compliance, privacy and information governance, as well as higher SG&A expenses.\nSequentially, revenues decreased $14 million or 17.8%, primarily due to decreased demand for M&A-related second request services.\nAdjusted segment EBITDA declined $10.7 million sequentially.\nRecord revenues in the Strategic Communications segment of $69.4 million increased 31.1% compared to the prior-year quarter.\nThe increase in revenues was primarily due to higher demand for corporate reputation and public affairs services.\nAdjusted segment EBITDA of $15.5 million or 22.3% of segment revenues compared to $8.4 million or 15.9% of segment revenues in the prior-year quarter.\nThe increase in adjusted segment EBITDA was due to higher revenues.\nSequentially, revenues increased $1.6 million, primarily due to higher demand for financial communications and corporate reputation services.\nAdjusted segment EBITDA increased $2 million sequentially.\nLet me now discuss key cash flow and balance sheet items.\nWe generated net cash from operating activities of $196.9 million, which increased by $85.3 million compared to $111.6 million in the third quarter of 2020.\nThe year-over-year increase was largely due to an increase in cash collected resulting from higher revenues, which was partially offset by an increase in compensation-related costs and other operating expenses.\nWe generated free cash flow of $172.2 million in the quarter.\nTotal debt net of cash decreased $160.7 million sequentially from $159.4 million on June 30, 2021 to a negative net debt position of $1.3 million on September 30, 2021.\nThe sequential decrease was primarily due to an increase in cash and cash equivalents and repayment of borrowings under our senior secured bank revolving credit facility.\nTurning to our guidance.\nIn light of our record financial performance during the first nine months of 2021, we are raising the low end of our previous full year 2021 guidance range for revenues of between $2.7 billion and $2.8 billion to expected revenues of between $2.75 billion and $2.8 billion.\nWe are raising our full year 2021 guidance ranges for GAAP earnings per share of between $5.89 and $6.39 and adjusted earnings per share of between $6 and $6.50 to GAAP earnings per share of between $6.39 and $6.64 and adjusted earnings per share of between $6.50 and $6.75.\nThe $0.11 per share variance between earnings per share and adjusted earnings per share guidance for full year 2021 includes the estimated impact of noncash interest expense of $0.20 per share related to our 2023 convertible notes and the second quarter 2021 $0.09 per share gain related to the fair value remeasurement of acquisition-related contingent consideration, which are not included in adjusted EPS.\nOur updated guidance after our record year-to-date performance is shaped by four key considerations.\nFirst, restructuring activity remains subdued.\nAs credit markets remain in an accommodative mode and the number of stressed and distressed issuances remains low, Standard & Poor's is now forecasting that the trailing 12-month U.S. speculative rate -- default rate -- corporate default rate will fall further in the first half of 2022, reaching 2.5% by June 2022, which compares to 3.8% in June 2021 and 6.6% in January 2021.\nSecond, global M&A activity, which drives demand in our Economic Consulting and Technology segments as well as our transactions business in Corporate Finance & Restructuring, has been at record levels year to date.\nThere is no certainty that M&A activity will continue at this pace.\nThird, we are a large jobs firm.\nAnd when large engagements end, they may not be immediately replaced.\nAs Steve and I have both mentioned today, we saw several large jobs end or significantly wind down in the last two quarters across our Economic Consulting, Technology, and Corporate Finance & Restructuring businesses.\nFourth, the fourth quarter is typically a weaker quarter for us because of a seasonal business slowdown at the end of the year.\nBefore I close, I want to reiterate four key themes that underscore the strength of our company.\nFirst, our results show that while continuing to dominate our traditional areas of strength, we have demonstrably grown our adjacencies and footprint, which also have the added benefit of making us less susceptible to the business cycle.\nBusiness transformation and transaction services, which represented 36% of total segment revenues in Corporate Finance in Q3 of last year, contributed 59% this quarter.\nNon-M&A-related antitrust services have steadily grown to represent 32% of our Economic Consulting revenues this quarter, which compares to 23% in Q3 of last year.\nOur Australian business has grown to 31 senior managing directors from 19 two years back.\nAnd our Middle East business has grown to 16 senior managing directors from five two years back.\nAnd EMEA represented 30% of revenues this quarter with us only recently ramping up in Germany and Spain.\nSecond, we count among our staff, arguably, some of the leading experts in the world in areas such as antitrust, financial arbitration and economic analysis, restructuring, technology and data analytics-based investigations, and corporate reputation and communications.\nThird, in many industries around the world, the pace of change is accelerating.\nAnd we have the surge capacity to help our clients when they face their greatest challenges and opportunities.\nAnd finally, our strong balance sheet continues to give us the flexibility to make sustained investments toward growing our business globally.\n",
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"content": "compname reports q3 earnings per share of $1.96.\nq3 adjusted earnings per share $2.02.\nq3 earnings per share $1.96.\nq3 revenue rose 13 percent to $702.2 million.\nraises fy adjusted earnings per share view to $6.50 to $6.75.\nraises fy earnings per share view to $6.39 to $6.64.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin and free cash flow.\nTo ensure our disclosures are consistent, these slides will provide the same details as they have historically, and as I've said, are available on the Investor Relations section of our website.\nWith these formalities out of the way, I'm joined today by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nAlways have to remember to take off from you, Mollie.\nMy guess is many of you, like me, are extraordinarily happy to see 2020 behind us.\nI think also many of us realized that some elements of 2020 are not yet fully behind us.\nThe COVID cases are coming down from the extraordinary levels that we saw over the holidays.\nBut of course, they're not down to zero chance, and there's still a lot of it around.\nWe have vaccines, but they're not yet in each of our arms.\nAnd I guess most important, the disruption that COVID-19 has caused to our businesses, our personal lives and society more broadly, obviously, remain.\nHaving said that, I think we all see some light at the end of this tunnel and I, for one, am so, so grateful to see that.\nToday, I have two messages about our company.\nThe first is that I am, and I hope you are, incredibly impressed by how our company has weathered this unprecedented set of challenges of 2020 and continue to do so thus far in 2021.\nAnd the second is to suggest that the resilience shown in 2020 further underscores my condition in the tremendous power of this company and just how bright our future is coming out of COVID.\nOur teams did an incredible job.\nKeeping our people safe, keeping their family safe, supporting each other and our families through that challenging year, all while delivering for clients in unprecedented ways, in critical ways from home.\nAs a result of those efforts, even in the face of those challenges, we won and delivered on some of the most important assignments in our company's history.\nWe built our brand.\nWhile maintaining incredible morale around the firm, we promoted terrific people.\nWe attracted more great people to FTI.\nAnd through all that, we delivered solid financial results, even while parts of our business faced unprecedented challenges.\nWith respect to the financial results, I'm going to leave most of the discussion to Ajay, but let me talk about why I use the word solid.\nSome folks could look at the $5.99 of adjusted EBITDA -- sorry, the adjusted earnings per share for 2020 and point out, it's another record year, another record year of adjusted earnings per share for the company.\nIn truth, when you unpack it, and Ajay will unpack it a bit further, I think it's more appropriately viewed as a solid performance.\nAs you know, there are a bunch of things in any quarter that can play out one way or another like taxes or success fees.\nIn the fourth quarter, those items played out positively in a much bigger way than we typically have -- when we typically see.\nIf you adjust for that, you don't see it as a record year but rather a solid year.\nAnd I think that's a better way to look at it.\nBecause if you look at some of the underlying factors, it's also, I think, a solid year.\nWe grew, but we grew less fast than we had hoped to at the beginning of the year, but we grew less than the headcount we added.\nAdjusted EBITDA, which you know we've been growing over time, this year, it was really flat.\nSo I think a solid year is a more appropriate description of 2020.\nBut another way to look at it, and I think this is an important part, but we had a solid year.\nFor example, we grew in the face of COVID.\nA solid year in a year when some parts of our business had unprecedented challenges.\nSome parts of our business were close to shutdown for parts of the year.\nAnd importantly, we drove those solid results without short changing our future, in fact, while supporting and investing for the future of this company.\nWe didn't risk teams that were facing slow periods.\nWe continue to attract great people, develop our people, retain terrific talent.\nWe made both organic and inorganic investments.\nWe didn't cut headcount in the face of COVID.\nWe increased our billable headcount by 14.5%.\nWe seized the opportunity created by disruptions in the market to attract 36 terrific SMDs laterally.\nWe didn't make those investments to bolster our profitability this year on the short term.\nAs we talked about in the past, most investments like that in professional services cost you in the short term.\nWe made them because we believe they, like the prior investments we made, build our business and will build their business for the next many years.\nAnd we made those investments because we could.\nBecause the investments we had made in prior periods had given us a strength that allowed us to have the wherewithal to invest at a time when others we're not so fortunate.\nThose moves, those investments, that support for the great core team of FTI in my position, in my opinion, position us extremely well for the period coming out of COVID.\nYou could ask other challenges ahead -- of course, they're a challenge ahead.\nI think we all know them.\nI've never seen a world with more uncertainty, with more disruption, whether it's economic uncertainty, credit uncertainty or political uncertainty.\nYou can point to lose money out there and government interactions that are dampening restructuring activity, you can look at the fact that there are new variants of the coronavirus that could accelerate cases conceivably, and we can all point to stress and uncertainty in the global political world.\nBut to me, if this year proves anything about our company, it is the incredible resilience of our business and our people, our ability to thrive through a myriad of challenges over any medium term.\nA few quarters ago, we had some businesses that had record low utilization and were, for the first time ever, not profitable.\nIn those circumstances, you always have some people question, oh, should we do layoffs?\nWill these businesses ever come back?\nWe thought those were great businesses with great people, and we continue to support them.\nAnd now just two to three quarters later, that confidence in this business is being rewarded.\nThe efforts of the people in those businesses that they made to stay relevant to clients, connected to critical issues, connected to their people, not only resulted in those businesses coming back, but as a result of us being involved in critical matters and our backlogs up dramatically from where they were just a few quarters ago.\nThis past year confirms for me lessons I've learned over many years in professional services, which in times of difficulty, if you avoid focusing on the quarter, avoid overreacting, but rather concentrate on aggressively building positions around the most important market needs, attracting and supporting the best professionals, you can use that period to help build an institution that's a powerful growth engine.\nPerhaps not in that quarter or the next one, but for years to come.\nAn institution that great professionals want to be part of, that they want to help grow and an institution that creates economic value for those committed employees and for shareholders.\nThat is what we have been doing in these last years.\nIt has led to some quarters, some quarters with down results, and some years with only solid results.\nBut it's also led to years where we can deliver the highest employee engagement scores and the lowest turnover ever.\nWe can invest in important initiatives for the future of this company, like diversity, inclusion and belonging and corporate citizenship.\nIt allows us to continue to attract great talent.\nI think it's not generally known that two-thirds of our SMDs in this firm today either joined the firm or were promoted in during my six years.\nAnd it allows you to win more big impactful cross-segment jobs in more places than ever before.\nUltimately, those sorts of investments allow you to build a better, stronger, more attractive vibrant institution, which ultimately then also allows you to deliver a lot of shareholder value.\nFor example, as many of you know, we've more than doubled the market cap of this company over the last few years.\nI so look forward to continuing that journey, hopefully, with each of you in the years ahead.\nI'll begin with some highlights for the year.\nRevenues of $2.461 billion increased $108.6 million or 4.6%.\nGAAP earnings per share of $5.67 compared to GAAP earnings per share of $5.69 in 2019.\nAdjusted earnings per share of $5.99 compared to adjusted earnings per share of $5.80 in 2019.\nAs Steve mentioned, our GAAP and adjusted earnings per share included a significant tax benefit that boosted full-year 2020 earnings per share by $0.30.\nAnd adjusted EBITDA of $332.3 million was down from $343.9 million in 2019.\nOur performance this year is the result of the breadth of our service offerings and the continued investments we have made for future growth.\nThe global pandemic boosted demand for our restructuring services.\nThough such demand peaked in the second quarter as governments increased liquidity and placed moratoriums on insolvency proceedings.\nConversely, in the second half of the year, increase in liquidity spurred M&A activity, creating more demand for our Economic Consulting and Technology segments as well as our transactions practice within our Corporate Finance & Restructuring segment.\nUndeterred by the impact of the pandemic on co-closures and travel, which especially hurt our Forensic and Litigation Consulting or FLC segment, we continue to invest in growth.\nIn 2020, our total billable headcount for the company grew 14.5%, on top of the 17.8% growth in 2019.\nLower SG&A expenses from the constraints on travel and entertainment and lower weighted average shares outstanding or WASO from share buybacks also boosted 2020 EPS.\nOverall, given the challenging year, we are very pleased with these results.\nNow I will turn to fourth-quarter results, which exceeded our expectations.\nFor the quarter, revenues of $626.6 million increased $24.4 million or 4%.\nGAAP earnings per share of $1.57 compared to $0.76 in the prior-year quarter.\nNoteworthy during the quarter, we recorded an $11.2 million tax benefit from the use of foreign tax credits in the United States and a deferred tax benefit arising from an intellectual property license agreement between our U.S. and U.K. subsidiaries, which boosted both GAAP earnings per share and adjusted earnings per share by $0.32 for the quarter.\nAdditionally, the impact of lower WASO from share repurchases increased earnings per share by $0.11.\nAdjusted earnings per share of $1.61, which excludes $0.04 of noncash interest expense related to our 2023 convertible notes compared to adjusted earnings per share of $0.80 in the prior-year quarter.\nNet income of $55.6 million compared to $29.1 million in the fourth quarter of 2019.\nAdjusted EBITDA of $82.3 million or 13.1% of revenues compared to $58.3 million or 9.7% of revenues in the prior-year quarter.\nThe increase in EBITDA was primarily due to higher revenues in our Corporate Finance & Restructuring, Economic Consulting and Technology segments, which was partially offset by a decline in FLC and lower SG&A expenses due to a true-up of bonuses and lower travel and entertainment expenses.\nThese increases were only partially offset by higher compensation related to a 14.5% increase in billable headcount.\nNow turning to our performance at the segment level for the quarter.\nIn Corporate Finance & Restructuring, revenues of $219.8 million increased 21.4% compared to Q4 of 2019.\nAcquisition-related revenues contributed $19 million in the quarter.\nExcluding acquisition-related revenues, the increase was primarily due to higher demand for restructuring services, largely in North America and EMEA as well as higher success fees.\nThis increase was partially offset by a $7.6 million decline in pass-through revenues due to a decline in billable travel and entertainment expenses.\nAdjusted segment EBITDA of $35.4 million or 16.1% of segment revenues compared to $24.8 million or 13.7% of segment revenues in the prior-year quarter.\nThis increase was due to higher revenues, which was partially offset by an increase in compensation, primarily related to 38.6% growth in billable headcount and higher variable compensation.\nOf note, the net year-over-year increase of 461 billable professionals includes continued organic hiring, 147 professionals from the acquisition of Delta Partners and the transfer of 66 professionals from our FLC segment into Corporate Finance, which occurred in the second quarter of 2020.\nOn a sequential basis, Corporate Finance & Restructuring revenues decreased 7.1% due to the decline in restructuring activity.\nThis decline was partially offset by a sequential increase in revenues from our transactions-related services.\nMoving on to FLC.\nRevenues of $127.2 million decreased 15.4% compared to the prior-year quarter.\nThe decrease was primarily due to lower demand for disputes and investigation services.\nAdjusted segment EBITDA of $7.6 million or 6% of segment revenues compared to $17.4 million or 11.6% of segment revenues in the prior-year quarter.\nThis decrease was primarily due to lower revenues with lower staff utilization, which was partially offset by a decline in SG&A expenses.\nSequentially, FLC revenues increased 6.8% due to higher revenues in North America particularly driven by higher demand for our dispute services.\nAs with last quarter, we continue to see momentum steadily building with an increase in new matters being opened, the gradual reopening of courts and trial dates getting scheduled, though utilization is still below pre-COVID levels.\nEconomic Consulting's record revenues of $160.5 million increased 4.9% compared to Q4 of 2019.\nThe increase in revenues was primarily due to higher demand and realized bill rates for M&A-related and non-M&A-related antitrust services.\nAdjusted segment EBITDA of $31.3 million or 19.5% of segment revenues was a record and compared to $17.3 million or 11.3% of segment revenues in the prior-year quarter.\nThis increase was due to higher revenues, a reduction in our use of external affiliates and lower SG&A expenses.\nSequentially, revenues in Economic Consulting increased 3.5% as we continue to see higher demand for our non M&A-related antitrust services.\nIn Technology, revenues of $58.6 million increased 13.8% compared to Q4 of 2019.\nThe increase in revenues was largely due to higher demand for M&A-related second request services and litigation services.\nAdjusted segment EBITDA of $10.2 million or 17.3% of segment revenues compared to $7.8 million or 15.1% of segment revenues in the prior-year quarter.\nThis increase was due to higher revenues, which was partially offset by an increase in compensation.\nLastly, in strategic communications, revenues of $60.5 million decreased 8.8% compared to Q4 of 2019.\nThe decrease in revenues was primarily due to a $4.8 million decline in pass-through revenues.\nAdjusted segment EBITDA of $11.7 million or 19.4% of segment revenues compared to $9.9 million or 14.9% of segment revenues in the prior-year quarter.\nThis increase was primarily due to a decline in SG&A expenses compared to the prior-year quarter.\nSequentially, revenues in Strategic Communications increased 14.2%, primarily due to higher demand for corporate reputation and public affairs services in the EMEA region.\nNow I will discuss certain cash flow and balance sheet items.\nNet cash provided by operating activities; of $327.1 million compared to $217.9 million in the prior year.\nFree cash flow of $292.2 million in 2020 compared to $175.8 million in 2019.\nIn 2020, we repurchased 3.3 million of our shares for a total cost of $353.4 million.\nIn Q4 alone, we repurchased 1.6 million shares at an average price per share of $105.84 for a total cost of $169.2 million.\nAnd throughout 2020, we continue to invest in the business through both organic and inorganic investments, including attracting and developing senior managing directors through lateral hires and promotions and our acquisition of Delta Partners.\nDespite using $353.4 million for share repurchases, a 14.5% increase in billable headcount and the acquisition of Delta Partners, we ended the year with our total debt, net of cash, up only $74.4 million compared to December 31, 2019.\nTurning to our 2021 guidance.\nAs usual, we are providing revenues, GAAP earnings per share and adjusted earnings per share guidance for the year.\nWe estimate that revenues for 2021 will be between $2.575 billion and $2.7 billion.\nWe expect our GAAP earnings per share which includes estimated noncash interest expense related to our 2023 convertible notes of approximately $0.20 per share to range between $5.60 and $6.30.\nWe expect full-year 2021 adjusted EPS, which excludes the impact of the noncash interest expense, to range between $5.80 and $6.50.\nYou may notice that our guidance ranges are slightly wider than previous years.\nAnd the low end of our guidance for adjusted earnings per share is up only slightly compared to our full-year 2020 performance after adjusting for the benefits of our tax strategy.\nOur 2021 guidance range is shaped by several assumptions.\nGlobally, increased liquidity and moratoriums and insolvency have benefited even the most distressed companies.\nSuch that speculative debt default levels are at a record low.\nWe expect restructuring activity to be subdued in terms of new defaults, at least through the first half of 2021.\nHowever, we believe that, eventually, moratoriums will be lifted and there may be limits to liquidity, resulting in an increase in restructuring activity but when such demand surfaces or to what extent is uncertain.\nConversely, we see the current backdrop of strong M&A activity continuing to favorably impact our Economic Consulting, Technology and Strategic Communications segments as well as our transactions business within our Corporate Finance & Restructuring segment.\nWe have also invested significantly in capacity in our business transformation and transactions businesses where we believe we have enormous growth potential.\nThe segment which was most impacted by COVID-19 in 2020 was FLC.\nWe're already seeing a recovery, albeit slow, and our current expectations are that we will continue to gain momentum.\nWe expect a higher effective tax rate in 2021.\nWe currently expect our full-year 2021 tax rate to range between 23% and 26%, which compares to 19.7% in 2020.\nAnd we expect SG&A to gradually increase through the year as the pandemic eases.\nBefore I open the call to questions I, like Steve, would like to express my gratitude to our employees for their performance in 2020 in the face of COVID-19 and to our shareholders and clients for their continued support.\nAnd now I'll close my remarks today by emphasizing a few key themes.\nFirst, our business is resilient.\nBecause of our diverse mix of services, which uniquely positions us to help our clients as they navigate their most complex business challenges, regardless of business cycle.\nSecond, our business is strong, not only in North America, but also globally, our capacity to serve our clients in multiple jurisdictions is one of our distinct competitive advantages.\nBoth our EMEA and Asia Pacific regions had record revenues in 2020.\nOur CAGR for revenues in EMEA since 2017 is a 23.9%.\nAs Steve said, we succeed by building positions around the most important market needs and attracting and supporting the best professionals.\nThird, our leadership team remains focused on growth with strong staff utilization.\nAnd finally, our business generates excellent free cash flow, and our balance sheet is exceptionally strong.\nWe have the capability to continue to boost shareholder value through share buybacks, organic growth and acquisitions when we see the right ones.\n",
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"content": "q4 earnings per share $1.57.\nq4 revenue $626.6 million versus refinitiv ibes estimate of $617.6 million.\nsees fy 2021 adjusted earnings per share $5.80 to $6.50.\nsees fy 2021 earnings per share $5.60 to $6.30.\nq4 adjusted earnings per share $1.61 excluding items.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A copy of which is available on our Investor Relations website at www.\nDuring the call, we will discuss certain non-GAAP financial measures such as total segment operating income, adjusted EBITDA, total adjusted segment EBITDA, adjusted earnings per diluted share, adjusted net income, adjusted EBITDA margin, and free cash flow.\nLastly, there are two items that have been posted to the Investor Relations section of our website for your reference.\nTo ensure our disclosures are consistent, these slides provide the same details as they have historically, and as I have said, are available on the Investor Relations section of our website.\nWith these formalities out of the way, I'm joined by Steven Gunby, our president and chief executive officer; and Ajay Sabherwal, our chief financial officer.\nMollie, can you hear me OK?\nLet me start with a couple of preliminary remarks before we get into it.\nSo I apologize for the inconvenience and want to express our appreciation for you all, juggling your calendars to be here.\nSecond, my second point was going to be, I thought a positive point.\nI was going to, maybe for the first time ever, begin to talk a little positively on the COVID situation.\nAnd I was going to express my hope that we are finally, in many places around the world and I hope where you are, starting to see some movement toward the normality.\nI still hope that, but I think the events in the Ukraine in the last little while, remind us that the hope to normality, unfortunately, is not just limited to COVID.\nSo I wish many good wishes to you and any colleagues, family, friends who are affected by that situation.\nLet me turn to what I think is a much more positive set of messages.\nAs I'm sure many of you have by now have already seen, 2021 was another terrific year in the face of the global pandemic, and as we'll talk about, the worst restructuring market in probably the last 15 years, we delivered another record year.\nAnd let me stress that word another.\nWe've now had 7 years in a row of adjusted earnings per share growth.\n7 years in a row in the face of COVID, fluctuating restructuring markets, turning around core strategies, expanding geographies, entering new adjacencies, lumpiness from big jobs coming or going, heightened competition, and attracting talent among lots of other challenges.\n7 years in a row of growth in adjusted EPS, which is the easiest thing to measure, but also, to me, far more important in the underlying drivers of those financial results.\nThe talent level of our organization, the ambition of it, the energy, the commitment of our people, the leadership, the number of great assignments we are working on, the client relationships we forged, and the enhancement of our reputation that all those factors have driven.\nWe don't have a single business that has guaranteed automatic growth every quarter.\nIn fact, if you look back over these several years, many of our teams in sub businesses during this period were down multiple quarters in a row, as they face difficult markets or made big investments, or had big jobs end.\nWhat I believe our results have shown is that over any extended period of time, those short-term factors don't matter.\nRather over any extended period of time when our teams do the right things, they control our destiny.\nWe create our own future.\nOver time, we have shown ourselves able to attract great talent to support the growth of that talent in our organization, to double down and reinforce core positions in core markets, to expand into new adjacencies, and as a consequence of all that, make ourselves ever better able to serve our clients, to build our businesses, to build our brand.\nIt is that commitment, those efforts by our leaders and our teams that have allowed us to grow seven years in a row.\nAnd over those last four years -- in the last four years of that, in the face of good markets and bad markets, to average double-digit organic top-line growth.\nTo me, that demonstrates something important.\nIt demonstrates that FTI is not the cork on the restructuring wave that some described us as when I joined.\nRather, I think our teams have shown that when we do the right things, we have multiple, multiple businesses that are each powerful growth engines, engines that, of course, can get buffeted by markets or other short-term factors over any extended period of time, engines that could plow through markets, plow through them and find their way toward success in attracting and developing talent, success in brand building assignments and success in financial results.\nOver the past several years, I believe we've seen examples of that in every business.\nThis year, in the resilience of CF, the comeback of FLC in some parts of Econ business, in the last several years, the extraordinary performance of our tech business following the strategic changes they made five years ago or the performance of our stratcom business over now seven years.\nAnd I think the story is similar, if you think about it instead of by segment but by geography.\nJust think about the challenges our teams had of taking on difficult positions in, say, Australia or LATAM.\nThey were not small, nor is the challenge of conquering new markets in Europe.\nBut that's why I think our teams very much deserve the sense of excitement and pride that they have when they turned those platforms positions into platforms for growth.\nFor the second point, let me pick up on that word platform.\nWhat I'd like to underscore is that to me, the successes we have been having are not the end, but rather the beginning.\nThe success we've had has left us with powerful platforms that we can leverage going forward to extend that growth, to build upon it.\nThe success we've had in stability now to bet boldly in Germany and France, in The Netherlands, in China, in the Middle East, and in other places in a way that we could never have done a few years ago.\nIt gives us the ability to invest behind that successful tech business and that successful Stratcom business to drive our investigations business, to grow all those non-restructuring services in CorpFin, and in the face of a slow restructuring market to commit to continue to grow that business, to extend that global leadership, confident that it will eventually pay off in a big way and brand assignments in leadership positions in attracting great talent.\nTo me, to my knowledge, this company has never had such a rich set of opportunities before it as we do today.\nAnd that brings me to the third point to preview something Ajay will discuss, which is there's always near-term risk in these sorts of investments.\nLet me spend a minute on that.\nAs you know, our investments are typically in hiring.\nIf one instead buys a company, the investment shows up in its capital.\nIf on the other hand, you hire a lot of people, it shows up in EBITDA.\nThis year, our ambition is to have the highest organic growth rate during my tenure and I guess is during the company's entire history, the highest organic growth rate.\nThere is no way to make those sorts of bold bets without facing some short-term financial risk.\nAnd if you want to underscore some of the negatives, we're making those bets at a time when our most profitable business, our restructuring business, is facing market demand that is lower than it's been in 15 years according to one measure and 20 years according to another measure.\nAnd we no longer have the rollover of the large restructuring jobs from the early parts of the 2020.\nAnd we're facing compensation pressure due to wage inflation in a tight talent market.\nAnd at the same time, we're expecting rising SG&A expenses due to a rebound in travel expenses post COVID, as well as investments in infrastructure, to support the growth.\nSo one can get worried about the number of bets we're making.\nOne could wonder in the face of that, could we cut back on our bets.\nOf course, we could.\nBut let me underscore something else.\nI don't believe that's how one makes a company like this soar.\nIt's not how we've built this company over the last seven years.\nIt's not how we've achieved the growth we have.\nMy experience is when you have great people and great bets to make, you commit to those people, you commit to those opportunities and you make those bets.\nAnd you live with any potential short-term dislocations in the P&L.\nBecause if you do, even if there are short-term dislocations in the P&L in a couple of quarters or a year in the medium term, the company soars, it delivers for your clients.\nIt delivers for the people whose energy and sweat makes that success happen.\nAnd ultimately, thereby it delivers for the shareholders, as you have seen now over the last seven years.\nSo we are making those bets this year.\nAnd there is some risk in the near-term P&L.\nBut I will say those bets, those opportunities have left me never more excited about where we can take this company over the next while.\nI so look forward to sharing that journey with each of you.\nI will begin with some highlights from our full year 2021 performance.\nRevenues of $2.78 billion increased $314.9 million from $2.46 billion in 2020.\nGAAP earnings per share of $6.65 increased $0.98 from $5.67 in 2020.\nAdjusted earnings per share of $6.76 increased $0.77 from $5.99 in 2020 and adjusted EBITDA of $354 million was up $21.7 million from $332.3 million in 2020.\nOur record performance this year is primarily because of 12.8% revenue growth, once again demonstrating how beneficial it is to have the breadth of our service offerings.\nIn 2021, demand continued to decline for restructuring, often our highest margin service offering as access to capital remained abundant and many pandemic-related moratoriums and insolvency proceedings were extended.\nConversely, the continued high level of liquidity in the market spurred record levels of M&A activity, which drove strong demand for our economic consulting and technology segments, as well as our transactions practice within our corporate finance and restructuring segment.\nOur forensic and litigation consulting, or FLC segment, which was heavily impacted by pandemic-related travel restrictions and core closures in 2020, saw activity levels rebound across almost all practice areas in 2021.\nSo FLC has not yet reached pre-COVID-19 levels of business activity across the entire segment.\nLastly, our strategic communications segment recovered well from COVID-related impacts in 2020 and delivered a record year.\nWe also continue to invest in people.\nOur total headcount increased 7.3% year over year on top of the 13.5% increase in total headcount in 2020.\nRevenue growth more than offset the increase in direct costs, primarily from headcount growth and higher variable compensation, and an increase in SG&A expenses.\nNow I will turn to fourth quarter results.\nFor the quarter, revenue of $676.2 million increased $49.7 million or 7.9%, with revenues increasing across all business segments compared to the fourth quarter of 2020.\nGAAP earnings per share of $1.07, compared to $1.57 in the prior-year quarter.\nAdjusted earnings per share of $1.13, which excludes $0.06 of noncash interest expense related to our 2023 convertible notes, compared to adjusted earnings per share of $1.61 in the prior-year quarter.\nOf note, the fourth quarter of 2020 included a significant tax benefit resulting from the use of foreign tax credits in the U.S. and a deferred tax benefit arising from an intellectual property license agreement between our U.S. and U.K. subsidiaries, which boosted both fourth quarter of 2020 GAAP and adjusted earnings per share by $0.32.\nNet income of $38.2 million, compared to $55.6 million in the fourth quarter of 2020.\nAdjusted EBITDA of $62 million, compared to $82.3 million in the prior-year quarter.\nNow turning to our performance at the segment level for the fourth quarter.\nIn corporate finance and restructuring, revenues of $231.5 million increased 5.3% compared to Q4 of 2020.\nThe increase was due to higher demand for business transformation and transaction services, as well as an increase in pass-through revenues and success fees, which was partially offset by lower demand for restructuring services compared to the prior-year quarter.\nBusiness transformation and transactions represented 62%, while restructuring represented 38% of segment revenues this quarter.\nThis compares to business transformation and transactions representing 44% and restructuring representing 56% of segment revenues in the prior-year quarter.\nAs business transformation and transactions grew 50%, while restructuring revenues declined 27%.\nAdjusted segment EBITDA of $22.2 million or 9.6% of segment revenues, compared to $35.4 million or 16.1% of segment revenues in the prior-year quarter.\nThis decrease was primarily due to higher compensation, which was largely related to an increase in variable compensation and higher SG&A expenses.\nIn FLC, revenues of $138 million increased 8.5% compared to the prior-year quarter.\nThe increase was primarily due to higher demand for health solutions and investigation services.\nAdjusted segment EBITDA of $8.5 million or 6.2% of segment revenues, compared to $7.6 million or 6% of segment revenues in the prior-year quarter.\nThis increase was due to higher revenues, which was partially offset by an increase in SG&A expenses and compensation.\nEconomic consulting's revenues of $172.3 million increased 7.4% compared to Q4 of 2020.\nThe increase in revenues was primarily due to higher demand for non-M&A-related antitrust and financial economic services, which was partially offset by lower demand for M&A-related antitrust services compared to the prior-year quarter.\nNon-M&A-related antitrust services represented 33% and M&A-related antitrust services represented 20% of total segment revenues for the fourth quarter.\nAdjusted segment EBITDA of $30 million or 17.4% of segment revenues, compared to $31.3 million or 19.5% of segment revenues in the prior year quarter.\nThis decrease was primarily due to higher compensation.\nIn technology, revenues of $64.6 million increased 10.2% compared to Q4 of 2020.\nThe increase in revenues was primarily due to higher demand for investigations and litigation services.\nAdjusted segment EBITDA of $7.8 million or 12.1% of segment revenues, compared to $10.2 million or 17.3% of segment revenues in the prior-year quarter.\nThis decrease was primarily due to higher compensation, which includes an increase in variable compensation and the impact of a 14.7% increase in billable headcount, as well as higher SG&A expenses.\nLastly, in strategic communications, revenues of $69.9 million increased 15.5% compared to Q4 of 2020.\nThe increase in revenues was primarily due to higher demand for corporate reputation and public affairs services.\nAdjusted segment EBITDA of $14.9 million or 21.4% of segment revenues, compared to $11.7 million or 19.4% of segment revenues in the prior-year quarter.\nThis increase was due to higher revenues, which was partially offset by an increase in compensation and SG&A expenses.\nI will now discuss certain cash flow and balance sheet items.\nNet cash provided by operating activities of $355.5 million, compared to $327.1 million in the prior year.\nFree cash flow of $286.9 million in 2021, compared to $292.2 million in 2020, primarily due to an increase in net cash used for purchases of property and equipment, which includes capital expenditures related to our new office in New York City.\nThere were no share repurchases in Q4 of 2021.\nFor the full year 2021, we repurchased 422,000 shares at an average price of $109.37, for a total cost of $46.1 million.\nCash and cash equivalents at the end of the year were $494 million -- $494.5 million.\nTotal debt net of cash of negative $178.2 million on December 31, 2021, decreased $199.5 million compared to December 31, 2020.\nTurning to our 2022 guidance.\nWe are, as usual, providing guidance for revenues and EPS.\nWe estimate that revenues for 2022 will be between $2.92 billion and $3.045 billion.\nWe expect our earnings per share to range between $6.40 and $7.20.\nOf note, due to our adoption of a new accounting standard change that went into effect on January 1, 2022, we will not record noncash interest expense related to our 2023 convertible notes.\nAs such, assuming no other future special charges or adjustments, we currently expect earnings per share and adjusted earnings per share to be the same in 2022.\nAdditionally, pursuant to the first supplemental indenture for our 2023 convertible notes that was effective on January 1, 2022, the company is now required to settle the principal amount of our 2023 convertible notes that is due upon conversion in cash only versus at our option in cash or stock or a combination.\nWe retained the option of settling the premium, if any, due upon conversion of our 2023 convertible notes in cash or stock or a combination.\nImportantly, none of these changes affect the calculation of adjusted earnings per share in the prior periods.\nTurning to our guidance.\nOur 2022 guidance range incorporates several assumptions.\nFirst, as we have the wherewithal, intent, and opportunity to invest for growth, our plans include aggressive hiring globally.\nThough there is no certainty that we will be successful in such hiring, aggressive headcount additions typically result in reduced profitability in the short term.\nCoupled with investment in headcount, there is also increasing pressure on wages, and not all of this expense may be recoverable in price increases.\nSecond, though we believe we are the leader in restructuring globally, and we intend to maintain that position, we currently expect restructuring activity to improve only moderately over the course of 2022.\nAdditionally, many of the large restructuring engagements we supported in 2020 and 2021 has now concluded.\nMoody's trailing 12-month global default rate for speculative-grade corporate issuers was 1.7% as of the end of 2021, down from 6.9% in December of 2020.\nMoody's is currently forecasting that this rate will fall to a bottom of 1.5% in Q2 of 2022 and will gradually rise to 2.4% by the end of 2022.\nSome analysts don't expect a rebound in restructuring activity until 2023.\nThird, global M&A activity, which drives demand in our economic consulting and technology segments, as well as our transactions business and corporate finance and restructuring was at record levels in 2021.\nThough we currently expect that this elevated level of activity will continue, regulatory scrutiny, crystal policy, and other events globally may dampen such demand.\nFourth, demand in our FLC segment improved significantly in 2021 compared to pandemic-related lows in performance in 2020.\nHowever, over the course of 2021, demand for these services weakened.\nOur current expectation is for a rebound in such demand in 2022.\nFifth, certain aspects of SG&A such as travel and entertainment, have remained depressed due to the pandemic.\nOur expectation is that in 2022, SG&A may revert back closer to the per-person levels we saw in 2019.\nSixth, we expect a higher effective tax rate in 2022.\nWe currently expect our full year 2022 tax rate to range between 22% and 25%, which compares to 21.1% in 2021.\nOverall, based on our expectation for a gradual improvement in demand for restructuring and FLC services, our guidance assumes that the second half of 2022 will be stronger than the first half.\nI must point out that our assumptions define a midpoint and a range of guidance around such midpoint, which I characterize as our current best judgment.\nOften, we find actual results are beyond such range, because ours is largely a fixed cost business in the short term and small variations in revenue may have an outsized impact on income.\nAnd now, I will close my remarks today by emphasizing a few key themes.\nFirst, we believe FTI is unique in having such a diverse mix of services and that helps us thrive regardless of business cycle.\nSecond, our investment to build expertise in areas like information governments, privacy and cybersecurity, public affairs, and in industry verticals like energy, power and renewables and financial services and in geographies, including Continental Europe, the Middle East, and Australia are paying off, and we intend to double down on these and other investments.\nNon-U.S. revenues have more than doubled in the last five years, while U.S. revenues have grown by a third over that time frame.\nThird, our leadership remains focused on growth with strong staff utilization and realization.\nAnd finally, our business generates excellent free cash flow, and our balance sheet is exceptionally strong.\nWe have the capacity to continue to boost shareholder value through organic growth, share buybacks, and acquisitions when we see the right ones.\n",
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"content": "sees fy earnings per share $6.40 to $7.20.\nq4 adjusted earnings per share $1.13.\nq4 earnings per share $1.07.\nq4 revenue rose 8 percent to $676.2 million.\nsees fy 2022 revenue $2.92 billion to $3.045 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today, FCX reported second quarter 2021 net income attributable to common stock of $1.08 billion or $0.73 per share.\nAdjusted net income attributable to common stock totaled $1.14 billion or $0.77 per share.\nOur adjusted EBITDA for the second quarter of 2021 totaled $2.7 billion.\nAnd you can find a reconciliation of our EBITDA calculations on Page 35 of our slide deck materials.\nWe had a strong second quarter.\nOur copper sales of 929 million pounds and gold sales of 305,000 ounces were significantly above the year ago quarter, but our sales were approximately 5% lower for copper and 8% lower for gold relative to our recent estimates, primarily reflecting the timing of shipments from Indonesia.\nOur annual guidance is consistent with our prior estimates.\nOur results in the second quarter benefited from strong pricing.\nOur second quarter average realized copper price of $4.34 a pound was 70% higher than the year ago quarterly average.\nOur net unit cash cost of $1.48 per pound of copper on average in the second quarter was slightly above our estimate going into the quarter of $1.42 per pound, but that primarily related to nonrecurring charges associated with a new four-year labor agreement at Cerro Verde.\nOperating cash flow generation was extremely strong, totaling $2.4 billion during the quarter.\nThat included $0.5 billion of working capital sources.\nAnd our operating cash flow significantly exceeded our capital expenditures of $433 million during the quarter.\nOur consolidated debt totaled $9.7 billion at the end of June.\nAnd our consolidated cash and cash equivalents totaled $6.3 billion at the end of June.\nNet debt was $3.4 billion at the end of the quarter, and we achieved our targeted net debt level several months ahead of our schedule.\nWe are really pleased to reporting what's now becoming a string of really strong operating performances for our company.\nAnd with this great positive outlook for our business, we're all really enthusiastic about it.\nHoping all of you are staying healthy through this pandemic.\nVaccinations are giving us an opportunity to protect ourselves and those around us, and we're working hard to encourage our people globally to take full advantage of this opportunity whenever possible.\nOur teams are working safely.\nWe remain diligent with our COVID protocols that have been so effective.\nWith the recent rise in cases globally, we are refocusing, redoubling our efforts, restoring some protocols that we had loosened to keep our team and communities safe.\nOur results in the second quarter demonstrate really strong execution of our plans, really strong and favorable pricing for our products.\nKathleen mentioned the shipping issue.\nLogistics is an issue globally.\nWe've been able to -- we basically met or slightly exceeded our production targets.\nWe've been able to ship everything we produced.\nWe would have beat our sales target.\nWe also, common in the mining industry, had some one-off type issues affecting production.\nWithout those and with shipping, we would have had a real strong beat on our previous guide.\nReally important, our Grasberg underground ramp-up is proceeding on schedule.\nThis is a remarkable and, I would say, a historic success for both our company and even the mining industry.\nOur team in Indonesia is doing remarkable and outstanding work.\nAnd this is building value for our shareholders and long-term, sustainable, low-cost values for the future.\nWe're making money in the Americas.\nCopper prices -- production in the U.S. is increasing.\nOur Lone Star project in Eastern Arizona is really exciting.\nWe have a series of ongoing value-enhancing opportunities in the U.S. in front of us.\nAnd I'm personally really encouraged about future growth in the U.S. The South America teams in Peru and Chile are navigating the pandemic effectively.\nWe're restoring production that we have curtailed a year ago.\nWe have achieved these outstanding financial results made possible by the hard work and investments we've been making for many years.\nWe are now generating significant cash flows, which will be sustainable for years in the future.\nThis quarter alone, we had $2 billion of cash flow after capital spending.\nThat's just remarkable considering where we were just a year ago.\nKathleen mentioned, and it's notable that we reached our debt target several months earlier than our forecast earlier this year.\nWe ended the quarter with $3.4 billion of net debt, and that's within the targeted range we set at $3 billion to $4 billion.\nWe've reduced our debt by like 60% over the past year.\nWe're now positioned in accordance with the financial policy that our Board adopted earlier this year and that we disclosed to the market to shift our capital allocation priorities by increasing cash returns to shareholders as we make disciplined investments for future growth of our business.\nThis policy will allow us to maintain a strong balance sheet with high-grade credit metrics while providing cash for increasing shareholder returns and investing in our company's long-term future.\nSlide four talks about how we're devoting significant attention and resources to sustainability initiatives.\nAnd this has always been key to our company and a position of our company.\nWe are committed to the sustainability principles of ICMM.\nWe're also moving to certify all of our operations with The Copper Mark, a relatively new industry framework developed by the International Copper Association to ensure responsible production consistent with UN sustainability development goals.\nTo date, we lead the industry with six of our operations now certified.\nIn the second quarter, we submitted five additional operating sites for this initiative, and we've committed to validate all of our sites to this robust framework.\nResponsible production is critical in building and maintaining trust, which we've earned over the years through long-standing partnerships with communities as we deliver a product, copper, valued by society, produced in safe, environmentally sound, innovative manner.\nSlide five talks about electrification, which is key to copper.\nMajority of copper goes into generating and transmitting electricity, and copper is critical in every aspect of achieving low carbon goals for the global economy.\nThis ranges from electric vehicles and supporting infrastructure to clean energy from wind and solar.\nCopper is just simply essential to a green economy.\nThis transition is now just beginning to unfold.\nIt will add significantly to future demand for copper.\nAnd as the global leading copper producer, Freeport is solidly positioned to benefit from this higher future demand.\nIn addition, now companies around the world are responding to COVID with aggressive physical and monetary policies.\nThis alone is creating important near-term copper demand beyond China.\nAnd China's consumption remains strong.\nThere are some mixed economic signals.\nBut even with that, demand for copper in China is strong.\nAnd now as higher consumption is being generated from economic recovery in developed countries around the world, and that's even in the face of an important sector of copper demand, automobiles, which is being constrained by this chip problem.\nSo this increasingly important incremental demand outside China, the long-term growth from global -- from growth in emerging markets just is very positive for our outlook.\nCopper demand is also expanding from technology advances in communications, artificial intelligence applications, expanding connectivity through global infrastructure initiatives and efforts to improve health through using copper to fight viruses and other infections.\nSlide six talks about this growing demand, the global challenges in maintaining much less growing supply makes the outlook for copper, compelling.\nI would say compelling is an understated word.\nReally, really positive and enthusiastic about it.\nThis recent pullback in copper pricing that we've seen has not altered in any way our conviction, but the favorable long-term outlook for copper.\nThis is a decision we made years ago, which underscores our strategy at Freeport to focus on copper because of its favorable fundamentals, the nature of our assets and our team.\nThere are always actions that influence sentiment in short-term pricing at any point in time.\nSo beyond that, indisputable facts support a positive fundamental outlook for copper.\nDemand growth is inevitable.\nMaintaining supply or growing supply is challenged.\nOur prices will be required to support major new investments in copper.\nRising demand, scarcity of supplies point to large impending structural deficit, supporting much higher future copper prices.\nOur company has high-quality assets, industry-leading experience, highly motivated team will allow us to benefit from these fundamentals.\nPortfolio of assets in the copper business is rare, if not unique, in our industry.\nIt would be difficult, if not impossible to replicate these assets.\nWith strong growing production, embedded brownfield, low-risk growth from our large portfolio of undeveloped resources, our assets are extremely valuable in today's world and will become more valuable as these market develops -- market deficits emerge in the future.\nSlide seven highlights our growing margins and cash flows.\nWe've had meaningful volume growth in recent quarters that you've all seen.\nThis growth will continue.\nFor the year 2021, copper value -- copper volumes are projected to increase 20%; gold volume, 55% over 2020.\nThen looking forward to 2022, we'll see a further growth of 15% to 20% over 2021 levels.\nThe capital and execution risk to achieve these higher volumes are largely behind us.\nOur volumes will -- with low incremental costs, we yield expanding margins at prices ranging from $4 to $5 per pound for copper.\nWe've generated annual EBITDA for '22 and '23 of $12 billion to $17 billion of copper with capital expenditures in the range of $2.5 billion a year.\nLooking back, there was always an overhang for report related to execution risk with this underground development, political risk in Indonesia, debt levels.\nIf you look back over the past three years, we have met and mitigated all of these major risks that were overhanging our company, and it's been a really exciting and gratifying time for our company.\nSlide eight highlights the great progress we're making with the Grasberg underground ramp-up.\nI just met with Mark Johnson and his team in Indonesia and really congratulating them on the fabulous work they're doing even in the face of COVID.\nIn the second quarter, we achieved just under 80% of our target annualized run rate for metal sales.\nWe're on track to reach full rates of metal production by the end of the year.\nAnd our team in Indonesia has just done a fabulous job in the face of dealing with pandemic and a challenging physical environment.\nWe executed well-designed operating protocols.\nWe're dealing with this new upturn in cases in Indonesia in recent weeks.\nWe're helping to support the government and our local community.\nWe've implemented travel, other restrictions to mitigate the spread.\nWe're encouraged by the increasing availability of vaccines at our job site and generally in Indonesia.\nA number of our workers -- a significant number have already received vaccines -- have received vaccines.\nWe have a goal of providing vaccines to all of our workforce in the second half of the year, and we're supporting nearby communities in their efforts to respond to COVID.\nWe have a real strong support from the government of Indonesia, a real positive partnership with PT-FI state home shareholders on that shareholder mine and they were all working together and are aligned.\nI've been working in Freeport for 30 years -- over 30 years.\nAnd I'm personally proud and gratified by our team's accomplishments since we began investing in the underground over 20 years ago, transition from the open pit that began 18 months ago and dealing with COVID, it's just remarkable what we've been able to do.\nPlanning and investing in this transition began in the 1990s.\nNow experiencing this success is special for all of us at Freeport.\nWe now look forward to continuing long-term success at Grasberg by building value to this world-class historic mining district with low-cost, high-volume and sustainable production.\nSlide nine shows the multiple options for brownfield low-risk growth across our global portfolio.\nIncreasingly encouraged by the opportunities in the U.S. where we have favorable community support across the board with where we operate, favorable tax situation and a long history of working in a responsible way.\nWe are expanding our mine production at Lone Star, Bagdad, other sites.\nAnd we have exciting new opportunities from technology evolving leach recovery from our historical operations.\nThe Lone Star mine, our newest operation situated adjacent to our long-standing operations in Southeast Arizona.\nThere, we have strong community support, and this new mine is performing above design capacity.\nWe're evaluating expansions of Lone Star's oxide ores.\nWe're actually making a lot of money in what normally would be stripping operations.\nWe're conducting long-range planning for the development of a potentially world-class sulfide resource that lies beneath this oxide cover in our historical mining area.\nWe have an opportunity and a strong likelihood of moving forward with constructing a new concentrator to double production in our Bagdad mine in Northwest Arizona.\nWe expect to commence this project next year.\nEmerging leaching technology, which I am pumped about, provides substantial opportunities for added growth across our portfolio of global resources.\nWe are evaluating an attractive expansion operation -- expansion opportunity at our El Abra mine in Chile where we're partners with CODELCO.\nThis project would require significant capital investment and long lead time, but it's attractive and large.\nMajor future expansion in El Abra is likely, but not now.\nWe are deferring investment decision on this project until we have more clarity about the mining policy issues currently under consideration by the government in Chile.\nWe're also evaluating development of an underground deposit of Kucing Liar in the Grasberg district operated by PT-FI.\nThis copper gold resource involves a large block cave mine using the substantial infrastructure that we already have in place.\nWe have expertise, long track record.\nMark Johnson and his team has come up with revised development plans that make the project less capital-intensive.\nThe economic is better.\nIt's a large operation.\nIt would be a block cave with about 90,000 tonnes per day.\nSo that's a real big, six billion tonnes of copper resource, six million ounces of gold, and it fits right in with our plans.\nWe have additional opportunities to invest in projects to support our copper -- our carbon reduction, our sustainability goals, including investing to develop clean renewable energy for our operations and communities.\nWe're advancing plans for an exciting ESG-type project to recover metals from the recycle of electronic devices at our Atlantic Copper processing facilities in Spain.\nBottom line, we're going to be disciplined in devoting capital to new investments.\nWe're going to be focused on value-added projects supported by long life reserves.\nWe have a long track record of success in developing projects.\nWe have established license to operate and positive relationship and support from communities where we have the opportunities to invest.\nSlide 10 goes back to Lone Star, shows we're meeting, exceeding expectation.\nOriginal plan was 75,000 tonnes a day, 200 million pounds of copper.\nWe now exceeded this, reaching the targeted rate of 95,000 tonnes a day.\nOn a sustained basis, we have takeouts capacity to do this to yield 285 million pounds of copper.\nLooking at a further increment that would involve a relatively small investment in tank houses, mining equipment to produce 300-or-more pounds of copper, 50% more our than original design.\nThe project view though is longer term.\nWe have a major opportunity for Lone Star to become a cornerstone asset for our company.\nPotential resource is 10 times more than our current reserve.\nAs we mine these oxide ores, we're gaining access to this underlying potentially massive sulfide resource.\nLong-term cornerstone asset for our company.\nSlide 11 talks about this reference I made earlier through reaching technology, gaining additional copper from material that's already mined.\nWe have lots of opportunities to apply.\nIt's an exciting potentially high-value opportunity with low incremental cost and low carbon footprint.\nWe're engaged in multiple studies using a range of different technologies internally and externally to capture this value from existing stockpiles.\nOur estimate now is for 38 billion pounds of copper in these stockpiles.\nThis is material that's already been mined.\nAnd if we can recover just 10% to 20% of this material, it would be like having a major new mine with variable capital and operating costs.\nA significant portion of this is in our flagship Morenci mine, the largest mine in North America, where we are now applying artificial intelligence, data analytics to help us understand what's going on with these leaching performance opportunities.\nOur team historically was an instrumental in unlocking substantial values years ago with the new SXEW technology.\nWe are now focused on taking this leaching technology to the next level by using modern approaches to it.\nWe've established a cross-functional team of technical experts, metallurgists, mine planners, data scientists, geologists, business analysts all working together to take full advantage of this really exciting opportunity.\nWe have strong operating franchises in the U.S., South America and Indonesia, gained the trust and respect of our partners, our customers, suppliers, financial markets, and more importantly, the workers, communities and host governments where we operate.\nWe have significant large-scale project development, operating expertise.\nTeam Freeport has all the capabilities to undertake new projects in a responsible, efficient manner.\nI want to close on slide 13 by recognizing the people of Freeport.\nAll around the world, their commitment, dedication, resilience, positive outlook, cooperative spirit is just gratifying.\nOur team is passionate about the role we're going to play in achieving a better and more sustainable future for everyone.\nTeam Freeport has the capabilities and drive to continue to meet, exceed our own high level of expectations and those of our stakeholders.\nWe're living in a great -- a time of great challenge and exceptional opportunity for our business.\nAt our team, we're meeting the challenges, embracing the opportunities.\nOur future is bright.\nWe at Freeport are charging ahead responsibly, reliably and relentlessly.\nRichard talked about the great progress we're making at Lone Star.\nWe're very focused now on sustaining the rates to keep our tankhouse full there, which has a capacity of 285 million pounds per year of copper and looking at potential increments beyond that with relatively small and attractive investments.\nRichard also mentioned our plans at Bagdad.\nWe're advancing studies to double the capacity there and hope to be in a position to qualify a project and commence a project there next year.\nAt Morenci, we've started to increase our mining rates, which had been curtailed in the last 12 months.\nWe averaged about 725,000 tonnes per day of mining material in the second quarter and are ramping up to reach 800,000 tonnes per day by the end of this year, going to 900,000 tonnes a day in 2023.\nWe've also advanced from 2022 the restart of some of Morenci milling capacity.\nThat was also idled last year to reduce cost.\nNow with the improvement in copper prices, these actions result in more profitable production.\nWe're also very encouraged by the opportunity to add low-cost production at Morenci through our leach technology initiatives.\nIn South America, the teams are continuing to work to restore production to prepandemic levels.\nWe continue to target a full restoration at Cerro Verde in 2022.\nAnd we've been running at about 95% of the mill capacity in recent months.\nThat was in advance of our labor agreement exploration, which is coming up at the end of August of this year.\nWe're very pleased with the win-win outcome of the agreement and now working to conclude a mutually satisfactory agreement with the balance of employees.\nAt El Abra in Chile, we're well on our way to restoring production levels that were curtailed last year.\nWe're increasing the stacking rate of material on the leach pads and moving forward to add a new leach pad to accommodate the higher rates.\nThis is capital that was always part of our plan, but was deferred last year as part of the capital conservation plans that we rolled out in April of last year.\nThis allows El Abra to increase production on a sustained basis to about 200 million to 250 million pounds per annum for the next several years as we assess opportunities for a major expansion there.\nAs Richard talked about at Grasberg, we're continuing to deliver results and generating strong cash flows.\nAs you recall, we started the second quarter with significantly more concentrate inventory than we normally carry with the strong production volumes and some maintenance downtime at our port, weather issues at quarter end, sales were below our earlier estimates in the quarter.\nThis is really a short-term timing issue, and we expect to be able to work inventory levels down in the second half of this year.\nWe successfully commissioned at Grasberg the second crusher at our Grasberg Block Cave during the quarter, and that will provide sufficient capacity for a ramp-up to 130,000 tonnes per day.\nYou've seen the performance and the records achieved from the Grasberg Block Cave during the quarter.\nWe're also moving to advance the installation of our third SAG mill there.\nThat's been part of our plan to support the higher rates of throughput.\nWe've also identified an opportunity to invest in a new mill circuit that will allow us to increase copper and gold production in Indonesia through the achievement of higher mill recoveries when the initial phases of this project and the economics are highly attractive.\nOur global team also remains focused on cost management and efficiency projects to extend equipment lives, improve energy efficiency and maintenance practices with the use of technology.\nWe have experienced some degree of cost increases this year, principally from energy price increases and, to a lesser extent, the impact on consumables of steel price increases, increased freight costs and sulfuric acid cost.\nWe've had -- partially offsetting these items, we've had the benefits of a weaker exchange rate in South America versus the U.S. dollar.\nThe increases in costs have been offset by significant increase in molybdenum prices in recent months, and those have provided a very nice hedge to certain of these cost inflation items.\nWe talked on slide, you've seen in the release our plans for -- to meet our commitments in Indonesia for the new smelter.\nOn slide 16, we provide an update on our plans to meet the commitment that we agreed to with the Indonesian government in 2018 to construct two million tonnes per year of in-country processing facility of copper concentrate.\nWe have been advancing the discussions with our Japanese partners to expand the existing smelter at PT Smelting.\nThat would fulfill a portion of the obligation.\nAnd there are several financial and operating benefits of expanding this facility, which has been expanded very efficiently in the past.\nAfter considering various alternatives for the balance of the commitment, we've concluded that the best long-term option is to continue with our plans to construct a new greenfield smelter in East Java near the existing facilities at PT Smelting.\nWe recently entered into an EPC contract with Chiyoda to construct a 1.7 million tonne facility there.\nAnd we're now focused on completing the project as efficiently and as timely as possible.\nWe show in the graph on slide 16 on the right, the estimated timing of expenditures over roughly a three-year period.\nFCX is responsible for 49% of these expenditures.\nWe recently completed a new $1 billion bank credit facility for PT-FI to advance these projects and are planning additional debt financing, which can be attained at attractive rates to fund these activities.\nAs indicated, the long-term cost of the financing expected for the smelter would be offset by a phaseout of the 5% export duty.\nAnd we show a graph on the bottom of slide 16 which shows you that the economic impact is not material as the cost of the smelter would be essentially offset in lower duties, which we're currently paying.\nSlide 17 provides a three-year outlook for volumes.\nThese are consistent with our previous guidance.\nWe're continuing to pursue additional incremental near-term growth opportunities and conducting our longer-range development planning.\nMoving to slide 18, we show the significance of cash flow generation using these volumes and cost estimates.\nAnd the price is ranging from $4 to $5 copper and holding gold and molybdenum flat at $1,800 per ounce of gold and $16 per pound of molybdenum.\nWhat you see here on these graphs, we would generate EBITDA in the range of over $12.5 billion per annum for '22 and '23 on average at $4 copper to $17 billion per annum at $5 copper.\nAnd at operating cash flows, net of taxes and interest would be $9 billion to $12 billion using these price assumptions.\nAs demonstrated in the second quarter, we're generating very significant free cash flow, and this trend is expected to continue with cash flow significantly above our capital spending.\nOn slide 19, we include our projected capital of $2.2 billion this year and $2.5 billion in 2022.\nAs you'll note, we shifted about $100 million in expenditures from 2021 to 2022, which was timing related.\nAnd we've advanced some capital from future years into 2022 to reflect the timing of additional leach pad construction at Lone Star and the addition of some highly attractive growth spending in Indonesia related to mill recoveries.\nWe've entered a period of outstanding free cash flow generation.\nWe've got growing volumes, strong markets and low capital requirements.\nYou'll see on slide 20, and this is backward looking, but over the last 12 months, we've reduced our net debt by $5 billion, and that included $2 billion in the second quarter alone.\nYou'll see our credit metrics are strong and less than 0.5 times EBITDA on a trailing 12-month basis.\nAnd we're projecting our credit metrics to continue to be strong and improving.\nAs Richard mentioned, we achieved our targeted net debt level several months ahead of our schedule with our long-lived asset base and growing production profile and strong markets.\nWe'll have the ability to continue to strengthen our balance sheet, provide increasing cash returns to shareholders and build additional values in our asset base.\nThe slide on 21 just reiterates our financial policy.\nWe have performance-based payout policy, which was established by our Board earlier this year, providing up to 50% of free cash flow, would be used for shareholder returns with the balance available for growth and further balance sheet improvements.\nAnd with the recent achievement of our net debt target, we expect our Board will consider additional payouts to shareholders with our 2021 results.\nWe're looking forward to reporting on our continued progress and continuing to build additional values as we go forward.\nKathleen, I want to put an exclamation point on your -- the comments you made about cost management.\nEveryone is focused on inflation around the world and the impact on mining companies.\nAnd as Kathleen said, we've had higher energy costs, higher grinding material cost.\nBut Josh Olmsted and our Americas team have just done a great job in helping offset that.\nMike Kendrick in running our molybdenum business, which is a primary production business and a by-product business and with higher molybdenum prices is offsetting us some of these cost increases.\nWe've got a high gold price which helps us.\nDanny Hughes is leading our supply chain group.\nAnd so a combination of all these things is helping us as a company to really mitigate much of these increases in costs, working with logistics.\nSo I just wanted to make a note of that because I think it's important giving -- given all of our concerns about where inflation is leading us.\nSo let's do turn over to questions.\n",
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"content": "compname reports q2 earnings per share of $0.73.\nqtrly earnings per share $0.73.\nfreeport-mcmoran - average realized prices in q2 2021 were $4.34 per pound for copper, $1,794 per ounce for gold and $13.11 per pound for molybdenum.\nqtrly adjusted net income attributable to common stock totaled $1.14 billion, or $0.77 per share.\nconsolidated sales totaled 929 million pounds of copper, 305 thousand ounces of gold and 22 million pounds of molybdenum in q2.\nramp-up of grasberg underground mines advancing on schedule.\nfreeport-mcmoran - sees q3 consolidated sales of 1.035 billion pounds of copper, 360 thousand ounces of gold and 21 million pounds of molybdenum.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company's current expectations and there can be no assurance the company's actual future performance will meet management's expectations.\nWe're happy to have the opportunity to talk with you today.\nWe're pleased that in the first quarter of fiscal 2021 our operations continue to demonstrate their strength, agility, and ability to progress even during the continuing pandemic.\nSpecifically, as you can see in Slide 3, in the first quarter revenue was strong driven particularly by the strength and growth of All Access Pass and related sales, gross margins increased by 359 basis points compared to those in last year's strong first quarter, operating SG&A declined by $4.4 million, adjusted EBITDA was $3.7 million versus an expectation of between $2 million and $2.5 million, our net cash provided by operating activities increased 60% [Phonetic] or $4.1 million to $10.9 million, substantially exceeding even the $6.8 million of net cash provided by operating activities in last year's first quarter and we ended the quarter with approximately $49 million of liquidity, up from $42 million at the end of the fiscal year in August and up from $39 million at the start of the pandemic.\nSo we are pleased with the continued progress in the first quarter and I'd like to discuss the results in more detail in just a moment, but first just thought we'd provide a little context.\nIn our year-end conference call a little over two months ago, we reported that in our Enterprise Division in North America, which accounts for approximately 70% [Phonetic] of total enterprise sales and where all Access Pass and related sales account for 84% of total sales on the way to 90%, we reported first, as you can see on Slide 4, chart 1A on Slide 4 in the far left hand corner, we expect All Access Pass subscription sale -- that we as expected reported All Access Pass subscription sales had remained strong throughout the pandemic to date, growing 18% in North America for the period March through August and as indicated, we said that we expected All Access Pass subscription sales to continue to be strong through this year's fiscal first quarter and on an ongoing basis thereafter.\nSecond, as shown in the chart 1B on Slide 4, we said that after the initial disruption of live on-site coaching and training services during the first six weeks of the pandemic, are quick [Phonetic] to delivering training and coaching services live online, a capability we've had for more than a decade, allowed our add-on services to rebound quickly.\nWe reported that as a result by July, our new bookings of services had returned to essentially the same levels we had achieved in the prior year.\nWe said that we expected this booking trend to continue in Q1 and beyond.\nThird and chart 1C, in our international operations, we reported that despite having had only nationed [Phonetic] All Access Pass subscription businesses in most of our international operations and that's a relatively small base of All Access Pass subscription revenue to cushion them, they had begun to recover.\nAs we said, we expected these operations to strengthen further as the year progressed and that the accelerated focus on All Access Pass in these offices would over the next few years allow them to achieve a strong base of subscription and related [Technical Issues] achieve revenue retention rates and build up the deferred revenue, similar to that currently being achieved in our North American operations.\nAnd finally, as indicated in 1D, we said that in our education division, which accounts for just under 20% of total sales, we had achieved very high Leader in Me subscription school retention in last fiscal year and that remarkably in the middle of the pandemic, we had also added 300-plus new schools, almost all of which came on during the pandemic.\nWe said that notwithstanding a continued difficult school environment, we expect that our subscription retentions remain high and even increased in fiscal 2021 and that we expected to add even more new Leader in Me schools in fiscal 2021 than in fiscal '20.\nWhile the environment has continued to be challenging, we're happy to report that as indicated in Slide 5, these positive trends have continued and even accelerated through the first quarter and continue to accelerate in the second quarter.\nAs shown, 1A All Access Pass subscription sales continued to be very strong in the first quarter and invoiced amounts accelerated even faster building the foundation for future acceleration of actual subscription sales.\nSecond, All Access Pass related sales rebounded quickly and are now exceeding the levels achieved last year even pre-pandemic.\n1C, sales in China, Japan and among our other international offices have continued their strong recovery and finally Leader in Me membership retention from existing Leader in Me schools has been very strong in the first quarter we'll talk about and sales to new schools were off to a very encouraging start.\nDiving a little deeper, I'd like to address each of these points so that you have some background and transparency on them.\nFirst, as shown in chart 1A in Slide 6, total company All Access Pass subscription sales grew 16% in the first quarter to $17 million and grew 17% to $65 million for the latest 12 months.\nIn addition, as also shown in chart 1B in Slide 6, total company All Access Pass amounts invoiced which are added to the balance sheet and which form the basis for accelerated future growth in sales -- oops, we got some paper shuffling in the back here sorry somewhere, increased -- seeing our invoiced amounts increased an extremely strong 55% in the first quarter and even excluding a large government All Access Pass contract, growth was still very -- growth in invoice sales was still a very strong 32%.\nThis establishes a strong foundation for accelerating future growth.\nImportantly, All Access Pass performance was strong across all of the key elements that we look at for All Access Pass, including sales to new logos, which increased substantially both in the first quarter and for the latest 12 months, nine of those 12 months of course took place during the pandemic and still had new logos increase every quarter.\nAnnual revenue retention, which continued to exceed 90% both for the quarter and for the latest 12 months as you can see in 1C and the sale of multi-year contracts, which as shown in 1D were unbilled deferred revenue related to multi-year contracts grew 19% in Q1 compared to Q1 '20 to $40.5 million.\nSo we're really pleased that all of the key underlying metrics and drivers were strong.\nAs shown in chart 1A then on Slide 7, in addition, in North America as previously noted, our almost immediate pivot to booking and delivering coaching and training engagements live online allowed us to continue to meet the needs of our customers remotely and interestingly the flexibility which live online delivery provides has in many cases also resulted in clients expanding the extent of their use of add-on services because they see it so simple to get people together and do it.\nAs shown, the strong booking trend for add-on services, almost all of which are now being delivered online, which by July had resulted in our booking pace equaling that achieved at the same time in the prior year and then exceeding it by the end of August has continued strong through December.\nThe increase in bookings, which is a lead measure or predictive measure to this booked, but not yet recognized drove an increase in the lag measure, which is the actual invoiced sale of services having been delivered and both bookings and sales of services have continued to strengthen.\nAs you can see in the chart one of Slide 7 with the beginning of the pandemic in March, bookings of live on-site services were [Phonetic] necessarily canceled, the stay-at-home restrictions and the year-over-year volume of services followed down with delivered engagements down 6.9 million in North America in the third quarter.\nHowever in the fourth quarter of fiscal 2020, new bookings increased to the level nearly equal to that we'd achieved in the fourth quarter of fiscal '19 and this in turn drove an increase in the dollar volume of services actually delivered.\nAs a result, instead of being off $6.9 million as in the third quarter, the dollar volume of services delivered in the fourth quarter was off only $1.1 million.\nThis same positive trend continued in the first quarter with total bookings were up year-over-year and invoice of sales which followed were only off $200,000 compared even to last year's very strong first quarter and when you add in December results for the first four months of fiscal 2021, September through December, actual sales of services delivered exceeded those achieved for the same four-month period last year, which was a very strong period for us last year pre-pandemic.\nAs shown in chart 1B in Slide 7, it's important that 87% of our clients have now shifted to live online delivery of services.\nThis is important, with 87% of our clients now having shifted to live online, our susceptibility to the future cancellations has been reduced substantially.\nSo we're very pleased with the trends continuing here.\nMaybe just turn to our international operations.\nSecond, as you can see in Slide 8, sales in China, Japan, Germany and among our other direct offices and licensee partners in the first quarter improved substantially compared to both the third and fourth quarters.\nAt the start of the pandemic, we had to reschedule substantially all live on-site training engagements in these countries and since these countries were just starting to sell All Access Pass and therefore did not have a strong base of durable subscription revenue to cushion them, sales in these countries declined to only $4.1 million in the third quarter compared to $12.7 million in the third quarter of fiscal '19.\nHowever, in last year's fourth quarter, while still operating well below the levels achieved in last year's fourth quarter, sequential sales in these countries increased 70% to $7 million from the $4.1 million in sales in this year's third quarter -- in last year's third quarter and we had said we'd expect that our international operation would continue to strengthen in the first quarter and we were pleased that they did.\nAs shown in the first quarter, international sales were $9.9 million, ahead of our expectation of $9 million and while still below the level achieved last year, this represented an increase of $2.9 million or 41% compared to the $7 million achieved in the fourth quarter and was 2.4 times the amount -- the $4.1 million amount achieved in the third quarter.\nImportantly, in addition to the significant recovery in reported sales, our international operations have also seen strong increases in All Access Pass amounts invoiced, which are starting to build the balance of deferred revenue on the balance sheet that will drive sales in these countries in the future.\nSo we feel good about the direction in these countries and strategically also the acceleration of their shift to All Access Pass.\nFinally, as shown in Slide 9, in the Education Division, despite an environment that continues to be very challenging, as we all know, we've seen some strengthening in trends in the first quarter, including one that the number of Leader in Me schools which have renewed or ready to renew their Leader in Me membership contracts has increased to 615 compared to 450 schools at the same time last year.\nSecond thing is that the number of new Leader in Me schools contracting or in the process of contracting after being down in the fourth quarter and equal to that achieved in last year's first quarter, which was of course pre-pandemic.\nAnd so considering the current education environment, we feel very good and encouraged about these trends in education.\nLet me now dive a little deeper into our first quarter performance.\nOur adjusted EBITDA for the first quarter was $3.7 million, exceeding our expectation of achieving adjusted EBITDA between $2 million and $2.5 million.\nThese results are even more notable in light of the fact that last year's first quarter was itself very strong.\nNext, as shown on Slide 11, our cash flow and liquidity position were also very strong.\nAs shown on Slide 11, our net cash generated for the quarter of $532,000 in our -- one of our lowest quarters, was $4.9 million higher than in last year's first quarter.\nThis reflects almost entirely that our significant growth in new All Access Pass contracts invoiced resulted in our net deferred revenue position not going down as much -- we're pulling stuff off the balance sheet versus what you added on actually improved by $6 million versus the prior year.\nAs you can see in Slide 12, also our cash flow from operating activities for the first quarter was $10.9 million, which was $4.1 million or 60% [Phonetic] higher than last year's $6.8 million.\nThis strong cash flow reflects an additional benefit of our subscription business model is that we invoice upfront and collect all of the cash faster than we recognize all of the income and so it actually generates cash faster than it generates income.\nAs a result, we ended our fiscal year in August with more than $40 million in total liquidity comprised of $27 million of cash and our $15 million revolving credit facility undrawn, an amount that was even higher than we had at the start of the pandemic and we're pleased that we added further to this liquidity during the first quarter and in the first quarter was $49 million of total liquidity comprised of $34 million of cash, which means no net debt and with our $15 million revolving credit facility still undrawn and available.\nSo we're pleased with the financial position.\nThis strong performance was driven by, you can see on Slide 13, strong growth -- our revenue growth, our revenue was $48.3 million, was strong and a little bit stronger than we would have thought, driven by -- particularly by our North American operations, which in turn was driven by the performance of All Access Pass.\nAs you can see in Slide 1A of Slide 14, companywide All Access Pass subscription sales grew 16% in the first quarter and in addition to the All Access Pass subscription revenue actually recognized in the quarter as we talked about and as shown in chart 1B of Slide 14, we also achieved an extremely strong 55% growth in All Access Pass amounts invoiced and as I mentioned, even excluding a large government contract, growth in All Access Pass amounts invoiced was still a very strong 32%.\nAs you know, most of the significant growth in All Access Pass amounts invoiced was not recognized in the quarter, but was added to the balance sheet as deferred revenue that will be recognized in future quarters accelerating our results in those quarters.\nAnd as noted previously, also these new invoiced amounts included strong sales to new logos, a continued quarterly and latest 12-month revenue retention rate of greater than 19% [Phonetic] as you can see in 1C, the largest number of All Access Pass expansions and shown in 1D, a large volume of multi-year All Access Passes, which increased our unbilled deferred revenue, which of course will flow into sales in future quarters.\nAll Access Pass add-on sales were also very strong in the first quarter as we mentioned previously, our add-on services booking momentum, which is a lead indicator to actually add-on sales returned to levels equal to the prior year as early as July and our booking pace accelerated beyond that in August and through the first quarter and through December.\nThis is resulting in a strong booking pace that's resulted also then in strong actual delivered revenue where worldwide these services increased to $9 million, which was a bit above actually even that achieved pre-pandemic in last year's very strong first quarter where we actually saw very significant growth of add-on sales compared to the prior year.\nSecond, as you can see in Slide 15, All Access Pass drove also strong gross margin growth again in the first quarter.\nThe gross margin percent was 75.3%, it's up 359 basis points from the 71.7% achieved in the first quarter of fiscal 2020 and up 275 basis points for the latest 12 months.\nAs a result, our gross margin percentage for the Enterprise Division in the first quarter increased to 80.6% compared to 75.3% in last year's first quarter, an increase of 530 basis points.\nYou can see our SG&A was lower than last year, it came in at $32.7 million, which was $4.4 million lower than last year's first quarter and finally, the combination of these factors is in adjusted EBITDA as we mentioned before coming in at $3.7 million in the first quarter compared to an expectation of between $2 million and $2.5 million and just $1.3 million lower than in last year's very strong quarter despite the slower recovery in our international operations.\nWe mentioned again that we had strong invoice in multi-year sales in the first quarter and because most of these sales were not recognized, it built up our balance of deferred revenue, which as you can see in Slide 16, our total balance of billed and unbilled deferred revenue increased to $97.4 million, reflecting growth of $14.7 million or 18% compared to our balance of $82.7 million at the end of last year's first quarter.\nAs noted, last quarter, I'll just note again, approaching $100 million of deferred revenue -- billed and unbilled deferred revenue is a big landmark for subscription businesses.\nThis provides significant stability of and visibility into our future performance and this strong combination of factors both reported sales, new bookings, balance sheet improvement, and increases in balance of deferred revenue continues to drive our expectation that we will generate very high rates of growth in adjusted EBITDA and cash flow in 2021 and on an ongoing basis.\nAs you can see in Slide 17, you've seen this before, we expect to generate adjusted EBITDA of between $20 million and $22 million in fiscal 2021 and we're pleased to be off to a strong start toward this objective.\nAchieving $20 million to $22 million in adjusted EBITDA would represent approximately 50% increase in adjusted EBITDA compared to the $14.4 million we achieved in 2020.\nOur target is to see adjusted EBITDA then increase by approximately $10 million per year each year thereafter to approximately $30 million in 2022 to approximately $40 million in 2023.\nThese targets reflect our expectation that we will achieve at least high-single digit revenue growth each year, growth that's approximately $20 million per year of revenue growth.\nThen on average approximately 50% of that amount of growth in revenue will flow through to increases in adjusted EBITDA and cash flow reflecting our high gross margins -- strong gross margins and variable selling costs.\nWe fully expect to achieve an adjusted EBITDA to sales margin of 20% in the coming years and really to become a $1 billion market cap company in the coming years even at an adjusted EBITDA multiple that's conservative relative to our adjusted EBITDA growth rate and without relying on multiples of revenue, which we should increasingly be able to garner.\nLooking forward, I'd now like to address the three factors that we expect to drive us toward the achieving of these strong objectives and of our being a consistently we hope and expect high adjusted EBITDA growth, high cash flow growth company.\nOn move navigation Slide in 18, those three points are the three drivers.\nGrowth driver number one is the strength of the All Access Pass economic engine, which we've talked about.\nGrowth driver number two is that we are making significant ongoing investments in areas that are our customers value most and in which we already have significant competitive advantages.\nAnd third is actually the strength of our organization and leadership in our teams throughout the world.\nShown in Slide 19, growth driver number one is the strength of the All Access Pass economic engine.\nIn Slide 20, you see the All Access Pass and related sales have driven the vast majority of our growth in revenue and adjusted EBITDA over the past five years.\nYou can see since 2015, annual All Access Pass and related sales have grown from really nothing to more than $90 million through fiscal year 2020 reflecting a huge compounded average growth rate and average absolute All Access Pass and related revenue growth of between $10 million and $20 million each year.\nThis growth in All Access Pass and related sales has generated the vast majority of the total revenue growth for the company overall during these years and in almost every individual year more than offsetting the early run-off of our legacy facilitator and onsite businesses which are now largely behind us with 84% of our revenue now in Enterprise Division in North America coming from All Access Pass and related.\nSecond, as you can see in Slide 21, in the first quarter, companywide All Access Pass subscription sales grew $2.3 million or 16% compared to the same period and for the latest 12 months, including nine months of the pandemic from March to November, All Access Pass subscription sales still grew 17% compared to the same nine-month period a year ago or latest 12 months a year ago.\nAgain, as shown in chart 1A of Slide 22, we've noted this that All Access Pass sales grew, the add-on services grew and that importantly our amounts invoiced of new sales that are put on the books grew 55%, including a large government All Access Pass contract but even excluding that, still grew 32% or $3.4 million.\nThe other thing about All Access Pass that's really driving it is shown in Slide 23 that's compelling business model economics.\nAs you can see, it's driving strong gross margins, it's high revenue retention is allowing us to reduce our operating SG&A as a percentage of revenues, so it is reducing operating costs.\nThat's giving us a high flow through with a combination of strong gross margins and declining operating costs as a percentage of sales, it is expected to allow approximately 50% of incremental revenue growth to flow through the increases in adjusted EBITDA and cash flow and then in terms of the visibility and predictability, the large and growing balance of billed and unbilled deferred revenue, which is approaching $100 million as we talked about and then also the predictability of the All Access Pass is key operating metrics including annual revenue retention of where the 90%.\nThe fact that more than a third of All Access Passes are entering into -- holders are entering into multi-year contracts and that our add-on services, which we've now proven to be extremely durable average 45%.\nAll of this we believe gives us significant durability, visibility, and predictability.\nGrowth driver number two is the ongoing investments we're making in areas where we're already strong.\nWe're making significant investments behind the things that are actually distinct and competitive advantages and these are the things our customers value most.\nI just say that All Access Pass is not just another typical as we say all-you-can-eat subscription service providing unlimited access to large amounts of undifferentiated skills content, rather All Access Pass is a subscription service I'd say with a punch or as illustrated in 25 really four powerful strategic punches.\nFranklin Covey is purposely and systematically built a strategic mat to establish best-in-class competitive moats in each of the following four areas that are important to our customers.\nAs you can see in Slide 26, moat number one is having the best-in-class solutions to our clients' highest impact must-win opportunities and challenges.\nAt any given time, most organizations have several high impact opportunities which if achieved or challenges which overcome, will have a significantly disproportionate positive impact -- a disproportionately positive impact on the organizational result.\nThese opportunities and challenges include things like successfully and systematically implementing a new or refined strategy.\nNumber two, getting an entire organization to nimbly adjust to necessary change as we've all had this past year.\nThird, achieving a major non-linear operational breakthrough such as increasing sales performance or improving customer experience.\nFour, establishing the foundation for winning and engaging culture.\nFive, developing leaders at all levels -- leaders who as Eisenhower suggested get people to want to do the things that must be done.