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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.\nBefore I discuss the details of our results, I would like to tell you about how we are handling COVID-19.\nWe are very fortunate that COVID-19 has not impacted our ability to keep our factories running globally.\nNeedless to say, we greatly appreciate the extraordinary efforts of our employees and their families, our suppliers, and of course, our customers for their continued dedication and hard work during this challenging time.\nWe've taken great measures to ensure the safety of our employees and their families, and we are pleased to report that we are operating at 100% capacity and that our employees are well.\nExtreme flexibility, decisive response to the crisis, excellent leadership and teamwork, together with excellent partnerships with our customers and suppliers, helped us make immediate changes to our build schedules and operating protocols to meet the volatile demand resulting from the crisis.\nWe came to know about the COVID-19 issues from Casix, our factory in China, in late January.\nThe information received from our staff during the Chinese New Year was very disconcerting as the virus was reported to be similar to the SARS virus of 2003.\nWe immediately implemented all of the measures taken in our China factory across all of our factories, starting the first week of February.\nWe continued to enhance the measures as recommended by the CDC, the World Health Organization, local and federal governments of the regions where we operate as well as based on our own research on the subject.\nThe measures include monitoring body temperatures of all people entering the factories, cutting down on visitors, banning visitors from regions heavily hit by the virus, mandatory social distancing, frequent washing of hands, wearing face masks, stopping large group meetings, providing disinfectant in all areas of the factories and special training of staff on the symptoms and precautions to be taken in the factory and at home.\nWe encouraged staff to work from home where possible and mandated that all vulnerable staff work from home.\nBy mid-February, we started disinfecting all material coming in to ensure it was virus free before it was issued to the manufacturing lines.\nDespite the challenges we faced, we demonstrated the flexibility inherent in our business model to produce financial results that were within our guidance range in our fiscal third quarter, with revenue of $411 million and non-GAAP net income of $0.92 per share.\nThis nimbleness also enabled us to generate significant free cash flow.\nLooking at some of the details of the quarter.\nOur high-level business mix was relatively consistent with our recent history, with 75% of revenue from optical communications and 25% from non-optical communications.\nOptical communications revenue of 309 million was down 4% from the second quarter but up 3.5% from a year ago.\nWithin optical communications, telecom revenue was 224 million, down 10% from the second quarter but up 3% from a year ago, reflecting some inventory adjustments associated with certain next-generation programs.\nDatacom revenue of 85 million rebounded nicely and was up 14% from the second quarter and up 5% from a year ago.\nBy technology, silicon photonics-based optical communications revenue increased 5%, both from the second quarter and from a year ago, to 86 million and represented 21% of total revenue.\nRevenue from QSFP28 and QSFP56 transceivers also continued to grow and was up 7% from the second quarter and 17% from a year ago at 51 million or 12% of total revenue.\nBy data rate, 100-gig programs grew 1% from the second quarter and 10% from a year ago to 161 million.\nProducts rated at speeds of 400-gig and above declined 41% from the second quarter but grew 25% from a year ago to 29 million.\nLooking at our non-optical communications business.\nRevenue of 103 million was essentially flat from the second quarter and up 2% from a year ago.\nDemand for industrial lasers was also flat sequentially with revenue of 46 million.\nDuring the third quarter, we reclassified certain revenue from other non-optical revenue to automotive to better represent the end market being served.\nAs such, automotive revenue was 31 million and other revenue was 22 million.\nExcluding the impact of this reclassification, revenue from automotive and other non-optical revenue would have been consistent with the second quarter.\nSensor revenue was 3 million.\nAs we look to and beyond the fourth quarter, it's clear that there is extraordinary uncertainty ahead.\nIn light of this, I wanted to share some thoughts on how the COVID-19 crisis could impact our business going forward.\nOn the one hand, with work-from-home protocols in place around the world, demand for Internet bandwidth has grown substantially.\nClearly, the next-generation telecom and datacom products we manufacture for our customers, which make up about three-quarters of our revenue, are critical to expanding network capacity.\nThis will continue to be a positive driver for Fabrinet.\nOn the other hand, we could continue to see regional downward demand adjustments if outbreaks return.\nIn addition, markets for other products we manufacture such as industrial lasers and automotive are likely to see reduced demand in a prolonged economic downturn.\nOur approach toward managing shifting customer demand remains unchanged.\nOur employee wellbeing remains our top priority, and that means we will continue to follow intense safety protocols at all of our facilities.\nAt the same time, the availability of parts and materials we need to manufacture are likely to face variability.\nAnd we will continue to work closely with our customers and suppliers to identify solutions to satisfy our customers' demand.\nThese supply chain constraints are the primary factor that has pressured our gross margin in the third quarter and will likely continue to do so in the foreseeable future until the COVID-19 impact settles down.\nBecause of this, we now expect our gross margin to be in the range of 11.5 to 12% or slightly below our target range of 12 to 12.5% for the full year.\nAnd we could see this pressure continue into early fiscal 2021.\nFortunately, our business model remains extremely resilient and agile.\nMore than 90% of our costs are variable, with components and materials making up the greatest portion of our costs.