\nAnd so while the rewards for achieving organizational breakthroughs in these areas can be truly significant, even great organizations often struggle to consistently address and achieve them.\nThese are challenges which can't be solved just by letting people search through a content library and pick topics interesting to them rather achieving breakthroughs in these areas requires collective organizational and behavioral change at scale.\nWhen you step back from this, you recognize that there are certain things like strategic consulting that can have a big impact that are just not very scalable, it doesn't get behavioral change.\nAs you can see in Slide 20 -- well you can see in Slide 25 some of those solutions.\nAs you can see in Slide 27, our best-in-class solutions include a bunch of great solutions including four disciplines of execution, the speed of trust, four essential roles of leaders, multipliers and a wide variety of other offerings including our two most recent best-selling solutions, Six Critical Practices for Leading a Team and Overcoming Unconscious Bias to Unleash Potential.\nAnd of course, these are in addition to our historical strong things -- solutions like Leader in Me in Education, and 7 Habits of Highly Effective people, both of which continue to set all-time usage records, even though they're now a minority of our offerings.\nBut even with this very strong collection of best-in-class solutions we're making ongoing investments in new contents, tend to end solutions, including a new change management solution, new leadership offerings.\nLet me just refer you to in Slide 20, I've got something, it looks good with numbering from one of these slides, but were also the flexibility, as you can see in Slide 27, is also a big competitive moat for us because having best-in-class solutions for our clients biggest opportunities and toughest problems is critical.\nHowever, they've also got to be able to deliver that and access it flexibly.\nSo we've made significant ongoing investments in technology, portals, digital learning, assessments, microlearning, coaching, and the latest instructional design investments, sorry.\nWe now got flexibility across a wide variety of modalities including digital, microlearning, live online, live on site, coaching, or any combination of thereof in almost any segment of time, which you see on Slide 27, on any device in more than 20 languages worldwide.\nWith digital live online or live coaching and other services available to support them.\nAnd as a result, again, as shown on Slide 30 -- Slide 30, All Access Pass related sales jumped as a result they've increased from zero to more than $90 million, latest 12 months, some of the revenue retention has been high, at more than 90%.\nMore than 35% of Pass holding clients are signing multi-year contracts.\nOur average Pass size has grown from 29,800 to 40,000 in the latest 12 months.\nAnd again, our balance of billed and unbilled deferred revenue is really significant.\nMaybe looking at Slide 31, which is the third puzzle piece, you can see in Slide 32, Franklin Covey has built a direct sales force of 247 client partners or sales associates in the US and Canada and in China, Japan, Australia, and in the UK, Ireland, Germany, Austria and Switzerland.\nIn addition, we expect to add 20 net new client partners this fiscal year to the 247 client partners we had at the end of Q1.\nAnd Paul, let me turn the time to you to maybe talk about are also the licensee network that we've built and the other strategic moats that we have.\nIf you -- as you look there on slide -- if we go to Slide 33, in addition to a growing number of client partners who continue to ramp at/or above our expectations, which they themselves represent a great revenue driver for us as company, but on Slide 33, we've also built a network of approximately 80 international licensee partner offices, which cover most of the countries in the world.\nThese partner offices generate gross revenues of approximately $50 million and they pay Franklin Covey a royalty that's equal to about 15% of these revenues.\nThese licensee partner offices are strategically very important to us, not only do they work to penetrate their local market, but they also provide services to global clients with local offices.\nAnd so this allows for example, a global client in Germany who buys an All Access Pass to roll out that solution in many countries around the world and have access to All Access support resources in just about any country that they might be operating in.\nAnd then as shown in Slide 34, the fourth strategic moat is the power reach and influence of Franklin Covey's industry leading thought leadership.\nOur years of investment in research and development and our thought leadership partnerships, not only result in solutions that provide enormous value for clients, but they create a large treasure trove of research and case studies that we used to broaden our thought leadership.\nAs shown in Slide 35, Franklin Covey and its key thought leaders publish what often become best sellers, which present the principles and solutions to help our clients.\nOur key thought leaders in each solution area also write white papers and articles, they contribute to publications, they deliver podcast and webinars, and they speak some of the world's most influential events.\nFranklin Covey's industry leading thought leadership includes best-selling books as well.\nAnd to date we've sold more than 50 million copies of books worldwide in more than 50 -- in over 50 languages.\nAnd to put that 50 million number in perspective, the number of books that we've sold as part of our thought leadership strategy is greater than the amount sold by a large number of our top competitors combined.\nTo achieve best seller status, a book typically needs to sell a little over 250,000 copies and so to reach 50 million copies sold and still counting is unprecedented in the industry.\nThese books, typically achieve best seller status, not only in the US and Canada, but also in other countries throughout the world.\nAnd in addition, our practice and thought leaders regularly publish articles and podcasts in a variety of publications and outlets and speak at client events and on the World Business Forum stage.\nThis strong thought leadership helps to establish our position as a partner of choice for organizations that are truly seeking best-in-class solutions around the world and at scale.\nAnd so Bob, you could talk about growth driver number three?\nIn fact Paul, why don't you just go ahead and talk about the strength of our organization.\nMost of these people have grown up through use.\nYeah, see the navigation slide there, 36.\nSo speaking about the strength of our organization.\nThis is really kind of our third growth driver.\nAnd ours is a culture where our leaders are experienced and trusted.\nOur processes are disciplined and strong, and our team members are really highly engaged.\nMost organizations correctly attribute their success to the strength of their people and they're correct in doing so.\nHowever, with the opportunity of having a front-row seat deep inside the operations of thousands of organizations with whom we work, we know that Franklin Covey's organization, our leaders, and processes, and our culture are extremely strong, in fact they are among the strongest that we see.\nAs to our leaders being highly trusted, in our recent Annual Employee Engagement and Culture survey all of Franklin Covey associate where asked to rate on a zero to 10 scale, with 10 being the highest, how likely they would be to recommend their Leader or manager as someone to work for.\nAnd you can see on Slide 37, 94% rated their leader 7 or above and 83% rated their Leader at 9 or a 10 on that question.\nAnd this even in the middle of the pandemic when leaders are being stretched or required to deal with a number of additional challenges.\nAs to our process being strong, we do a lot of work with organizations as I mentioned earlier, helping them institutionalize their ability to execute on their key priorities.\nWe know that every organization has pockets of great performance and we know that every organization has variability in that performance.\nWhat differentiates the great performers from lesser performers is the extent of that variability.\nYou can see a little diagram of this in Slide 38, top performers performance distribution curve is simply righter and tighter than that of their lesser performing counterparts.\nIn other words, on average their performance is better and there is less variability among their units.\nThis institutionalization of great results requires strong and consistent processes.\nWe've implemented the same strong execution processes throughout our own operations.\nWe use the four disciplines of execution as an example.\nAnd we're pleased that as a result of our strong leaders and strong processes our leaders performance distribution curve is very right and tight.\nIllustrative of their strong execution that as shown, you'll see on Slide 39.\nIn the first quarter, 12 of our 15 Managing Director, so each country has a Managing Director and in United States, we have 10 -- United in Canada, we have in hand and they lead our great sales teams, but each -- 12 of our 15 Managing Directors met or exceeded their quarterly revenue objective in Q1.\nAnd the other three leaders who missed their goal, missed by an aggregate of only 1.3% of the total direct office sales goal.\nAnd collectively, the group, all 15 exceeded their revenue goal.\nIn addition, as you can see there on the right of this slide 14 of the 15 Managing Directors met their EBITDA goal, with the one who missed missing by only $50,000 and collectively of course, this group exceeded -- they actually exceeded EBITDA by about $1 million collectively.\nAnd finally, to the engagement of our associates around the world is shown in Slide 40, again on the same recent culture survey that we conducted.\nFranklin Covey associates were asked to rate on a zero to 10, with 10 being the highest again, how likely they would be to recommend Franklin Covey has a great place to work.\nSomebody that they would want to invite their friends and people that they know to come in and join.\nAnd we're pleased that 92% of employees gave a rating of 7 or higher and 69% gave a rating of a 9 or a 10.\nWe have just a phenomenal group of associates around the world.\nWe're so grateful for their efforts.\nThey are tireless workers and not only do they bring a tremendous amount of energy and passion.\nThis is a group that execute very, very well and I think you see that in the results we've talked about today.\nSo Bob, I'll turn to you for any comments and I think you want to move on to guidance probably.\nYeah, so stepping back from it, we feel very -- we all wish were in the pandemic, but we are grateful pandemics proven that the solutions that we have are really valued by our clients.\nThe business model and subscription version of this has been extremely strong and positive.\nOur teams who could have just hunkered down in the tent with avalanches coming down and it didn't, they got out of their tents and started climbing back up.\nAnd regain traction very quickly and so we're really pleased and grateful to be where we are with strong people, strong teams strong offerings, the financial resources to continue to make good investments and significant liquidity to cushion us.\nAnd with that, I'd like to ask Steve Young to review our outlook and guidance.\nI enjoyed hearing about the business and I'm also very excited about where we are in the direction that we're going.\nPleased to talk a little bit about guidance and target.\nSo our guidance for FY '21 as discussed last quarter is that we expect to generate adjusted EBITDA of between $20 million and $22 million.\nThis result would be approximately 50% increase in adjusted EBITDA compared to the $14.3 million of adjusted EBITDA achieved last year.\nThis expected growth reflects everything that Bob and Paul have talked about including the continued strong performance of our North America operations, our All Access Pass, and other things.\nUnderpinning this guidance for the year are the following expectations that we talked about last quarter and are consistent with our first quarter results.\nFirst, the recognition to sales during FY '21 of more than $60.6 million of deferred revenue already on the balance sheet at the end of last year and the recognition of a portion of the $39.6 million of unbilled deferred revenue which we had contracted.\nThese balances provided and provide significant visibility into our revenue and gross margin for FY '21.\nSecond, in addition to the recognition of deferred revenue, the factor which is expected to have the greatest impact on our FY '21 result is also a factor in which we have high confidence that is the strength of All Access Pass and related sales.\nWe expect that All Access Pass will continue to achieve strong growth in both sales and invoiced amounts, will achieve high revenue retention rates, strong sales of new logos and continued growth in Pass expansion and multi-year contracts.\nWe also expect that All Access Pass add-on sales will continue to be strong.\nDriven by this in FY '21, we expect our operations in the US and Canada, including government to achieve an adjusted EBITDA contribution level higher than in FY '19 and even somewhat higher than we had originally expected to achieve in FY '20.\nSo the third underpinning of our guidance.\nWe expect that our revenue in Japan, China, and among our licensees will continue to strengthen.\nThe increase in All Access Pass, which we expect to achieve in these countries will of course result in a portion of the new sales being added to the balance sheet as deferred revenue.\nAnd the fourth underpinning of guidance in education, we expect to continue to achieve strong retention of both schools and revenue among existing Leader in Me schools.\nIn addition, despite the fact that we could continue to be in a challenging and budget constrained environment for education in the remainder of FY '21, we still expect to achieve growth in the number of new Leader in Me school that we had this year compared to the number we added last year.\nSo affirming our annual guidance and we feel comfortable with that.\nFor our second quarter of this year, we expect that adjusted EBITDA will be between $1 million and $1.5 million compared to $4.1 million in adjusted EBITDA in last years very strong second quarter and still reflecting the expected strong performance of All Access Pass in the US, Canada and government and the same general expectations just outlined for international operations and education.\nPlease remember the last quarter we did say we expected Q2 this year to be less than the very strong Q2 last year.\nPlease also remember that our second quarter is typically been the lowest adjusted EBITDA, EBITDA quarter of the year due primarily to the holiday season.\nAnd please also remember that even $1 million of adjusted EBITDA in Q2 would be more than the second quarter result in FY '18 or the second quarter results in FY '19.\nOur second quarter result last year was just a very strong second quarter representing the momentum that we had and talked about at the time and are beginning to see again.\nSo that's guidance now.\nJust a couple of thoughts related to general targets for the coming years and repeating a lot of what Bob said, building on our $20 million to $22 million of adjusted EBITDA, we expect to achieve this year and driven substantially by the expected continued growth in All Access Pass, our target is to have adjusted EBITDA increase by around $10 million per year to around $30 million in FY '22 and around $40 million in FY '23.\nThese targets reflect our expectation of being able to achieve as Bob talked about high-single digit revenue growth of around $20 million, 50% [Phonetic] revenue to adjusted EBITDA.\nSo those are our targets.\nWhile changes in the World business outcome and many other factors could impact our expectation, we want to share these as our current internal targets and our assumptions and expectations.\nWe also wanted to share, again like we did last quarter, in order for the executive team to receive full long-term incentive pay, we need to achieve those targets.\nSo that's our guidance and a few thoughts about coming years.\n",
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"content": "q1 sales $48.3 million versus refinitiv ibes estimate of $48 million.\naffirms its previously announced guidance.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the Company's current expectations.\nAnd there can be no assurance that Company's actual future performance will meet management's expectations.\nWith that out of the way we'd like to turn the time over to Mr. Bob Whitman, our Chairman and Chief Executive Officer.\nWe appreciate you joining us today.\nReally happy to have the opportunity to talk with you.\nWe're really pleased that our second quarter results were strong and even stronger than expected.\nWe believe this again emphasizes the strength, quality, and durability of Franklin Covey's value proposition and of our strong subscription business model.\nSpecifically in the second quarter, as you can see in Slide 3, revenue was strong driven particularly by the strength and growth of All Access Pass and related sales.\nGross margins increased 559 basis points compared to last year's already strong second quarter.\nOur operating SG&A declined by $2.4 million.\nAdjusted EBITDA increased to $5.1 million, which is the level $1.1 million or 26% higher than the $4 million of adjusted EBITDA achieved in last year's strong pre-pandemic second quarter and so the level significantly higher than our expectation of achieving between $1.5 million and $2 million in adjusted EBITDA for the quarter.\nOur cash flow was also strong.\nNet cash provided by operating activities year-to-date increased 26% or $4.5 million to $21.9 million, ahead of the $17.4 million achieved in last year's second -- year-to-date second quarter.\nAnd finally, we ended the quarter with approximately $55 million in liquidity, which is up from the $39 million in liquidity we had at the start of the pandemic one year ago.\nSo we're pleased to be in this position.\nLike to discuss these results in more detail in just a moment, but first some context.\nThis strong and stronger-than-expected performance reflects the continuation and acceleration of four key trends we've discussed in the past three quarters and which continued in this quarter.\nSpecifically, as indicated in Slide 4, these trends are first that the growth of All Access Pass sales has been very strong.\nSecond that All Access Pass related services have continued to be strong and are now even higher than the very strong levels we had pre-pandemic.\nThird, our international operations have continued to rebound.\nAnd fourth, despite continued uncertainty during the first half of the year trends in our education business are really encouraging.\nI'd like to provide a little more detail on each of these trends.\nFirst, as expected, the growth of All Access Pass and related sales which accounts for 83% of our enterprise sales in North America continued to be very strong.\nAs shown in Chart A in Slide 5, you can see total Company All Access Pass pure subscription sales grew 13% in the second quarter to $17.5 million, have grown 14% year-to-date for the first six months and 15% for the total 12 months, the period which is the entirety of the pandemic to date, to $67 million.\nIn addition, as shown in Chart B, total Company All Access Pass amounts invoiced have been growing even faster growing 16% in the second quarter to $22.5 million and 30% year-to-date to $38.4 million.\nImportantly, much of this 30% year-to-date growth in All Access Pass invoiced amounts has been added to the balance sheet and will establish the foundation for accelerated sales growth in future quarters.\nImportantly, to us All Access Pass performance has been strong across all the key elements, which we pay attention to.\nThe number of All Access Pass sales to new logos increased meaningfully both in the second quarter and in the latest 12 months.\nSecond, the sale of All Access Pass related services which is delivered primarily live online was also very strong in the second quarter.\nChart A in Slide 6 shows the strong booking trend for All Access Pass add-on services, almost all of which are now being delivered live online.\nAs you can see in Chart C, with the beginning of the pandemic in March of last year bookings of services delivered live on-site at client locations were necessarily canceled and the year-over-year dollar volume of services declined with delivered engagements down $6.9 million in North America in the third quarter.\nHowever, in the fourth quarter of fiscal 2020 new bookings increased levels nearly equal to those achieved in the fourth quarter of the prior year in '19.\nThese strong bookings in turn drove an increase in the dollar volume of services actually delivered.\nAs a result instead of being up $6.9 million as in the third quarter, the dollar volume of services delivered in the fourth quarter was off only $1.1 million.\nThis same positive trend continued in the first quarter and accelerated in the second quarter with a result that in the second quarter sales were actually higher and year-to-date actually services revenue in North America has exceeded the levels achieved in last year's second quarter and first six months period pre-pandemic.\nAs shown in Chart B, 92% of our services are now being delivered to clients live online and this is important because with 92% of services now being delivered live online our momentum can continue regardless of when and whether organizations return to their offices.\nThird, as shown in Slide 7, performance in our international operations has also strengthened in the second quarter.\nSales in China, Japan, Germany and among other international direct offices and licensee partners continued to improve, continuing the trend established in both the fourth and first quarters.\nAt the start of the pandemic, we had rescheduled substantially all live on-site training engagements in these countries.\nSince these countries were just starting to sell All Access Pass and therefore did not have a strong base of durable subscription revenue to cushion them, sales in these countries declined significantly compared to the third quarter of fiscal '19 and actually the decline started a little earlier in China in the middle of last year's second quarter with the onset of the coronavirus there.\nAs shown in last year's fourth quarter while still operating well below the levels achieved in the prior year's fourth quarter, sequential sales and sales as a percentage of the prior year in these countries began to improve significantly.\nYear-over-year sales improved further in the first quarter.\nWe expect sales in these operations to continue to strengthen in the second quarter and we're pleased that they did.\nAs shown in the second quarter, international sales were ahead of our expectations and just 14% lower than in last year's second quarter with most of this decline -- year-over-year decline represented in Japan and UK, which have had a series of ruling shutdowns in their economy, which we expect will strengthen.\nFinally, as shown in Slide 8, in the Education Division, despite an educational environment which has continued to be very challenging, we've seen a strengthening in the trends of our education business both in the second quarter and year-to-date.\nThis strengthening includes, number one, the number of Leader in Me schools which have renewed or are ready to renew their leader in Me membership increased to 1,059 during the second quarter compared to 725 schools at the same time last year.\nAnd second, the number of new Leader in Me schools who have contracted by the end of the first quarter were in the process of contracting and is almost equal to that achieved in last year's second quarter pre-pandemic.\nJust note that there are also some positive trends in the education market overall despite the challenges, which we all know about.\nWe expect these will help our education business during the remainder of this fiscal year and into next fiscal year.\nThese trends include, one, increasing confidence among those in educational communities that most schools will be opened in the fall of this year, not certain but more confident.\nSecond, that is shown in Slide 9 and as shown on Slide 9, the three COVID-19 stimulus bills passed by Congress in March last year, December and this March dedicated nearly $200 billion toward stabilizing budgets in K-12 schools with a disproportionate amount of that help coming to Title One schools where Leader in Me is often the strongest.\nAnd three, the third trend is that social-emotional learning for students called SEL which plays to the strength of Leader in Me continues to gain momentum.\nIts importance is being talked about everyday in the press.\nIt's becoming increasingly required by districts.\nJust one more note.\nTo take advantage of the stimulus funding and SEL movement, or social emotional learning, our education team has added to its positioning efforts, helping the schools to take on the issues of learning recovery and the student and teacher mental wellness as these become the pressing topics the education community is trying to address and the Leader in Me is really designed to deliver on.\nEarly indicators suggest this expanded positioning is working well.\nAnd so we believe these businesses and market trends will work in our favor.\nThere is still be a difficult environment this year, but we're confident in the future of our education subscription business.\nWe've been conservative about our expectations this year and feel good about our ability to meet those.\nWith this context, I'd like ask -- turn the time to Steve Young and ask him to dive a bit deeper into our performance for the second quarter.\nI'm pleased to be on the line with you today to talk a little bit more about our second quarter results.\nSo as shown in Slide 10, our performance for the second quarter was stronger than expected and showed positive momentum in almost every front.\nOur adjusted EBITDA for the second quarter was $5.1 million, an increase, as Bob said, of $1.1 million or 26% compared to last year's second quarter, an amount substantially exceeding our expectation of achieving second quarter adjusted EBITDA of between $1.5 million and $2 million.\nThese results are even more notable given that last year's second quarter was itself very strong.\nOur cash flow and liquidity positions also increased significantly.\nAs shown in Slide 11, our net cash generated for the quarter of $5.2 million was $4.2 million higher than the $1 million of net cash generated in last year's second quarter.\nThis reflects strong growth in adjusted EBITDA and significant growth in All Access Pass contracts invoiced resulting in our balance of billed and unbilled deferred revenue increasing by almost $13.2 million or 16% to $95.9 million in the second quarter.\nAs shown in Slide 12, our cash flow from operating activities for the second quarter increased $4.5 million or 26% to $21.9 million compared to the $17.4 million in last year's second quarter.\nThis strong cash flow reflects that an additional benefit of our subscription model is that we invoice upfront and collect the cash from invoiced amounts faster than we recognize all of the income.\nAs a result, we ended our fiscal year in August with more than $40 million of total liquidity, comprised of $27 million of cash and $15 million on an undrawn revolving line, which was an amount higher than at the start of the pandemic.\nWe are pleased that we added further to this liquidity during this year's first half.\nWe ended the second quarter with $55 million of total liquidity, comprised of $40 million in cash, which means we had no net debt and with our $15 million revolving credit facility still undrawn and available.\nSo this good performance was driven by, first, strong revenue.\nAs shown in Slide 13, our second quarter revenue of $48.2 million was driven by very strong performance in our North America operations and the continued outstanding performance of All Access Pass.\nWhere as shown in Chart A of Slide 14, companywide All Access Pass subscription sales grew 13% in the second quarter, 14% year to date and 16% for the last 12-month pandemic period.\nAnd in addition to the All Access Pass subscription revenue recognized in the quarter, Chart B shows that we also achieved a very strong 16% growth in All Access Pass amounts invoiced to $22.5 million in the second quarter and grew 30% year-to-date to $38.4 million.\nMost of the significant growth in All Access Pass amounts invoiced was not recognized in the quarter but was added to the balance sheet as deferred revenue.\nThis will, of course, be recognized and help accelerate our results in future quarters.\nThese new invoiced amounts included strong sales of new logos, a continued quarterly and last 12-month revenue retention rate of greater than 90%, as shown in Chart C a large number of All Access Pass expansions and as shown in Chart D a significant volume of multi-year All Access Passes, which increased our unbilled deferred revenue significantly over last year's amount.\nSales of services were also very strong in the second quarter.\nServices revenue in North America grew $7.7 million in the second quarter compared to $7.1 million in the prior year.\nSecond, as shown in Slide 15, the strong All Access Pass sales drove significant growth in our gross margin percentage again in the second quarter.\nAs shown, our gross margin percentage in the second quarter increased 559 basis points to 77.5% from 71.9% in the second quarter of last year.\nAs shown also, our gross margin percentage has increased 459 basis points year-to-date and 392 basis points for the last 12 months.\nIn the Enterprise Division, driven by the significant growth of the All Access Pass and related sales, our gross margin percentage increased to 81.7% compared to 76.1% in last year's second quarter, an increase of 562 basis points.\nThird, our operating SG&A in the second quarter was $2.4 million lower than last year's second quarter and $6.8 million lower than the first half of last year.\nAnd finally, the combination of these factors resulted in adjusted EBITDA growing to the $5.1 million, an increase of $1.1 million or 26% compared to the just over $4 million of adjusted EBITDA achieved in last year's strong second quarter and significantly higher than our expected amount.\nThe strong second quarter also resulted in adjusted EBITDA for the first six months of this year, reaching $8.8 million, a level only $200,000 less than the first half of fiscal 2020 which of course was pre-pandemic.\nImportantly, as noted, we also had strong invoiced and multiyear sales in the second quarter because most of these new invoice sales were subscription sales.\nThese amounts were not recognized in the quarter, but went on to the balance sheet and added to our balance of billed and unbilled deferred revenue which will add to and be recognized in future quarters.\nAs a result, as shown in Slide 16, our total balance of billed and unbilled deferred revenue increased to $95.9 million, reflecting growth of $13.2 million or 16% to our balance of $82.7 million at the end of last year second quarter.\nAs noted last year approaching $100 million of billed and unbilled deferred revenue is a big landmark for our subscription business and helps to provide significant stability and visibility into our future performance.\nThis strong combination of factors continues to drive our expectation that we will generate very high growth in adjusted EBITDA and cash flow in fiscal 2021 and on an ongoing basis.\nSo we're pleased with the second quarter result and, Bob, turn the time back over to you.\nJust continuing, as shown in Slide 17, as reviewed last quarter, we expect to generate adjusted EBITDA of between $20 million and $22 million in fiscal 2021 and we are pleased to be off to a very strong start toward this objective.\nAchieving that range in adjusted EBITDA would represent an approximately 50% increase in adjusted EBITDA compared to the $14.4 million of adjusted EBITDA we achieved in fiscal 2020.\nAnd also as we've noted previously, our target is to see adjusted EBITDA now increase by approximately $10 million per year every year thereafter to at least to approximately $30 million in fiscal 2022, to $40 million in 2023 and so on.\nAnd these targets reflect our expectation that we'll be able to achieve at least high single-digit revenue growth each year, which is growth of approximately $20 million per year.\nBut on an average approximately 50% of that amount of growth in revenue will flow through to increases in adjusted EBITDA and cash flow.\nAs we also said previously, we fully expect to achieve an adjusted EBITDA to sales margin of approximately 20% over the next few years as adjusted EBITDA approaches $60 million and to become $1 billion market cap company even at the adjusted EBITDA multiple of around 15% that is conservative relative to our adjusted EBITDA growth rate, which is more like 35%.\nAnd this of course doesn't reflect the multiple of -- that we'd ever get a multiple of revenue which is often achieved by companies with similarly successful subscription-based business models.\nSo looking forward, as we've discussed, substantially all our growth has been and is being driven by growth in All Access Pass and related sales.\nThis strong growth in All Access Pass and related sales has continued strong through the pandemic you've heard and we expect it to continue to drive significant growth in the future.\nLike to just briefly highlight three factors that we expect will continue to drive significant growth in our subscription business and which will drive the very significant growth in sales and profitability in the coming quarters and years.\nAs shown in Slide 18, these are first driven by growth in All Access Pass.\nWe expect substantially all of the Company's sales to be subscription and subscription-related within the next three to four years.\nSecond, we expect that the already significant lifetime customer value of an All Access Pass holder will actually continue to increase.\nAnd third that as we continue to aggressively grow our salesforce and our licensee network, the volume of new high lifetime value All Access Pass logos will accelerate.\nJust like to touch on each of these three quickly.\nFirst, as indicated in Slide 19 driven by growth in All Access Pass-related sales we expect that substantially all of the Company's sales will be subscription and subscription-related within three to four years.\nAs this almost complete conversion to subscription and related revenue occur we expect virtually the entire Company to be able to generate the same kinds of growth in revenue, gross margins, revenue retention and customer impact we've seen in our subscription business over the past five years.\nWe expect this almost total transition to be driven by the following three things.\nOne -- first, by the continued strong growth of All Access Pass and related sales in the Enterprise Division in North America where All Access Pass already accounts for 83% of sales.\nAs shown in Slide 20, All Access Pass and related sales represented only 13% or $13.7 million of total sales in North America in 2016 when we first introduced All Access Pass.\nThe dramatic, sustained, compounded growth since then has resulted in All Access Pass and related increasing to $94.3 million for the latest 12 months through this year's second quarter.\nAnd with annual All Access Pass-related sales growth expected to continue to grow at more than a double-digit pace and with our historical legacy sales now at very low levels and expect to remain flat or decline a little bit further, we expect All Access Pass and related sales to increase to more than 90% of total North America enterprise sales over the next few years.\nThe second major driver to becoming almost totally subscription and related is the conversion of the majority of our international operations to All Access Pass and related in the coming years.\nIn addition to the 83% of North America enterprise sales, which were already All Access Pass, the growth in penetration of All Access Pass has also progressed rapidly in our English-speaking international direct offices.\nAs you can see in Slide 21 from having almost no subscription sales in these offices just five years ago, All Access Pass and related sales for latest 12 months now account for 74% of total sales in the UK and 69% in Australia for the last 12 months.\nBoth these offices are well in their way toward the same 90% penetration we expect to achieve in North America.\nAs you know, our largest international direct offices are in China and Japan, both of which are in the early stages of conversion to All Access Pass but accelerating.\nHaving made the conversion to All Access Pass in the US and Canada, the UK and Australia, we know what the play is.\nWe are confident the China and Japan will also convert the vast majority of their revenue to All Access Pass and related in the coming years.\nAnd then the final driver of increased subscription penetration is the other area of the company is our education division, which accounts for 22% of sales.\nSlide 22 shows within our K-12 business, 70% of our sales were subscription -- were pure subscription for the latest 12-month period through this year's second quarter.\nSlide 22 also shows the significant increase in subscription sales in our K-12 business over the past years and we expect both our K-12 and higher ed businesses to continue to advance toward the same 90% subscription that we are close to in North America, which we're on the way to in the UK and Australia and which we will achieve also in China and Japan.\nWith this combination of the 82% and everything else moving, we expect virtually the entire business to reflect the higher growth, higher margin, higher retention properties for subscription operations in the coming years as you've seen.\nAnd the impact will be what we've already seen in North America and on the total business.\nI'd now like to ask Paul Walker to address the other two elements behind our expected accelerated growth in our subscription business.\nFor the second factor that we expect will continue to drive significant growth in profitability as shown there in Slide 23, point number two, is that the already significant lifetime customer value of our All Access Pass holders has increased and will continue to increase in the future.\nAs shown in Slide 24, All Access Pass has, first there at the top, a relatively large and increasing pass size of $38,000, up from $31,000 just a year ago.\nSecond, the pass has an annual revenue retention rate of greater than 90% which was the case even throughout the pandemic.\nThird, a services attachment rate of 44% and I think important to note that that's up from just 17% a few years ago.\nThe combination of All Access Pass, the pass itself and the related attached services now total approximately $55,000 per pass-holding customer and that numbers continue to increase.\nAnd then fourth as shown here, the blended gross margin on the pass and the related services combined have a gross margin of greater than 85%.\nThese strong economics are driving a very significant lifetime customer value.\nIn fact, this customer value is quite a bit higher than we had under our previous legacy pre-subscription model.\nFor example, as shown in Slide 25 a prior client, an example client, spending $10,000 in a given year under our legacy model, typically spend about twice that or $20,000 over three years and has a gross margin of about 70%.\nIn contrast, a typical All Access Pass customer today spends approximately $55,000 on a combination of their pass and the related services in their first year, $49,500 in their second year and $44,500 in their third year for a three-year total of $149,000 between the pass and the related services.\nStated a minute ago, whereas the old model was about a 70% gross margin, this new blended margin on All Access Pass and related is greater than 85%.\nThat's the second reason.\nThe third reason is indicated here -- as indicated here in Slide 26, the third factor for driving our expectation of significant revenue and profitability growth is that as we continue to aggressively grow our sales force and our licensee network, the volume of new All Access Pass logos will accelerate.\nThe combination of one, our high and growing lifetime customer value; second, our less than one-to-one cost of acquiring a new customer and third our approximately one-year payback on the investment in hiring a new client partner makes the economics of growing our sales force extremely compelling.\nAs shown in Slide 27, over the past five years we've added 74 net new client partners in our direct offices.\nMore than half of these client partners are only midway through their five-year ramp-up to $1.3 million in annual sales volume.\nWe expect these ramping client partners to generate significant revenue growth over the next few years as they complete their ramp and we also have a lot of headroom to add additional client partners.\nAs shown in Slide 28, this is just the US and Canada example alone where we currently have 179 client partners across both enterprise and education.\nWe have room to add at least an additional 435 client partners in the coming years.\nWe expect that the combination of ramping the existing client partners and hiring at least 30 net new client partners each year will allow us to add a significantly increasing number of new logos, which in turn will generate very significant and increasing lifetime customer value.\nAnd so we believe that the combination of these three factors will continue to drive significant growth in sales and profitability in the quarters and years to come.\nAnd I'll turn it to Steve Young to address our guidance now.\nAnd I'll keep the ball.\nSo our guidance for FY '21 as discussed in past quarters is we expect to generate adjusted EBITDA between $20 million and $22 million and we affirm that guidance.\nThis result would be an approximately 50% increase compared to the $14.3 million of adjusted EBITDA achieved last year.\nThis expected growth reflects everything that Bob and Paul talked about, including the continued strong performance of our North America operations.\nUnderpinning this guidance for the year are the following expectations that we talked about last quarter and that are still consistent with our year-to-date results.\nFirst, that a significant portion of the deferred revenue on the balance sheet and a portion of the contracted unbilled deferred revenue will clearly flow through to recorded sales as expected.\nSecond, that the All Access Pass will continue to achieve, one, strong growth in both sales and invoiced sales, high revenue retention rates, strong sales of new logos and continued growth in pass expansion and multi-year contracts.\nWe also expect that All Access Pass add-on sales will continue to be strong.\nThird, that net sales in Japan, China and among our licensees will continue to strengthen.\nThe increase in the All Access Pass sales which we expect to achieve in these countries will, of course, result in a portion of the new sales to be added to the balance sheet as deferred revenue.\nAnd four, that in education we expect to continue to achieve strong retention of both schools and revenue among existing Leader in Me schools.\nAnd despite the fact that the environment could be challenging and budget-constrained for education in the remainder of FY '21, we still expect to achieve growth in a number of new Leader in Me schools beyond the 320 schools achieved in FY '20.\nSo that's our overall guidance that we are affirming that guidance.\nFor the third quarter of fiscal 2021 we expect that adjusted EBITDA will be between $4 million and $4.5 million compared to the adjusted EBITDA loss of $3.6 million in last year's pandemic-impacted third quarter.\nPlease note that among -- that the amount of adjusted EBITDA expected in Q3 is not only more than $7.5 million higher than last year, it is also higher than the adjusted EBITDA result of $3.1 million achieved in the third quarter of FY '19.\nSo that's our guidance.\nNow our general targets for years beyond 2021.\nAs we said before, building on the $22 million of adjusted EBITDA that we expect to achieve this year and driven substantially by the expected continued growth of All Access Pass, our target is to have adjusted EBITDA increase by around $10 million per year to around $30 million in FY '22 and to around $40 million in FY '23.\nThese targets reflect our expectations of being able to grow at least high single-digit revenue growth and approximately 50% of that growth in revenue will flow through to increases in adjusted EBITDA.\nWhile changes in the world's business outlook and many other factors could impact our expectations, we wanted to share these as our current internal targets and assumptions.\nSo that's our guidance, Bob, and turn the time back over to you.\nWe're delighted to be where we are and grateful and really excited about what's ahead of us.\nAt this point, we'll open it to questions.\n",
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"content": "q2 sales $48.2 million versus refinitiv ibes estimate of $48.6 million.\naffirms previously announced guidance & continues to expect adjusted ebitda to total between $20 million to $22 million in fiscal 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Many of these conditions are beyond our control or influence, any one of which may cause future results to differ materially from the company's current expectations, and there can be no assurance the company's actual future performance will meet management's expectations.\nWith that out of the way, we'd like to turn the time over to Mr. Paul Walker, our Chief Executive Officer.\nWe're pleased to report that our fourth quarter and full year results were strong, in fact, very strong and stronger than expected.\nAs you can see shown in Slide three, adjusted EBITDA for fiscal 2021 increased to $28 million, which was up 96% from $14.3 million of adjusted EBITDA in fiscal 2020 and up 36% when compared to fiscal 2019 strong $20.6 million of adjusted EBITDA.\nThis result was well above our original guidance for the 2021 fiscal year of between 20 and $22 million and also $1.5 million above the high end of our updated guidance range of $24.5 to $26.5 million.\nThese results reflect the strength and power of Franklin Covey's high-growth and durable subscription business model, which is shown in Slide four, achieved strong growth on every key metric.\nSpecifically, as you can see on Slide four, first, total revenue grew 40.7% or $20 million in the fourth quarter and grew 13% or $25.7 million for the full fiscal year 2021.\nSecond, you can see there that total subscription revenue grew 33% or $7.2 million in the fourth quarter and 15% or $13 million for the full fiscal year.\nTotal subscription and subscription service revenue grew 52% or $17.7 to $52.1 million in the fourth quarter and 21% or $27.5 million for the year.\nAnd finally, as you can see shown there, the sum of billed and unbilled deferred revenue grew 27% or $27.2 million to $127.4 million for the year.\nThere are five things we'd like to talk about today and have you takeaway from our discussion, and you can see these summarized in Slide five.\nThe first is that our results for the fourth quarter and full year 2021 were strong and even stronger than expected.\nAnd as you'll hear in a moment, this strength is reflected in every key P&L category, including revenue growth, gross margins, adjusted EBITDA and cash flow.\nThe second takeaway we'll talk about today is that this strong performance was driven by the strength of our rapidly growing subscription business model.\nThe third is that also driving our growth is the fundamental importance of challenges, we're helping our clients address.\nThe fourth is that we expect subscription and subscription services to account for greater than 90% of the company's sales within three years.\nAnd finally, the fifth takeaway is that we expect our almost complete conversion to our subscription and subscription services to also drive significant additional value to our shareholders.\nTo talk about this first takeaway, I'd like to turn time and ask Steve Young to address this, our performance for the fourth quarter and full fiscal year results.\nI'm very pleased to have an opportunity to share some comments about our results for the quarter and for the year.\nAs you can see in Slide seven and eight, there are some key highlights for the quarter and for the year.\nAs shown, revenue for FY '21 grew 13% or $25.7 million to $224.2 million.\nOur fourth quarter revenue increased 40.7% or $20 million to $68.9 million.\nGross margin for the year increased 388 basis points to 77.1% from 73.3% in FY '20.\nThe operating SG&A to sales percentage declined to 64.7% from 66.1% in FY '20.\nAdjusted EBITDA for the year increased to $28 million, an increase of 96% or $13.7 million compared to $14.3 million in FY '20.\nAdjusted EBITDA for the fourth quarter increased 18.5% to $10.6 million.\nCash flow from operating activities for the year increased 68% to $46.2 million, up from $27.6 million in FY '20, and we ended the quarter with $62.4 million in liquidity.\nI'd like to provide a little more detail on these key highlights as shown in Slide nine.\nRevenue in the fourth quarter, like we said, grew 40.7% to $68.9 million, an increase of $20 million compared to the $49 million of revenue generated in last year's fourth quarter.\nThis revenue was also $3.8 million higher than the $65.2 million of revenue recorded in the fourth quarter of FY '19.\nWe're also pleased that revenue for FY '21 came in essentially the same as in FY '19, with strong revenue growth in North America and the Education Division offsetting the fact that despite significant improvement, international revenue did not quite get back to the FY '19 levels.\nAnd as strong as our revenue growth was, the growth in our profitability and cash flow related to this revenue was even more significant.\nOur gross margin percentage increased a strong 388 basis points for the year to $77.1 million, up from an already good $73.3 million in FY '20.\nThe gross margin percentage is 644 basis points higher than the 70.7% gross margin percentage we achieved in FY '19, reflecting the ongoing shift to our high-margin subscription offerings.\nOur operating SG&A as a percentage of sales declined 139 basis points to 64.7% for FY '21.\nAnd this improvement despite operating SG&A increasing 287 basis points in the fourth quarter to 62%, primarily reflecting the accelerated commissions associated with FY '21's strong finish compared to those in last year's COVID impacted fourth quarter.\nAdjusted EBITDA increased 96% or $13.7 million to $28 million for FY '21 compared to $14.3 million in FY '20.\nThis $28 million of adjusted EBITDA also represented a 36% increase in adjusted EBITDA compared to the $20.6 million achieved in FY '19.\nAs noted, this was also significantly higher than our initial guidance in FY '21 of $20 million to $22 million, also higher than our updated full year guidance of 24.5 and $26.5 million of adjusted EBITDA.\nThis $28 million of adjusted EBITDA also represented a $7.9 million or 36% increase over even the strong $20.6 million in adjusted EBITDA achieved in FY '19.\nFor the fourth quarter, adjusted EBITDA increased to $10.6 million, an increase of 18.5% compared to $8.9 million in adjusted EBITDA last year.\nOur cash flow and liquidity position were also very strong.\nAs shown in Slide 10, net cash generated for FY '21 was $39.7 million, which is $30.8 million higher than the $8.9 million generated in FY '20 and up 78% compared to the $22.2 million of net cash generated in FY '19.\nThis increase in net cash generated reflects very strong growth in adjusted EBITDA, a very significant increase in deferred subscription revenue and reduced amounts of capital expenditures and capitalized content development.\nAlso shown in Slide 11, our cash flow from operating activities for FY '21 increased a very strong $18.6 million or 68% to $46.2 million compared to $27.6 million in FY '20 and $30.5 million in FY '19.\nThis strong cash flow reflects an additional benefit of our subscription model, specifically that the invoice upfront and collect the cash from invoiced amounts even faster than we recognized all of the subscription revenue.\nWith this strong cash flow, we ended the fourth quarter with $62.4 million in total liquidity, even after investing $10.6 million in the third quarter related to the acquisition of Strive, extending our management training and learning platform.\nOur $62.4 million of liquidity at year-end was comprised of $47.4 million in cash, which means no net debt.\nAnd with our $15 million revolving credit facility remaining fully undrawn.\nImportantly, this $26.4 million of liquidity is significantly higher than even the $39.8 million in liquidity we had at the end of our second quarter in February 2020, just before the start of the pandemic.\nSo we're very pleased with our results.\nI'd just like to add that this strong performance reflects the continuation and acceleration of three key trends that we've talked about on the last number of calls with you.\nAnd these are shown on Slide 12.\nThe first, is the Enterprise Division sales in North America continue to be extremely strong, driven by rapidly accelerating growth in All Access Pass subscription and subscription services sales.\nTotal revenue in North America grew $16.3 million or 16% from $103.3 million in fiscal '20 million to $119.6 million in fiscal '21.\nThe second, as you can see there in the middle of that page is that our international operations have continued to strengthen.\nWhile pandemic related challenges continue in Japan and in certain of our licensee partner operations, resulting in our total international revenue still being somewhat below fiscal '19 levels.\nWe're pleased with the strong ongoing rebound in our international operations, where in the fourth quarter, revenue grew 54% compared to the fourth quarter of fiscal 2020.\nIn addition, the strong focus on All Access Pass sales in our international operations has resulted in significant increases in All Access Pass deferred revenue, which will establish the foundation for strong sales growth in the future.\nAnd third, as you can see on the right side of Slide 12, the performance of and trends in our Education division have strengthened substantially.\nThe strengthening is reflected by two things: first, an increase in the number of leader in Me schools that renewed their leader in Me membership to 2,323 schools in fiscal '21, up from 2,193 schools in fiscal '20.\nAnd second, the significant 79% increase in the number of new Leader in Me schools brought on during fiscal '21.\nWe added 574 new leader in Me schools, up from 320 in fiscal '20.\nThis increase in New and retained schools drove strong performance in the Education division, with revenue growing $5.5 million or 12.7% compared to fiscal '20 and adjusted EBITDA increasing $4.9 million over fiscal '20 and $1.2 million over fiscal '19.\nSo that's the first takeaway we want to share relative to our strong fourth quarter and strong full fiscal '21 results.\nThe second takeaway we'd like to talk about is that this strong performance was driven by the strength of and our rapidly growing subscription business model.\nAs you can see in Slide 14, our total subscription and subscription services sales grew 21% to $157.2 million in fiscal '21, representing additional growth of $27.5 million compared to $129.7 million in subscription and subscription services revenue in fiscal 2020.\nIn the fourth quarter, subscription and subscription services sales grew 52% to $52.1 million, which was an increase of $17.7 million compared to the fourth quarter of fiscal 2020.\nImportantly, this also represented growth of 29% compared to the $40.3 million in subscription and subscription services sales achieved even in the strong fourth quarter of fiscal 2019.\nAs you can see the sum of billed and unbilled deferred revenue also grew substantially, growing 27% for the year to $127.4 million.\nThat was an increase of $27.2 million compared to our sum of $100.2 million of billed and unbilled deferred revenue at the end of last year's fourth quarter.\nThis provides significant stability of and visibility into our future revenue growth.\nThe breakout between Billed deferred and unbilled deferred revenue, as you can also see on Slide 14.\nAs shown, our balance of deferred subscription revenue grew 27% or $16.4 million to $77 million at the end of -- at year-end compared to $60.6 million at year-end fiscal 2020.\nAnd our balance of unbilled deferred revenue grew 27% or $10.8 million to $50.4 million in this year's fourth quarter, reflecting the significant ongoing increase in the percentage of our All Access Pass contracts, which are now multiyear.\nAn example of this would be North America.\nIn fiscal 2021, 41% of All Access Pass contracts, representing 53% of total All Access Pass contract value were under multiyear contracts.\nImportantly, we achieved this strong subscription growth in both Enterprise and Education divisions.\nAs shown in Slide 15, in the Enterprise division, All Access Pass subscription and subscription services sales grew 24% or $22 million to $112.5 million in fiscal 2021 compared with $90.5 million in fiscal 2020.\nThis also reflected growth of 38% or $31 million compared to fiscal 2019.\nAnd in the fourth quarter, All Access Pass subscription and subscription sales grew 41% or $9.3 million to $32 million.\nAdditionally, the number of All Access Pass new logos in North America increased 39% in the fourth quarter.\nAnnual revenue retention continue to exceed 90%, and the sale of multiyear contracts, as I mentioned a minute ago continue to be strong with our balance of unbilled deferred revenue increasing 28% to $49.2 million in the Enterprise division, and that compares to $38.5 million in the fourth quarter of fiscal '20 and is up 69% compared to the $29.1 million balance of unbilled deferred revenue we had at the end of the fourth quarter fiscal 2019.\nAs shown in Slide 16, in the Education division, in fiscal 2021, Leader in Me subscription and subscription services sales grew 14% or $5.4 million to $44.7 million compared with $39.2 million in fiscal '20.\nFiscal 2021's $44.7 million of subscription and subscription services sales reflected growth of 5% or $2.1 million compared to fiscal 2019.\nIn the fourth quarter, Leader in Me subscription sales and subscription services grew $8.4 million to $20.1 million.\nThis represented growth of 72% compared to the $11.7 million in the fourth quarter of fiscal '20 and growth of 13% compared to the strong fourth quarter of fiscal '19, which was pre-pandemic.\nThe third overall takeaway we'd like to talk about today, as shown in Slide 17 is that also driving our strong performance is the importance of the opportunities and the challenges that we help our clients address.\nAs you can see in Slide 18, while lots of things, including sharing information and helping people learn new skills can add value to an organization.\nWhat it takes to really move any organization aggressively forward is to achieve collective behavioral change on the most important challenges.\nIn other words, getting everyone moving together and offering their collective best contributions toward the achievement of the organization's highest priorities.\nHelping organizations achieve this kind of seismic progress is where Franklin Covey really shines.\nThis is the reason why in the middle of the pandemic, more than 1,000 organizations purchased, renewed and/or expanded their All Access Pass and purchased support services from Franklin Covey to help them achieve their objectives in an incredibly challenging environment.\nIt's also the reason why during the last 12 months, in the middle of the pandemic, when schools were scrambling to learn how to teach remotely, connect with kids, provide breakfast and lunches to students who otherwise wouldn't have any and the myriad other challenges they were facing, 2,323 schools renewed their Leader in Me subscription and 574 new schools became Leader in Me schools.\nIt's also the reason why as shown in Slide 19, the lifetime value of our customers continues to be both large and growing.\nAs shown in Slide '20, the fourth takeaway that we want to share today is that we expect subscription and subscription services to account for greater than 90% of the company's sales within three years.\nAs this almost complete conversion to subscription and subscription services occurs, we expect virtually the entire company to be able to generate the same strong growth in revenue, gross margins, revenue retention and customer impact that we've seen in our subscription business over the past five years.\nIn North America, All Access Pass subscription and subscription services already account for 83% of total sales.\nAnd this is expected to increase to more than 90% within the next couple of years.\nAs shown in Slide '21, All Access Pass subscription and subscription services sales represented only 13% or $13.7 million of total sales in North America in 2016, when we first introduced the All Access Pass.\nThe dramatic, sustained, compounded growth since then has resulted in All Access Pass subscription and subscription services sales increasing to $112.5 million in fiscal 2021.\nWith annual All Access Pass subscription and subscription services sales expected to continue to grow at a more than double-digit pace.\nAnd with legacy sales now at very low levels and expected to remain flat or even decline a bit further, we expect All Access Pass subscription and subscription services sales to increase to more than 90% in North America, as I mentioned over the next couple of years.\nAll Access Pass subscription and subscription services are also expected to make up the vast majority of our sales internationally in the coming years.\nThe growth and penetration of All Access Pass subscription and subscription services has also progressed rapidly in our English Seating direct offices.\nAs you can see also shown on the right side of Slide '21, from having no subscription sales at all of these offices just five years ago, All Access Pass subscription and subscription services sales for the latest 12 months now account for 81% of total sales in the U.K. and 76% in Australia.\nBoth of these offices are well on their way toward the same 90% penetration we expect to achieve in North America.\nAs you know, our largest international direct offices are in China and Japan.\nBoth of which are in the relatively early stages of converting themselves to All Access Path.\nBut having made the conversion in the U.S., Canada, U.K. and Australia, we're confident that in China and Japan, we too will convert the vast majority of their revenue to All Access Pass subscription and subscription services in the coming years.\nIn fact, I think it's important to note that in fiscal '21, All Access Pass subscription and subscription services made up a third of Japan's total sales.\nSo we're pleased with the progress there.\nAnd finally, because of our Leader in Me subscription model, more than 90% of sales in the Education division are already subscription and subscription services.\nAnother reason we expect that our subscription and subscription services growth will accelerate is that we continue to make significant growth investments.\nWe've continued to invest in hiring additional salespeople or client partners.\nAs you can see in Slide 22, we ended fiscal 2021 with 273 client partners.\nAnd as we've discussed in the past, we have many decades of headroom for additional client partner growth.\nAs we continue to aggressively grow our sales force and our licensee network, the volume of new All Access Pass logos, all with high lifetime value is expected to continue to accelerate.\nAdditionally, we expect significant growth to come from the approximately 120 existing client partners we've hired over the past few years who are still in the middle of their ramp-up process.\nWe've also made ongoing in growth investments in new content, technology, and as shown in Slide 23, acquisitions, such as Jhana, Robert Gregory and most recently Strive.\nThe combination of our powerful content and solutions, Jhana, our vast coaching and training delivery capabilities and key behavior change in performance metrics, all integrated into our new Strive learning platform will create an industry-leading solution for clients who seek to drive collective behavior change to address their most important challenges.\nThese investments are accelerating our ability to ensure that the All Access Pass users have constant access to the solutions and tools they need to improve performance and increase results on a daily basis.\nThey're also providing an important foundation for us to address larger and larger populations inside existing and new pass holding clients and are helping us accelerate the growth of All Access Pass sales.\nI think it's important to note that we're also making significant investments in marketing and advertising.\nThe annual global learning and development spend totals nearly $400 billion, with more than $90 billion of that spent externally.\nAdditionally, billions more spent by business leaders on strategy execution and sales performance and by school superintendents and principles around the world.\nThese markets are large and growing, and no single provider in the space owns more than 1% or 2% of the market.\nWe -- the opportunity for us is massive.\nAnd we're focusing heavily on ensuring that Franklin Covey is clearly positioned at the top of the mines for current and future clients around the world.\nFinally, the fifth takeaway today is that we expect our almost complete conversion to subscription and subscription services to drive significant additional value to our shareholders.\nAnd to discuss this takeaway, I'd like to turn the time to Bob.\nNice to talk to all of you.\nShareholders, you all have often asked us how we think about the true value of the company.\nAnd while the specific valuation is something we'll leave to you to determine, I would emphasize that we expect the achievement of our multiyear business plan to create significant incremental value for our shareholders.\nJust note, we expect the additional value to be created in three key ways: first, just as a natural result of the significant growth in adjusted EBITDA that we expect, with strong continued growth in subscription and subscription services revenue and the expectation of achieving strong gross margins and a high flow-through of these additional sales to incremental adjusted EBITDA and cash flow.\nAs shown in Slide 25, we expect adjusted EBITDA over the next three years to grow from $28 million in fiscal 2021 to between 34 and $36 million in fiscal 2022 to between 44 and $46 million in fiscal 2023 and between 54 and $56 million in fiscal '24.\nSecond reason we believe that just the natural result of our growth will drive shareholder value is that we expect to generate a significant amount of cash flow during those same years and to use it to create additional shareholder value.\nWe expect our growth in cash to meet or even exceed our rapid growth and adjusted EBITDA.\nAnd we believe the expected growth in cash flow is likely to far exceed any reasonable discount rate anyone might apply to it.\nAs a result, we believe the net present value of our expected cash flow is likely were significantly more than the value implied by applying a -- to a given year's adjusted EBITDA, particularly when adjusted EBITDA is growing at a 25% compounded rate or higher.\nAs a consequence, we expect we'll be able to create additional shareholder value by investing a portion of more than $100 million of available cash we expect to have over the coming years to make strategic acquisitions to grow the business and also to repurchase substantial number of our shares.\nAnd finally, we expect that our almost complete conversion to being a high revenue growth, high adjusted EBITDA and high cash flow growth, subscription and subscription services business is likely to drive an increasingly SaaS-like valuation.\nWe're pleased to be achieving metrics at levels very similar to those being achieved by the strongest SaaS companies, which are trading at high multiples of revenue.\nHowever, like Adobe and other companies who during their period of conversion to SaaS created a discount to smaller subscription start-ups.\nWe expect that as our conversion to subscription and subscription services to SaaS becomes nearly complete, the impressive quality of our subscription metrics is likely to drive a valuation more reflective of the high lifetime customer value we're creating.\nAnd I'd like to turn to Steve to talk about guidance and our outlook.\nSo outlook and guidance.\nOur guidance for FY '22 is that we expect to generate adjusted EBITDA of between 34 and $36 million.\nThe midpoint of this range would reflect an approximately 25% increase in adjusted EBITDA compared to the $28 million of adjusted EBITDA achieved in FY '21.\nUnderpinning this guidance are the following expectations.\nFirst, the recognition that during FY '22, of a large portion of the $77 million of deferred revenue already on the balance sheet and the billing of a large portion of the $50 million of unbilled deferred revenue, which has been contracted.\nThis provides significant visibility into our FY '22 revenue and gross margin.\nSecond, in addition to the recognition of deferred revenue, the factor which is expected to have the greatest impact on our FY '22 results is also the one in which we have high confidence.\nThat is the strength of All Access Pass and related sales.\nWe expect that All Access Pass will continue to achieve one, strong growth in both sales and invoice sales, two, high revenue retention rates; three, strong sales to new logos; and four, continued growth in pass expansions and multiyear contracts.\nWe also expect that All Access Pass subscription services will continue to be strong.\nThird, we expect that our revenue in Japan, China and among our licensees will continue to strengthen.\nThe increase in All Access Pass, which we expect to achieve in these countries will obviously result in a portion of the new sales being added to the balance sheet as deferred revenue.\nAnd fourth, in Education, we expect to continue to achieve strong retention of both schools and revenue among existing Leader in Me schools.\nMe schools beyond that achieved last year.\nNow for our first quarter, we expect that adjusted EBITDA will be between 5.5 and $7 million compared to the $3.7 million in the first quarter of fiscal 2021, reflecting strong performance by All Access Pass in the U.S., Canada and government and the same general expectations just outlined for international operations and education.\nNow, in addition to our guidance, we'll offer some insight into our targets for FY '22, '23 and '24.\nBuilding on the $34 million to $36 million in adjusted EBITDA, we expect to achieve this year and driven substantially by the expected continued growth of All Access Pass.\nOur target is to achieve adjusted EBITDA increase by about $10 million per year, each year thereafter.\nTo be, as Bob said, around $45 million in FY '23 and around $55 million in FY '24.\nThese targets reflect our expectation of being able to achieve low double-digit revenue growth and approximately 40% of that growth in revenue to flow through to increase in adjusted EBITDA and cash flow.\nEven after significant growth investments, in marketing, our sales force, technology and expansion into new content areas.\nAll of this, at least until we achieve an adjusted EBITDA to sales percentage margin of approximately 20% or approaching 20%.\nWhile dramatic changes in the world environment could impact these expectations, we want to share that these are our current expectations and assumptions.\nWe all want to share that not only are these -- our targets and expectations.\nBut when you read our proxy statement, you'll see that the executive team's LTIP awards still depend on achieving these strong multiyear growth goals.\nWe feel great about our momentum and are pleased to be in a position to offer this guidance, and are looking forward to a great 2022.\n",
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"content": "q4 sales rose 41 percent to $68.9 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As Joanne mentioned, I'm Christine Cannella, Vice President, Global Corporate Communications and Investor Relations with Fresh Del Monte Produce.\nJoining me in today's discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Eduardo Bezerra, Senior Vice President and Chief Financial Officer.\nYou may also visit the company's website at freshdelmonte.com for a copy of today's release as well as to register for future distributions.\nWith that, I am pleased to turn today's call over to Mohammad.\nIt has been a very difficult few months for the world.\nOur thoughts go out to all the heroes working to keep people safe and healthy during this unprecedented evolving global pandemic.\nI want to extend my best wishes to you and your families that you stay safe and healthy.\nI also want to extend my gratitude to our frontline team members for their commitment to providing healthy convenient fresh and prepared food products during this crisis.\nI will go directly to what is likely top of mind for all of us, the impact of the COVID-19 pandemic and the actions we have taken to support our team members and their families, customers, suppliers and our local communities.\nAt the outback of the pandemic, we immediately activated our global and regional executive crisis management teams to respond accordingly.\nAt our production facilities where food safety has always been top of mind, we introduced additional operating procedures and safety protocols to include social distancing, thermal screenings and increase cleaning cycles to protect our production teams.\nWe activated our supply chain contingency plans to mitigate any disruptions in our ability to service our customers.\nMost recently we voluntary closed the distribution and fresh-cut facility in Boston, Massachusetts for 10 days, due to team members being diagnosed with the COVID-19.\nWe shifted inventory and production from our Boston facilities and continued to meet demand and deliver uninterrupted service to our customers in the Northeastern US.\nAs of today our Boston facility is back in operation.\nOther preventive actions included having as many global employees as possible working remotely.\nOur worldwide team members have rallied around maintaining business continuity during this critical time.\nAnd I am pleased with how quickly they adapted to the circumstances, especially our frontline teams that have kept our farms, plants and distribution centers running, allowing us to maintain our commitment to providing healthy convenient and safe Del Monte branded products around the world.\nWe are also collaborating in a number of ways with our local communities during this time of uncertainty, adding support wherever we can.\nRegarding our business, while we saw an increase in demand in our banana business, we did experience reduced demand for fresh-cut, for Fresh and value-added products, as stay at home orders impacted the restaurant and foodservice industry.\nWe anticipate this trend continuing in the near future as consumer adapt social distancing.\nHouseholds manage unprecedented economic hardships and unemployment rates soar.\nI would like to add that our Mann Packing subsidiary had shown improved results in January and February as they are recovering from their fourth quarter 2019 voluntary recall.\nHowever the COVID-19 impact to the foodservice channel also reduced demand for Mann's meals and snacks and fresh-cut vegetables product lines.\nWe expect the trend to continue in the second quarter of 2020 if conditions remain the same.\nOver the coming three months we will be moving our operations to our new Gonzales, California facility, which will allow us to streamline and improve our production capabilities, customer service and reduce costs.\nIn addition, earlier in the quarter we saw a reduction in our business in Asia as a result of supply and demand imbalances brought about by the closures and restrictions put in place in China logistics operations.\nThis plan turned around in March as the Asia region showed signs of recovery and we began to see demand increase, especially for bananas.\nWhile we did experience a number of challenges in the quarter that softed top line sales, we took several actions to fortify our business and conserve liquidity, including halting our share repurchase program, reducing our dividend by 50%, postponing non-critical capital investments for the second half of 2020 and establishing measures to reduce selling, general and administrative expenses going forward.\nAll of these measures, give me confidence that we will come out of this crisis stronger than ever.\nWhat will the new normal be?\nI believe we will see behavior changes in the market.\nOne such example is the surge in e-commerce category sales, while online grocery shopping grows at rapid pace during the pandemic, I believe, consumer usage has just begun.\nWhich is why in April of 2020 we broadened our distribution channels by introducing our online store in the United Emirates with plans, sort of the concept to other countries soon now.\nI want to begin with a few words regarding the confidence we have in our cash and our current debt positions as we renewed our credit facility.\nAs you're aware, we have a considerable variability in our $1.1 billion credit line.\nOur leverage ratio for the first quarter of 2020 was below 3.2 times EBITDA.\nIn addition to our variability on our credit line, the decision to halt our share repurchase program reduced the interim cash dividend and postponed non-critical capital investments, we strengthened our cash flow position for the second quarter.\nIn terms of liquidity, we were assured from our lenders we have no issues with drawing down if needed.\nWe generated cash this quarter and kept our level almost flat to the end of fiscal year 2019.\nSo these speak to the strength of our business.\nWe continue to focus on reducing our debt while we continue to invest in critical high margin capital projects to drive efficiency in our operations and expand our value-added business.\nWhile we see pressure on revenue and earnings in the short-term, we see much opportunity for us to be ready for future growth when this crisis has passed.\nGiven all of our capabilities as Mohammad declared, I am confident Fresh Del Monte will weather these difficult times and emerge stronger from this challenge.\nWith that I will now get into the results for the first quarter of 2020.\nAdjusted earnings per diluted share were $0.34 compared with adjusted earnings per diluted share of $0.46 in 2019.\nNet sales were $1,118 million compared with $1,154 million in first quarter 2019, with unfavorable exchange rates negatively impacting net sales by $8 million.\nWe estimate that the COVID-19 pandemic impacted net sales during the first quarter of 2020 by approximately $27 million.\nAdjusted gross profit was $77 million compared with $95 million in 2019.\nAdjusted operating income for the quarter was $24 million compared with $41 million in the prior year and adjusted net income was $16 million compared with $23 million in the first quarter of 2019.\nIn regards to the product lines for the first quarter of 2020, in our fresh and value-added business segment, net sales decreased $29 million to $661 million compared with $690 million in the prior year period.\nAnd gross profit decreased $19 million to $43 million compared with $62 million in the first quarter of 2019.\nThe decrease in net sales was primarily the result of lower net sales of fresh-cut vegetables, pineapples and meals and snacks, partially offset by higher net sales of avocados.\nAs compared with our original expectations, the COVID-19 pandemic affected our net sales of fresh and value-added products by an estimated $21 million during the quarter.\nAlso the continuing effect of November's Mann Packing voluntary product recall affected our net sales in the first quarter of 2020.\nIn our pineapple category, net sales were $102 million compared to $111 million in the prior year period, primarily due to lower sales volume in North America, Asia and Europe as a result of lower production in our Costa Rica and Philippines operations, primarily due to unfavorable growing conditions.\nAlso contributing to the decrease in net sales was the impact of the COVID-19 pandemic, which resulted in lower demand for pineapples across all of our regions.\nPartially offsetting this decrease were higher selling prices in North America and Europe and higher sales volume in the Middle East as a result of expanded sales to existing markets and additional shipments from our Kenya operation.\nOverall volume was 16% lower.\nUnit pricing was 9% higher and unit cost was 6% higher than the prior year period.\nIn our fresh-cut fruit category, net sales were $118 million in line with the prior year period.\nNet sales were impacted by lower demand in our foodservice distribution channel as a result of social distancing measures imposed by government around the world.\nOverall volume and unit pricing were in line with the prior year period and unit cost was 1% higher than the first quarter of 2019.\nIn our fresh-cut vegetable category, net sales were $103 million compared with $119 million in the first quarter of 2019.\nThe decrease in net sales was due to the effect of the COVID-19 pandemic, which -- a significant reduction of our foodservice business during the month of March, mainly in our Mann Packing subsidiary.\nWe also faced the continuing effect of our voluntary product recall announced in November 2019.\nVolume was 12% lower.\nUnit pricing was 2% lower and unit cost was 5% higher than the prior year period.\nIn our avocado category, net sales increased to $94 million compared with $89 million in the first quarter of 2019, primarily due to higher selling prices in North America as a result of lower industry supplies from Chile.\nAlso contributing to the increase in net sales were higher sales volume and selling prices in Asia, due to increased demand.\nPartially offsetting this increase were lower sales volume in North America.\nPricing was 33% higher and unit cost was 44% higher than the prior year period, impacted by start-up costs from our new processing facility in Europe and Mexico.\nIn our vegetables category, net sales decreased to $39 million compared with $42 million in the first quarter of 2019, primarily due to lower sales volume and selling prices as a result of Mann Packing voluntary product recall and lower sales as a result of the COVID-19 pandemic.\nUnit price was in line with the prior year period and unit cost was 9% higher.\nIn our non-tropical category, which includes our grape, berry, apple, citrus pear, peach, plum, nectarine, cherry and kiwi product lines, net sales increased to $62 million compared with $61 million in the first quarter of 2019.\nVolume increased to 9%.\nUnit pricing decreased to 7% and unit cost was 8% lower.\nIn our prepared for the product line, which includes the company's prepared traditional products and meals and snacks product lines, net sales decreased primarily due to the impact of the COVID-19 pandemic, product rationalization in our Mann Packing business and the continued impact of the 2019 voluntary product recall.\nThe decrease in net sales was partially offset by higher net sales in the company's prepared traditional product line.\nGross profit was impacted by lower sales volume in our meals and snacks product line.\nIn our banana business segment, net sales decreased to $5 million to $427 million compared with the $432 million in the first quarter of 2019, primarily due to lower net sales in Asia, Europe and North America, partially offset by higher net sales in the Middle East.\nAsia was impacted by lower sales volume and port closures in China related to the COVID-19.\nEurope banana net sales decreased due to lower industry supply in the beginning of 2020 and the impact of COVID 19 selling prices in March.\nAs compared with our regional expectations the COVID-19 pandemic affected banana net sales by an estimated $6 million during the quarter.\nNorth America was also impacted by lower supplies from our Central America production area.\nOverall volume was 1% higher than last year's first quarter.\nWorldwide pricing decreased 2% over the prior year period.\nTotal worldwide banana unit cost was 1% higher and gross profit decreased to $25 million compared to $35 million in the first quarter of 2019.\nNow moving to selected financial data.\nSelling, general, administrative expenses during the quarter were $53 million compared with $54 million in the first quarter of 2019, mainly due to lower advertising and administrative expenses.\nWe expect our recent actions to reduce selling, general and administrative expenses to have a positive impact beginning in the second quarter.\nThe foreign currency impact at the gross profit level for the first quarter was unfavorable by $6 million compared with an unfavorable effect of $3 million in the first quarter of previous year.\nIn the month of March we entered in several fuel hedges that extend through the end of 2021 to take advantage of lower fuel prices to reduce the exposure of our shipping cost in the Americas and Asia.\nSimilar to our foreign currency hedges we have in place to reduce our exposure in different countries that we market our products.\nThese fuel hedges are intended to minimize our financial exposure to volatility in the market.\nInterest expense net for the first quarter was $5 million compared with $7 million in the first quarter of 2019 due to lower debt levels and interest rates.\nIncome tax expense was $300,000 during the quarter compared with income tax expense of $9 million in the prior year.\nThe decrease in the provision for income taxes was primarily due to lower earnings in certain taxable jurisdictions.\nThe tax provision for the first quarter of 2020 also includes a $2 million benefit related to net operating losses carry back provision allowed through the recently enacted Coronavirus Aid Relief and Economic Security Act, the CARES Act.\nFor the first three months of 2020, our net cash provided by operating activities was $2 million compared with a net cash used in operating activities of $7 million in the same period of 2019.\nThe increase in net cash provided by operating activities was primarily attributed to higher balances of accounts payable and accrued expenses, partially offset by lower net income.\nOur total debt increased from $587 million at the end of 2019 to $599 million at the end of the first quarter of 2020.\nAs it relates to capital spending, we invested $17 million on capital expenditures in the first quarter of 2020 compared with $34 million in the same period of 2019.\nThis concludes our financial review.\n",
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"content": "q1 adjusted earnings per share $0.34.\nexpects volatility in supply & demand,reduced demand in foodservice distribution will adversely impact q2.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As Tekilamentioned, I'm Christine Cannella, vice president, investor relations with Fresh Del Monte Produce.\nJoining me in today's discussion are Mohammad Abu-Ghazaleh, chairman and chief executive officer; and Eduardo Bezerra, senior vice president and chief financial officer.\nYou may also visit the company's website at freshdelmonte.com for a copy of today's release as well as to register for future distribution.\nIn the first quarter of 2021, we delivered strong profits across all of our business segments while net sales were slightly lower year over year.\nGross profit increased 53% from last year's first quarter.\nNet income increased 228% to $43 million or diluted earnings per share of $0.90, compared with net income of $30 million or diluted earnings per share of $0.27 a year ago.\nWe believe that these results reflect the resilience of our company and are a demonstration of the initiatives we implemented in 2020 to further strengthen our operating model and improve working capital.\nI assume you all know what is happening in the global markets.\nThe structure of the economy has changed.\nWe recognize the new economic reality and market challenges we face.\nSpecifically, the inflationary pressure we are facing on all fronts which is forcing us to increase our prices.\nWe intend to continue to proactively manage and anticipate these challenges as we have done in the past by taking decisive actions to counterbalance any adverse conditions to our business.\nAs we move forward, we intend to continue to operate with agility so that we can quickly respond to market changes as they come.\nWhat you see today is only the beginning of our potential.\nWe also dealt with rising inflationary pressures during the first quarter.\nNow let's review our first quarter of 2021 results.\nNet sales decreased $29.7 million or 3% to $1.88 billion, compared with the prior year period with favorable exchange rates benefiting net sales by $16 million.\nThe decrease was primarily attributable to lower net sales in our fresh and value-added and banana business segments.\nAdjusted gross profit increased 39% to $107 million, and our adjusted gross profit margin increased to 10%, compared with 7% in the prior year period.\nWe benefited from increased profitability in our fresh and value-added business segment, partially offset by higher fruit production, procurement, and distribution costs.\nHowever, I would like to point out that if you apply the adjusted gross profit margin for the fresh and value-added produce segment of 8.7% to the $19 million of net sales impacted by COVID-19 in this segment, we estimate we would have delivered an additional $1.7 million in adjusted gross profit.\nAdjusted operating income increased 140% to $58 million compared with the prior year period, mostly driven by increased gross profit.\nAnd adjusted net income increased 154% to $42 million compared with the prior year period.\nWe achieved a diluted earnings per share of $0.90, compared to diluted earnings per share of $0.27 in the prior year period.\nExcluding nonoperational and nonrecurring items, we delivered adjusted diluted earnings per share of $0.88, compared with adjusted diluted earnings per share of $0.34 in the prior year period.\nAdjusted EBITDA increased 61%, and adjusted EBITDA margin increased 300 basis points when compared with the prior year period.\nLet me now turn to segment results, beginning with our fresh and value-added produce segment.\nFor the first quarter of 2021, net sales decreased $30 million or 5% compared with the prior year period.\nThe primary drivers of the variance were lower sales volumes of melons as a result of the hurricanes in Guatemala; the impact of COVID-19 to net sales in January and February in our fresh-cut vegetable and vegetable product lines; an increase in avocado volume, which was offset by lower per unit sales price that impacted the industry; an increase in pineapple volume in most of our regions; and an increase in net sales in our prepared food products line due to higher per unit sales prices.\nFor the quarter, adjusted gross profit in our fresh and value-added product segment increased 9% to $55 million, and adjusted gross profit margin increased 100 basis points.\nDuring the quarter, we began to benefit from the actions we took in 2020 to optimize our operations, primarily in the following product lines: fresh-cut fruit, melon, avocados and our prepared food products.\nFresh-cut fruit margins recovered back to double digits.\nRationalization in our domestic melon operations and higher per unit sale prices helped offset the damage from the hurricanes.\nAvocado gross profit margin doubled during the quarter and achieved the double digits.\nPrepared food products margins achieved the high teens.\nWe also pursued volume expansion during the quarter in the following product lines: pineapple volume increased 22% and avocado volume increased 12%.\nGross profit in our non-tropical product line decreased primarily in rates as a result of damage caused by severe rainstorms to some of our farms in Chile, which resulted in a $3.1 million inventory write-off.\nOur Mann Packing business was impacted by lower sales volume in our food service distribution channels, which drove higher per unit product costs.\nNet sales in our banana segment decreased $9 million to $418 million while adjusted gross profit increased 93% or $23 million during the quarter, primarily driven by lower net sales in North America and the Middle East, mainly as a result of decreased sales volume, partially offset by strong demand in Asia.\nOverall volume decreased 8%.\nPricing increased 7%, which offset an increase in production and procurement costs due to the impact of hurricanes Eta and Iota in Guatemala as well as inflationary pressure on cost of goods sold.\nNow moving to selected financial data.\nSelling, general, and administrative expenses decreased $4 million to $49 million, compared with $53 million in the prior year period.\nThe decrease was primarily due to cost-saving initiatives in our North America region that resulted in reduced promotional expenses and lower selling and marketing costs.\nThe foreign currency impact at the gross profit level for the first quarter was favorable by $13 million, compared with an unfavorable effect of $6 million in the prior year period.\nInterest expense net for the first quarter at $5 million was in line with the prior year period.\nThe provision for income taxes was $11 million during the quarter, compared with the income tax of $300,000 in the prior year period.\nThe increase in the provision was due to -- sorry, the increase in the provision for income tax of $10.7 million is primarily due to increased earnings in certain jurisdictions.\nDuring the quarter, we generated $47 million in cash flow from operating activities, compared to $2 million in the prior year period.\nThe increase was primarily attributable to higher net income and higher balances of accounts payable and accrued expenses, principally due to our optimization efforts associated with working capital.\nAs it relates to capital spending, we invested $34 million in the first quarter, compared with $17 million in the prior year period.\nOur investments were mainly related to our new refrigerated container ships, one of which was received during the first quarter and expansion and improvements to facilities in North America and Asia.\nAs of the end of the quarter, we received cash proceeds of $42.4 million in connection with our asset sales under the asset optimization program of which approximately $40 million was received in 2020.\nThe gain during the first quarter of 2021, primarily related to a gain on the sale of a refrigerated vessel.\nWe believe we're on track to achieve the $100 million program by the first quarter of 2022.\nWe paid down our long-term debt by $8 million, resulting in a total debt balance of $534 million.\nAnd based on our trailing 12 months, our total debt to adjusted EBITDA ratio stands at 2.4 times.\nThis concludes our financial review.\n",
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"content": "fresh del monte produce q1 earnings per share $0.90.\nq1 adjusted earnings per share $0.88.\nq1 earnings per share $0.90.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As Christine mentioned, I'm Christine Cannella, Vice President, Investor Relations with Fresh Del Monte Produce Inc. Joining me in today's discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Eduardo Bezerra, Senior Vice President and Chief Financial Officer.\nYou may also visit the company's website at freshdelmonte.com for a copy of today's release, as well as to register for future distributions.\nWith that, I am pleased to turn today's call over to Mohammad.\nI'm pleased with our overall performance in the third quarter.\nNet sales totaled $1.1 billion, gross profit increased 42% from last year's third quarter, and we generated earnings per share on an adjusted basis of $0.35 per share, up from a loss per share of $0.14 a year ago.\nDuring the quarter, we continued to make progress on our strategic objectives, as we transform our company to a value-added higher margin business.\nDisrupting the legacy of being a volume based banana business.\nMuch of the improvement came from our fresh and value-added business segment.\nMost notably, our fresh-cut fruit product line in North America.\nWe continue to see strong demand from existing and new customers.\nOur new fresh-cut unit in Yokohama, Japan is on track to open in the first quarter of 2020, and we have begun expansion of our existing fresh-cut facilities in the UK.\nThis will allow us to keep pace with global demand trends and expand our foodservice and retail customer base.\nOur vegetable business through Mann Packing also performed well during the third quarter.\nAs part of our meals and snacks product line, we were excited to see the launch of our Better Break line of vegetable rich convenience snacks.\nWe are moving ahead, as well with some of our newest and biggest opportunities.\nFor example, we continue to grow our foodservice partnerships across the Middle East, Asia and Europe, which is increasingly a focus of new business for us.\nWe are also on schedule to open our fresh food and beverage store in the United States during the first quarter of 2020 in Coral Gables.\nThis concept has proven itself in the Middle East and we are looking forward to the possibilities in the United States.\nWe are about to bring our new state-of-the-art avocado packing facilities online in Mexico, which will give us even more control over our supply.\nThis should improve our margin and secure new additional sourcing opportunities to serve the rapidly expanding consumer market for avocados.\nWe recently released on our website, the latest corporate social responsibility report highlighting Fresh Del Monte's commitment to making a better world tomorrow.\nSustainability has always been a part of who we are and what we do every day.\nWe recognize setting and meeting our sustainability goals is an opportunity for us to positively impact people and the environment.\nWe look forward to building on our momentum as we advance our efforts to meet all our corporate responsibility goals and make a better way tomorrow.\nIn summary, we remain committed to transforming the company growing our product lines, increasing shareholder value and inspiring healthier lifestyles for generations to come.\nOur financial performance in the third quarter demonstrates that our strategy to evolve Fresh Del Monte to our value-added, efficient, profitable and more focused business is under way.\nFor the third quarter of 2019, adjusted net income per diluted share was $0.35, compared with an adjusted loss per diluted share of $0.14 in 2018.\nNet sales were in line with the prior year period.\nAdjusted gross profit increased 42% to $75 million in the third quarter of 2019, compared with $53 million in 2018.\nAdjusted operating income for the quarter increased to $25 million, compared with $3 million in the prior year.\nAnd adjusted net income was $17 million, compared with an adjusted net loss of $7 million in the third quarter of 2018.\nTurning to our business segments and key product lines.\nIn our fresh and value-added business segment for the third quarter of 2018, net sales were $653 million, compared with $640 million in the prior year period.\nPrimarily as a result of higher net sales in our fresh-cut fruit, avocado and vegetable product line, partially offset by lower net sales in our pineapple and non-tropical product lines.\nGross profit increased 27% to $54 million, compared with $42 million in the third quarter of 2018, primarily due to higher gross profit in our fresh-cut, pineapple and vegetable product lines.\nOur gross profit margin for the segment improved by 1.6 percentage point, maintaining the growth trend of the first half of 2019.\nIn our pineapple category, net sales decreased to $102 million, compared to $112 million in the prior year period.\nThe result of lower production volumes, due to adverse growing conditions in our production areas.\nThe decrease was offset by higher selling prices in North America and Europe.\nOverall volume was 20% lower, unit pricing was 14% higher and unit cost was 7% higher than the prior year period.\nIn our fresh-cut fruit category, net sales were $145 million, compared with $132 million in the prior year period, primarily due to higher sales volume and higher selling prices in North America.\nOverall volume was 10% higher, unit pricing was 1% higher and unit cost was 2% lower than the third quarter of 2018.\nIn our fresh-cut vegetable category, net sales increased to $124 million, compared with $123 million in the third quarter of 2018.\nThe increase was primarily the result of higher selling prices.\nVolume was 9% lower, unit pricing was 11% higher and unit cost was 9% higher than the prior year period.\nIn our avocado category, net sales increased to $98 million, compared with $85 million in the third quarter of 2018, supported by higher selling prices as a result of tight industry supply.\nVolume decreased 8%, pricing was 26% higher and unit cost was 28% higher than the prior year period.\nIn our fresh vegetable category, net sales increased to $46 million, compared with $40 million in the third quarter of 2018, due to higher sales volume and increased selling prices.\nVolume increased 9%, unit price increased 6% and unit cost was 1% lower.\nIn our non-tropical category, which includes our grape, berry, apple, citrus, pear, peach, plum, nectarine, cherry and kiwi product lines.\nNet sales decreased to $32 million, compared with $42 million in the third quarter of 2018, primarily due to planned rationalization of low-margin products in this category beginning in 2018.\nVolume decreased 22%, unit pricing was in line with the prior year period and unit cost was 2% lower.\nIn our prepared food category, which includes our traditional canned products and meals and snacks product lines.\nNet sales increased, due to higher sales volume, gross profit was impacted by lower selling prices in the traditional prepared product lines.\nIn our banana business segment, net sales were $386 million, compared with $397 million in the third quarter of 2018, primarily due to lower net sales in North America and Asia, partially offset by higher sales in the Middle East and Europe.\nOverall volume was 7% lower than last year's third quarter, worldwide price increased 4% over the prior year period and total worldwide banana unit cost was 3% higher than the prior year period and gross profit increased to $17 million, compared with $10 million in the third quarter of 2018, reflecting a 1.7 percentage point increase in gross profit margin.\nNow moving to selected financial data.\nOn selling, general and administrative expenses, we were in line with the prior year period.\nRegarding foreign currency, our foreign currency was impacted at the sales level for the third quarter with an unfavorable impact of $7 million, and at the gross profit level the impact was unfavorable by $2 million.\nInterest expense, net for the third quarter was $6 million compared with $7 million in the third quarter of 2018, due to lower debt and volume.\nIncome tax expense was $3 million during the quarter, compared with income tax expense of $1 million in the prior year, mainly due to higher taxable earnings in North America.\nAt the end of the quarter, our cash flow -- cash from operating activities was $130 million, compared with net cash provided by operating activities of $271 million in the same period of 2018, primarily due to lower accounts payable and accrued expenses, partially offset by higher net income.\nAt the end of the quarter, we were able to reduce our debt by an additional $50 million to $590 million from $640 million at the end of the second quarter of 2018.\nIn October 2019, we amended and restated our $1.1 billion unsecured credit agreement and extended the credit facility until October 2024, with a more favorable rate.\nWe also included an accordion feature that could increase the availability by, up to $300 million.\nAnd we are pleased to have the continued support of our lenders and appreciate the confidence they maintain in Fresh Del Monte's future.\nAs it relates to capital spending, we invested $94 million on capital expenditures in the first nine months of 2019, compared with $119 million in the same period in 2018.\nThis is a 33% or $0.02 increase over the dividend paid in September 2019.\nThis concludes our financial review.\n",
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"content": "compname reports q3 adjusted earnings per share $0.35.\nq3 adjusted earnings per share $0.35.\ncompany increases dividend 33% from $0.06 to $0.08 per share.\ncompany extends credit facility until 2024.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As Julianne mentioned, I'm Christine Cannella, Vice President, Investor Relations, with Fresh Del Monte Produce.\nJoining me in today's discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer, and Eduardo Bezerra, Senior Vice President and Chief Financial Officer.\nYou may also visit the company's website at freshdelmonte.com for a copy of today's release as well as to register for future distributions.\nWith that, I am pleased to turn today's call over to Mohammad.\nOur performance in 2019 highlights the decisions we made in 2018 to realign certain production units and the progress we have made toward shifting our strategy to becoming a more value added and more diversified company.\nWe advanced on many fronts in 2019, which I will highlight in a minute.\nHowever, I want to first touch on our fourth quarter performance.\nThe fourth quarter is traditionally a tough quarter for the industry.\nAlso, our quarterly results were impacted by our Mann Packing unit's voluntary recall in November.\nTo a lesser impact, competitive pressures on avocados and pineapples affected selling prices in the quarter.\nCollectively, these fourth quarter factors constrained our full-year performance in 2019.\nNow I would like to highlight a few of our accomplishments in 2019.\nWe gained strength in our fresh and value-added business driven by demand from both our existing and new customers.\nParticularly for our fresh-cut fruit product line, which continues to expand globally.\nWe proceeded with our roll out of the new healthy innovative products by introducing our Better Break vegetable-based on-the-go convenience snack pack, snack line.\nWe opened our new avocado production facility in Mexico, which will allow us to increase our pack out capacity, further strengthening our competitive position.\nIn 2019, we commenced our strategic direction by expanding global customer supply partnerships.\nI'm encouraged about how these key relationships are trending as they play important roles in the value-added product diversification strategy for our distribution channels.\nWe reduced our debt in 2019, we brought back our quarterly dividend and we repurchased shares.\nWe also initiated capital investments in technology, automation and logistics as part of our strategic goal to transform Fresh Del Monte to be a technology-driven and efficient producer.\nLooking forward, 2020, I'm optimistic about the future of Fresh Del Monte.\nWe are a different company today than we were a year ago.\nWe have embarked on five-year plan to transform Fresh Del Monte.\nThe key elements of our transformation involve protect and grow the core business, drive innovation and expansion growth on value-added categories, evolve our culture to increase employee engagement and productivity, become a technology-driven company to drive efficiencies, become a consumer-driven company, and sustainability, which means waste less for better world tomorrow.\nWhile this transformation is a multi-year strategic plan and there is still a lot of work to do, I continue to be inspired by the commitment and resilience of our organization as we transform our company.\nI look forward to updating you regarding the actions we take on our path forward in our upcoming earnings call.\nDue to service cancellations and containers being unable to clear at certain Chinese ports, and thus the supply is being shifted to traditional markets such as Japan and Korea and may have adverse impact on our operations.\nLike everyone else, we are closely following developments of the rapidly changing situation and our ability to supply our customers in the region.\nAt this point, I would like Eduardo to take over.\nAs Mohammad mentioned, our Mann Packing unit announced a voluntary recall products in our fresh and value-added business segment in November 2019.\nAs a result, we reported adjustments of $11 million related to inventory write-offs, sales claims and other costs associated with the product recall.\nWe expect to have some continuing impact from the recall in 2020.\nI'll now go into the results for the fourth quarter and full-year 2019.\nIn regards to the product line, I will update you on fourth quarter numbers.\nFor the full-year 2019, adjusted earnings per diluted share were $1.12, compared with adjusted earnings per diluted share of $0.40 in 2018.\nNet sales were in line with the prior year at $4.5 billion, with unfavorable exchange rates negatively impacting net sales by $43 million.\nAdjusted gross profit increased to $312 million, compared with $280 million in 2018.\nAdjusted operating income for the year was $113 million, compared with $82 million in the prior year.\nAnd adjusted net income increased to $55 million, from $20 million in 2018.\nFor the full-year 2019, net sales in our fresh and value-added business segment increased by $50 million to $3 billion compared to the prior year, primarily as a result of higher net sales in our fresh-cut, avocado and vegetable product lines.\nOur gross profit increased $5 million to $195 million and gross profit was negatively impacted by the Mann Packing voluntary product recall.\nFor the full-year 2019, net sales in our banana business segment decreased $47 million, due to lower net sales in North America, Asia and Europe, while gross profit increased $30 million as a result of higher selling prices in Europe and Asia.\nFor the fourth quarter of 2019, adjusted loss per diluted share was in line with the fourth quarter of 2018 at $0.45, net sales were in line with the prior-year period at $1 billion, with unfavorable exchange rates negatively impacting net sales by $4 million.\nAdjusted gross profit was $47 million,compared with adjusted gross profit of $42 million in the fourth quarter of 2018.\nAdjusted operating loss for the quarter was $6 million, compared with an adjusted operating loss of $8 million in the prior year.\nAnd adjusted net loss for the quarter was $21 million, compared with an adjusted net loss of $22 million in the fourth quarter of 2018.\nIn our fresh and value-added business segment for the fourth quarter of 2019, net sales were $597 million, compared with $618 million in the prior-year period, and gross profit decreased to $21 million, compared with $45 million in the fourth quarter of 2018.\nThe decrease in net sales and gross profit was primarily the result of Mann Packing's voluntary product recall.\nIn our pineapple category, net sales were $115 million, compared to $116 million in the prior-year period, primarily due to lower sales volume and the selling prices in Europe, and lower selling prices in Asia.\nOverall volume was 2% lower, unit price was 2% higher, and unit costs were 6% higher than the prior-year period.\nIn our fresh-cut fruit category, net sales were $116 million compared with the $113 million in the prior-year period, primarily due to increased demand in North America, Europe and Asia.\nOverall volume was 2% higher, unit pricing was in line with the prior year, and unit cost was 1% higher than the fourth quarter of 2018.\nIn our fresh-cut vegetable category, net sales were $96 million compared with $120 million in the fourth quarter of 2018.\nThe decrease was primarily due to lower sales volume as a result of Mann Packing's voluntary product recall.\nVolume was 21% lower, unit pricing was 1% higher, and unit cost was 19% higher than the prior-year period.\nIn our avocado category, net sales increased to $65 million, compared with $65 million in the fourth quarter of 2018, supported by higher sales volume as a result of increased customer demand.\nVolume increased 8%, pricing was 2% lower, and unit cost was 8% higher than the prior-year period.\nWith the opening of our new packing facility and changes in how we procure of avocados, we believe we will see reduced costs and improvement in margins in this product line.\nIn our vegetables category, net sales decreased to $47 million compared with the $49 million in the fourth quarter of 2018, primarily due to lower sales volume and selling prices as a result of Mann Packing voluntary product recall.\nVolume decreased 4%, unit pricing decreased 2%, and unit cost was 1% higher.\nIn our non-tropical category, which includes our grape, berry, apple, citrus, pear, peach, plum, nectarine, cherry, kiwi product lines, net sales increased to $33 million compared with $29 million in the fourth quarter of 2018.\nVolume increased 1%, unit price increased 11%, and unit cost was 2% higher.\nIn our prepared foods category, which includes our traditional canned products, and meals and snacks product lines, net sales for the fourth quarter decreased 1% compared with the fourth quarter of 2018.\nThe decrease was primarily due to lower sales in our meals and snacks product line, partially offset by higher sales in our canned pineapple product line.\nIn our banana business segment, net sales were $399 million compared with $395 million in the fourth quarter of 2018, primarily due to higher sales volume in the Middle East and higher selling prices in Europe, partially offset by lower sales volume in North America and Asia.\nOverall volume was 1% lower than last year's fourth quarter, worldwide pricing increased 2% over the prior-year period.\nTotal worldwide banana unit cost was 2% lower and gross profit increased to $13 million compared with a loss of $2 million in the fourth quarter of 2018, reflecting 3.7 percentage point increase in gross profit margin.\nNow moving to selected financial data.\nOn selling, general and administrative expenses during the quarter, they represented $49 million compared with $47 million in the fourth quarter of 2018.\nThe foreign currency impact at the gross profit level for the full year was unfavorable by $15 million and the foreign currency impacts at the gross profit level for the fourth quarter was unfavorable by $5 million.\nInterest expense net for the fourth quarter was $5 million compared with $7 million in the fourth quarter of 2018, due to lower debt levels as well as lower interest rates.\nIncome tax expense was $1 million during the quarter compared with income tax expense of $3 million in the prior year.\nRegarding cash from operating activities at the end of the quarter, our net cash provided was once $169 million compared with net cash provided by operating activities of $247 million in the same period of 2018.\nThe decrease was primarily due to lower accounts payable and accrued expenses, partially offset by higher net income.\nOur total debt decreased from $662 million at the end of 2018, to $587 million at the end of 2019.\nAs it relates to capital spending, we invested $122 million in 2019, compared with $151 million in the same period in 2018.\nJust a correction in our avocado category.\nNet sales increased to $69 million compared with $65 million in the fourth quarter of 2018.\nThis concludes our financial review.\n",
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"content": "q4 adjusted loss per share $0.45.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We continue to be in various remote locations today.\nWe may have some audio quality issues and we appreciate your patience should we experience a disruption.\nA replay of today's call will be available via phone and on our website.\nTo be fair to everyone, please limit yourself to one question plus one follow-up.\nAnd now, I'd like to turn the discussion over to Phil Snow.\nI'm pleased to share our third quarter results headlined by strong top line growth.\nThis has allowed us to increase our organic ASV plus professional services guidance for this fiscal year.\nBuilding on last quarter's momentum, we grew organic ASV plus professional services by 5.8% this quarter.\nThe investments made in both content and technology over the past seven quarters have strengthened our product portfolio.\nAnd as a result demand for our solutions is increasing, further supported by our clients' own digital transformation needs.\nOur growth this quarter was strongest with wealth managers, banking clients and asset owners.\nThe acceleration in ASV reflects solid execution from the sales team who increased wallet share with existing accounts and further improve client retention.\nOur strategy to build the industry's leading open content and analytics platform continues to make an impact in the market.\nWe remain on track with our multiyear investment plan.\nWe continue to build out our content offering with particular focus on deep sector, private markets, ESG and data for wealth managers.\nGrowth in workstations this quarter was driven by deep sector and private markets data, especially with banks and corporate clients.\nThe expansion of our StreetAccount coverage in Canada and Asia as well as more fund data collection has generated greater demand from wealth managers.\nAnd clients are using our data management solutions, which include entity mapping and data concordance services to manage their own content.\nThese offerings are key differentiators often sought by asset management clients.\nOur migration to the cloud is progressing as planned, and gives us the opportunity to build new products that support ASV growth.\nOne example is the advisor dashboard which is being well received by wealth managers as evidenced by new wins and solid pipeline.\nClients are seeking personalized tools like the advisor dashboard that can surface insights, increase efficiency and help users identify the next best action.\nIn addition, we provide greater flexibility to clients by further opening up our platform.\nOur broader API offerings allow clients to leverage core and alternative data sets, tap into our robust portfolio analytics engine, build digital portals and gain access to proprietary signals.\nWe have seen strong demand for our analytics APIs, as well as fundamental company data APIs for CTS.\nWe are also seeing more data sales through cloud-based platforms such as Snowflake and having success with CRM integrations.\nThis growth in our digital solutions can be attributed to our technology investments.\nLooking at our regions, I'm pleased to say that our ASV growth rate increased in the Americas and EMEA across the majority of our business lines.\nThe Americas growth rate increased to 6% with strength across CTS, research and analytics.\nAcceleration was driven primarily by strong workstation sales to our banking clients and overall demand for premium and core data feeds.\nWe benefited from an increase in hiring of middle market and bulge bracket banks due to robust M&A and equity capital markets.\nEMEA's growth rate accelerated to 5% improving over the past two quarters.\nWe experienced stronger results in research and analytics reflected in part by higher retention of our asset management and wealth firms.\nIn addition, we captured greater international price increases as clients continue to affirm the value of our solutions.\nAsia Pac's growth remained at 9% driven largely by research and analytics.\nResults include strong cross sales to asset management firms, as well as increases to global banks who are hiring more to accommodate increased capital markets activity.\nThe region also benefited from higher price increases.\nIn summary, we enter the end of fiscal '21 with good momentum and have good visibility into our fourth quarter.\nWe have a strong pipeline weighted most heavily toward institutional asset managers, broker-dealers and wealth managers and are increasing our organic ASV guidance to $85 million to $95 million for this fiscal year.\nOverall, we are encouraged by market trends.\nClients are showing more willingness to spend against the backdrop of anticipated economic recovery.\nDecisions on more complex deals that had been delayed are now beginning to be reconsidered as clients look to execute on their own digital transformations.\nWe see increased demand for enterprisewide technology upgrades and data management as CIOs and CTOs look to future proof their technology stacks.\nThis gives us conviction in the long-term benefit of our multiyear investment plan and our path to higher growth.\nThis month marks FactSet's 25th year as a public Company.\nI'm proud to reflect on our team's strong performance, the culture of continuous innovation we have fostered, and the significant value to shareholders we have created over the years.\nWe will continue to push ourselves to create smarter, more adaptive and more personalized solutions that make us the trusted enterprise partner for clients.\nShe will take you through the quarter in more detail.\nOur quarterly results also reflect increased year-over-year spending in people and technology, in line with our investment plan as well as anticipated higher ASV performance.\nWe believe the progress made in our own digital transformation is enhancing our ability to help clients do the same.\nI will now share more details on our third quarter performance and provide an update to our annual outlook.\nWe grew organic ASV plus professional services by 5.8%, reflecting in part the client demand for our solutions driven by their own digital transformation needs.\nIn addition, our ability to realize higher pricing is a direct reflection of the value our products provide to clients.\nTo that point, in line with the $14 million captured last quarter with the Americas price increase, we added $8 million from our international price increase this quarter.\nOur investments in content technology have further strengthened our product offerings with clients, as reflected in both higher levels of client retention and cross-selling.\nFocused execution from our sales team in delivering key workflow solutions also accelerated our growth.\nAll of these factors underpin our results year-to-date.\nFor the quarter, GAAP revenue increased by 7% to $400 million.\nOrganic revenue which excludes any impact from foreign exchange, acquisitions and deferred revenue amortization increased 6% to $397 million.\nGrowth was driven primarily by our analytics and CTS solutions, which have been the drivers of ASV in prior quarters.\nAs a reminder, ASV represents the next 12 months of revenue.\nSo there is a lag between the recording of ASV and the realization of revenue.\nFor our geographic segments, organic revenue growth for the Americas grew to 6%, EMEA grew to 5% and Asia Pacific to 11%.\nAll regions primarily benefited from increases in our analytics and CTS solutions.\nGAAP operating expenses grew 12% in the third quarter to $282 million, impacted by higher cost of services.\nCompared to the previous year, our GAAP operating margin decreased by 300 basis points to 29.5%, and our adjusted operating margin decreased by 390 basis points to 31.6%.\nAs a percentage of revenue, our cost of services was 570 basis points higher than last year on a GAAP basis and 560 basis points higher on an adjusted basis.\nThis increase is driven by higher compensation and technology costs.\nCompensation growth is comprised of higher salary expenses for existing employees, new hires to support our multiyear investment plan and higher bonus accrual in line with stronger than anticipated ASV performance.\nThis higher technology spend relates to our planned migration to the public cloud.\nWe have been experiencing higher cloud usage and costs due to increased client trials, enterprise hosting and new product development.\nWe anticipate this level of elevated expenses to continue as clients adopt our digital solutions.\nSG&A expenses when expressed as a percentage of revenue improved year-over-year by 270 basis points on a GAAP basis and 170 basis points on an adjusted basis.\nThe primary drivers include reduced facility expenses, lower spend due to office closures and a decrease in professional fees, offset in part by higher compensation costs, reflecting the same factors as noted in the cost of services.\nMoving on, our tax rate for the quarter was 12% compared to last year's rate of 15% primarily due to lower operating income this quarter, and a tax benefit related to finalizing prior year's tax returns.\nGAAP earnings per share was almost flat to last year at $2.62 this quarter versus $2.63 in the prior year.\nAdjusted diluted earnings per share decreased 5% to $2.72.\nBoth earnings per share figures were largely driven by higher operating expenses, partially offset by higher revenue.\nFree cash flow which we define as cash generated from operations, less capital spending was $122 million for the quarter, a decrease of 13% over the same period last year.\nThis decrease is primarily due to higher capital expenditure from higher investment in internal software and the timing of certain tax items.\nFor the third quarter, our ASV retention continued to be above 95%, and our client retention improved to 91% which speaks both to the mission criticality of our solutions and the solid efforts and focused execution of our sales teams.\nWe grew our total number of clients by 7% compared to the prior year to over 6,100 clients, largely due to the addition of more wealth and corporate clients, including private equity and venture capital firms.\nAnd our user count grew 11% year-over-year and crossed the total of 155,000, primarily driven by wealth and corporate users.\nFor the third quarter, we repurchased over 178,000 shares of our common stock for a total of $58 million, at an average share price of $323.\nWe also increased our quarterly dividend by 6.5% to $0.82 per share, marking the 22nd consecutive year that we have increased our dividend.\nWe remain disciplined in our buyback program and committed to returning long-term value to our shareholders.\nThe impact of our multiyear investment plan is reflected in our results.\nThe demand for our strong content offerings, digital solutions and open platform is accelerating growth.\nGiven our strong performance this quarter, and our confidence that we will execute successfully on a healthy pipeline as we close out the fiscal year, we are increasing our full-year organic ASV plus professional services guidance range to $85 million to $95 million.\nWe are also reaffirming the other metrics in our annual outlook.\nGiven its timing and nature, an increase in ASP in the fourth quarter will not materially change revenue in fiscal year '21, but would result in a higher bonus accrual.\nThe related expense would impact our margins by an incremental 60 basis points to 75 basis points.\nWe believe that we will remain within our stated annual guidance ranges.\nIn closing, from the vantage point of now overseeing FactSet sales and marketing organization, I can attest to the diligent focus and efforts we have made this year, helping clients leverage our offerings, building a stronger and broader pipeline and converting opportunities to sales.\nI have confidence in our ability to continue to execute on all these fronts and grow our market share as we finish the year.\n",
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"content": "q3 adjusted earnings per share $2.72.\nq3 earnings per share $2.62.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We continue to be in various remote locations today.\nWe may have some audio quality issues and we appreciate your patience should we experience a disruption.\nA replay of today's call will be available via phone and on our website.\nTo be fair to everyone, please limit yourself to one question, plus one follow-up.\nAnd now, I'd like to turn the discussion over to Phil Snow.\nI'm pleased to share that we delivered strong fourth quarter and full year results.\nWe ended the year with record organic ASV plus professional services growth of $68 million for the quarter, crossing the $100 million annual ASV threshold for the first time and soundly beating the top end of our guidance.\nOur year-on-year organic ASV growth rate accelerated 200 basis points to over 7% and we delivered annual revenue of $1.6 billion and adjusted earnings per share of $11.20.\nOur outperformance was driven by two years of planned accelerated investments in content and technology, which is paying dividends.\nFactSet's goal to be the leading open content and analytics platform is resonating in the marketplace and increasing our wallet share with clients.\nOur targeted investment in new content sets was a significant ASV driver in fiscal '21 and fueled our workstation growth.\nThe continued development of our deep sector coverage improved sell side retention and expansion with our largest banking clients and help secure a new business.\nContent and technology were both key to our expansion with wealth management firms where we landed important wins, including with the Royal Bank of Canada and Raymond James, Canada.\nThese wins were due to our market leading data and the launch of FactSet's Advisor Dashboard.\nWe are also expanding our addressable market by increasing our content and delivery capabilities across the front, middle and back office.\nCloud delivery coupled with the strength of our DMS in concordance as a service solutions enable our clients to centralize, integrate and analyze disparate data sources for faster and more cost-effective decision making.\nThis has been a major driver for our CTS business.\nAs we look ahead to 2022 and beyond, we remain focused on three things: scaling up our content refinery to provide the most comprehensive and connected set of industry, proprietary and third-party data for the financial markets; two, enhancing the clients' experience by delivering hyper personalized solutions, so clients can discover meaningful insights faster; and third, driving next generation workflow specific solutions for asset managers, asset owners, sell side wealth management and corporate clients.\nWe added new data and capabilities to further these goals by acquiring differentiated assets over the past year.\nThe addition of Truvalue Labs has grown our ESG offering; BTU Analytics advanced our deep sector content for the energy markets; and Cabot Technologies will better support the portfolio analytics workflows of asset managers and asset owners.\nThe progress we have made on our investment plan along with these acquisitions and our award-winning products give us a distinct competitive advantage.\nTurning now to our financial results.\nWe accelerated our organic ASV plus professional services growth to 7.2%.\nOur strong performance was driven by stellar execution from our sales and client-facing teams throughout the entire year and especially in the fourth quarter.\nOur buy side and sell side growth rates increased 100 basis points and 400 basis points respectively since the third quarter, reflecting higher sales across our key clients.\nOn a year-over-year basis, we saw an increase in ASV growth rates from high-single digit to double digits across banks, asset owners, hedge funds, data providers, wealth managers and corporates, including private equity and venture capital firms.\nWe capitalized on the strength of our end markets, particularly in banking and landed several large deals in our wealth and CTS businesses.\nTurning now to our geographic segments, we saw acceleration in every region.\nASV growth in the Americas rose to 7% in the fourth quarter, driven primarily by increased sales to our banking, corporate and wealth clients.\nWe also had a large data partner win this quarter in CTS.\nAsia-Pac had a record ASV quarter and delivered a growth rate of 12%.\nWe saw wins across many countries with global and regional banks as well as our research management products.\nCTS and analytics also contributed to growth with wins across asset managers and data providers.\nEMEA accelerated to a 6% growth rate, driven by strong performance with data providers, asset managers and banking clients and CTS had the highest contribution to this region, followed by Research.\nNow turning to our businesses.\nResearch was the largest contributor to our ASV growth this year with a growth rate of 6% driven by very strong growth on the sell side at 12%.\nWe increased Research workstation users by 86% this quarter versus a year ago with growth across both sell-side and buy-side clients.\nIncreasing our workstation presence and footprint with our largest clients positions us very well for cross-selling opportunities in the future.\nAnalytics and trading accelerated in the second half in fiscal 2021 versus the first half, ending the year at a 6% growth rate.\nWe saw wins across performance in reportings, front office and core analytics solutions.\nWithin the front office solutions, we are really pleased to see larger wins with our trading platform and believe this will be a contributor to analytics going into next year.\nCTS grew 16% driven by core company data and data management solutions sold through an increasing number of channels.\nCTS had robust sales to data providers this year and expanded their footprints across multiple workflows within middle and back office functions at asset management and banking clients.\nAdditionally, while all Truvalue Labs ESG sales are excluded from our organic numbers, I'm pleased to report that ESG data sales were a contributor to CTS' overall growth this quarter.\nWealth ended the year with a 6% growth rate.\nWealth workstations grew 24% year-over-year and they alongside FactSet's Advisor Dashboard have been the biggest contributors to winning new clients.\nWe've seen a combination of large and medium-size wins as existing clients continue to expand their Advisory businesses and we are equally pleased with our new business wins.\nWe are also seeing cross-selling opportunities with analytics products as wealth managers increasingly look to advance the sophistication of their offerings.\nMoving forward with fiscal '22, we will report three workflow solutions.\nWe are combining the desktop portion of the Wealth business with Research into one business to be known as Research and Advisory.\nWe believe this is the right strategy to further our goals to holistically manage our desktop solutions, accelerate the build out of differentiated front office solutions and facilitate the global expansion on the adoption of StreetAccount news in FactSet Web.\nWe have also taken the wealth digital business and combined it with CTS to better align our digital solutions.\nIn summary, we are entering fiscal '22 with strong momentum and a solid pipeline as reflected in our Annual ASV guidance.\nThe need for more differentiated content and analytics is at an unprecedented high and we are perfectly positioned to capture this demand and poised to deliver best in class workflows and a hyper personalized experience for our clients.\nI'm proud of our Company's strong performance in fiscal '21.\nWe have advanced our digital platform, executed at a high level and strengthened our relationship with clients.\nAnd I'm confident that as our Chief Revenue Officer, she will bring a disciplined growth-oriented mindset and the same rigor to the sales organization as she did leading finance, enabling us to continue our success going forward.\nI'm happy to be here with you today and I hope that we will continue to engage even after I fully transition to my sales role.\nLike Phil, I want to congratulate FactSetters around the world for achieving outstanding results in fiscal 2021.\nWhile we have continued primarily to operate remotely, I am so impressed with the resilience with which our FactSet teams are able to serve our global clients.\nOur 7% top line growth this year is a testament to the hard work of our teams and validates our strategy to invest in content and technology, capitalize on market trends and address client needs.\nThroughout this fiscal year, we accelerated our growth rate in ASV plus professional services through consistent conversion of our pipeline, delivering over $100 million in ASV growth and surpassing our most recent guidance for the year.\nFull year revenue also exceeded our target as we realize more revenue from ASV booked early in the fourth quarter.\nWe generated solid earnings through disciplined expense management and operating leverage.\nDriving sustainable long-term growth requires continued investment back into the business, as reflected by our increased spend on differentiated content and cloud enabled technology, we executed our plan well and our operating results are in line with expectations due to higher revenue and productivity gains with higher adjusted operating income and growth in adjusted EPS.\nLet me now walk you through the specifics of our fourth quarter.\nBefore I explain the quarterly results, I want to remind everyone that our prior year fourth quarter GAAP results were impacted by one-time non-cash charge of approximately $17 million, related to an impairment of an investment in a third-party.\nThus any year-over-year comparison of GAAP operating results for the fourth quarter of 2021 should take that into consideration.\nAs you saw on the previous slide, our organic ASV plus professional services growth rate was 7.2%.\nThis increase reflects the higher demand for our solutions as clients execute on their own digital transformation.\nOur success in solving the workflow challenges has resulted in higher levels of both client retention and cross-selling activity.\nFor the quarter, GAAP revenue increased by 7% to $412 million.\nOrganic revenue, which excludes any impact from foreign exchange, acquisitions and deferred revenue amortization also increased 7% to $410 million.\nGrowth was driven by our Analytics, CTS and Research Solutions.\nFor our geographic segments, organic revenue for the Americas grew to 6%, EMEA grew to 7%, and Asia-Pacific to 12%.\nAll regions primarily benefited from increases in our Analytics and CTS solutions.\nGAAP operating expenses grew 3% in the fourth quarter to $293 million, impacted by a higher cost of services.\nCompared to the previous year, our GAAP operating margin increased by 320 basis points to 28.9% and our adjusted operating margin decreased by 150 basis points to 31.6%.\nAs a percentage of revenue, our cost of services was 10 basis points higher than last year on a GAAP basis and flat to last year on an adjusted basis.\nThe increase is primarily driven by growth in compensation comprised of higher salary expenses for existing employees, new hires to support our multiyear investment plan and higher bonus accrual in line with stronger than anticipated ASV performance.\nSG&A expenses when expressed as a percentage of revenue improved year-over-year by 330 basis points on a GAAP basis, but increased 170 basis points on an adjusted basis.\nThe primary drivers include higher compensation costs, reflecting the same factors as noted in the cost of services.\nMoving on, our tax rate for the quarter was 15% higher than the prior year's tax rate of 7% primarily due to lower tax benefits associated with stock-based compensation in the current quarter as well as a tax benefit related to finalizing the prior year's tax returns.\nGAAP earnings per share increased 15% to $2.63 this quarter versus $2.29 in the prior year.\nAgain, this improvement is primarily a result of the impairment charge we recorded in the fourth quarter of 2020.\nAdjusted diluted earnings per share remained flat year-over-year at $2.88.\nAdjusted earnings per share was driven by higher revenues offset by higher operating expenses, and an increase in the tax rate.\nFree cash flow which we define as cash generated from operations less capital spending was $171 million for the quarter, an increase of 18% over the same period last year.\nThis increase is primarily due to higher net income, improved collections and the timing of certain tax payments.\nFor the fourth quarter, our ASV retention remained above 95% and our client retention improved to 91%, which again speaks to the demand for our solutions and excellent execution by our sales team.\nCompared to the prior year, we grew our total number of clients by 10% over 6,400, largely due to the addition of more wealth and corporate clients.\nAnd our user count grew 14% year-over-year and crossed the total of 160,000, primarily driven by sales in our wealth and research solutions and in particular in the number of banking users.\nFor the quarter, we repurchased over 265,000 shares of our common stock at a total cost of $93 million, with a average share price of $348.\nFor the year, we repurchased $265 million of our shares and increased our dividend for the 22nd consecutive year.\nWith share repurchases and dividends on an annual basis, we have returned to shareholders almost 70% as a percentage of free cash flow and proceeds from employee stock option.\nWe remain disciplined in our buyback program and committed to returning long-term value to our shareholders.\nTurning now to our outlook for fiscal year 2022, we delivered outstanding results in the back half of 2021, and believe this pace will carry into our next fiscal year.\nFor organic ASV plus professional services, we are guiding to an incremental $105 million to $135 million.\nThe midpoint of this range represents a 7% increase, which is equal to this year's organic growth rate, reflecting continued momentum in our business.\nWe are confident in our ability to perform at the high standard we demonstrated in fiscal '21 with underlying drivers to include disciplined execution and continued benefits from our investments.\nWe expect growth to be driven largely with existing clients through high retention and cross-selling.\nIn addition, we expect our ability to successfully sell new business in this virtual environment to continue.\nOur recent investments in digital and content, are providing us with more opportunities to sell direct solutions tailored for specific workflows.\nDrivers of future growth would include, first, the retention and expansion of our sell side client base through our deep sector strategy as we launch new targeted industries in addition to new private markets offerings.\nSecond, new wins with wealth managers who have been responding well to our web-based workstation and personalized Advisor Dashboard.\nAnd third, growth with institutional asset management clients who benefit from our data management solutions and enhanced capabilities in front office and ESG workflows.\nWe are mindful about the global environment and potential future market disruptions.\nBut we believe we have the right offerings and strategy to maintain our high performance and growth rate into fiscal 2022.\nFrom an operational perspective, we plan for continued labor productivity and operating leverage.\nIn addition to our multiyear investment plan, new investments will be made in content and front office solutions funded in part by ongoing cost discipline, including permanent savings related to the pandemic and additional efficiency actions.\nAs a result of higher growth in revenues and continued cost discipline, we are guiding to an expansion in our operating margins.\nCombined with our consistent use of capital for share repurchases, we expect to accelerate growth in our diluted EPS, both on a GAAP and adjusted basis.\nWe are seeing the results of our investments take hold in both technology and content.\nAs we look to fiscal 2022, we are focused on delivering more value to clients, prioritizing our resources and ensuring execution excellence.\nAs I transition to my new role, I am seeing firsthand experience and skills of our sales team in adapting to meet the needs of the market.\nOur client-centric mentality combined with our expanding data universe and digital advances provide me with the confidence that we have the people, strategy and product to build the leading open content and analytics platform in our industry, all while generating long-term value for our shareholders.\n",
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"content": "qtrly earnings per share $2.63.\nqtrly adjusted earnings per share $2.88.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining us on the call today are members of the media.\nDuring our question-and-answer session, callers will be limited to one question in order to allow us to accommodate all those who would like to participate.\nI want to remind all listeners that FedEx Corporation desires to take advantage of our safe harbor provisions of the Private Securities Litigation Reform Act.\nJoining us on the call today are Raj Subramaniam, president and COO; Mike Lenz, executive vice president and CFO; and Brie Carere, executive VP, chief marketing and communications officer.\nAnd now, Raj will share his views on the quarter.\nFirst and foremost, our thoughts are with those affected by the ongoing violence in Ukraine.\nThe safety of our team members in Ukraine is our utmost priority, and we are providing them with financial assistance and various resources for support.\nWe have suspended all services in Ukraine, Russia, and Belarus.\nAdditionally, we are helping to move relief to Ukraine, and we have provided more than $1.5 million in humanitarian aid.\nExecution of our strategies resulted in substantially higher operating income for the quarter as Team FedEx delivered yet another outstanding peak season.\nDecember 2021 was our most profitable December in FedEx history.\nOur ability to handle the influx of packages was years in the making as we've taken deliberate steps to enhance our unparalleled network and support of customers large and small.\nWe have fundamentally changed our performance as we handled increased e-commerce volume during peak and set a new precedent for peak seasons moving forward.\nHaving said that, we are laser focused on improving our margins.\nYou'll hear us talk more about this today and then more specifically at our upcoming Investor Day.\nEven with the successful execution of peak, the new year brought new challenges, mostly driven by omicron.\nThis affected our business in two ways: first, we experienced staffing shortages, particularly in our air operations.\nIn January alone, the absentee rate of our crew due to omicron was over 15%, which caused significant flight disruptions.\ndomestic and European markets.\nBoth of those factors resulted in softer-than-expected volume levels, especially in January.\nWe estimate the effect of omicron-driven volume softness in our Q3 results was approximately $350 million.\nWhile it was significant, it was also temporary, and we have seen volume rebound from January levels.\nEven with these challenges, FedEx Express delivered strong adjusted operating income growth of 27% year over year.\nSpeaking of the Express team, we announced that after nearly 40 years of distinguished service, Don Colleran, president and CEO of FedEx Express, will retire later this year and named Richard Smith, current executive vice president of global support and regional president of Americas at FedEx Express, as a successor.\nWe'll have much more to say about Don and his countless contributions to the business during our call in June.\nFedEx Freight once again delivered strong results with third quarter operating income nearly tripling year over year, driven by a continued focus on revenue quality.\nTurning to FedEx Ground.\nOperating costs continue to be challenged by the competitive labor environment now primarily manifesting in increased labor rates.\nWe estimate the total impact of approximately $210 million at ground in the third quarter, which is significantly lower than what we saw in Q1 and Q2 as we have seen substantial improvement in labor availability post peak.\nWith the stabilization in the labor environment, I'm pleased to share that we have successfully unwound network adjustments that were necessary to provide service but cost inefficiencies.\nStaffing levels and the rapid acceleration in labor costs have stabilized and our network is operating at normal levels.\nDespite improvement in the labor headwind, volume levels in Q3 were softer than we had previously forecasted, in part due to omicron surge slowing customer demand.\nAs such, we expect our second half Ground margins will be lower than our previous expectations and not reach double digits.\nOver the years, FedEx Ground has built a strong foundation to serve B2B and small and medium customers with an unmatched value proposition.\nAs a result, we have grown market share in these segments and they remain strong priorities for the future.\nAnd then more than three years ago, we built upon this foundation and embarked on a strategy that positioned FedEx squarely in the center of the fast-growing e-commerce market with a differentiated portfolio and a diversified customer base.\nThis included a period of strategically investing in our network to meet growing market demand.\nLet me note here that this strategy is different than what our primary competitor has pursued.\nBy building on our current base of business and making those prior investments in our network to facilitate growth, we are in a position to generate improved operating profit and margins.\nWe saw this potential in our financial results for December prior to the surge of omicron.\nAnd moving forward, our financial performance will be further enhanced by maximizing existing assets, improving capital utilization, and leveraging technologies that facilitate optimization of our existing physical capacity and staffing.\nAs we prepare to close fiscal year '22, permit me a moment to share what's on the horizon for FedEx as we continue to focus on margin expansion and shareholder return.\nIn addition to the opportunity to enhance performance at Ground that I just discussed, we have other levers for profitable growth, which include: number one, driving improved results in Europe; number two, increasing collaboration and efficiency to optimize our networks, lower our cost to serve and enhance return on capital; and number three, unlocking new value through digital innovation.\nOf course, we'll do this in an environment of strong revenue quality management.\nOur international business, particularly Europe, remains a big profit opportunity.\nAir network integration remains on track for the end of the month to complete the physical integration of TNT into FedEx Express and enable full physical interoperability of these networks, both in the air and on the road.\nParis CDG airport will serve as the main hub for all European and intercontinental flights.\nLiege will connect specific large European markets and ensure we have the flexibility to scale our operations in response to market needs, thus enabling us to focus on international growth.\nOur expanded collaboration across operating companies will utilize our air and ground networks in a smarter and more calculated manner.\nFor example, FedEx Freight trucks have traveled more than 7 million miles while operating on behalf of FedEx Ground this fiscal year.\nFedEx Freight has also provided FedEx Ground with intermodal containers, which have already been dispatched more than 36,000 times.\nWe'll continue to comprehensively look at all our assets in our network to put the right package in the right network and the right cost to serve.\nAdditionally, we are unlocking value through digital innovation, our accelerated integration of data-driven technologies that will drive increased productivity in our linehaul and dock operations, as well as in the last mile.\nEnhanced sortation technology will be operational at FedEx Ground in hundreds of facilities fired as we speak.\nIt will increase upstream efficiencies, enabling managers to do better balance and planned sortation operations, thereby unlocking key capacity.\nFor example, during Cyber Week, this technology helped keep 1.9 million ground economy packages out of constrained sorts.\nWe're also modernizing the planning and staffing of our dock operations, as well as the systems, training, and technology that maximizes productivity on every sort.\nOne such example is a recently rolled out package handler scheduling technology that will help ensure the right staffing levels for every sort and every facility across the Ground network.\nThis will improve dock productivity.\nAnd when combined with a focus on employee retention, it will enable us to significantly reduce the cost of turnover and strategically target recruiting spend when and where necessary.\nFor last mile, we continue to improve upon the route optimization technology already implemented to enable service providers to make real-time decisions that enhance their business' daily efficiency.\nThese ongoing investments in automation and technology have helped FedEx build the most flexible and responsive network in the industry and will enable us to improve our margins.\nIn closing, we have the networks, the strategy, and the right team in place as we deliver financial returns and drive shareholder value for years to come.\nSeveral macroeconomic forces, including the tragic conflict in Ukraine, uncertainty around the pandemic, a tight labor market, supply chain disruptions, high energy prices, and inflationary pressure have dampened the current GDP outlook globally and for the United States.\nLast week, we lowered our economic outlook.\nU.S. GDP is now expected to increase 3.4% in calendar year 2022, revised down from 3.7%, and our outlook is 2.3% in calendar year 2023, with consumer spending tilting toward services and B2B growth supported by inventory rebuilding.\nGlobal GDP growth is expected to be 3.5% in calendar year 2022, previously 4.1% and it will be 3.1% in calendar year 2023.\nGrowth will be driven by the release of pent-up demand for services while investment demand and inventory restocking support global manufacturing and trade.\nGiven the tremendous fluidity of the macroeconomic environment, we will continue to update our outlook.\nOur teams are ready to adjust plans, as required, to drive margin improvement despite the dynamic environment in which we operate.\nWith fuel prices increasing around the world, today, we announced a fuel surcharge increase effective April 4 for FedEx Express, Ground, and Freight.\nAdditional details can be found on fedex.com.\nThe change in economic outlook does not change our confidence that e-commerce will continue to drive strong parcel market growth.\nWe believe the e-commerce growth rate in the United States will be in the mid- to high single digits for the next three to four years.\nWe will continue to build differentiated value propositions to achieve market-leading pricing in all our customer segments, including e-commerce, our small and medium customers and our commercial B2B business.\nWe are very pleased with the results of our revenue quality strategy and know we have a great opportunity to increase the flow-through to margin expansion.\nIn the third quarter, revenue growth was 10% year over year, with double-digit yield improvement for FedEx Express and FedEx Freight, close behind with FedEx Ground at 9% year-over-year yield improvement.\nIn the United States, our package revenue grew 9% in Q3 on strong yield improvement of 10%.\nWe executed on our peak pricing strategy in the month of December, delivering more than $250 million in peak surcharge revenue.\nSoftness in parcel volumes came predominantly from constraining FedEx Ground economy and the effects of omicron on both our network and on our customers.\nThe focus on revenue quality and profitable share growth drove outstanding results for FedEx Freight this quarter.\nFor the quarter, revenue increased 23% year over year, driven by a 19% increase in revenue per shipment.\nAdditionally, FedEx Freight Direct continues to gain great momentum as an e-commerce solution for heavy bulky items with phenomenal growth in Q3 year over year.\nOur international businesses are navigating a dynamic environment.\nCapacity constraints continue to be a reality.\nAt this point, valet capacity on Trans-Atlantic passenger airlines is expected to recover faster than Trans-Pacific.\nPassenger airline capacity is not expected to fully recover to pre-COVID levels until 2024 or even later across our largest global trade lanes.\nScarce capacity on international lanes and strong demand out of Asia is resulting in a continued favorable pricing environment.\nWith the completion of our integrated air network at the end of this month, we have one European air network and one road network in and out of Europe.\nOur international portfolio of services contains the best European road network, the broadest U.S. next-day coverage, and a combined parcel and freight offering that no one else in the market has.\nAs a result of the integration, we will be able to offer improved transit times, earlier delivery, and later pickup services to more customers and more locations.\nSeven new countries will now be connected on a next-day basis within Europe, while 14 countries will be expanding our noon delivery coverage.\nIn several countries, this will be the first time we have introduced next-day service to the rest of Europe.\nWe will leverage the expanded European portfolio to improve international profitability, drive revenue growth and gain market share.\nIn addition to the improvements in our European value proposition, we have made significant strides to enhance our digital solutions as well.\nIn January, we enhanced our tracking service based on an advanced machine learning and artificial intelligence model developed by FedEx DataWorks.\nThis new experience delivers greater estimated delivery date accuracy, including updates for early or delayed shipments through all tracking channels.\nThis improves both the shipper and the recipient experience, and it will reduce calls to customer service.\nAdditionally, our new modernized FedEx Ship Manager, which is our online shipping application, has now been rolled out in more than 153 countries.\nIn January, we began introducing customers to it in the United States and Canada.\nFedEx Ship Manager is the primary shipping application for our small and medium customer segment.\nWe believe a market-leading digital portfolio will enable FedEx to continue to take market share in this very profitable segment.\nIn summary, we remain optimistic about Q4 and beyond, and we'll continue to deliver on our market-leading value proposition.\nAfter a strong start to the third quarter with the most profitable December in company history, January was significantly influenced by the rapid spread of the omicron variant and its negative effect on our operations and the macro environment.\nThese challenges subsided during February, resulting in third quarter adjusted operating income of $1.5 billion, up 37% year over year on an adjusted basis.\nThere are a number of factors influencing our third quarter results for both this year and last year that I will cover.\nAs Raj explained the effects on our operations, I will give further context for the financial implications.\nFirst, labor market conditions, although much improved, once again had a significant effect on our results at an estimated $350 million year over year, which was primarily experienced at Ground.\nFor the third quarter, that was primarily due to higher rates for both purchase transportation and wages.\nLabor availability-driven network inefficiencies were significantly less of a factor in the third quarter compared to earlier in the year.\nThe implications from the omicron variant surge reduced third quarter operating income by an estimated $350 million, predominantly at Express, as it influenced customer demand and pressured our operations, resulting in constrained capacity, network disruptions and lower volumes and revenue.\nThe third quarter had favorable year-over-year comparisons for variable compensation of approximately $380 million, including the one-time Express hourly bonus last year and significantly less impactful winter weather that lead it to $310 million.\nWith that overview of the consolidated results of the third quarter, I'll turn to the highlights for each of our transportation segments.\nGround reported a 10% increase in revenue year over year, with operating income down approximately $60 million and an operating margin at 7.3%.\nWhile pressures from constrained labor markets began subsiding, the effect was still significant at an estimated $210 million year over year, predominantly due to the higher purchase transportation and wage rates.\nIn addition, our volume was softer than expected due to the omicron variant surge slowing customer demand.\nA 9% yield improvement partially offset these headwinds, and our teams remain very focused on improving ground performance, as Raj outlined earlier.\nExpress adjusted operating income increased by 27% year over year, driven by higher yields and a net fuel benefit, with adjusted operating margin increasing by 100 basis points to 5.8%.\nExpress results also benefited in the third quarter from $285 million of lower variable compensation, as well as much less severe winter weather.\nThe strong results were partially offset by the headwinds I mentioned earlier, with the omicron surge having the largest effect, especially during January, of an estimated $240 million.\nTeam member absences primarily among our pilot severely disrupted operations, requiring many flight cancellations and further constraining capacity.\nAdditionally, during this time, the omicron surge reduced customer demand in many parts of the world.\nFreight had another outstanding quarter, delivering an operating margin of 15%, 850 basis points higher year over year, and revenue for the third quarter increased 23% with operating income up over 180% despite the pressures from higher purchase transportation rates and wages.\nAnd for the first time in Freight's history, they realized sequential operating income and operating margin improvement from the second quarter to the third quarter.\nTurning to the balance sheet.\nWe ended our quarter with $6.1 billion in cash and are targeting over $3 billion in adjusted free cash flow for fiscal 2022.\nAs I emphasized last quarter, our stronger cash flow provides extensive flexibility as we continue to focus on balanced capital allocation.\nAs such, I'm pleased to share the accelerated share repurchase program announced last quarter was completed during Q3 with 6.1 million shares delivered under the ASR agreement.\nTotal repurchases during fiscal '22 are nearly 9 million shares or 3% of the shares outstanding at the beginning of the year.\nThe decrease in outstanding shares resulting from the ASR benefited third quarter results by $0.06 per diluted share.\nAlso during the quarter, we made a $250 million, a voluntary contribution to our U.S. pension plan and have funded $500 million year to date.\nNow turning to what's ahead.\nWe are affirming our full year adjusted earnings per share range at $20.50 to $21.50.\nThe operating and business environment uncertainty I mentioned in December did materialize to a greater degree than anticipated during Q3, but we have navigated those challenges and project a solid finish to our fiscal year.\nLabor-related network and efficiency effects have diminished and the wage rate component should become less of a headwind as we lap the onset of labor rate increases in the fourth quarter.\nLastly, variable compensation expense will be a tailwind as it was in Q3.\nTurning to capital spending.\nWe have lowered our FY '22 capital-spending forecast from $7.2 billion to $7 billion.\nMuch of the change is driven by extended timelines resulting from supply chain considerations.\nWhile we are still developing our FY '23 plans, our focus remains on lowering our capital intensity while investing in strategic initiatives to drive returns.\nWe are highly focused on ensuring our capital investments generate returns to drive further growth in earnings and cash flows.\nLastly, our projection for the full year effective tax rate is now 22% to 23%, prior to the mark-to-market retirement plan adjustments.\nWhile we are confident in our ability to deliver a strong fourth quarter, uncertainty remains across many fronts, including additional pandemic developments, the labor market, inflation, high energy prices and further geopolitical risk, and the potential effects on the pace and timing of global economic activity.\nWe continue to monitor these trends and adjust accordingly.\nWith that, we are all very much looking forward to sharing additional background in our upcoming investor meeting on June 28 and 29 in Memphis.\n",
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"content": "q3 operating income improved due to higher revenue per shipment and a net fuel benefit at all transportation segments.\nsees fy earnings per share $20.50 to $21.50 before (year-end mtm retirement plans accounting adjustment, and excluding some costs.\nsees fy capital spending of $7.0 billion, compared to prior forecast of $7.2 billion.\nqtrly results were partially offset by effects of omicron variant, as well as higher purchased transportation costs and wage rates.\nstrong quarterly operating income increase was dampened by surge of omicron variant.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: In addition, this conference call contains time-sensitive information that reflects management's best judgment only as the date of the live call.\nManagement's statements may include non-GAAP financial measures.\nI will not dwell on the economic devastation that occurred in the second quarter.\nYou have all heard more than enough about that by now.\nFor Forum specifically, a primary piece of our business is selling short-cycle products to service companies to sustain, replace and upgrade their drilling and completion operations.\nOur customers have sharply reduced their spending in these areas as their equipment utilization evaporated.\nEventually, much of this equipment will go back to work, which will drive demand for our products and services, but the timing is uncertain.\nThat is why Forum's recently announced debt exchange that extended our debt maturity to October 2025 was so important.\nThis gives us the extended runway we need to exploit the inevitable upturn in drilling and completion activity.\nAfter buying back $72 million of our bonds at about $0.40 on the dollar in the first half of 2020, under our exchange, $350 million of the $328 million of our debt was due in 2021 was rolled into a new security.\nThis new debt has a cash coupon of 6.25%, the same as the old debt, plus another 2.75% that is payable at the company's option in cash or in kind additional notes.\nIn addition, there is a clear path for the company to delever as the new notes are partially convertible into for equity.\n$150 million principal amount of the new notes are convertible at a conversion price of $1.35 per share and are automatically and mandatorily convertible once form stock price trades through $1.50 for 20 business days.\nThe conversion of $150 million of new debt at a conversion price that is more than 2.5 times the current stock price would represent about 50% dilution to current shareholders, while ensuring a strong and sustainable capital structure for the company.\nThis debt exchange provides a number of benefits, the time necessary for a business recovery, a clear path to delever the balance sheet.\nIt does not burden the company with a higher required cash cost of financing or restrictive financial maintenance covenants.\nAnd it aligns the interest of our debt holders and our legacy stockholders around the long-term success of Forum.\nThe second quarter of 2020 was exceptionally difficult, and Lyle will review our results in a minute.\nBut it did provide the catalysts to resolve Forum's capital structure issues and to significantly restructure our costs for long-term success in a world of lower demand for oilfield equipment.\nCompared to the year ago quarter, our second quarter cash costs, excluding our purchased materials costs, are down about $150 million or 39%, with most of that savings happening in the most recent quarter.\nSo we now have a very competitive cost structure for the current market environment.\nAs I look ahead, I believe we have seen the bottom in our orders and our EBITDA.\nFor the third quarter, we expect revenues will be comparable to the second quarter as we rebuild the order book with an increase in domestic completions and international well construction activity.\nWe are already seeing some positive signs in this regard.\nWe also expect a modest improvement in EBITDA driven by cost reductions.\nLooking further ahead, Forum is positioned for renewed success with our new cost and capital structures, dedicated employees and our portfolio of winning products.\nI am pleased to represent the Forum team with Cris and Neal at this exciting inflection point for the company.\nThe decrease in activity and spending by our customers resulting from the COVID-19 pandemic and the dramatic reduction in drilling and completion activity due to low oil prices had a significant impact on our second quarter financial results.\nOur total revenue for the quarter was $113 million, down 38% from the first quarter.\nOur book-to-bill ratio was 76% as orders for our consumable products, which are typically booked and shipped in the same period, were most severely impacted.\nIn response to the forecasted declines in our revenue, we initiated a significant cost reduction plan in March and completed many of our identified cost reduction actions early in the second quarter.\nWe focused our plans on cash costs included in SG&A and cost of goods sold, except from the purchased materials.\nIn total, we reduced these costs by $24 million compared to the first quarter, a 30% reduction.\nThese cost reductions, which have all occurred since March, amount to approximately $100 million in total savings on an annualized basis.\nOur cost reduction actions included significant head count reductions, especially at senior levels of the organization; facility closures, including production and distribution facilities located in the U.S.; salary reductions across the company; suspension for our U.S. and Canadian retirement plans; and other reductions in variable costs.\nAs a direct result of these cost savings, sequential decremental EBITDA margins were limited to 23%, resulting in adjusted EBITDA of negative $11 million for the second quarter.\nWe are particularly pleased with this result given the weak pricing environment and the COVID-related under absorption of fixed costs that had a direct impact on our gross margins.\nFor clarity, adjusted EBITDA results exclude roughly $3 million of noncash stock compensation expense for the second quarter.\nOur free cash flow after net capital expenditures in the second quarter was negative $3.5 million as the impact of lower earnings was mostly offset by reductions in working capital from strong collections of receivables and inventory management.\nIncluded in this result were approximately $5 million of cash severance and other restructuring costs paid in the quarter.\nBut for these restructuring costs, Forum was free cash flow positive in the quarter and has generated positive free cash flow for the past seven quarters.\nOver this period, Forum generated $109 million of free cash flow.\nIn the quarter, we decreased our net inventory position by $15 million and expect the monetization of excess inventory to continue in 2020 and beyond.\nNet loss for the quarter was $5 million or $0.05 per diluted share.\nExcluding a $39 million gain on extinguishment of debt and $9 million of special items, adjusted net loss was $0.29 per diluted share.\nSpecial items for the quarter on a pre-tax basis included $4 million of severance and other restructuring costs, $4 million of inventory and other working capital impairments and $1 million of foreign exchange loss.\nI will now summarize our segment results on a sequential basis.\nIn our Drilling & Downhole segment, orders were $42 million, a 40% decrease from the first quarter, resulting from significant declines in drilling and well construction activity in North America.\nThis decrease was mitigated by our international exposure in this segment.\nTo put that in context, despite the low commodity price environment in the second quarter, our drilling product line was awarded a multiyear contract to supply rig handling tools and related equipment for a 24-rig new build program in the Asia market.\nOrders for the second quarter include $14 million for this award with additional orders under the award anticipated in the second half of the year.\nSegment revenue was $47 million, a $29 million or 38% sequential decrease as book and ship activity across the segment was impacted by lower activity levels and lockdowns due to the COVID-19 pandemic.\nAdjusted EBITDA for the segment was negative $3 million in the second quarter, a sequential decrease of $10 million.\nIn our Completions segment, orders decreased 72% to $14 million.\nSegment revenue was $18 million, a sequential decrease of $33 million or 65% due to the virtual standstill and well completion activity in the quarter.\nThe segment was also impacted by shipping delays from one of our international customers due to the impacts of COVID-19.\nAdjusted EBITDA for the segment was negative $6 million, a $10 million sequential decrease.\nDespite the significant cost reductions mentioned earlier as well as additional furloughs in several facilities within the segment, the magnitude of the decline in revenue and resulting loss of operating leverage from unabsorbed fixed costs had an outsized impact on our Completions segment EBITDA.\nProduction segment orders were $29 million, a sequential decrease of 43%, primarily due to a significant decline in customer bookings activity for our valves product line as customer activity ground to a halt due to the pandemic due to pandemic-related lockdowns and significant distributor destocking.\nSegment revenue was $49 million, a 13% decrease due to lower sales of valves.\nThis decrease was partially offset by a slight increase in shipments of surface production equipment for our customers focused on natural gas production in the Northeastern United States.\nAdjusted EBITDA for the segment was $2 million, up $2 million sequentially due to lower overhead expenses from cost reductions.\nI will now discuss some additional details about our results and financial position at the Forum level.\nOur capital expenditures in the second quarter were less than $1 million.\nWe are a capital-light business, and we expect our total capital expenditures for 2020 to be less than $5 million.\nIn the second quarter, we reduced net debt by $32 million, primarily due to the repurchase of $72 million principal amount of senior notes at a discount.\nWe ended June with $110 million of cash on the balance sheet and availability under our revolving credit facility of $84 million, resulting in total liquidity of $194 million.\nOur debt at the end of June included $85 million outstanding on our revolving credit facility and $328 million of unsecured notes due 2021.\nFollowing the debt exchange completed earlier this week, we now have $315 million of new secured notes due in 2025 and $13 million remaining on the old unsecured notes.\nIn connection with the debt exchange, we also amended our revolving credit facility.\nThe changes include: a reduction in the size of commitments from $300 million to $250 million, an increase in the interest rate margin, a limit on the amount of availability derived from our inventory collateral and certain other administrative changes.\nThe maturity of the revolving credit facility will be October 2022 with the resolution of the small remaining stub of all notes.\nPro forma for the credit facility amendment, our liquidity at the end of the second quarter would have been $126 million.\nInterest expense was $6 million in the second quarter.\nWhile we do expect higher interest expense following our debt exchange, the 6.25% of cash interest on the new convertible notes is consistent with cash interest on the previous notes.\nIn the second quarter, depreciation and amortization and stock-based compensation were $12 million and $3 million, respectively.\nWe expect these expenses to remain at similar levels in the third quarter.\nAdjusted corporate expenses were $6 million in the second quarter, and we expect them to be similar in the third quarter as well.\nWe will continue to have some tax expense despite an overall net loss as we are not recognizing tax benefits in loss-making jurisdictions, but we continue to recognize tax expense for some international jurisdictions with income.\nOnce we turn profitable in the loss-making jurisdictions, we expect to have a relatively low tax rate as we begin to use our net operating losses.\nTogether, we made sacrifices to dramatically reduce costs and position Forum for the future.\nThe market will recover, and when it does, our employees will be the key differentiator in our success.\nAs Cris and Lyle have mentioned, the unprecedented decline in drilling and completions activity due to COVID-19 significantly reduced demand for many of our products.\nIn response, we have sized our businesses to produce positive EBITDA with only a modest market rebound.\nWe remain committed to controlling costs while generating cash flow from inventory.\nThe second quarter presented the most challenging market conditions in a generation.\nOur ability to execute will increase as the market improves.\nForum's customers rely on our products to increase their productivity and reduce their cost.\nFor example, within our Forum Multilift solutions product portfolio, we provide sand management tools and cable plants that extend the life of electric submersible pumps, or ESPs.\nThese products witnessed an increase in monthly demand after bottoming out in May, and we expect demand for these products to continue as we as more wells are brought back online.\nAnother example of Forum's winning products was the large multiyear rig handling tool award Lyle referenced earlier.\nIn an industry where capital is limited and tight, our customer selected the premium product of our handling tools, and we are very excited to play a key role in this rig new build program.\nLet me provide one more example.\nIn the midst of last quarter's meltdown, one service company customer was proud to post a picture of social media with one of their frac fleets working.\nAmong the key components in that picture, seven were supplied by Forum, 7: our 3,000-horsepower pumps, our JumboTron radiators, our ICBM single-line manifold, our high-pressure flow wire, our AMT wireline pressure control equipment, our Hydraulic Latch Assemblies and our newest product from quality wireline and wireline cables.\nIn addition, after the frac work was completed, our DURACOIL coiled tubing from Global Tubing was used for drilling out the plugs and our Forum SandGuard with Cannon clamps was used with the artificial lift installation.\nThis picture reinforced to me that Forum has the products, the people and the desire to be the leading solutions provider in our space.\nThese are just a few examples, and I can name many more from our valve solutions, production equipment and subsea product lines.\nThe market rebound may take many months to occur, but when it does, we are positioned to win.\nThe second quarter presented an extremely challenging market environment, but I am proud of the way our team has navigated through the significant cost reductions.\nI am also pleased with the outcome of our debt exchange, which leaves us well positioned for future growth.\nWe now have the cost structure and the balance sheet to prosper in a lower-for-longer environment.\nForum has excellent earnings power potential with our stable of well-positioned completions products, artificial lift accessories and well construction products, to name a few.\nWith our new much more efficient cost structure, we can realize this earnings potential at a much lower level of drilling and completions activity than in the past.\nShanteller, let's take the first question.\n",
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"content": "compname reports q2 loss per share $0.05.\nq2 loss per share $0.05.\nq2 revenue $113 million.\nq2 adjusted loss per share $0.29 excluding items.\ncustomer spending has been 'exceptionally' weak, impacting demand for many of forum's products.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will also discuss certain non-GAAP financial measures.\nParticipants in today's call include our President and Chief Executive Officer, Steve Strah; Senior Vice President and Chief Financial Officer, Jon Taylor; and our Vice Chairperson and Executive Director, John Somerhalder.\nWe will also have several other executives available to join us for the Q&A session.\nYesterday, we reported first quarter 2021 GAAP earnings of $0.62 per share and operating earnings of $0.69 per share, which is in the upper end of our guidance range.\nAs Jon will discuss, our results reflect the continued successful implementation of our investment strategies, higher weather-adjusted load in our residential class and strong financial discipline in managing our operating expenses.\nLast month, I was honored to be named FirstEnergy's CEO and appointed to the Board of Directors.\nI greatly appreciate the trust and confidence the Board has placed in me, since I was named President last May and Acting CEO in October.\nI have great pride in FirstEnergy and the work our employees do to serve our customers and communities.\nIt's my privilege to continue leading the company as we navigate our current challenges and position our business for long-term stability and success.\nAs we work to move FirstEnergy forward, my priorities are the continued safety of our employees and customers.\nEnsuring that ethics, accountability and integrity are deeply ingrained in our culture and supported by a strong corporate compliance program.\nExecuting FE forward, our transformational effort to capitalize on our potential, deliver long-term results and maximize near-term financial flexibility and continuing our investments in infrastructure growth opportunities from electrification, grid modernization and renewable integration to benefit our customers.\nDuring today's call, I'll provide an update on the Department of Justice investigation, regulatory matters and our FE Forward initiative and other business developments.\nJohn Somerhalder will join us for an update on the Board and management's work toward instilling a culture of compliance built upon the highest standards of ethics and integrity.\nAs we discussed on our fourth quarter call, we are committed to taking decisive actions to rebuild our reputation and focus on the future and continuing to cooperate with the ongoing government investigations.\nWe have begun discussions with the DOJ regarding the resolution of this matter, including the possibility FirstEnergy entering into a deferred prosecution agreement.\nWe can't currently predict the timing, outcome or the impact of the possible resolution with the DOJ.\nOur goal is to take a holistic and transparent approach with a range of stakeholders across the spectrum of matters under review.\nThis approach is consistent with the changes we're making in our political and legislative engagement and advocacy.\nFor example, we are stopping all contributions to 501(c)(4)s.\nWe've paused all other political disbursements, including from our political action committee.\nAnd we have limited our participation in the political process.\nWe have also suspended and/or terminated various political consulting relationships.\nIn addition, we'll be expanding our disclosures around political spending in order to provide increased transparency.\nFor example, we have committed to post updates on our website, on our corporate political activity, relationship with trade associations and our corporate political activity policy, which is under revision.\nA comprehensive and open approach is also the cornerstone in our regulatory activity.\nIn Ohio, we continue taking proactive steps to reduce the regulatory uncertainty, affecting our utilities in the state.\nThis includes our decision in late March to credit our Ohio utility customers approximately $27 million.\nThis comprises the revenues that were collected through the decoupling mechanism authorized under Ohio law plus interest, the partial settlement with the Ohio Attorney General to stop collections of decoupling revenues and our decision not to seek recovery of lost distribution revenues from our Ohio customers.\nTogether, these actions fully address the requirements approved in Ohio House Bill 128 as well as the related rate impact of House Bill 6 on our customers.\nThese are important steps to put this matter behind us.\nIn other Ohio regulatory matters, we proactively updated our testimony in the ESP quadrennial review case to provide perspective SEET values on an individual company basis.\nWe are engaged in settlement discussions with interested parties on this matter as well as the 2017, 2018 and 2019 SEET cases that were consolidated into this proceeding.\nDuring our last call, we mentioned that we were proactively engaging with our regulators to refund customers for certain vendor payments.\nThose conversations are under way in each effective jurisdiction.\nIn Ohio at the PUCO's request, the scope of our annual audit of Rider DCR has been expanded to include a review of these payments.\nOutside of Ohio, our state regulatory activity is concentrated on customer-focused initiatives that will support the transition to a cleaner climate.\nFor example, on March 1, JCP&L, filed a petition with the New Jersey Board of Public Utilities seeking approval for its proposed EV driven program.\nIf approved, the four-year $50 million program would offer incentives and rate structures to support the development of EV charging infrastructure throughout our New Jersey service territory, in an effort to accelerate the adoption of electric vehicles and provide benefits to our residential, commercial and industrial customers.\nAnd in late March the Pennsylvania PUC approved our five-year $390 million energy efficiency and conservation plan, which supports the PUC's consumption reduction targets.\nIn March, we closed the transaction to sell JCP&L's 50% interest in the Yards Creek pump-storage hydro plant and received proceeds of $155 million.\nAnd we also announced plans to sell Penelec's Waverly New York distribution assets, which serves about 3,800 customers to a local co-op.\nThe deal, which is subject to regulatory approval will simplify Penelec's business by solely focusing on Pennsylvania customers.\nDuring our fourth quarter call, we introduced you to FE Forward, our companywide effort to transform FirstEnergy into a more resilient, effective industry leader delivering superior customer value and shareholder returns.\nWe expect the FE Forward initiatives to provide a more modern experience for our customers with efficiencies in operating and capital expenditures that can be strategically reinvested into our business, supporting our growth and investments in a smarter and cleaner electric grid, while also maintaining affordable electric bills.\nDuring the first phase of the project, we evaluated our processes, business practices and cultural norms to understand where we can improve.\nWhile our safety and reliability performance is strong, we found opportunities in many areas to enhance and automate processes, take a more strategic focus on operating expenditures and modernize experiences for our customers and employees.\nWe've identified more than 300 opportunities and now we are diving deeper into these ideas, developing detailed executable plans as we prepare for implementation beginning later this quarter.\nExamples of this work include, improving the planning and scheduling through integration of systems to allow our employees to deliver their best to our customers, leveraging advanced technologies such as drones and satellite imagery to improve our vegetation management programs, using predictive analytics and web-based tools to provide our customers with more self service options and improve their experience and leverage purchasing power to optimize payment terms.\nAs part of these efforts, we intend to evaluate the appropriate cadence to initiate rate cases on a state-by-state basis to best support our customer focused strategic priorities.\nWe will also remain focused on emerging technologies, smart grid, electric vehicle infrastructure and our customers' evolving energy needs as we think through how to reduce our carbon footprint.\nWe're off to a great start this year, and yesterday we reaffirmed our 2021 operating earnings guidance of $2.40 to $2.60 per share.\nOur leadership team is committed to upholding our core values and behaviors and executing on our proven strategies as we put our customers at the center of everything we do.\nWe will take the appropriate steps to deliver on our promise to make FirstEnergy a better company, one that is respected by our customers, the investment community, regulators and our employees.\nIt's a privilege and a pleasure to join you today.\nI'd like to start by sharing my impressions of FirstEnergy after almost two months in this role.\nThis is a company with a firm foundation, including a commitment to improve in the area of governance and compliance, our commitment to customers by embracing innovation and technology to help ensure the strength, resilience and reliability of its transmission and distribution businesses, a deep seeded and strong safety culture and a strong potential to deliver significant value to investors through customer focused growth.\nSince joining the team, I've been supporting senior leadership in advancing the company's priorities, strengthening our governance and compliance functions and enhancing our relationships with external stakeholders, including regulators and the financial community.\nSteve spoke about our business priorities.\nSo, I will focus my remarks today on our compliance work including remedial actions.\nFirst, I'd like to update you on our internal investigation which has rebuild no new material issues since our last earnings call.\nThe focus of the internal investigation has transitioned from a proactive investigation to continued cooperation with the ongoing government investigations.\nManagement and the Board with the assistance of the compliance subcommittee of the Audit Committee, have been working together to build a best-in-class compliance program.\nThrough these efforts, we have identified improvement opportunities in five broad categories, including governance, risk management, training and communications, concerns management and third-party management.\nAs part of these efforts FirstEnergy is embracing a commitment to enhancing its compliance culture to be best-in-class.\nSome of the actions completed to date include hiring, our Senior Vice President and Chief Legal Officer, Hyun Park in January; Antonio Fernandez, who joined as Vice President and Chief Ethics and Compliance Officer last week; and myself.\nOn the Board side, Jesse Lynn and Andrew Teno, joined us from Icahn Capital in March.\nAnd the Board has nominated a new Independent Member, Melvin Williams for election at the Annual Shareholders Meeting when Sandy Pianalto's term ends next month.\nI believe the insights and experience of these new leaders are helping to round out a very committed and confident Board and management team.\nIn March, the Board affirmed our confidence in Steve by naming him CEO.\nSteve has consistently demonstrated the integrity, leadership skills, strategic acumen and deep knowledge of our businesses needed to position FirstEnergy for long-term success and stability.\nThese changes along with the Board's reinforcement of the executive team's commitment to setting the appropriate tone at the top or support a culture of compliance going forward.\nFor instance, we recently held an event where the Chairman and the Chair of the Compliance subcommittee addressed the company's top 140 leaders, regarding the expectations to act with integrity, in everything we do.\nOur legal department recently completed training on up the ladder reporting and we have enhanced our on-boarding process for new employees and for third-parties on expectations around our code of business conduct.\nOver the course of the next few months, there will be many more steps the company will take to enhance our compliance program such as, continuing to build the new more centralized compliance organization under Antonio's leadership; addressing our processes, policies and controls, which include additional oversight for political contributions; continuing to emphasize our values and expectations in ongoing communications with our employees, incorporating compliance into our goals and performance metrics and holding all employees regardless of title to the same standards; enhancing the channels for incident reporting and developing thorough and objective processes to investigate and address allegations of misconduct; and insuring increased communications with and training of employees with respect to our commitment to ethical standards and integrity of our business procedures; compliance requirements; our code of business conduct; and other company policies; and understanding and utilizing the process for reporting suspected violations of law or code of business conduct.\nWe have also enhanced our internal controls around disbursements to require additional approvals, targeted reviews of any suspicious payments and a reassessment of approval levels across the entire company.\nAdditionally, in the area of disbursements, we will update and clarify policies and procedures, conduct training and institute a regular audit program that reviews payments and services performed.\nA detailed list of the corrective actions we are taking can be found on Pages 8 and 9 of our first quarter FactBook.\nOver the next several months, we expect to make significant progress in the areas of compliance led by Antonio's organization, where it will continue to be overseen by the Board and the newly established management steering committee for Ethics and Compliance.\nThrough these efforts, we expect the material weakness associated with the tone at the top to be remediated by the time we file our fourth quarter earnings.\nOur leaders are continuing to elevate the importance of compliance and working to regain the trust of employees and our stakeholders by modeling appropriate behavior and consistently communicating that compliance and ethics are core values, just like safety.\nWe are committed to ensuring that employees understand what is expected of them and are comfortable reporting ethical violations without fear precautions.\nBy continually emphasizing the importance of compliance to our strategies and future as well as demonstrating that we are setting the right tone at the top, we strive to bolster confidence among our employees that the management team and the Board are taking the proper decisive actions to move the company forward.\nI believe we have learned a lot from recent challenges and are taking the right actions to emerge as a better, stronger company with a bright future.\nNow I'll turn the floor over to Jon Taylor for a review of first quarter results and the financial update.\nWe have provided new disclosures in three main areas within our Investor FactBook.\nOur steps to support a cleaner, smarter grid and the movement to more green and renewable resources, additional disclosures on our balance sheet, including our funds from operations target and the steps we're taking to achieve our goals and third, enhanced ESG disclosures.\nAlso note that we continue to provide more robust disclosures on ROEs including more granular sensitivities.\nYesterday we announced GAAP earnings of $0.62 per share for the first quarter of 2021 and operating earnings of $0.69 per share, which was at the upper end of our guidance range.\nGAAP results for 2021 include two special items, regulatory charges related to customer refunds associated with previously collected Ohio decoupling revenues and expenses associated with the investigation.\nIn our distribution business our results for the first quarter of this year as compared to 2020 reflect higher residential usage on both in actual and weather-adjusted basis as well as growth from incremental riders and rate increases, including DCR and grid modernization in Ohio, the distribution system improvement charge in Pennsylvania and the implementation of our base rate case settlement in New Jersey.\nThese drivers were partially offset by $0.10 per share related to the absence of Ohio decoupling revenues and our decision to forgo the collection of lost distribution revenues from our residential and commercial customers.\nOur total distribution deliveries for the first quarter of 2021 decreased 2% on a weather-adjusted basis as compared to the last year, reflecting an increase in residential sales of 2% as customers continue to spend more time at home in the first quarter of 2021, a decline of 7% in commercial sales and in our industrial class first quarter low decreased 3%.\nIt's worth noting that total distribution deliveries through the first quarter are consistent with our internal load forecast, with residential demand 2% higher versus our forecast, while industrial load is down 2%.\nIn our regulated transmission business earnings decreased as a result of higher net financing costs, which included an adjustment to previously capitalized interest, partially offset by the impact of rate base growth at our ATSI and MAIT subsidiaries.\nFinally, in our corporate segment, results reflect lower operating expenses, offset by the absence of a first quarter 2020 pension OPEB credit, related to energy harbors emergence from bankruptcy as well as higher interest expense.\nWe are off to a solid start for the year and are reaffirming our operating earnings guidance of $2.40 to $2.60 per share for 2021.\nWe've also introduced second quarter guidance of $0.48 to $0.58 per share.\nIn addition, our strong focus on cash helped drive a $125 million increase in adjusted cash from operations and a $185 million increase in free cash flow versus our internal plan for the first quarter.\nAs to a couple of other financial updates, our 2021 debt financing plan remains on track.\nIn March FirstEnergy transmission issued $500 million in senior notes and a strong well supported bond offering that showcase the strength of our transmission business.\nThe deal was oversubscribed and on par with an investment grade offering.\nWe used the proceeds to repay $500 million in short-term borrowings under the FET revolving credit facility.\nIn addition, we repaid $250 million at the FirstEnergy Holding Company.\nWe also successfully issued $200 million in first mortgage bonds at MonPower in April, that was also very well supported.\nThis supports our earlier commitment to reduce short-term borrowings as well as our goal to improve our credit metrics at FirstEnergy, return to investment grade as quickly as possible and maintain the strong credit ratings at our utilities.\nWe continue to provide the rating agencies with regular updates on our business and we are working with them to develop a clear outline of what is needed to return FirstEnergy to investment grade credit ratings.\nKey milestones include governance and compliance changes at our company, resolution of the DOJ investigation and solid credit metrics.\nAs to more longer term financing needs through the execution of FE Forward, we have reduced our debt financing plan by approximately $1 billion through 2023, mainly at the FirstEnergy and FirstEnergy Transmission holding companies.\nAdditionally, as we have previously mentioned, equity is an important part of our overall financing plan, with plans to raise up to $1.2 billion of equity over 2022 and 2023.\nAs we said previously, we'll flex these plans as needed and we are also exploring various alternatives to raise equity capital in a manner that could be more value enhancing to all stakeholders.\nThese actions combined with new rates at JCP&L and our 60% plus formula rate capital investment program will generate $150 million to $200 million of incremental cash flow each year, while maintaining relatively flat adjusted debt levels through 2023, all of which will support our targeted 12% to 13% FFO to debt range.\nTurning to our pension.\nOur funding status was 81% at March 31, up from 78% at the end of last year, resulting in a $500 million reduction in our unfunded pension obligation, which improves our adjusted debt position with the rating agencies.\nThe extended funding timeframe permitted under the American Rescue plan, together with the modification of interest rate stabilization rules means that we do not expect any funding requirements for the foreseeable future, assuming our plan achieves a 7.5% expected return on assets.\nAlthough, we plan to make contributions into the pension next year, this legislation provides us with additional discretion and flexibility to make voluntary contributions as we assess our capital allocation plans.\nAs Steve mentioned discussions have begun with the Department of Justice.\nWhile no contingency has been reflected in our consolidated financial statements, we believe that it is probable we will incur a loss in connection with the resolution of this investigation.\nHowever, we cannot yet reasonably estimate the amount.\nFinally last month President Biden introduced the American Jobs Plan, which includes a corporate tax increase and proposed minimum tax as well as potential opportunities related to proposed infusion into the electric vehicle infrastructure and the energy grid.\nClearly, it's very early in the process, but the corporate tax provision could be slightly cash positive for us if implemented in its current form.\nOur solid first quarter results and expectations for the year reflect our strong operating fundamentals and the continued success of our strategies to modernize and enhance our distribution and transmission systems.\nAs we move our company forward, we are laser focused on unlocking opportunities and increasing value for our shareholders, customers and employees.\nNow, let's open the call to your Q&A.\n",