\nBecause of this, we are able to quickly adjust manufacturing costs to manage changing demand dynamics.\nAs such, we believe we can maintain industry-leading gross margin levels despite the demand churn and material availability challenges.\nFrom an operating expense perspective, we continue to be a very lean organization and do not foresee meaningful expansion of operating expenses in the near future.\nFrom a balance sheet perspective, we remain very well capitalized with over $465 million in cash and investments and total debt of approximately $55 million.\nIn addition, we continue to generate significant cash flow and anticipate maintaining that position in the upcoming quarters.\nIn summary, we're in a very dynamic business environment and our within guidance performance in the third quarter is a strong reflection of our resiliency and agility.\nThis ability to quickly respond to shifting markets has been a part of Fabrinet's core strategy since our inception, and its value becomes most apparent when the environment gets challenging.\nAs such, we believe we are uniquely positioned to continue to thrive during and post the COVID-19 crisis.\nI will provide you with more details on our financial results for the third quarter and our guidance for the fourth quarter of fiscal year 2020.\nTotal revenue in the third quarter of fiscal year 2020 was 411.2 million, within our guidance range and slightly below our record second-quarter performance as anticipated.\nRecall that in our last call, our revenue guidance incorporated an 8 million to $10 million impact from COVID-19.\nDuring the quarter, we have demonstrated our extreme flexibility to produce financial results that were within our guidance changes even though the actual impact on revenue from the pandemic was 12 to $15 million or 4 to $5 million more than we originally anticipated.\nNon-GAAP net income was $0.92 per share, which was at the lower end of our guidance range, even after the greater-than-expected effects on both revenue and expenses that Seamus discussed.\nNow, turning to the details of our P&L.\nSeamus described a number of extraordinary efforts we are going through during COVID-19 to remain operational while also keeping our employees safe.\nCombined with the revenue impact, gross margin was below our target range at 11.2% in the third quarter.\nNon-GAAP operating expense was $12.2 million in the third quarter, flat with Q2.\nAs a result, non-GAAP operating income was 33.7 million, and non-GAAP operating margin was 8.2%.\nTaxes in the third quarter were 1 million and our normalized effective tax rate was 2.4%.\nWith revenue streams coming from more advantageous tax jurisdiction, we now expect our effective tax rate to be below 5% for the full year.\nNon-GAAP net income was 34.8 million in the third quarter or $0.92 per diluted share, as I indicated earlier.\nOn a GAAP basis, which includes share-based compensation expenses and amortization of debt issuance costs, net income for the third quarter was 28.3 million or $0.75 per diluted share, also within our guidance range.\nTurning to the balance sheet and cash flow statement.\nAt the end of the third quarter, cash, restricted cash and investments were 465.2 million, up from 450.5 million at the end of the second quarter.\nOperating cash flow in the quarter was 51.8 million.\nAnd with capex of $12.1 million, free cash flow was $29.8 million in the third quarter.\nOn a year-to-date basis, operating cash flow was 104.4 million and free cash flow was 77 million.\nFrom a capital allocation perspective, we remain committed to returning value to shareholders and have been focused on opportunistically repurchasing share in the open market as permitted.\nDuring the quarter, we repurchased 355,000 shares at an average price of $58.27 for a total cash outlay of 20.7 million.\nAt the end of the quarter, we have 41.5 million remaining in our share repurchase program.\nWe will continue to evaluate market conditions to opportunistically repurchase additional shares when possible.\nI would now like to turn to our guidance for the fourth quarter of fiscal year 2020.\nWe believe that long-term growth trends are intact for the markets we serve and that the current environment in many respect highlight the importance of products we manufacture.\nThat said, we are not immune from the broader factors that are impacting some of our customers, and this is reflected in our revenue guidance, which calls for a sequential decline of 6% at the midpoint.\nAt the same time, the market uncertainty is greater than we have seen in some time.\nAs such, we are expanding our guidance ranges to reflect this.\nFor the fourth quarter, we anticipate revenue to be in the range of 370 to 400 million, including a 25 to 35 million impact from COVID-19-related uncertainties.\nWe are also reflecting in our guidance an approximately 15 million impact as a result of an inventory correction from one of our customers.\nAs you'd anticipate from the factors that impacted our gross margin in the third quarter, many of which will extend into upcoming quarters, we expect gross margin to be in the range of 11.5 to 12%, slightly below our target range of 12 to 12.5% for the full year of fiscal 2020.\nFrom an earnings perspective, we anticipate non-GAAP net income per share in the fourth quarter to be in the range of $0.80 to $0.92 and GAAP net income per share of $0.64 to $0.76, based on approximately 27.6 million of fully diluted shares outstanding.\nIn conclusion, we are pleased to see our resilient business model work successfully at a volatile time.\nWhile we see the potential for even greater uncertainty ahead, our flexibility and agility leaves us well positioned to protect our business during this pandemic.\nWe believe we can exit the crisis in an even stronger position and continue to be optimistic about our prospects to deliver shareholder value over the longer term.\n",