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"content": "sees fy non-gaap operating earnings per share $2.40 to $2.60.\nq1 gaap earnings per share $0.62.\naffirming its full-year 2021 operating (non-gaap) earnings guidance of $2.40 to $2.60 per share.\nfor q2 of 2021, gaap and operating (non-gaap) earnings forecast range of $260 million to $315 million, or $0.48 to $0.58 per share.\noperating (non-gaap) earnings for q1 of 2021 were $0.69 per share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will also discuss certain non-GAAP financial measures, reconciliations between GAAP and non-GAAP financial measures.\nParticipants in today's call include our President and Chief Executive Officer, Steve Strah; Vice Chairperson and Executive Director, John Somerhalder and Senior Vice President and Chief Financial Officer, Jon Taylor.\nWe also have several other executives available to join us for the Q&A session.\nOperating earnings were $0.59 per share, which is above the top end of our earnings guidance.\nThese strong operational results reflect a customer-focused investment strategy in our regulated distribution and transmission businesses, solid financial discipline and the continued shift in higher weather-adjusted demand from our residential customers.\nWe're pleased with our performance as well as the substantial progress we've made to transform FirstEnergy and position our company for the future.\nWe have taken critical steps to build a best-in-class compliance program while identifying and driving initiatives to deliver long-term value to all stakeholders.\nOur leadership team is committed to modeling the behaviors and the humility necessary to restore trust with our stakeholders.\nWe look forward to continuing this work and achieving the milestones that will mark our progress.\nI'll start our call today with an update on the DOJ and other investigations related to House Bill 6 and John Somerhalder will join us for a brief discussion on board activity and the progress of our compliance program.\nYesterday, we announced that we've entered into an agreement with the U.S. Attorney's Office for the Southern District of Ohio to resolve the DOJ investigation into FirstEnergy.\nThis deferred prosecution agreement was filed in federal court.\nUnder the three-year deferred prosecution agreement, we agreed to pay $230 million, which will be funded with cash on hand.\nHalf of these funds is designated for the U.S. Treasury and the other half is being directed to the benefit of utility customers by the Ohio Development Service Agency.\nNo portion of the filing will be recovered from customers.\nWe also agreed to the government's single charge of honest services wire fraud, which will be eventually dismissed, provided we abide by all the terms of the agreement.\nIn accordance with the agreement, we will provide regular reports to the government regarding our compliance program, as well as internal controls and policies and continued efforts to build on the comprehensive compliance initiatives we've rolled out this year.\nThe conduct that took place at our company was wrong and unacceptable.\nOur Board, the management team and the entire FirstEnergy organization have done extensive work and are committed to make the necessary changes to move on from this.\nOur progress on these efforts, along with the DPA, demonstrate that we are making meaningful headway in navigating through this period and we are positioned to move forward as a stronger integrity bound organization.\nWe will continue to cooperate fully with the ongoing investigations, audits and related matters as we work to resolve these issues and rebuild trust with our employees, customers, regulators and investors.\nWe are intently focused on fostering a strong culture of compliance and ethics and assuring that we have robust processes in place designed to ensure that nothing like this happens again.\nIn May, we held our first compliance town hall with employees to discuss what compliance, ethics and integrity mean at FirstEnergy and the importance of building a culture of trust where everyone is comfortable with speaking up when something doesn't feel right.\nIn the weeks following the town hall, our management team has responded to employee questions and concerns and we are committed to continuing this conversation and engagement.\nNext week, we plan to hold another town hall meeting with employees where we will introduce our updated mission statement, reinforcing the role of uncompromising integrity as the cornerstone of FirstEnergy's identity and business strategies.\nWe will also refresh our core values to better reflect the importance of integrity together with safety, diversity, equity and inclusion, performance excellence and stewardship.\nThese values will be embedded in our practices and processes and become ingrained in the way we work.\nAdditionally, we updated our code of business conduct, which John Somerhalder will speak to in a moment.\nWe also continue to strengthen our leadership team with two more new hires, Michael Montaque joined us earlier this month as Vice President, Internal Audit and yesterday we announced that Soubhagya Parija has been named Vice President and Chief Risk Officer effective August 16.\nThese two experienced professionals represent another important step as we strengthen our key internal functions and I'm confident that they will help us develop best-in-class audit and enterprise risk programs.\nNow, John Somerhalder will join us to provide an update on board matters and other facets of our compliance program.\nThen I'll be back to discuss FE Forward and review some regulatory updates.\nOur progress with the DOJ builds on the substantial steps we have taken to enhance our Board, strengthened our leadership team, ensured we have a best-in-class compliance program and significantly modify our approach to political engagement as we work to regain the trust of our stakeholders.\nI'll start with a review of recent Board changes.\nAs you know, Jesse Lynn and Andrew Teno joined the Board from Icahn Capital in March, but they do not currently have voting rights pending regulatory approval.\nI'm pleased to note that FERC approved our request for voting rights last week.\nThe process in Maryland continues as we have communicated FERC's recent action to the Commission.\nMelvin Williams was elected to the Board at our Annual Meeting in May and last month we added two more independent directors, Lisa Winston Hicks and Paul Kaleta.\nJesse, Melvin, Lisa and Paul comprise our Special Litigation Committee.\nThis committee has full and binding authority to determine the company's action with respect to the pending shareholder derivative litigation.\nI'll also note that with the formation of the Special Litigation Committee, the Board has dissolved Independent Review Committee.\nAs previously discussed, the company's internal investigation has now been transitioned from a proactive to a response mode and in light of the significant review, investigation and related actions accomplished by the independent review committee, the Board has also dissolved that committee.\nBut many proactive actions taken by the Board and management over the past year have improved our governance and put us in a strong position to remediate the material weakness associated with our tone at the top by the time we file our four quarter results.\nOver the last several quarters, we've talked a lot about the work we're doing to elevate our ethics and compliance program and reinforce our values and expectations with all employees.\nWe continue to make timely progress in this area and our new, more centralized compliance organization is taking shape under Antonio Fernandez, who joined the company in April as our Chief Ethics and Compliance Officer.\nYesterday, we published our updated internal Code of Business Conduct, The Power of Integrity, which will be supported by ongoing education around behaviors and the importance of reporting ethical violations and we have continued to strengthen our policies, processes and internal controls including those around 501(c)(4)s, other corporate engagement and advocacy and business disbursements.\nWhile the transformation of our culture and our steps to restore trust with all stakeholders will be long-term endeavors, this team has started building a stronger company built around a foundation of ethics, honesty and accountability.\nThe comprehensive assessment and recalibration of our ethics and compliance program has been running on a parallel path to FE Forward.\nOur transformational effort to enhance value for all stakeholders by investing in modern and distinctive experiences that will improve the way we do business, we have improved our programmatic efforts to mature our ethics and compliance program into the FE Forward work.\nIn this way, we can leverage FE Forward's rigor to implement changes quickly and efficiently, embed ethics and compliance into our operational culture and ensure we sustain a comprehensive transformation well into the future.\nFE forward has entered its third phase, which is a full-scale effort to execute our implementation plans.\nThe program is expected to deliver value and resilience including cumulative free cash flow improvements of approximately $800 million from 2021 through 2023 and an annual run rate capex efficiencies of about $300 million in 2024 and beyond.\nAt the same time, we expect the program to build on our strong operations and business fundamentals as we reinvest a portion of our efficiencies into strategic opportunities to better serve our customers and support a smarter and cleaner electric grid.\nTo ensure our organizational structure supports these improvement over the long term, we realigned our business units last month around five pillars: Finance and Strategy, Human Resources and Corporate Services, Legal, Operations and Customer Experience.\nThis new structure reflects a best-in-class model and supports operational excellence, clarity in decision making and accountability and less complexity.\nAs part of this new organizational structure, we've created a customer experience function that will truly understand our customers' evolving expectations, so we can develop solutions and drive benefits to customers.\nWe've also created a new position, Vice President transformation to shepherd the FE Forward initiatives across our company, while also developing customer focused emerging technology opportunities.\nThe development of executable plans, a best-in-class compliance program and critical organizational changes will position the company to move forward in a positive sustainable direction.\nI'll just take a moment now and review recent regulatory matters starting in Ohio.\nFirst, in July, the PUCO approved our filing to return approximately $27 million to our Ohio utility customers, representing all revenues that were previously collected through the decoupling mechanism plus interest.\nOur Ohio utilities have filed supplemental testimony in the quadrennial review of our ESP IV.\nWe are committed to working with a broad range of parties in Ohio to resolve the range of issues that are still pending here.\nWe held our first full-scale collaborative meeting on March 31 and have since received further feedback from participants.\nWe are preparing for another collaborative meeting in the next few weeks.\nWe are also working through regulatory audits in Ohio, New Jersey, Pennsylvania and the FERC.\nFinally, in April, the New Jersey BPU approved JCP&L's three year $203 million energy efficiency and conservation plan, which includes a return on certain costs, as well as the ability to recover lost distribution revenues.\nAs per our financial results, we're pleased with our strong performance in the first half of the year.\nWe are reaffirming our 2021 operating earnings guidance of $2.40 to $2.60 per share and we expect to be at the top half of that range.\nWe are also introducing third quarter guidance of $0.70 to $0.80 per share.\nWe remain focused on executing our plans, maintaining our costs and building on this positive momentum.\nWe are making substantial progress to transform FirstEnergy live up to our values and deliver long-term value to all of our stakeholders.\nYesterday, we announced GAAP earnings of $0.11 per share for the second quarter of 2021 and operating earnings of $0.59 per share.\nAs Steve mentioned, this exceeded the top end of our guidance range.\nSpecial items in the second quarter of 2021 include investigation and other related costs, which include the impact from the deferred prosecution agreement, as well as regulatory charges and state tax legislative changes.\nIn our distribution business, 2021 second quarter results as compared to 2020 reflect growth from our capital investment programs, rate increases and lower expenses, primarily related to the absence of pandemic related expenses we incurred in the second quarter of last year, partially offset by the absence of Ohio decoupling and lost distribution revenues in the second quarter of 2020, which we stopped collecting earlier this year.\nTotal distribution deliveries increased on both an actual and weather-adjusted basis compared to the second quarter of 2020 when many of the pandemic related restrictions were in full effect.\nHowever, the mix of customer usage resulted in a flat year-over-year earnings impact.\nSecond quarter 2021 weather-adjusted residential sales were 6% lower than the same period last year when many of our customers were under strict stay at home orders.\nHowever, as we look at trends, weather-adjusted residential usage over the past few quarters has been on average about 4% higher than pre-pandemic levels and in fact, the second quarter of this year was close to 8% higher than weather-adjusted usage we saw in the second quarter of 2019.\nWe think more permanent work from home initiatives could impact our longer-term load forecast and we will be watching closely to see if the structural shift in our residential customer class continues.\nWeather-adjusted deliveries to commercial customers increased 8% and industrial load increased 11% as compared to the second quarter of 2020.\nDespite the increase in commercial activity this spring, weather-adjusted demand in this customer class continues to lag pre-pandemic levels by an average of about 6%.\nLooking at the industrial class, we are encouraged by the steady recovery in demand over the past year.\nIn fact, this quarter, industrial load was only slightly down compared to the second quarter of 2019.\nWe continue to see higher load from the shale gas industry, but that was offset by lower load in other industrial sectors such as steel, auto and mining, which have not fully recovered to pre-pandemic levels.\nIn our Regulated Transmission segment, higher net financing costs in the second quarter of 2021, primarily related to our revolving credit facility borrowings were more than offset by the impact of higher transmission investment at MAIT and ATSI related to our Energizing the Future program.\nOur transmission investments drove year-over-year rate base growth of 7%.\nAnd in our Corporate segment results reflect the absence of discrete tax benefits recognized in the second quarter of 2020, as well as higher interest expense.\nFor the first half of 2021, operating earnings were $1.28 per share compared to $1.23 per share in the first half of 2020.\nThis increase was the result of continued investments in our transmission and distribution systems, weather-related sales and lower expenses and consistent with our second quarter results, the positive drivers for the first half of this year more than offset the absence of $0.13 of decoupling and lost distribution revenues that were recognized in the first half of 2020 that are no longer in place this year.\nAdditionally, our continued focus on financial discipline together with strong financial results helped drive a $196 million increase in adjusted cash from operations versus our internal plan and a $264 million increase above the first six months of last year, building on the improvements we noted on our first quarter earnings call.\nAs per capital markets activity, we continue making good progress on this year's debt financing plan with five of our six debt transactions complete, all with pricing similar to investment grade companies.\nIn May, we issued a $150 million in senior notes at Toledo Edison and MAIT with pricing at 2.65% and 2.55% respectively.\nAnd in June, we issued $500 million in senior notes at JCP&L that priced at 2.75%.\nIn addition, we made progress on our commitment to reduce short-term debt during the second quarter by repaying $950 million under our revolving credit facilities bringing our borrowings down to $500 million as of June 30.\nAnd earlier this week, we repaid the remaining $500 million under these facilities.\nWhile we did obtain a waiver for our credit facilities related to the DPA, this repayment was voluntary and not required by the bank group.\nWe plan to operate on a normal course going forward and we utilize the revolving credit facilities on an as needed basis as we have done historically.\nAs you know, we have two revolving credit facilities, one for FE Corp, which is shared with our utility companies and one for FET both expiring in December of 2022.\nOver the next few months, we plan to work with our bank group to evaluate and refinance these bank facilities with the goal of completing this initiative before the end of the year.\nAnd finally, we continue to consider alternatives to our equity needs.\nWe continue to think through options that include a minority sale of distribution and/or transmission assets, which would raise substantial proceeds and eliminate all of our expected non-SIP equity needs, ensure the execution of our balance sheet improvement plans and provide funding for strategic capex in customer-focused emerging technologies that support the transition to a cleaner electric grid.\nBased on our current timeframe, we expect to provide you with an update in the fourth quarter.\n",
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"content": "reaffirms fy non-gaap operating earnings per share view $2.40 to $2.60.\nq2 gaap earnings per share $0.11.\nq2 revenue $2.6 billion versus refinitiv ibes estimate of $2.65 billion.\nfor q3 of 2021, providing a gaap and operating (non-gaap) forecast range of $380 million to $435 million, or $0.70 to $0.80 per share.\noperating (non-gaap) earnings were $0.59 for q2 of 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will also discuss certain non-GAAP financial measures.\nSeveral other executives will be available for the Q&A session.\nWe had another strong quarter, and I'm excited to talk to you about our progress on many different fronts.\nYesterday, we reported third quarter 2021 GAAP earnings of $0.85 per share.\nOur operating earnings were $0.82 per share, which is above the top end of our guidance range.\nOur customer-focused strategies, positive mix of weather-adjusted load, great operational performance and financial discipline continue to drive solid results.\nFurthermore, I'm proud of our progress to resolve important legacy issues and strengthen all aspects of our company.\nIn Ohio, we continue to take a collaborative approach, and we're engaged in settlement discussions with a broad range of parties to resolve several of our pending cases before the PUCO.\nOur meetings continue to be productive, and we're making good progress.\nWe are also making progress on the Ohio corporate separation, DMR and DCR audits.\nThe corporate separation audit report was filed on September 13 and showed no findings of major noncompliance.\nThe expanded DCR audit report is due by November 19.\nAnd we continue to work through the DMR audit, which is now due on December 16.\nSince our last earnings call, we've taken additional steps to strengthen our compliance program and instill a culture focused on ethics, integrity and accountability across our organization.\nThese include: a new Compliance & Ethics Program Charter and policies in multiple areas; instructor-led business Code of Conduct awareness training for senior leadership and individuals with significant roles in our control environment; training on the concepts of our new internal Code of Conduct for everyone in leadership, with training for all employees planned in the first quarter of 2022; and publishing our new corporate engagement report.\nAdditionally, we have started to develop a new integrated risk management platform to enhance our ethics and compliance, audit and risk functions.\nThe new tool will help us streamline case management of ethics and compliance concerns, manage the life cycle of corporate policies, assess and respond to risks, and report on our compliance with internal controls and regulatory requirements across the organization.\nAs we've discussed, over the last 12 months, our Board and management team acted quickly and decisively, adding additional independent board members, making changes in our management structure, establishing effective controls, reinforcing our culture change and building a best-in-class ethics and compliance program.\nOur relentless focus in these areas resulted in remediation of the material weakness in internal controls associated with our tone at the top.\nWhile this is an important step, we continue driving these cultural changes and keeping compliance and integrity at the center of everything we do.\nWe are working every day to continue rebuilding stakeholder trust and confidence in FirstEnergy and to ensure that our employees can be proud of our company and our mission.\nYesterday, we announced another key hire to enhance our leadership team.\nCamilo Serna will join FirstEnergy on November eight as our new Vice President of Rates and Regulatory Affairs.\nCamilo brings a great depth of experience, developing and implementing state and federal regulatory strategies.\nHis experience will be invaluable as we build a smarter electric grid and support the transition to a cleaner energy future.\nWe continue taking steps to achieve these goals.\nFor example, last month, JCP&L submitted a proposal to PJM and the New Jersey BPU for transmission investments that would connect clean energy generated from the state's offshore wind farms to the power grid, while minimizing the impact on the environment and communities.\nWe expect a decision on this proposal, which supports the clean energy investments driven by the New Jersey Energy Master Plan in the second half of 2022.\nIn West Virginia, we recognize our responsibility to operate our two regulated fossil plants for the benefit of our customers in the state.\nLater this year, we intend to file an effluent limitation guideline, or ELG plan, that calls for additional capital expenditures at the two plants to comply with environmental rules and to ensure that they can continue to operate beyond 2028.\nAt the same time, we intend to begin discussing with stakeholders our plans for a timely clean energy transition.\nAs a part of that transition, later this year, we plan to file with the West Virginia Public Service Commission for 50 megawatts of utility scale solar generation.\nOur wind connection and solar proposals support core components of our climate strategy, building a more climate-resilient energy system that meets our customers' changing needs, enables the transition to a carbon-neutral economy and powers a sustainable and prosperous future for our stakeholders.\nIn the other recent regulatory activity, this month, our ATSI transmission subsidiary reached a settlement with parties to a FERC proceeding that will address legacy issues associated with ATSI's move from MISO to PJM in 2011 and provide for partial recovery of the MISO transmission project costs that will be allocated to ATSI in the future.\nIt's an exciting time for our company.\nWe have a robust long-term pipeline to modernize our transmission network, and we plan to continue embracing renewables.\nIn our distribution business, we're incorporating emerging smart technologies and building a technologically advanced distribution platform.\nAnd our industry will play a key role in the infrastructure build-out for electric vehicles, battery storage and other technologies.\nWe're pleased with our strong performance through the first nine months of 2021.\nAs we close out the year, we are raising and narrowing our operating earnings guidance from $2.40 to $2.60 per share to $2.55 to $2.65 per share.\nThe midpoint of this range represents a 9% increase over 2020 operating earnings results.\nFinally, I can't pass the call over to Jon without acknowledging that it's been one year since I stepped into my leadership role under very sobering circumstances.\nIt's been a challenging year on many fronts.\nI continue to be impressed by the grit and the resilience of the entire team.\nTogether, we are building positive, sustainable momentum, and creating a new FirstEnergy that is a forward thinking and industry-leading company.\nNow Jon will provide a review of third quarter results and a financial update.\nYesterday, we announced GAAP earnings of $0.85 per share for the third quarter of 2021 and operating earnings of $0.82 per share.\nAs Steve mentioned, this exceeded the top end of our guidance range.\nIn our distribution business, results for the third quarter of 2021 as compared to last year reflect the absence of Ohio decoupling and lost distribution revenue, which totaled $0.04 per share as well as lower weather-related usage.\nThese were partially offset by higher revenues from our capital investment programs, new rates from our JCP&L distribution base rate case and lower operating expenses.\nConsistent with the trends we've discussed over the last few quarters, total distribution deliveries increased on both an actual and weather-adjusted basis compared to the third quarter of 2020.\nWhile weather was hotter than normal in our region this summer, it was cooler in the third quarter of 2020.\nWeather-adjusted residential sales for the third quarter of 2021 were essentially flat compared to the third quarter of 2020 as many of our customers continue to work from home.\nComparing our results to the pre-pandemic levels in the third quarter of 2019, weather-adjusted residential usage was nearly 6% higher this quarter.\nWhile the commercial and industrial classes have not yet recovered to levels we saw before the pandemic, they are starting to trend in the right direction.\nWeather-adjusted commercial deliveries increased 3% while industrial load was up nearly 4% compared to the third quarter of 2020.\nIndustrial load increased in most of the sectors in our service territory this quarter, led by steel, chemical and fabricated metal.\nIn our regulated transmission business, we continue to see benefits from higher transmission investments at our MAIT and ATSI subsidiaries as part of our Energizing the Future program.\nHowever, this was offset by higher interest from the debt issuance at FET earlier this year and a prior year formula rate true-up.\nAnd in the Corporate segment, results reflect lower O&M and benefit expenses.\nFor the first nine months of 2021, operating earnings were $2.10 per share compared to $2.07 per share in the first nine months of 2020.\nThe increase was driven by our ongoing investments in our distribution and transmission systems, higher weather-related usage and lower expenses.\nThese items more than offset the $0.17 of decoupling and lost distribution revenues recognized in the first nine months of 2020.\nOur strong results and financial discipline have resulted in year-to-date adjusted cash from operations of $2.4 billion, which represents an increase of $600 million versus last year.\nWhile we expect a few offsets in the fourth quarter, we now expect cash from operations of approximately $2.8 billion for the year, which includes approximately $300 million of investigation and other related costs, the largest of which is associated with the $230 million EPA settlement.\nEarlier this month, we successfully restructured our revolving credit facilities from a 2-facility model to 6, fulfilling our commitment to complete this action before the end of the year.\nThe 2021 credit facilities provide for aggregate commitments of $4.5 billion and are available until October of 2026, with two separate 1-year extensions.\nThe credit facilities and their sublimits are detailed in the strategic and financial highlights.\nWe are also pleased that following the restructuring of these facilities, S&P issued a one notch upgrade to the 10 distribution companies and the three transmission companies.\nWhile we're glad to return to investment-grade ratings for these companies with all three rating agencies, we remain committed to improving our balance sheet and the overall credit profile at the parent company.\nWe previously communicated that we were targeting FFO to debt in the 12% to 13% range.\nWe're raising that target to be solidly at 13%, which will provide ample cushion to the new Moody's threshold of 12%.\nAnd we expect to set the company on a firm glide path to mid-teens.\nOn a number of recent calls, we've communicated that we're contemplating a minority asset sale as we consider alternatives to raise equity capital.\nCurrently, we are engaged in a process to sell a minority interest in our transmission holding company, FirstEnergy Transmission, which owns ATSI, MAIT and TrAILCo.\nThe interest is very strong and preliminary indications are very supportive of our financial plan and targets.\nBut given where we are in the process, we can't comment any further on the details.\nWe continue to evaluate all options to raise equity capital in an efficient manner to support our longer-term outlook, which includes traditional rate base growth and formula rate investments, planned rate case activity, and incremental and strategic capex that supports the transition to a cleaner electric grid.\nWe are optimistic that we'll be in a position to share our overall financing plan and our longer-term outlook within the next couple of weeks.\nIn fact, you may have noticed that we've expanded the information in the appendix of our strategic and financial highlights document.\nGiven the current status of the proposed asset sale, we recognize that the fact book will be more relevant once we can include the outcome from that transaction.\nDuring the fourth quarter, we expect to provide you with 2022 guidance and a detailed capital plan, along with the runway of our FFO-to-debt target, longer-term capital forecasts, and targeted rate base and earnings growth rates.\n",
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"content": "sees fy non-gaap operating earnings per share $2.55 to $2.65.\nq3 gaap earnings per share $0.85.\noperating (non-gaap) earnings for q3 of 2021 were $0.82 per share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Gary Norcross, our ChaInvestor Relationsman and Chief Executive Officer, will discuss our operating performance and review our strategy to continue accelerating revenue growth and maximizing shareholder value.\nWoody Woodall, our Chief Financial Officer, will then review our financial results and provide updated forward guidance.\nBruce Lowthers, President of FIS, will also be joining the call for the Q&A portion.\nTurning to Slide 3.\nAlso throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings, adjusted net earnings per share and free cash flow.\nThese are important financial performance measures for the company but are not financial measures as defined by GAAP.\nWe achieved very strong start to the year, exceeding our expectations across the board in the fInvestor Relationsst quarter.\nAs shown on Slide 5, we realized accelerating revenue growth, exceptionally strong new sales and significantly expanded margins across all our operating segments.\nOur Worldpay revenue synergies are also accelerating through increased cross-selling as well as ramping volumes on prior synergistic sales.\nAs a result, we are increasing our 2021 and 2022 revenue synergy targets to $600 million and $700 million, respectively.\nDuring the quarter, we leveraged our continually strong free cash flow to begin buying back stock, fund our increased dividend and make strategic investments in intriguing new companies that are accelerating new capabilities and pushing the boundaries of financial technology.\nI'm also pleased to share that we divested our remaining minority position in Capco in April, netting a very positive return for our shareholders in over $350 million in proceeds for our remaining stake.\nThese exceptional results demonstrate the strength of our business model, the success of our client-centric focus and our disciplined capital allocation strategy.\nGiven that focus, we consistently invest in platform and solution innovation in the areas of greatest demand.\nAs a result, FIS is the most modern scale provider in market with a unique suite of solutions that enable our clients to transform theInvestor Relations envInvestor Relationsonments, grow theInvestor Relations businesses and engage with theInvestor Relations customers in dynamic new ways.\nWe are quickly becoming one of only eight companies in the S&P 500 with revenues approaching $14 billion, growing more than 7% with an already high and expanding mid-40s EBITDA margins.\nWe believe there is no one in our industry better positioned.\nWith our strong start to the year, we expect accelerating organic revenue growth and strong earnings throughout 2021, giving us the confidence to raise our full year guidance.\nTurning to Slide 6.\nIn banking, new sales grew 17% year-over-year, reflecting a 24% CAGR since the fInvestor Relationsst quarter of 2019 as our investments in new solutions continue to yield impressive results not only in our traditional business but in emerging areas as well.\nFor example, Green Dot, the world's largest prepaid debit card company with over $58 billion in annual volume, chose to expand our relationship this quarter to now include one of our B2B solutions to support theInvestor Relations commercial customers as well as our online chat and social media solution for customer care to serve theInvestor Relations mobile digital bank.\nIn addition, we are helping large financial institutions to upgrade theInvestor Relations legacy technology by moving to our next-generation cloud-based solutions.\nBMO Harris selected the modern banking platform this quarter, making them our 11th large win.\nAnd I'm pleased to share that 40% of our earlier wins are already live due to our software's elegant and modular design.\nThis rapid onboarding continues to give us confidence in our accelerated revenue growth outlook for the remainder of the year.\nBMO chose to partner with us because of our open cloud-native and scalable platform, which will help them modernize the services they provide to theInvestor Relations customers, speed new products to market and increase theInvestor Relations operational efficiency.\nVietnam's largest bank, BIDV, also chose FIS to upgrade theInvestor Relations core banking software to harness the power of our global reach and world-class scale.\nWith this win, we are now the core processor of Vietnam's two largest banks.\nAs we think about continuing to increase our growth, we have several new solutions in our banking segment that we've launched recently and more in the pipeline to be released later this year.\nTo highlight a few examples, PaymentsOne is the newest and most modern card issuing platform in the market, delivering an agile and frictionless payments experience across all card types on one unified platform.\nWe spent the past year migrating more than 1,000 of our issuing clients to this platform and have also seen strong demand from new clients where we've already installed more than 300 new financial institutions since the launch of this solution.\nRealNet is another innovative new solution being launched, which enables account-to-account transactions over real-time payment networks across the globe.\nThis cloud-native SaaS platform will function as a network of networks, allowing our clients to seamlessly leverage multiple payment types to transact effortlessly around the world and cross borders in real time.\nRealNet is proof of our strategy to support the global movement of money across the entInvestor Relationse financial ecosystem for our clients in banking, merchant and capital markets.\nWe've also launched an industry-fInvestor Relationsst cryptobanking solution, which we created in partnership with NYDIG.\nTraditionally, consumers and corporations had to go outside of theInvestor Relations existing banking relationships to acquInvestor Relationse Bitcoin.\nOnce an FIS core banking client enables this capability, theInvestor Relations customers will be able to view and transact theInvestor Relations Bitcoin holdings alongside theInvestor Relations traditional accounts in a single view.\nOur new solution taps into the advanced functionality of Digital One to provide consumers with a user-friendly in-app experience.\nIt will also allow our banking clients to grow theInvestor Relations businesses through a new source of income by providing Bitcoin services through a seamless, easy-to-use digital experience.\nEach of these new launches reflect the power of our technology innovation and deep domain expertise.\nTurning to Merchant on Slide 7.\nWe revamped our go-to-market strategy, significantly improving new sales results as evidenced by our exceptional 76% growth.\nOur new sales success doesn't just reflect easy comps.\nNew sales were up 39% over the fInvestor Relationsst quarter of 2019, translating to an 18% CAGR over the past two years.\nWe continue to successfully expand our financial institution partner program to serve SMBs.\nAs an example, we formed an exclusive merchant referral partnership with CIT Bank this quarter.\nIn this strategic takeaway, we will cross-sell merchant processing to CIT's over 45,000 customers, expanding on an already successful relationship with our banking segment.\nWe also continue to expand our leading ISV partner network, adding 20 new ISVs in the U.K. this quarter as well as several more in the U.S. and Canada that span a diverse range of verticals from retail, hospitality, salons and spas to event ticketing, education, property management and many others.\nAs we look at large enterprise and leading global brands, we are the provider of choice due to our unique omnichannel capabilities, expansive global reach and best-in-class authorization rates.\nAs an example, we won 80 new global e-commerce clients this quarter, more than doubling our new sales from last year.\nTo keep pace with the demand, we are investing to grow our sales force by over 300 more professionals this year.\nWe also won a diverse set of marquee clients such as Intercontinental Exchange; BetBull, a premier online sports betting company; and The Nature Conservancy, a preeminent global conservation organization.\nWe continue to consistently win share in travel and aInvestor Relationslines, including Norwegian Cruise Lines this quarter, and expect leading companies like this to accelerate rapidly as the industry recovers.\nAs we think about newly formed high-growth sectors, FIS is the leading acquInvestor Relationser for cryptocurrency, with revenue from this vertical growing by 5 times over last year.\nOKCoin, a leading cryptocurrency exchange, selected FIS this quarter to help them grow theInvestor Relations business.\nWe serve five of the top 10 digital asset exchanges and brokerages globally, including innovators like Coinbase and BitPay.\nThe results of our investment in new and modernized merchant technology is certainly showing in our sales success throughout our various merchant verticals.\nDuring the quarter, we successfully completed the final client migrations to our next-generation acquInvestor Relationsing platform, also known as NAP, which enables us to offer a more agile experience and modular offering while still providing tailored solutions for our clients.\nWe processed over 1.8 billion transactions on NAP during the fInvestor Relationsst quarter and continue to expect accelerating growth now that we are aggressively selling in market.\nIn addition to our new fully launched acquInvestor Relationsing platform, we have seen tremendous success with the launch of our new gateway.\nThrough our new simple APIs, merchants can go live on our platform faster while still benefiting from our full global breadth and sophisticated solutions.\nOur new APIs provide a seamless, easy-to-integrate single point of access for our clients, and transactions are ramping exponentially, ending the fInvestor Relationsst quarter at more than four million transactions per day.\nThis represents more scale than all but two of our largest e-com competitors in less than two years post launch.\nAll of this shows that FIS is increasingly differentiated by our ability to bring innovation at scale that is enterprise ready from day one in a way that few can claim or offer today.\nIn addition to leveraging our innovative portfolio of technology assets, our clients are also relying on us to support theInvestor Relations expansion into new geographic markets.\nThis quarter, we expanded our services into South Africa, Nigeria and Malaysia, and we plan to bring online several more countries later this year.\nSince the combination with Worldpay, FIS has now brought acquInvestor Relationsing to nine new countries.\nTurning to Slide 8.\nIn Capital Markets, we have made remarkable progress since acquInvestor Relationsing SunGard in 2015.\nWe completely changed the revenue growth profile from persistent declines to accelerating top line growth.\nAnd I'm pleased to say that we are now consistently growing faster than our peers.\nWe simultaneously improved margins and moved the business to over 70% reoccurring revenue.\nDuring the fInvestor Relationsst quarter, average deal size increased 36% with new logos representing 30% of new sales, clearly showing that we are winning share.\nNew sales of our SaaS-based reoccurring revenue solutions are also very strong, increasing by 57% this quarter.\nFor example, our differentiated solutions and deep treasury expertise are motivating the leading corporate, like GlaxoSmithKline, to select FIS to power theInvestor Relations treasury management systems.\nIn addition, our comprehensive suite of solutions, strong track record and speed of implementations is very attractive to emerging fintechs like Acorns and Robinhood.\nThese two fintechs are utilizing our solutions to further drive financial inclusion.\nAs another example, Futu is a next-generation online broker-dealer who selected FIS this quarter to help power theInvestor Relations growth in securities, finance and trading.\nSecurian Financial is a great example of a diversified financial services company who partnered with us this quarter to deliver a leading cloud-based risk modeling and management platform.\nThey selected FIS because they needed a partner who could support theInvestor Relations growth and scale, while at the same time being nimble enough to help them quickly respond to changing regulatory requInvestor Relationsements.\nThe consistent execution of our strategy is driving our success.\nOngoing investments in new solutions, advanced technology and expanding distribution are generating strong new sales and competitive takeaways while accelerating revenue growth across all our operating segments.\nOur relentless focus on achieving efficiency and scalability through automation and integration continues to enhance our profitability and margin profile.\nLastly, we see our exceptional free cash flow generation as a competitive advantage.\nIt allows us to consistently invest for growth and to generate superior shareholder returns through return of capital and M&A.\nIn summary, our strategy is continuous transformation, pivoting to growth while simultaneously driving efficiency and scale through the strategic allocation of capital.\nStarting on Slide 11, I will begin with our fInvestor Relationsst quarter results, which exceeded our expectations across all metrics to generate an adjusted earnings per share of $1.30 per share.\nOn a consolidated basis, revenue increased 5% in the quarter to $3.2 billion, driven by better-than-expected performances in each of our operating segments.\nAdjusted EBITDA margins expanded by 10 basis points to 41%.\nStrong contribution margins and synergy achievement within each of our segments more than offset increased corporate expenses from unwinding last year's COVID-related cost actions.\nWe continue to make excellent progress on synergies exiting the quarter at $300 million in run rate revenue synergies, an increase of 50% over the fourth quarter's $200 million, accelerating revenue synergy attainment driven primarily by ongoing traction and ramping volumes within our bank referral and ISV partner channels as well as cross-sell wins related to our new solutions and geographic expansion.\nGiven our progress to date and robust pipeline, we're increasing our revenue synergy target for 2021 by 50% or $200 million to $600 million; and for 2022 by $150 million to $700 million.\nOur achievement of cost synergies has also been very successful.\nWe have doubled our initial cost synergy target of $400 million, exiting the quarter with more than $800 million in total cost synergies.\nThis includes approximately $425 million in operating expense synergies.\nOur backlog increased mid-single digits again this quarter as strong new sales more than offset our recognition of revenue in the quarter.\nTurning to Slide 12 to review our segment GAAP and organic results.\nAs a reminder, the only difference between GAAP and organic revenue growth for our operating segments this quarter is the impact of currency.\nOur Banking segment accelerated to 7% on a GAAP basis or 6% organically, up from 5% growth last quarter.\nThese strong results were driven primarily by ramping revenues from our recent large bank wins, recurring revenue and issuer growth.\nOur issuing business grew 10% in the quarter, driven primarily by revenue growth from PaymentsOne, increased network volumes and economic stimulus.\nWe expect both of these tailwinds to continue, driving accelerated growth into the second quarter in support of our outlook for mid- to high-single-digit organic revenue growth for the full year.\nCapital Markets increased 5% in the quarter or 3% organically, reflecting strong sales execution and growing recurring revenue.\nThe Capital Markets team is driving a fast start program for the beginning of 2021 and appears to be trending toward the higher end of our low to mid-single-digit organic growth outlook for the year.\nIn Merchant, we saw a nice rebound, with growth of 3% in the quarter or 1% organically, accelerating 10 points sequentially as compared to the fourth quarter.\nMerchant's fInvestor Relationsst quarter performance was driven primarily by strength in North America and e-commerce, including significantly ramping volumes on our new acquInvestor Relationsing platform.\nCOVID impacts on travel and aInvestor Relationslines as well as continued lockdowns in the U.K. drove a 5-point headwind in the fInvestor Relationsst quarter.\nSlide 13 shows the significant ramp in volumes and revenue that the Merchant business generated throughout the quarter.\nImportantly, as volumes rebounded, yields grew significantly.\nWe ultimately exited the quarter generating approximately 70% revenue growth during the last week of March, including five percentage points of positive yield contribution.\nWe expect this positive revenue yield tailwind to continue to expand in the second quarter and continue throughout the remainder of the year.\nBased on March exit rates and second quarter comparisons, we expect merchant organic revenue growth of 30% to 35% in the second quarter.\nThe expanding investments we are making in merchant technology platforms and global sales execution will yield long-term benefits for our clients and significant new wins for our business.\nAs Gary highlighted, we are very pleased with the execution of our segments.\nWith accelerating revenue growth and strong new sales, each of them are winning market share.\nTurning to Slide 14.\nWe returned approximately $650 million to shareholders in the quarter through our increased dividend and share repurchases.\nStarting in March, we bought back approximately 2.8 million shares at an average price of $143 per share.\nBeyond this return of capital, we also successfully refinanced a portion of our higher interest rate bonds, which extended our average duration by a year and lower expected interest expense for the year by about $60 million to approximately $230 million.\nTotal debt decreased to $19.4 million -- $19.4 billion for a leverage ratio of 3.6 times exiting the quarter, and we remain on track to end the year below 3 times leverage.\nTurning to Slide 15.\nI'm pleased to be able to raise our full year guidance so early in the year based on our strong fInvestor Relationsst quarter results and second quarter outlook.\nFor the second quarter, we expect organic revenue growth to continue to accelerate to a range of 13% to 14%, consistent with revenue of $3.365 billion to $3.39 billion.\nAs a result of the high contribution margins in our business, we expect adjusted EBITDA margin to expand by more than 400 basis points to approximately 44%.\nThis will result in adjusted earnings per share of $1.52 to $1.55 per share.\nFor the full year, we now anticipate revenue of $13.65 billion to $13.75 billion or an increase of $100 million at the midpoint as compared to our prior guidance driven primarily by accelerating revenue synergies.\nWe continue to expect to generate adjusted EBITDA margins of approximately 45%, equating to an EBITDA range of $6.075 billion to $6.175 billion.\nWith our improved outlook, successful refinancing and share repurchase to date, we are increasing our adjusted earnings per share guidance to $6.35 to $6.55 per share, representing year-over-year growth of 16% to 20% and an increase of $0.15 at the midpoint above our prior guidance.\nBy all measures, this was a great quarter for FIS.\nThe investments we're making in driving strong new sales -- are driving strong new sales and accelerating our revenue growth profile.\nAs a result, we remain confident in meeting or exceeding our increased outlook for 2021.\n",
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"content": "q1 adjusted earnings per share $1.30.\nq1 revenue rose 5 percent to $3.223 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Gary Norcross, our Chairman and CEO, will discuss our performance and review our strategy to continue accelerating revenue growth and maximizing shareholder value.\nWoody Woodall, our Chief Financial Officer will then review our strong financial results and provide updated forward guidance.\nBruce Lowthers, President of FIS, will also be joining the call for the Q&A portion.\nTurning to Slide 3.\nAlso throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings, adjusted net earnings per share and free cash flow.\nThese are important financial performance measures for the company, but are not financial measures as defined by GAAP.\nOur second quarter results exceeded expectations across the board and demonstrates the continued success of our pivot to growth strategy that we laid out before the pandemic.\nRevenue of $3.5 billion was the highest quarterly revenue in our company's history.\nRevenue increased more than $500 million or 17% year-over-year, and adjusted earnings per share grew 40%.\nSales results, which were the strongest in our company's history, are being driven because our solutions remain in high demand, enabling businesses of all sizes to advance the way the world pays banks and invest.\nThis demand, combined with our organizational focus on delivering broader value to our clients, was also reflected in a very strong cross-sales, driving our largest revenue synergy quarter-to-date, increasing our run rate by 50% or $150 million sequentially to $450 million.\nThis sales execution in turn drove a $1.5 billion increase to our backlog, which is now greater than $22 billion.\nOur strong execution is driving us to raise both our 2021 guidance and increase our year-end revenue synergy target to $700 million.\nIn addition, as we consider client demand across our portfolio of solutions, we are extending our mid-term outlook of 7% to 9% revenue growth through 2024.\nThey are our most important asset and play a vital role in advancing the commerce and financial technology that keeps thousands of clients up and running in the economy moving every day.\nTurning to Slide 6.\nI'd like to highlight a few recent wins that demonstrate FIS' differentiation.\nClients are increasingly demanding access to new capabilities that are outside of their traditional solution, so they can innovate in new and interesting ways.\nWe have the unique ability to serve our clients horizontally across a breadth of financial technology with integrated cloud native platforms.\nFurther, our open APIs are resilient and easy to use as clients expand their relationships with FIS.\nOur sales success with the Modern Banking platform demonstrates this client demand as they look to differentiate with cloud native capabilities.\nThis quarter, we delivered the largest release since the start of MBP, including expansion of commercial deposit functionality as well as new enhancements to our lending module.\nAs we have previously discussed, one of the exciting opportunities with the current MBP clients is an ongoing ability to cross-sell additional functionality modules.\nThis quarter, we had our first cross-sell to American Express, who added a new checking account feature to their deployment.\nThis is a great example of our ability to land large complex clients and the value of our modern platform.\nAs we continue to add functionality, clients continue adopting these new capabilities to grow their businesses, which drives additional revenue for FIS and expand these important relationships.\nFifth Third Bank provides a second key example of the ways we grow our strategic relationships.\nFifth Third is a longtime client, who is on a journey to reengineer its technical infrastructure with a focus on resiliency and scale.\nThis quarter, they expanded their relationship with us to replace their legacy in-house core with the Modern Banking platform and their legacy wealth management system with FIS Unity.\nUnity is our leading-edge global wealth management system and will provide rich data and insights for Fifth Third's customers throughout their wealth journey.\nIt incorporates automated cash management, multicurrency and other advanced wealth management functionality and flexible design that is fully integrated with FIS Trust accounting.\nT. Rowe Price provides yet another example of an industry leader looking to FIS to help them modernize their 401(k) retirement offering with advanced technology.\nThis landmark win will lay the foundation for other large asset managers to utilize FIS as they look to leverage our scale and expertise in the retirement space.\nIn addition, PayPal and Chevron both expanded their relationships with us to begin utilizing our cloud-enabled payment switching capabilities.\nAnd finally, WesBanco joined our merchant referral network in order to upgrade to our leading acquiring technology.\nAs we continue to innovate, our integrated cloud native ecosystem creates a powerful network effect that empowers our clients to transform and grow.\nOn Slide 7, I want to highlight another important win.\nI'm pleased to announce that Walmart will begin utilizing our innovative loyalty network, Premium Payback, for both in-store and e-commerce transactions.\nThe value proposition for this solution is exceptional, driving positive outcomes for our merchants, issuers and the end consumer.\nIn other retail locations where we have rolled out the solution, we are seeing consumers accept premium paybacks offered to pay with points approximately 50% of the time when they are prompted.\nBoth our merchant and our issuer clients are increasingly eager to participate, and we expect adoption to continue to ramp as we implement the solution with all the innovative clients shown on the slide as well as more in the future.\nPremium Payback is a clear example of the network effect that we've created by integrating, issuing and acquiring.\nTurning to Slide 8.\nWe invest heavily in new solutions and capabilities with the belief that the market is changing and how it consumes technology and looking for cloud-native architectures.\nThe revenue contribution from solutions developed over the past three years continues to grow as a percent of our total revenue mix, up from less than 1% in 2019 to over 4% in 2021.\nThis rapid growth is driven by our ability to cross-sell new solutions into our existing client base as well as adjacent verticals, which increases our total addressable market.\nNew solutions also contribute meaningfully to our total revenue growth, with contribution increasing from less than 1% in 2019 to more than 2% in total revenue growth in 2021.\nLooking forward, we expect new solutions to drive up to 3 points of incremental growth each year, supporting our outlook for 7% to 9% revenue growth through the midterm.\nAt this point, a strong commitment to innovation is embedded in our culture and will continue to drive growth for years to come.\nWe are at the forefront of the industry with the broadest collection of cloud-native solutions available.\nWe remain uniquely positioned to serve domestic and multinational merchants who are looking for a single trusted provider for all of their acquiring needs.\nWe solve our clients' most complex problems, ranging from global acquiring for their e-commerce business to treasury and cash management with our innovative Quantum software.\nFurther, on the right side of the page, we show our unique bundle of cloud native solutions for financial institutions that demonstrate our ability to innovate at scale.\nLastly, we highlight a few examples of innovative solutions that create compelling value propositions for both merchant and FIS clients in the center of the page.\nClearly, the investments we've made during the pandemic and driving differentiated outcomes for our clients and for us, and we continue to make these investments today in order to power future growth.\nIt's why we are confident in our forward momentum to drive strong 7% to 9% revenue growth through 2024.\nStarting on Slide 11, I will begin with our second quarter results, which exceeded our expectations.\nOn a consolidated basis, revenue increased 17% to $3.5 billion, driven by outperformance in each of our operating segments.\nOrganic revenue growth was 16%.\nWe haven't had any material M&A activity over the past year.\nSo the difference between reported and organic revenue growth this quarter is primarily due to the impact of foreign exchange rate.\nAdjusted EBITDA margins expanded 460 basis points to 44%, reflecting strong operating leverage and synergy contribution.\nAs a result, adjusted earnings per share increased 40% year-over-year to $1.61 per share.\nAs Gary mentioned, we had exceptional cross-selling quarter, driven primarily by Premium Payback, issuer processing, merchant referral and data analytics win.\nGiven our progress and strength of our pipeline, we are increasing our revenue synergy target for 2021 by $100 million to exit the year at $700 million on an annualized run rate basis.\nOur achievement of cost synergies also continues to be successful, running further ahead of schedule than we anticipated when we announced the deal.\nWe have more than doubled our initial cost synergy target of $400 million and are on-track to exit the year with approximately $900 million in total annualized savings, including approximately $500 million in operating expense synergies.\nTurning to balance sheet and cash flow.\nWe repurchased 2.7 million shares worth approximately $400 million during the quarter, bringing share repurchase to a total of $800 million year-to-date at an average price of $145 a share.\nOur leverage ratio declined to 3.3 times, keeping us on-track to end the year below 3 times leverage.\nLastly, we generated free cash flow in excess of $1 billion this quarter, which is the most in our company's history and reflects the highly cash generative nature of our business.\nTurning to Slide 12 to review our segments.\nBanking revenue growth accelerated to 8% due in part to strong issuer processing growth of 17% and a 30% increase in Modern Banking platform revenue.\nAs Gary noted, we had another 2 MBP wins this quarter as well as an add-on sale and MBP revenue will continue to accelerate as more clients go live.\nWe currently expect MBP revenue growth of nearly 50% for the full year 2021 and for this to further accelerate into 2022.\nThe Banking segment's adjusted EBITDA margin expanded 410 basis points to 46%.\nThese strong results were driven primarily by ramping revenues from our recent large bank wins as well as continued recurring revenue growth.\nCapital markets revenue growth also accelerated to 6% this quarter, reflecting strong recurring revenue growth and sales execution.\nCapital Markets adjusted EBITDA margin expanded 100 basis points to 46%.\nLastly, for Merchant, revenue growth rebounded sharply to 45% in the second quarter, which includes 10 points of yield benefit and the segment generated its largest new sales quarter in the history of the business.\nMerchants' revenue acceleration included 31% revenue growth in e-commerce.\nOur eComm revenue growth is particularly impressive in light of in-store reopening as lockdown orders eased and cross-border travel remains affected, making it an avenue for significant future growth.\nGrowth was also broad-based, expanding both domestic and international and discretionary verticals like restaurant are accelerating sharply.\nMerchants adjusted EBITDA margin expanded 910 basis points to 50%, primarily reflecting its high contribution margin and synergy benefits.\nAs we begin to lap the pandemic with growth spanning online and in-store, SMB and enterprise across North America and International, our results clearly demonstrate the strength of our competitive position.\nIn addition, growth includes both rebounding volume and yields, as we expected.\nRelative to 2019, we've seen no increase in attrition, and we'll continue to grow our client count.\nWe have not taken our foot off the gas, investing through the pandemic, completing NAP, ramping Access Worldpay, expanding our sales force, entering new countries and adding multiple strategic ISV and bank partners, including expanding integrated payments to Europe.\nThe business clearly has strong underlying momentum.\nWe expect to further drive acceleration relative to 2019 in the second half of the year.\nTurning to guidance on Slide 13.\nBased on our strong results and favorable outlook, I'm pleased to raise full year guidance.\nWe now anticipate revenue of $13.9 billion to $14 billion for the full year 2021, which represents an increase of $250 million over our prior guidance.\nThis guidance assumes full year revenue growth for Banking in the upper single digits and Capital Markets in the mid-single digits.\nWe now expect Merchant growth to approach 20% this year, ahead of our initial expectations.\nRelative to 2019, Merchant revenue growth accelerated 9% in the second quarter or 12% in the U.S.\nWe expect Merchant revenue growth to continue to accelerate into the mid- to high teens in the second half of the year as international revenue and discretionary verticals like travel and airlines continue to rebound versus 2019.\nWe're also raising our full year 2021 adjusted EBITDA guidance to $6.125 billion to $6.2 billion and increasing our adjusted earnings per share guidance to $6.45 to $6.60 per share.\nFor the third quarter, we expect 9% to 10% revenue growth and to generate revenue of $3.49 billion to $3.52 billion.\nAs a result of the high contribution margins in our business, we expect adjusted EBITDA margin to expand more than 50 basis points sequentially or about 200 basis points year-over-year to approximately 44% for the third quarter.\nThis will result in adjusted earnings per share of $1.66 to $1.69 in the first year.\nI'm excited about our results and raised guidance.\nBeyond our guidance for the year, we expect to generate 7% to 9% revenue growth in the midterm through 2024, as Gary discussed.\nI have comments on this outlook for a number of reasons.\nFirst, our sharp second revenue growth acceleration and our ability to significantly increase revenue guidance, show strong execution and the underlying strength in the business.\nSecond, strong new sales and cross-selling activity drove our backlog above $22 billion and increased our revenue synergy attainment by 50% in just one quarter, which will continue to drive future growth into 2022 and beyond.\nAnd finally, the investments we've made and continue to make are driving strength across our segments and accelerating our revenue growth profile.\nOur cloud native ecosystem of solutions is highly differentiated, helping us to grow in new and emerging verticals.\n",
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"content": "sees q3 adjusted earnings per share $1.66 - $1.69; sees fy 2021 adjusted earnings per share $6.45 - $6.60.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Gary Norcross, our Chairman, President and CEO, will discuss our quarterly operating performance and share our strategy for continued accelerating revenue growth.\nWoody Woodall, our Chief Financial Officer, will then review our financial results, including our balance sheet, cash flow and segment-level trends.\nTurning to Slide 3.\nAlso, throughout this conference call, we will be presenting non-GAAP information, including adjusted EBITDA, adjusted net earnings and adjusted net earnings per share.\nThese are very important financial performance measures for the company but are not financial measures as defined by GAAP.\nI'm extremely proud of our third quarter results, which returned to positive organic growth for the quarter, an impressive results for our team, given the backdrop of a global pandemic.\nWe continue to sell new business, grow the top line, expand margins and generate exceptional free cash flow.\nOur strong performance demonstrates the durability of our unique business model and underscores our commitment to lifting our clients and communities.\nWhile others have been forced to retrench and preserve capital, we continue to invest for growth, bringing new solutions and services to our clients now.\nThis quarter alone, we launched several new solutions, including Access Worldpay, which is now the world's most advanced payments gateway; ClearEdge, a new subscription-based offering that enables community banks to run a highly efficient, modern bank while also benefiting from simplified pricing and contracting; Ethos is our innovative, new data ecosystem that provides clients with a unified view across our enterprise, powering data-driven insights and automating reporting.\nIn addition, we partnered with The Clearing House to launch our new real-time payments managed service, which provides a complete turnkey service for financial institutions to quickly and cost-effectively connect to the United States' real-time payments network.\nEven with all these new solutions, we continue to look beyond our own current capabilities to see what's next on the horizon for our clients.\nI'm pleased to announce that we recently completed our fifth annual Fintech Accelerator program, which was just named Best Fintech Accelerator by Finovate, and we launched our new FIS Impact Labs, both of which are focused on accelerating transformative innovation into the market.\nNow more than ever, our clients are embracing innovative technologies like these and our scalable end-to-end solutions are increasingly in demand.\nWe saw evidence of this demand from our recent InFocus client event, which was heavily attended and expanded its reach virtually this year to nearly 40 countries and which drove a 25%-plus increase in demand for FIS solutions.\nOur strong new sales performance has increased our backlog by 6% organically during the third quarter.\nAnd our pipeline is exceptionally strong, up more than 30% year-over-year as we continue to grow and win new business.\nWe are also adding our new sales opportunities for revenue synergies.\nAs of the end of the third quarter, we are generating $150 million in annual run rate revenue synergies and we have $60 million more currently being implemented with our clients.\nThis puts us in great shape to exceed our $200 million revenue synergy target before the end of the year.\nWe clearly have the momentum to continue accelerating revenue growth through 2021 and to sustain high single-digit top line growth into the future.\nOur ability to leverage our world-class scale is driving ongoing margin expansion.\nAdjusted EBITDA margins expanded 340 basis points sequentially and 30 basis points year-over-year during the third quarter as we continue to harness the operating leverage inherent in our business.\nWe remain focused on further enhancing our superior cost structure by driving automation, streamlining our organizational structure and generating expense synergies through our proven integration capabilities.\nOur unique combination of durable revenue growth and persistent operating leverage enables us to generate exceptionally high levels of free cash flow.\nWe will use our free cash flow to invest back into our business, both organically to delivering innovative solutions like the ones that I mentioned a few moments ago, as well as inorganically to expand into new high-growth segments of the market.\nThis, in turn, will reinforce the momentum that we're building to drive continued growth acceleration.\nTurning to Slide 6.\nPeople often ask me what's next for FIS and how their investments allow us to compete with disruptors.\nIn order to answer that question, it's important to understand not only where we've been, but where we are going, what's new and what's next for FIS and most importantly, for our clients.\nIt begins with the pathway to transformation that we started five years ago.\nWe consolidated data centers and moved solutions to the cloud.\nWe rearchitected our application stack to be modular and componentized while upgrading and integrating our enterprise tool sets.\nAnd we launched a dramatically more client-friendly approach to delivery and service.\nNow we are leveraging our technology and expertise to leapfrog over inflexible point solutions using cloud-native open architecture to deliver digital omni-channel solutions that are simple to integrate and easy to navigate.\nIn this way, we are helping our clients to quickly adapt to rapidly changing consumer expectations with innovative solutions that are fast, flexible and frictionless.\nWhat you can expect to see next from our centers around our unique ability to tailor end-to-end experiences by connecting the global financial ecosystem in ways that only FIS can do.\nWe serve each of our clients as a trusted partner by building new and unique capabilities to better solve their challenges.\nWe then scale these new capabilities across our cloud-based environment for the benefit of all of our clients in a highly efficient and cost-effective manner.\nThis is the advantage of our unique business model.\nAnd we're just getting started.\nBy investing approximately $1 billion annually in new product development and R&D, we are bringing tomorrow's innovation forward now.\nAnd by using our one-to-many model, we can continue to grow faster than the market, support our clients' needs and sustain their technology leadership.\nI'll give you a few examples of how we are bringing together capabilities from across the business to create new and exciting growth opportunities on Slide 7.\nCase New Holland is a global leader in agriculture and industrial equipment.\nThey have been a valued client with our capital markets business for the past three years, leveraging our auto and equipment finance solutions to deliver a robust and automated digital experience for its customers.\nThey recently asked us to help them to drive data and insights as well as improved acceptance across their network of more than 900 dealerships.\nNow we're bringing capital markets together with merchant by partnering to drive frictionless payments.\nAnother great example is our Premium Payback solution, which enables consumers to pay for purchases with reward points.\nDemand is very strong from both our banking and merchant clients as there is a compelling value proposition for each of them as well as for the consumer.\nThousands of financial institutions, representing more than 7,000 card loyalty programs, are enrolled in the FIS Premium Payback ecosystem.\nIn this quarter, we added one of the largest issuers in the world to our points bank, further driving adoption.\nIn addition, we announced this quarter that Walgreens is now one of the growing number of merchants to offer its customers our Premium Payback service, joining companies like PayPal, Shell and BP.\nThe ability to use loyalty points is becoming an increasingly important factor in consumer decisions on where to shop.\nHighlighting the type of next-generation value that we are offering to our clients now.\nAnother area where we are driving phenomenal value is with our merchant bank referral network.\nWhen we signed the Worldpay deal, we thought that we would be able to sign three to four new bank referral agreements per year.\nAs it turns out, we have signed more than 15 significant new bank relationships, adding well over 1,000 branches to our partner distribution network in the first year.\nLastly, it's gratifying to see one of the key benefits of the deal come to fruition as we expand our global reach.\nWe're leveraging our combined scale to enable our merchant business to enter new countries and markets.\nOur e-com business remains a global leader and continues to be a partner of choice for multinational companies and leading global brands.\nWe're expanding into six new countries this year, including Argentina, which we announced most recently.\nWith our new domestic acquiring licenses, Worldpay from FIS can deliver advanced payment technology to both merchants and global companies operating in these countries around the world.\nI'm also happy to announce that we have successfully expanded our integrated payments business into Europe.\nWe signed more than 30 partners there already and are finalizing agreements with several more.\nWinning these new partners gives us access to distribution that will drive accelerated growth through 2021 and beyond.\nWith recent investments in the U.S. as well, new wins are up significantly within our integrated payments despite the pandemic.\nIn banking, we added another top 30 financial services firm to our growing roster of large client wins.\nThey will use our Modern Banking Platform to power their online bank and chose FIS because of our cutting-edge technology and omni-channel capabilities.\nWe are also seeing strong success with our digital and mobile banking solutions.\nThis quarter, we signed an agreement with a top 50 bank, who chose us because our Digital One and mobile banking solutions will enable them to rapidly innovate, further differentiate their consumer user experience and increase their speed to market for new products.\nIn merchant, we signed a top 100 luxury retailer, who chose to partner with us because of our end-to-end capabilities, including our debit routing, e-commerce and differentiated omni-channel technology.\nSticking with the omni-channel theme for a moment, I'm very pleased to announce that Walmart, the world's largest retailer, recently began processing e-commerce transactions with us, further expanding our existing relationship.\nIt's a testament to our superior client value proposition and omni-channel capabilities that we continue to win share of wallet with our largest global clients.\nIn integrated payments, we signed two of the world's leading dealer management system software providers, one in the U.S. and one in the U.K. Between the 2, it will provide us with distribution to thousands of dealerships through these leading ISVs.\nTurning to capital markets.\nDemand for our end-to-end, SaaS-based solution remains robust.\nI'm excited to announce that we signed a deal with a leading global technology company to power their complex multinational treasury function as well as to modernize their B2B payment operations.\nThe company selected FIS because of our cloud-based technology, flexible deployment and simple integration.\nWe also signed a significant new deal with a large Japanese bank to provide a middle- and back-office post-trade derivative clearing solutions.\nThe bank chose us in order to leverage our new API-driven technology stack to drive efficiencies and reduce operational risk.\nWe clearly have the momentum to continue accelerating revenue growth through 2021 and to sustain high single-digit top line growth into the future based on our new solutions, our unique ability to combine our knowledge and expertise from across our business and new ways to solve our clients' challenges and due to our continued sales success with marquee clients.\nAs Gary highlighted, we're excited about the momentum that we are building in the business.\nOur pipelines are full with more than 30% in banking and capital markets and remain the largest that I've ever seen.\nOur cloud-based end-to-end solutions are clearly resonating in the market right now.\nTransaction and volume growth continue to improve in our merchant segment.\nAnd we are seeing positive trends in our revenue yields as well.\nAnd with our backlog consistently growing in the mid- to upper single digits for multiple quarters in a row, I feel really good about our ability to accelerate revenue growth next year, consistent with the 7% to 9% range we have been messaging.\nBut let's start with our third quarter results beginning on Slide 10.\nWe delivered a strong set of financial results with significantly improving trends.\nOn a consolidated basis, revenue increased 13% to $3.2 billion, up 1% organically, which represents a marked improvement from the 7% decline that we experienced last quarter.\nImproving revenue growth was primarily driven by two things: stronger recurring revenue in both banking and capital markets as well as improving trends throughout the quarter within our merchant business.\nAdjusted EBITDA increased to $1.4 billion with margins expanding 340 basis points sequentially and 30 basis points year-over-year to 42%.\nWe continue to expect margins to expand sequentially again in the fourth quarter as consumer spending trends continue to improve, driving margin expansion for the full year as compared to 2019.\nAs a result of our improving revenue growth and profitability, we achieved adjusted earnings per share of $1.42 for the third quarter.\nTouching on our Worldpay integration.\nWe are more than two years ahead of schedule.\nWe have achieved $150 million in revenue synergies as we continue to see really strong traction with our Premium Payback solution.\nAnd we are significantly outperforming our initial expectations for merchant bank referrals.\nWe have also achieved cost synergies of over $700 million, including $385 million in operating expense savings, contributing to our adjusted EBITDA margin expansion.\nI'll expand more around our segments with Slide 11.\nBanking Solutions revenue increased 3% organically to $1.5 billion.\nThis includes a three percentage point headwind related to COVID as well as an exceptionally large license comparison in the prior year period.\nExcluding these, organic revenue growth was closer to 6% for banking, which is more consistent with our strong growth in recurring revenue.\nAdjusted EBITDA was $653 million for banking, representing 220 basis points of sequential margin expansion to 43%.\nThis is a very good result as the team drove effective cost management to overcome the large margin headwind associated with last year's license comparison.\nOur merchant segment also saw a significant rebound in the quarter.\nRevenue was flat on an organic basis at $1 billion.\nThis represents 14 points of improvement over 2Q when normalizing for the U.S. tax deadline shift as we continue to win market share, particularly in our e-commerce, integrated payments and merchant bank referral channels.\nAdjusted EBITDA in the segment was $487 million, representing over 700 basis points of sequential margin improvement as we saw a material rebound in our higher-margin transaction processing revenue.\nCapital markets revenue has increased 3% year-to-date on an organic basis, demonstrating more than one point of acceleration compared to the prior year period.\nWe continue to see good progress in transitioning this business to a SaaS-based recurring revenue model and away from license sales.\nCapital markets declined 1% in organic revenue growth for the third quarter and was primarily due to quarterly differences in the timing of license renewals.\nAnd we expect quarterly variability of this segment to continue to improve as we complete the transition to SaaS.\nRecurring revenue continues to grow strongly and new sales for our SaaS-based recurring revenue solutions increased by nearly 50% during the third quarter, reinforcing our confidence for continued acceleration in revenue growth during 2021 and beyond.\nAdjusted EBITDA was $286 million, representing a consistent 46% margin with last quarter, as capital markets teams continue to manage cost and execute at a very high level.\nTurning to Slide 12 for an overview of our recent merchant volume and transaction trends.\nWe continue to see improvement throughout the third quarter with volume and transaction growth exiting the quarter at 6% and 3%, respectively.\nTrends have consistently improved since April.\nAnd this is especially notable for our revenue yields.\nHistorically, merchant revenue growth has been highly correlated with transaction and volumes.\nBut the severe impact of the COVID pandemic on cross-border and SMB caused revenue growth to fall by more than volume growth last quarter.\nThis quarter, as expected, we saw that spread narrowing as yields continued to improve, primarily with improving SMB trends.\nE-commerce transactions increased 30% in the quarter, excluding travel and airlines.\nWhile the global pandemic continues to affect us all, we believe this is a critical time to continue to invest in our solution suite to empower our merchants into an accelerating digital economy.\nAs Gary mentioned, we have rolled out significant enhancements within our merchant segment, all of which continue to position FIS as the premier provider of global e-commerce and integrated payments.\nTurning to Slide 13.\nI wanted to provide some color on the strength of our balance sheet, cash flows and liquidity position.\nWe ended the quarter with a total debt balance of about $20 billion and a weighted average interest rate of 1.6%.\nOur debt balance is up slightly quarter-over-quarter, primarily due to FX translation, as we carry significant euro- and pound-denominated balances.\nWe continue to generate high levels of free cash flow.\nThis quarter, we generated $866 million, representing a 27% conversion of revenue.\nCapital expenditures were $263 million or 8% of revenue.\nAs a result, liquidity increased again to $4.2 billion, up by more than $700 million quarter-over-quarter.\nOur business model remains durable and our strategy is clearly working to help us win market share.\n",
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"content": "compname reports q3 adj earnings per share of $1.42.\nq3 adjusted earnings per share $1.42.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: What we will say today is based on the current plans and expectations of Comfort Systems USA.\nThose plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments.\nJoining me on the call today are Brian Lane, President and Chief Executive Officer; Trent McKenna, Chief Operating Officer; and Bill George, Chief Financial Officer.\nBrian will open our remarks.\nWe are pleased to report a strong start to 2021.\nEarnings improved substantially but earnings per share of $0.73, compared to $0.48 in the pandemic impacted first quarter of last year.\nOur backlog has also strengthened sequentially, and we see good trends in underlying activity levels, especially in our industrial, technology and modular markets.\nOverall, we are optimistic about our prospects for the next several quarters.\nAs Brian said, our results were again very strong.\nFirst quarter revenue was $670 million, a decrease of $30 million, compared to the same quarter last year.\nOur same-store revenue declined by $83 million.\nHowever, our recent acquisitions added approximately $53 million in revenue this quarter.\nYou may recall that last year we had large data center work ongoing in Texas and that created high revenue in the comparable period.\nWe will continue to face a tough revenue comparison in the second quarter of 2021, but to a lesser extent than this quarter.\nGross profit was $123 million for the first quarter of 2021, an increase of $6 million and gross profit as a percentage of revenue rose to 18.4% in the first quarter of 2021, compared to 16.7% for the first quarter of 2020.\nThe improvement in gross margin results from stronger margins in electrical.\nSG&A expense was $88 million, or 13.2% of revenue for the first quarter of 2021, compared to $93 million, or 13.3% of revenue for the first quarter of 2020.\nOn a same-store basis, SG&A declined by $6 million -- $11 million.\nThat decrease included a $6 million reduction in bad debt expense as last year's collectability concerns for retail and other customers are trending better than we predicted.\nThe remainder of the decline in SG&A was the result of cost discipline.\nOur 2021 tax rate was 24.8%, compared to 27.6% in 2020.\nOur current year tax rate benefited from permanent differences related to stock-based compensation, and we expect it to trend upwards into our normal range for the full-year.\nOverall net income for the first quarter of 2021 was $26 million, or $0.73 per share, as compared to $18 million, or $0.48 per share in 2020.\nFor our first quarter, EBITDA was $51 million, a 39% improvement over last year and our trailing 12-month EBITDA is a record $264 million.\nFree cash flow in the first quarter was $80 million, as compared to $15 million in Q1 2020.\nThis year's -- this quarter's free cash flow is far higher than we've ever achieved in the first quarter as we received advance payments on large projects that are commencing and our lower same-store revenue led to some temporary harvesting of working capital.\nAs we execute these projects over the next few quarters, and if organic revenue improves in the second half as expected, we will see some absorption of working capital.\nOur free cash flow over the trailing 12-month period is $330 million and that strong performance has returned our leverage to well under 1 times EBITDA despite our many ongoing and recent acquisitions.\nThat's all I have, Brian.\nI'm going to spend a few minutes discussing our backlog and markets.\nI will also comment on our outlook for the remainder of 2021.\nBacklog at the end of the first quarter of 2021 was $1.66 billion.\nWe believe that the effects of the pandemic are beginning to subside as same-store backlog increased sequentially by nearly $150 million, or 10%.\nAlthough we expect some delays in bookings will continue through the second quarter, we remain optimistic about trends for the second half of the year.\nOverall, we are very comfortable with the backlog we have across our operating locations.\nWe are seeing good trends in underlying activity levels, especially in our industrial, technology and modular markets.\nOur industrial revenue was 40% of total revenue in the first quarter.\nWe expect this sector to continue to grow as a majority of the revenues at our newer companies of TAS and TEC are [Phonetic] industrial and industrial is heavily represented the new backlog.\nInstitutional markets, which include education, healthcare and government were 35% of our revenue and that is roughly consistent with what we saw in 2020.\nThe commercial sector is now about 25% of our revenue.\nFor the first quarter of 2021, construction was 77% of our revenue, with 45% from construction projects for new buildings and 32% from construction projects in existing buildings.\nService was 23% of our first quarter 2021 revenue with service projects providing 9% of revenue, and pure service, including hourly work providing 14% of revenue.\nYear-over-year service revenue is up approximately 4% with improved profitability.\nWe are seeing good opportunities in indoor air quality, which has helped many of our service departments return to pre-pandemic volumes.\nThe high move [Phonetic] interest in IAQ plays to our strength of solving problems for our customers and air quality considerations help us differentiate ourselves in both service and construction.\nOur mechanical segment continues to perform extremely well.\nOur electrical gross margins improved from 5.5% in the first quarter of 2020 to 14.7% this year.\nOur backlog strengthened this quarter and the effects of the pandemic are fading.\nWe expect some continued organic revenue declines in the second quarter of 2021, but less than we experienced in the current quarter.\nWe continue to see strong project development and planning activity among our customers, especially in technology and other industrial verticals.\nOur large operations are in place where companies continue to invest, such as Texas, North Carolina, Florida and Virginia.\nIt was one year ago that we reported our first quarter at a time when everyone was adjusting to the risk and uncertainty of the pandemic.\nWe will continue to work hard to keep our workforce and our community healthy and safe.\nWe look forward to continued strong profitability and good cash flow in 2021 and our strong pipeline makes us optimistic about activity levels in the second half of this year and into 2022.\nWe will continue to invest in our workforce and to improve our formidable mechanical and electrical businesses in existing and new geographies.\n",
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"content": "q1 earnings per share $0.73.\nbacklog as of march 31, 2021 was $1.66 billion as compared to $1.51 billion as of december 31.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: What we will say today is based upon the current plans and expectations of Comfort Systems USA.\nThose plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments.\nJoining me on the call today are Brian Lane, President and Chief Executive Officer; Trent McKenna, Chief Operating Officer; and Bill George, Chief Financial Officer.\nBrian will open our remarks.\nWe are happy to report an excellent second quarter.\nWe earned $0.90 per share despite some revenue headwinds arising from pandemic-related delays in some areas and projects.\nOur sequential backlog increased by $180 million this quarter on a same-store basis, and our year-over-year same-store backlog also increased by $200 million.\nAnd this is the first time since the pandemic decline that we have seen a same-store increase in our backlog from the prior year.\nThese increases support our belief that direct pandemic effects are abating.\nOur free cash flow continues to be strong and yesterday we increased our dividend.\nOur essential workforce proved its mettle during the recent challenges and they continue to excel as circumstances improve.\nWe are grateful for their strength and perseverance.\nWe are optimistic about our prospects for the next several quarters.\nWe recently announced that Amteck will be joining Comfort Systems USA and that acquisition is expected to close in the third quarter.\nAmteck provides electrical contracting solutions and services, including core electric and low voltage systems as well as services for plans of maintenance, retrofit and emergency work.\nAmteck is headquartered in Kentucky and focuses on the Southeastern United States, including Kentucky, Tennessee and the Carolinas.\nAmteck brings experienced professionals and a fantastic reputation for electrical contracting and services in industrial markets such as food processing.\nAmteck will add world-class capabilities in complex projects, deep customer relationships, design build confidence and opportunities for synergy.\nBefore I review second quarter details, I want to discuss the impact of COVID and how that has affected the composition and timing of earnings and revenues so far this year and in the comparable period last year.\nOur first quarter results in 2020 were lowered by COVID.\nAs we closed that quarter last year in the midst of governmental orders in building and job shutdowns, we were very concerned about how the pandemic and work precautions would affect our productivity.\nAccordingly, the judgments we made to close the first quarter last year led us to expect higher cost on jobs and reduced margins and we also reserve certain receivables.\nThree months later, by the time we were closing our second quarter, it had become clear that our activities were deemed essential and that we could work at good productivity levels, or would be paid for lost productivity in most cases.\nAs a result, we reassess some cautious estimates and partially as a result of those judgments the second quarter of 2020 was particularly robust.\nWe continue to benefit from those factors in last year's order as well and the third quarter of 2020 also benefited from a very discrete gain relating to the settlement of open issues with the IRS for our 2014 and 2015 tax years.\nAs a result, although underlying trends are strengthening, we continue to face tough comparables in the third quarter.\nNow during the first half of this year and a year later, we have good execution and productivity.\nHowever, we have had some revenue softness due to delays in work preparation and pre-construction due to the pandemic.\nWe are also toward the end of closing out some work that was performed under the worst conditions of the pandemic and so the margins we achieved this quarter reflect a little of that headwind.\nFortunately, those effects are subsiding, and our research and backlog and active pipeline is a sign of good demand and prospects.\nAnd so with that background and context, let me review the numbers in more detail.\nRevenue for the 2021 second quarter was $714 million, a decrease of $30 million compared to last year and our same-store revenue declined by $46 million.\nGross profit this quarter was $126 million, lower by $19 million.\nAnd gross profit as a percentage of revenue declined to 17.7% this quarter compared to 19.6% for the second quarter of 2020.\nOur gross profit this quarter reflected the headwinds that we are experiencing in construction, particularly in our Mechanical segment.\nIf you compare the six months period this year to the same period in 2020, gross profit was 18.1% for the first six months of 2021, which is roughly equivalent to 18.2% for the first half of 2020.\nSG&A expense for the quarter was $88 million, or 12.3% of revenue compared to $85 million, or 11.4% of revenue for the same quarter in 2020.\nOn a same-store basis, SG&A was similar to last year with a same-store increase of $1 million.\nOur 2021 tax rate was 23.8% compared to 27.6% in 2020.\nOur quarterly tax rate benefited from permanent differences related to stock-based compensation, and we expect a more normal rates in the second half of the year.\nNet income for the second quarter of 2021 was $33 million, or $0.90 per share.\nAnd that resulted -- that result included $0.10 of income related to the revaluation of our contingent earn-out obligations.\nWe have four large earn-outs active in 2021 and so we expect more variability than usual in earn-out valuation this year.\nOur net income for the second quarter of 2020 was $39 million, or $1.08 per share.\nFor our second quarter, EBITDA was $55 million and year-to-date we have $106 million of EBITDA.\nFree cash flow in the first six months was $101 million as compared to $151 million for the first half of 2020.\nThe slowdown and some temporary tax benefits created unprecedented cash flow last year.\nOur cash flow is very strong through six months.\nBut as activity levels improve, we are likely to continue deploying some working capital to start new projects in many of our geographies.\nOngoing strong cash flow has allowed us to reduce our debt faster than expected, and also to remain active in repurchasing our stock, and we have reduced our outstanding share count for five consecutive years.\nBrian mentioned that we recently entered into an agreement to acquire Amteck, and that transaction is expected to close shortly and during the third quarter.\nWe have not yet closed Amteck, so no revenue or backlog is yet included.\nAmteck will be included in our Electrical segment, and it is expected to contribute annualized revenues of approximately $175 million to $200 million and EBITDA of $14 million to $17 million.\nIn light of the required amortization expense related to intangibles and other costs associated with that transaction, the acquisition is expected to make a neutral to slightly accretive contribution to earnings per share for the first 12 months to 18 months.\nSo that's all I have on financials, Brian.\nI'm going to spend a few minutes discussing our backlog and markets.\nI will also comment on our outlook for the remainder of 2021.\nNew bookings significantly exceeded backlog performed during the second quarter.\nBacklog at the end of the second quarter of 2021 was $1.84 billion.\nWe believe that the business impacts relating to COVID-19 have now stabilized, and as a result same-store backlog increased sequentially by 11% or $180 million.\nThat is a strong increase, particularly for the second quarter.\nThe increase is broad based with strength across our markets, most notably, in industrial projects.\nAlthough delays might modestly impact activity levels for the third quarter, we see strong underlying trends in the coming quarters, and we are comfortable with the backlog we have across our operating locations.\nOur industrial activities were 42% of total revenue in the first half of 2021.\nWe think this sector will continue growing as the majority of the revenues at our new companies of TAS and TEC are industrial, and because industrial is heavily represented in new backlog.\nInstitutional markets, which include education, healthcare and the government, are strong and with 33% of our revenue.\nThe commercial sector is also solid.\nBut with our changing mix it is now about 25% of our revenue.\nFor the first six months of 2021, construction was 77% of our revenue with 46% from construction projects for new buildings, and 31% from construction projects in existing buildings.\nService was a great story this quarter, and service revenue was 23% of year-to-date revenue with service projects providing 9% of revenue, and pure service, including hourly work, providing 14% of revenue.\nYear-to-date service revenue is up approximately 12% with improved profitability.\nService is now rebounded to full activity levels.\nProfitable small project activity is back and we continue to help customers with their indoor air quality.\nOverall, Service was a major source of profit for us this quarter and really help to offset the temporary air pockets in construction.\nOur Mechanical segment continues to perform well, despite being most impacted by the pandemic-related air pockets.\nOur Electrical gross margins improved from 6.5% in the first six months of 2020 to 14.3% this year.\nOur backlog grew this quarter and strength is returning.\nProject development and planning activities continue to be strong with our customers.\nWe are confident in recent acquisitions and are excited about the pending addition of Amteck.\nWe also continue to invest in our workforce and businesses in order to grow earnings and cash flow.\nFor the balance of 2021 the pandemic recovery will continue to affect revenue timing and work, and we also faced a tough third quarter comparison as Bill mentioned.\nAs work picks up, we will be impacted by timing, and we will invest some working capital in order to ramp up.\nFor the next few quarters, we will have relatively fewer closeouts also.\nWe are paying more for materials, but so far material availability and increases have been manageable.\nWe are closely monitoring material shortages and costs, and are taking steps to add additional protections on new work.\nAll of these considerations make it hard to predict exactly how the next quarter or two will unfold, but the underlying trends and opportunities are very positive.\nDespite some moving pieces in carryover effects in the near term, we look forward to continued profitability and our increased backlog and strong pipeline indicate that we can expect stronger activity levels later this year and into 2022.\nWe are optimistic about finishing 2021 on a strong note, and we are even more optimistic about 2022.\n",