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"content": "compname posts q3 non-gaap earnings per share of $0.92.\nq3 non-gaap earnings per share $0.92.\nq3 gaap earnings per share $0.75.\nsees q4 revenue $370 million to $400 million.\nq3 revenue $411.2 million versus refinitiv ibes estimate of $414.1 million.\nsees q4 2020 non-gaap earnings per share $0.80 to $0.92.\nsees q4 2020 gaap earnings per share $0.64 to $0.76.\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 very strong quarter, representing our third quarter in a row of record revenue and earnings per share, both of which also exceeded our guidance.\nWith sequential growth in all of the end markets that we track, total revenue was $479.3 million.\nNon-GAAP operating margins of 9.5% were at the highest level in two years and helped produce record non-GAAP earnings of $1.21 per share.\nWe generated these results while positioning ourselves for continued growth, and we are optimistic that we can deliver another record quarter in Q4.\nLooking at some of the highlights of the quarter.\nOptical communications revenue reached a new record, driven primarily by record telecom revenue.\nOur Cisco optical transport system transfer program, which we have been discussing on recent calls, contributed to this strong performance.\nThis program transfer was completed in the third quarter, reaching its full run rate about one quarter earlier than originally anticipated.\nBased on the success of this transfer, we believe that our unique value proposition in manufacturing complete network systems puts us in a strong position to win additional new business from our existing customers, as well as other systems manufacturers who are looking to leverage their supply chain by outsourcing more efficiently.\nNotably, these newer systems programs are having a positive impact on operating margins as we were able to generate this revenue with close to zero incremental operating expenses.\nWe also achieved record non-optical communications revenue in Q3.\nRevenue grew sequentially from all non-optical markets, with automotive reaching a new record revenue level and representing the largest non-optical category for the third quarter in a row.\nNewer automotive technologies were the biggest factors driving our strong automotive growth in the quarter.\nIn summary, we are pleased to have delivered record third quarter results that exceeded our guidance.\nWe are optimistic about all the end markets that we serve and believe that with continued efficient execution, we'll be able to deliver an even stronger fourth quarter, resulting in our best year ever.\nWe are excited about our performance in the third quarter, which produced record revenue and non-GAAP earnings.\nRevenue of $479.3 million was above our guidance range, and non-GAAP earnings of $1.21 also exceeded our guidance.\nLooking at revenue in more detail.\nOptical communications was $361.7 million or 75% of total revenue, up 4% from Q2.\nNon-optical communications revenue was $117.6 million or 25% of total revenue and increased 11% from Q2.\nWithin optical communications, telecom revenue was $283.5 million, up 4% from last quarter.\nDatacom revenue was $78.3 million, up 5% sequentially.\nSilicon photonics remains an important revenue driver at 22% of total revenue or $105.4 million, up 4% from Q2.\nRevenue from 100G products increased 8% sequentially to $138.6 million but remains below peak levels as growth from faster data rate products continues to accelerate.\nRevenue from 400G and faster was $105.1 million, up 1% from last quarter and more than tripled from a year ago.\nIn Q4, we expect optical communications growth trend to continue.\nLooking at our non-optical communications business.\nAutomotive has grown to become the largest category for the third quarter in a row with record revenue of $52.5 million in the third quarter, up 12% sequentially, driven primarily by growth from new automotive programs.\nWe remain optimistic about these new automotive programs as we look ahead.\nIndustrial laser revenue was $36.1 million, up 7% from Q2.\nSensor revenue was $4.1 million and other non-optical communications revenue was up 10% to $24.8 million.\nWe believe the combination of laser and automotive strength will generate sequential growth for non-optical communications again in the fourth quarter.\nNow turning to the details of our P&L.\nGross margin was 12.2%, up from 12.1% in Q2 and in line with our target range of 12% to 12.5%.\nOperating expenses in the quarter were $12.7 million or 2.6% of revenue, reflecting our ability to grow revenue without meaningful increases in operating expenses.\nThis produced record operating income of $45.6 million or 9.5% of revenue, the highest level in two years.\nTaxes in the third quarter were $1.6 million and our normalized effective tax rate was 4%.\nWe continue to anticipate an effective tax rate of about 4% for the year.\nNon-GAAP net income was a record at $45.4 million or $1.21 per diluted share.\nOn a GAAP basis, net income was also a record at $27.5 million or $1 per diluted share.\nTurning to the balance sheet and cash flow statement.\nAt the end of the third quarter, cash, restricted cash and investments were $508.9 million.\nOperating cash flow was a strong $23.8 million.\nWith capex of $6.4 million, free cash flow was $27.5 million in the third quarter.\nDuring the quarter, we repurchased approximately 15,000 shares at an average price of $80.64 for a total cash outlay of $1.2 million.\nI would now like to turn to our guidance for the fourth quarter of fiscal year 2021.\nWe continue to be very optimistic about our business and anticipate another record quarter for revenue and profitability in Q4.\nWe expect total revenue in the fourth quarter to be between $475 million and $495 million and earnings per share to be in the range of $1.18 to $1.25 per diluted share.\nIn summary, we had our best performance ever in Q3 and are well positioned to continue our track record of success as we look ahead.\n",
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"content": "sees q4 revenue $475 million to $495 million.\nsees q4 non-gaap earnings per share $1.18 to $1.25.\nq3 non-gaap earnings per share $1.21.\nq3 revenue $479.3 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: Speaking today will be Jim Herbert, the bank's founder, chairman, and co-CEO; Gaye Erkan, co-CEO and president; and Mike Roffler, chief financial officer.\nAll are available on the bank's website.\nIt was another very strong quarter with robust growth in loans, deposits and wealth management assets.\nOur client-centric business model is continuing to perform very well across all of our segments and all of our geographic markets.\nSince 1985, First Republic's success has been grounded in colleague empowerment and a service culture of taking care of each client one at a time while operating in a very safe and sound manner.\nThis straightforward and personal approach has led to a very consistent organic growth for 36 years.\nThe growth is not predicated on mergers or acquisitions.\nLet me review for a moment the results of the second quarter.