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"content": "q2 earnings per share $0.90.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: What we will say today is based on the current plans and expectations of Comfort Systems USA.\nThose plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments.\nJoining me on the call today are Brian Lane, President and Chief Executive Officer; Trent McKenna, Chief Operating Officer; and Bill George, Chief Financial Officer.\nBrian will open our remarks.\nWe are happy to report a fantastic third quarter.\nWe earned $1.27 per share on revenue of $834 million.\nSame-store revenue grew by 9% compared to the third quarter of 2020, as work and bookings are returning as COVID challenges decrease.\nOur backlog was over $1.9 billion this quarter, which is a $270 million same-store increase over this time last year.\nOur free cash flow continues to be strong, and yesterday we increased our dividend by 8%.\nOur essential workforce continues to perform at an outstanding level, and we are grateful for their strength and perseverance during these challenging times.\nDuring the third quarter, we closed our acquisition of Amteck, which focuses on electrical projects and service in Kentucky, Tennessee and the Carolinas.\nAmteck brings an exceptional set of capabilities and relationships and a strong reputation in industrial markets, such as food processing.\nWe are thrilled to have them as part of Comfort Systems USA.\nI'll turn this over to Bill to review our financial performance.\nThis will be pretty brief.\nRevenue for the third quarter of 2021 was $834 million, an increase of $120 million or 17% compared to last year; same-store revenue increased by a strong 9%, with the remaining increase resulting from our acquisitions of TEC and Amteck.\nGross profit this quarter was $159 million, a $12 million improvement compared to a year ago while gross profit percentage was 19.1% this quarter compared to 20.6% for the third quarter of 2020.\nOur gross profit percentage related to our Mechanical segment was strong at 20.1% and margins in the Electrical segment have increased significantly compared to last year.\nSG&A expense for the quarter was $95 million or 11.4% of revenue compared to $91 million or 12.7% of revenue for the third quarter in 2020.\nOn a same-store basis, SG&A was down approximately $2 million, primarily due to tax consulting fees that we incurred in the prior year.\nOur year-to-date 2021 tax rate was in the expected range at 24.1%.\nNet income for the third quarter of 2021 was $46 million or $1.27 per share.\nThis compares to net income for the third quarter of 2020 of $50 million or $1.36 per share, as last year included a $0.17 benefit that resulted when we settled tax audits from past years.\nExcluding that discrete item from last year, our earnings per share increased by 7% compared to the record level of a year ago.\nFor our third quarter, EBITDA was up significantly to $82 million, an increase of 15% over the prior year.\nAnd through nine months, our EBITDA is $188 million.\nFree cash flow in the first nine months was $139 million, as compared to $199 million in 2020.\nThe COVID-induced work slowdown and some temporary tax benefit created unprecedented cash flow last year.\nOur cash flow this year is robust through nine months and we expect continued good cash flow, although we are likely to continue to deploying some net working capital to start new projects in many places.\nIn addition, we will be paying the federal government an extra $16 million of payroll taxes next quarter that were deferred under the CARES Act in 2020.\nOngoing strong cash flow has allowed us to reduce our debt faster than expected, while still actively repurchasing our stock.\nSince the beginning of the year, we have repurchased 346,000 shares which is almost 1% of our outstanding shares at an average price of $73.69.\nSince we began our repurchase program in 2007, we have bought back over 9.6 million shares at an average price of less than $22.\nBrian mentioned that we closed the acquisition of Amteck.\nAmteck is reported in our Electrical segment and it is expected to contribute annualized revenues of approximately $175 million to $200 million and earnings before interest taxes, depreciation and amortization of $14 million to $17 million.\nHowever, because of the amortization expense related to intangibles, the acquisition is not expected to contribute to earnings per share for the next few quarters.\nThat's all I have on financial Brian.\nI am going to spend a few minutes discussing our backlog and markets.\nI will also comment on our outlook for the remainder of 2021 and full year 2022.\nBacklog at the end of the third quarter of 2021 was $1.94 billion.\nOur sequential same-store backlog was up slightly, which is great by the end of the third quarter due to the heavy backlog burn this time of the year.\nYear-over-year our backlog is up by over $500 million or 36%.\nSame-store backlog increased by 19%, a broad base increase.\nWe believe that the impact on activity levels related to COVID-19 have now stabilized and we expect to continue seeing good trends in work availability in the coming quarters.\nIndustrial customers were 43% of total revenue in the first nine months of 2021.\nWe think this sector which includes technology, life sciences and food processing will remain strong for us, as Industrial is heavily represented in new backlog as well as in our recent acquisitions.\nInstitutional markets, which include education healthcare and government are strong and represented 33% of our revenue.\nThe commercial sector is also doing well but without changing mix it is now a smaller part of our business at about 24% of revenue.\nYear-to-date, construction was 77% of our revenue with 46% from construction projects for new buildings and 31% from construction projects in existing buildings.\nService was very strong this quarter and our increasing service revenue was 23% of our year-to-date revenue with service projects providing 9% of revenue and pure service including hourly work providing 14% of revenue.\nYear-to-date service revenue was up by 11%.\nAnd with our continuing strong margins our service earnings were up by a similar amount.\nService has rebounded as buildings are open and profitable small project activity is back.\nOverall, service continues to be a great source of profit for us.\nOur backlog is at record levels.\nProject development and planning activities with our customers are continuing.\nWe are paying more for materials but so far our teams have coped successfully with challenges in material availability and cost.\nWe are closely monitoring material shortages and costs and are taking steps to add additional protections on new work.\nVaccine mandates by certain customers have post challenges in our ability to pursue certain work.\nAll the staff are maintained scheduling on work that is subject to such mandates.\nSo far we have been able to meet our customers' requirements.\nHowever, the Occupational Safety and Health Administration, OSHA is drafting an emergency regulation on vaccinations and it is impossible to predict the scope, timing and impact of the new regulation on us, or our industry or on the US economy.\nThe underlying trends in customer demand and opportunities are very positive.\nAnd so despite challenges, we continue to anticipate solid earnings and cash flow for the remainder of 2021 and we feel that we have good prospects for 2022.\nOver the last few years, we completed a series of transformative acquisitions that have built upon our unbroken history of profitability and cash flow to increase our scale, deepen our exposure to complex markets, including industrial, technology and pharma and expand our recurring service revenue.\nEach investment has strengthened and expanded our unmatched nationwide community of skilled workers.\nWe are also experiencing increasing benefits from our substantial and ongoing investments in training, productivity and technology.\nThese acquisitions and other investments have laid the foundation for the current strong results and gives us confidence as we move forward.\nAbove all, we are mindful of the ongoing challenges that our employees across the United States continue to confront and we are deeply grateful for their perseverance.\nWe are committed to providing our workers and thus our customers with unmatched resources, opportunities and support.\n",
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"content": "compname reports q3 earnings per share $1.27.\nq3 earnings per share $1.27.\nbacklog as of september 30, 2021 was $1.94 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: What we will say today is based on the current plans and expectations of Comfort Systems USA.\nThose plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments.\nJoining me on the call today are Brian Lane, President and Chief Executive Officer; and Bill George, Chief Financial Officer.\nBrian will open our remarks.\nDue to the commitment and resilience of our people, we were able to overcome unprecedented challenges during 2020 to achieve record earnings and cash flow.\nIn addition to the ongoing challenges from the pandemic, our people and organizations also experienced and overcame significant adversity in Texas just last week.\nIn 2020, we earned more than 20% of our revenue in Texas, where we have multiple strong mechanical capabilities in many markets, and Texas is also the home to our largest electrical team.\nVirtually, all of our operations were closed for at least three full days with loss of productivity throughout last week.\nWe are now back to full capacity.\nI am deeply grateful for the courage and perseverance that our field employees demonstrated, last week, in Texas and in many other markets that experienced terrible weather.\nAnd I am in awe of our field workforce's grit and perseverance through COVID as every day our essential workers overcame the challenges they faced.\nWe continue to work hard to keep our workforce and our community safe and healthy every day.\n2020 was a record year for Comfort Systems USA.\nWe finished the year with strong fourth quarter earnings per share of $1.17, and for the full year, we earned $4.09.\nThis marks the highest annual earnings per share in the history of our company, even without our tax and valuation gain.\nRevenue for full year 2020 was also a record at $2.9 billion.\nOur backlog is up slightly since September, and we have very good ongoing bidding activity as we start 2021.\nOur 2020 free cash flow was an unprecedented $265 million.\nAnd yesterday, we again announced an increase in our dividend.\nAt the end of 2020, we acquired a Tennessee Electric Company headquartered in Kingsport, Tennessee, and we expect they will contribute $90 million to $100 million of revenues in 2021.\nThis acquisition was closed on December 31, 2020.\nSo their balance sheet and backlog are included as of the last day of December.\nTEC is a strong electrical and mechanical contractor, but TEC also brings unique industrial construction and plant service expertise and relationships with complex industrial clients.\nTheir results will be reported in our electrical segment starting in 2021.\nIn December, we promoted Trent McKenna to Chief Operating Officer.\nTrent has been with Comfort Systems USA for 16 years, and I believe he will be a valuable leader, as we continue to grow and improve our operations.\nBy the way, I am not going anywhere, but this added depth will provide much-needed bandwidth to our senior team.\nBefore I review our operating results and prospects, I want to ask Bill to review our financial performance.\nSo as Brian said, our results were again very strong.\nI'm going to just briefly point out some things for most of the line items of our P&L.\nSo fourth quarter revenue was $699 million, a decrease of $21 million compared to the same quarter last year.\nOur same-store revenue declined by a larger $68 million.\nHowever, our recent acquisitions of TAS and Starr offset that decline somewhat as they added $48 million in revenue this quarter.\nYou may recall that last year, at this time, we had large data center work in Texas that created very high revenue in the comparable period.\nWe will continue to face tough revenue comparisons through the first half of this year, especially in electrical, as a result of last year's big deployments.\nRevenue for the full year was $2.9 billion, an increase of $241 million or 9% compared to 2019.\nFull year same-store revenue in 2020 was 2% lower than in 2019 due to the factors I just mentioned.\nGross profit was $137 million for the fourth quarter of 2020, an increase of $4 million.\nAnd gross profit as a percentage of revenue rose to 19.6% in the fourth quarter of 2020 compared to 18.4% for the fourth quarter of 2019.\nFor the full year, gross profit increased $45 million, and our gross profit margin was approximately flat at 19.1%.\nSG&A expense was $89 million or 12.7% of revenue for the fourth quarter of 2020 compared to $87 million or 12% of revenue for the fourth quarter of 2019.\nThe prior year fourth quarter benefited from insurance proceeds associated with the cyber incident of approximately $1.6 million, and that reduced SG&A last year.\nFor the full year, SG&A as a percentage of revenue was 12.5% for 2020 compared to 13% for 2019.\nOn a same-store basis, for the full year, SG&A declined $6 million, and that decrease was primarily due to austerity relating to COVID, such as reductions in travel-related expenses.\nDuring the fourth quarter of 2020, we revalued estimates relating to our earn-out liabilities, and as a result, we reported an overall gain of $7 million or $0.18 per share.\nFor the full year, the gain associated with acquisition earn-out valuation changes was $0.20 per share.\nThese gains were due to lower-than-forecasted earnings associated with our recent acquisitions, especially at Walker, which was more affected by COVID than our other operations.\nOur 2020 tax rate was 21.6% compared to 24.7% in 2019.\nDuring the third quarter of 2020, we finalized advantageous settlements with the IRS from their examination of our amended federal tax returns for 2014 and 2015.\nOn a go-forward basis, we now expect our normalized effective tax rate will be between 25% and 30%.\nAlthough 2014 and 2015 are now settled, we have open audits relating to refunds we are claiming for the 2016, 2017 and 2018 tax years.\nBut we believe that any benefits that arise from those years would most likely be recognized in 2022 or beyond.\nSo after giving effect to all these items, we achieved record net income.\nSpecifically, net income for the fourth quarter of 2020 was $43 million or $1.17 per share as compared to $34 million or $0.92 per share in 2019.\nEarnings per share for the current quarter included that $0.18 gain associated with earn-out revaluations.\nOur full year earnings per share was $4.09 per share compared to $3.08 per share in the prior year.\nThe current year also included a tax benefit of $0.17 that we reported in the third quarter of 2020 from a discrete tax item.\nThe gains associated with earn-out revaluations, which for the full year was $0.20.\nFor the fourth quarter, EBITDA was $63 million, which is 6% higher than the fourth quarter of last year.\nOur annual 2020 EBITDA was a milestone achievement for us, as our full year EBITDA was $250 million.\nCash flow for 2020 was extraordinary.\nOur full year free cash flow was $255 million compared to $112 million in 2019.\nOur 2020 cash flow includes roughly $32 million of benefit, that's a direct result of the Federal Stimulus Bill, which allowed us to defer payroll tax payments in the last nine months of 2020.\nThese tax deferrals will be repaid in two equal installments in the fourth quarters of 2021 and 2022.\nEven with our acquisition expenditures, we were able to reduce our debt to less than one turn of trailing 12-month EBITDA.\n2020 was our largest year for share repurchases in quite some time, as we reduced our overall shares outstanding by repurchasing 685,000 of our shares at an average price of $43.99.\nSince we began our repurchase program in 2007, we have bought back over 9.3 million shares at an average price under $20.\nThat's all I have, Brian.\nI'm going to spend a few minutes discussing our backlog and markets.\nI will also comment on our outlook for 2021.\nOur backlog level at the end of the fourth quarter of 2020 was $1.51 billion.\nSequentially, our same-store backlog increased by $10 million, with particular strength in our modular backlog.\nSame-store backlog compared to one year ago has decreased by $375 million, of which approximately, 1/3 related to an expected decline in our electrical segment.\nWe are also experiencing delays in bookings and in project starts at certain of our large private companies.\nOverall, we are comfortable -- we are very comfortable with the backlog we have across our operating locations as our booked work at the end of 2019 included some live beta projects and that comparison represented an unusually high level of backlog.\nMost of our sectors continued to have strong quotation activity, even the sectors where bookings have been delayed.\nThat is particularly true on our industrial business, which includes technology, manufacturing, pharmaceuticals and food processing.\nOur industrial revenue has grown to 39% of total revenue in 2020 compared to 34% a year ago.\nWe expect this sector to continue to be strong, and the majority of TAS and TEC revenues are industrial.\nInstitutional markets, which includes education, healthcare and government, were 36% of our revenue, and that is roughly consistent with what we saw in 2019.\nThe commercial sector was 25% of our revenue.\nFor 2020, construction was 79% of our revenue with 47% from construction projects for new buildings and 32% from construction projects in existing buildings.\nBoth of our construction and service businesses achieved record operating income margin.\nService was 21% of our 2020 revenue with service projects providing 8% of revenue and pure service, including hourly work, providing 13% of revenue.\nBeginning in late March, our service business experienced the first and most pronounced negative impacts associated with COVID-19, largely as a result of building closures and decisions by customers to limit facility access.\nWe are seeing good opportunities in internal air quality, which has helped many of our service departments return to pre-pandemic volumes.\nThe most important element of IAQ is this -- is not just the immediate revenue, but also the opportunity to use our unmatched expertise to create new relationships.\nThis really plays to our strength of solving problems for our customers, and it is not just a service story.\nAs air quality considerations really add to our ability to differentiate and add value in construction and at times will increase the size and complexity of even large projects.\nOverall, our service operations ended the year with improved profitability, and thus, today, they are back to prior volumes.\nDespite pandemic-related challenges, our mechanical segment performed incredibly well during the quarter.\nWe are grateful for our performance this year, and our prospects are much better than we would have expected this past spring.\nOur electrical segment had a tougher 2020 than we would have liked, but we currently expect good margin improvement in electrical in 2021.\nOur backlog strengthened this quarter, but our near-term business continues to reflect some delays in bookings and starts that will result in same-store revenue headwinds in the first half of 2021.\nAt the same time, we have really strong project development and planning activity with our customers.\nWe are increasingly optimistic about 2021 and beyond because of that strong pipeline.\nWe currently expect full year 2021 results that are similar to, but lower than, the record results that we achieved in 2020.\nWe continue to prepare for a wide range of potential circumstances in nonresidential construction in the coming quarters.\nHowever, we perceived strong trends, especially in industrial, technology and manufacturing.\nAnd we think our geographic markets are favorably positioned with comparatively strong prospects.\nWe look forward to good profits and cash flow in 2021.\nWe have an unmatched workforce and a great and essential business, and we will continue to invest our reliable cash flows to make the most of these advantages and opportunities.\n",
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"content": "q4 earnings per share $1.17.\nq4 revenue $699 million versus refinitiv ibes estimate of $694.7 million.\nbacklog as of december 31, 2020 was $1.51 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: There is an inherent risk that actual results and experience could differ materially.\nYou can find a discussion of our risk factors, which could potentially contribute to such differences, in our Form 10-Q filed earlier today.\nBefore we get started on operational results, one of the strategic priorities outlined during our Strategy Day was to foster a high-performance culture with purpose.\nAnd I'm pleased to announce that we have appointed Tolani Azis, a six-year Fluor employee with 20 years of EPC experience, to lead our diversity, equity and inclusion efforts.\nFluor is a vast and diverse company, and with Tolani's leadership, she will help us retain, attract and cultivate a workforce that represents the world in which we live and operate.\nOn a separate subject, please note that earlier this week, a favorable motion was granted as it relates to an outstanding securities class action lawsuit.\nThis motion dismissed with prejudice all allegations, except those relating to a single statement in 2015 about one gas-fired power project.\nWhile no assurance can be given as to the ultimate outcome of this remaining allegation, we do not believe it is probable that a loss will be incurred.\nIt's been great to see the vaccine rollout around the globe, and I'm particularly encouraged at the speed of distribution here in the United States.\nAlthough there are still many regional challenges to deal with, the end of the pandemic seems to be in sight, which will be a relief to all of us.\nCurrently, well over 90% of our project sites and about 80% of our offices are operating at limited operations or better.\nOne exception is our office in New Delhi, where a surge in COVID cases has caused local officials to issue a lockdown and curfew order effective until May 10.\nThe safety and well-being of all employees is our top priority.\nTo help support our Delhi colleagues and families that are in medical need, we airlifted several oxygen concentrators from Houston.\nOur 1,500 New Delhi employees are all now working safely and productively from home.\nIn the first quarter, our book-to-bill ratio was 1.25, with new awards led by the Dos Bocas in our Energy Solutions Group.\nWhile we continue to see softness in the markets when it comes to capital spending, we anticipate that awards will start to pick up as we get into the back half of 2021.\nAnd our teams are busy on front-end work and project pursuits that will help to build a healthy backlog over the next few years.\nNote again that we are now reporting in line with our three new business segments: Energy Solutions, Urban Solutions and Mission Solutions.\nAdditionally, Stork is now a part of discontinued operations.\nJoe will give an update on our divestitures of Stork and AMECO in just a few minutes.\nMoving to Slide 5, with regard to NuScale's.\nOn April 5, we announced a $40 million equity contribution from JGC.\nWe know JGC well, having executed projects with them for more than 10 years.\nThey are an ideal partner that could support NuScale's industry-leading carbon-free energy solution.\nThis is consistent with the strategy announced in January to reduce Fluor's equity ownership of NuScale.\nRegarding our cost savings initiative, efforts are now well under way to streamline the organization.\nWe will be updating you on our progress as the year proceeds.\nKey to this program will be ensuring the deployment of world-class execution teams onto new prospects over the coming quarters, coupled with the proper level of fit-for-purpose back-office support.\nI'd like to take the next few minutes to inform you on what is happening across our end markets and what we expect to see over the next few quarters.\nIn Energy Solutions, this quarter, our ICA Fluor joint venture was awarded three contracts totaling $2.8 billion for the PEMEX Dos Bocas refinery in Mexico.\nWe have a long and successful history of PEMEX contracts, and we are pleased to be adding our $1.4 billion share of this refinery program to backlog.\nDuring the quarter, a chemicals project was canceled.\nAnd as a result, we removed approximately $1 billion from backlog while slightly increasing Energy Solutions total backlog to $11.1 billion.\nWhen we unveiled our strategy in January, there was a lot of interest in Fluor's energy transition opportunities, supporting a reduced carbon future.\nOver the past few months, we've been in extensive conversations with clients about our energy transition capabilities.\nWe are executing several carbon capture FEED and feasibility studies using our proprietary Econamine FG plus technology.\nAdditionally, we are doing early work in the areas of refinery efficiency, gasification to produce carbon-negative energy, green hydrogen, renewable diesel, renewable jet fuel and energy storage.\nIn each of these areas, we have identified projects and are continuing to pursue new opportunities as well.\nI encourage all of you to check out the project website and social media channels to see our progress on the project.\nOn site, we have completed all site preparation work.\nThe Cedar Valley Lodge camp is filling up, pilings are in place and -- overseas -- modules are being constructed in the fab yards.\nWe've been remobilizing craft workers on site and are currently at required staffing levels.\nIn 2021, the focus on site is completing the installation of underground cable and pipe as well as concrete foundations.\nThis will allow the project team to go vertical and be positioned for the receipt of large equipment and the first modules which are scheduled to arrive later this year.\nCOVID-19 and changes in law have impacted both engineering and material deliveries as well as the site's ability to mobilize workers due to public health orders.\nHowever, several opportunities are being jointly explored with the client to mitigate the COVID-19 and change in law impacts.\nWe will keep you updated on the outcome of these discussions.\nMoving to Urban Solutions on Slide 8.\nThis segment is comprised of the infrastructure, mining and metals and advanced technologies and life sciences end markets.\nIn infrastructure, we completed the handover for the 183 South Highway project outside of Austin, just a few miles from the Oak Hill Parkway project we booked in 2020.\nThere is obviously a lot of interest and excitement with the proposed federal infrastructure plan.\nWe think a long-term infrastructure bill would obviously be a good thing for the U.S. economy.\nIn addition to providing needed funding for surface transportation improvements, it would enable state and local governments to better plan for future growth and capacity needs.\nIt's too soon to tell what impact the bill could have on Fluor, but we typically experience a two- to three-quarter lag between any new federal infrastructure spending and the release of construction and services RFPs within the states.\nWithin our infrastructure-focused area of regional projects in selected states, we are tracking some key opportunities in Texas and North Carolina this year.\nNext, we remain confident in our mining and metals opportunities and prospects.\nWe are currently completing FEED work that represents $20 billion of potential projects, and we see a robust pipeline of FEED and feasibility studies ahead of us.\nThese projects will support an increasingly urbanized and electrified world that is driving the need for investment in minerals like copper and lithium.\nWe have several large prospects in 2021 and expect awards throughout the year.\nFor our last group in Urban Solutions, we have a lot of positive momentum in advanced technologies and life sciences, as we briefly mentioned in February.\nIn the first quarter, we won a significant EPCM biotech project in Europe.\nThis award from Fujifilm is for a world-scale biologics drug substance manufacturing facility that will be used to produce a variety of treatments, including vaccines.\nAs we have seen over the last 18 months, vaccine development is an integral part of our global economy, and facilities like this one will be essential going forward in protecting the population.\nFinally, there's been a lot of news recently about the inability of semiconductor chip manufacturers to increase production to meet demand.\nWhile it will take several months for the supply chain to overcome this shortage, this is another area where we can leverage our advanced manufacturing capabilities.\nCurrently, we are tracking several semiconductor prospects in the United States.\nMoving to Mission Solutions on Slide 10.\nThis quarter, our Fluor-led joint venture won an extension for the Portsmouth decontamination and decommissioning contract from the Department of Energy in Ohio.\nThis reimbursable 12-month contract with two six-month options is valued at $690 million.\nThe DOE is a key long-term client, and we look forward to continuing our support at Portsmouth.\nAnd finally, a few weeks ago, the federal government announced that it was -- would withdraw all troops from Afghanistan by September 11.\nAlthough uncertainty about the pace of withdrawal remains, Fluor expects to book an additional three-month extension to LOGCAP IV in the second quarter that will allow us to further support the U.S. Army in Afghanistan until they are demobilized.\nPeter is the last of a long line of family members to serve the company since our founding in 1912.\nJoining the Board in 1984, he continued the Fluor family legacy of a commitment to excellence, integrity and ethics, always putting the safety and well-being of employees first and recognizing that teamwork is a key component of our success.\nFor the first quarter of 2021, we are reporting adjusted earnings per share of $0.07.\nAs a reminder, we are adjusting out NuScale expenses, foreign exchange fluctuations, impairments and certain legal-related costs.\nOur adjusted results also exclude an embedded foreign currency derivative for an Energy Solutions project in Mexico.\nThis derivative is based on exchange rates between the U.S. dollar and the Mexican peso and will fluctuate over the life of the contract or at least until the job has been fully procured.\nOur overall segment profit for the quarter was $60 million or 2% and includes the $29 million embedded derivative in Energy Solutions and quarterly NuScale expenses of $15 million.\nThis compares favorably to $55 million in the first quarter of 2020.\nRemoving NuScale expenses and the effect of the embedded derivative would improve our total segment profit margin to 3.6%.\nMargins in Energy Solutions and Urban Solutions reflect reduced execution activity on certain projects and the lack of new awards to replace projects we are completing.\nWe anticipate project activities will accelerate as we move through 2021.\nIn Mission Solutions, margins were strong due to the increased execution activity on DOE projects as well as an increase in performance scores on several projects.\nAs David mentioned, we received a $40 million investment in NuScale from JGC this quarter and are anticipating other significant investments in the near future.\nNote here that even though partners are meeting NuScale's cash needs, we will continue to expense 100% of this investment on our income statement on a consolidated basis.\nOur G&A expense in the quarter was $66 million.\nThis is higher than our expected run rate due to the increase in our stock price driven -- driving up the value of our executive compensation expense.\nAs David said, our cost savings initiative is well under way.\nWe have identified cost savings above the $100 million target previously discussed.\nI look forward to providing an update on the progress as we get into the execution phase later this year and transition into a fit-for-purpose organization.\nOn Slide 12, our ending cash for the quarter was $2 billion, 25% of this domestically available.\nAs a reminder, the rest of our cash is tied up in either VIEs in projects or in foreign accounts and is not easily accessible.\nOur operating cash flow for the quarter was an outflow of $231 million and was negatively impacted by increased funding of COVID costs on our projects, higher cash payments of corporate G&A, including the timing and extent of employee bonuses, and increased tax payments.\nWhile it is typical to have a lower operating cash flow in the first quarter, we expect full year operating cash flow to be positive.\nWe used approximately $50 million in cash for challenged legacy projects in the first quarter.\nAs I stated in February, we expect to spend an additional $65 million over the balance of 2021 to fund these projects.\nAs we announced earlier this week, we have divested our AMECO North America business for $73 million.\nThis follows our successful transaction of our AMECO Jamaica business last year.\nWe are now focusing on our South American assets, and we'll update you on that plan later in 2021.\nThe store divestiture process is well under way, and we have received interest from a number of promising buyers.\nWe are working through our diligence and are targeting a sale near the end of this year or early in 2022.\nPlease move to Slide 13.\nWe are maintaining our adjusted earnings per share guidance of between $0.50 and $0.80 for the full year.\nHitting this target is dependent on projects being awarded in a timely fashion and revenue picking up over the next two quarters.\nWe are also maintaining our previous segment level guidance and expect 2021 full year segment margins to be approximately 2.5% to 3.5% in Energy Solutions, which excludes any fluctuation from the embedded foreign currency derivative; 2% to 3% in Urban Solutions; and 2.5% to 3% in Mission Solutions.\nWe have posted unaudited financials for 2019 and 2020 that aligns with our new reporting structure on the Investor Relations section of our website.\nOperator, we are now ready for our first question.\n",
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"content": "compname reports q1 adjusted earnings per share $0.07.\nq1 adjusted earnings per share $0.07 from continuing operations.\nq1 adjusted earnings per share $0.07 excluding items.\nmaintaining its adjusted earnings per share (eps) guidance of $0.50 to $0.80 per diluted share for 2021.\nguidance for 2021 assumes increased opportunities for new awards in second half of year as post-pandemic capital spending improves.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: There is an inherent risk that actual results and experience could differ materially.\nYou can find the discussion of our risk factors, which could potentially contribute to such differences, in our 2020 Form 10-K and in our Form 10-Q, which was filed earlier today.\nBefore we move into operational results, I'd like to start by pointing out some of the more interesting events and notable items our employees are currently involved in.\nThis quarter, I want to highlight Melvina Stacey, our HSE Deputy Director in Canada.\nTwo months ago, she started a series on social media where she showcases women in HSE roles at Fluor.\nFluor is committed to our DE and I program in ensuring that everyone could be seen, heard and recognized for their hard work.\nLet's begin by providing some perspective on what we're seeing in each of our major end markets, starting with Mission Solutions.\nIn Mission Solutions, we experienced quite a bit of activity during the quarter.\nTo begin with, margins for the quarter reflect increased execution activity on U.S. Department of Energy projects, higher-than-forecasted performance-based fees and the release of COVID-19 cost reserves.\nThis strong performance was somewhat offset by the LOGCAP IV Afghanistan program that was completed in July.\nNew awards for the quarter were strong at $1.6 billion.\nOur largest award in the segment was a $789 million 12-month extension to our management and operations contract for the DOE's Savannah River Site.\nThis award was under the Air Force Contract Augmentation Program that Fluor has been a part of since 2020.\nSpecific to this effort, we received a call from the Air Force in late August, and within a week, we had temporary housing, food, medical and other critical humanitarian assistance for 1,000 evacuees, and an increased total capacity a few weeks later to 5,000.\nCurrently, more than 4,000 men, women and children call this newly created facility home.\nFluor will continue to provide assistance until the operation concludes, likely next spring.\nLast week, a joint venture, including Fluor, was awarded the Savannah River Site Integrated Mission Completion Contract.\nThis indefinite delivery -- indefinite quantity award is valued at up to $21 billion over the next 10 years.\nWork will include liquid waste stabilization and disposition, among other requirements.\nThis is a great award that expands our presence on the Savannah River Site in South Carolina.\nOur next major pursuit in Mission Solutions is the Y12/Pantex Management and Operations contract in Tennessee and Texas.\nWe anticipate hearing about potential selection for this multibillion-dollar award in the next few months.\nNow let's turn to our Urban Solutions group on Slide four.\nIn mining, we booked a copper project in Indonesia with a valued long-term client.\nIn our conversations with mining clients, we continue to see a disciplined approach to project analysis and final investment decisions.\nMining clients are aware of the critical role they play as the world focuses on energy transition and electrification.\nAt the same time, they are taking a fresh look at their own portfolio of assets and identifying how they can significantly reduce energy and water consumption with a specific focus on increased use of renewable power.\nOur FEED pipeline of future mining work remains steady, and we continue to work on a slate of projects under limited notice to proceed contracts.\nOver the next four quarters, we expect to book opportunities to support a broad range of commodities, including copper, nickel, alumina, lithium, steel and phosphates.\nIn Infrastructure, we booked $316 million in revenue for our share of the I-35E Phase two expansion project in Dallas for TxDOT.\nThis 6.5 mile long design build project includes full reconstruction and expansion of the existing general purpose lanes as well as the reconstruction of two managed lanes.\nBefore talking about prospects in this segment, I want to provide a quick update on our legacy Infrastructure portfolio.\nDuring the quarter, we recognized $19 million in forecasted adjustments on a light rail project that has experienced schedule delays and productivity challenges.\nThe project is approximately 90% complete, and we anticipate project completion next summer.\nThere are no significant changes in estimated cost to complete the remaining legacy Infrastructure projects.\nAnd as a reminder, we expect to receive the final settlement payment on the Purple Line project next month.\nOur Infrastructure clients continue to express interest in the pending infrastructure bill.\nWhile we remain disciplined in our approach, we see some near-term opportunities in roads and bridges as well as project management only prospects.\nIn advanced technologies and life sciences, we are starting to convert some of our initial enthusiasm around semiconductor manufacturing into new awards.\nDuring the quarter, we won the front-end scope of a large semiconductor project in Arizona.\nThis is the first of many awards that we were tracking for this facility over the next 12 months.\nWe're also winning new work to support food packaging clients.\nOverall, momentum continues to build in Urban Solutions.\nWhile we expect to see lower new awards in the fourth quarter, we are well positioned to convert our existing FEED pipeline into full EPC contracts next year.\nMoving to Energy Solutions on Slide seven.\nResults for the quarter were more in line with our expectations, with segment margins of 5.3%.\nThese positive segment margin results included an $18 million gain recognized on an embedded derivative inside of an equity method investment, which is excluded from our adjusted earnings per share numbers.\nNew awards in the quarter totaled $644 million compared to $141 million in the third quarter of 2020 and included refining and LNG work in Mexico.\nTurning to Slide eight.\nOur work on LNG Canada continues to advance positively.\nDuring the third quarter, we crossed the 50% completion mark, and we continue to drive scheduled progress through fabrication and construction activities.\nOn October 30, we also celebrated a three-year milestone from the receipt of the project's full notice to proceed.\nEngineering on the project is essentially complete, and all major procurement has been awarded.\nRemaining procurement efforts are centered on top-ups of bulk materials, such as pipe and cables.\nAccordingly, the project has mitigated inflation concerns on the equipment and materials for this project.\nWe are operating in a COVID-restricted environment there.\nLast quarter, we announced an agreement with the client for COVID-related delays and costs for engineering and procurement through February 26, 2021.\nWe continue to monitor our progress on our procurement, fabrication and construction activities and are working with the client to mitigate any additional COVID-related delays and costs.\nI'm pleased to say that our first 16 modules have shipped, and we expect to receive them at our marine offloading facility starting next week.\nThese are the first of 192 modules weighing a total of 256,000 tons that will be fabricated and shipped to the site.\nAnd finally, we began our heavy lift mechanical equipment program with the installation of two precoolers and the main cryogenic heat exchangers for Train one.\nThis reflects the site moving toward substantial aboveground construction activities, as you can see on Slide eight.\nOur efforts to support the energy transition needs of our clients continues to accelerate.\nDuring the quarter, we received work to support renewable biodiesel and lithium production projects.\nInterest in our ability to decarbonize existing assets is coming primarily from Europe and the U.S.\nThis includes Fluor's proprietary carbon capture technologies, renewable-driven e-crackers, electric drive motors and increased demand for hydrogen-based power.\nWe also see increased activity in battery chemicals to support the expanding needs of the automotive industry.\nWhen you look at our opportunities across the Energy Solutions landscape, we see that our clients have resumed investing in sustaining capital and small capital projects.\nLarger projects, other than what we see in chemicals, remain on the drawing board.\nAlthough competition continues to be brisk, we remain disciplined in the projects and clients we pursue.\nNow let's turn to NuScale on Slide 10.\nAs we mentioned last quarter, we received considerable interest in our carbon-free nuclear power solution, with $193 million received in outside investments this year.\nWe continue to receive positive feedback from Guggenheim Securities, which NuScale retained six months ago to accelerate the funding of its path to commercialization.\nDuring the third quarter, NuScale signed MOUs with entities in Poland and the Ukraine.\nThey are seeking to move forward with small modular reactor deployments.\nNuScale also reached an agreement at COP26 to advance clean energy development in Romania, and Fluor signed an MOU with Bulgarian Energy Holding, as they look for opportunities to convert their existing coal-fired fleet to SMRs.\nNuScale also announced the building out of its manufacturing supply chain with a key partner in Canada.\nFinally, Fluor received additional work from Utah Associated Municipal Power Systems to develop the NRC combined construction and operating license application and the initial site-specific plant design for the NuScale technology facility to be built at the Idaho National Laboratory.\nSince September, Fluor has been working to meet vaccine deadlines on government projects that are covered under President Biden's executive order.\nIn Mission Solutions, where a majority of our government contracts have received the mandate contract language, we will continue to work toward complying with the vaccine mandate and encourage our employees to meet the corresponding deadlines.\nOur nongovernment business lines are also encountering vaccine mandates being issued by a few commercial clients.\nWe are carefully considering such mandates to ensure they are properly addressed in contract modifications, are implemented in a legally compliant manner and keep our projects productive.\nYesterday, in addition, OSHA released a new emergency temporary standard that will require companies with 100 or more employees to mandate that their staff be fully vaccinated or get weekly testing.\nOur teams will be working closely together to ensure we respond accordingly.\nOn the international front, we are starting to see clients and government signal moves in a similar direction.\nOn Slide 12, I want to share a few observations as we head into the final quarter of 2021 and provide a look ahead into 2022.\nIn the near term, we expect to see variability in new awards as clients continue to weigh the timing of capital expenditures against the impacts of supply chain disruptions, labor availability and inflation.\nCurrently, we are working on or have recently completed several hundred Study and FEED projects, representing over $170 billion in estimated total installed cost.\nLooking ahead, we are tracking over 200 Study and FEED prospects in the next 18 months, representing over $150 billion in TIC across the markets we serve.\nOverall, I'm very pleased with the speed and the direction we are moving the company.\nWe are well into creating an organization that aligns with the needs of our clients and the expectations of consistent returns for our stakeholders.\nThis includes a healthier backlog that is coupled with our efforts to improve our processes and permanently reduce costs throughout the organization.\nDuring the quarter, we finalized our path forward that includes overhead savings of over $150 million annually when fully implemented.\nFor the third quarter of 2021, we are reporting a diluted adjusted earnings per share amount of $0.23.\nWe continue to make significant improvements to our capital structure.\nUsing the proceeds from the convertible preferred offering, we successfully tendered for our notes maturing in 2023 and 2024.\nWhen you include the open market purchases in July, we were able to reduce outstanding debt by $509 million or 30% from the $1.7 billion in total debt outstanding at the end of June.\nWhen we laid out the company's strategic goals in 2024, we included a target debt to total capitalization ratio of 40%.\nI'm pleased to report that we were able to accelerate this process, and we are now below that target at 37%, which is a significant improvement from 55% back in January.\nAlthough we are ahead of our three-year plan as it relates to our capital structure, we will continue to look at options for the remaining outstanding indebtedness under the 2023 and 2024 notes in a way that supports a longer-term credit facility.\nOur overall segment profit for the quarter was $110 million or 3.5% and included the $18 million gain for embedded derivatives in Energy Solutions and quarterly new scale expenses of $8 million.\nExcluding these items, our total segment profit margin is 3.2%, in line with our guidance for the year.\nTo give more perspective, year-to-date segment profit margin was 3.3% driven by Energy Solutions at 5.8% and Mission Solutions at 5.3%.\nOur ending cash and marketable securities balance was $2.2 billion and reflects cash deployed from the convertible offering to reduce outstanding debt.\nDespite the incremental cash demands on legacy projects, we've been able to keep our cash balance at these levels for the past three years.\nOur operating cash flow for the quarter was an outflow of $66 million.\nThis outflow was driven by the timing of cash inflows.\nWe expect full year operating cash flow to be neutral to slightly positive.\nOur G and A expense was $42 million compared to $31 million last quarter.\nThis increase is due primarily to ongoing investigation costs.\nAt the end of the quarter, our backlog contained $1.1 billion in legacy projects that are in a loss position, $900 million of which is related to the Gordie Howe Project.\nWe anticipate cash contributions to these loss projects in the fourth quarter to be more than offset by the final settlement payment for Purple Line.\nMoving to asset divestitures.\nIn our last call, we shared that we had a high interest in Stork, with over 50 parties signing an NDA and receiving an information memorandum.\nSince then, nonbinding offers have been received.\nAnd due to this high level of interest, the divestiture team worked through two steps of selection since late September.\nWe are pleased to have down-selected to a few strong bidders who are doing their due diligence and submitting binding offers later this month.\nWe remain on schedule and are planning to close the sale by end of Q1 2022.\nAs it relates to AMECO South America reported in discontinued operations, we are holding productive conversations that support our strategy of transacting this business in the next few months as well.\nOn the P3 front, we are making progress on transacting our interest in a completed infrastructure project in North America.\nWe expect to receive additional proceeds early next year.\nAs David mentioned, our cost reduction initiative have started to accelerate.\nWe now identified over $150 million in annual savings and have started to implement our plan to fully realize this run rate savings by 2024.\nAs part of Fluor's focus on managing internal costs, the company has implemented a plan to rightsize our global real estate footprint.\nWhen fully realized in 2024, this represents an additional $20 million in annual savings.\nBased on current trends, we are raising our adjusted earnings per share guidance from $0.60 to $0.80, up to $0.85 to $1 per diluted share.\nWe are also adjusting our Q4 segment level guidance and expect margins to be approximately 4% in Energy Solutions, which excludes currency exchange fluctuations and the embedded foreign currency derivative; approximately 4.5% in Urban Solutions; and 3.5% to 4% in Mission Solutions.\nOur guidance for the remainder of the year remains modest -- assumes modest revenue increases in Mission and Urban Solutions, full year corporate G and A expenses of $185 million to $195 million and a tax rate of approximately 35%.\nFinally, I want to point out a little administrative housekeeping that you will see in our SEC filings over the next few days.\nWe will be filing an SA to register the Chief Executive Officer equity awards granted in December.\nAnd separately, we will file several amendments to deregister shares under SH related to our 401(k) plans and some of our prior compensation plans that are no longer active.\nOperator, we are now ready for our first question.\n",
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"content": "sees fy adjusted earnings per share $0.85 to $1.00.\nq3 adjusted earnings per share $0.23 from continuing operations.\nq3 adjusted earnings per share $0.23.\nq3 new awards of $3 billion with ending backlog of $21 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: There is an inherent risk that actual results and experience could differ materially.\nYou can find a discussion of our risk factors, which could potentially contribute to such differences, in our Form 10-K filed earlier today.\nMy first two official months back at Fluor have been extremely busy.\nThe immediate priority was to reset and communicate our longer-term strategy and the corresponding organizational structure.\nAs you know, we announced the new Fluor management team in January.\nOur collective focus is on the end markets where we have the right technical expertise to add value for our clients, while earning a suitable return for our shareholders.\nThe recent changes that have been implemented align our business around the strategic priorities identified for Fluor in the near term.\nAs a reminder, our four strategic priorities are to: number one, drive growth across the portfolio; two, pursue contracts with fair and balanced terms; three, foster a high-performance culture with purpose; and four, reinforce financial discipline.\nFor a longer-term view of Fluor's opportunities and key focus areas, please tune in to our Strategy Day from last month if you haven't had a chance to view it yet.\nStrategy Day kicked off one of the more exciting eras of change and growth in Fluor's long history.\nAnd we are confident that the strategic plan as outlined will deliver a directional earnings range between $3 and $3.50 per share by 2024.\nWe ended the year with a backlog of $25.6 billion and full year new awards of $9 billion.\nNew awards clearly reflected the impact of the pandemic and its pressure on our clients.\nThey also reflect our stringent pursuit criteria and strategy to reduce risk.\nAcross our end markets, we saw clients delay capital spending plans while they waited for uncertainty from the pandemic to subside.\nBased on conversations with our clients, we are starting to see positive momentum and expect to see new awards pick up in the second half of 2021.\nWe continue to see good prospects across our portfolio and are completing front-end work scopes to populate our future backlog.\nHowever, lower awards in 2020 will create a headwind for 2021 earnings.\nBefore talking about what we are seeing for 2021, I want to reinforce that the people of Fluor have tackled the challenges of 2020 with a resilience and energy that was unmatched.\nThese challenges have made us all more adaptive, and I believe that the organization is truly motivated to successfully take the company forward into its next chapter.\nNow let's turn to our business lines and how we are aligning our priorities with the opportunities ahead.\nTurning to Slide 4.\nAs we move into 2021, our urban solutions end markets are gaining momentum, specifically, in mining.\nWe are seeing high demand for metals such as copper and iron ore.\nLast year, we booked a significant North American steel project as well as several front-end studies that we expect will convert to follow-on EPCM awards in late 2021 and beyond.\nLate last year, we achieved patent completion for the BHP Spence copper project in Chile.\nWe've had a long-term relationship supporting BHP's capital efforts, and we are proud to be completing another successful project for them.\nWe are also encouraged by the opportunities we are seeing in our advanced technologies and life sciences end markets.\nHere, we are pursuing data centers and semiconductor opportunities in North America and major life sciences prospects in Europe.\nIn addition, Fluor has just been selected for a large biotech project in Europe, and we are finalizing contract details now.\nThis confirms our strategy to leverage front-end technical solutions into full EPC awards.\nContract signature is expected by the end of Q1 2021, and we look forward to sharing more specifics at that time.\nAdvanced technologies and life sciences is well positioned to support our clients for advanced manufacturing projects.\nThis includes opportunities arising from the U.S. government's executive order that is focused on the domestic supply chain for critical materials, including semiconductors, batteries, pharmaceuticals and rare earth elements.\nMoving to Slide 5.\nIn Infrastructure, we are well positioned for select opportunities in the U.S. due to urbanization and an aging infrastructure system.\nFurthermore, we believe these opportunities could be enhanced with the introduction of a federal infrastructure spending bill.\nAs a reminder and as messaged previously, infrastructure margins will be under pressure as legacy zero-margin projects are worked down through the year.\nApproximately 35% of our infrastructure revenue will come from zero-margin work in 2021.\nAs we discussed during Strategy Day, we will be very selective in the infrastructure projects we pursue in the future.\nEach pursuit must have the right scope, the right client, the right location, the right contract terms, the right size and, importantly, the right execution team and resources.\nOur goal is to deliver predictable earnings and not chase top line growth.\nThis will be especially apparent in our infrastructure pursuits going forward.\nTurning to Slide 6.\nThe management team is very excited about the work we are doing in Mission Solutions and the opportunities we see in supporting our government clients going forward.\nAs you know, we are keenly focused on growing our presence in the intelligence, cyber and mission-critical infrastructure and operations markets.\nFurthermore, we continue to support the DOE and the National Nuclear Security Administration with its nuclear security, environmental remediation and energy projects and operations.\nWe expect that work to be a strong baseload for Fluor in the coming years.\nWhile we are optimistic about our prospects in Energy Solutions in 2021, we don't expect our clients to resume capital spending at a meaningful pace until later in 2021 and beyond.\nWe are having productive conversations with our energy clients and are well positioned to meet their growing needs.\nImportantly here, we are living in an ever-changing world, and Fluor continues to enhance its capabilities in the energy transition space.\nWe fully expect this market to begin a larger part of our prospect pipeline as clients pivot themselves toward a lower carbon economy.\nNext, our chemicals clients see recovery in key sectors of the market, which are anticipated to translate into additional capital expenditures.\nThis includes the specialty chemicals market, where we continue to see positive signs of investment with our existing clients and significant activity with ongoing pursuits.\nAlso, future consumer demand in the battery market is translating into additional client investments associated with lithium and related battery chemicals.\nNow let me give you a brief update on some of our key projects, starting with LNG Canada.\nMoving to Slide 8.\nAt our Strategy Day, Project Director Phil Park gave a full update on the good progress at LNG Canada and Kitimat.\nEarlier this month, the project received approval for its construction ramp-up plan from the Office of the Public Health Officer and Northern Health.\nWe are coordinating with government and health authorities as our workforce on site increases, and we focus on our spring and summer construction program.\nMoving on to the Purple Line project.\nAs mentioned on the third quarter call, a settlement was reached between our Purple Line JV and the Maryland Transit Authority.\nWe received the first payment in the fourth quarter and expect a second payment in the second half of 2021.\nThis month, the design-build team for the Tappan Zee bridge filed a lawsuit against the New York State Throughway Authority for unapproved change orders.\nAs a team, we agreed we had exhausted all other options for resolution and believe we are owed compensation.\nWhile we don't have a timeline for the resolution of these legal actions, we will keep you updated as the situation proceeds.\nWith respect to our two challenged government projects, I'm pleased to report that on the Radford project, we have turned overall 113 systems to our clients, and we are essentially complete.\nThe F.E. Warren project continues to make steady progress.\nFinally, we remain confident in the viability of our NuScale initiatives.\nAnd as stated last month, we are currently evaluating new investors and looking to reduce our ownership stake and capitalize on this clean energy investment.\nI'm very encouraged by the levels of interest we are seeing and believe that NuScale can provide sizable returns for Fluor over time.\nThe main topic I'll discuss today are: One, an overview of our 2020 financial performance; Two, an update on our liquidity and financial position; Three, an update on our initiatives; and Four, our outlook for 2021.\nYou'll see that today's results are presented in alignment with our old reporting segments and includes Stork as part of continuing operations.\nStarting with our Q1 2021 results, we will be presenting our financials aligned with our three new business segments: Urban Solutions, Mission Solutions and Energy Solutions.\nAt that time, we also expect to report Stork as discontinued operations.\nWe will maintain another segment which will principally represent NuScale.\nOur Radford and F.E. Warren projects will move back into Mission Solutions.\nAs David said, Radford is essentially complete with all 113 systems turned over to BAE, while Warren will flow through at zero margin until its completion.\nTurning to Slide 10.\nFor 2020, Fluor reported a net loss from continuing operations attributable to Fluor of $294 million or a loss of $2.09 per diluted share.\nDuring the year, we recognized the following significant charges, most of which were recorded in quarter one: $298 million for impairments of goodwill and tangible assets, investments and other assets; $60 million for current expected credit losses associated with Energy & Chemicals clients; $146 million for impairments of assets held for sale included in discontinued operations, of which $12 million related to goodwill; as well as significant forecast revisions for project positions due to COVID-19-related schedule delay and associated cost growth.\nCorporate G&A expenses for 2020 was $241 million, up from $166 million a year ago.\nFor the full year, $47 million was due to foreign exchange currency losses predominantly driven by the weakening of the U.S. dollar, and $42 million was attributable to the professional fees associated with the 2020 internal review.\nOur increased compensation expense of 2020 was primarily due to the impact of a higher price on stock-based compensation as our share price increased from the date of the grant to the end of the year.\nWe achieved an estimated run rate savings of $140 million annually in our overhead expenses due to actions taken in 2020.\nIt's important to note that these savings are spread across the business lines and in corporate overhead.\nAs I mentioned last month, we expect to achieve an additional $100 million of annual savings over the next three years as we rationalize overhead to the new shape of our business.\nDuring the fourth quarter, we exited two of our European infrastructure P3 investments and received cash of approximately $20 million.\nWe also have two North American joint ventures that we expect to exit later in 2021.\nMoving to Slide 11.\nOur ending cash balance was $2.2 billion, up from 2019.\nDomestic available cash represented 32% of this total.\nWe expect to see our cash holding steady around $2 billion through the year, with debt retirement being offset by divestitures and the liquidity improvement measures we have discussed in the past.\nOperating cash flow for the full year was $186 million, which included approximately $375 million of cash to fund our legacy projects.\nAdditionally, our debt-to-capitalization requirement on this amendment facility was expanded to 0.65 times, which gives us more flexibility in current borrowing capacity as we assess our capital needs moving forward.\nWe believe this is the appropriate size facility we need to support our business given the shift in our strategy as well as another good example of our efforts we are making around the organization to make Fluor fit for purpose.\nIn 2020, we continued the process of monetizing our investment in AMECO, an equipment rental business; earlier in the year, we sold our operations in Jamaica, closed our operations in Mexico and sold the equipment rental business owned by Stork.\nWe announced on our Strategy Day call that we have received a letter of intent for our AMECO North America business and are now reviewing options for the remaining South America business.\nOur two main financial priorities in 2021 are further stabilizing our capital structure, which we plan to primarily do with debt retirement and divestitures, and booking a pipeline of work that fits our revised pursuit criteria and our strategies.\nWe are introducing our 2021 adjusted earnings per share guidance of $0.50 to $0.80 per diluted share for continuing operations.\nThis excludes NuScale-related expenses and any impact from foreign currency gains or losses, restructuring or impairments.\nThis also reflects Stork being a discontinued operation.\nAs David said, we expect to see new awards begin to pick up in the back half of 2021 with significant earnings per share growth in 2022 as we begin to work these projects.\nThough we do not give quarterly guidance, Q1 results have historically reflected higher G&A expenses.\nWhile we are seeing green shoots around the business, the lingering effects of the pandemic will continue to keep awards depressed for the next few months.\nFurthermore, our existing backlog is still being impacted by the pandemic.\nThough our projects are back online for the most part, government restrictions have slowed down our progress and the rate at which we are able to grow our clients.\nTurning to Slide 13.\nOur assumptions for 2021 include: a slight decline in revenue as compared to 2020, adjusted G&A expense of approximately $40 million to $50 million per quarter and a tax rate of approximately 28%.\nWe anticipate average full year margins of 2% to 3% in Urban Solutions, 2.5% to 3% in Mission Solutions and margins of 2.5% to 3.5% in Energy Solutions and improving as the year progresses.\nThese margins include the remaining impact of zero-margin work flowing through the business.\nWe also anticipate 2021 capital expenditures to be below $100 million as we divest our AMECO business this year.\nAs David reaffirmed, we maintain our long-term guidance of $3 to $3.50 of earnings per share by 2024.\nWe are taking the necessary first steps by strengthening our balance sheet and focusing our growth on end markets where we see the best opportunities for revenue and margin expansion.\nWith the COVID headwinds starting to subside, we will see a resumption of project awards to drive our profits over the next several years.\nOperator, we're ready for our first question.\n",
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"content": "sees 2021 adjusted earnings per share $0.50 to $0.80 (not sees q4 adjusted earnings per share $0.50 to $0.80).\nfull year new awards of $9.0 billion; ending backlog $25.6 billion.\n2021 adjusted earnings per share guidance established at a range of $0.50 to $0.80.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate you participating in our conference call today to discuss Flowserve's First Quarter 2021 Financial Results.\nThese statements are based upon forecasts, expectations and other information available to management as of May 4, 2021, and they involve risks and uncertainties, many of which are beyond the company's control.\nWe are pleased with our strong start to 2021.\nFlowserve's adjusted earnings per share of $0.28 increased over 47% compared to last year's first quarter.\nAnd our bookings for the first three months of 2021 were up by over 16% compared to the average of last year's final three quarters.\nWe were especially encouraged with this performance given that our first quarter results are traditionally lower.\nGiven what we saw in the first quarter, we believe that we are off to a strong start in 2021.\nIn the last two earnings calls, we indicated that we believe our end markets are well positioned for a post-pandemic recovery, and our first quarter results support this belief.\nAlthough the various regions and countries we serve are on different trajectories in terms of vaccinations, infection rates, return to mobility and overall economic recovery, we are confident that the world is making steady progress as economies emerge from this global pandemic.\nAs a result, we have started to see these green shoots of activity translate into sequential bookings growth.\nAssuming vaccines continue to roll out globally, and COVID issues subside without new setbacks, we are confident in our ability to deliver substantial year-over-year bookings growth in 2021.\nWith an improving environment, combined with our Flowserve 2.0 growth initiatives, we were encouraged to book $945 million in the first quarter, which represented over 15% growth sequentially and was driven primarily by increased MRO and aftermarket activity.\nAs we move through the quarter, our bookings by month tracked the overall pandemic progress.\nJanuary was slow, February improved but was impacted by severe cold weather in the Gulf Coast and March activity steadily increased.\nIn total, our bookings growth this quarter exceeded our original expectations.\nThe market inflection seems to have begun a quarter or two earlier than we had anticipated.\nWhile North America led the increased activity levels, we delivered sequential bookings growth in all of our served regions.\nIn addition to increased aftermarket and MRO-related activity, we were pleased that project bookings levels approached approximately 85% of 2020's first quarter.\nWe saw a number of smaller projects get awarded with the largest of these in the $10 million to $15 million range.\nWe also experienced good diversity in our end markets and geographic regions, which highlights the comprehensive nature of our reach and offering.\nThese projects included a nuclear upgrade in Korea, a pipeline in Central America, a refinery in Mexico and a chemical plant in Asia.\nThe impact of the February winter storms forced us to close our Texas and Louisiana operations for about a week.\nBut we did see increased repair and replacement work in the storm's aftermath which drove an estimated $20 million of incremental repair in replacement business as we supported more than 30 customer installations in the region.\nFlowserve's QRC footprint and our proximity to impacted customers uniquely positioned us to assist them in getting back online quickly and efficiently.\nIn addition, our channel partners and distributors also received unplanned storm-related business from a variety of end markets, including water and power, that should benefit us in future periods as they reorder and restore their inventory positions.\nDespite damage and power outages to their own homes, our associates were committed to providing the necessary equipment and services to support our customer base and restore their critical operations.\nWe are confident that helping our customers in a time of need will result in stronger relationships and increased future business for Flowserve.\nThere is still work to be done at some of our customers' facilities to restore their operations to normal conditions.\nWe anticipate additional bookings at about the same level as we saw in February and March to continue throughout the second quarter related to the storm impact.\nTurning now to our end markets and booking outlook.\nOur discussions with customers indicate increasing optimism.\nRising utilization levels across industrial assets should result in an increase in their spending levels to maintain uptime and address pent-up maintenance activity that was deferred throughout 2020.\nWe continue to believe that the aftermarket and MRO will lead the early phases of the recovery throughout the year.\nProject activity is also beginning to pick up and we expect this to increase as the year progresses.\nCurrently, our project funnel is about 12% higher than a year ago, and the compare period includes many of the projects that were placed on hold due to the pandemic.\nWe expect many of these delayed projects to progress toward funding in the coming quarters.\nOpportunities are apparent across all end markets, but we expect general industry in chemical projects to lead the return to growth in a recovering economic environment.\nIn conclusion, it was a strong start to the year, both at our bookings and financial results.\nWe believe our end markets remain well positioned to benefit from the recovering economic environment.\nWhile we expect to see COVID flare-ups in some regions, like what we're seeing in India today, we are optimistic that with increasing vaccinations, the world is beginning to move in the right direction, which will ultimately help support our ability to deliver bookings growth.\nWe are very pleased with our financial results in the first quarter.\nOur adjusted earnings per share was up significantly compared to last year, and the margins we delivered in our SG&A levels continue to reflect the benefit of the decisive cost actions we took in 2020 and the ongoing Flowserve 2.0 transformation program.\nFor the first quarter, we delivered solid results, including an adjusted earnings per share of $0.28, which represents an increase of nearly 50% versus prior year.\nOn a reported basis, earnings per share of $0.11 included $0.08 of realignment, $0.04 of costs related to early retirement of debt and $0.05 of below-the-line FX currency impact.\nAs a reminder, with our focus on improving the quality of our earnings, we are now including 2021 transformation costs in our adjusted earnings in contrast to prior years when this expense was adjusted out.\nFirst quarter revenue of $857 million was down 4.1% versus the prior year primarily driven by the 10% sales decline in original equipment, including FPD's 15% original equipment decrease.\nWe were pleased to see modest aftermarket sales growth as revenue of $450 million increased 2%, with both FPD and FCD contributing.\nOur first quarter performance was largely driven by the significant cost actions we took in the middle of 2020 as well as ongoing transformation-driven operational improvements and a 400 basis point mix shift toward higher-margin aftermarket revenue, partially offset by increased under-absorption.\nAdjusted gross margin of 30.4% was roughly flat versus prior year and the sequential quarter, driven by FPD's 60 basis point increase offset by FCD's 170 basis point decline, both as compared to 2020's first quarter.\nOn a reported basis, first quarter gross margin decreased 50 basis points to 29.3% due primarily to absorption headwinds and higher realignment costs versus the first quarter of 2020.\nFirst quarter adjusted SG&A decreased $34 million to $194 million versus prior year and was largely flat on a sequential basis.\nAs a percent of sales, first quarter adjusted SG&A declined 290 basis points year-over-year.\nThe decisive cost actions we took in mid-2020 and our ongoing focus on cost control drove the improvement.\nReported SG&A decreased $47 million versus prior year, where in addition to cost action benefits, adjusted items were down $13 million compared to the first quarter of 2020.\nWe delivered a $20 million increase in adjusted operating income in the first quarter, a strong performance considering the $36 million decrease in revenue.\nAs a result, adjusted operating margin improved 250 basis points versus last year to 8.1%, driven by the previously mentioned cost actions, ongoing operational progress and the mix shift to higher-margin aftermarket products and services.\nFPD and FCD improved 230 and 60 basis points to 10.3% and 10.4%, respectively.\nFirst quarter reported operating margin increased 380 basis points year-over-year to 6.5%, including the roughly $12 million reduction of adjusted items.\nOur first quarter adjusted tax rate of 23.2% is in line with our full year guidance of 22% to 24%.\nTurning now to cash and liquidity.\nOur first quarter cash balance of $659 million decreased $436 million compared to the year-end 2020 level.\nThe primary use of cash was for debt reduction, with the $407 million payment to retire the remaining portion of our euro notes.\nAdditionally, we returned over $30 million to shareholders through dividends and share repurchases.\nOur ability to both pay down debt and return cash to shareholders underscores the strength of our balance sheet and our focus on value creation through capital allocation.\nTotal debt at quarter end was $1.3 billion compared to over $1.7 billion at year-end.\nCompared to last year's first quarter, gross debt is down over $50 million, while the cash balance is up over $35 million.\nFlowserve's quarter end liquidity position remained strong at over $1.4 billion, including $742 million of availability under our undrawn senior credit facility.\nFirst quarter free cash flow was approximately $25 million.\nAnd for the second year in a row and only the third time in the last 15 years, Flowserve delivered positive free cash flow in the first quarter.\nThis trend is an indication that our focus on cash management is delivering results.\nAs is typical, working capital was a use of cash in the first quarter of $40 million driven primarily by a reduction in accounts payable.\nInventory was also a use of $17 million, but I was pleased that our focus and improved processes to control inventory drove a 60% reduction versus last year's first quarter use.\nAccounts receivable and contract liabilities were sources of working capital cash this quarter.\nTaking a look at primary working capital as a percent of sales, we saw 110 basis point sequential increase to 29.6%, again, driven primarily by accounts payable and a lower top line.\nAlthough our backlog increased over $30 million, we were pleased that inventory, when including contract assets and liabilities, decreased $4 million versus the fourth quarter of 2020.\nAs we continue to drive the integration and utilization of enterprisewide business planning systems across our operations and functions, we have direct line of sight on consistent improvement in our working capital metrics throughout the year.\nAnd importantly, we remain confident in achieving free cash flow conversion in excess of 100% in 2021.\nTurning now to our outlook for the remainder of 2021.\nBased on our strong first quarter bookings and visibility into improving end markets, Flowserve increased and tightened our adjusted earnings per share guidance range for the full year to $1.40 to $1.60 per share and reaffirmed all other guidance metrics.\nWe now expect full year 2021 bookings to increase mid-single digits versus our prior outlook of low single digits.\nAnd further expect the majority of this increase to occur in our aftermarket and shorter cycle MRO original equipment products where associated revenue may be recognized in 2021.\nBased on the expected increase in short-cycle activity, we now expect the revenue decline in the 3% to 5% range versus our initial guide of down 4% to 7%.\nThe adjusted earnings per share target range continues to exclude expected realignment expenses of approximately $25 million as well as below-the-line foreign currency effects and the impact of potential other discrete items which may occur during the year.\nOn a quarterly basis, we expect our adjusted earnings per share to increase sequentially over the course of 2021 as we see the benefit of our first quarter bookings flow through and from the expected increase in short-cycle activity.\nWith our Flowserve 2.0 transformation program and its elements now embedded in our operations and functional teams, we expect 2021 transformation expenses of roughly $10 million, representing a decline of over 50% versus the prior year.\nAs previously mentioned, we are now including these costs in our adjusted earnings per share guidance.\nAdditional guidance components remain unchanged with expected net interest expense in the range of $55 million to $60 million and an adjusted tax rate between 22% and 24%.\nLastly, looking at cash.\nAs is historically the case, we expect free cash flow will be weighted to the second half of the year, largely in the fourth quarter.\nMajor planned cash usages this year include the recently completed retirement of our euro notes and an expectations to return over $100 million to shareholders through dividends and share repurchases.\nWe also intend to invest in our business as we return to the growth aspects of our Flowserve 2.0 program, including capital expenditures in the $70 million to $80 million range which includes spending for enterprisewide IT systems to further consolidate our ERP platform and support our transformation-driven productivity improvements.\nIn conclusion, based on our first quarter performance, we are more optimistic than ever about the opportunities in 2021.\nOur end markets are likely improving at a rapid pace.\nOur balance sheet remains strong and our operational and cost discipline has us well positioned for margin expansion and free cash flow generation as revenues grow.\nI want to wrap up today with some comments around two key strategic priorities.\nOur ongoing Flowserve 2.0 transformation and how Flowserve will support energy transition.\nLet me first provide an update on our Flowserve 2.0 transformation progress.\nIn 2020, the pandemic-driven downturn dictated that we focus heavily on cost reduction.\nWe shifted our efforts and accelerated the cost reduction aspects of the transformation last year.\nAdditionally, we continue to progress our strategy to improve our overall enterprisewide IT systems.\nThese improvements in the overall rationalization are improving our visibility, streamlining our operations and improving our overall productivity.\nAll of these enhancements support the new Flowserve 2.0 operating model.\nAs our new operating model takes hold throughout the enterprise, we expect to continue to deliver margin and productivity improvements throughout the business.\nAs we look to fully embed the transformation into our operations by the end of 2021, I am confident that our Flowserve 2.0 process improvements will continue to provide benefit to Flowserve and our customers for years to come.\nAll of the fundamentals are now in place to fully leverage the expected market recovery.\nDuring 2021, our transformation priorities are focused primarily on growth, including an improved customer experience, accelerated product innovation and further market penetration.\nWith our strengthened operating model, we are also better positioned to pursue value-added partnerships, and we are more confident in our ability to integrate potential acquisitions.\nAn important aspect of Flowserve's strategy in the coming years will be driven by the expected growth investment related to energy transition.\nThe energy transition theme is real, and we expect investments to rapidly increase in the near-term to support this global call to action.\nWe believe Flowserve is well positioned with our current portfolio to benefit from increased spending from our customers to achieve their carbon reduction targets and energy efficiency goals.\nEnergy transition has been at play for much of the last two decades.\nHowever, 2020 served as a pivotal year, and began first with COVID, been an acceleration of investments in alternative sources of energy and further driven by social, political and regulatory changes.\nThese multifactor dynamics are accelerating the transition, resulting in increased urgency across the industrial sector and especially within the energy sector.\nOur approach to energy transition includes: first, supporting our existing customers and markets by delivering energy efficiency through systems, automation, uptime and a life cycle view plan.\nSecond, we are scaling our flow control solutions for emerging and new value chains in gasification, carbon capture, hydrogen, energy storage, and non-fossil fuel energy sources.\nAnd finally, by evolving flow control into autonomous flow using data and science to monitor, diagnose and correct through built-in intelligence, utilizing our recently launched RedRaven platform.\nAs part of our first quarter bookings, we participated in projects related to biodiesel, concentrate solar power, carbon capture and energy efficiency.\nAnd we believe that this is just the beginning.\nAs an example, in the third quarter of 2020, we introduced a new liquid ring compressor designed specifically for flare gas and other vapor recovery.\nThis product positions us to support our customers' greenhouse gas emission-reduction goals through the production of blue hydrogen in carbon capture.\nSince introduction, we have already received over $30 million of orders for the product, and we see growing demand for years to come.\nThe more conversations I have with our customers about their energy transition plans, the more excited I get about the opportunities that energy transition can offer Flowserve.\nWe are making good progress on developing our go-to-market strategy, and we are currently working closely with a few select customers to demonstrate and prove how our suite of capabilities can help them to drive efficiency and reduce emissions.\nIn addition to our current customers, we also believe energy transition will provide opportunities across the industrial spectrum, including end markets where we currently have limited scale, like water, food and beverage, cement, steel and mining.\nWe expect the largest near-term opportunities for Flowserve will be helping our existing customers achieve improved energy efficiency and reduced emissions.\nWe believe that our flow control expertise across pumps, valves and seals, combined with enhanced data analytics, can dramatically improve our customers' energy consumption and reduce carbon emissions.\nWe are also actively developing technology to expand our presence in other forms of energy, including solar, hydrogen and lithium mining and processing.\nOverall, we feel that Flowserve is uniquely positioned to help our customers today and grow our business through the energy transition.\nIn January, we launched our RedRaven IoT offering, which can further instrument pumps, valves and seals to provide the capability to assist our customers with a data-driven approach on how to improve their operations, increase asset uptime and reduce associated energy consumption.\nWe are really pleased with the market's response to our IoT offering.\nSince the rollout of RedRaven, we have been awarded, on average, one new contract or site installation per week and the pipeline of interesting parties continues to build.\nThe first quarter provided us a better start to the year than we previously expected, with bookings inflecting earlier and at a higher level than we initially assumed in our February guidance.\nWith an improved outlook for the remainder of the year, we feel confident in our ability to raise our adjusted earnings per share guidance.\nWe have improved visibility to market growth and are confident in our ability to execute.\nWe believe we are firmly in recovery from the pandemic-driven downturn.\nAdditionally, many countries around the world are announcing significant infrastructure spending plans that will inevitably include flow control equipment.\nAnd finally, we are confident in our longer-term outlook and see energy transition as a significant growth opportunity for Flowserve.\nAfter three years of hard work on our Flowserve 2.0 transformation program, we are now operating at a higher level and we are well positioned to transition to growth.\nI am confident that we'll capitalize on the opportunities ahead of us and create value for our shareholders and other stakeholders.\n",