\nTotal loans outstanding were up 18.9% year to date annualized.\nTotal deposits have grown 37% year over year.\nWealth management assets were up 55% year over year to a total of more than $240 billion.\nThis across-the-board, very organic growth drove our strong financial performance.\nTotal revenue year over year has grown 34% and net interest income was up 27%.\nQuite importantly, tangible book value per share increased 15.5% year over year.\nThe safety and soundness of the First Republic franchise continues to reflect our strong credit quality.\nNet charge-offs for the quarter were only $1.2 million, just a fraction of a basis point.\nNonperforming assets at quarter end were only 8 basis points of total assets.\nWe remain, as always, focused on capital and liquidity.\nAt quarter end, our Tier 1 leverage ratio was 8.05% and our HQLA was 14.3% of total average assets during the second quarter.\nThis included higher-than-normal cash levels.\nOur clients remain very active as the reopening of our urban coastal markets takes hold.\nThis is particularly evident in the strong growth of single-family home loans during the quarter and so far this year.\nAs represented -- this growth represented a substantial portion of the quarter's total loan activities, including both purchase and refinance.\nFor some perspective on the long-term stability of First Republic's service model, residential loans have remained steady at approximately 60% of our loan portfolio for the entire past two decades.\nThis is a very safe asset class, particularly with our stringent underwriting standards and is a key to us attracting new households.\nDuring the second quarter, we opened our first banking offices in Hudson Yards.\nClients are responding well to our presence in the area and foot traffic has been actually quite good.\nOur other new markets, including Palm Beach and Jackson Wyoming, continue to perform very well.\nOverall, it's been a strong and successful first half of 2021.\nBefore turning the call to Gaye, I would like to take a moment to congratulate her on her appointment as co-CEO.\nGaye has been an inviable contributor to our performance, and I'm really delighted to continue our successful partnership at this new level.\nWorking together, we intend to ensure the consistency of First Republic's culture, which is particularly important as we emerge from the pandemic.\nI'm honored to be appointed co-CEO and continue to serve this truly special organization alongside you and our leadership team.\nWe will work hard to keep scaling our people-first culture, with an unwavering focus on safety and soundness and doing more of what we do best, delivering exceptional service to our clients.\nI'm excited about opportunities ahead and look forward to continue to work with all of our extraordinary colleagues at First Republic.\nTurning to our earnings results, it was a terrific quarter that reflects our continued focus on safe, sound, organic growth.\nOur top priority as an organization is taking care of our exceptional colleagues and empowering them to provide unparalleled client service.\nOur client satisfaction results and exceptionally low client attrition, which, in turn, fuels our growth through repeat business and client referrals.\nHappy people lead to happy clients, and the more happy clients we have, the more repeat business we do and the more client referrals we get.\nEach year, more than 75% of our safe organic growth comes from these sources.\nOver the past several years, we have continued to make strategic investments in technology and risk infrastructure.\nThese investments allow us to scale our service model, while keeping our bank safe and sound.\nOur digital and tech investments are geared toward minimizing transactional time to create more time to build further trust and deepen relationships with clients and to serve our communities.\nLet me now provide some additional comments about the quarter.\nLoan origination volume was $16.8 billion, our best quarter ever.\nI would note that the weighted average loan-to-value ratio for all real estate loans originated during the second quarter remained conservative at 58%.\nSingle-family residential volume was $8.7 billion, also a record.\nRefinance accounted for 49% of single-family residential volume during the second quarter.\nA large percentage of refinance activity continues to come from clients with loans at other institutions, which provides us with great opportunities for new client acquisition.\nFor perspective, throughout the past 10 years across varying interest rate environments, refinance activity has always accounted for at least 40% of single-family volume.\nTurning to business banking.\nBusiness loans and line commitments, excluding PPP loans, were up 27% year over year.\nCapital call outstanding balances were down quarter over quarter, driven mainly by a reduction in the utilization rate from 40% to 36%.\nThis is in line with our historic utilization range of mid-30s to low 40s.\nIn terms of funding, it was an exceptional quarter.\nTotal deposits were up 37% from a year ago, supported by client activity, as well as a very meaningful impact from both fiscal and monetary policy.\nWe continue to maintain a diversified deposit funding base.\nChecking deposits increased by $5.3 billion in the second quarter and represented 68% of total deposits.\nBusiness deposits represented 61% of total deposits, up modestly from the prior quarter.\nThe average rate paid on all deposits for the quarter was just 7 basis points, leading to a total funding cost of 20 basis points.\nTurning to wealth management, assets under management increased to $241 billion.\nThis is an increase of $46 billion year to date, of which more than half was from net client inflows.\nYear to date, wealth management fees were up 39% from the same period a year ago.\nThe strength of our integrated model continues to attract very high-quality teams.\nOur second-quarter results demonstrate the power of our service model and the dedication of our exceptional colleagues.\nOur strong second-quarter results reflect the consistency of our business model.\nRevenue growth for the quarter was exceptional, up 34% year over year.\nThis was driven by strong organic growth across the franchise, including loans, deposits and wealth management assets.\nOur net interest margin for the second quarter was 2.68%.\nThis includes the impact of our elevated cash position from fiscal and monetary policy, which has resulted in significant deposit growth.\nWe continue to expect our net interest margin for the full-year 2021 to be in the range of 2.65% to 2.75%.\nImportantly, net interest income was up a very strong 27.5% year over year.\nThis is due to the robust growth in earning assets and a stable net interest margin.\nWe are pleased with our efficiency ratio, which was 62% for the second quarter.\nOur expense growth remains proportionate to our revenue growth as we continue to invest in the franchise to deliver outstanding client service.\nI would note that our 2020 Net Promoter Score actually increased from the prior year.\nWe continue to expect our efficiency ratio for the full-year 2021 to be in the range of 62% to 64%.\nLet me talk for a moment about CECL, which has been in place for six quarters now.\nCECL's formulaic guidelines take into account our loan growth, loan mix and historic credit performance.\nIn accordance with CECL, our provision for credit loss during the quarter was $16 million, reflecting our continued loan growth.\nSince CECL became effective at the start of 2020, we have added $160 million to our reserves, while only experiencing $4 million of losses.\nTurning to the tax rate.\nOur effective tax rate for the second quarter was 17.4%.\nThe decline in the tax rate from the prior quarter was due to increased tax benefits resulting from stock awards vesting during the second quarter.\nThese tax benefits added $0.11 to earnings per share in the second quarter.\nThis compares to $0.03 in the same quarter last year.\nUnder current tax law, we continue to expect our tax rate for the full-year 2021 to be in the range of 20% to 21%.\nOverall, this was a great quarter in the first half of the year.\nOur time-tested quite straightforward business model remains very focused on delivering the highest possible level of client service, doing only what we do best and operating very safely and soundly.\nAnd it continues to work quite well.\nNow we'd be delighted to take any questions.\n",
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"content": "q2 revenue $1.2 billion versus refinitiv ibes estimate of $1.18 billion.\nnet interest income $1.0 billion for quarter, up 27.5% compared to q2 a year ago.\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're obviously quite content to being able to provide black numbers, maybe to the surprise of many of you.\nQ1 '21 was a fairly quiet quarter corporate-wise as we are in a good position financially and no major transactions were concluded during the quarter.\nWe continue from Frontline a high focus on the well-being of our seafarers as they are out there being exposed to the global ebb and flow of COVID-19 infections.\nOur technical and operations team are doing a fantastic job in mitigating the challenges that arise and I'm very happy to report that they are well under way in vaccinating our sailors.\nLet's move to Slide 3 and have a look at the highlights.\nThe Q1 '21 performance is very much a testament to keeping true to our strategy.\nBeing mostly spot exposed and not expecting an imminent recovery in the market, our charter investment remains true to trading the ships in a month where we allow our vessels to commit to long voyages securing income but potentially giving away upside.\nOur modern fuel-efficient fleet is built for this purpose and it also gives us this flexibility.\nThis proved to be the right call.\nIn the first quarter of 2021, we made $19,000 per day our VLCC fleet, $15,000 per day on our Suezmax fleet, and $12,000 per day on our LR2/Aframax fleet.\nSo far in Q1, we have booked 70% of our VLCC days at $18,100 per day, 63% of our Suezmax days have $13,600 per day, and 59% of LR2/Aframax days have $14,200 per day.\nAll these numbers in the table are on the load to this chart basis.\nBefore Inger takes you through the financial highlights, let me quickly comment on the fleet development as well.\nWe took delivery of two of our four LR2s coming this year.\nFront Fusion and Front Future in March and April respectively, bringing our number of LR2s on the water to 20.\nFurther, subsequently, we confirmed acquisition through the resale of six high-spec ECO-scrubbers fleet of VLCCs to be delivered from Hyundai Heavy Industries in Korea.\nFive in 2022 and one early in 2023.\nI'll now let Inger take you through the financial highlights.\nLet's turn the slide to Slide 4 and look at the income statement.\nAs I said, we are happy to report numbers in black, and Frontline achieved total operating revenues and work expenses of $107 million in the first quarter.\nWe also have an adjusted EBITDA of $59 million and net income of $28.9 nine million, or $0.15 per share.\nFurther, we have an adjusted net income of $8.8 million or $0.04 cents per share.\nThe adjustments consist of a $15.7 million gain on derivatives, a $3.1 million unrealized gain on marketable securities, a $1.2 million on amortization on acquired time charters, and $0.1 million results of associated companies.\nThe adjusted net income in the first quarter has increased by $21 million compared with the previous quarter.\nThe increase was driven by a decrease in ship operating expenses of $11 million, mainly as a result of $6.4 million lower dry-docking fund.\nWe also had an increase of cash and cash equivalents of $6.4 million and that was due to the prior TCE rates, as well as we had a $11.2 million decrease in other costs.\nLet us then take a look at the balance sheet on Slide 5.\nThe total balance sheet numbers have increased by $10 million in the first quarter.\nThe balance sheet movements in the quarter were related to taking delivery of the energy sector from Fusion in addition to ordinary debt payments and depreciation.\nAs of March 31, 2021, Frontline had $318 million in cash and cash equivalents including undrawn amounts under our senior unsecured loan facility, marketable securities, and minimal cash requirements.\nLet's then take a closer look on Slide 6 on the cash breakeven rates and the opex.\nWe estimate that risk cash costs break-even rate will remain for 2021 of approximately $21,500 per day for VLCC, $17,700 for days for the Suezmax tankers, and $15,900 per day for LR2 tankers.\nThis gave a fleet average of about $18,100 per day.\nThese rates, they are all-in day rates.\nThat's our vessel rates to cover budgeted operating costs and dried up estimated interest expenses, TCE, and bearable high, and installments on loans, and G&A expenses.