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"content": "flowserve q1 adjusted earnings per share $0.28.\nq1 adjusted earnings per share $0.28.\nq1 earnings per share $0.11.\nraised full-year 2021 revenue and adjusted earnings per share guidance, reaffirmed all other metrics.\nsees 2021 adjusted earnings per share $1.40 - $1.60.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate you participating in our conference call today to discuss Flowserve's third quarter 2021 financial results.\nThese statements are based upon forecasts, expectations and other information available to management as of October 28, 2021, and they involve risks and uncertainties, many of which are beyond the company's control.\nThere are two key messages that we want to cover today.\nFirst, we are confident that Flowserve is on the path to growth after a dramatic pandemic-driven downturn.\nWe are optimistic about the future, the positive inflection we are seeing in the cycle and our opportunities through energy transition.\nSecond, we experienced a number of challenges in the third quarter with our supply chain, logistics and labor availability.\nThese problems had an impact on our revenue and profitability in the quarter, but we believe that we will work through the issues and restore our revenue to a more normal conversion rate in the quarters to come.\nAs I just indicated, the third quarter presented a number of challenges, which we continue to navigate, including supply chain, logistics and labor availability.\nThese issues were truly global in nature and have had an impact on Flowserve and other global industrials in the quarter.\nFlowserve had been largely successful in mitigating these issues in the first half of the year, but the confluence of events and the combined impact of the challenges had an adverse effect on our third quarter results.\nIt is important to note that we remain encouraged by the healthy underlying demand that we see across many of our end markets and by the fact that many of the headwinds we experienced in the third quarter are primarily timing related.\nWe expect that our business will return to growth and that the Flowserve team will work diligently to resolve the issues that we faced in the quarter.\nLet me now turn to our results.\nThird quarter reported and adjusted earnings per share were $0.38 and $0.29, respectively.\nThe combination of supply chain, logistics and labor availability shifted approximately $60 million of expected revenue out of the quarter.\nOur backlog remains secure, and we are confident in our ability to recognize the backlog at a more normal revenue conversion rate in the coming quarters.\nOur third quarter bookings of $912 million represented a 13% increase over prior year, continuing this year's trend of strong year-over-year quarterly growth.\nAftermarket and MRO bookings during the quarter were consistent with first half levels, while larger award activity continues to remain below pre-pandemic levels.\nAftermarket orders of $495 million increased 16% and are at pre-COVID levels.\nThe aftermarket business is benefiting from the increased utilization rates of our customers' assets being driven by improved mobility and increasing GDP levels around the globe.\nOriginal equipment bookings increased 9% year-over-year to $417 million.\nOur project or original equipment business continues to lag in the recovery with less than a handful of larger projects awarded in the quarter with only two project orders in the $10 million to $20 million range.\nSome of the same macro issues around logistics and supply chain are also impacting the progress of these global projects moving toward award.\nWe remain confident in our pipeline of opportunities, and we expect project work to increase from this point forward.\nEach of our core end markets delivered year-over-year growth in the third quarter, with oil and gas up 33%, while chemical and power were both up 17%.\nWater bookings were also particularly strong, up 46% and included a $10 million desalination award.\nFrom a regional perspective, bookings growth was driven primarily from North America and the Middle East and Africa.\nSome of these markets were up over 30%.\nCOVID continues to negatively impact Flowserve's and our customers' operations in Asia Pacific, which was the only region not returning to growth thus far in 2021.\nWe do expect our overall bookings to recover more toward our first half 2021 quarterly run rate of approximately $950 million in the fourth quarter.\nWe saw bookings growth in each of the three months during the third quarter, and we believe that September's exit rate can restore our bookings levels to those in the first half of the year.\nProject timing will be the key variable for fourth quarter bookings levels.\nWe believe full year bookings will grow year-over-year in the 10% range.\nThis level of bookings growth positions Flowserve well for revenue growth and solid financial performance in 2022.\nI would now like to return to the operational challenges that we faced in the third quarter.\nApproximately $60 million of revenue and $20 million in gross profit that we had previously expected to recognize in the period was deferred from the third quarter due to supply chain issues, global logistics and labor availability.\nWe were largely successful in mitigating these types of items during the first half of the year, but as the quarter progressed, we faced significant issues on all three fronts.\nHistorically, challenges like these might affect a few locations in any given period, but in the third quarter, we saw a very large number of our global manufacturing facilities and QRCs impacted by the logistics supply chain labor issues.\nOn the supply chain front, we are facing disruption and inflation across the entire value chain.\nWe have done a good job managing our critical vendors for procured items such as castings, forgings, machining and large motors.\nAnd we are seeing the benefits from the supplier consolidation and the quality work that was completed in the Flowserve 2.0 transformation.\nHowever, the broad issues and extension of lead times across the central components like base materials, coatings, small motors, consumables and electronics have impacted our ability to deliver product to our customers.\nWe have now identified and are mitigating these extended lead times, but there is no immediate fix, and we expect further disruption in the coming quarters.\nTo address the accelerating inflation that we saw during the third quarter, we have now announced our fourth price increase of the year, which will go into effect at the end of this year to continue our efforts to offset the increased costs on purchase items and logistics in the marketplace.\nWe are in a difficult environment with inflation and cost pressures, but I feel that we have done a nice job balancing enhanced pricing and our pursuit of growth.\nWith logistics, we are getting impacted in three different ways.\nFirst, our supply chain is predominantly out of Asia, and the ability to ship product from that region to Europe and the Americas is now more costly and less predictable than ever before.\nSecond, it is also difficult to reliably coordinate and schedule product shipments from our factories to our customers.\nAnd third, in some cases, our customers are unwilling or unable to schedule pickup or delivery of our products, which impacts the timing of revenue recognition.\nWhile we believe the situation with our customers is getting better, we are the most impacted in the latter weeks of the third quarter.\nFinally, it is hard to maintain staffing and productivity levels in certain parts of the world in the current environment.\nFor example, in China, we're having to hire a significant number of new associates to keep up with demand and to satisfy the emerging local laws.\nIn Europe, labor is especially tight in certain areas.\nWhile in the Americas, we saw a large COVID quarantine rate during Delta's rise, and it is also a very tight labor market.\nWe are pleased that the heightened COVID cases and related quarantines we saw in the third quarter across our business have consistently declined through October, and we are encouraged by this continuing downward trend.\nWe will, of course, continue to focus on the safety of our associates as we have been since the start of the pandemic.\nWe are actively working through each of these disruptions, and we expect it will take a few quarters for us to adjust to extended supplier lead times, the disruption in logistics and the issues with labor availability before we return to the more normal operating model.\nAdditionally, we have not seen, nor do we expect an increase in cancellations from our backlog.\nSo our revenues are there for us to deliver in the coming quarters.\nFollowing our third quarter results and with the assumption that these issues will impact Flowserve in the fourth quarter and likely into 2022, we adjusted our 2021 full year guidance metrics yesterday.\nLooking at Flowserve's third quarter financial results in greater detail.\nOur reported earnings per share of $0.38 exceeded our adjusted earnings per share of $0.29 due to a $16.6 million discrete tax adjustment from the reversal of certain deferred tax liabilities.\nPartially offsetting the $0.13 gain on taxes, our adjusted earnings per share also excludes $0.04 of items, including realignment expenses, below-the-line FX impact and certain costs incurred in our debt refinancing.\nDuring the third quarter, we took advantage of the favorable debt markets to solidify our liquidity and financial flexibility for years ahead by prefunding upcoming debt maturities.\nWe amended and restated Flowserve's senior credit facility by extending the maturity of our revolving credit facility by two years and enhancing the financial flexibility we have under it as well as lowering the ongoing commitment fees and including sustainability-linked options to enable further cost reductions as we progress our ESG objectives.\nIn addition to the revolver, we also obtained a $300 million fully drawn term loan, which included participation from a minority-owned depository institution in addition to most of the syndicate banks in the revolver.\nWe sincerely appreciate the support of our historic and new banking partners in both facilities and look forward to working closely with them in the years ahead.\nIn September, we also accessed the debt capital markets and issued $500 million in new 2.8% 10-year senior notes.\nWe value the confidence of investors in this offering as well.\nIn October, we used all the proceeds from the term loan and senior notes in addition to some excess cash, together totaling $842 million, to fully redeem our senior notes with maturities in 2022 and 2023.\nNow I'd like to return to our third quarter financial results.\nAs Scott mentioned, the third quarter was impacted by supply chain, logistics and labor headwinds that delayed roughly $60 million of expected revenue out of the quarter.\nThese issues primarily occurred late in the third quarter.\nRevenue decreased 6.3% to $866 million, largely due to the deferred revenue I just mentioned.\nAll in, we had an 11% decline in original equipment, or OE, sales, driven by FPD's 20% decrease, but partially offset by FCD's 2% increase.\nBeyond the challenges in the third quarter, FPD continues to be impacted by its 2021 beginning OE backlog, which was down roughly 25% versus the start of 2020.\nAftermarket sales remained relatively resilient in total, down roughly 1%, where FCD's 12% increase was offset by FPD's 3% decline.\nOur third quarter adjusted gross margin decreased 190 basis points to 29.6%, primarily due to the OE sales decline and the related under-absorption particularly at our engineer-to-order sites in both segments, the other previously mentioned disruptive impacts as well as higher logistics costs, which increased 25% year-over-year.\nThese headwinds were partially offset by a 3% mix shift toward higher-margin aftermarket sales.\nOn a reported basis, the gross margin decreased 160 basis points to 29.3% was driven by the factors previously mentioned and were partially mitigated by the $3 million decrease in realignment charges versus prior year.\nThird quarter adjusted SG&A increased $7.4 million to $200 million versus prior year, primarily due to a $3 million increase in expense related to our incurred but not reported potential reserves, increased R&D spending and the return from travel costs which were a temporary benefit in 2020 as well as headwinds from foreign exchange.\nReported SG&A was flat to the prior period, and these increases were offset by a $7 million decrease in adjusted items and disciplined cost control offset the return of some of last year's temporary cost benefits.\nThird quarter adjusted operating margins of 7% decreased 390 basis points year-over-year as did FPD's adjusted operating margin, primarily due to increased under-absorption related to a 20% OE revenue decline.\nFPD's adjusted operating margin decreased 170 basis points year-over-year to 10.5% due to sales mix and slightly higher SG&A as a percent of sales.\nWe expect that sales volume normalize, that margins will improve.\nAnd to that point, had Flowserve not experienced the $60 million revenue deferral, our adjusted operating margins would have been flat to modestly up on a sequential basis.\nThird quarter reported operating margin decreased 280 basis points year-over-year to 6.6%, where the previously discussed challenges more than offset the $10 million reduction of adjusted items.\nOur third quarter adjusted tax rate of 15.2% was driven by our income mix globally and favorable resolution of certain foreign audits in the quarter.\nThe full year adjusted tax rate is expected to normalize in the 20% range.\nTurning to cash and liquidity.\nOur third quarter cash balance of $1.5 billion reflected the debt refinancing discussed earlier as well as solid cash flow performance in the quarter.\nOur net debt position of $652 million at the end of the third quarter has declined by over $300 million in the last three years.\nWe believe a bright spot in our third quarter financial results is our continued progress on cash flow.\nOn a year-to-date basis through the third quarter, operating cash flow of $151 million is up nearly $37 million versus the prior year, while free cash flow of $117 million has increased 73% or $49 million over the prior year.\nIn the third quarter, we delivered $78 million or approximately 67% of our year-to-date free cash flow total.\nThis third quarter performance is up versus the comparable period in 2020 despite voluntary funding of a $20 million pension contribution during the quarter compared to no funding a year ago.\nWe are pleased with our improved cash flow performance year-to-date.\nAnd with our typically seasonally strong fourth quarter ahead, we are confident in our ability to stay on pace to deliver a free cash flow conversion of over 100% of our adjusted net income once again in 2021.\nWorking capital was a cash source of $56 million in the third quarter and a $47 million increase versus last year.\nAccrued liabilities, prepaid expense and continued improvements in our accounts receivable process were the major contributors this quarter.\nAs a percentage of sales, primary working capital saw a modest 40 basis point sequential increase to 29.8% due primarily to the market disruptions in the quarter.\nBoth DSO and inventory turns were roughly flat sequentially.\nI would also like to highlight our disciplined inventory management.\nFor the third consecutive quarter, our combined balance of inventory and contract assets and liabilities decreased while backlog continued to increase and despite holding elevated work in process and finished goods inventory at quarter end due to the logistics challenges.\nSince year-end 2020, backlog has increased $115 million, while inventory and contract assets and liabilities have declined $16 million.\nMajor uses in the third quarter include dividends and capex of $26 million and $11 million, respectively.\nAs I just mentioned, we also contributed $20 million to our U.S. cash balance pension plan to keep it largely fully funded.\nIn the fourth quarter, major uses expected include the completed retirement of the 2022 and 2023 senior notes, the $26 million October dividend and a higher level of capex spend.\nTurning now to our outlook for the remainder of 2021.\nBased on the supply chain and logistics challenges that arose and accelerated late in the quarter, its impact on our third quarter earnings and the expectations that these conditions will persist, Flowserve revised our full year 2021 revenue and earnings per share guidance ranges.\nWe now expect a full year revenue decline of 3.5% to 4.5% and reported an adjusted full year earnings per share of $1.05 to $1.10 and $1.40 to $1.45, respectively.\nTo briefly cover our thought process, we expect the revenues and income that were deferred out of the third quarter to be largely realized in the fourth quarter.\nHowever, we expect the challenges of the third quarter to continue industrywide for the next few quarters.\nSo we are assuming the fourth quarter has a similar deferred revenue impact to what we just experienced.\nThis, coupled with the impact of the strengthening dollar on our non-U.S. denominated sales, particularly the euro, resulted in us lowering our expectations for full year 2021 revenue.\nWe do expect that the fourth quarter will have the traditional Flowserve fourth quarter seasonality with strong revenue conversion.\nHowever, we do not expect that revenue and the associated profit will be fully caught up at year-end.\nOur adjusted earnings per share range continues to exclude expected realignment expenses as well as below-the-line foreign currency effects and the impact of other potential discrete items which may occur during the year, such as the premium and fees incurred to retire the notes.\nIn terms of other guidance metrics, our net interest expense remains unchanged at $55 million to $60 million and we modestly lowered our full year adjusted tax rate guidance to approximately 20%.\nFrom a bookings standpoint, we now expect full year 2021 bookings to increase in the 10% range year-over-year.\nAdditionally, we continue to expect the majority of this increase will come from our aftermarket and shorter-cycle MRO original equipment products.\nThe major categories of our full year cash usages include the October debt retirement, dividends and share repurchases of roughly $120 million, capital expenditures in the $65 million range, the third quarter's pension contribution and the funding of our now modest realignment programs.\nIn conclusion, while our third quarter was impacted by supply chain, logistics and labor headwinds, we view these primarily as transitory.\nThe backdrop for our traditional markets looks positive.\nThere is an increasing interest in our energy transition offerings, and we continue to build momentum in our operational and cash flow progress.\nWith a solid and growing backlog and expected progress by the broader industry in managing the supply chain and logistics headwinds, we believe that Flowserve is well positioned to deliver earnings growth in 2022.\nBefore addressing our outlook for the remainder of the year and some early thoughts on 2022, let me first provide an update on our strategic initiatives.\nWhile current conditions are increasingly favorable for our traditional energy markets, we are taking steps to best position the company for the energy transition that is already underway and which presents a significant long-term opportunity for Flowserve, our shareholders and all stakeholders around the world.\nTo support our efforts, we have increased our strategic focus on three major themes: decarbonization, digitization and diversification to accelerate our growth in 2022 and beyond.\nWe continue to identify significant energy transition opportunities in applications where we have been supporting our customers for decades.\nAs we focus on lower carbon energy production, we are investing in technology to advance our customers' aspirations, including additional capabilities within carbon capture, hydrogen and energy storage.\nWe are still in the early innings of tapping into this growing market, and our third quarter bookings included over $25 million of energy transition work, including biodiesel conversions, solar power projects and energy efficiency upgrades.\nOur project funnel for energy transition continues to grow, demonstrating we have the flow control products and expertise to support our customers today and through their energy transition journey.\nI'd like to highlight a few examples of our third quarter bookings success stories.\nFlowserve was selected to provide pumps and seals for a sustainable aviation fuel project in the Netherlands.\nThe facility will produce sustainable aviation fuel that when compared to fossil jet fuel has the potential to cut life cycle emissions from aviation by up to 80%.\nAdditionally, we will remain active on the facility for years to come, ensuring the lowest total cost of ownership with the inclusion of Flowserve's LifeCycle Advantage aftermarket solutions.\nOur pumps and seals were also chosen recently for a biodiesel conversion project in the United States.\nFlowserve helped compress the engineering and approval time from a normal 12-week -- 12-month cycle to seven months, supporting an earlier plant start-up and delivering a faster payback.\nThe project is expected to reduce CO2 emissions from diesel production by up to 600,000 tons per year.\nIn addition, our vacuum pump technology was selected to support a leading provider of thin-film technology for the production of solar power panels.\nFlowserve will provide equipment for new facilities in the U.S. and in India, reducing the overall power consumption, maintenance downtime and the floor space required.\nFinally, let me update you on the progress of RedRaven, our IoT offering launched earlier this year, which instruments pumps, valves and fuel systems to provide the capability to assist our customers with a data-driven approach on how to improve their operations, increase asset uptime and reduce associated energy emissions.\nWe continue to expand the RedRaven instrumentation across product portfolio in the quarter and further increased access for our customers while developing the distribution channel.\nWe are currently working with over 40 customers and have connected nearly 5,000 assets.\nWhile we are still relatively early in the rollout, customer interest continues to increase.\nTurning now to our outlook for the remainder of the year and our positioning as we think about 2022.\nWith bookings continued to improve in October, we are confident in the market outlook as we close out the fourth quarter and plan for 2022.\nAs I indicated earlier, we expect fourth quarter bookings to be roughly $950 million, depending on the level of project activity.\nBy achieving this level, our 2021 bookings would deliver a 10% year-over-year growth rate.\nBased on current market conditions, we also expect year-over-year bookings growth to continue in 2022 based on our discussions with our customers, EPC backlogs and our project funnel.\nWe believe that the lessening impact of the pandemic, combined with increased energy demand, growing decarbonization and energy transition opportunities and global economic growth, create a compelling view of our markets.\nAdditionally, with increased utilization, coupled with energy prices that are well above pre-pandemic levels, we expect that our customers will continue their aftermarket and MRO spending as well as return to their capacity expansion plans across our served markets.\nOur project funnel remains well above prior year levels, providing confidence that while the timing of the return of these larger projects remains uncertain, we expect that many will ultimately move forward in 2022.\nAll of this gives us increased confidence in the flow control markets, driving bookings growth throughout 2022.\nAdditionally, we believe that our added focus on decarbonization, digitization and diversification will only enhance our growth outlook.\nLooking both near and longer term, energy transition investment will provide strong opportunities for Flowserve.\nWhile we continue to support our customers' traditional applications, we believe we are well positioned to support our customers' energy transition initiatives.\nOperationally, I'm confident that we have the team and the tools to work through the third quarter challenges.\nFlowserve 2.0 has provided the visibility and business processes to address these issues, and our teams are currently working to resolve and mitigate the issues that arose in the third quarter.\nLonger term, we expect the opportunities from our served end markets, combined with our improved operational execution and an embedded continuous improvement culture, will enable Flowserve to deliver on the longer-term targets we introduced during our last Analyst Day.\nIn closing, we believe that with the expected return to growth and continued execution improvements, Flowserve will be well positioned to deliver stronger incremental margins and overall financial results.\nWe believe in the company's long-term ability to achieve our original targets, including operating margins in the 15% to 17% range, ROIC of 15% to 20% and to continue free cash flow conversion in excess of 100%, which we've already demonstrated.\nOur focus remains on supporting our customers, execution and capitalizing on improved markets to drive long-term value for our shareholders and our stakeholders.\n",
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"content": "flowserve corporation sees fy 2021 revenues down 3.5% to 4.5%.\nq3 adjusted earnings per share $0.29.\nq3 earnings per share $0.38.\nrevised full-year 2021 financial guidance metrics, including revenue and adjusted eps.\nsees fy 2021 revenues down 3.5% to 4.5%.\nsees fy 2021 reported earnings per share $1.05 - $1.10.\nsees fy 2021 adjusted earnings per share $1.40 - $1.45.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Following their prepared comments, the operator will announce that the queue will open for the Q&A session.\nThis information is not calculated in accordance with GAAP and may be calculated differently than non-GAAP information at other companies.\nThese statements reflect the best information we have as of today.\nAll statements about our recovery, outlook, new products and acquisitions and expectations regarding business development and future acquisitions are based on that information.\nThey are not guarantees of future performance and you should not put undue reliance upon them.\nThese documents are available on our website and at sec.gov.\nBefore we begin, I would like to make you aware that over the last few weeks, we posted two short videos to the Investor Relations website.\nThe first is around our approach and strategy for electric vehicles as discussed by Alan King, who is the head of the U.K., Europe and ANZ for fuel and heading up that effort for us.\nThe second is a video providing some insight into our downmarket full AP product so you can get a feel for what it is and how it works.\nWe had mentioned that we would likely spend some more time on these topics in the future, and this is an interim step while we continue to work on those efforts.\nSo upfront here, three subjects: first, my view of Q1 results; second, I'll share our rest of year outlook; and then third, talk a bit about how we're positioned for growth over the midterm.\nOkay, let me turn to Q1 results.\nSo we reported Q1 revenue of $609 million, really kind of spot on our expectations.\nReported cash earnings per share of $2.82.\nThat's a bit better than our guide, mostly helped by lower credit losses and fewer outstanding shares.\nThe macro, not much of a factor.\nWe really call the macro pretty well versus our guidance.\nWe did have higher fuel prices but a bit lower spreads and so really no impact there.\nAgainst the prior year, we reported a revenue decline of 8% and organic revenue decline of 6%.\nUnfavorable Brazil FX hurting our prints and continued weak same-store client volume softness impacting our organic growth.\nAll right, let me make a turn to the trends in the quarter and share with you what we're seeing.\nSo volume, sequential volume in Q1 versus Q4, pretty stable, as we expected, but we are now beginning to see a bit of an uptick here in April, so early signs of volume recovery.\nSame-store sales or what we call client softness really stuck at approximately minus 6%.\nThis continues to reflect a small segment of our client base that is struggling to recover but fortunately still trying.\nRetention, really terrific in Q1.\nWe reported 93% overall retention.\nThat's our best result in years.\nCredit losses, very low for the quarter, $2 million.\nThat was helped by a $6 million recovery and again, lower sales rolling into this year.\nBut the real story of Q1 is sales, so Q1 sales results, nothing -- really nothing short of fantastic.\nConsolidated sales finished 7% ahead of last year.\nYes, 7% ahead of last year, so finally growing again.\nIf you rewind sales over the last four quarters, so sales versus prior year, 55%, 81%, 92% and now 107%.\nInside of that, our fuel card businesses, both here and international, coming in ahead of the prior year, driven mostly by record digital sales.\nSo for Q1, we signed 35,000 new business clients worldwide, 35,000.\nSo again, a terrific result.\nSo the summary for Q1, I'd call it an in-line result for volume, revenue and cash EPS, and I call it an outstanding result for credit performance, retention performance and most importantly, sales performance.\nLet me transition to our rest of year 2021 outlook, along with the assumptions behind that.\nIncluded in our Q1 earnings supplement on page 12, you'll see our updated guidance for the year.\nSo full year '21 revenue expectations at the midpoint, $2,650,000,000.\nThat's unchanged from last time.\nReasons that we're staying put are: one, Q1 revenue, again, coming in kind of on plan; two, we've built in significant sequential revenue step-up in the forward quarters, probably in the range of $100 million up from Q1 to Q4.\nSo our Q2, Q3, Q4 revenue guidance now assumes revenue growth in the high teens.\nIn terms of the COVID recovery in our outlook, I'd say it's a bit mixed.\nU.S. and U.K. look maybe better than our planned outline.\nBut in our case, the Brazil COVID situation, worse, and so a pushback there in terms of recovery.\nOn the cash earnings per share front, we will flow through our $0.12 Q1 beat.\nWe'll raise full year '21 cash earnings per share guidance at the midpoint to $12.42, so $12.42 for the base business.\nIn terms of the AFEX acquisition, hopeful now to close that deal on June 1.\nInitially, we thought May 1.\nSo as a result of the one month delay, we're going to take the expected in-year AFEX accretion at the midpoint to $0.18 versus $0.20 previously.\nIf you combine the base business and AFEX, our consolidated earnings per share outlook at the midpoint would be $12.60, $12.60 for the full year.\nI do want to add, we feel very good about the AFEX cross-border deal.\nThey had a great Q1 performance and their management is really holding steady their rest of year forecast.\nLet me make a turn over to our last subject today, which is how is FLEETCOR positioned for growth in '22 and beyond.\nSo I do want to highlight just a few factors that give us confidence in sustainable growth.\nSo one is the exit rate.\nSo if we hit this rest of year guidance, our Q4 step-off will be quite strong heading into '22.\nAnd if we hit our rest of year sales plan, again, that will pour in-year revenues into 2022.\nDigital, I can't say enough about digital and the investments we're making in digital selling, digital UIs and customer experience, new ways of underwriting credit, and so the digital transformation making a big impact on the company.\nWe're actually embracing EV, particularly in Europe.\nEarly feedback really, really positive there that we may actually be advantaged in selling because of our integrated mix lead experience as well as this at-home recharging opportunity.\nIt looks like clients will pay subscriptions to basically measure and reimburse employee recharging at home.\nSo potentially a new meaningful revenue opportunity that is nonexistent today.\nFourth factor, our Beyond strategy or our entry into new segments.\nSo as we've discussed before, we're extending into new customer segments really in each of our major lines of business.\nSo in corporate pay, the Roger deal helped us enter the SMB space.\nIn lodging, a couple of deals last year helped us enter the airline accommodation space.\nAnd in Brazil, we've entered what we call the urban driver space.\nSo in each of these cases, basically, we're extending our businesses, extending our TAM and obviously extending our longer-term sales opportunity.\nFifth factor is brand.\nWe've just introduced our new Corpay brand aimed at unifying all of our various corporate payment assets.\nSo this single brand will help our corporate payment business go to market with a single identity and hopefully give us an advantage with this broader bundle that we've got.\nAnd then last factor is capital.\nOur balance sheet's in terrific shape.\nLeverage ratio 2.5 times, liquidity approaching $2 billion.\nAgain, our plan is to generate $1 billion-plus of annual free cash flow.\nWe had the ability to lever up to three times target, which would produce circa $8 billion in capital to invest in either M&A or buybacks over the forecast period.\nSo obviously, upside for us via capital allocation.\nSo look, the takeaways from today: so one, Q1, I'd say again, an in-line Q1 financial performance but an outstanding Q1 sales performance.\nRest of year, again, we're raising rest of year cash earnings per share at the midpoint to $12.42.\nThat's excluding acquisitions, and the $12.60 at the midpoint, that's including AFEX, so tracking to deliver that, although again, fully aware of the uncertainties.\nAnd then lastly, in terms of positioning, we really do feel well positioned to grow the company next year and beyond.\nAgain, we expect a strong exit, which will pour into '22.\nWe're extending each of our businesses into bigger TAMs, and we've got the available capital to drive incremental returns if we manage it well.\nFor Q1 of 2021, we reported revenue of $609 million, down 8%; GAAP net income up 25% to $184 million, and GAAP net income per diluted share up 29% to $2.15.\nIncluded in our Q1 2020 results was the impact of the $90 million onetime loss related to a customer receivable in our cross-border payments business, which equated to $0.74 per diluted share, as reported last year.\nAdjusted net income for the quarter decreased 8% to $242 million, and adjusted net income per diluted share decreased 6% to $2.82 as we continue to feel the effects of COVID on our businesses.\nOrganic revenue growth improved two points sequentially to down 6% on a year-over-year basis.\nWe saw improvement in every category except tolls as Brazil continues to grapple with incremental COVID-related shutdowns.\nAs a reminder, organic revenue neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices and fuel spreads and includes pro forma results for acquisitions closed during the two years being compared.\nOur fuel category was down organically about 6% year-over-year, which was a 4-point improvement from Q4.\nThe international fuel business growth was a bit better than North American growth as those international markets shut down earlier in the quarter last year, so had easier comps.\nThe corporate payments category was down 5% in the first quarter, one point better than Q4, as improvements in virtual card and full AP were offset by FX, which was lapping a very strong Q1 last year.\nFull AP growth accelerated 14 points sequentially to 21% growth year-over-year, powered by continued strong new sales.\nTolls was up 3% compared with last year but down four points from Q4 of 2020 due to the aforementioned shutdowns in Brazil.\nLooking longer term, compared with Q1 of 2019, revenue was up 13% organically.\nThe lodging category was down 14%, which was an improvement from down 25% last quarter, with domestic airline activity recovering faster than we expected.\nGift showed organic growth of 2% year-over-year as that business felt the effects of COVID earlier in Q1 of 2020 than most of our other businesses.\nThat said, we've seen real traction in digital card sales and in our B2B sales efforts where we are selling gift cards to businesses for use as incentives.\nRecognizing that the comps to 2020 may not be very helpful, we did add some comparisons to 2019 for organic revenue growth and sales, so you can see how we are trending compared with the most recent pre-COVID or \"normal year\".\nThat's available in the supplement we provided today.\nlooking further down the income statement.\nTotal operating expenses were down 7% to $343 million, excluding the impact of the onetime loss in our cross-border payments business last year.\nThe decrease was primarily due to better bad debt expense, lower expenses in Brazil due to the currency translation impact and lower T&E costs as travel and the associated expenses are much lower than last year.\nAs a percentage of total revenues, operating expenses excluding the onetime loss were stable compared with Q1 of 2020 at approximately 56%.\nIn the quarter, bad debt was only $2.5 million or one basis point, as it included the benefit of a $6 million recovery for credit loss recorded in the first quarter of last year.\nCredit continues to be a bright spot, but we expect our bad debt to normalize as our new sales levels recover and grow.\nInterest expense decreased 20% to $29 million due to lower borrowings on our revolver and decreases in LIBOR related to the unhedged portion of our debt.\nOur effective tax rate for the first quarter was 21.8%.\nExcluding the impact of the onetime loss in our cross-border payments business last year, our effective tax rate in Q1 of 2020 was 18.9%.\nThe increase over last year's adjusted tax rate was due primarily to the level of excess tax benefit on employee stock option exercises relative to pre-tax income.\nNow turning to the balance sheet.\nWe ended the quarter with $958 million of unrestricted cash, and we also had approximately $1 billion of undrawn availability on our revolver.\nIn total, we had $3.5 billion outstanding on our credit facilities and $915 million borrowed on our securitization facility.\nAs of March 31, our leverage ratio was 2.48 times trailing 12-month adjusted EBITDA, as calculated in accordance with our credit agreement.\nWe refinanced our securitization facility at the end of the first quarter, less than six months after our last refi.\nRecall that our normal three year term expired last fall when credit markets were unfavorable, so we entered into a one year note at LIBOR plus 125 basis points with a 37.5 basis point floor, expecting to refinance again when conditions improve.\nOur new securitization has a duration of three years at LIBOR plus 100 basis points with a floor of 0, so our effective all-in rate is approximately 50 basis points better, given the current level of LIBOR.\nWe've also just completed a refinance of our Term B credit facility, upsizing it to $1.15 billion for a new term of seven years and maintaining the rate of LIBOR plus 175 basis points.\nWe used the proceeds to pay off our existing Term B note, pay down the revolver, funded the AFEX acquisition and improve our liquidity position for future capital actions.\nWe repurchased approximately 640,000 shares during the quarter for $170 million at an average price of $266 per share, and we have approximately $836 million in repurchase capacity remaining under our current authorization.\nNow let me share some thoughts on our outlook.\nWe are maintaining our full year revenue guidance of between $2.6 billion and $2.7 billion as improvements in some businesses such as domestic airline lodging are being offset by other places like Brazil and Europe.\nThey're experiencing incremental virus flare-ups and associated lockdowns.\nAs we explained last quarter, our full year guidance assumes we recover about 1/3 of our Q4 exit revenue softness during calendar 2021.\nAnd that this recovery would account for about four to five percentage points of revenue growth in the second half.\nWithin that expectation, there is very little recovery impact assumed for Q1, a modest amount for Q2 and then an acceleration into the back half of the year.\nWhile we are seeing some puts and takes between businesses, our overall outlook remains intact.\nWe are raising the midpoint of our adjusted net income per diluted share guidance $0.12 to $12.42 to reflect our first quarter results compared to our expectations.\nLooking ahead, we are expecting Q2 2021 adjusted net income per diluted share to be in the range of $2.80 to $3 per share.\nVolumes should build throughout the year with the COVID recovery and our new growth initiatives gaining momentum.\nAs for AFEX, the closing is taking longer than we had hoped, but we still believe the deal will close by the end of the second quarter as we're nearing the finish line with all of the approvals we need from the various regulators globally.\nBecause of the delay, the in-year benefit will be slightly less than what we expected in February.\nBut the upside is that we've had more time to refine our integration plans, so we'll hit the ground running at full speed once we do close.\n",
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"content": "sees q2 adjusted earnings per share $2.80 to $3.00.\nq1 adjusted earnings per share $2.82.\nq1 earnings per share $2.15.\nsees fy revenue $2.6 billion to $2.7 billion.\nq1 revenue fell 8 percent to $608.6 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Following the prepared comments, the operator will announce that the queue will open for the Q&A session.\nThis information is not calculated in accordance with GAAP and may be calculated differently than non-GAAP information at other companies.\nThese statements reflect the best information we have as of today.\nAll statements about our recovery outlook, new products and acquisitions, and expectations regarding business development and future acquisition are based on that information.\nThey are not guarantees of future performance and you should not put undue reliance upon them.\nUpfront here, I will plan to cover four subjects.\nFirst, I'll provide my take on our Q4 finish.\nSecond, I'll put a bow on full-year 2020.\nThird, I'll share our 2021 outlook, and lastly provide a bit of an update on our transformation plan, which is intended to accelerate the company's growth.\nOkay, let me turn to our Q4 results.\nSo today, we reported revenue of $617 million, that's down 12%, and cash earnings per share of $3.01, that's down 5% versus last year.\nThese results both better than anticipated, volume recovered a bit more in the quarter than we forecasted and we did manage operating expenses down 14% against the prior year.\nOrganic revenue growth overall minus 8%.\nBut most importantly are the trends in Q4, really quite good.\nSales strengthened to over 90% of last year's level.\nSame-store sales or client-volume softness improved to minus 6%.\nCredit loss is $6 million, although held by a reserve release and retention continued steady at 92%.\nWe did have a fantastic beyond highlight in Brazil in the quarter.\nWe added 175,000 new urban or city users in Q4.\nThat represents 30% of all the new tags we sold in the quarter.\nSo demonstrates there's real demand among the Non-Toll segment in Brazil for this RFID purchasing network, including fueling, parking, and now even fast food locations.\nSo look, the conclusion of Q4 is really in the sequential trends of the business.\nIf you look at Page 7 of our earning supplement, you can see that every Q4 metric is improving from the Q2 low.\nRevenue up from $525 million to $617 million, cash earnings per share up $2.28 to $3.01, sales up from 55% to now over 90% of last year's level.\nSame-store sales volume getting better from minus 17% to minus 6%, credit losses from $21 million to $6 million, and then lastly retention holding steady at 92%.\nSo to us, evidence that the business continues to recover from the earlier year lows.\nSo from a financial perspective, 2020 not our best year.\nRevenue finished at approximately $2.4 billion, that's down 10% versus $19 billion, and cash earnings per share finishing at $11.09, down 6% against 2019.\nCOVID and the shutdowns did manage the vanquish over $400 million of revenue that we planned in 2020, really in three ways.\nSo first client softness, we had a number of COVID impacted clients that use less of our services.\nCOVID reset the macro environment in Q2 driving down fuel prices and weakening international currencies.\nAnd then third, for a while, COVID reduced our 2020 new sales, mostly due to the market being distracted.\nThe good news is despite the fact that COVID is going, that we're still living with COVID is the financial impacts on us appear to be lessening.\nSo we've now recovered in Q4 about half of the client softness revenue loss that we experienced in Q2.\nSo half of it back already.\nPost the macro reset, we've seen relative stability in fuel prices and FX rates.\nAnd lastly, the demand for our service is clearly recovering as sales reached 90% of prior-year levels.\nSo despite not having the greatest financial performance in 2020, we did manage to accomplish a few things.\nSo credit, I'm just delighted with our credit performance in 2020.\nExpenses, tough times but we did manage expenses down over 10% in Q2, 3, and 4.\nWe signed four acquisitions in 2020.\nOur guys ran IT exceptionally well, had the best overall system uptime in the history of the company.\nAnd lastly, we were able to replan the business in the second half.\nWe conducted a replanning exercise in the summer and the actuals came in a smidge better than the replan.\nSo reminds us again that fleets of business you can plan.\nI really do want to give a shoutout to all FLEETCOR people who hung in there and kept the company going through very unsettling times.\nOkay, let me make the turn to 2021 and outline our initial guidance for the year, along with the assumptions behind it.\nClearly a higher beta in our 2021 numbers but we'd say that our setup is generally positive.\nSo first, volume and revenue trends strengthening through 2020.\nSo with the potential to continue that into '21.\nSales production improving thus the amount we expect to get of end-year revenue from new business, and as I mentioned a bit ago, very solid client retention and credit trends.\nWe are also hopeful that we'll get additional client-softness recovery in '21, although we're the first to admit that that's hard to forecast.\nSo in our guidance, we're planning to recover about one-third of our Q4 exit revenue softness that's still outstanding now.\nSo if we get that, that recovery would provide about 4% to 5% of incremental revenue lift in the second half.\nSo with that, our guidance for '21 would be as follows.\nRevenue of $2,650,000,000 at the midpoint that reflects an 11% increase.\nOverall organic revenue in the same range kind of 9% to 13% but I do want to emphasize that assumes 3% to 4% of softness recovery from today's level.\nWe're anticipating significant sales growth over 30% this year, which would be a record-level sales for the company and profit guide at the midpoint $12.40 of cash earnings per share for the core business.\nWe are planning about $0.10 of dilution from the Roger acquisition, so that would put our consolidated number at $12.30 at the midpoint.\nLastly, assuming now May 1 close for the AFEX acquisition, accretion could be approximately $0.20 for the year.\nSo if that happens on time, that could take consolidated cash earnings per share to $12.50.\nChuck will speak further about how the guidance rolls out across the quarters, but I do want to point out that our guidance outlooks Q2, 3, and 4 revenue and profit growth to be back into the high-teens.\nOkay, let me transition now to my last subjects, which is the company's transformation plan.\nSo really our transformation plan is intended to accelerate growth by doing two things.\nSo first, the portfolio deciding what businesses we want to be in and not be and constantly reworking that to have a more diverse set of faster-growing businesses.\nBut the second way we transformed the company is through our Beyond strategy, which we do utilize in all four of our major existing businesses.\nSo in this Beyond strategy, we're really trying to do two things.\nFirst, identify new segments of the market that we can extend the business into.\nSo we ask who else can we serve, and then second, we identify additional or adjacent services that we can cross-sell back to the client base.\nSo if you look at Page 11 of our earnings supplement, you'll see the current Beyond initiatives for each of our four businesses.\nWe do continue to make progress against our Beyond strategy.\nJust an example to call out in our Lodging business in 2020.\nWe now settled 25% of all proprietary hotel payments with our virtual card in which we earn interchange.\nSo that's up from literally from 0% a few years ago.\nBut today, we begin implementation of maybe our most exciting Beyond initiative of all with the acquisition of Roger.\nSo this begins the move of our Corporate Payments' business down market into the SMB space along with the opportunity to offer a full online bill pay to our global SMB fuel card base.\nYou can see that on Pages 11 and 12 of our supplement.\nSo this single bill pay initiative has the potential to dramatically accelerate growth rates in both our Corporate Pay and Fuel card businesses.\nWe feel like it's a pretty unique position that we're in, because of the special set of assets that we have.\nSo a large global SMB client base numbering in the hundreds of thousands, we've got working SMB sales channels, they historically have acquired 30,000 new clients per quarter.\nWe've got scaled virtual card processing capability, we generated over $30 billion in annualized spend last year, we've got a very large merchant database that allows us to monetize virtual card, and now we've got some modern cloud software to provide the bill-pay functionality, along with a pretty cool user interface.\nSo look, in conclusion, today, I'm hoping to provide just a few away.\nSo Q4 again, not our best quarter from an absolute perspective, but clear evidence of improving trends in the business.\n2020, we did manage to perform better as the year went on and certainly learned some new tricks around how to manage credits, expenses, IT, even sales onto remote environments.\n'21, again our setup we think looks pretty good.\nOnly a slightly unfavorable macro to deal with, but improving trends coming into the year and certainly the wildcard that I mentioned of what happens with the incremental softness recovery.\nAnd lastly, transformation, our Beyond strategy now progressing providing some traction but today's online SMB bill pay initiative maybe the biggest of them all.\nFor the fourth quarter of 2020, we reported revenue of $617 million, down 12%.\nGAAP net income down 11% to $210 million, and GAAP net income per diluted share down 6% to $2.44.\nThe quarter was again affected by COVID-related business slowdowns, although we showed improvement over last quarter in most of our businesses.\nAdjusted net income for the fourth quarter of 2020 decreased 10% to $258 million, and adjusted net income per diluted share decreased 5% to $3.01.\nWe continue to manage expenses in line with revenue performance.\nOrganic revenue in the quarter was down 8% overall, primarily due to same-store sales being down 6% year-over-year.\nOrganic revenue neutralizes the impact of year-over-year changes in foreign exchange rates, fuel prices, and fuel spreads and includes pro forma results for acquisitions closed mid-period.\nOur fuel category was down organically about 10% versus Q4 last year.\nOur domestic Fuel businesses were stable to improving in the quarter, whereas the international Fuel businesses were affected by the renewed COVID related closures, especially in Western Europe.\nThe corporate payments category was down approximately 6% in the fourth quarter.\nApproximately 6 points of decline was again driven by the 100 most-affected customers we discussed last quarter.\nLower spending on our T&E product drove another 2 points of organic drag.\nVirtual card volumes were up 12% for the quarter, which was an improvement from flat last quarter as continued political spend and the benefit of new customers offset the drag from the highly affected customers.\nCross-border or FX-related volumes were down 1% as payment volumes are still being affected by lower invoice levels, specifically in manufacturing and wholesale trade.\nFull AP continued to perform very well, with volume up 14%.\nNew sales of Full AP were very strong as full-year 2020 sales were more than double 2019's results.\nWe continue to invest here and have enabled 10 new ERP integrations in 2020, with plans for another 10 or so in 2021.\nTolls continue to be our most resilient business and grew organically 7% in the fourth quarter, up 4% from last quarter.\nActive toll tags were up 6% in the quarter, with urban tags accounting for 25% of all new tags sold during 2020.\nThe lodging category was down 25% organically in the fourth quarter, with 20 points of drag caused by the inclusion of acquired airline Lodging businesses in the year-ago period.\nOur workforce Lodging business has improved with volumes down in the mid-single-digits.\nThe airline lodging volumes have also improved in-line with flight activity but still remained well below last year's levels.\nLooking further down the income statement.\nOur total operating expenses were down 14% for the fourth quarter of 2020 to $323 million.\nWe performed in-line with the high end of our target reduction compared with the fourth quarter of 2019.\nThe decrease was primarily due to lower volume-related costs, lower employee-related costs, including headcount, sales commissions, bonuses, and stock compensation.\nWe also saw lower T&E expenses in addition to the impact of foreign exchange rates.\nAs a percentage of total revenues, operating expenses were approximately 52.4%, or roughly 240 basis point improvement from last quarter.\nBad debt expense in the fourth quarter of 2020 was $6 million or 2 basis points, which includes a reserve release of $5 million.\nBad debt was only 4 basis points excluding the reserve release.\nOur bad debt levels continue to be good and our aging roll rates remain very favorable.\nThere is still uncertainty around the timing, level, and duration of government stimulus and various responses to increaseing COVID cases around the world.\nSo that's still a consideration on our reserve.\nInterest expense decreased 13% to $30.3 million, driven primarily by decreases in LIBOR related to the unhedged portion of our debt.\nThis was partially offset by the impact of additional borrowing for share buybacks earlier in the year.\nOur effective tax rate for the fourth quarter of 2020 was 20.3%, with the reduction from last year, driven primarily by incremental excess tax benefit on stock option exercises.\nNow, turning to the balance sheet.\nAs of December 31, 2020, we have approximately $1.9 billion of total liquidity consisting of available cash on the balance sheet and our un-drawn revolver at quarter-end.\nWe ended the quarter just shy of $1.5 billion in total cash, of which approximately $542 million is restricted and consists primarily of customer deposits.\nWe had $3.6 billion outstanding on our credit facilities and $700 million borrowed in our securitization facility.\nWe remain committed to a consistent program of capital allocation, using our free cash flow for acquisitions and buybacks.\nIn the quarter, we repurchased roughly 181,000 shares in-connection with employee sales.\nIn total for 2020, we spent $850 million on share buybacks.\nWe believe that we have ample liquidity to pursue any near-term M&A opportunities, while still opportunistically buying back shares when it makes sense.\nFor the quarter, we had approximately $23.4 million of capital expenditures and we finished with a leverage ratio of 2.67 times trailing-12 month EBITDA as of December 31st.\nNow, let me share some thoughts on our outlook.\nLooking ahead, we're expecting Q1 2020 adjusted net income per share to be between $2.60 and $2.80, which at the midpoint is approximately $0.31 or 10% lower than what we reported in Q4 of 2020.\nAbout half of the difference is attributable to revenue seasonality.\nYou see, while some of our businesses like Gift have seasonally strong fourth quarters, most of our businesses have seasonally weak first quarters.\nOf course, volume-related expenses will slightly offset this revenue seasonality impact.\nRoughly a third of the difference is due to the normalization of certain expenses, for example in Q4 of 2020, we released $5 million of our bad debt reserve, which we do not expect to repeat in Q1.\nAs sales performance has continued to recover throughout 2020, we expect bad debt to gradually increase sequentially as those customers' balances age.\nAdditionally, when the impact of the COVID-related shutdowns became clear in 2020, we proactively reduced our annual incentive target payouts by 50% and accrued to those lower targets for the remainder of the year.\nAs our business has recovered meaningfully, we plan to return incentive targets to 2021 to normal levels.\nWe also expect our effective tax rate in Q1 of 2021 to be about 80 to 100 basis points higher than the rate we reported in Q4 of 2020.\nLastly, the acquisition of Roger and incremental sales and marketing investments are slightly dilutive to the quarter sequentially.\nNow, looking beyond Q1 to full-year 2021, we feel it's important to help you understand how we're thinking about the outlook and providing some ranges around possible outcomes even though, those ranges are a bit wider than what they have been in the past.\nFor 2021, we are guiding revenues to be between $2.6 billion and $2.7 billion and adjusted net income per diluted share to be between $11.90 and $12.70 inclusive of the Roger acquisition.\nWe're still faced with substantial uncertainty regarding the pace of economic recovery and the impact it will have on our financial performance.\nThat said, we've developed a 2021 budget, which incorporates everything we know now, including revenue and expense run-rates, current macro-environmental factors, planned sales contributions, and expected attrition impacts.\nIn addition, our guidance assumes a continued roll-out of the vaccines, that will allow gradual volume and revenue improvement in the first half of the year, with an acceleration in the back half of the year, as client softness and new sales performance improved sequentially.\nAs I mentioned earlier, we expect several expense lines to normalize higher in 2021 compared with 2020.\nAs our business recovers, stock and bonus accruals, as well as sales commission expenses will be higher.\nT&E will rise as our salespeople get back on the road and volume-related expenses will also rise with increased business activity.\nBad debt expense is expected to normalize as we've reopened credit and our sales performance continues to improve.\nWe're also making incremental investments in sales, marketing, and IT to support our growth aspirations and to deliver a 2021 sales production plan, that's more than 30% higher than 2020's results.\nWe're extremely excited with the Roger acquisition and a disproportionate share of our incremental sales and marketing investments will be directed toward that business.\nAs such, the fully loaded acquisition will be an estimated $0.10 drag to adjusted net income per diluted share in 2021.\nAs we've demonstrated time and again, we do take a balanced approach on expenses and we'll adjust accordingly if we see revenues begin to deviate from our expectations.\nAnd lastly, we continue to work through the approvals on AFEX, which have been slowed by Brexit and virus-related shutdowns.\nWhile we still expect the deal to be accretive in 2021, we now believe it is more likely to close in Q2 versus our original expectation of Q1.\nAnd just for clarity, AFEX is not included in the guidance ranges I provided earlier.\n",
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"content": "fleetcor q4 earnings per share $2.44.\nq4 adjusted earnings per share $3.01.\nq4 earnings per share $2.44.\nsees q1 adjusted earnings per share $2.60 to $2.80.\nsees fy 2021 adjusted earnings per share $11.90 to $12.70.\nsees fy 2021 revenue $2.6 billion to $2.7 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On a per share basis, third quarter earnings were $1.52 compared with $2.52 last year and $1.16 for the third quarter of 2019.\nDuring the third quarter of 2021, the Company recorded pre-tax adjustments to earnings, including a $30 million impairment in one of the company's minority investments, $13 million of costs related to the wind down of the Footaction banner, and $14 million of acquisition and integration costs related to WSS.\nAs a reminder, last year's third quarter included a pre-tax non-cash gain of $190 million related to the higher valuation of GOAT.\nOn a non-GAAP basis, earnings per share were $1.93 compared to $1.21 for the third quarter of last year, and $1.13 for the third quarter of 2019.\nAndy Gray, Executive Vice President and Chief Commercial Officer will then provide color on the key product and customer engagement highlights from the quarter.\nAndrew Page, Executive Vice President and Chief Financial Officer will then review our third quarter results and provide guidance for the current fiscal year.\nWe are pleased to report that the third quarter was another great performance for our company, as we comped a strong back-to-school season from last year, battled supply chain challenges and delivered impressive bottom line results.\nWe also successfully completed the WSS acquisition during the quarter and subsequent to the quarter end, closed the Atmos transaction as well, bringing both of these great companies into the Foot Locker family of brands.\nAs we begin the fourth quarter, in the all-important holiday season, we continued to see three macro trends working in our favor.\nNumber 1 is the democratization of sneaker culture, with more brands and more consumers participating in the ecosystem of sneaker culture.\nWith our position as a multi-branded retailer through Foot Locker, Kids Foot Locker, Champs Sports x Eastbay and now, WSS and Atmos, we have an incredible connection to the marketplace and consumers.\nSecond is the growing emphasis on fitness and self-care, as people look to offset stress and work-from-home conditions by getting up and staying active to maintain their physical and mental wellness.\nWhether it's home fitness, running, training, hiking or any number of other sport fitness categories, we see consumers are turning to and returning to Foot Locker to meet their fitness needs, and we see this trend increasing.\nAnd third is the overall athleisure trend and further casualization of society.\nSome of this is aided by the continued work-from-home environment, some of it by the new return-to-work hybrid model.\nBut overall, people want to be more comfortable, and that certainly plays into our strengths, especially around footwear, but also in our apparel business, which has been performing extremely well this year.\nAll of this to say, consumer demand remains strong, driven by mega trends and consumer adoption and demand that favors the brands and the categories we sell.\nSpending continues to be fueled by people wanting to look good as they venture out again.\nIn terms of the global supply chain, we're all aware of the challenges.\nIt's a fluid situation that we are making every effort to manage, and we do have a few advantages.\nFirst, we are a truly multi-branded retailer, with a diversified product mix serving a broad range of consumer needs across price points.\nWe like our position in terms of our assortment of brands, and we benefit from the very strong partnerships we have built with them over many decades.\nIn times like these, our partnerships are mutually beneficial, enabling us to look together as far into the future as possible to plan, collaborate and be solution-oriented.\nSecond, carrier capacity is something we always keep a close eye on, and we are much better positioned this year than in the past with FedEx, UPS and our pool carriers and with the US Postal Service as another alternative.\nWe've got better visibility than we've ever had on where their hot spots are, so we can manage customer expectations appropriately.\nThird, we feel good about our distribution center staffing and capacity levels.\nWe are building in some additional flex capacity for the fourth quarter to ensure we are doing everything we can to effectively mitigate any macro pressures.\nAnd fourth, we are focused on leveraging the advantage that having approximately 3,000 stores globally offers us to serve our customers and deliver the types of diversified product offerings, inclusive of apparel, accessories and complementary products that our customers come to us for.\nIn the third quarter, we successfully launched our controlled brands.\nWe are especially excited about this offense.\nOur teams have been working hard to bring it to life in a big way and we are poised to push these brands meaningfully forward in the coming seasons.\nAt the same time, we are expanding our range of brand partners using programs like our innovative greenhouse incubator and LEED initiative to invest in up-and-coming designers, new concepts, exclusive collaborations and curated partnerships, all of which will ultimately help us provide a broader range of product offerings to our consumers.\nAnd finally, but perhaps most importantly, we are benefiting from great connectivity with our consumers.\nElevating the customer experience has long been one of our strategic pillars.\nWe have great brand awareness and consumers continue to come to Foot Locker first.\nI believe we have the best team in retail, the best partners in the business and we feel very good about where we're headed for the upcoming holiday season and beyond.\nTurning to our recent acquisition of WSS.\nIt's been a great start with our back-to-school and overall Q3 results.\nSome of the early progress includes setting up our team addition offense for WSS, which we believe is a big operational opportunity to get speed-to-market to support their apparel business.\nWe have also looked at our supply chain, technology and other operating contracts, and we've been able to secure some wins here as well.\nAll that to say, the early integration work is off to a good start.\nWe are very bullish on WSS, driven in part by their strong connection to the Hispanic consumer and because it's very complementary to our existing portfolio from a consumer perspective, a merchandise assortment and pricing approach and the geography and real estate standpoint.\nWe are encouraged to see new WSS stores perform above their budgets, giving us confidence to continue to expand the store base in the coming year.\nTexas is our next WSS growth market.\nPlans are well underway for Dallas and Houston, and we also see some fill-in market opportunities.\nWe continue to open stores in Northern California.\nTurning now to Atmos.\nWe are excited to have closed the acquisition earlier this month.\nThis premium globally recognized, digitally led brand sits at the center of sneaker culture.\nWe are thrilled to have Hommyo san and his talented team officially onboard.\nSimilar to WSS, we are bullish on this high-growth business and are well underway with the integration process.\nTurning to Champs Sports x Eastbay.\nIt's been about 18 months since we combined these operating units.\nAnd in late January, we will be opening our first home field store in South Florida, which is the new concept where these two banners come together bringing the best of what they do individually to one singular location.\nOur first home field store will be the largest format we have in our global fleet at about 35,000 gross square feet.\nWe will have several features that drop on the equity and the DNA of Champs Sports and Eastbay, inclusive of the best global brands and sport lifestyle performance.\nWe'll also have a dedicated zone for Eastbay training and performance footwear and apparel.\nIt will feature an athlete fuel station for guests with protein shakes and smoothies, nutrition bars and post-recovery workout-type supplements that consumers can enjoy in the space itself or buy products to take home with them.\nThere will be several digital and interactive parts of the store, including an activation space where we will hold coaching clinics training sessions and skill development or yoga workouts.\nWe will be live and interactive in bringing sport into the space, and we are excited to be able to connect with the community through those experiences.\nWe'll also be able to leverage our Eastbay Team Sports division through existing and new relationships with key schools.\nIn fact, there are 12 high schools within a 10-mile radius of the home field location.\nWe will look to expand the relationships with those schools, building bridges and opportunities with the athletic directors, coaches and athletes themselves.\nWe are very excited to see this experience come together as we pilot this new concept.\nOur team has done an incredible job executing on the wind down and transitioning some of the locations to other banners.\nTo date, we've converted 18 locations, and there are another nine under construction, with over half of them rebranding as Foot Locker.\nAbout 40% is Champs Sports and the remaining 10% of Kids Foot Locker.\nWithout exception, we have seen encouraging productivity gains with these stores performing above expectations and well above their previous results.\nWe have negotiated or worked with our lease flexibility to close about 85% of the total fleet by year-end.\nWe are continuing our negotiations with landlords for the approximately 35 stores that will remain open into fiscal '22.\nWe've had a great partnership with our vendors and are pleased with the vendor community's reception to the Footaction transition.\nWe've been able to transfer not only inventory, but also access to some brands and concepts that will bode well for some of our go-forward banners, especially Champs Sports and Eastbay.\nYesterday, we announced some exciting organizational enhancements to advance Foot Locker's long-term growth in omnichannel objectives.\nFrank Bracken, Executive Vice President and Chief Executive Officer, North America, has been named Chief Operating Officer effective immediately.\nIn his new role, Frank will oversee the company's global operating divisions, the omni customer experience, inclusive of global technology services and supply chain, and our global franchise JV partnerships.\nSusie Kuhn, Senior Vice President, General Manager of Foot Locker Europe, has been named as President of EMEA and General Manager of Foot Locker Europe, also effective immediately.\nAndy Gray, Chief Commercial Officer, will expand his responsibility by leading our global commercial unit including product, the powering up of our controlled brands, omni-marketing, membership and commercial development and the LEED initiative.\nTogether, the announced leadership appointments and organizational enhancements underscore our focus on aligning our commercial, operations and finance functions to drive organizational productivity.\nWith a more agile operational structure, we will be in an even stronger position to expand our customer base and grow our connectivity with sneaker culture and the communities we serve.\nOverall, our financial position remains strong.\nOur vendor relationships are very strategic in nature, and we continue to obsess around our customers, whether it's through our digital channels, social media, FLX or an in-store customer experience.\nOur solid Q3 performance is why we remain optimistic about the strength of our portfolio, the power of our assortments and the loyalty of our customers.\nWe are confident that this positive momentum will continue into 2022 and beyond.\nIt is their dedication and hard work that made these outstanding results possible and will enable us to continue to drive our business forward and fulfill our purpose to inspire in a power youth culture.\nThroughout the quarter, we remain laser-focused on continuing to strengthen our relationships with our existing consumers and bringing new ones into our business.\nThis enabled us to beat our results from last year and continued to outpace 2019.\nTo give you a breakdown of our performance, our footwear business decreased low single digits, while our apparel and accessory businesses were both up double digits.\nAll families of business were up relative to 2019.\nWhile our total men's business was down slightly, we saw acceleration in women's and positive momentum in kids' driven by our success at drawing in more consumers and the expansion of our sneaker community.\nAgain, all areas were positive to 2019.\nWe often saw a great vendor diversity showcasing the health of our category and the expansion of our consumers' taste preferences as they fill their sneaker and apparel closet.\nThe majority of our top 20 vendors posted gains driving excitement in their respective categories, all of which helped to offset supply chain disruption that impacted the flow of some of our franchisees and launch products.\nAnother area of our business that continues to gain momentum is apparel, which was up double digits in men's, women's and kids' versus both LOI and 2019.\nOur branded business remains strong across categories, and our own brand business has expanded and accelerated.\nIn addition to our CSG business, which is our Champs Sports private label offering, we reimagined our Eastbay performance wear in the third quarter with a cross-category launch featuring Jalen Hurts.\nAnd we introduced our Locker brand for the first time to great reception from our customers.\nThis momentum continues into Q4.\nWe are launching more own brands, including Cozy, a new apparel brand tailored for our female consumer.\nWe just launched All City by Just Don, a lifestyle brand created with Don C rooted in basketball and sneaker culture that is inspired by the spirit of community.\nDon C has been a part of the cultural vanguard for decades as a music executive, fashion designer, sneaker collaborator and brand storyteller and this launch immediately resonated with the next generation of streetwear enthusiasts.\nAnd we have upcoming exclusive partnerships with more taste makers and celebrity curators like Melody Ehsani as we continue to add dimension to our apparel business.\nStore retailing continues to evolve and enable us to connect with our consumers as we work with all of our partners to deliver a strong pipeline of exciting exclusive product concept that set us apart in the marketplace.\nWe delivered 15 exclusive concepts in the third quarter, which were significant in terms of scale and consumer engagement.\nAnd our powerful consumer concept offense continues throughout the holiday season, including Alter and Reveal with Nike, Adidas and Trey Young, Crocs and AWAKE collaboration, Louis De Guzman and New Balance, and a whole host of excitement from PUMA, including LaMelo Ball, LOL surprise and Staple.\nThis offense, together with our positioning in the key footwear franchises, continued seasonal expansion with an increased focus on boots and fleece and a very strong pipeline of product and inventory in apparel, leaves us well positioned to delight the consumer in the holiday season.\nLocal areas of development for the team in the quarter included enhancing our mobile and app experience where we see 90% of our online traffic come from evolving our launch reservation process with new data algorithms to improve fairness and work toward ensuring unique individual winners and enhancing our buy online, pick-up in store experience, leading to greater adoption.\nLastly, the ongoing expansion of our community stores and geo offense is a critical component of our strategy.\nDuring the quarter, Downey in LA and Brixton in London opened their doors to great reaction from our consumers.\nWe also continued to build community through the rollout and expansion of our FLX membership program.\nWe now have over 28 million enrolled members with over 3 million joining in this quarter alone.\nWe remain encouraged by the results and engagement of our members who spend more and shop more often than nonmembers.\nAnd there's still a lot of opportunity ahead of us with the program recently launching in Italy, Germany and Spain.\nAs we push our consumer-led offense forward, it's a combination of product leadership and diversity, enhanced omni experiences and our focus on community and purpose that continues to drive our leadership in the industry and strengthen our relationship with our consumers.\nLet me now pass the call over to Andrew.\nAs we navigate the ongoing supply chain challenges, our strong third quarter results demonstrate the resilience and flexibility that our diversified product mix and our strong vendor relationships afford us.\nDuring my review of the results, I would like to note that in addition to comparing to last year, I will also reference comparisons to the third quarter of 2019 where it is helpful.\nOn a year-over-year comparable basis, our third quarter sales were up 2.2% and earnings per share grew almost 60%.\nImpressively, this strong result was on top of the robust 7.7% comp gain in last year's third quarter and speaks to the strong connection we have built with our customer base.\nThis connection was apparent during the back-to-school period where we saw strong customer engagement in our stores, digital and social channels, and growing attachment to our key initiatives like our FLX membership program.\nFrom a cadence perspective, with school openings on a more normal schedule, August led with a low double-digit comp gain, while September comps, which benefited last year from the later school openings, declined high single digits.\nWe then saw momentum turn meaningfully positive in October with comp sales up low single digits.\nTotal sales for the quarter rose to $2.2 billion or a 3.9% increase over the prior year and up 13.3% versus the third quarter of 2019.\nThis includes a $56 million contribution from WSS since the close of the transaction in mid-September.\nFor the third quarter, our global fleet was open for 97% of possible operating days with temporary closures in Australia, New Zealand, certain markets in Asia and Germany.\nOur year-over-year comp sales through our store channel increased 4.2%.\nStore traffic increased approximately 30% compared to fiscal 2020 as our customers continued to want an in-store experience with our multi-brand product assortment.\nWhen compared to fiscal 2019, traffic was down high single digits, and conversion was up significantly.\nIn our digital channels, which continued to be an important connection point with our customers, sales were down 4.6% in the third quarter as we lapped an approximate 50% increase from last year.\nDigital sales penetration rate was 19.8%.\nWhile down 160 basis points in 2020, it was well above the 15.3% from 2019.\nOur customers continued to overwhelmingly start their shopping journey with us digitally.\nAnd as we continued to create a seamless omni experience, they can easily close their transactions through our apps, our websites or in our physical stores.\nTurning now to some highlights of our three geographies.\nIn North America, our Champs Sports, Foot Locker Canada and Kids Foot Locker banners led the way with low single-digit comp gains, at the top of last year's double-digit increases.\nThe other North American banners posted comp declines with Foot Locker in the U.S. down low single digits, Eastbay down high single digits and Footaction in wind-down mode closed the quarter down over 20%.\nIn EMEA, pent-up demand continues to drive growth as stores reopened across all countries with strength across apparel, women's footwear and strategic brands like Converse and New Balance, leading to another double-digit comp gain at Foot Locker Europe and high teens comp gain at Sidestep.\nOur EMEA fleet was opened 99% of possible operating days in the quarter compared to 96% in the third quarter of last year.\nOur APAC region was down slightly due to ongoing challenges related to COVID.\nThe fleet was open approximately 55% of possible operating days, down from 82% in Q2 of this year.\nFoot Locker Pacific leveraged strong demand through the digital channel to offset the impact of the store closures and finished with a low single-digit comp gain, while Foot Locker Asia was down mid-single digits.\nWe continued to make progress on our expansion strategy within Asia as we opened two new stores and sold during the third quarter.\nAnd earlier this month, we completed the acquisition of Atmos giving us a strong presence in Japan, one of the key markets in sneaker culture.\nAcross our markets, regions and channels, the combination of more limited promotional environment, solid demand and a higher penetration in our stores led to a low single-digit increase in average selling prices while units were down slightly.\nMoving down the income statement.\nGross margin was 34.7% compared to 30.9% last year and 32.1% in the third quarter of 2019.\nThe improvement in our gross margin was driven by many of the same trends from the first half of 2021 as the combination of robust demand and fresh and lean inventory drove meaningfully lower levels of promotional activity.\nOur merchandise margin rate improved 470 basis points over last year and 80 basis points over 2019, driven primarily by the meaningful reduction in markdowns.\nLooking into the holiday season and the fourth quarter, we expect the promotional activity to remain favorable relative to both 2020 and 2019.\nAs a percent of sales, our occupancy and bias compensation costs delevered 90 basis points over Q3 of 2020.\nAs a reminder, in last year's third quarter, we benefited from $32 million of COVID-related tenancy relief versus $3 million this year.\nWhen compared to Q3 of 2019, we leveraged our occupancy expense by 180 basis points.\nOur SG&A expense came in at 20.9% of sales in the quarter compared to 20.1% in the prior year period.\nWhen compared to 2019, our SG&A rate improved by 40 basis points.\nFor the quarter, depreciation expense was $49 million, up from $44 million last year.\nInterest expense rose to $4 million from $2 million in the prior year due to the incremental expense related to the company's new bond issuance.\nWithin other income, there was a benefit of $26 million or $0.18 per share from the mark-to-market of our investment in Retailers Limited.\nAs a reminder, Retailers Limited is our partner in the joint venture that manages our Foot Locker stores in select Eastern and Central European market and is also our franchise partner in Israel.\nOur non-GAAP tax rate came in at 27.8% compared to last year's rate of 30.7%.\nTurning to the balance sheet.\nWe ended the quarter with approximately $1.3 billion of cash, down $54 million from a year ago.\nAt the end of the quarter, inventory was up 9.1% to last year, driven by our supply chain and logistics team efforts to position us well for the upcoming holiday season combined with the inventory that was included in the WSS acquisition.\nOn a constant currency basis, inventory was up 8.5% and sales increased 3.6%.\nIn terms of capital expenditures, we invested $50 million in the quarter, bringing the year-to-date total to $137 million.\nThis funded the opening of 32 new stores, including new Foot Locker community stores in Downey, California and Brixton, UK.\nChamps Sports Power stores in the Bronx, New York and Torrance, California; the expansion of Sidestep in Belgium; and the conversion of 18 Footaction stores.\nWe also relocated or remodeled 29 stores and closed 80 stores in the quarter, including 50 Footaction stores.\nWith the addition of WSS stores, we finished the quarter with 2,956 company-owned stores.\nFor the full year, we now expect to open approximately 144 stores, including eight new WSS stores, remodel or relocate 200 stores and close 370 stores, including about 205 Footaction doors.\nLooking forward, we now expect to invest approximately $240 million in capital expenditures this year, lower than our prior guidance of $260 million due primarily to supply chain challenges with the balance shifting into 2022.\nTurning to capital allocation.\nWe and our Board are confident in the financial position of the company and continue to believe that returning cash to our shareholders is an important aspect of the company's capital allocation strategy.\nFirst, we returned $30 million to our shareholders through our quarterly dividend program.\nNext, we saw opportunity given the value of the company's stock, and we repurchased 2.75 million shares of common stock for $129 million during the quarter.\nIn total, we have returned $242 million to shareholders through the first nine months of the year through share repurchases and dividends while continuing to make strategic investments to fuel our growth.\nWe also returned to the capital markets during the quarter, taking advantage of favorable market conditions to create more flexibility by issuing $400 million worth of 4% senior notes due in 2029.\nProceeds from the issuance will be used for general corporate purposes such as repaying $98 million of senior notes due in January 2022 and replenishing our inventory levels.\nOf note, following the capital raise, our liquidity position is comparable to pre-pandemic levels.\nIn summary, we are still on track with our capital allocation program investing in our business first, with a continued focus on returning cash to shareholders through our dividend and opportunistic share repurchase programs.\nFinally, turning to our full year outlook, which now includes the benefit from WSS and Atmos.\nWe believe we are well positioned for the holiday season in terms of both strong customer demand and inventory levels to support that demand.\nLike other companies, we expect global supply chain constraints, including factory shutdowns and port congestion to continue to be a headwind through the fourth quarter and into 2022.\nAs such, we remain appropriately cautious in the near term.\nBased on our current visibility, we expect to deliver sales growth in the high teens for the full year, with comp sales in the mid-teens.\nWe are expecting the gross margin rate to be up 540 basis points to 550 basis points for the full year versus 2020, mostly driven by a more rational promotional environment.\nOur SG&A expense rate is expected to leverage between 40 basis points and 50 basis points year-over-year.\nMoving down the income statement.\nWe expect depreciation and amortization expense to be approximately $190 million, interest expense of about $14 million and our year-over-year effective tax rate of around 28%.\nWe now expect our non-GAAP earnings range to be approximately $7.53 to $7.60 per share.\nThis guidance reflects our strong performance in the first nine months of the year and our increased visibility in the fourth quarter while recognizing the supply chain challenges that we discussed.\nAs we look ahead to fiscal 2022, powered by the strength of our portfolio, the breadth of our assortments and the loyalty of our customers, we look forward to providing our fiscal 2022 outlook on our fourth quarter earnings call.\nIn closing, we believe the combination of our financial strength, strategic relationships with our vendor partners and deep connection with our customers provide us with flexibility to maneuver in this rapidly evolving marketplace through the fourth quarter and beyond, executing toward our long-term strategic imperatives and driving shareholder value.\nWe remain very confident in our strategy, are pleased with the trajectory we are currently on, and we look forward to updating you on our progress in the coming quarters.\n",
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"content": "q3 non-gaap earnings per share $1.93.\nq3 earnings per share $1.52.\nq3 same store sales rose 2.2 percent.\nexpect global supply chain constraints to persist throughout q4.\nfoot locker-as of oct 30,2021, co's merchandise inventories, which included addition of wss, were $1,301 million, 9.1% higher than at end of q3 last year.\nbelieve we are positioned for holiday season, with positive momentum and inventory levels ready to meet customer demand.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Mark will review our first quarter results and provide our outlook for 2021 and the second quarter.\nAndrew will provide an overview of select financial items.\nInformation presented represents our best judgment based on today's understanding.\nActual results may vary based upon these risks and uncertainties.\nToday's discussion and the supporting materials will include references to adjusted EPS, adjusted EBITDA, adjusted cash from operations, free cash flow and organic revenue growth, all of which are non-GAAP financial measures.\nPlease note that as used in today's discussion, earnings means adjusted earnings and EBITDA means adjusted EBITDA.\nA reconciliation and definition of these terms as well as any other non-GAAP financial terms to which we may refer during today's conference call are provided on our website.\nOur first quarter results were in line with our guidance and expectations.\nRevenue and earnings were down as forecasted, though earnings were modestly above the midpoint of our guidance.\nWe continue to expect a good second quarter and a strong full year.\nWe had two important product launches in the quarter, Overwatch Herbicide based on our Isoflex active in Australia and Xyway fungicide in the U.S. Isoflex is one of 11 new active ingredients we plan to launch this decade.\nBoth launches have exceeded our expectations and have delivered approximately $50 million of Q1 sales.\nIn March, we announced an important agreement with UPL to toll manufacture Rynaxypyr insect control in India and to distribute products based on the active ingredient in selected markets.\nIn the future, FMC will supply Rynaxypyr active to UPL for use in product formulations developed and marketed by UPL around the world.\nThis agreement is the next step in growing our important diamide franchise and accelerating FMC's long-term plans to expand the franchise in diverse geographies and crops with differentiated formulations.\nIt also reaffirms the strength of our patent portfolio that protects our diamide franchise, far beyond just the composition of matter patents.\nWe returned over $135 million to shareholders in the quarter through our recently increased dividend and share repurchases.\nOur guidance for Q2 indicates an expected return to mid-single-digit growth on the top line, with slightly lower earnings growth because of higher costs compared to Q2 2020.\nThese higher costs are principally related to increasing raw materials and logistics.\nAdditionally, we will be spending more on SG&A and R&D compared to the abnormally low spend in Q2 2020.\nI'd like to take a moment to provide a COVID-19 update on our business.\nAll our manufacturing facilities and distribution warehouses remain operational and properly staffed.\nOur research laboratories and greenhouses also have continued to operate throughout the pandemic.\nWhile many of FMC's other employees continue to work from home, plans are in place to resume in-office operations where permitted by local authorities.\nFinally, we are all aware of the challenges India is facing with significant increases of COVID cases across that country.\nLast week, FMC announced it will donate seven pressure swing absorption oxygen plants to hospitals across five states in India to help address the rapidly increasing demand for medical oxygen.\nThis program focuses on rural areas where we are providing further community support.\nTurning to our Q1 results on Slide three.\nWe reported $1.2 billion in first quarter revenue, which reflects a 4% decrease on a reported basis and a 5% decrease organically.\nAs planned, we saw slower sales in Brazil as we drew down channel inventories in that country as well as the shortfall in EMEA due to Brexit-related sales that occurred in Q4 2020.\nIn North America, we saw very good demand based on strong fundamentals in row crops and commodity prices, offset by a shift of diamide third-party sales to Latin America.\nIn Asia, double-digit sales growth in Australia, Japan and our Asian subregion drove revenue performance in that region.\nAdjusted EBITDA was $307 million, a decrease of 14% compared to the prior year period and $2 million above the midpoint of our guidance range.\nEBITDA margins were 25.7%, a decrease of 290 basis points compared to the prior year.\nAdjusted earnings were $1.53 per diluted share in the quarter, a decrease of 17% versus Q1 2020, but also $0.03 above the midpoint of our guidance range.\nThe year-over-year decline was primarily driven by the decrease in EBITDA, partially offset by lower interest expense.\nMoving now to Slide four.\nQ1 revenue decreased by 4% versus prior year, driven by a 4% volume decrease and a 1% price decline.\nForeign currencies were a modest tailwind in the quarter on the top line.\nSales in Asia increased 18% year-over-year and 13% organically, driven by double-digit growth in Australia, Japan, the Philippines, Thailand and Vietnam.\nWe had strong Overwatch Herbicide sales for cereals, and sales of our diamides were robust for fruit and vegetable and rice applications.\nInsecticides also performed well in Indonesia, helped by our recent expanded market access in that country, and improved weather helped sales across the ASEAN subregion.\nEMEA sales were down 4% year-over-year and 8% organically.\nWe had strong sales of diamides and other insecticides as well as fungicides, but these were more than offset by headwinds from the Brexit-related U.K. sales in Q4 that we described a quarter ago as well as discontinued registrations.\nIn North America, sales decreased 8% year-over-year.\nOur herbicide business grew double digits, partially due to the timing of some sales that shifted from Q4 to Q1 as well as the continued strength of Authority Edge and Authority Supreme herbicides.\nWe also had a strong launch in the U.S. of Xyway fungicide for corn and Vantacor insect control for specialty crops.\nThese were offset primarily by a shift of diamide third-party partner sales from North America to Latin America, as one of our key partners adjusted the way it purchases from FMC globally.\nThis was simply a move of purchasing location and not a change in demand.\nExcluding this shift, our North America sales were up low double digits.\nMoving now to Latin America.\nSales decreased 22% year-over-year and 13% organically.\nAs a reminder, we were facing a particularly difficult comparison in Latin America, where sales increased 26% year-over-year and 38% organically in Q1 2020.\nBrazil's cotton business was very strong for us a year ago, which did not repeat this season as cotton hectares were down 15%.\nWe also proactively reduced channel inventory of FMC products as planned in Q1, improving our inventory situation in Brazil.\nAnd our Andean Zone subregion continued the momentum from 2020 with double-digit sales growth.\nTurning now to the first quarter EBITDA bridge on Slide five.\nEBITDA in the quarter was down $50 million year-over-year due to a very strong Q1 2020 comparison.\nVolume headwinds in Latin America and EMEA were partially offset by new product launches in Asia and North America.\nIn Latin America, we focused on reducing channel inventory to set ourselves up for a much stronger pricing environment in the second half of 2021.\nCost headwinds were slightly higher than expected, while FX headwinds were far lower than in the prior four quarters.\nTurning now to our view of the overall market conditions for 2021.\nWe continue to expect the global crop protection market will be up low single digits on a U.S. dollar basis.\nRelative to this time last year, commodity prices for many of the major crops are higher, and stock to use ratios are much improved.\nAll regions are seeing some benefit from better crop commodity prices, while the negative impact from COVID on crop demand appeared to be modest.\nThe only change to our regional forecast is that we now forecast mid-single-digit growth in the EMEA market versus low single-digit growth before.\nThis improved view is due to the strengthening of currencies in that region relative to the U.S. dollar.\nMarket growth in Asia is still expected to be in the low to mid-single digits, driven by India, Australia and ASEAN countries, while growth in the North American and Latin American markets is still projected to be in the low single digits.\nBasic crop fundamentals remain strong.\nHowever, our overall forecast for the total crop protection market remains low single-digit growth due to signs of supply chain constraints in the industry as well as modest channel inventory overhang in certain countries.\nAlthough Brazil and India are facing significant increases of COVID cases, we are not seeing signs that this is impacting their respective agricultural markets at this time.\nThis is, however, something we are continuing to watch closely.\nTurning to Slide six and the review of FMC's full year 2021 and Q2 earnings outlook.\nFMC full year 2021 earnings are now expected to be in the range of $6.70 and to $7.40 per diluted share, a year-over-year increase of 14% at the midpoint.\nThis is up slightly versus our prior forecast, reflecting the share count reduction from our Q1 share repurchases.\nConsistent with past practice, we do not factor in any benefit from future share repurchases in our earnings per share guidance.\nOur 2021 revenue forecast remains in the range of $4.9 billion to $5.1 billion, an increase of 8% at the midpoint versus 2020 and 8% organic growth.\nWe believe the strength of our portfolio will allow us to deliver this organic growth, continuing a multiyear trend of above-market performance.\nEBITDA is still expected to be in the range of $1.32 billion to $1.42 billion, representing 10% year-over-year growth at the midpoint.\nGuidance for Q implies a year-over-year sales growth of 6% at the midpoint on a reported basis and 5% organically.\nWe are forecasting EBITDA growth of 1% at the midpoint versus Q2 2020, and earnings per share is forecasted to be up 3% year-over-year.\nTurning to Slide seven and full year EBITDA and revenue drivers.\nRevenue is expected to benefit from 6% volume growth, with the largest growth in Asia and a 2% contribution from higher prices.\nFX is now forecasted to have no impact on the top line.\nWe continue to expect broad growth across all regions and a very strong second half of 2021.\nNew products like Overwatch herbicide, Xyway fungicide and Vantacor insect control, are already making meaningful contributions.\nWe are also planning to launch Fluindapyr fungicide in the U.S. for non-crop applications later this year.\nWe expect new products to contribute $400 million in revenue this year.\nThis includes all products launched since 2018.\nWe are forecasting strong growth in each of our product categories in the year.\nIn addition to the continued growth of Rynaxypyr and Cyazypyr insect controls, we expect growth from other key insecticide brands in our portfolio, including Avatar, Hero and Talisman.\nOur herbicide portfolio is also expected to grow led by brands, including Authority, Gamit, Spotlight Plus and Overwatch.\nXyway is expected to lead growth of our fungicide portfolio, building on the successful launch of Lucento fungicide a couple of years ago.\nOur EBITDA guidance reflects significant volume and pricing benefits, offset partially by increases in R&D spending, the reversal of some temporary cost savings from 2020 as well as increase in raw material and logistics costs.\nAs we've stated in February, we are forecasting an increase in R&D to bring us to a level of funding that keeps all projects on a critical path to commercialization.\nWe are taking cost control actions to limit the net cost headwind to an incremental $10 million versus what we showed in February.\nWe also intend to offset the higher raw material costs with an additional $10 million in price increases, which will come primarily in the second half of the year.\nMoving to Slide eight, where you can see the Q2 drivers.\nOn the revenue line, we are expecting positive contributions from all categories: volume 4%, pricing 1% and FX 1%.\nWe're expecting solid sales growth in Asia, EMEA and Latin America.\nAsia growth is expected to be broad based across the region, with particular strength in India, Australia and China.\nGrowth in EMEA will be driven by improved crop conditions for cereals and sugar beets.\nLatin America, growth should be supported by improved conditions in both Brazil and Mexico and the continuation of strong growth in the Andean Zone.\nWe see good conditions in North America for row crops and a positive outlook for our new products.\nRegarding EBITDA drivers, positive contributions from volume, price and FX more than offset the increased costs, which we previously discussed.\nTurning now to Slide nine.\nWith the guidance for Q2 and the full year on record, we would like to also show the implied forecast for the second half.\nWe have a very strong outlook for H2, and let me outline the drivers for that growth.\nWe forecast year-over-year revenue growth of 15% in the second half driven by five main elements.\nFirst, our expectations are strong for the U.S. and Brazil, following our weak Q4 2020 performance in those countries.\nSecond, price increases, primarily in Brazil, with contributions from numerous other countries will help offset the FX headwind from last year and the higher costs from raw materials this year.\nThirdly, new products will continue to be a major factor, Overwatch in Australia, Xyway and diamide formulations Elevest and Vantacor and Fluindapyr for non-crop applications in the U.S. and Authority NXT herbicide in India.\nFourth, improved crop fundamentals.\nCotton in Brazil is the most obvious to us, as growers have indicated, a 15% increase in hectares for next season.\nAnd we also expect a strong Q4 in North America and Latin America, driven by good fundamentals for soybeans and corn.\nAnd finally, fifth, improved market access and expansions into new geographies and crops.\nThis is having a significant impact in Asia with recent initiatives in India, Indonesia, Philippines and Vietnam all forecast to drive high-growth rates.\nOur guidance also implies a 30% year-over-year EBITDA growth in the second half of the year.\nMuch of that will come directly from the volume and pricing growth I just described, but we also expect to limit the raw material and supply chain cost headwinds with sustained cost discipline in other areas.\nFX was a modest tailwind for revenue growth in Q1 at 1% versus our expectations of a 2% headwind, as the U.S. dollar weakened against many currencies with the notable exception of the Brazilian reais.\nInterest expense for the first quarter was $32.4 million, down $8.4 million from the prior year period, with the benefit of lower LIBOR rates as well as lower foreign debt and lower term loan balances, partially offset by higher average commercial paper balances.\nWe continue to anticipate interest expense between $130 million and $140 million for the full year.\nOur effective tax rate on adjusted earnings for the first quarter was 13.1% as anticipated and in line with our continued expectation for a full year tax rate between 12.5% and 14.5%.\nMoving next to the balance sheet and liquidity.\nGross debt at the end of the quarter was $3.6 billion, up over $300 million from the prior quarter, with the expected seasonal build of working capital.\nGross debt to trailing 12-month EBITDA was 3.0 times at the end of the first quarter, while net debt-to-EBITDA was 2.7 times.\nBoth metrics were above our targeted full year average levels due to the seasonality of working capital.\nWe expect that this will improve throughout the year, and we will return to target levels by year-end.\nMoving on to Slide 10 and cash flow and cash deployment.\nFree cash flow for the first quarter was negative $354 million.\nAdjusted cash from operations was similar to the prior year period, with improved working capital offset by changes in nonworking capital items and lower EBITDA.\nCapital additions were somewhat higher as we ramped up spending following deferral of projects last year due to COVID.\nLegacy and transformation spending was substantially lower with the completion of our SAP program.\nWe continue to expect to generate full year free cash flow within a range of $530 million to $620 million, with the vast majority of this cash flow coming in the second half of the year.\nWe returned $137 million to shareholders in the quarter via $62 million in dividends and $75 million of share repurchases, buying back 696,000 shares in the quarter at an average price of $107.73 per share.\nWe continue to anticipate paying dividends approaching $250 million and repurchasing $400 million to $500 million of FMC shares this year.\nAnd with that, I'll hand the call back to Mark.\nOur Q1 financial performance was in line with our expectations.\nWe are now focused on delivering against our full year forecast.\nCOVID-19 continues to be a factor to watch, and we're closely monitoring raw material and supply chain costs.\nWe remain confident in our full year forecast that builds upon the new technologies and improved market access that are driving our growth.\nThe market demand for our most recent product launches is important as it confirms the strength and value that our innovative R&D pipeline delivers to growers.\nWe expect this momentum to continue to accelerate over the coming years, with launches of new active ingredients and products as well as outcomes from technology partnerships we've established in the past year.\nFinally, we remain committed to our cash deployment plan.\nWe are on track to deliver more than $700 million to shareholders this year, building on a trend since 2018 of improving cash generation and returning excess cash to shareholders.\n",
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"content": "sees fy adjusted earnings per share $6.70 to $7.40.\nsees fy revenue $4.9 billion to $5.1 billion.\nqtrly revenue of $1.2 billion, a decrease of 4 percent versus q1 2020.\nqtrly consolidated adjusted earnings per diluted share of $1.53.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Mark will review our fourth-quarter and full year performance and provide our outlook for 2021 in the first quarter.\nAndrew will provide an overview of select financial items.\nInformation presented represents our best judgment based on today's understanding.\nActual results may vary based upon these risks and uncertainties.\nToday's discussion and the supporting materials will include references to adjusted earnings per share adjusted EBITDA, adjusted cash from operations, free cash flow and organic revenue growth, all of which are non-GAAP financial measures.\nPlease note that as used in today's discussion, earnings means adjusted earnings, and EBITDA means adjusted EBITDA.\nA reconciliation and definition of these terms as well as other non-GAAP financial terms to which we may refer during today's conference call are provided on our website.\nLet me start by saying the fourth-quarter was an unusually difficult one for our company and we are disappointed in our earnings results.\nWe exceeded the midpoint of our guidance on earnings per share and EBITDA for a long stretch of quarters principally because of the strength of our portfolio and our geographic balance, combined with strong execution in the face of extreme weather events and significant industry specific supply chain disruptions.\nThis quarter was an anomaly and we will be as transparent as always to explain what happened.\nWe experienced significant logistics and supply chain constraints in the US; reduced demand in the US on some lower value herbicides, lower demand in Brazil and Argentina following the drought related delay to the start of the season, and products that were held up in Argentina customs.\nOn the positive side, we saw strong growth in EMEA, and once again, broad growth in Asia.\nWe had a very strong quarter from a cash flow perspective, which led to full year free cash flow of $544 million, an 80% increase over 2019.\nWe also posted very solid 2020 overall results.\nDespite numerous challenges related to the COVID-19 pandemic and $280 million in revenue headwinds from foreign currencies.\nOur organic revenue growth of 7% and our 2% EBITDA growth shows how aggressively we manage costs and implemented price increases to offset as much of that FX headwind as possible.\nThe guidance for Q reflects our view of the environment in Brazil, as well as continued logistics and supply chain disruptions occurring around the world.\nWe believe these COVID impacts are perhaps severe as at any point over the last year.\nIn addition, our very strong Q1 2020 makes this quarter year-over-year comparison a particularly difficult one.\nAll of FMC's manufacturing facilities and distribution warehouses remain operational and fully staffed despite the ongoing pandemic.\nHowever, one of our US toll manufacturers was disrupted in Q4 because of COVID related staffing issues, illustrating just one of the ongoing business risks during the pandemic.\nWe successfully completed the implementation of our new SAP system in November.\nWe now have a single modern system across the entire company for the first time in our history, which is enabling significant efficiencies in our back office processes.\nAnd finally, we gave a thorough technology update to investors on November 17, highlighting the increasingly positive impact new synthetic and biological active ingredients will have on our business over the next decade and the ways in which we are driving to be the leader in crop protection innovation.\nWe plan to launch seven new active ingredients and four new biologicals this decade, which we expect will contribute a combined $1.8 to $2.1 billion in Incremental sales by 2013.\nWe recently announced a new collaboration with Novozymes, a world leader in enzyme discovery and production to research, co-develop and commercialize biological enzyme based crop solutions for growers around the world.\nThis adds to research collaborations and partnerships signed in 2020 with Zymergen and Cyclica and continues our trend of investing in new and innovative technologies that will enhance our long-term competitiveness.\nTurning to our Q4 results on Slide 3.\nWe reported $1.15 billion in fourth-quarter revenue, which reflects a 4% decrease on a reported basis and 2% organic growth.\nDespite those headwinds we posted double-digit sales growth in Asia, led by India, China, Japan and Australia, and in EMEA, with double-digit growth across a broad set of countries.\nAdjusted EBITDA was $290 million, a decrease of 9% compared to the prior year period.\nEBITDA margins were 25.2%, a decrease of 150 basis points compared to the prior year.\nAdjusted earnings were $1.42 per diluted share in the quarter, a decrease of 19% versus Q4 2019.\nThis year-over-year decline was primarily driven by the decrease in EBITDA, an increase in tax rate compared to the very low tax rate in Q4 2019, and slightly higher D&A, partially offset by lower interest expense and lower non-controlling interests.\nMoving now to Slide 4.\nQ4 revenue decreased by 4% versus prior year, driven by a 5% FX headwind and a 3% volume decrease.\nPrice increases contributed a positive 4% impact, and offset 80% of the FX headwind, the highest in the past few quarters to deliver a positive 2% organic growth.\nVolume growth in EMEA and Asia was more than offset by weakness in North America and Latin America.\nSales in EMEA increased 45% year-over-year and 42% organically.\nWe saw a particularly strong demand for our insect control applications for specialty crops as well as herbicides for cereals, especially in France, Spain, Russia and Germany.\nWe also had significant growth in the UK as customers secured orders in advance of Brexit.\nIn Asia, revenue increased 11% year-over-year, driven by broad volume growth in India, China, Japan and Australia.\nIndia saw strong demand in rice and pulses in the south, and in sugarcane in the north, in addition to the growth from our recent market access expansion activities.\nLast earnings call, we highlighted India as a key pillar of growth in Asia.\nAnd the strength we saw in Q4, exemplifies this potential, with India growing over 20% organically in the quarter.\nChina so robust demand for diamide insecticides and fungicides on fruit and vegetables.\nGrowth in Australia was driven by demand in herbicides for cereals and oilseeds, while Japan's strength came from a variety of insecticides.\nMoving now to Latin America.\nSales decreased 9% year-over-year, but grew 4% excluding significant FX headwinds.\nPricing actions across the region offset about 50% of the currency headwind at the earnings level in Q4, substantially more than in the prior 2 quarters.\nThe Brazil season was delayed by at least 30 days due to hot dry weather and this delay meant many numerous crops missed applications that will not return.\nThe drought persisted throughout Q4 resulting in lower than expected decline [Phonetic] across many crops, and it also impacted Argentina and other countries in the region.\nFor Latin America, overall we estimated the drought reduced sales by about $30 million.\nIn Argentina, we also had about $10 million of product held in bonded warehouses that was not released by customs officials in a timely manner.\nAlthough these factors reduced Q4 growth in Argentina, 2020 was still our best year ever for the country.\nIn North America, sales decreased 34% year-over-year, roughly $40 million of this decline was due to supply chain disruptions, including COVID related factors associated with logistics and a toll manufacturing partner, impacting our ability to meet demand late in December.\nAn additional $30 million of the decrease was due to reduced volume and some lower value pre-emergent herbicides.\nOur new herbicides such as Authority Edge, Authority Supreme and Anthem Maxx continue to add value and grow wealth.\nWe should also note, our biologicals business had a very strong Q4, with sales up in all regions by at least a high-teens percentage, including very strong sales of Quartzo in Brazil and successful launches of Accudo in EMEA and asset plan [Phonetic] and [Indecipherable] in South Korea.\nTurning now to the fourth-quarter EBITDA bridge on Slide 5.\nWe had a $50 million contribution from higher pricing, which was nearly double what we realized in Q3.\nWe also aggressively managed costs to offset nearly all the $30 million year-over-year headwind we had anticipated.\nHowever, the FX headwinds were more severe than expected and the late volume mixes in North America and Latin America were too large to overcome.\nMoving to Slide 6 for a review of our full year results.\nWe reported $4.64 billion in revenue, which reflects a 1% increase on a reported basis and a 7% organic growth rate.\nAdjusted EBITDA was $1.25 billion, an increase of 2% compared to 2019 even with nearly $270 million in headwinds from FX.\nEBITDA margins were 26.9%, an increase of 40 basis points compared to the prior year.\n2020 Adjusted Earnings was $6.19 per diluted share, an increase of 2% versus 2019.\nThis increase was driven by the increase in EBITDA as well as lower interest expense and lower share count, offset partially by a higher tax rate compared to the very low tax rate in the prior year and higher D&A.\nTurning to Slide 7 for some of the drivers behind the full-year revenue growth.\nOverall volume contributed 4% to revenue growth while price increased sales by 3%.\nAbout $50 million of the 2020 revenue growth came from product launches within the year.\nIn Asia, sales increased 6% year-over-year and 9% organically, market expansion and share gains in India, coupled with a very strong market rebound in Australia were the primary drivers.\nOur diamides were in high demand throughout the region in 2020 as we continue to grow in specialty crops such as rice and fruits and vegetables.\nSales in EMEA grew 4% versus in 2019% and 6% organically.\nDemand was driven by diamides on specialty crops Battle Delta herbicide on cereals and Spotlight Plus herbicide on potatoes.\nLatin America posted a 1% year-over-year revenue growth but high single-digit volume growth and solid price increases led to 17% organic growth.\nBrazil had robust demand for our products for soybeans and sugarcane while there was reduced demand acreage for cotton.\nNorth America sales decreased 8% as we had channeled destocking in the first half and then a tough Q4 as described earlier.\nOf note, the Lucento fungicide launch had a strong second year and Elevest insect control had a good launch year.\nMoving to Slide 8 where you can see our full-year EBITDA bridge.\nVolume contributed 9% of the growth, while the combination of stringent cost controls and price increases offset 70% of the impact of foreign currencies.\nTurning now to Slide 9 and I look at the overall market conditions for 2021.\nWe expect the global crop protection market will be up low-single digits on a US dollars basis.\nCommodity prices for many of the major crops are higher and stock to use ratios have improved compared to this time last year.\nAll regions are seeing some benefit from better crop commodity prices, while the impacts from COVID on crop demand appear to be lessening.\nGrowth in Asia is expected to be in the low to mid single digits, driven by India, Australia and ASEAN.\nFavorable weather should contribute in many countries.\nThe weather related recovery in Australia is expected to continue the other three regions are each projected to grow in the low single digits.\nGrowth in the Latin American market will be strengthened by price recovery from FX headwinds from 2020 in Brazil, continued strength in the soybean market, an increase of fruit and vegetable exports from Mexico and more normal weather patterns that are forecasted across the region.\nIn the EMEA market, we are seeing a solid market for cereals and specialty crops, which should be helped by improved weather in several parts of the region.\nThe market in North America is projected to have a firm foundation from crop commodity prices, but we are seeing a trend of distributors and retailers looking to strategically reduce their own inventory levels.\nThe specialty crop market is stable, but the most significant change in demand will depend on the pace of the economic recovery.\nTaking all the above into consideration, we view 2021 as a more positive Ag macro environment than we did this time last year.\nHaving said that, we are all too well aware of the potential disruptions that COVID and the whether can cause in any one quarter.\nTurning to Slide 10 and the review of FMC's full-year 2021 and Q1 earnings outlook.\nFMC full-year 2020 earnings are now expected to be in the range of $6.65 to $7.35 per diluted share, a year-over-year increase of 13% at the midpoint.\nConsistent with past practice, we do not factor in any benefit from planned share repurchases in our earnings per share estimates.\n2021 revenue is forecasted to be in the range of $4.9 to $5.1 billion, an increase of 8% at the midpoint versus 2020%, and 9% organic growth.\nWe believe the strength of our portfolio will allow us to deliver this organic growth, continuing a multi-year trend of above market performance.\nEBITDA is expected to be in the range of $1.32 billion to $1.42 billion, which represents a 10% year-over-year growth at the midpoint.\nGuidance for Q1 implies year-over-year sales contraction of 7% at the midpoint on a reported basis and 5% organically.\nWe are forecasting an EBITDA decline of 15% at the midpoint versus Q1 2020, and earnings per share is forecasted to be down 18% year-over-year.\nTurning to Slide 11 and full-year EBITDA and revenue drivers.\nRevenue is expected to benefit from 7% volume growth with the largest growth in Asia and a 2% contribution from higher prices.\nFX is forecasted to be a 1% top line headwind.\nWe are expecting broad growth across all regions, Asia has the best overall fundamentals.\nBut we're also seeing the benefit of better weather in Europe, strong soybean outlook for both Latin America and North America, and a cotton recovery in Brazil next fall.\nBecause of these factors, we are expecting a very strong second half of 2020, 2021 relative to the first half.\nNew products such as Overwatch herbicide in Australia based on our Isoflex active and Xyway fungicide in the US are expected to make meaningful contributions.\nAnd we are also launching Fluindapyr fungicide in the US for non-crop applications.\nWe are focusing a strong year for each of our product areas.\nIn addition to continuing strength of Rynaxypyr and Cyazypyr insect controls, insecticides growth is also expected to come from products such as Talisman, Hero and Avatar.\nHerbicides should see growth in several of our top brands including Authority, Gamit, Reata [Phonetic] and Spotlight Plus, in addition to the Overwatch launch.\nAnd growth in fungicides is forecasted to be driven primarily by the Xyway launch in the US.\nOur EBITDA guidance reflects strong volume and pricing benefits, offset partially by increases in R&D spending as well as the reversal of some of the temporary cost savings from 2020.\nWe are forecasting a $40 million increase in R&D to bring us to a level of funding that keeps all projects on a critical path to commercialization.\nAdditionally, we're making growth investments in our farm intelligence and the precision Ag initiatives, new product launches like Overwatch, as well as FMC Ventures.\nWe are also expecting some supply chain cost increases including logistics and pockets of raw materials.\nThese headwinds will be partially offset other realization of the final $15 million of SAP synergies which will give us a cumulative SAP synergies of approximately $65 million.\nMoving to Slide 12 where you see the Q1 drivers.\nOn the revenue line, volume is expected to drive a 6% decline, while a 1% contribution from higher prices largely offset the FX headwind.\nWe expect the benefit of approximately $25 million in sales from Q4, supply and logistics delays to be captured in Q1.\nThis is about half of the Q4 impact.\nIn the US, this miss timing limits what we can recoup.\nAnd in Argentina, ongoing customers delays and release in products could cause us to miss application windows.\nThere are several headwinds in Q1 revenue that more than offset the flow through from Q4.\nFirst, we are facing a particularly difficult comparison in Latin America where sales increased 26% year-over-year and 38% organically in Q1 2020.\nBrazil's cotton business is very strong for as a year ago, this will not be repeated this season as cotton acreage is down 15%.\nIn EMEA, we are facing continued headwinds from discontinued registrations, and the $15 million in Q4 sales related to Brexit that would normally have been sold in the first quarter.\nRegarding EBITDA drivers reduced volume is the biggest factor.\nWhile pricing is forecast to offset the FX headwind, costs are expected to be higher by $12 million, driven primarily by the increased R&D investments, we mentioned earlier.\nFX was a 5% headwind to revenue in the quarter, as expected, with the impact of higher than anticipated local currency denominated sales in Brazil, offset in part by a modest tailwind in the Eurozone.\nFor full year 2020 FX was a 6% headwind to revenue.\nThe Brazilian Real represented by vast majority of the FX headwinds in 2020 followed by the Indian rupee, Pakistan rupee and a broad number of non-euro currencies in EMEA.\nPricing actions offset slightly half of the currency headwinds in the year.\nLooking ahead to 2021, we expect a more stable FX environment with only a slight headwind to revenue [Phonetic].\nWe will continue to take pricing actions in Brazil to recover the FX impact from 2020.\nBut overall pricing will be somewhat dampened by price volume choices being made in our Asia business to drive higher growth.\nInterest expense for the fourth-quarter was $34.2 million dollars, down $8.7 million from the prior year period, benefiting from lower debt balances and lower LIBOR rates.\nInterest expense for full year 2020 was down $7.3 million from the prior year with the benefit of lower interest rates, partially offset by changes in debt outstanding.\nOur effective tax rate on adjusted earnings for 2020 was 13.7%, well within our expectations and up from the very low 2019 rate due to shifts in the geographic mix of taxable earnings and inter-related impacts on the US minimum tax and [Indecipherable].\nThe tax rate in the fourth-quarter was 14.4% to true up with the full year actual rate.\nTax was a headwind to earnings in the quarter due to the very low tax rate in the prior year period.\nWe expect our effective tax rate to be in the range of 12.5% to 14.5% in 2021 similar to 2020.\nMoving next to the balance sheet and liquidity.\nGross debt at year-end was $3.3 billion, essentially flat with the prior quarter with nearly $600 million of cash on hand.\nWe chose to hold cash on the balance sheet in advance of the seasonal working capital build we see in the first quarter to avoid having to take on as much commercial paper in the beginning of the new year.\nAs such, gross debt to trailing 12 month EBITDA was 2.6 times at the end of the year, while net debt to EBITDA was 2.3 times.\nWe are in the right leverage range given the excess cash at year-end.\nWe do not expect to carry this level of cash on a steady state basis going forward, so you should expect cash balances to decline through the coming year.\nMoving to Slide 13 and a look at 2020 cash flow and the outlook for 2021.\nFree cash flow for 2020 was $544 million with free cash flow conversion from adjusted earnings at 67%.\nBoth metrics up 80% percent from the prior year period.\nAdjusted cash from operations increased by about $170 million in 2020 with growth in working capital, more than offset by lower non-working capital factors and increased EBITDA.\nCapital additions were down $60 million due to project delays and deferrals related to COVID-19 pandemic.\nLegacy and transformation spending was down $14 million with relatively stable legacy spending and transformation spending lower as we completed our SAP implementation.\nWe anticipate full year 2021 free cash flow to be in the range of $530 to $620 million, an increase of 6% at the midpoint, with free cash flow conversion 63% at the midpoint.\nGrowth in adjusted cash from operations and reduced legacy and transformation spending are expected to be partially offset by a significant year-over-year increase in capital additions.\nThis increase in capital additions comes as we catch up on projects that were delayed or deferred in 2020 due to the pandemic.\nTurning to Slide 14, we are pleased with our strong free cash flow growth and improvement in free cash conversion.\nThere are a number of moving parts in our 2020 cash flow results and 2020 outlook that merits some further discussion and will help better explain this trajectory.\n2020 free cash flow benefited from a planned real estate asset sale that will not repeat as well as the un-forecasted delay of a lump sum environmental liability payment we had expected to be paid in December.\nExcluding these impacts, 2020 free cash flow would have been about $500 million, in cash conversion about 62%.\nSimilarly, 2021 free cash flow was negatively impacted by the timing shift of the environmental liability payment.\nAdjusting for this timing shift, 2021 free cash flow would be about $600 million, in cash conversion 65%.\nSo, on a more comparable basis, free cash conversion steps up from 38% in 2019 to 62% in 2020, and 65% in 2021, getting closer to our 70 to 80% target range for 2023.\nI know that this view [Phonetic] of cash flow, we've not made any adjustments for the abnormally low capital additions in 2020 or the catch up to a more normal level in 2021.\nBut this shift, is in large part, the reason why cash conversion steps up more slowly in 2021, as the increase in capital additions largely offsets the step down and transformation cash spending from the completion of the SAP program.\nYou should expect the capital additions to continue in a similar range to 2021 for the next several years to support our organic growth, including new capacity that support new active ingredient introductions.\nEqually as important as growing our free cash flow is the discipline with which we deploy it.\nAs you can see on Slide 15, we continue our balanced approach to cash deployment.\nWe are fully funding our organic growth in making modest inorganic investments to enhance our growth.\nWe are then returning the excess cash to shareholders through dividends and share repurchases, while keeping debt at our targeted leverage levels.\nIn 2020, we deployed nearly $350 million of cash flow, while maintaining excess liquidity throughout the pandemic.\nWe deployed $65 million to acquire the remaining rights to the fungicide [Indecipherable].\nWe paid nearly $230 million in dividends and we repurchased $50 million in FMC shares in the fourth-quarter.\nIn 2021, we expect to accelerate cash deployment.\nWe are planning to repurchase between $400 and $500 million worth of FMC shares in the year with purchases in every quarter of the year, though more heavily weighted to the second half.\nWe expect to pay dividends approaching $250 million and we will continue to look for attractive opportunities to make additional modest inorganic investments to complement our organic growth and expand our technological capabilities.\nI'd like to close with a final update on our SAP S/4HANA ERP system implementation.\nWe had a successful last go-live in November and are now operating on a single thoroughly modern system across the entire company for the first time in our history.\nThe go-live went better than expected and we have smoothly transitioned to operating the company in closing the books in the new system.\nOur new SAP system has enabled significant efficiencies in our back office processes.\nWe captured over $50 million in synergies in 2020 having moved aggressively to accelerate $30 million in planned savings from 2021 to 2020.\nWe now expect to deliver $15 million in SAP enabled synergies in 2021, the benefit of which is reflected in our full year guidance for a total of $65 million in synergies from implementing the new system.\nThere will certainly be additional efficiency gains in 2022 and beyond as we further leverage this generational investments in our business process infrastructure, but we will drive them as part of our business as usual efforts to gain leverage on back office costs as we continue to grow the company.\nWe had a number of issues in late Q4 that we're having to address.\nWe do not expect all of them to results in Q1.\nWe do however see these issues as transitory and are focused on ensuring we can mitigate supply chain risks and continue to expand our market growth opportunities.\nAs you can see from our robust 2021 guidance, we are confident that 2021 will be another year of strong revenue and earnings growth for FMC.\nWe continue to renew our portfolio launching two new important products in Q1, we continue to invest in our R&D pipeline, and we remain fully committed to bringing new sustainable technologies to our customers.\nOur overall agenda on sustainability continues to advance, with the recent appointment of our first Chief Sustainability Officer and through new partnerships like the one we recently announced with Novozymes.\nWe plan to return about $700 million to shareholders this year through dividends and buybacks.\nAnd finally, with our 2021 growth rates above the long-range plan, we remain firmly on track to deliver our five-year plan commitments.\nI very much appreciate his leadership and look forward to his continued involvement as non-Executive Chairman.\n",
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"content": "sees q1 revenue down 7 percent.\nsees fy revenue $4.9 billion to $5.1 billion.\nqtrly revenue of $1.15 billion, down 4 percent versus q4 2019, up 2 percent organically.\nq4 adjusted earnings per share $1.42.2021 adjusted earnings are expected to be in range of $6.65 to $7.35 per diluted share.\nfull-year 2021 free cash flow is expected to be in range of $530 to $620 million.\nexpects to repurchase $400 to $500 million of fmc shares in 2021, beginning in q1.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: First, I'll begin by providing an update on how we are navigating our business through the COVID-19 pandemic, while supporting our employees, customers, communities and shareholders.\nSecondly, I'd like to briefly comment on a few points about our first quarter financial performance and finally, I'd like to revisit several key strategic initiatives and programs.\nOur company's existing pandemic preparedness plan and ongoing pandemic exercises enabled F.N.B to stay at the front of this escalating crisis.\nDating back to 2018, our management team went through a pandemic simulation and collaborated with our business continuity team to develop a formal pandemic response plan.\nDuring this process, sustainability was thoroughly evaluated and ultimately formed the foundation of the comprehensive plan currently in place.\nAdditionally, our ongoing commitment to invest in our digital channels and technology played a critical role in our ability to provide convenient banking options for our customers, who were not able to leave their homes.\nOur investments in technology also enabled us to build and establish an automated process to handle nearly 15,000 business applications for the SBA Paycheck Protection Program in just one week's time.\nOur efforts resulted in approving and processing 75% of those applications in the first round of funding, representing $2.1 billion in loans.\nWe anticipate processing the remaining applications during the second round of funding.\nAs I mentioned, when Phase 1 of F.N.B's technology initiative called clicks-to-bricks began, we had previously introduced online appointment setting and we're able to quickly make specialized COVID-19 content and offerings available in our solution centers.\nWe tapped into the strength of our established communication channels for both customers and employees, keeping both audiences informed of any update.\nOur employees' response to this crisis has been exceptional.\nTheir professional, compassionate, positive, and resilient attitudes have been a bright light in helping each other, our customers and our communities while navigating these unprecedented times.\nProtecting the health, safety, and financial well-being of our employees remains critical as we find ways to address any impact to their health or the health of their families.\nFor example, F.N.B provided our team with up to 15 days paid leave and also expanded our existing paid caregiver leave program.\nAdditionally, to assist with any possible financial hardships resulting from the coronavirus, F.N.B provided a special assistance payment to essential employees working on the front line and in our operations areas, who ensure that our customers continue to receive vital financial services.\nWe also leveraged our IT infrastructure by making accommodations to give employees the ability to work remotely where appropriate.\nTo-date, we have approximately 2,200 colleagues working remotely, which represents about half of our workforce and largely non-retail position.\nThis capability also speaks to our investment in technology and IT infrastructure.\nAs we focus on our communities, the F.N.B Foundation committed to provide $1 million in relief in response to COVID-19, benefiting food banks and providing essential medical supplies.\nMany of our employees began reaching out to our clients and our communities to provide support.\nAt our Pittsburgh headquarters, F.N.B's vendor management team has been using our vetting process to assist Allegheny County and quickly researching new vendors, offering medical supplies and services to combat COVID-19.\nWith respect to our retail branches, we have focused on drive-up services and closed our lobbies, reverting to appointment only practices, which are supported by the appointment setting capability within our clicks-to-bricks platform.\nAs you can imagine, the monumental commitment of our leadership team and employees to operate in this challenging environment required to sustain 24/7 effort.\nI would like to commend our employees for the actions they've taken to execute and abide by our safety measures, while continuing operations.\nWith these key priorities and actions in place, let me pivot and comment briefly on our first quarter performance.\nGiven all that's happened in a noisy quarter, our underlying core performance remained solid.\nOur philosophy is to maintain our approach to risk management through varying economic cycles and serve as the primary capital provider to our clients.\nWhile F.N.B like many banks will be subject to a difficult economic environment, this philosophy and the actions we have taken to strengthen our balance sheet and reduce risk should position F.N.B well as we move through the current crisis.\nLooking at the quarter's result, GAAP earnings per share of $0.14 included $0.15 of bottom line impact from significant items primarily related to COVID-19 and the adoption and implementation of CECL in the corresponding reserve build under these macro economic conditions.\nTopline results were solid as revenue increased to more than $300 million, driven by strong loan and deposit growth and positive results across our fee-based businesses.\nAverage commercial loans grew $225 million or 6% as we saw activity pick-up in late March, particularly in C&I with growth of 17%.\nI'll note there was limited impact to average balances from anticipated liquidity draws.\nCompared to the first quarter of 2019, average deposits increased 5% with growth in non-interest-bearing deposits of 7%, leading to an improved funding mix.\nThe net interest margin expanded to 3.14%, supported by strong loan growth, a 7 basis point improvement in total cost of funds and higher accretion levels compared to the prior quarter.\nThe fundamental trends in non-interest income were strong with capital markets revenues of $11 million, setting another record in the first quarter.\nInsurance and mortgage banking income also had strong underlying performance.\nDue to the significant shift in the interest rate environment, our non-interest income includes $7.7 million of impairment on mortgage servicing rights.\nExcluding changes in MSR valuation, mortgage banking income totaled $6.7 million, up more than 50% from the first quarter of 2019 with significant pipelines moving forward.\nOn a core basis, expenses remained stable compared to the fourth quarter and disciplined expense management will continue to be a top priority as we move beyond this crisis.\nVincent and Gary will provide more detail on the implementation of CECL and additional details on the financials in their remarks.\nWe closed out the first quarter of 2020 with our credit portfolio remaining in a satisfactory position in the midst of the current global challenges that have come as a result of COVID-19.\nThe first quarter also marked the adoption of the CECL accounting standard, which as I communicated last quarter, brings additional changes to the reporting of credit quality metrics.\nI will also review the steps we are taking to monitor the books and manage the emerging risks, while continuing to meet the credit needs of our borrowers and the communities in which we operate.\nLet's now review our first quarter results.\nThe level of delinquency at March 31 totaled 1.13%, up 19 basis points over the prior quarter and included a temporary uptick in early stage, a majority of which has already been brought current NPLs and OREO totaled 64 basis points, a 9 basis point increase linked-quarter.\nThis increase does not reflect credit deterioration, but rather changes non-accrual reporting moving from the former PCI pool accounting to the new CECL standard.\nNet charge-offs remained low at $5.7 million for the quarter or 10 basis points annualized.\nProvision expense for the quarter totaled $48 million of which $38 million relates to a reserve build for adverse macroeconomic conditions tied to COVID-19.\nThe ending reserve stands at 1.44%, up 15 basis points compared to our day one CECL reserve of 1.29%, providing NPL coverage of 256% at quarter-end.\nIt's worth noting that inclusive of unamortized loan discounts, our period ending reserve represents 66% of our 2018 DFAST severely adverse scenario charge-offs.\nOur teams have been working tirelessly over the last several weeks, meeting with borrowers, reviewing credits, tracking performance metrics and administering government-backed lending programs as part of our response to the COVID-19 crisis.\nWe entered the crisis with our credit portfolio in a position of strength due in large part to our core credit philosophies that I have discussed with you before, including consistent underwriting, proactive management of risk, attentive and aggressive work-out, and a balanced asset mix spanning our entire footprint.\nWe have taken many actions over the last several years to maintain a lower risk profile to position our book to withstand various economic cycles and adverse conditions, similar to those we are currently experiencing.\nOver the last four years, we have sold approximately $700 million in loans to proactively de-risk the balance sheet, a large portion of which were higher risk acquired loans that we were able to move off the books at a financial benefit to the company.\nWe've also historically limited our exposure to highly sensitive industries like travel and leisure, food and accommodation and energy with exposure to these three industries remaining very low, totaling only 3.8% of our loan portfolio.\nAs it relates to relief programs, we were able to quickly mobilize our credit teams to review and approve payment deferral plans for qualified borrowers, which to-date totals approximately 6% of our loan portfolio.\nAs an SBA preferred lender, we have also been working diligently to support our small business borrowers in securing PPP financing that is fully backed by the SBA.\nThe volume and key performance metrics for these relief programs are monitored daily through a specialized set of reports developed in response to COVID-19.\nUsing our holistic credit systems, we have been tracking daily utilization rates, deferral activity, PPP loan volume and borrower impact assessments, which are broken down further to allow us to monitor our credit portfolio by line of business, loan product, geography, and industry.\nIn addition to expanded analytics, we have also leveraged our existing allowance and DFAST frameworks to conduct scenario analysis and stress testing including select loan portfolios.\nAll of the actions taken will help us manage through the challenging conditions faced by the industry today.\nAbove all, I would like to take a moment to recognize our team of bankers and credit support staff for all of their hard work and dedication to help meet the credit needs of our customers and communities during this challenging time.\nWe'll continue to draw on the leadership and experience of our credit and banking teams to manage through this challenging environment as we have in past cycles.\nToday, I'll cover our results for the first quarter and provide an update on the current environment.\nAs noted on slide nine, first quarter GAAP earnings per share totaled $0.14, which includes $0.15 of significant items.\nThe TCE ratio ended March at 7.36%, reflecting 16 basis points of CECL adoption impact and another 15 basis points for the $48 million of after-tax items.\nThese significant items are listed in the reconciliation tables with the biggest piece being the COVID-19 related reserve build of $38 million during the first quarter.\nWe used a pandemic driven recessionary scenario in evaluating the macroeconomic projections.\nLet's start with the review of the balance sheet on slide 14.\nLinked-quarter average loan growth totaled $278 million or 5% annualized, attributable to commercial growth of 6% and consumer growth of 2%.\nThe average commercial growth includes less than 1 percentage point annualized for COVID-19 related increases in commercial line utilization that occurred in the month of March.\nContinuing on the balance sheet slide, on a linked-quarter basis, average deposits were relatively flat as normal seasonal outflows impacted average balances.\nOn a year-over-year basis, average deposits were up $1.2 billion or 5.2%.\nFrom an overall liquidity standpoint, we are comfortable with our current position, including the benefit of opportunistically accessing the debt capital markets to raise $300 million in holding company liquidity at very attractive spreads on February 20th.\nWe also executed a portion of our previously announced share repurchase program, buying back 2.4 million shares prior to March 12th, representing 0.7% of our total shares outstanding.\nTurning to the income statement on slide 15, net interest income totaled $233 million, up $6.2 million or 2.7% from last quarter.\nThe net interest margin expanded 7 basis points to 3.14%, driven by solid average loan growth, lower cost of funds, and higher discount accretion levels now that we are in a CECL environment.\nDuring the first quarter, the higher discount accretion offset the pressure on variable rate loan yields, given the significant decline in the short end of the curve.\nOn the funding side, the total cost of funds decreased 7 points to 1.01% from 1.08%, reflecting lower borrowing costs as well as the shift in funding mix and a 10 basis point reduction in the cost of interest bearing deposits.\nSlide 16 and 17 provide details for non-interest income and expense.\nThere continues to be strong performance in capital markets, mortgage banking, insurance and trust as well as for operating non-interest income as a whole.\nAs Vince noted earlier, we are consistently receiving positive contributions from our fee-based businesses, which diversifies our revenue base and helps to mitigate the impact of a volatile interest rate environment.\nLooking at the first quarter, non-interest income totaled $68.5 million, a 7.4% decrease from last quarter, due mainly to the impact from the $7.7 million MSR impairment, given the moving down in interest rates.\nExcluding the impairment, non-interest income increased $2.2 million or 3% with capital markets posting a record of $11.1 million, increasing 29% from the fourth quarter, driven by strong origination volume.\nTurning to slide 17, non-interest expense on a run rate basis remained stable compared to fourth quarter levels.\nThis excludes $2 million of expenses associated with COVID-19, $8.3 million of branch consolidation costs, and $5.6 million of expense related to changes in retirement provisions for new grants under our long-term incentive program that do not affect the total cost of the grants, but do affect the expense recognition timing.\nBank shares and franchise taxes increased $1.7 million, reflecting the recognition of a $1.2 million state tax credit in the prior quarter and higher year-end 2019 bank capital levels while other increases and decreases essentially offset each other.\nThe efficiency ratio equaled 59% compared to 56% as the other unusual or outsized items increased current quarter's efficiency ratio by over 3 percentage points.\nRegarding guidance, the outlook we shared in January is no longer relevant, given the impacts of the COVID-19 pandemic on the overall economy and the uncertainty around the length of time it takes to recover.\nHowever, in the spirit of transparency into our short-term forecasts, we are providing our current directional outlook for the second quarter of 2020 on slide 18 based on what we know today, which is subject to change, given the very fluid situation we are all managing through.\nWe expect second quarter net interest income to decline mid-single digits from first quarter levels as the net interest margin reflects a full quarter's impact of the current interest rate levels.\nWe expect average loan balances to be up mid-to-high single-digits, reflecting higher March 31 spot balances and $2.1 billion of PPP loans from the initial phase of the program that are expected to fund during the quarter.\nThe second phase of the program would be additive to these figures as we strive to accommodate all of our customers that want to participate.\nWe expect expenses to be flat from the core level of $178 million this quarter.\nWe expect our core fee trends to continue from solid levels in the first quarter with service charges expected to decline due to COVID-19 impacts on certain products and services.\nWe expect the effective tax rate to be around 20%.\nI'd like to touch on several initiatives that stand out as we move forward.\nIn January, we launched our new interactive website designed with enhanced functionality that creates a one-stop shopping and interactive digital experience.\nOnline appointment setting, a streamlined account opening process and deploying interactive teller machines throughout our footprint are just a few of the functionalities that our clicks-to-bricks digital strategy affords us.\nCombined with our network of nearly 40 ITMs and 550 ATMs and our robust award winning mobile applications, we are well positioned to continue to provide service to our customers through multiple channels and meet their needs during this time of social distancing and economic challenges.\nWe've invested heavily in our mobile and online platform, which is critical during a time of limited operations in the physical channels.\nMobile deposits are up more than 40% in the last two weeks of March compared to the year ago period and pre-COVID-19 first quarter levels.\nF.N.B will continue to build-out our digital capabilities as previously planned.\nTo protect our customers and communities from economic disruption, F.N.B was one of the first banks to develop a structured deferral program and announced several measures to support customers who may be enduring financial hardships and were directly impacted by COVID-19.\nFurthermore, we instituted an outreach program and activated an outbound calling initiative to contact thousands of customers across all business units during the crisis, ensuring their needs were being met.\nWe also continue to participate in the previously mentioned Paycheck Protection Program and evaluate other COVID-19 related federal government relief programs to determine their suitability for our customers and communities.\nRegarding our outlook, liquidity and overall capital position, we consistently run stress test for a variety of economic situations, including severely adverse scenarios that have economic conditions like current conditions.\nUnder these scenarios, our regulatory capital ratios remain above the thresholds and we are able to maintain appropriate liquidity levels, demonstrating our ability to continue to support all of our constituencies under stressful financial conditions.\nAs we gain more clarity on this evolving health pandemic and the resulting challenging economic environment, we will continue to update you on key business drivers and expectations.\nIn closing, I'd like to express how proud I am of our team's efforts during this very difficult time to identify new and creative ways to connect with those in need.\nThis is an unprecedented time for our nation and our industry.\nOur mission has always been to improve the quality of life in the communities we serve.\nNow more than ever, we must work together to support those impacted by this public health crisis.\n",
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"content": "compname reports q1 earnings per share $0.14.\nq1 earnings per share $0.14.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'd like to open the call by expressing my appreciation to the entire FNB team, who produced highly impressive results despite continued challenges presented by the pandemic.\nFirst quarter net income totaled $91 million or $0.28 per share, resulting in an upper quartile return on tangible common equity of 15%.\nI'm so proud to state that the first quarter results are on par with pre-COVID-19 levels, an extraordinary accomplishment given the significant changes in interest rates and a less favorable economic environment during the last 12 months.\nOur company remains well capitalized, with increased risk-based capital ratios and an allowance for credit losses, excluding PPP loans, at 1.57%.\nFNB demonstrated strong fundamental performance.\nIts total revenue increased both on a year-over-year and linked-quarter basis.\nWe established a new record for noninterest income at $83 million, supported by strength in mortgage banking, record wealth management and insurance revenues and solid contributions from Capital Markets.\nDuring the quarter, we originated nearly $1 billion of PPP round 2 loan.\nOn a linked-quarter basis, tangible book value per share increased $0.13 to $8.01, as we continue to -- our commitment to paying an attractive dividend by declaring our quarterly common dividend of $0.12 last week, while executing on $36 million of share buybacks during the quarter, at an average price of $11.91.\nIn addition, our CET1 ratio increased to 10% as we continue to prioritize our options for capital deployment in the manner that produces the highest risk-adjusted returns for our shareholders.\nDiligent expense management remains a top priority, and we are on track to meet this year's $20 million cost savings target, completing our three-year $60 million expense reduction initiative.\nThe efficiency ratio totaled 58.7%, improving 36 basis points compared to the first quarter of 2020, with both quarters reflecting seasonally elevated expenses.\nToday, I'll take a deeper dive into three areas discussed in our annual letter to shareholders, where we've successfully gained scale, strengthened our risk profile and diversified our revenue streams.\nFirst, I will cover the successful expansion of our fee-based businesses and how we've continually expanded our suite of value-added products and services.\nNext, I want to highlight FNB's new digital capabilities and provide updates about our de novo strategy within the clicks-to-bricks initiative.\nLastly, after Gary reviews asset quality and Vince provides details on financials, I will wrap up with a summary of how we differentiate ourselves and deliver value to all of our stakeholders.\nOne of the main areas emphasized in our 2020 annual report was our goal of diversifying our overall revenue mix.\nOver the last several years, we've been consistently growing value-added fee-based businesses, many of which generated double-digit annual growth rates that have led to a more granular fee-based revenue stream.\nIn what has been a challenging interest rate environment over the last 12 months, we have successfully leveraged these investments in our fee-based businesses to mitigate net interest margin headwind, specifically through significant growth in capital markets, mortgage banking, wealth management and insurance revenues.\nDuring the first quarter of 2021, we've continued to build on last year's success as those businesses have increased $16 million or 56% compared to the first quarter of 2020.\nIf you recall, we laid out our long-term strategy to invest and scale our fee-based businesses to offer core products and services to our clients, namely mortgage banking and capital markets.\nAs we transformed our footprint and expanded into attractive markets such as Baltimore, Maryland, Washington D.C. and the Carolinas, FNB continues to grow the scope and depth of client relationships.\nIn 2021, we are adding capacity to mortgage banking operations and servicing as production levels continue to set records each quarter.\nAs of this week, mortgage pipelines are at record levels in relation to both production and held for investment origination.\nOur mortgage banking business had a record-breaking year in 2020 with more than $3 billion in total production and $50 million in fee income.\nEven as rates have risen, we are confident that a broader geography and a more favorable economic environment for purchase money mortgage loans will support healthy production levels and become a greater portion of our total volume.\nTurning to our capital markets platform.\nWe've expanded our capabilities significantly through building our syndications, derivatives and international banking platforms organically, with those businesses now contributing revenues from just over $1 million to more than $30 million annually.\nAdditionally, we have expanded the breadth and reach of our capital markets platform with enhanced debt capital markets capabilities geared toward our upper middle market and large corporate clients.\nLooking ahead, we are also focusing on specific opportunities in public finance and other specialty verticals that will provide broader revenue opportunities with the issuance of corporate and municipal debt.\nAs we've advanced our fee-based businesses, our consumer bank is making important decisions relative to evolving overall consumer preferences and how we deliver products to our clients.\nConsumers can now utilize FNB's e-style checking designed to prevent overdraft and NSF fees completely.\nFNB continues to expand its digital capabilities through launching new products.\nWe recently rolled out a number of new features, such as e-signature and offering credit scores, with plans for embedding the solution center e-store into our robust mobile application.\nThis will provide clients with the opportunity to directly purchase loan products within the mobile application as well as deposit products.\nThe next phase is to finalize our single omnichannel online application so the customer can apply for multiple products with a single application while utilizing our shopping card experience.\nAlong with our digital investments, we continue to streamline elements of the physical delivery channel through implementing dynamic appointment setting capabilities and a comprehensive data-driven sales management platform to better identify value-added products and services when clients conduct business in the branch.\nAdditionally, we are focused on bringing the application process online for more of our loans and our other consumer products in the coming quarters so that consumers are able to seamlessly manage and add FNB products and services using online or mobile channels as we continue to make progress within applications for end-to-end delivery of digital products and services.\nIn addition to investing in technology, we continue to make targeted investments in our physical delivery channel to position our company for accelerated growth and efficiency.\nCharleston, South Carolina is an example of our successful de novo strategy to enter a higher growth market.\nThis year, we will have five retail branch locations and a regional hub that permits us to offer a complete set of fee-based products complementing the consumer and commercial team that are firmly established in the market.\nOur South Carolina bankers were recruited from some of the largest financial institutions in the country.\nThe commercial team has originated more than $150 million in funded assets since inception, and the retail locations ranked among the upper quartile of branches relative to their key performance indicators during 2020.\nLooking ahead, near-term commercial pipeline are at an all-time high, and South Carolina was the fastest-growing commercial market companywide on a percentage basis for both full year 2020 and first quarter 2021.\nThere are many exciting things happening with our investments in de novo growth market and digital technology.\nAnother area we are proud of is our risk management and credit performance.\nAnd with that, I will transition the call over to Gary to discuss our progress.\nWe continued to see positive performance across our credit portfolio during the first quarter of the year.\nOur key credit metrics improved across the board and remained at very solid levels, with better-than-expected results across a number of consumer portfolios as well as the favorable positioning of our commercial book following the actions taken last quarter to proactively reduce exposure to the most challenged industries.\nI would now like to review some highlights for the quarter, followed by a brief overview of our current deferral levels.\nThe level of delinquency improved over the prior quarter to end March at 80 basis points, representing a 22-basis point improvement linked-quarter, which was driven by positive macroeconomic trends and some seasonally lower past due levels in the consumer portfolio, as is typical in the first quarter.\nExcluding PPP loan volume, delinquency stands at 89 basis points.\nThe level of NPLs in OREO ended March at 65 basis points, an improvement of 5 bps on a linked-quarter basis, while at non-GAAP level, excluding PPP loans, stands at 72 basis points.\nThe improvement was largely driven by a reduction in nonaccrual loans of $12 million during the quarter, with nearly half of our NPLs continuing to pay on a contractually current basis.\nNet charge-offs for the first quarter came in at a very solid level of $7 million or 11 basis points annualized and 13 bps on a non-GAAP basis, with provision expense totaling $6 million, resulting in an ending March reserve position at 1.42%.\nExcluding the PPP portfolio, the non-GAAP ACL stands at 1.57%, up 1 basis point over the prior quarter.\nInclusive of the remaining acquired unamortized discount, our total reserve coverage stands at 1.78%, with our NPL coverage position also remaining favorable at 230% following the previously noted improvement in NPL levels during the quarter.\nI'd now like to provide you with a brief update on our loan deferral levels.\nAt the end of March, our deferrals are down to 1.2% of our core loan portfolio and the number of new requests from commercial borrowers have essentially ceased at this point.\nWe continue to monitor these smaller credits actively, as we have done throughout the entire pandemic, with the expectation that the numbers will continue to reduce as the economy opens up.\nAdditionally, we continue to track our portfolio mix and performance trends to stay ahead of any potentially sensitive asset classes that could show signs of stress toward the tail end of the pandemic.\nAs is consistent with our approach to risk management, we will continue to proactively identify any potential areas of risk and take action if opportunities arise that are strategically and financially beneficial to the company.\nIn closing, we are very pleased with the solid start to the year and the continued progress we've made in the book to work down our limited exposure to the more sensitive industries.\nAs the broader economy continues to evolve, we are focused on managing our book through our core credit principles of disciplined underwriting across our footprint, attentive risk management and the proactive workout of credits to keep our portfolio well positioned as we look forward to the anticipated activity from an accelerating economy in the second half of the year.\nToday, I will discuss our financial results and some of our current expectations.\nAs noted on Slide 5, first quarter earnings per share was solid at $0.28, up significantly on a year-over-year basis, as the first quarter of 2020, a significant reserve built at the onset of the pandemic.\nAt a high level, results for the quarter included record levels of noninterest income translating into revenue growth, well-managed expenses and significantly lower provision for loan losses given recent asset quality trends, partially offset by the continued impact of this low interest rate environment.\nLet's review the balance sheet on Page 8.\nAverage balances for total loans increased 8.3% on a year-over-year basis and decreased 0.8% from the fourth quarter.\nOn a spot basis for the first quarter of 2021, total loans were up 0.3% as PPP balances increased $330 million on a net basis, with $900 million of round 2 PPP loans funded during the quarter partially offset by $500 million of PPP forgiveness.\nCommercial line utilization rates remain at record lows in the low 30s, which translates into about $0.5 billion in funded balances at a normalized utilization rate.\nThis level creates upside for loan growth, as reflected in the strength of our long-range commercial pipelines, which are near all-time highs.\nAverage deposits grew 19.3% on a year-over-year basis and increased 5.7% annualized on a linked-quarter basis.\nOn a spot basis, for the first quarter of 2021, total deposits increased $1.2 billion or 16.9% annualized, led by strong growth in noninterest-bearing and interest-bearing demand deposits, partially offset by a managed decrease in time deposits.\nThis continued deposit growth bolsters our ample liquidity and strengthens our deposit mix, with a loan-to-deposit ratio at 84%, with 33% of our deposits being noninterest-bearing at the end of the quarter.\nTurning to the income statement.\nNet interest income declined $11.5 million or 4.9% compared to the fourth quarter.\nThe reported net interest margin narrowed 12 basis points to 2.75% as higher average cash balances were a 6-basis point negative impact on the margin compared to last quarter.\nAdditional drivers to the lower margin were a 7-basis point reduction in PPP contribution and a 2-basis point reduction in the benefit from purchase accounting on acquired loans.\nExcluding these impacts, the underlying margin increased 5 basis points from the fourth quarter, with benefits from continuing to manage down interest-bearing deposit costs which improved 12 basis points to 31 basis points for the quarter.\nWith the cost of these deposits ending the quarter at 27 basis points on a spot basis, 4 basis points lower than the average, we expect further reductions in our cost of funds moving forward.\nLet's now look at noninterest income and expense on Slides 10 and 11.\nNoninterest income totaled a record $83 million as mortgage banking income remained strong at $16 million, with expanded gain on sale margins and strong sold production volume that was up 69% on a year-over-year basis.\nWealth management increased 14% from the fourth quarter to record levels due to the expanded footprint and positive market impacts on assets under management.\nSolid contributions from capital markets and insurance also supported the record fee income result for the quarter.\nLooking on Slide 11.\nNoninterest expense totaled $184.9 million, relatively flat with the prior quarter and year ago quarter.\nOn an operating basis, compared to the fourth quarter of 2020, salaries and employee benefits increased $2.7 million or 2.5%, primarily related to $5.6 million of expense in the first quarter of 2021 due to the timing of normal seasonal long-term compensation recognition, similar to last year's first quarter.\nOccupancy and equipment on an operating basis increased $2.5 million or 8.1% due to investments in digital technology, expansion in key growth markets across the footprint and seasonal expenses related to adverse weather.\nOur CET1 ratio improved to an estimated 10%, up from 9.1% last March, even with $75 million of buyback over this period, reflecting FNB's strategy to optimize capital deployment.\nTurning to our outlook.\nWe expect reported net interest income to be generally flat from first quarter '21 levels, as we expect a pickup in loan activity to be weighted toward the second half of the year and the net interest income contribution from PPP to be similar to the first quarter.\nFor the full year of 2021, our mid-single-digit loan and transaction deposit growth assumptions, ex-PPP, remain unchanged from our prior guidance.\nWe expect continued strong contributions in mortgage banking, given the pipelines Vince mentioned, with total noninterest income expected in the high $70 million range for the second quarter.\nFor provision, our current outlook is down from our expectations in January, subject to loan origination activity in the second half of the year.\nWe are on-track to achieve our expense savings target of $20 million for 2021 and expect operating expenses for the second quarter to be down from seasonally higher expenses in the first quarter, based on our current forecasted level of mortgage commissions.\nFor the full year of 2021, we still expect revenues to be stable compared to 2020 and expenses to be down slightly year-over-year.\nLastly, we expect the full year effective tax rate to be around 19%, assuming no change to the statutory corporate tax rate of 21%.\nWe've covered a lot of ground today, and I want to wrap up with how successfully executing our long-term growth strategy differentiates FNB moving forward.\nFirst and foremost, FNB is in a unique position as a regional bank with a top market share in many attractive growth markets across a broad geography.\nGiven this position, our local product specialists and decision-makers, dedicated to serving our markets, can provide a high-touch, relationship-based personal service level that consumers and middle market borrowers prefer.\nWe have an exceptionally talented team of bankers, the necessary funding and optimal capital levels to pursue relationships across the footprint to accomplish our growth objectives and provide our shareholders with peer-leading returns on tangible common equity.\nAs an organization, we've consistently and prudently invested in technology, data analytics and risk management to better the customer experience, improve profitability and enable FNB to maintain superior asset quality throughout varying cycles while maintaining a top quartile efficiency ratio relative to peers.\nWe have been recognized for our mobile and digital offerings that have improved the customer experience by positioning the company for shifting preferences and providing FNB with a sustained competitive advantage.\nOur culture of risk management and disciplined approach to underwriting and local decision-making allows us to maintain our lower risk profile.\nWe are unique in that we can maintain a lower level of cumulative losses while driving mid- to high single-digit loan growth because of our diversified granular approach to credit.\nAs it relates to the quality of people and strength of our culture, FNB has received more than 65 Greenwich Excellence and Best Brand Awards, including specific recognition for excellence in client advisory services and for its commercial banking client experience during the past decade.\nThe company further built on these honors in 2020 with three consecutive quarters of recognition as a Greenwich Associates Standout Commercial Bank amid crisis for our COVID-19 response.\nAnd just last week, FNB was named to Forbes 2021 ranking of the World's Best Banks based on consumer feedback.\nFNB is one of only 75 banks in the United States to be recognized on the list, which includes a total of 500 banks from around the globe.\nIn closing, we are focused on continuing our commitment to advance our market position by gaining scale and operational efficiency and by cultivating meaningful lasting relationships with our clients and communities while simultaneously creating value for our shareholders.\n",
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"content": "compname reports q1 earnings per share $0.28.\nq1 earnings per share $0.28.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Gary will discuss asset quality and provide further detail on our loan portfolios.\nVince will address our financial results and cover relevant trend.\nI will then provide an update on our digital platforms and physical operation and, finally, discuss our organization's $250 million commitment and continuing initiative to address economic and social inequity in our community.\nAs a company, and on a personal level, we've endured significant challenges and change this year.\nOur thoughts are with those who have been impacted by the pandemic and unrest in our community.\nI am proud of how our company has rallied in support of our customers and neighborhoods where we operate.\nThe resolve to work together to emerging stronger and united in our demand for a more successful future for all of our constituents.\nF.N.B. second quarter results increased significantly.\nOperating earnings per share increased 53% to $0.26, which included an additional $17 million or $0.04 per share of COVID-19 reserve bill in the quarter.\nPPNR increased to $130 million.\nCore revenue trends remained solid throughout a challenging interest rate environment with total revenues increasing 6% annualized to $306 million.\nAnd total assets growing nearly $3 billion to end June at $38 billion.\nCompared to the first quarter, loans and deposits increased $2.3 billion and $3.6 billion or 10% and 15% respectively.\nOn a linked quarter basis, double-digit second quarter loan and deposit growth were supported by organic commercial production and originating nearly 20,000 PPP loans totaling $2.6 billion.\nOur fee-based businesses performed exceptionally well with capital markets and mortgage banking establishing revenue records of $13 million and $17 million respectively.\nOur efficiency ratio was 53.7% and operating expenses were well controlled, down 3% from the first quarter.\nEven though there has been disruption across our footprint due to COVID-19, we've still seen good commercial loan origination activity across most of the footprint.\nThis is a testament to our team to continue to serve our clients and meet their borrowing needs, while dealing with the challenging operating environment.\nThe strength in our balance sheet and ample liquidity enabled F.N.B. to support our clients' capital needs.\nWe continue to apply our consistent underwriting standards aligned with our strategy and overall risk profile as we evaluate business opportunities in the current climate.\nOn a linked quarter basis, total average loans increased 9%, largely driven by growth in commercial loans of 14%.\nCommercial line balances when compared to historical levels contracted as we saw much lower line utilization of 36%.\nThe utilization rate decreased as PPP funds were utilized to support working capital needs by many existing clients and economic activity declined during the period.\nCommercial loan balances were also impacted by large corporate borrowers paying down bank credit facilities with increased liquidity in the bond market.\nAverage deposits increased 11% as we had solid organic growth in customer relationships.\nThe large inflow of deposits for PPP funding in government stimulus activities also occur.\nAs part of our business strategy, we have been focused on reducing the level of wholesale borrowings by continuing to gain depositors and expand existing relationships.\nAs a result, we were able to fully eliminate our overnight borrowing position, replacing it with customer deposit.\nNon-interest bearing deposits were up $2.1 billion or 33% from the prior quarter-end.\nLooking at June 30 spot balances, our loan to deposit ratio was 92%, including the funded PPP loans.\nwhich positions us more favorably in the current rate environment.\nGrowing non-interest-bearing deposits has been integral -- has been an integral part of our long-term strategy, and we've consistently been able to grow organically through various interest rate environment, further strengthening our overall funding mix.\nIn fact, transaction deposits have increased $4 billion or 20% from March 31 and now represent 85% of total deposits, which compares very favorably to 79% five years ago.\nWith the Fed taking near-term rate increases off the table, there is opportunity to offset net interest income headwind by continuing to reduce deposit costs.\nAs we have stated previously, continuing to grow our fee-based businesses is essential to diversifying our revenue sources and to mitigate pressure on net interest income in an extended low rate environment.\nWith interest rate expectations now reflecting lower for longer, it is important we continue to build on our recent success in capital markets, mortgage banking, wealth management and insurance.\nThis quarter's record mortgage banking income of $17 million better reflects the fundamentals in the results without MSR impairment as the mortgage banking business set a new production record for the quarter of $869 million.\nTurning to our participation in the Paycheck Protection Program.\nI would first like to recognize our teams for their support of our customers and communities throughout these extraordinary circumstances.\nOur employees have worked tirelessly to ensure businesses receive critical funding during a time when regions within our footprint experienced extended shut down, particularly in our metro markets in Pennsylvania and the Mid-Atlantic, and when many borrowers turned from larger banks to F.N.B. to accommodate their needs.\nAs part of the PPP origination process, each borrower opened an F.N.B. account, which supports our efforts to bring in new households.\nLooking ahead, we are optimistic that borrowers will be able to deploy these funds in businesses around the footprint we open.\nAs an organization, we leveraged our technology infrastructure and expertise already in place to quickly adapt and accommodate our customers in a challenging remote environment.\nCoupled with significant financial aid and employee volunteerism in our communities, our efforts have helped tens of thousands of small businesses during the pandemic, and supported the retention of hundreds of thousands of jobs.\nFrom the beginning of the COVID-19 crisis, F.N.B. has upheld consistent volumes of total transactions -- deposit transactions by providing customers with a seamless transition from physical to online and mobile engagement.\nThis was made possible from the significant investment we've committed to digital -- our digital and online platforms over the last decade.\nIn fact, the appointment setting feature on our new website that went live in January enabled F.N.B. to continue serving clients safely in our branches throughout the crisis.\nWe grew from 26 monthly appointments in January to 2,700 appointments in April.\nthe rapid shift to remote services accelerated the enhancements to our digital strategy, and we're already under way, and minimized disruption for our customers.\nBut the operating environment remains in a constant state of change, we will continue our innovative approach to better serve our customers.\nI will now share some updates regarding our operations and delivery teams.\nTogether with the uptick in online appointment setting, our websites increased -- our website increased traffic by millions of daily visitors.\nAs we are deepening relationships with customers throughout our digital capabilities, we are also generating significant opportunities.\nBy synchronizing physical and digital customer experience, we can take customers to utilize a single product and broaden the relationship to improve products such as savings, credit card, private banking, mortgage, wealth management and insurance.\nAt the end of the day, it provides tremendous value to the customer to have multiple product relationships within F.N.B. on a single platform connected through digital capabilities.\nOverall, the acceleration of digital and remote banking volume demonstrates our versatile and integrated multi-channel strategy.\nCustomers have been more active in F.N.B.'s mobile and online channels with monthly average users up by 50,000 in both categories compared to the average for 2019.\nWhile our customer adoption rates for online and mobile have accelerated, our customers have still expressed the strong desire to conduct business within our branches.\nAs an essential business, it is important for F.N.B. to remain available and accessible.\nOur business continuity team in collaboration other units, including data science, human resources and retail banking, developed a monitoring system in which we can evaluate data related to the healthcare prices on a locational basis.\nOn July 13th, 2020, we reopened the majority of our branch lobbies customers adhering to the most stringent safety measures, including social distancing and cleaning protocols as we begin to move forward to the next phase of operation.\nDuring the second quarter, our credit portfolio continued to perform in a satisfactory manner as the COVID-19 global pandemic continues to evolve.\nOur credit metrics have held ground in this challenging economic environment, which I will cover with you in greater detail on both a GAAP as well as a non-GAAP basis, exclusive of our loan volume funded under the PPP program.\nI'll also provide some updates on the status of our loan deferrals and the steps we are taking to manage our book, particularly those borrowers tied to COVID-sensitive industries.\nLet's now review the quarterly results.\nThe level of delinquency ended the second quarter at 92 basis points on a GAAP basis, down 21 bps over the prior quarter as early stage delinquencies returns to more normalized levels.\nOn excluding PPP loan volume, level of delinquency would have ended the quarter at 1.02%, down 11 bps from the prior quarter.\nLevel of NPLs and OREO totaled 72 basis points at June, an 8 basis point increase linked quarter, while the non-GAAP level was 80 bps, excluding PPP.\nThe migration was due primarily to a few previously rated credits that were further impacted by the current COVID environment that we've proactively moved to non-accrual during the quarter.\nOf our total NPLs at June, 48% of these borrowers continue to pay as agreed and are current.\nNet charge-offs remained at a good level at $8.5 million for the quarter or 13 basis points annualized, resulting in a year-to-date level of 12 basis points.\nProvision expense totaled $30 million in the quarter, which includes additional build for macroeconomic conditions tied to COVID-19.\nInclusive of the Q1 economic-driven build, our COVID-related provision for the first half of the year totaled $55 million.\nOur ending reserve stands at 1.4% and, excluding PPP volume, the non-GAAP ending ACO totals 1.54%, representing a 10 basis point increase over the prior quarter, resulting in NPL coverage of 215%.\nWhen including the acquired unamortized loan discounts, our coverage, excluding PPP volume, is 1.87%.\nUnder the preliminary severely adverse DFAST scenario, the current reserve position, inclusive of unamortized loan discounts, would cover 78% of stressed loss.\nAs the pandemic continues to pressure the global economy, our approach to managing the book in this COVID environment remains in line with what I communicated on last quarter's call.\nWe continue to conduct thorough borrower level reviews within our commercial book to attract key performance indicators.\nFor those that operate in economically sensitive industries or that have otherwise been impacted by the pandemic.\nThese ongoing targeted portfolio reviews allows our credit teams to quickly identify and proactively address emerging risks at the borrower, industry or overall portfolio level.\nAdditionally, we continue to conduct a series of scenario analysis and stress test models under our existing allowance and DFAST frameworks as we work through this challenging environment.\nAs it relates to our borrowers requesting payment deferral, 10% of our loan portfolio, excluding PPP loans, were approved during the initial deferment request window.\nOf these deferments, 98.4% were current and in good standing prior to the pandemic.\nOf the remaining 39 million, 12 million is already on non-accrual.\nOur request for initial deferrals are essentially non-existent, and we have only seen a small amount of second request for payment deferral at this time.\nThat said, we are carefully monitoring our credit portfolio and remain vigilant to identify borrowers that could face further pressure during uncertain economic conditions.\nThis approach allows us to quickly identify and manage risk in the portfolio, while still meeting the credit needs of our customers.\nThe composition of the portfolio remains diverse and well balanced across several product lines, geographies and industries.\nAs shown on Slide 10, our exposure at the highly sensitive industries remains low at 3.8% of the total portfolio, which includes all borrowers operating in the travel and leisure, food services and energy space.\nAnd the level of payment deferrals granted to these borrowers remains at 38%.\nAdditionally, we have been tracking our retail-secured IRE portfolio closely to assess the emerging challenges on this asset class, as well as the nature of the tenants' operations and insulation from certain economic strain as essential businesses.\nOur weighted average LTV position in this book remains strong at 65%.\nIn summary, we continue to manage our credit portfolio through this difficult economic environment by drawing on our strong credit fundamentals and our risk management strategies, which we continue to enhance as the COVID situation plays out.\nConsidering these challenges, our portfolio is in a satisfactory position entering the second half of the year.\nRealizing the uncertainty of the economic environment as we look ahead, we continue to draw on the strength of our experienced banking teams to manage through this environment as we move into the latter half of the year.\nI would like to recognize our teams for their tireless efforts as we continue to work through this challenging environment.\nToday I will review the second quarter results and trends in our operating environment, and then discuss our capital management approach and current position.\nI'll note that our tangible common equity levels entered the year at strongest position we've had in nearly two decades, and we are comfortable with our current capital position.\nLooking at Slide 5, GAAP earnings per share for the second quarter is $0.25, excluding $0.05 related to significant or outsized items.\nThis included $17.1 million of COVID-19 reserve build and $2 million of COVID-19-related expenses.\nThe TCE ratio ended June at 6.97%, reflecting these items as well as a 52-basis-point temporary impact for the $2.5 billion in net PPP loan balances at June 30th.\nWithout the PPP balances, the TCE ratio would have been 7.49%.\nAdditionally, our CET1 estimate ended the quarter at 9.4% compared to 9.1% at March 31st and 9.4% at the end of 2019, as PPP loans carry a 0% risk weighting for risk-based capital purposes.\nPretax pre-provision earnings increased to $130 million, providing more than adequate earnings power as we declared our third quarter dividend of $0.12 earlier this week.\nWith a dividend payout ratio of 48% in the second quarter, they're well below historical levels of previous payout ratios.\nI'll touch on our capital management approach in more detail later on my comments.\nTurning to the balance sheet on Slide 14, the key theme is the impact of $2.5 billion in net PPP loan, as high as [Phonetic] 9.5% of total loans and leases at June 30th.\nPPP was the primary driver in the linked-quarter average increase of $2.1 billion or 9% as well as strong organic activity across most of the commercial footprint.\nOur commercial line utilization ended June at 36%, below historical levels, and down from the mid-40%s spot utilization rate at the end of the first quarter as we clearly saw some customer borrowing activity shift over to the PPP and our large corporate borrowers access to capital markets to reduce their bank debt.\nAverage consumer loans were essentially flat with direct installment loans increased $65 million from 14% annualized and residential mortgage increased 6% annualized, two bright spots to continue to perform well.\nThe increases in direct installment mortgage loans were offset by continued declines in indirect auto loans and consumer lines, two loan classes heavily affected by the pandemic.\nContinuing down to Slide 14, average deposit increased to $2.7 billion or 11% on a linked quarter basis, led by $2.9 billion or 15% of transaction deposit growth.\nTransaction deposits equaled 85% of total deposits.\nAs our managed decline in CDs continued, transaction deposit balance has benefited from stimulus programs and PPP customer-driven inflows.\nNon-interest-bearing, interest-bearing demand, and savings account balances each increased significantly, up $1.8 billion, $854 million, $226 million respectively.\nNow focusing on the income statement on Slide 15.\nCompared to the first quarter, net interest income totaled $228 million, a decrease of $4.7 million or 2% as loan and deposit growth mostly offset the impact from lower rates.\nThe net interest margin narrowed 26 basis points to 2.88%, primarily driven by a full quarter impact from March action, the lower the target Fed fund range to zero to 25 basis points.\nAdditionally, average one-month LIBOR fell to 36 basis points from 141 in the prior quarter.\nTotal yield on average earning assets declined 58 basis points to 3.54%, reflecting lower yield on variable and adjustable rate loans due to the lower interest rate environment and the impact of the PPP balances.\nTotal cost of funds decreased to 67 basis points from 101 basis points as cost on interest-bearing deposits were reduced 37 basis points.\nSlide 16 and 17 provide details for non-interest income and expense compared to the first quarter.\nNon-interest income totaled $77.6 million, increasing $9.1 million or 13.3% as mortgage banking operations increased $17.6 million on a reported basis or $10.2 million excluding MSR impairments of $300,000 and $7.7 million respectively.\nMortgage production established a new quarterly record at $869 million, increasing $306 million or 55% from the prior quarter with large contributions from North Carolina and the Mid-Atlantic region.\nCapital markets also set a new record of $12.5 million, increasing $1.4 million or 12.6% with strong contributions from interest rate derivative activity across the footprint.\nAs expected, service charges decreased $6.2 million or 20.5% due to noticeably lower transaction volumes in the COVID-19 environment.\nTurning to Slide 17, non-interest expense totaled $175.9 million, a decrease of $19 million or 9.7%, including $2 million of expenses associated with COVID-19 in second quarter 2020, $15.9 million of outsized, unusual or significant expenses occurring in the first quarter.\nOn an operating basis, expenses declined $5.1 million or 2.9% compared to the first quarter of 2020 as we have realized lower variable expenses such as travel and business development and increased FAS 91 benefits, given the amount of loans originated in the second quarter.\nAdditionally, we recognized an impairment of $4.1 million from a second quarter renewable energy investment tax credit transaction.\nThe related tax credits were recognized during the quarter as a benefit to income tax.\nThe efficiency ratio improved significantly 53.7% compared to 59%.\nTurning to recent trends on Slide 18, we continue to observe daily changes in external factors, including multiple aspects of potential economic recovery, changes in government programs and regulation changes over current programs.\nSaying that, we are providing our current directional outlook for the third quarter based on what we know today, which is subject to change, as we all know.\nWe expect period end loans to increase low-single-digits from June 30th, assuming no forgiveness of PPP loans, given the SBA's current expected time for processing forgiveness applications.\nWhile we expect deposits to decline from the second quarter 2020 levels based on an expectation that customers increase the deployment of funds received through the government programs, we do expect to see continued organic growth in transaction deposits.\nWe expect third quarter net interest income to reflect the full impact of lower one-month LIBOR rates and variable rate loans, partially offset by a full quarter benefit of higher commercial loan balances, continued reductions in the cost of interest bearing deposits.\nWe expect positive trends in capital markets and mortgage banking, although lower than the record levels this quarter.\nWe expect service charges to increase and recent transaction volume trends continue.\nWe expect expenses to be stable, up slightly from the second quarter.\nLastly, we expect the effective tax rate to be around 17% for the full-year 2020.\nFor the remainder of my comments, I would like to discuss our risk-based capital position and overall management philosophy, given the current environment beginning on Slide 20.\nWe continue to be very comfortable with our capital ratios as they stand today with the benefit of entering this crisis from a position of strength.\nAs demonstrated in the new capital slides we have added to the deck, we have ample internal capital generation cushions for all of our capital ratios in relation to well-capitalized thresholds.\nFor example, for the total risk-based capital ratio fall below 11%, total capital would have to drop by $258 million, 7.9% of total capital of $3.3 billion.\nOur risk-weighted assets will have to increase by $2.3 billion, which is 8.5% of total risk-weighted assets of $27.5 billion.\nI could comment also that $258 million is in after-tax dollars.\nOn top of our capital position, we have a conservative bias in how we build reserves, especially given the consistent underwriting philosophy that's been in place for well over a decade.\nWith CET1 of $2.6 billion and an allowance for credit losses of $365 million and a remaining PCD discount of $77 million, we have a substantial base available to absorb credit losses.\nTo put that in context, our reserves plus remaining discount on previously acquired loans would cover 62 quarters of net charge-offs that averaged $7.1 million per quarter in the first half 2020.\nThis is before considering the $2.6 billion in CET1.\nAnother way to look at this is relative to severely adverse charge-offs in our last stress test.\nAgain, using $442 million in reserves plus remaining discount, we covered 75% of $586 million in charge-offs projected under the severely adverse scenario for a nine-quarter period.\nIf we put the $586 million in context, that compares to $64 million over nine quarters using the first half of 2020 net charge-offs or 9.2 times the current levels.\nAs far as dividend sustainability, we are governed by the Federal Reserve and the OCC.\nFrom a Fed perspective, we currently pay out $39 million in common dividends and $2 million in deferred dividend for a total of $41 million per quarter.\nThe Fed fourth quarter test currently shows in excess of $153 million after paying out the third quarter dividend just declared.\nFrom an OCC perspective, there are significant cushions to support the $46 million the bank is projected to pay up to the holding company.\nThree-part [Phonetic] test shows a cushion of $913 million relative to net divided [Phonetic] profits, $517 million relative to net profits for the current year combined with retained net profits for the prior two years, cushions are both well-capitalized levels ranging from 228 basis points to 384 basis points.\nIn addition to looking at our capital position, it's important to consider PPNR generation.\nYear-to-date PPNR of $236 million more than supports the incremental reserve build through the first six months of the year.\nWe generated ample capital to cover the preferred and common dividend, and our CET1 ratio was consistent with where we ended 2019 at 9.4%.\nEarlier this week, we announced our third quarter dividend of $0.12.\nGiven the earnings level through the first half of 2020, you can see there is capacity to continue the return capital to shareholders.\nOverall, our capital management philosophy is grounded in a conservative and consistent underwriting and credit management philosophy throughout varying economic cycles, supplemented with robust and comprehensive enterprise risk management, including very active credit monitoring processes.\nLooking at everything we've managed through over the last few months, the efforts of our team has been nothing short of exceptional, through assisting our clients and communities in which we serve.\nRecent events highlighting persistent inequities in our country have affirmed our important mandate to support those who are vulnerable and traditionally underserved.\nAs an organization, we continue to place a strong emphasis on being inclusive and demonstrated by our recent $250 million commitment to address economic and social inequity and low and moderate income and predominantly minority communities.\nAs we continue to deploy these investments, our shareholders will benefit as we have continued to prudently manage risk, liquidity and capital action to better position our company.\nDuring the quarter, F.N.B. originated nearly $500 million in Paycheck Protection Program loan in low to moderate income in rural neighborhoods, assisting thousands of small businesses and employees.\nOur success is a direct result of our banker's proactive outreach to over 100 organizations and non-profit entities that work directly with these communities.\nThis is just an example of how committing our resources this way leads to good business results.\nAs we look ahead to move into the next phase of COVID-19 recovery, we will continue to focus our response on four key pillars to meet the needs of each of our constituent.\nThe pillars are employee protection and assistance, operational response and preparedness, customer and community support, and risk management and actions taken to preserve shareholder value given the extreme challenges presented.\nDue to these unprecedented conditions, our employees have consistently delivered superior experience for our customers.\nIn June, F.N.B. was ranked among the best banks in Ohio and North Carolina by Forbes and AdvisoryHQ respectively, a testament to the consistency of our customer-centric culture across our footprint.\nThe company was again named the Top Workplace in Northeastern Ohio for the sixth consecutive year by the Cleveland Plain Dealer.\nThis recognition, which is based solely on employee feedback, joined the list of nearly 30 such awards received over the past decade.\nAll of this has been made possible by our dedicated employees.\nOur dedication to cultivating a superior culture directly translates into a better customer experience, greater financial performance and higher returns for our shareholders.\n",
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"content": "compname reports second quarter 2020 earnings per share of $0.25.\ncompname reports second quarter 2020 earnings per share of $0.25, a 79% increase from prior quarter.\nq2 earnings per share $0.25.\nq2 operating earnings per share $0.26.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: First, I will provide a short review of the second quarter financial results.\nThen I'll cover recent performance trends of our key business model before turning the call over to Gary and Vince for their remarks.\nF.N.B. second quarter earnings per share totaled $0.31, representing an 11% increase on a linked-quarter basis.\nOperating net income reached a record $101 million and total revenue increased to $308.\nOur performance resulted in a return on tangible common equity of 16% and growth in tangible book value per share to $8.20, an increase of $0.19 or 2%.\nThe quarter's efficiency ratio of 56.8% improved due to the benefit of increased revenue and continued expense discipline as we achieved the 2021 operating cost savings floor of $20 million.\nOur company remains well capitalized with an estimated CET1 ratio of 10.02% for the second quarter.\nSecond quarter revenues, supported by record wealth management revenues and strong contributions across a number of segments, including insurance, mortgage banking, capital markets and SBA lending.\nMany of these areas have continued to benefit from our expansion into higher growth markets.\nOn a year-to-date basis, wealth management revenues increased over 6 million, as total wealth management and insurance revenues increased 26% and 8% respectively.\nLooking at the balance sheet, on an annualized linked-quarter basis, F.N.B. demonstrated strong fundamental performance as we saw a pickup in lending activity that translated into a significant spot loan growth of 9% when excluding the impact of PPP loan.\nOn a spot basis, total deposits were flat with seasonal outflows and a decline in time deposit balance.\nNon-interest bearing deposits grew to $10.2 billion at June 30 and now comprise a third of total deposits.\nThis brings our loan-to-deposit ratio to 82.4% providing F.N.B. with ample liquidity and a favorable funding mix moving forward.\nDiving deeper into the Wholesale Bank's performance this quarter, we are encouraged that commercial loan activity has begun to pick up across the footprint and pipelines are healthy entering the second half of the year.\nWe have significant opportunities within the commercial pipelines in the Carolinas.\nPittsburgh and Mid-Atlantic markets, which reached the highest level in the last two years.\nAdditionally, strength in the total near-term pipeline, give us optimism for strong second half for commercial loan origination.\nConsistent with our comments on the April call, activity levels around commercial pipelines, as well as consumers are encouraging given our goal to reach mid single-digit loan growth on a spot basis by the end of the year.\nHowever, I'll note that commercial line utilization rate remain well below historical level.\nWe are optimistic that utilization rates could move higher in the second half of this year as remaining PPP loans are processed through the forgiveness period and the U.S. economy begins to accelerate as the supply chain for many industries improves.\nAs we discussed on the prior call, our mortgage banking business continues to see near record production volumes; however, gain on sale margins contracted across the industry during the quarter were reflecting the current market conditions.\nIn addition to mortgage banking, the overall consumer pipelines have grown significantly since the beginning of the year.\nWe have begun to experience lending growth across the consumer product set.\nAs economic activity has begun to pick up, we are experiencing increased loan demand in commercial and consumer banking and favorable credit trends.\nOur results for the second quarter were favorable and we are very pleased with our credit portfolios position moving into the second half of the year.\nDelinquency and non-performing levels decreased meaningfully during the quarter and our net losses remained low.\nPositive momentum of the broader economy and continued reopening of businesses have further contributed to the favorable results for the quarter, particularly as some borrowers in the more sensitive industries and asset classes begin to show signs of recovery.\nI'll cover that in greater detail later in my remarks.\nBut first, let's walk through our credit results for the second quarter and review some of those highlights.\nThe level of delinquency excluding PPP balances ended June at 80 bps, a 9 basis point improvement linked quarter, which was driven by broad improvements across all portfolios, notably commercial and [Indecipherable].\nThe level of NPLs and OREO also improved to end the quarter at 58 basis points, representing a 14 basis point decrease from the prior quarter's ex-PPP level.\nOur NPLs decreased meaningfully down nearly $30 million during the quarter, which was driven primarily by a $21 million reduction in the commercial portfolio, including the resolution of a credit that was previously reserved for.\nNet charge-offs for the quarter were very low at $3.8 million or 6 basis points annualized.\nWhile year-to-date net charge-offs remained at a very solid 9 bps annualized.\nNon-GAAP net charge-offs excluding PPP balances were 7 bps and 10 bps for the quarter and year respectively.\nWe recognized a $1.1 million net benefit in provision this quarter following broadly improving economic activity and positive credit quality results through June, resulting in a stable reserve position at 1.42% while the ex-PPP reserve stands at 1.51%.\nNPL coverage also remains very favorable at 278% due to reduced NPL levels during the quarter.\nOur total ending reserve position inclusive of acquired unamortized discounts totals 1.58%.\nI'd now like to provide some additional color on our loan portfolio and give an overview of our approach to underwriting and managing risk as lending markets remain highly competitive.\nI think quickly on loan deferrals, we ended June at a level of 0.7% of our core loan portfolio with these levels continuing to decline as new requests have essentially ceased and borrowers returned to contractual payment schedules.\nOur banking teams have also remained actively engaged with our commercial customers to stay apprised of how the broader economy and emerging trends are affecting their operations, including the impact of supply chain disruptions, labor shortages and the general future outlook for their respective industries.\nThese factors are all taken into careful consideration during our underwriting and credit approval processes, which is consistent with our overall credit philosophy.\nWe were successful in closing a number of high-quality lending opportunities in the quarter with strong borrowers that fit within our desired credit profile and we will continue to approach transactions in this manner to help us meet our growth targets, while maintaining our desired risk profile.\nIn closing, we had a successful quarter marked by solid credit results and low losses, which has us favorably positioned moving into the second half of the year.\nWe made significant progress working down rated credits as indicated by a 15% reduction in classifieds, reflecting the tireless efforts put forth by our work out teams to reduce exposure to more sensitive industries and take risk off the table as economic conditions continue to improve.\nAs we look ahead to new lending opportunities, our core credit principles that have served us well throughout economic cycles remains front and center in all credit decisions we make including consistent and disciplined underwriting across the footprint, attentive and timely management of risk, and proactive portfolio management to further position us for the quarters ahead.\nToday, I will discuss our financial results and current expectations.\nAs noted on Slide 5, first quarter earnings per share increased to $0.31,, up significantly from the prior and year ago quarters.\nLooking at highlights for the quarter, on an operating basis, net income available to common stockholders increased $18.3 million or 22% to a record $101.5 million as total revenue increased $2.1 million or 0.7%.\nOperating expenses were well controlled, down $5 million linked quarter.\nWe saw a negative provision for credit losses due to the improved credit metrics that Gary just discussed.\nLinked quarter growth and operating PPNR of $7 million or 6% reflects the company's strong performance in the quarter even without provision benefit.\nNow turning to Slide 7 to review the balance sheet.\nPeriod-end loan balances excluding PPP increased $515 million or 9.1% annualized on a linked quarter basis.\nThrough organic growth with strong contributions from both commercial and consumer segments, the economy continues to rebound.\nOn an average balance basis, total loans decreased $56 million reflecting accelerated PPP forgiveness during the second quarter.\nOn the deposit side, average deposits increased $1.1 billion or 3.9% to over $30 billion, a record high with non-interest bearing deposits comprising 33% of total deposits.\nOn a spot basis, deposits were relatively flat, even the managed decline in higher cost time deposits.\nFocusing on Slide 8.\nNet interest income increased $5 million to $227.9 million as the PPP contribution increased $2.2 million -- $25 million [Phonetic], which was offset by $1.9 million decreased contribution of purchase accounting accretion to $5.0 million.\nThe underlying net interest income trends improved due to a more favorable balance sheet mix and our continued focus on reducing deposit costs in the lower interest rate environment was evidenced by our total cost of interest bearing deposits declining 7 basis points to 24 basis points.\nReported net interest margin decreased 5 basis points to 2.70% as earning asset yield declined 9 basis points, which was partially offset by the 6 basis point reduction in the cost of funds.\nThe yield on total loans and leases remain stable at 3.51%.\nWhen excluding the higher cash balances, purchase accounting accretion and PPP impacts, the underlying net interest margin would be 2.71%, representing a 1 basis point increase compared to the first quarter 2021 and the second quarter in a row of improving underlying net interest margin.\nLet's now look at non-interest income and expense on Slides 9 and 10.\nNon-interest income totaled $80 million decreasing $3 million from record levels last quarter.\nWe achieved record wealth management revenue of $15 million through contributions across the geographic footprint and positive market impacts on assets under management.\nSBA volume and average size of transactions increased during the quarter, driving SBA premium revenues to $2.6 million almost double the prior quarter.\nPipelines in this business remain solid and we expect near-term SBA premium revenues to be strong.\nMortgage banking operations income decreased $8.3 million as gain on sale margins tightened meaningfully in the second quarter 2021 throughout the industry.\nHeld for sale pipeline declined significantly elevated levels and the benefit for mortgage servicing rights impairment valuation recovery was $2.2 million lower than last quarter.\nNon-interest expense decreased $2.4 million linked quarter on a reported basis.\nWhen excluding $2.6 million of branch consolidation costs in the quarter, non-interest expense decreased $5 million or 2.7%.\nOn an operating basis, salaries and employee benefits decreased %5.3 million or 4.9%, primarily related to the timing of normal annual long-term stock awards recognized in the first quarter each year.\nOutside services expenses increased $1.8 million reflecting increases from third-party technology providers, legal costs and other consulting engagements.\nWe are very pleased with this quarter's results with record operating net income, accelerating sequential loan growth, strong revenue growth, solid credit quality metrics, continued growth in tangible book value per share, increasing $0.19 per share to $8.20.\nNow turning to our outlook for the third quarter of 2021.\nExcluding PPP contribution, we would expect net interest income to be up slightly in the third quarter compared to the second quarter.\nThe level of PPP contribution will be a direct function of the modest forgiveness process during the quarter.\nOur current thinking is that we will see around $500 million of forgiveness in the third quarter, which would translate into a $79 million reduction in net interest income contribution from PPP loans.\nHowever, if the SBA approves forgiveness closer to second quarter levels, the reduction in PPP contribution would be smaller.\nWe expect non-interest income to be in the high $70 million area given the diversified nature of our non-interest income revenue streams.\nWe expect non-interest expense to be flattish compared to operating expenses in the second quarter.\nOur provision for loan losses remains dependent on the level of loan origination activity and we are encouraged by the favorable credit trends observed during the first half of 2021.\nRegarding our full year assumptions, our loan growth, total revenue and non-interest expense assumptions remain unchanged with current deposit growth reflecting the benefit of additional government stimulus as we continue to see increased liquidity and a loan-to-deposit ratio below historical levels.\nI'd like to provide an update on the pending Howard acquisition.\nWe are excited to begin the integration process with the Howard team.\nWe are confident that our established leadership in the Mid-Atlantic market will work well with the talented bankers at Howard.\nWe share a deep culture of client and community service, which should allow for a seamless transition in the coming months for all of our stakeholders.\nWe also expect the conversion and integration to run smoothly as both organizations operate on common core system.\nAs discussed previously, our decision to selectively enter higher growth markets through a combination of de novo locations, loan production offices and strategic acquisitions has F.N.B well positioned today.\nWith the Howard merger, we will grow to the number 6 deposit share in the Baltimore MSA, while adding meaningful customer density to the Mid-Atlantic region, which covers Maryland, Washington DC and Northern Virginia.\nOur long-term strategy is to best position our company in the markets where we have the ability to grow loans, low cost deposits and fee income organically through increasing our market share over the long term and expanding the universe of clients and prospects.\nIf you look at our market expansion strategy in the Mid-Atlantic, our four acquisitions since 2013 came in a lower relative acquisition cost with a weighted average price to tangible book of 1.5 times.\nOur growth strategy in the Mid-Atlantic region provided access to a population of 10 million and more than 300,000 businesses with revenue greater than 100,000.\nSince the end of 2015, our compounded annual organic loan growth for F.N.B in Maryland is 15%.\nFurthermore, as a company overall, we have nearly doubled our annual non-interest income since 2015 from $162 million to $294 million, most of which has to do with our investment in products and services, but also bringing those capabilities into our expansion markets and broadening our client relationships.\nTherefore, we are very excited about our long-term potential for growth as we offer our deep product suite to Howard's customer base.\nLooking specifically at some of the transaction highlights.\nThe Howard franchise increases F.N.B. Baltimore deposits by $1.7 billion to $3.5 billion on a pro forma basis, while creating a combined organization of more than $41 billion in total assets.\nAdditionally, the transaction carries lower execution risk given the end market synergies.\nWe view the transaction as financially attractive with a 4% earnings per share accretion with fully phased-in cost savings and enhanced pro forma profitability metrics, which included 200 basis point improvement in the efficiency ratio and an internal rate of return greater than 25%.\nConsistent with our approach to capital management, the transaction is expected to be neutral to CET1 at closing and includes minimal tangible book value dilution of 2%.\nAs I noted earlier, our TBV growth this quarter alone was 2%, essentially earning the TBV dilution back in one quarter.\nOur M&A strategy hasn't changed from what we said in the last couple of quarters.\nFirst and foremost, our focus is on organic growth.\nBut if opportunities arise, where the target is in market, has potential for significant cost saves and carries low execution risk with minimal tangible book value dilution, the potential acquisition becomes worthy of evaluation.\nWe are excited about the opportunities in front of us as our organization continues to flourish and evolve as a more diversified financial institution.\nLast month, we were honored to be named as the Top Workplace in Northeast Ohio for the 7th consecutive year and our 30th Workplace recognition overall, which are based solely on employee feedback.\nIn closing, we are focused on continuing our commitment to advance our market position by gaining scale and operational efficiency and by cultivating a great culture and meaningful lasting relationships with our clients and communities while simultaneously creating value for our shareholders.\n",