\nIn the quarter, we recorded opex expenses of $7,300 per day for the VLCCs, $7,100 a day for the Suezmax tankers, and $7,200 for the LR2 tankers.\nWe did dry dock one Suezmax tanker in the first quarter only, and we expect to dry dock up two Suezmax tankers and four LR2 tankers in the second quarter.\nLet's then look at the graph on the right hand of the slide.\nAs usual, we show the incremental cash flow after debt service per year and per share.\nAssuming $10,00, $20,000, $30,000, or $40,000 per day achieve rates in excess of all the cash breakeven rates.\nThe numbers include vessel on timeshare are distant from building deliveries.\nAnd then looking at the period of 365 days from April 1, 2021.\nSo in this graph, as an example, with a fleet average cash possibly breakeven rates of $18,100 per day and assuming $30,000 on top of the average fleet earnings, then the TCE rate would be $48,100 one per day.\nA strong fund would then generate a cash flow per share of the debt service of $3.45.\nWith this, I'll leave the word to Lars again.\nAnd let's move to Slide 7 and have a look here for a recap of the Q1 '21 tanker market.\nAnd it goes without saying that it's been somewhat demanding.\nSo total world oil consumption rose by 4.3 million barrels from January to March and reached to 96.5 million barrels per day.\nOn the other hand, supply fell by 0.5 million barrels.\nThis was mostly fueled by the actions from Saudi Arabia and their volunteer cuts to -- turn it up at 93.5 million barrels per day at the end of the quarter.\nAs we continued to draw on inventory, tanker demand remained basically unchanged.\nWe did, during the quarter, see return of Libyan volumes.\nAnd we had toward the end of the quarter a U.S. -- the U.S. cold snap that created a lot of volatility.\nSo tanker rates firmed toward the end of the quarter, and this is I find quite positive because it actually is indicating a thinner balance than what may be perceived.\nSo basically, to wrap up Q1, we see demand or consumption is running ahead of supply and the draw on inventories is come for mitigating that volume.\nIf you look at the chart on the right-hand side, you see what I refer to as a ripple rather than a very strong market, but we see how quickly rates react where we saw, firstly, the Aframax market move in line with the Libya opening up.\ncold snap, affecting what was inside of the U.S. Gulf.\nSo let's move on to Slide 8 and look at the tanker order books.\nOn all asset classes, we are observing delayed recycling.\nWe see very little support for keeping older tonnage in this market.\nBut they remain in the fleets.\nRecycling prices are up 30% year to date and are now count being negotiated around %550 per long ton or $23 million for a VLCC.\nThis is, to some extent, being outcompeted by the fact that we continue to see demand for vintage tonnage from undisclosed price -- buyers with relatively firm prices.\nThe overall tanker order book has shrunk year to date by approximately 4%.\nThis as vessels deliver and new ordering has been fairly muted.\nWe've seen on the VLCC's 20 new -- 28 new orders placed, but as 25 vessels are delivered at the same time, the order book remains to be fairly flat.\nThe VLCC order book stands at around 9% of the existing fleet, and the overall order book for tankers is up to around 7% of the existing fleet.\nLet's move to Slide 9 and recap what's going on the asset prices.\nSo the asset prices are on the move.\nWe have, over the last six months, see more -- seen more than 170 new orders for containerships.\nWe've also seen quite some ordering on LPG.\nAnd also seeing confirmation of LNG orders, which has further contributed to the activity.\nAnd in line with the entire commodity space, steel prices have appreciated sharply.\nThe fundamentals of the tanker market suggest a tightening of capacity over the coming years.\nAnd the regulatory tightening in respect of greenhouse gas emissions further supports the case of investing in modern fuel-efficient ships.\nPropulsion is yet not the driver.\nRight now, it's the yard capacity or rather the lack of it which is driving prices together with the steel.\nSo let's move to Slide 10 and look at the short-term outlook.\nSo we're currently right in the middle of OPEC plus productions increasing.\nThey are increasing somewhat slowly, but they are adding to transportation demand.\nCurrently, Asia, and in particular, China, are coming out of refinery maintenance.\nAnd oil demand continues to recover.\nand Europe in focus as we're coming out of lockdowns.\nInventories, both on land and floating, are now normalized and at pre-COVID-19 levels.\nFrom where we are now, according to EIA, oil supply is expected to grow by 6 million barrels by year-end.\nIf you look at the graph on the left-hand side below, we see that most of these increases are expected to happen basically from where we stand now and over the summer.\nThe key to the demand bounces in 2021, you can find on the right-hand side.\nWe know that gasoline demand fell by 3.3 million barrels per day in 2020.\nAnd it's now expected to grow by 1.8 million barrels per day in 2021.\nFor jet, it's affected the crude oil balances by 3.2 million barrels per day and negative in 2020 and about 1.3 million barrels per day is expected to return this year.\nFor diesel, we're actually adding more than we lost, 1.2 million barrels per day.\nFor fuel oil, we're keeping at level.\nOther kind of uses of oil is also linked to this at 0.7 million barrels per day.\nLet's move over to Slide 11 and my summary.\nSo basically, to wrap this up, all key macro indicators points toward a firm recovery.\nAnd global GDP is expected up 6% this year.\nAsset prices are on the move as yard capacity is tightening and steel prices are increasing.\nI've just mentioned, global oil supply is expected to grow by 6 million barrels by the end of 2021.\nThe COVID-19 vaccination pace in the developed countries is very encouraging and countries are opening up.\nWe can see on the graph below, which indicates activity within the various key segments of the shipping sector.\nThat the cyclical recovery run has started.\nAll key shipping sectors are firm.\nThe tankers are lagging.\nFrontline is ideally positioned to capitalize on the anticipated recovery in tanker markets with our modern, spot-exposed, fuel-efficient fleet.\nAnd with that, I would like to open up for question-and-answer session.\n",