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"content": "compname reports q2 revenue $308 mln.\nq2 non-gaap earnings per share $0.31 excluding items.\nq2 revenue $308 million versus refinitiv ibes estimate of $305.2 million.\ncorp quarterly net interest income $227.9 million versus $227.96 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today I'll provide third quarter highlights and an update to our strategic initiatives.\nGary will discuss asset quality and Vince will cover the financials.\nThird quarter operating earnings per share of $0.26 reflects strong fundamental performance as we continue to have success across many business units, despite a challenging operating environment and provision expense totaling $27 million.\nThis quarter's performance reflects growth in average loans and deposits of 2% and 4% respectively, as well as continued strength in our fee-based businesses with strong contributions from capital markets activity and record mortgage banking income of $19 million.\nOn a linked-quarter basis, tangible book value per share increased $0.18 to $7.81, as we continue our commitment to paying an attractive dividend by declaring our quarterly common dividend of $0.12 last week.\nIn addition, our CET1 and TCE ratios increased meaningfully.\nAnd after adjusting for the indirect loan sale CET1 improves almost 20 basis points to the strongest level in the Company's history.\nOur bolstered capital base should provide us with increased flexibility to deploy capital in the best interest of the shareholders.\nReturn on tangible common equity was again peer leading at 14% and the efficiency ratio equaled 55%.\nThese results illustrate the resiliency of FNB's business model and are truly remarkable given the challenges presented and unique circumstances the industry is facing, amid the global pandemic.\nI'm extremely proud of our team for going above and beyond to support our customers in this challenging macroeconomic environment.\nTheir hard work was critical to providing timely assistance to our impacted customers through the Paycheck Protection Program, by offering loan deferral options and consumer relief, as well as other programs to help clients manage their finances during these difficult times.\nCustomer feedback has been overwhelmingly positive, and we are encouraged by the low-single digit level of second loan deferral requests as a percentage of total loan as of October 15th, 2020.\nLower demand for second deferral request is indicative of the quality of our customer base, our consistent approach to credit risk management, and FNB's dedication to disciplined underwriting standards throughout various business cycles.\nOur bankers and credit teams will continue to actively evaluate and work with COVID-19 impacted borrowers as they manage through their pandemic related disruption.\nEarlier in the third quarter, our organization was recognized as a 2020 Standout Commercial Bank by Greenwich Associates, with FNB being one of only 10 banks in the country to be recognized for its response to the COVID-19 pandemic.\nIf you look at the credit metrics on FNB's COVID-19 sensitive sectors, we are favorably positioned to peers on a relative basis.\nOur disciplined approach to underwriting and portfolio management ensures granularity, diversification and appropriate credit structure within our loan portfolio.\nOn the deposit side, organic growth and government programs have resulted in increased liquidity in our customer base.\nLooking at the recent FDIC data compared to 2019, FNB has successfully gained share and fortified top market share position in Pittsburgh, Baltimore, Cleveland, Charlotte, Raleigh and the Piedmont Triad, with our largest market, Pittsburgh, surpassing the $8 billion mark in total deposits.\nAdditionally, as of June 30 2020, FNB ranked in the top 10 in retail deposit market share across seven major MSAs, and when looking at our footprint in total, FNB has a top 10 market share in more than 80% of the 53 markets categorized by the FDIC.\nCompared to June 2019, FNB continued to gain market share as total deposits increased nearly $5 billion or over 20% overall.\nIf you look back over the last six months, we've added thousands of new households and more than $4 billion in total deposits.\nDiving deeper by examining the regional market share trends, FNB has five MSAs with greater than a $1 billion in deposits and 16 MSAs with greater than $500 million in deposits.\nThese market positions reflect successful execution of our deposit gathering strategy centered on attracting low cost deposits through household acquisition and deepening commercial relationships, thereby enabling FNB to eliminate our overnight borrowing position.\nThe surge in core deposits have strengthened our overall funding mix as the loan-to-deposit ratio further improved to 89.1%.\nWe continue to be absolutely focused on generating non-interest bearing and transaction deposit growth, given the impacts of the expected lower for longer interest rate environment.\nTo complement our deposit gathering strategy, we are focused on supporting our customers and expanding our relationships as their primary capital provider with value-added products and services, while staying true to our credit culture.\nLooking ahead to the fourth quarter, we are encouraged by the current position of the balance sheet with ample liquidity to support growth opportunities and an expanded capital base.\nAdditionally, with our PPP efforts, we've added more than 5,000 prospects for non-customer PPP lending to pursue as long-term relationships.\nGiven our success and the quality of our bankers, we have firmly established ourselves as a formidable competitor across our seven state footprint, providing competitive financial products and services supported by technology, investment and the best personnel.\nDuring the third quarter, our credit portfolio continued to perform in a satisfactory manner as we continue to work through this challenging economic environment.\nOur key credit metrics have held up well with some slight increases noted during the quarter related to the COVID environment that is largely tied to borrowers in the hardest hit industries, which we have built loan loss reserves for accordingly.\nI will now walk you through our results for the third quarter followed by an update on our loan deferrals and some of the proactive steps we are taking to manage the book.\nLet's now discuss some key highlights.\nDuring the third quarter, delinquency came in at a good level of 1.07%, an increase of 15 bps over the prior quarter that was predominantly COVID related tied to mortgage forbearances, while the commercial portfolio remained relatively level with the prior quarter.\nWhen excluding PPP loan volume, delinquency would have ended the quarter at 1.18%.\nThe level of NPLs and OREO totaled 76 basis points, a 4 basis point increase linked-quarter, while the non-GAAP level excluding PPP loans stands at 85 bps.\nThis slight migration is attributable to some COVID impacted credits that were placed on non-accrual during the quarter, which is in line with our proactive risk management measures that we have in place to help identify potential pockets of softness.\nOf our total non-performing loans at September 30th, 50% continue to pay on a current basis.\nNet charge-offs came in at $19.3 million for the quarter, or 29 basis points annualized with the increase largely due to write downs taken against a few COVID impacted credits that were already showing weakness entering the pandemic.\nOn a year-to-date basis, our GAAP net charge-offs stood at 18 basis points through the end of the third quarter.\nProvision expense totaled $27 million, which includes additional build for COVID related credit migration, driven by the hotel and restaurant portfolios, bringing our total ending reserve to 1.45%.\nWhen excluding PPP loan volume, the non-GAAP ACL stands at 1.61%, a 7 basis point linked-quarter increase.\nOur NPL coverage remains favorable at 210% at quarter-end, which reflects the reserve build for the COVID driven credit migration during the quarter.\nWhen including the acquired unamortized loan discounts, our reserve position excluding PPP loan volume is 1.87%.\nWe continue to conduct a series of scenario analyses and stress test models under our existing allowance and DFAST frameworks as we work through this COVID impacted environment.\nUnder the final 2020 severely adverse DFAST scenario, the current reserve position, inclusive of unamortized loan discounts, would cover 77% of stressed losses, which does not include losses already incurred year-to-date.\nAs it relates to our borrowers requesting payment deferral 3.4% of our total loan portfolio, excluding PPP balances were under a COVID related deferment plan at quarter-end with remaining first requests representing 1.4% of the portfolio, and 2% being second deferrals.\nAs of October 16th, total deferrals have further declined by approximately $100 million to stand at 2.9%.\nWe continue to carefully monitor the credit portfolio as the pandemic evolves and borrowers work to overcome the uncertainty and challenging conditions that many currently face.\nOur exposure to highly sensitive industries remains low at 3.5% of the total portfolio, which includes all borrowers operating in the travel and leisure, food services, and energy space with deferrals granted to these borrowers totaling 29%, driven primarily by the hotel portfolio as we continue to work through these hardest hit sectors.\nDuring the quarter, we conducted another thorough deep dive credit review of our commercial borrowers operating in these economically sensitive industries, which was led by our seasoned and experienced credit officer team.\nOur portfolio review covered over 80% of our existing credit exposure in COVID sensitive portfolios, including travel and leisure, food services and retail related C&I and IRE.\nAs part of our review process, we assess the adequacy of cash flow, strength of the sponsors backing the deals, the collateral position and direct feedback from borrowers about their expected short and long-term outlooks.\nThis level of review has helped us to quickly identify potential credit deterioration and take appropriate action as we did during Q3 to better position us for the quarters ahead should this challenging economic environment continue.\nIn closing, we are pleased with the position of our portfolio entering the final quarter of 2020 relative to where we are in this COVID impacted economic environment.\nOur credit metrics have held up well and continue to trend at satisfactory levels as we remain focused on proactively identifying risk in the portfolio and aggressively working through it.\nThe experience and depth of our credit and lending teams have been paramount to our success, and I would like to recognize these groups for their tireless efforts each and every day as we work through these challenging conditions.\nNow I'll discuss our financial results and review the recent actions taken that have enhanced our overall balance sheet positioning, reduced interest rate risk and boosted capital levels.\nAs noted on Slide 4, third quarter operating earnings per share totaled $0.26, consistent with the prior quarter.\nThe level of PPNR remains solid and we continue to proactively manage our overall reserve position with provision expense totaling $27 million.\nWe feel good about the strength of the balance sheet and our current level of reserves based on what we know today after a comprehensive review of our loan portfolio.\nAdditionally, the quarter's results reflect the continued execution of our strategies focused on prudent risk management, supported by our recent actions.\nFor example, during the third quarter, we took proactive measures to strengthen capital and reduce credit risk.\nWe signed an agreement to sell $508 million of lower FICO indirect auto loans, closing Q4 with the proceeds being used to pay down a similar amount of high cost federal home loan bank borrowings, of which $415 million with a rate of 2.59% was prepaid this quarter for breakage fee of $13.5 million.\nWe also sold Visa Class B shares at a $13.8 million gain to fully mitigate the capital impact for the FHLB breakage costs.\nResulting transactions should add roughly 17 basis points to CET1, improve credit risk and be neutral to run rate earnings.\nWe continue to strengthen risk-based capital levels with our CET1 ratio increasing to 9.6% at the end of the quarter.\nAs I just noted, the pro forma CET1 ratio would increase by another 17 basis points after considering the impact of the upcoming loan sale.\nThe pro forma CET1 ratio marks the highest level in our history and will be in line with peer median levels from the most recent filings.\nOur improved capital levels give us additional flexibility that is important at this stage of the economic cycle.\nLooking at our TCE ratio, we ended September comfortably above 7%, increasing to 7.2%, which translates into 7.7% when excluding PPP loans.\nOn the expense front, we are progressing well toward achieving our 2020 cost savings goal, reducing run rate expenses via optimizing our branch network and reducing operational costs through ongoing vendor contract renegotiations.\nOn the revenue front, we are leveraging our new geographies to drive market share gains and fee-based businesses, notably mortgage banking, capital markets, wealth and insurance to offset net interest margin pressure in the current low rate environment.\nLet's now shift to the balance sheet.\nLimiting [Phonetic] spot balances, total loans were relatively flat compared to the prior quarter, excluding the transfer of $508 million of indirect auto loans to held for sale.\nLooking ahead, it's important to focus on the position of the balance sheet after the loan sale and excluding PPP.\nWe remain focused on driving organic growth as the $2.5 billion in PPP loans enter the forgiveness process and those balances wind down in the future.\nCompared to the second quarter, average deposits increased 4%, primarily due to 6% growth in interest bearing deposits and 7% growth in non-interest-bearing deposits.\nIt was partially offset by 6% planned decrease in time deposits.\nAs Vince noted, core deposit growth generated by building on our commercial and consumer relationships remains a focus for us, as we eliminated our overnight borrowing position and have ample liquidity to fund future growth objectives.\nLet's now look at non-interest income and expense.\nNon-interest income reached a record $80 million, increasing 3% linked-quarter, primarily due to significant growth in mortgage banking as well as strong contributions from wealth, insurance, and capital markets.\nMortgage banking income increased $2.3 million as sold production increased 9% from the prior quarter with sizable contributions from the Mid-Atlantic and Pittsburgh regions and a meaningful improvement in gain on sale margins.\nWealth management and insurance revenues each increased 10%.\nThese segments benefiting from increased organic commercial growth and greater activity in the Mid-Atlantic and Carolina regions.\nCapital markets revenue, while down from a record level last quarter, was again at a very good level at $8.2 million with these products continuing to remain an attractive option for borrowers, given the environment.\nTermination of $415 million of higher rate Federal Home Loan Bank borrowings resulted in a loss on debt extinguishment and related hedge termination costs of $13.3 million reported in other non-interest income.\nOffsetting these charges was the $13.8 million gain on the sale of the bank's holdings of Visa Class B shares also reported in other non-interest income.\nTurning to Slide 9, non-interest expense totaled $180.2 million, an increase of $4.3 million or 2.4%, which included $2.7 million of COVID-19 expenses in the third quarter compared to $2 million in the second quarter.\nExcluding these COVID-19 related expenses, non-interest expense increased $3.6 million or 1.9%, primarily related to higher salaries and employee benefit expense; higher production related commissions; lower loan origination salary deferrals, given the significant PPP loan originations in the prior quarter; and an extra operating day in the third quarter.\nFDIC insurance decreased $1.3 million due primarily to a lower FDIC assessment rate from improved liquidity metrics.\nThe efficiency ratio equaled 55.3% compared to 53.7% which is reflective of the higher production related expenses, noted previously.\nLooking at revenue, net interest income totaled $227 million, stable compared to the second quarter as loan and deposit growth mostly offset lower asset yield on variable rate loans tied to the short end of the curve.\nThe net interest margin decreased 9 basis points to 2.79% as the total yield on earning assets declined 20 basis points to 3.34%, reflecting lower yields on fixed-rate loans originated at lower rates given the interest rate environment and the impact of a 19 basis point decline in one month LIBOR.\nThe benefit of our efforts to optimize funding cost was evident in a 17 basis point reduction in the cost of interest bearing deposits which helped to reduce our total cost of funds to 56 basis points, down from 67 basis points.\nWe're very pleased with the performance of our fee-based businesses as they have supported revenue growth amid the current low interest rate environment, demonstrating the importance of having diversification.\nTurning to our fourth quarter outlook, we expect period-end loans to be generally flat at September 30th, assuming no forgiveness of PPP loans, given the current timing expectations for the SBA for process requests.\nWhile we expect deposits to decline from third quarter levels, that's based on an expectation that customers increase their deployment of funds received through the government programs, we do expect to see continued organic growth in transaction deposits.\nI'll note that our assumptions do not include any further government stimulus programs or actions.\nWe expect fourth quarter net interest income to be down slightly from third quarter, inclusive of the impact of the loan sale.\nWe are not assuming any PPP forgiveness in the fourth quarter.\nAbsent the loan sale, we would have expected net interest income in the fourth quarter to be flattish.\nWe expect continued strong contributions from fee-based businesses with a similar level in capital markets and some reduction from record levels of mortgage banking.\nWe expect service charges to increase, continuing to rebound, given recent transaction volume trends.\nLooking at fee income overall, we expect total non-interest income to be in the mid to high $70 million range.\nWe expect expenses to be stable to up slightly from the third quarter excluding COVID-19 expenses of $2.7 million.\nWe expect the effective tax rate to be around 17% for the full year of 2020.\nLastly, we are in -- we are currently in the early stages of budgeting for 2021.\nSimilar to 2019 and 2020, we will, again, seek to have meaningful cost saving initiatives, building on consecutive years of taking $20 million out of our overall cost structure to support strategic investments and manage the impact of the low interest rate environment.\nIt's taking considerable effort to bring our efficiency ratio down from over 60% in the past to the low-to-mid 50% levels we have been operating at currently.\nIn addition to the scale gain from prior acquisitions, we have consolidated close to 95 branches in the past five years, which is about 25% of our current branch network.\nWe have always been disciplined managers of costs, and it will be an important driver to return us to a position of generating positive operating leverage and mitigate growth and expenses in 2021.\nWe will share more details when we provide 2021 detailed guidance in January.\nOverall, we are pleased with the performance of the quarter in a very challenging environment.\nNext, Vince will give an update on some of our strategic initiatives in 2020.\nNow, I'd like to focus on our progress regarding key strategic initiatives, since our last call.\nIn our Consumer Bank, we continue to focus on optimizing our delivery channels.\nThe deployment of our new website has translated into higher digital adoption through increased website traffic, increased mobile deposits, and exponential growth in the number of online appointments.\nIn the current environment, customer activity trends continue to shift toward digital channels with mobile enrollment up 40% compared to 2019 averages.\nIn fact, we have seen both monthly average mobile and online users increase by 50,000 each compared with the 2019 average levels.\nRegarding website traffic, monthly visitors are up nearly 70%.\nLooking at our physical delivery channel, we continue to execute our established Ready program to optimize our branch network, which included more than 60 consolidation since May of 2018 making FNB one of the more active banks for branch consolidation.\nWe will continue to thoroughly evaluate additional consolidation opportunities as well as select de novo expansion across our footprint as consumer behaviors evolve.\nWe recently announced plans to develop additional de novo locations, which will enhance our retail strategy and support our corporate banking efforts in these attractive new markets.\nFor example, our Charleston branches are performing exceptionally well with nearly $50 million of deposit growth compared to 2019 and these branches are currently ranked among the upper quartile for performance compared to FNB's entire retail network.\nThis consumer growth works in tandem with our successful corporate banking efforts, as the Charleston region has grown nicely with our South Carolina commercial loan balances approaching $200 million at the end of September.\nWe recently brought the Wholesale Bank and respective credit teams back into the offices on a rotational basis as we remain steadfast in supporting our customers while building momentum to carry into the next year.\nGiven the impact from the government stimulus programs, customers have increased liquidity with lower commercial line utilization rate, a more normal environment offers upside moving into 2021.\nOur model is built on local decision-making and high touch relationship-based approach, coupled with consistent investment in technology.\nThis has served us well during the pandemic where our local bankers are in the market and working closely with our customers.\nAs we built out certain high value fee-based businesses such as treasury management and capital market we've embedded local specialists across all markets to support our commercial banker's efforts.\nDuring this pandemic where travel, physical mobility, and face-to-face interaction is limited, having well informed decision makers directly located in our markets enables FNB to best support our customers.\nTogether with our efforts in the wholesale bank, FNB has also benefited from our long-term consumer strategy Clicks-to-Bricks, by investing heavily in our digital platform.\nOne key element necessary for FNB to continue to deliver attractive returns for our shareholders is our commitment to our employees.\nI'm pleased to share that FNB was included for a tenth consecutive year as a Greater Pittsburgh Area top workplace by the Pittsburgh Post-Gazette, signifying the strength of our culture with a decade of excellence and consistency.\nThese results benefit our shareholders and we would like to recognize the hard work and dedication of all of our employees who have made these results possible.\n",
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"content": "q3 non-gaap earnings per share $0.26 excluding items.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: FNB's third quarter earnings per share was $0.34, representing an increase of 10% on a linked-quarter basis and bringing year-to-date earnings per share to $0.94.\nOur performance across our core businesses led to record revenue this quarter of $321 million, up 18% on a linked-quarter annualized basis with strong underlying momentum visible on our loan growth, pipeline, fee income, and digital customer engagement.\nLet's look at each one of these core building blocks starting with loan growth.\nOur spot loan growth, excluding the impact of PPP forgiveness, is 8% annualized linked-quarter, driven by a strong pickup in lending activity in both the commercial and consumer portfolios.\nSpot commercial loan growth totaled 7% annualized on a linked-quarter basis with positive growth in nearly every region across our footprint, notably the Pittsburgh, Cleveland, Harrisburg, and Raleigh region.\nConsumer lending grew over 8% annualized linked-quarter, led by increases in residential mortgages and direct installment home equity.\nAs evidenced by the spot loan growth, our teams had a strong quarter, and overall loan production reached record levels as the economy continues to recover.\nWe saw healthy pipeline build and a slight increase in line utilization with the pipeline being up nearly 12% year-over-year.\nIn prior earnings calls, we indicated our expectation for improvement in loan demand and that is now materializing.\nCommercial had record production in September and the consumer pipeline jumped 27% year-over-year.\nMortgage activity has slowed more recently because of the decline in refinance activity due to higher interest rates -- due to the higher interest rate environment.\nIn addition, revenues have decreased as margins have normalized.\nOverall, we are optimistic that our total loan pipeline indicate a path for sustained growth.\nAs we have continued to execute our strategic plan, non-interest income reached a record $89 million with strong contributions from capital markets and wealth management, as well as solid SBA revenue.\nOur emphasis on diversifying revenue streams has become even more important during the low-rate environment.\nThrough our efforts of enhancing our product suite and expanding our services, our non-interest income now comprises 28% of our total revenue.\nOur clicks-to-bricks strategy, introduced several years ago, was designed to integrate our mobile, online, and in-branch channels for a seamless and convenient banking experience.\nOur philosophy of continuing to invest in technology has resulted in many industry-leading offerings, including our e-store solution center, which features a retail shopping cart experience, our mobile app and our website with videos and substantial digital content.\nAfter launching our new website at the beginning of last year, our website engagement has increased 13% year-to-date compared to the same period in 2020, which included increased usage due to COVID and PPP origination.\nThe platform we built with clicks-to-bricks has been extremely important, driving the increase in adoption and usage of digital channels.\nWe continue to make enhancements to provide our customers with the most flexible banking option as demonstrated by our online application functionality that enables customers to quickly and easily apply for multiple products, including consumer deposits, credit cards, and home equity and mortgage loans.\nIn May, we launched our digital applications for mortgages on our e-store.\nAnd since then, 61% of all applications came through our digital channels, and those -- and of those applications, approximately 46% were submitted outside of normal business hours or on the weekend.\nIn addition, over half of our credit card applications were made digitally in the third quarter.\nOnline applications for small business loans and deposits, as well as auto loans will be available by year-end.\nAnd next year, we plan to launch a single unified application for virtually all FNB loan and deposit products to make the shopping experience for multiple products even easier.\nOur new interface will reduce customers' input by eliminating redundant application fields and expand our clients' capabilities to upload information in a secure portal to expedite approvals.\nBroader use of e-signature and automated documentation and disclosures will also be added over time.\nF.N.B. recently introduced a chatbot, which will apply artificial intelligence and automation to assist our customer service employees in supporting our customers.\nThe chatbot will identify policies and procedures and provide recommended scripting to address the Top 100 frequently asked questions.\nWe are excited about both the current and upcoming enhancements to our digital platform, which will continue to drive increased client engagement and client acquisition and improve our operating efficiency while differentiating F.N.B. in the marketplace.\nOur credit portfolio ended the third quarter very well positioned, following continued positive results across all of our key credit metrics.\nThis solid performance was marked by further improvement in the level of delinquency and non-performing loans, reductions in rated credits, and low net losses for both the quarterly and year-to-date periods.\nAdditionally, improving trends across the broader economy and government stimulus have further contributed to these favorable results, including deferrals, which have reached an immaterial level of only 0.2% of total loans.\nLet's now review some of the highlights for the third quarter.\nThe level of delinquency, excluding PPP balances, ended September at a very solid 71 basis points, a 9 bp improvement on a linked-quarter basis, reflecting a notable improvement in non-accruals within the commercial book.\nThe level of NPLs and OREO improved to end the quarter at 49 basis points, representing a 9 basis point reduction from the prior quarter's ex-PPP level.\nThe reduction in NPLs during the quarter totaled $18 million and when compared to the year-ago period when NPLs had reached their peak, declined by $68 million, representing a solid 38% year-over-year reduction.\nNet charge-offs for the quarter were very low at $1.6 million or 3 basis points annualized, while year-to-date net charge-offs were solid at 7 basis points on an annualized basis.\nWe recognized a $1.8 million net benefit in the provision during the quarter following these improvements in our credit quality position.\nThis resulted in a GAAP reserve position that was down 1 basis point to stand at 1.41% with the ex-PPP reserve decreasing 6 bps to stand at 1.45%.\nOur NPL coverage position further improved ending September at a very solid level of 317% following the noted reductions in NPLs during the quarter.\nOur total ending reserve position inclusive of acquired unamortized discounts totaled 1.56%.\nIn closing, we are very pleased with the position of our portfolio moving into the final quarter of the year and the continued progress we've made to further reduce non-performing and rated credit levels.\nWe remain vigilant and attentive to any emerging risks in both the broader economy and within the markets in which we and our customers operate.\nWith the continued supply chain and labor disruptions, elevated input costs, and the evolving nature of the virus, our approach to managing and growing our loan portfolio in this highly competitive environment remains balanced and consistent with our time-tested credit principles that have served us well throughout the various economic cycles.\nThis foundation of sound and consistent underwriting, timely and comprehensive management of risk, and selectively pursuing opportunities that fit our desired credit profile will support our future growth objectives as we move ahead.\nToday, I will discuss our financial results for the third quarter and provide guidance for the fourth quarter.\nOverall, this was a strong quarter, and we are very pleased with the results.\nOur continued strategic focus on diversified fee income contribution drove non-interest income to a record $88.9 million, up $9.1 million or 11% linked-quarter, leading to record pre-provision net revenue of $138 million on an operating basis and a return on tangible common equity reaching nearly 17%.\nOur tangible book value per share reached $8.42, an increase of $0.22 or 2.6% on a linked-quarter basis.\nLet's walk through the financials in greater detail, starting with the highlights on Slide 4.\nThird quarter earnings per share increased to $0.34, up $0.03 over the prior quarter and $0.09 from the year ago quarter.\nOn a linked-quarter basis, total revenue reached a record of $321 million, an increase of $13.6 million or 4.4% and drove net income available to common stockholders to a record $109.5 million, an increase of $10 million or 10.2%.\nWhen excluding PPP, which is more reflective of the underlying loan growth, period-end total loans increased $463 million or 7.8% annualized on a linked-quarter basis with commercial loans and leases increasing $289 million or 7.4% annualized and consumer loans increasing $173 million or 8.5% annualized, building on the strong growth generated in the second quarter of this year.\nAs Vince said, this loan growth was across the footprint with production levels 17% higher than last quarter and 45% higher than third quarter of 2020.\nLet's continue with the balance sheet on Slide 7.\nReported average loans and leases totaled $24.7 billion with average commercial loans and leases decreasing $942 million, which was entirely due to lower average PPP balances as we saw an acceleration of forgiveness and ended the quarter at $694 million.\nOn the deposit side, average deposits totaled $30.8 billion, an increase of $0.3 billion or 1.1% primarily in non-interest-bearing deposit accounts.\nWe continue to see a shift in customers' preferences for more liquid accounts in the low interest rate environment as well as maintaining larger deposit account balances than before the pandemic.\nIn addition, we have also seen an acceleration of deposit accounts opened digitally.\nTurning to Slide 8, net interest income totaled $232.4 million, an increase of $4.5 million or 2% from the prior quarter.\nMoving to PPP contribution and purchase accounting accretion, net interest income increased $2.8 million or 1.4%, reflecting an increase in average loans, more favorable funding mix and lower deposit costs.\nWe are expecting a slight tailwind for net interest income, excluding PPP contribution as a significant portion of our loan growth occurred during the end of the quarter.\nReported net interest margin increased 2 basis points to 2.72%, reflecting higher PPP contribution of 23 basis points and a 5 basis point benefit from acquired loan discount accretion, which was offset by higher average cash balances that reduced the net interest margin 26 basis points.\nExcess cash balances grew to $3.7 billion at quarter end, a 45% increase from June 30.\nWhen excluding these higher excess cash balances, acquired loan discount accretion and PPP impact, net interest margin declined 2 basis points.\nNow let's look at non-interest income and expense on Slides 9 and 10.\nRecord non-interest income totaled $88.9 million, increasing $9.1 million or 11.4% from the prior quarter with broad contributions from each of our fee-based businesses.\nCapital markets income increased $5.5 million, reflecting very strong swap activity with solid contributions from commercial lending activity as well as contributions from loan syndication, debt capital markets and international banking.\nService charges increased $2 million, reflecting seasonally higher customer activity volumes.\nSBA volumes and average transaction sizes continue to be strong with $2 million in premium income included in other non-interest income.\nAlso included in other non-interest income was a $2.2 million recovery on a previously written off other assets.\nReported non-interest expense increased $1.7 million or 0.9% to $184.2 million this quarter.\nExcluding non-operating items, non-interest expense increased $3.4 million or 1.9%.\nOn an operating basis, the increase was driven by salaries and employee benefits increasing $2.9 million or 2.8% due to production and performance-related commissions and incentives, consistent with record levels of total revenue, which was driven by diversified strong contributions from our fee-based businesses.\nOverall, we produced a strong quarter and believe we are well positioned for the fourth quarter.\nNow, let's turn to fourth quarter guidance on Page 12.\nWe expect PPP forgiveness to be $300 million to $500 million.\nWith the PPP loan balances decreasing, we are estimating a range of $10 million to $15 million with a PPP contribution to net interest income compared to the third quarter's contribution of $27 million.\nExcluding PPP contribution, we expect net interest income to be up low single-digits relative to the third quarter.\nContinuing to benefit from our diversified revenue base, we expect non-interest income to be in the high $70 million to $80 million for the fourth quarter.\nNon-interest expense is expected to be around $180 million on an operating basis, which is subject to normal production-related incentives and commissions as we close out the year.\nWe expect the effective tax rate to be between 19% and 19.5%.\nLastly, I would like to quickly review our full year 2021 guide given last quarter.\nWe believe we will meet our loan growth guidance of mid single-digits.\nWe expect full year GAAP revenue to be up year-over-year, which will impact the production-related incentives and commissions, bringing compensation related expenses slightly higher.\nFull year provision is expected to continue its strong performance with incremental provision dependent on the level of loan growth.\nOverall, we believe we will finish 2021 with solid earnings.\nWe're pleased to announce that Howard Bank integration is currently underway, and overall, everything is moving very smoothly.\nWe are impressed with Howard's employees and strong customer base, and look forward to working with them.\nWe are still expecting to close the transaction in early 2022.\nF.N.B. was once again recognized for our best-in-class digital strategy, clicks-to-bricks.\nWe recently received a prestigious national award for our mobile banking experience.\nOur continued productive investment in our top mobile offering will soon have a new look and feel with chat support, a credit center, mobile statements and F.N.B.'s proprietary mobile e-store enabling product, service and financial literacy to be available within the mobile app.\nOther features include Snap-to-Pay, which enables customers to add a payee by taking a picture of their bill and F.N.B. express deposit, where for a fee, select customers would be offered immediate funds availability for mobile deposited items.\nThis quarter's performance demonstrates the dedication and drive of our employees.\nIt is because of each person's commitment to F.N.B. and our clients that we have been able to achieve record quarterly revenue.\n",
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"content": "q3 revenue $321 million versus refinitiv ibes estimate of $306.9 million.\nq3 earnings per share $0.34.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We'll begin with a brief strategic overview from Randy; Mike will review the Title business; Chris will review F&G and Tony will finish with a review of the financial highlights.\nThere is significant uncertainty about the duration and extent of the impact of this pandemic.\nBecause such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected.\nIt will also be available through phone replay beginning at 3:00 PM Eastern Time today through May 14.\nOur team continued to perform at a high level despite the challenging environment that we have all endured as they kept our operations running smoothly, while maintaining a steadfast focus on our customers.\nIn our Title segment, we achieved record first quarter results, generating adjusted pre-tax title earnings of $512 million compared to $279 million in the year-ago quarter and a 19.9% adjusted pre-tax title margin compared with 14.4% in the first quarter of 2020.\nWe also continue to invest in technology as we roll out new applications which enhance the user experience, efficiency and safety of the title and closing process, while leveraging our unmatched national scale.\nMike will go into more detail on this in a minute.\nWe continue to execute on our growth strategy with strong top-line growth and bottom-line profitability during the quarter.\nFixed indexed annuity sales for the quarter were at record levels and growth was further fueled by our momentum in the bank and broker-dealer channel where we are gaining significant traction within the first year of launch.\nAs a result of our asset growth and disciplined approach to managing net investment spread, we delivered strong earnings during the first quarter, which Chris will discuss further in a few minutes.\nThe credit rating upgrades as a result of the acquisition have enabled us to actively pursue expansion into institutional products such as the pension risk transfer market, which will be a significant or strategic focus this year.\nWith the strong growth opportunities that we see, additional capital will be necessary to realize F&G's full potential.\nHowever, our current plan includes utilizing a third-party reinsurance strategy to provide that necessary growth capital.\nThe plan also includes an expected return of capital of $150 million annually from F&G to FNF or roughly 6% of our original investment beginning in 2022.\nWe believe this is a meaningful return on capital and is sustainable long-term.\nLooking forward, we remain committed to long-term value creation for our shareholders through our thoughtful capital allocation program, while also focusing on supporting the future growth of our business.\nYesterday, we announced a quarterly cash dividend of $0.36 per share and at the end of 2020, we announced a share buyback program of $500 million.\nDuring the first quarter, we repurchased 2.8 million shares for $112 million at an average price of $39.95 per share.\nAnd since announcing the buyback plan, we have purchased 6.9 million shares for $264 million at an average price of $38.28 per share.\nRandy touched upon our record first quarter results as we continue to benefit from low interest rates, driving strong origination demand and the continued rebound in commercial real estate activity.\nFor the first quarter, we generated adjusted pre-tax title earnings of $512 million, an 84% increase over the first quarter of 2020.\nOur adjusted pre-tax title margin was 19.9%, a 550 basis point increase over the prior year quarter with a 58% increase in direct orders closed, driven by a 103% increase in daily refinance orders closed; a 21% increase in daily purchase orders closed; and a 12% increase in total commercial orders closed.\nTotal commercial revenue was $257 million compared with the year-ago quarter of $245 million due to the 12% increase in closed orders, while total commercial fee per file was down slightly compared to the year-ago quarter.\nFor the first quarter, total orders opened averaged 12,600 per day with January at 13,500; February at 13,300; and March at 11,400.\nFor April, total orders opened were over 10,700 per day as we continue to see strong demand in purchase activity, while we have begun to see some decline in the refinance market compared to last year's robust levels.\nDaily purchase orders opened were up 18% in the quarter versus the prior year.\nFor April, daily purchase orders opened were up 90% versus the prior year.\nRefinance orders opened increased by 15% on a daily basis versus the first quarter of 2020.\nFor April, daily refinance orders opened were down 23% versus the prior year.\nLastly, total commercial orders opened per day increased by 12% over the first quarter of 2020.\nCommercial opened orders per day remained strong compared to the fourth quarter and to the year-ago first quarter.\nFor April, total commercial orders opened per day were up 72% over April of 2020.\nWe remain optimistic that the order volumes we have seen over the last several quarters will drive strong commercial performance in 2021.\nWe are also pleased with the ongoing rollout of our strategic technology initiatives that improve the production and delivery of our core products and services and better the overall transaction experience of home buyers and sellers, borrowers and real estate professionals.\nOur proprietary title automation technology and the engines that search, collect and process data remain at the core of our operations.\nOur digital inHere Experience Platform continues to be deployed and has been well received by our expert local escrow and settlement employees, consumers and clients.\nThe first quarter kicked off a great start to 2021 with record sales levels.\nOur fixed indexed annuity or FIA sales in the first quarter were $1 billion, up 11% from the sequential quarter.\nTotal annuity sales of $1.6 billion in the first quarter were up 16% from the sequential quarter.\nWe continue to see significant growth ahead, driven by strong momentum in our primary independent agent channel and traction in new channels.\nWe're now three quarters into our financial institutions channel launch and continue to be thrilled with the results.\nThe first quarter, total annuity results include $410 million from our newest channel and we expect to comfortably exceed our $1 billion goal for 2021.\nWith these strong sales results, we grew average assets under management or AAUM to $29 billion, driven by approximately $1.1 billion of net new business flows in the first quarter.\nOur spread results continue to track in line with historical trends, demonstrating our continued pricing discipline and active in-force management to achieve targeted spread.\nTotal product net investment spread was 255 basis points in the quarter and FIA net investment spread was 298 basis points.\nAdjusted net earnings for the first quarter were $78 million.\nStrong earnings were driven by steady spread results and AAUM growth.\nNet favorable items in the period were $12 million, primarily as a result of favorable mortality and investment income on CLO redemptions held at a discount to par.\nAdjusted net earnings, excluding notable items, were $66 million, up from $60 million in the fourth quarter, which included $4 million of higher strategic spend for faster than expected launch into new channels.\nTurning briefly to the investment portfolio.\nAs of quarter end, the portfolio's net unrealized gain position remains strong at $1.1 billion and there were no credit-related impairments in the quarter.\nIn summary, we continue to execute on our plan coming out of the FNF acquisition and we remain confident in our future prospects.\nWe generated $3.1 billion in total revenue in the first quarter with the Title segment producing $2.5 billion; F&G producing $539million; and the Corporate segment generating $42 million.\nFirst quarter net earnings were $605 million, which includes net recognized gains of $43 million versus net recognized losses of $320 million in the first quarter of 2020.\nThe net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continue to be held in our investment portfolio.\nExcluding net recognized gains and losses, our total revenue was $3.1 billion as compared with $1.9 billion in the first quarter of 2020.\nAdjusted net earnings from continuing operations were $455 million or $1.56 per diluted share.\nThe Title segment contributed $395 million; F&G contributed $78 million; and the Corporate and Other segment had an adjusted net loss of $18 million.\nExcluding net recognized losses of $59 million, our Title segment generated $2.6 billion in total revenue for the first quarter compared with $1.9 billion in the first quarter of 2020.\nDirect premiums increased by 37% versus the first quarter of 2020.\nAgency revenue grew by 45% and escrow title-related and other fees increased by 22% versus the prior year.\nPersonnel costs increased by 18% and other operating expenses increased by 7%.\nAll in, the Title business generated a 19.9% adjusted pre-tax title margin, representing a 550 basis point increase versus the first quarter of 2020.\nInterest income in the Title and Corporate segments of $29 million declined to $24 million as compared with the prior year quarter due to reduction of short-term interest rates on our corporate cash balances and our 1031 Exchange business.\nFNF debt outstanding was $2.7 billion on March 31 for a debt-to-total capital ratio of 24.6%.\nOur title claims paid of $46 million were $35 million lower than our provision of $81 million for the quarter.\nThe carried reserve for title claim losses is currently $87 million or 5.7% above the actuary central estimate.\nWe continue to provide for title claims at 4.5% of total title premiums.\nFinally, our Title and Corporate investment portfolio totaled $5.9 billion at March 31.\nIncluded in the $5.9 billion are fixed maturity and preferred securities of $2.3 billion with an average duration of 2.9 years and an average rating of A2; equity securities of $1.3 billion; short-term and other investments of $300 million; and cash of $2 billion.\nWe ended the quarter with just over $1.1 billion in cash and short-term liquid investments at the holding company level.\n",
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"content": "compname reports first quarter 2021 diluted earnings per share from continuing operations of $2.06 and adjusted diluted earnings per share from continuing operations of $1.56.\ncompname reports first quarter 2021 pre-tax title margin of 17.4% and adjusted pre-tax title margin of 19.9%.\nq1 adjusted earnings per share $1.56 from continuing operations.\nq1 revenue $3.1 billion versus $1.6 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We'll begin with a brief strategic overview from Randy.\nMike will review the Title business.\nChris will review F&G.\nAnd Tony will finish the review of the financial highlights.\nThere is significant uncertainty about the duration and extent of the impact of this pandemic.\nBecause such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected.\nIt will also be available through phone replay beginning at 3:00 p.m. Eastern Time today through Wednesday, November 10.\nWe are very pleased with our record-setting third quarter results as we increased revenues 31% to $3.9 billion, which resulted in adjusted net earnings growth of 39% to $604 million, both as compared with the 2020 third quarter.\nOur Title business continued to deliver record results, while F&G expanded into new institutional channels, which position us well for strong asset growth.\nImportantly, we grew our holding company cash balance by 25% to $1.5 billion as compared to $1.2 billion at the end of the second quarter of 2021.\nCash on our balance sheet grew despite our continued activity, returning capital to our shareholders through share buybacks and our quarterly dividend.\nAs Tony will discuss in more detail, the cash growth was delivered primarily through our organic business results.\nDuring the quarter, we took advantage of exceptional interest rates and issued $450 million of 3.2% senior notes with a 30-year maturity.\nWe also funded a $400 million intercompany loan with F&G to fund their growth.\nOverall, our results this quarter speaks to the dynamic business model that we have created and which we believe positions us for success through varying market cycles.\nTurning to our Title results.\nWe delivered adjusted pre-tax title earnings of $669 million, with an adjusted pre-tax title margin of 21.7% in the 2021 third quarter compared with adjusted pre-tax title earnings of $528 million and an adjusted pre-tax title margin of 21.2% in the 2020 comparable quarter.\nOur third quarter margins and earnings were the strongest third quarter results in our company's history, which speaks to our market-leading position combined with outstanding execution by our entire team.\nWe continue to be very pleased with the results this quarter as we open new channels of distribution and accelerate our sales growth, driving assets under management at the end of the third quarter to nearly $35 billion, an increase of 9% in the quarter.\nThis growth was driven by strong retail annuity sales and F&G's interest into institutional markets.\nTotal assets under management have grown 31% since we closed the acquisition, and we are well on our way toward our goal of more than doubling assets under management in five years.\nAs F&G's assets continue to grow, they provide an increasingly important component of our overall earnings.\nLooking forward, we will continue to evaluate our capital allocation strategy as we remain committed to long-term value creation for our shareholders while also focusing on supporting the future growth of our businesses.\nShare buybacks are an important component of our strategy, and we were active once again, having purchased 1.3 million shares for $61 million at an average price of $46.29 per share through the third quarter.\nIn the first week of October, we reached our $500 million share buyback target, which we announced in the fourth quarter of 2020.\nLastly, we announced yesterday a quarterly cash dividend of $0.44 per share, an increase of 10% from our previous quarterly dividend.\nThis is the second consecutive quarter that we have increased our dividend, given our strong earnings and cash flows through the first three quarters of the year.\nAs Randy highlighted, our third quarter results were the best third quarter in the company's history.\nFor the third quarter, we had generated adjusted pre-tax title earnings of $669 million, a 27% increase over the third quarter of 2020.\nOur adjusted pre-tax title margin was 21.7%, a 50 basis point increase over the prior year quarter.\nThe results were driven by a 25% increase in average fee per file, a 9% increase in daily purchase orders closed and a 31% increase in total commercial orders closed, partially offset by a 21% decrease in daily refinance orders closed.\nTotal commercial revenue was a record $366 million compared with the year-ago quarter of $216 million due to the 31% increase in closed orders and a 28% increase in total commercial fee per file.\nFor the third quarter, total orders opened averaged 10,800 per day, with July at 11,000, August at 11,000 and September at 10,300.\nFor October, total orders opened were 9,300 per day, as we saw solid demand and purchase activity, while the refinance market continues to moderate as compared with last year's robust levels.\nDaily purchase orders opened were up 1% in the quarter versus the prior year.\nAnd for October, daily purchase orders opened were up 4% versus the prior year.\nRefinance orders opened decreased by 33% on a daily basis versus the third quarter of 2020.\nFor October, daily refinance orders opened were down 38% versus the prior year.\nLastly, total commercial orders opened per day increased by 15% over the third quarter of 2020.\nCommercial opened orders per day were just under the record levels we saw in the second quarter.\nFor October, total commercial opened orders per day were up 15% over October of 2020.\nImportantly, commercial opened orders per day have exceeded 1,000 orders each of the last nine months, having consistently been in record territory and will provide momentum as we close out 2021 and begin 2022, given the longer tail for closings in commercial as compared with residential.\nOur Title business has performed very well through the third quarter with commercial and purchase volumes more than offsetting the decline in refinance activity.\nLooking forward, while refinance volumes may continue to moderate, it is important to note that direct refinance revenue only contributed approximately 19% of total direct revenue in the third quarter compared with 27% in the third quarter of last year.\nOn a sequential basis, refinance revenue contributed 21% of total direct revenue in the second quarter and 33% in the first quarter of this year.\nAdditionally, refinance fee per file in the third quarter was approximately $1,000 as compared with nearly $3,400 for purchase, providing a strong counterbalance to declines in refinance revenue.\nWe will also continue to watch our expenses closely and react to changes in our opened and closed order volumes.\nAnother critical aspect of our business has been our longer-term focus on integrating and leveraging automation, which has significantly improved our performance, as can be seen by our profitability this cycle.\nDuring the quarter, we reached a significant milestone as more than two million consumers have now been invited to begin their transactions on our digital inHere Experience Platform through Start inHere, and more than 1.3 million have chosen to do so.\nAs we have discussed, inHere transforms the real estate transaction by improving the safety and simplicity needed to start, track, notarize and close real estate transactions.\nWe are very pleased with our customers' adoption of our digital platform, as we believe it will not only improve their satisfaction with our service and product, but also improve our efficiency.\nUltimately, we believe the inHere Experience Platform, combined with our scale and our history and expertise in building market-leading technology solutions, positions FNF to grow market share.\nAt F&G, we're fully executing on our product and channel diversification strategy while leveraging our core capabilities and modernizing our operating platform.\nThis year has demonstrated our transformation from a previously monoline business into a well-diversified and leading provider of solutions in both retail and institutional markets.\nWe achieved record sales in the third quarter, surpassing $3 billion in total sales for the quarter and $7 billion in total sales for the first nine months of the year, which in turn have boosted ending assets under management to nearly $35 billion as of September 30, as Randy mentioned previously.\nIn the third quarter, annuity sales in our retail channel were $1.5 billion, up 43% from the third quarter of 2020 and down slightly from the record sequential quarter.\nWe see ongoing success with our independent agent distribution and continue to expand our bank and broker-dealer channels.\nWe are now distributing through a dozen active bank and broker-dealer distribution partners.\nWe are very pleased that our recent expansion into institutional markets has been exceptionally strong.\nLet me provide a few brief details.\nF&G has issued $1.2 billion of funding agreement-backed notes in September, following our inaugural $750 million issuance in June.\nBoth issuances saw extremely strong market demand and attractive pricing.\nF&G has also successfully entered the pension risk transfer market, closing $371 million of transactions in the third quarter and securing an additional $564 million of transactions in the fourth quarter.\nBased on transactions secured to date, F&G will assume approximately $900 million in pension liabilities and provide annuity benefits to over 22,000 retirees.\nOverall, institutional sales were $2.6 billion for the first nine-month period.\nAnd with the additional $500 million pension risk transfer volume secured in the fourth quarter, we're on track to achieve $3 billion of institutional sales in 2021.\nWith these strong top line results, average assets under management, or AAUM, has reached $32.7 billion, driven by approximately $2.3 billion of net new business flows in the third quarter.\nWe are focused on generating scale benefits by increasing assets under management while continuing to leverage Blackstone's unique investment management capabilities to deliver consistent spread.\nOur results continue to be strong.\nTotal product net investment spread was 285 basis points in the third quarter and FIA net investment spread was 335 basis points.\nAdjusting for favorable notable items, total product spread was 248 basis points and FIA spread was 293 basis points, both in line with our historical trends and consistent with our disciplined approach to pricing.\nLet me wrap up with a few thoughts on earnings.\nFirst, F&G's net earnings attributable to common shareholders of $373 million for the third quarter included a $224 million onetime favorable adjustment from an actuarial system conversion, reflecting modeling enhancements and other refinements and represents less than 1% of reserves.\nThis conversion was a significant milestone in our multiyear effort to deliver a modern, scalable platform, which will provide operating leverage with scale over time.\nThis onetime favorable adjustment was excluded from adjusted net earnings along with other standard items.\nNext, F&G's adjusted net earnings for the third quarter were $101 million.\nStrong earnings were driven by record AAUM and strong spread results from disciplined pricing actions on both new business as well as our in-force book.\nNet favorable items in the period were $27 million.\nAdjusted net earnings, excluding notable items, were $74 million, up from $70 million in the second quarter.\nIn summary, during the third quarter, we've delivered record sales and strong earnings for F&G.\nOur profitable growth strategy is firing on all cylinders, and we have successfully diversified our sources of premiums.\nWe remain excited about the opportunity to further contribute to the overall FNF strategy in the years ahead.\nWe generated $3.9 billion in total revenue in the third quarter, with the Title segment producing $2.9 billion, F&G producing $927 million and the Corporate segment generating $44 million.\nThird quarter net earnings were $732 million, which includes net recognized losses of $154 million versus net recognized gains of $73 million in the third quarter of 2020.\nThe net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continue to be held in our investment portfolio.\nExcluding net recognized gains and losses, our total revenue was $4 billion as compared with $2.9 billion in the third quarter of 2020.\nAdjusted net earnings from continuing operations were $604 million or $2.12 per diluted share.\nThe Title segment contributed $521 million.\nF&G contributed $101 million.\nAnd the Corporate segment had an adjusted net loss of $18 million.\nExcluding net recognized losses of $169 million, our Title segment generated $3.1 billion in total revenue for the third quarter compared with $2.5 billion in the third quarter of 2020.\nDirect premiums increased by 22% versus the third quarter of 2020.\nAgency premiums grew by 34%.\nAnd escrow title-related and other fees increased by 14% versus the prior year.\nPersonnel costs increased by 15%.\nAnd other operating expenses increased by 17%.\nAll in, the Title business generated a 21.7% adjusted pre-tax title margin, representing a 50 basis point increase versus the third quarter of 2020.\nInterest and investment income in the Title and Corporate segments of $27 million declined $4 million as compared with the prior year quarter due to decreases in bond interest, dividends received on preferred stock and a slight decrease in income from our 1031 Exchange business.\nIn September, we closed an issuance of $450 million of 3.2% senior notes due September of 2051.\nWe're very pleased with the market's receptivity to our issuance as well as the very attractive rate that we were able to secure.\nWe also put in place a $400 million intercompany loan to fund F&G's growth and to better optimize their capital structure.\nFNF debt outstanding was $3.1 billion on September 30 for a debt-to-total capital ratio of 24.9%.\nOur title claims paid of $55 million, were $45 million lower than our provision of $100 million for the third quarter.\nThe carried reserve for title claim losses is currently $95 million or 5.9% above the actuary's central estimate.\nWe continue to provide for title claims at 4.5% of total title premiums.\nOur title and corporate investment portfolio totaled $6.7 billion at September 30.\nIncluded in the $6.7 billion are fixed maturity and preferred securities of $2.2 billion with an average duration of 2.8 years and an average rating of A2, equity securities of $1.2 billion, short-term and other investments of $500 million and cash of $2.8 billion.\nWe ended the quarter with $1.5 billion in cash and short-term liquid investments at the holding company level.\nLet me end with a few thoughts on capital allocation.\nOur capital allocation strategy remains a key focus of the Board.\nWe're focused on returning capital to shareholders while making strategic investments in our businesses.\nOur current level of cash generation supports the following: first, FNF's $500 million annual common dividend; next, our $100 million annual interest expense on F&F debt; third, our $400 million 5.5% senior notes, which are due in September of 2022; and finally, our share repurchases.\nWe've continued to make share repurchases throughout the third quarter and into the fourth.\nDuring the quarter, we purchased 1.3 million shares at an average purchase price of $46.29 per share.\nAnd in the first week of October, we completed our previously announced $500 million share repurchase plan.\nIn total, we repurchased 12 million shares at an average price of $41.62 since announcing the plan in October of last year.\nWith regard to F&G, at the time of the merger last year, we stated that we expected F&G to double assets and earnings over five years through organic growth.\nGiven current momentum, we foresee that F&G's growth is running about one year ahead of schedule.\nFor 2021, F&G is on a trajectory to double its annual sales and has materially diversified its business with channel expansion in new retail and institutional markets.\nCapital funding for this growth includes $400 million in debt capital from FNF in the third quarter as well as third-party financial reinsurance with an existing partner in the fourth quarter.\nBased on current forecasts, we expect to contribute $200 million to $300 million of new equity capital in 2022.\nAnd with F&G's 25% debt-to-capital target, we believe F&G has ample financial flexibility to execute on our growth strategy and capture market opportunities.\nBeyond that horizon and subject to ongoing sales momentum, there may be an additional capital investment required in 2023, which could take the form of converting our existing $400 million term loan to equity capital.\nBut we believe at that point, we will be reaching a level where F&G is self-funding.\nGiven the compelling growth prospects, it is more attractive to defer any immediate return of capital from F&G in order to support its growing and stable source of earnings and target a return of capital a few years down the line.\nFNF has enough capital generation to do all of the above, and we view the marginal return on capital into F&G as attractive and strategically important to our dynamic business model to achieve long-term value creation and attractive shareholder returns.\n",
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"content": "compname reports third quarter 2021 diluted earnings per share from continuing operations of $2.58 and adjusted diluted earnings per share from continuing operations of $2.12.\ncompname reports third quarter 2021 pre-tax title margin of 16.6% and adjusted pre-tax title margin of 21.7%.\nq3 adjusted earnings per share $2.12 from continuing operations.\nq3 revenue $3.9 billion versus $3.0 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We'll begin today with a brief strategic overview from Randy, Mike will review the title business, Chris will review F&G, and Tony will finish with a review of the financial highlights.\nThere is a significant uncertainty about the duration and extent of the impact of this pandemic.\nSuch statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected.\nIt will also be available through phone replay beginning at 3:00 p.m. Eastern Time today until March 4.\nOur primary focus has been and continues to be the health and well-being of our employees while maintaining our business continuity and ensuring the needs of our customers are consistently met.\nFor the fourth quarter, we generated record adjusted pre-tax title earnings of $624 million compared with $355 million in the year ago quarter and a record 22.7% adjusted pre-tax title margin compared with 16.3% in the fourth quarter of 2019.\nWhile we are very pleased with our strong financial results, we also made significant headway on our technology investments in our title business, having recently announced both the inHere platform and subsequently Close inHere.\nMike will go into more detail on this, but as we continue to drive the innovation of the title industry, we believe our significant national footprint will prove to be a real plus as further adoption of our client-facing and title automation technology expands our competitive advantage.\nTurning to our acquisition of FGL Holdings.\nF&G continues to execute on its growth strategy, generating retail sales growth of over 40% in the fourth quarter.\nThe credit rating upgrade that F&G has enjoyed as a result of the acquisition by FNF has opened additional large market opportunities.\nF&G is gaining momentum in the newly entered bank and broker-dealer channel, generating $500 million of channel sales since our launch on July 1.\nAdditional distribution channels, including institutional products, will continue to be a strategic area of focus for F&G in 2021, including the pension risk transfer marketing.\nChris will go into more detail on F&G's fourth quarter results shortly.\nLooking forward, our priority continues to be focused on long-term value creation for our shareholders through our diligent capital allocation program, while also remaining focused on investing in our business to sustain growth.\nLast week, we announced a quarterly cash dividend of $0.36 per share, reflecting the fourth quarter dividend increase of 9%.\nAdditionally, in October, we announced a 12-month $500 million share repurchase target.\nAnd since that announcement, we have repurchased 3.8 million shares for approximately $140 million.\nAnd for 2020 in total, we repurchased 7.5 million shares for approximately $244 million.\nAs Randy mentioned, the fourth quarter was a record for adjusted pre-tax title earnings and adjusted pre-tax title margin, as we continue to benefit from low interest rates driving sustained momentum in refinance volumes, strong purchase demand and the continued rebound in commercial real estate activity.\nFor the fourth quarter, we generated adjusted pre-tax title earnings of $624 million, a 76% increase over the fourth quarter of 2019.\nOur adjusted pre-tax title margin was 22.7%, a 640 basis point increase over the prior year quarter.\nWe had a 40% increase in direct orders closed -- 48% increase in direct orders closed, driven by an 86% increase in daily refinance orders closed, an 18% increase in daily purchase orders closed and a 1% increase in total commercial orders closed.\nTotal commercial revenue was $322 million compared with the year ago quarter of $321 million due to the 1% increase in closed orders.\nTotal commercial fee per file was flat compared to the year ago quarter.\nFor the fourth quarter, total orders opened averaged 11,600 per day, with October at 11,800 and November at 11,900 in December at 11,000.\nFor January, total orders opened were over 13,400 per day and through the first three weeks of February were over 13,500 per day as we continue to see strong demand and purchase activity and continued strength in the refinance market.\nDaily purchase orders opened were up 14% in the quarter versus the prior year.\nFor January, daily purchase orders opened were up 15% and versus the prior year.\nAnd through the first three weeks of February were up 4% versus the prior year.\nRefinance orders opened increased by 90% on a daily basis versus the fourth quarter of 2019.\nFor January, daily refinance orders opened were up 96% versus the prior year and, through the first three weeks of February, were up 40% versus the prior year.\nLastly, total commercial orders opened increased by 3% over the fourth quarter of 2019.\nCommercial opened orders per day remained strong, with the fourth quarter flat sequentially from the third quarter.\nFor January, total commercial orders opened per day were up 5% over January 2020 and were up 2% through the first three weeks of February versus the prior year.\nWe remain encouraged by the order volumes we have seen in the last two quarters as open orders have rebounded across multiple geographies to the levels we saw before the outbreak of the pandemic.\nAs Randy briefly touched on, we made significant progress on our technology investments.\nWe have a long history of investing in and developing technology from title automation to data collection and order processing.\nOur inHere Platform is focused on transforming the real estate transaction experience by improving the safety and simplicity needed to start and track the progress of a real estate transaction as well as notarizing and signing the necessary documents.\ninHere works with our network of local trusted escrow and settlement professionals nationwide, leveraging the industry's largest footprint and the latest cloud-based technology.\nIn January, we launched Close inHere, our guided digital closing experience for consumers finalizing their real estate transactions.\nFor many, the closing of the transaction is the most overwhelming part of the process of buying or refinancing a home.\nClose inHere based upon digital tools instead of the traditional paper allows our staff of closing professionals to deliver a truly digital intelligent and interactive guided approach to closing.\nToday, the entire suite of inHere solutions are currently undergoing deployment throughout FNS family of companies, and this will continue throughout 2021.\nTo conclude, we are committed to driving innovation in the title industry and to investing in technology for the benefit of all of our customers, employees and shareholders.\nThe fourth quarter capped off another record year of growth at F&G.\nBuilding on the momentum we saw in the third quarter, we achieved record sales of fixed indexed annuities, or FIAs in the fourth quarter, while maintaining our pricing discipline.\nTotal retail annuity sales of $1.3 billion in the fourth quarter were up 42% from the prior year, and core FIA sales were $947 million, up 19% from the prior year.\nWe continue to see significant growth ahead of us as we take further market share in our primary independent agent channel and gain traction in new channels.\nAs we previously shared, post the FNF acquisition, we successfully launched into the financial institutions channel in July.\nSince then, we've generated over $500 million in new annuity sales in the channel to date, including $322 million in the fourth quarter alone.\nThese phenomenal sales results have surpassed our original expectations, and we continue to get very positive feedback from our new partners on our quality of service as well.\nWith these solid sales results, we grew average assets under management, or AAUM, to $28 billion, driven by approximately $900 million of net new business flows in the fourth quarter.\nNow despite the decline in interest rates this year, our spread results have remained in line with historical trends, demonstrating our continued pricing discipline and active in-force management.\nTotal product net investment spread was 255 basis points in the fourth quarter, and FIA net investment spread was 302 basis points.\nAdjusted net earnings for the fourth quarter were $128 million.\nStrong earnings were driven by steady spread results and a favorable tax benefit recognized following the FNF acquisition.\nNet favorable items in the period were $68 million, primarily as a result of this tax benefit.\nAdjusted net earnings, excluding notable items, were $60 million, down from $64 million in the third quarter due to $4 million of higher strategic spend due to our faster-than-expected launch into new channels.\nNext, I want to quickly touch on the topic of mortality, which many in the life and annuity industry are monitoring in the current pandemic.\nIn contrast to many of our peers, F&G has minimal exposure to traditional life products at only 6% of GAAP reserves after reinsurance.\nIn addition, mortality in our in-force life block has been within our pricing expectations despite the pandemic environment.\nMost importantly, our investment portfolio continues to perform well, and credit impairments for the year were less than our product pricing assumptions.\nIn addition, as of year-end, the portfolio's net unrealized gain position grew to $2 billion, a sharp reversal from the net unrealized loss position experienced early in 2020 due to the pandemic.\nMoreover, we came into 2020 with a strong balance sheet, which allowed us to effectively weather the volatility and economic impacts of the pandemic, while still growing the business.\nAs expected, we ended the year with an estimated RBC ratio of over 400% for our primary insurance operating subsidiary.\nWe also completed the sale of our offshore third-party reinsurance business, F&G Re, to Aspida Holdings in December.\nProceeds from the sale will be used to fund future growth opportunities for F&G.\nAnd we also entered into a mutually beneficial flow reinsurance agreement with Aspida on our MYGA products beginning in the first quarter of 2021.\nSo in summary, our sales are growing nicely as we diversify into multiple channels following the FNF acquisition.\nWe continue to consistently generate stable net investment spread and earnings, and we remain confident in our investment portfolio.\nWe generated approximately $3.8 billion in total revenue in the fourth quarter, with the title segment producing approximately $3 billion, F&G producing $667 million and the corporate segment generating $60 million.\nFourth quarter net earnings were $801 million, which includes net recognized gains of $573 million versus net recognized gains of $131 million in the fourth quarter of 2019.\nThe net recognized gains in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continued to be held in our investment portfolio.\nExcluding net recognized gains, our total revenue was $3.2 billion as compared with $2.2 billion in the fourth quarter of 2019.\nAdjusted net earnings from continuing operations were $588 million or $2.01 per diluted share.\nThe title segment contributed $498 million.\nF&G contributed $128 million, and the corporate and other segment had an adjusted net loss of $38 million.\nExcluding net recognized gains of $290 million, our title segment generated $2.8 billion in total revenue for the fourth quarter compared with $2.2 billion in the fourth quarter of 2019.\nDirect premiums increased by 29% versus the fourth quarter of 2019.\nAgency revenue grew by 33%, and escrow title-related and other fees increased by 21% versus the prior year.\nPersonnel costs increased by 15%, and other operating expenses decreased by 7%.\nAll in, the title business generated a 22.7% adjusted pre-tax title margin, representing a 640 basis point increase versus the fourth quarter of 2019.\nInterest income in the title and corporate segments of $32 million declined $23 million as compared with the prior year quarter due to the reduction of short-term interest rates on our corporate cash balances and our 1031 exchange business.\nFNF debt outstanding was $2.7 billion on December 31 for a debt-to-total capital ratio of 24.2%.\nOur title claims paid of $54 million were $33 million lower than our provision rate of $87 million for the fourth quarter.\nThe carried title reserve for claim losses is currently $62 million or 4.1% above the actuary central estimate.\nWe continued to provide for title claims at 4.5% of total title premiums.\nFinally, our title and corporate investment portfolio totaled $5.7 billion at December 31.\nIncluded in the $5.7 billion are fixed maturity and preferred securities of $2.5 billion with an average duration of three years and an average rating of A2, equity securities of $900 million, short-term and other investments of $500 million and cash of $1.8 billion.\nWe ended the quarter with just under $1 billion in cash and short-term liquid investments at the holding company level.\n",
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"content": "compname reports q4 revenue $3.8 bln.\ncompname reports fourth quarter 2020 diluted earnings per share from continuing operations of $2.74 and adjusted diluted earnings per share from continuing operations of $2.01.\ncompname reports fourth quarter 2020 pre-tax title margin of 29.4% and adjusted pre-tax title margin of 22.7%.\nq4 adjusted earnings per share $2.01 from continuing operations.\nq4 revenue $3.8 billion versus $2.4 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With me on the call today are Seamus Grady, Chief Executive Officer; and Csaba Sverha, Chief Financial Officer.\nWe had a strong start to fiscal 2022 with top and bottom line results for the first quarter that exceeded our expectations.\nDemand trends remain robust across our business, which contributed to revenue reaching $543.3 million, more than $13 million above the high end of our guidance.\nWe continue to execute very effectively with revenue upside falling to the bottom line as reflected in our non-GAAP net income of $1.45 per share, which was also above our guidance range.\nFrom a revenue perspective, we had a particularly strong quarter for optical communications, which grew 10% from the fourth quarter and 24% from a year ago.\nAs Csaba will detail in a moment, strong optical communications demand was evident in both telecom and datacom.\nWe continued to execute well despite the component supply constraints that we and many others continue to experience.\nDuring our last call, we estimated that we would see a $25 million to $30 million revenue headwind in the first quarter from these constraints.\nWe are pleased to report that the actual impact was at the lower end of that range.\nOur ability to overcome many of these component charges was most evident in our record optical communications results.\nComponent charges in the automotive markets' extremely lean supply chain resulted in a moderate decline in automotive revenue from the fourth quarter.\nAs we look to the second quarter, we are optimistic about continued strong demand across our business and are anticipating healthy overall growth despite persisting supply chain headwinds.\nOperationally, I'm very happy to announce that our COVID-19 vaccination program for employees in Thailand has been a great success and that, at this point, 99% or virtually all of our employees in Thailand are now fully vaccinated.\nI'm also pleased that we were successful in delivering first quarter margins within our target ranges despite these additional COVID-19 related costs in the quarter.\nAt our Chonburi campus, construction of our second building is progressing well.\nThis building will add approximately 1 million square feet or 50% to our global footprint, substantially increasing our manufacturing capacity.\nWe are on-track for construction to be completed around the end of the fiscal year.\nThis schedule is extremely timely since based on continued customer demand, we now anticipate that our first building in Chonburi will be effectively fully occupied when our second Chonburi building opens for business.\nIn summary, after a very strong first quarter, we are optimistic that Q2 will represent another strong quarter for revenue and profitability.\nDemand trends remain strong, and we are excited that our second building in Chonburi will be coming online just at the right time to enable us to continue meeting anticipated demand and extend our business momentum in the years ahead.\nWe are off to a great start for the fiscal year with record revenue and non-GAAP profitability in the first quarter.\nRevenue of $543.3 million was well above our guidance and represented an increase of 7% from the fourth quarter and 24% from a year ago.\nAs we continue to execute very efficiently, our top line outperformance fell to the bottom line, with non-GAAP earnings of $1.45 per diluted share, which also exceeded our guidance.\nThis result includes approximately $0.05 per share in foreign exchange gains, offsetting the expenses related to our vaccination program that we incurred in Q1.\nLooking at the quarter in more detail.\nOptical communications revenue was $427.3 million, up 10% from the fourth quarter and made up 79% of total revenue.\nWithin optical communications, telecom revenue increased 9% from the last quarter to $338.6 million, a new record, and datacom revenue of $88.7 million increased 15% from Q4.\nBy technology, silicon photonics products reached a record $135.1 million or 25% of total revenue and was up 23% from the fourth quarter.\nRevenue from products rated at speed of 400 gig or higher was $173.3 million, up 30% from the fourth quarter and 149% from a year ago.\nRevenue from 100 gig product increased modestly from Q4 to $135.6 million.\nBased on continue strong demand, we are expecting to see strong sequential growth in optical communications in the second quarter.\nNonoptical communications revenue was $116 million or 21% of total revenue, representing a 25% increase from a year ago, but a decrease of 5% from the fourth quarter.\nWhile as Seamus noted, the overall impact of component shortages was at the lower end of our expectations for the quarter, these constraints were more apparent for nonoptical products, especially in automotive.\nWith the majority of our sensor revenues serving automotive applications, we are now reclassifying automotive revenue and other nonoptical communications revenue to include historical sensor revenue, which has represented less than 1% of quarterly revenue for the past two years.\nOn this combined basis, automotive revenue was $48.2 million, a decrease of 8% from last quarter.\nWhile we don't intend to break this out in the future, for a more direct comparison purposes, automotive revenue, excluding sensors, declined 8% sequentially.\nIndustrial laser revenue was $37.5 million, a decline of 9% from Q4, but stable when viewed on a trailing 12-month basis.\nOther nonoptical communications revenue was $30.3 million, up 7% from the fourth quarter.\nThis category now includes a portion of revenue that was previously classified as sensors.\nNow turning to the details of our P&L.\nGross margin was 12.1%, down 20 basis points from Q4, consistent with our expectation, considering the expenses related to our vaccination program annual merit increases.\nOperating expenses in the quarter were $13.2 million or 2.4% of revenue, resulting in operating income of $52.5 million or 9.7% of revenue.\nEffective tax rate was 1.2% in the first quarter, and we continue to anticipate that our tax rate in the fiscal year 2022 will be approximately 3%.\nNon-GAAP net income was a record at $54.2 million or $1.45 per diluted share.\nOn a GAAP basis, net income was $1.20 per diluted share.\nTurning to the balance sheet and cash flow statement.\nAt the end of the first quarter, cash, restricted cash and investments were $528.6 million, compared to $548.1 million at the end of the fourth quarter.\nOperating cash flow was $39 million.\nWith capex of $34.6 million, free cash flow was $4.4 million in the quarter.\nWe did not repurchase any shares during the first quarter.\nWe remain committed to return surplus cash to shareholders through a 10b5-1 share repurchase plan, combined with opportunistic open market share buybacks.\nCurrently, we have $81.2 million in our share repurchase authorization.\nNow I would like to turn to our guidance for the second quarter of fiscal year 2022.\nAfter a strong start to the year, we are optimistic that our momentum will continue in the second quarter.\nWe expect strong top line growth despite similar revenue headwinds from component shortages that we experienced in the first quarter.\nWe estimate that the ongoing supply cost change will again impact our second quarter revenue by approximately $25 million to $30 million.\nWith that backdrop, for the second quarter, we anticipate revenue in the range of $540 million to $560 million.\nFrom a profitability perspective, we anticipate non-GAAP net income to be in the range of $1.42 to $1.49 per diluted share.\nIn summary, we are off to a great start to the year, and we are optimistic that strong demand trends and execution will combine again to produce even stronger results in the second quarter.\n",
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"content": "compname says revenue for first quarter of fy22 was $543.3 million, compared to $436.6 million in first quarter of fy21.\nrevenue for the first quarter of fiscal year 2022 was $543.3 million, compared to $436.6 million in the first quarter of fiscal year 2021.\ngaap net income per diluted share for the first quarter of fiscal year 2022 was $1.20.\nnon-gaap net income per diluted share for the first quarter of fiscal year 2022 was $1.45.\nexpects second quarter revenue to be in the range of $540 million to $560 million.\nnon-gaap net income per diluted share is expected to be in the range of $1.42 to $1.49 in q2.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With me on the call today are Seamus Grady, chief executive officer; TS Ng, chief financial officer; and Csaba Sverha, vice president of operations, finance, and CFO designate.\nWe had a very strong second quarter, with financial results that exceeded all of our guidance metrics, including record quarterly revenue.\nThis performance was driven by sequential growth in nearly all areas of our business.\nWith end market demand stabilizing, we expect to see continued year-over-year growth in the third quarter.\nRevenue in the second quarter was 426 million, up 7% from the first quarter and 6% from a year ago.\nRevenue upside largely fell to the bottom line with non-GAAP net income of $1 per share, which was also above the top end of our guidance range.\nGross margin was 11.9%, and we continue to anticipate non-GAAP gross margins to be within our target range of 12 to 12 and a half percent for the full year.\nLooking at our business by end markets.\nOptical communications revenue was 322 million, up 6% from the first quarter.\nThis represented 76% of total revenue, consistent with the first quarter.\nWithin optical communications, telecom revenue was 248 million, up 8% from the first quarter and 20% from a year ago, and represented 77% of optical revenue.\nOur Berlin transfer program with Infinera, again, contributed to our telecom growth, and the program was fully ramped at the end of the quarter as anticipated.\nDatacom revenue in the second quarter was 74 million, a slight increase from Q1, which was better than we had anticipated as demand trends for these products continue to stabilize.\nDatacom represented 23% of optical communications revenue.\nBy technology, silicon photonics-based optical communications revenue increased by 7% from the first quarter to 82 million, and represented 26% of optical communications revenue.\nRevenue from QSFP28 and QSFP56 transceivers was 48 million, up 3 million from the first quarter.\nBy data rate, 100-gig programs represented 49% of optical communications revenue at 159 million, and products rated at speeds of 400 gig and above continued to see rapid growth, up 31% from the first quarter to 49 million.\nLooking at our non-optical communications business, revenue of 104 million was up from 97 million in the first quarter, which was also better than expected.\nWe were pleased to see the demand for industrial lasers improve, and as a result, revenue for these products was also better than expected at 46 million, compared to 41 million in the first quarter.\nWe remain optimistic that over the longer-term, industrial laser manufacturers will increasingly leverage outsourcing to remain globally competitive.\nAnd we believe we are uniquely positioned to be a leader in serving this market as the opportunity evolves.\nAutomotive revenue moderated to 21 million, reflecting normal quarter-to-quarter variability from next generation automotive programs and which we expect to return to growth in the third quarter.\nSensor revenue increased slightly to 3.9 million from 3.5 million.\nFinally, revenue generated from other non-optical applications grew 20% sequentially to 33 million, mainly from Fabrinet West.\nDuring the quarter, we saw additional programs that had ramped production at Fabrinet West transferred to Bangkok where we anticipate their volumes will continue to grow.\nThis is another illustration of the success of our new product introduction model which we will continue to leverage in Santa Clara and we are gearing up to extend to Israel in the coming months.\nAt the same time, the success of our program with Infinera demonstrates our ability to build complete network systems, while offering economic advantages to our customers.\nWe believe there could be additional opportunities for us to vertically integrate from the component level, up to the system level, that can provide additional business to Fabrinet, while simplifying the supply chain for our customers, and we have been actively pursuing these opportunities.\nAnd today, I am pleased to announce that after the close of the second quarter, we were awarded a significant new project by Cisco which will further build on our successful partnership.\nWhile it is still early days, we believe that if this program ramps as anticipated, that Cisco could represent 10% of revenue or more for Fabrinet in fiscal 2021.\nWe look forward to sharing more on this program as it progresses.\nWe're extremely grateful to TS for his contributions over the years to Fabrinet, and for his commitment to ensuring a smooth transition.\nTS will be reporting to me as EVP special projects during this transition period.\nHis dedication and positive attitude are a model for us all, and we wish him the best in his well-deserved retirement.\nCsaba has been vice president of operations finance at Fabrinet for almost two years now, and I have had the pleasure of working directly with Csaba in the past.\nHe displays all the characteristics that have had a meaningful hand in Fabrinet's past success, including integrity, collaboration, and commitment to success.\nI am confident that Csaba will play a leading role in helping Fabrinet get to our next level of performance.\nWhile our third-quarter results often reflect a small seasonal down-take, guidance that we are providing for the third quarter also includes the anticipated impact from extended shutdowns in China due to the coronavirus outbreak.\nSpecifically, the Lunar New Year week-long shutdown at our Casix facility in Fuzhou, China, which manufactures custom optics components, has been extended from one week to two weeks ending February 10th.\nIn addition, some of our third-party suppliers in China are also impacted by shutdowns.\nThis has a direct impact on our top and bottom-line expectations, and is considered in the guidance we are providing for the third quarter.\nNews related to the coronavirus is rapidly evolving, and our top priority is to keep our employees safe, and will continue to monitor the situation.\nIn summary, we are pleased with our stronger than expected performance in the second quarter, and we're excited about our new business activity.\nWhile we anticipate that coronavirus outbreak will result in a larger than normal sequential revenue decline in the third quarter, I believe we remain well positioned to extend our business success and market leadership as we look ahead.\nI would like to congratulate Csaba on his appointment, and I am committed to making sure his transition to the CFO position is smooth.\nNow turning to our results.\nI will provide you in more details on our financial results for the second quarter, and then we'll introduce Csaba to provide our guidance for the third quarter of fiscal year 2020.\nTotal revenue in the second quarter of fiscal year 2020 was 426.2 million, above the upper end of our guidance range, and a quarterly record.\nNon-GAAP net income was $1 per share, and was also above our guidance range, even after a foreign exchange headwind of 1 million, or approximately $0.03 per share.\nNon-GAAP gross margin in the second quarter was 11.9%.\nWe continue to expect gross margin to be within our target range for the year.\nNon-GAAP operating expense was 12.3 million in the second quarter.\nAs a result, non-GAAP operating income was 38.5 million, and non-GAAP operating margin was 9%.\nTaxes in the quarter was 2 million, and our normalized effective tax rate was less than 5%.\nWe continue to expect our effective tax rate to be 5 to 6% for the full year.\nNon-GAAP net income was above our guidance range at 37.7 million in the second quarter or $1 per diluted share, as I indicated earlier, on a GAAP basis, which includes share base compensation expenses and amortizations of debt issuing costs, net income for the second quarter was 31.2 million or $0.83 per diluted share, also above the high-end of our guidance.\nTurning to the balance sheet and cash flow statement.\nAt the end of second quarter, cash, restricted cash, and investments was 450.5 million compared to 436.4 million at the end of the first quarter.\nOperating cash flow in the quarter was 50 million, and with capex of 9.1 million, free cash flow was 40.9 million in the second quarter.\nDuring the quarter, our working capital returned to neutral level as we began consuming the transfer inventory and collecting receivables.\nWe did not repurchase any shares during the quarter.\n62.2 million remain in our share repurchase program.\nWe will continue to evaluate market conditions to opportunistically purchase shares when possible.\nI appreciate your professionalism, and have enjoyed working with all of you.\nI wish you all nothing but the best.\nI will now invite Csaba to give our FQ3 guidance.\nI'm looking forward to stepping up as the next CFO at Fabrinet.\nTS has been a great mentor, and my aim is to maintain the transparent and open level of dialogue with investors that TS has had.\nI'm looking forward to a smooth transition, including getting to know those of you attending OFC in March, or other investor events in the coming months.\nI would now like to turn to our guidance for the third quarter of fiscal year 2020.\nAfter the record quarterly revenue performance in Q2, we expect to maintain our year-over-year growth in the third quarter.\nWe anticipate that the third-quarter revenue will moderate more than the usual seasonal impact as a result of the coronavirus outbreak in China.\nFor the third quarter, we anticipate revenue to be between 410 and 418 million.\nFrom an earnings per share perspective, we anticipate non-GAAP net income per share in the third quarter to be in the range of $0.92 to $0.95, and GAAP net income per share of $0.75 to $0.78, based on approximately 37.9 million fully diluted shares outstanding.\nIn conclusion, we are pleased with our strong performance in the quarter.\nWe are excited about our business momentum, and despite a small near-term impact of coronavirus outbreak, we remain optimistic that we can continue to build shareholder value over the longer-term.\n",
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"content": "compname posts q2 earnings per share of $0.83.\nq2 gaap earnings per share $0.83.\nsees q3 revenue $410 million to $418 million.\nq2 revenue $426.2 million versus refinitiv ibes estimate of $413.2 million.\nsees q3 2020 non-gaap earnings per share $0.92 to $0.95.\nsees q3 2020 gaap earnings per share $0.75 to $0.78.\ncsaba sverha to succeed ts ng as chief financial officer.\n",
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