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"content": "frontline q1 net income at usd 28.9 mln.\nq1 net profit 28.9 million usd.\nq1 diluted earnings per share 0.15 usd.\nreg-fro - first quarter 2021 results.\nnet income of $28.9 million, or $0.15 per diluted share for q1 of 2021.\nreported spot tces for vlccs, suezmax and lr2 tankers in q1 of 2021 were $19,000, $15,200 and $12,000 per day, respectively.\nhigh number of ballast days at end of quarter will limit amount of additional revenues to be booked on a load-to-discharge basis.\nwill recognize certain costs during uncontracted days up until end of period.\nwe expect spot tces for full q2 of 2021 to be lower than tces currently contracted, due to impact of ballast days at end of q2 as well as current freight rates.\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: Different from the first quarter this year, second quarter ended up being quite unbeatable.\nAs many of you have asked quite a few times now, will Frontline try and exploit the weakness in this market to grow further?\nAnd I guess, we have answered that now during Q2.\nWe are in some way a three-legged shipping platform with VLCCs, Suezmax and LR2s.\nOur VLCC leg has been a bit shorter than the others.\nNow we're amending that somewhat.\nParts of the challenges in the market this quarter has been the continuous flare-ups of COVID infections in various locations around the world.\nVaccination has come far in the Western parts.\nBut other parts of the globe are not so fortunate.\nWe remain vigilant toward our seafarers' well-being and are happy to share that our efforts to arrange vaccines for them is going well.\nIn addition, I'd like to mention we are very grateful certain port states are being extremely generous, offering vaccines to seafarers literally for free.\nSo let's move on and have a look at the highlights on Slide 3.\nQ2 '21 performance reflects the challenges the market faced this quarter.\nIt is, however, a further proof that our business model, efficient operations, modern fleet, and a very hardworking chartering team manages to outperform the key benchmarks.\nTo put this in perspective, an average weighted earnings index I checked recently for oil tankers came in just over $6,000 per day in Q2 '21, the lowest print in more than 20 years.\nIn order to outperform this, the owners, and in particular, the owners' charters, must fight for every cent and know their position well to be able to play their hands best possible.\nRegrettably, this is not always the case as far as we can observe.\nAnyway, at Frontline, we do the hard work and managed to achieve $15,000 per day on our VLCC fleet; $11,000 per day on our Suezmax fleet; and $10,600 per day on our LR2/Aframax fleet in the second quarter of this year.\nSo far in Q3, we have booked 70% of our VLCC days at $14,000 per day; 64% of our Suezmax days at $9,800 per day; and 63% of our LR2/Aframax days at $11,800 per day.\nAll numbers in this table are on a load-to-discharge basis.\nBefore Inger takes you through the financial highlights, let me quickly comment on the acquisitions in the quarter.\nDuring Q2, we acquired, through resale, six latest-generation ECO-type VLCCs currently under construction at Hyundai in Korea.\nIn addition, we acquired two modern ECO-type VLCCs built in 2019 at the same shipyard.\nWe have for a period of time followed the VLCC asset market closely to look for opportunities.\nAs we didn't expect an imminent recovery in tanker markets, delivery was a key bargaining chip.\nThe rallying steel prices and high activity around us for non-tanker assets pushing potentially delivery slots way forward added to our conviction in making these investments.\nI'll now let Inger take you through the financial highlights.\nFollowing the acquisition of the VLCCs, as Lars mentioned, we have progressed on the loan financing.\nAnd in August this year, we obtained financing commitments, subject to final documentation, for three senior secured term loan facilities.\nThey are in a total amount of just $247 million.\nAnd they will partially finance the acquisition on the two VLCCs built in 2019 and three of the six VLCC newbuilding contracts.\nAll facilities will finance 65% of the market value.\nThey will carry an interest rate of LIBOR plus a margin of 170 basis points.\nAnd they will have an amortization profile of 20 years, starting from delivery date from the yard.\nWe intend to establish long-term financing for the remaining four resale VLCCs newbuilding contracts closer to delivery of the vessels.\nThen I think we should move to Slide 4 and look at the income statement.\nFrontline achieved total operating revenues, net of voyage expenses, of $80 million and adjusted EBITDA of $28 million in this quarter.\nAnd we report a net loss of $26.6 million or $0.13 per share and an adjusted net loss of $23.2 million or $0.12 per share.\nThe adjustments this quarter consist of a $4.7 million loss on derivatives; a $0.8 million gain on marketable securities; and a $1.3 million amortization of acquired time charters; and lastly, a $0.8 million share of losses of associated companies.\nThe adjusted net loss in the second quarter decreased $32 million compared with the first quarter.\nAnd the decrease was driven by a decrease in our time charter equivalent earnings due to the lower TCE rates, as Lars mentioned; an increase in ship operating expenses of $9.3 million, mainly as a result of higher dry-docking costs; offset by a gain on marketable securities sold in the quarter of $4 million.\nLet us then look at balance sheet on Slide 5.\nThe total balance sheet numbers have increased with $64 million in this quarter.\nThe balance sheet movements in the quarter are primarily related to taking delivery of the LR2 tanker from Future and the acquisition of 6 VLCC newbuilding contracts in addition to ordinary debt repayments and depreciation.\nAs of June 30, Frontline has $257 million in cash and cash equivalents, including undrawn amounts under our senior unsecured loan facilities, marketable securities, and minimum cash requirements.\nThen let us take a closer look at cash breakeven rates on Slide 6.\nWe estimate risk cash cost per daily rate for the remainder of 2021 of approximately $21,800 per day for the VLCCs; $7,500 per day for the Suezmax tankers; and $15,400 per day for the LR2 tankers.\nAnd the fleet average estimate is about $18,000 per day.\nThese rates are the all-in daily rates that our vessels must earn to cover the budgeted operating costs and dry dock, estimated interest expenses, TCE and bareboat hire, installments on loans and G&A expenses.\nThe highly attractive terms on the updated financing commitments on four of the acquired VLCCs, which I mentioned earlier, decreases the daily cash breakeven rates with approximately $1,400 per vessel per day compared to existing financing terms of similar vessels.\nIn the quarter, we recorded opex expenses of $7,600 per day for VLCCs; $8,500 per day for Suezmax; and $9,000 per day for LR2.\nWe dry-docked three Suezmax tankers in this quarter and four LR2 tankers.\nAnd we expect to dry-dock one VLCC and two LR2 tankers in the third quarter and none in the fourth quarter.\nThe graph on the right-hand side of this slide shows that if we assume $30,000 on top of the daily fleet average cash cost per daily rate of $18,000, Frontline will generate a cash flow per share after the service cost of $3.51 per year.\nAnd the cash generation potential will increase after acquisition of the eight VLCCs.\nWith this, I leave the word to Lars again.\nSo let's look at Slide 7 and recap the second quarter tanker market.\nSo global oil consumption averaged 96.7 million barrels per day in Q2 '21.\nThat's up 2.1 million barrels per day from Q1 '21.\nProduction averaged 94.9 million barrels per day.\nHence, the world continued to draw about 1.8 million barrels from inventories.\nJust to put that in perspective, when you go from inventories, you're not really using that much transportation.\nAnd as a rule of thumb on tanker utilization, you need about 30 VLCC equivalents in order to transport 1 million barrel of oil per day.\nSo this kind of draw represents a loss of 30 to 35 VLCC equivalents in demand.\nThe tanker rate gradually slipped throughout the quarter and volatility faded.\nOPEC+ did increase supply by more than 1 million barrels per day during Q2 '21.\nThe key OPEC producers also went into higher-demand periods, typically in the Middle East, where summer hits and you start to basically burn oil or fuel for electricity generation.\nU.S. and Brazil added another 900,000 barrels per day.\nMost of the Brazilian additions came out as exports.\nDemand rose sharply in North America and Greater Europe while Asia, that led the recovery, saw a far more muted development in the second quarter of the year.\nAs illustrated in the two charts below, where we basically isolated North America, Europe, and Eurasia, we see that during Q2, demand there rose sharply while the rest of the world, and in particular Asia, and as I mentioned that led the recovery toward 2021, has performed kind of -- performed less first half this year.\nSo let's move over to Slide 8 and look at the tanker order books.\nNew ordering has naturally been muted during the second quarter of '21.\nWe've observed that the delivery window for ordering a significant number of VLCCs or Suezmaxes is now firmly into 2024.\nThis is obviously due to all the ordering activity for asset classes kind of outside of the tanker space.\nThe overall tanker order book for VLCCs, Suezmax, and LR2 has shrunk 10% year to date.\nThe overall order book for tankers above 10,000 deadweight tons stands at 8% of the existing fleet.\nAnd this is, in fact, comparable to levels seen in Q1 1997.\nIn absolute deadweight terms, we are at a 20 years low.\nI'd also like to put this in some perspective.\nTwenty years ago, the global oil consumption was around or at 76 million barrels per day.\nA normalized market now is closer to 100 million, if not above.\nSo it means that the oil market is 30% larger now than in early 2000 and the order book is just about the same size.\nThe VLCC order book is now at 81 units, give or take.\nAt the same time, 124 VLCCs will be above or past 20 years in the same period.\nFor Suezmax, we are at 41 units and 123 passing 20 years on the same metrics.\nLet's move to Slide 9 and look at oil in transit.\nThis is a very important indicator to us.\nWe monitor this basically on a monthly basis to see where we are.\nOil in transit is basically oil being transported, so in essence, excluding whatever is on storage.\nAnd as you can see on -- I've kind of circled in 2020 in a red rectangle here.\nAnd as you can see, 2020 was a very noisy year for oil transportation.\nWe started off the year with the Saudi-Russian price war, which distorted Q1 and Q2, and we had a massive production increase and transportation increase.\nThen the COVID-19 pandemic hit, and we had -- and we saw a demand shock that suddenly kind of took away a lot of production and also then transportation needs.\nAnd Q3 and Q4, the transportation needs diminished almost back to 2017 levels.\nFloating storage did save tank utilization at the time.\nFirst half of '21, the tanker markets have -- well, basically, volume has increased and transportation has grown.\nBut we've been facing increased fleet supply by vessels released from storage and delivery of newbuilds, together with seeing deep inventory draws.\nNow -- where we are now, this is obviously, July and August for Q3, we're back to Q4 2019 levels.\nOECD commercial inventories are now down to 2019 levels.\nAnd I believe or we believe that's a fair proxy for global inventories.\nThere is also another thing to note, when inventories are no longer drawn, transported oil will come into play.\nAs an example of this, EIA are currently estimating us to build 1 million barrels of oil per day for September.\nBut then come October, we're supposed to draw half a million barrels per day from inventories.\nThat gives you a delta of 1.5 million barrels, which then needs to be transported.\nThat's equivalent to the demand for 45 to 48 VLCC equivalents.\nAnd I think this gives you kind of a notion of how quickly this can turn.\nNow let's move to Slide 10.\nAnd I call it the VLCC fleet paradox.\nThis is almost the same for Suezmaxes.\nBut I decided to point out this for the VLCCs.\nWe may all speculate in what the older generation of VLCCs are doing.\nBut it is undisputable that a 20-year-old vessel will struggle as a very limited number of charters accept them.\nAnd this is purely on age.\nWith the challenging trading environment we've had during first half this year, earnings achieved on non-ECO, high-consuming vessels have been zero or negative.\nAnd mind you, 51 vessels are above 20 years as we speak.\nYear to date, eight VLCCs are reported sold for recycling.\nThe average recycling price in Asia has risen 70% in the same period and is now close to $25.5 million for a VLCC.\nWell, one of the typical exits for an older vessel in the tanker world is crude oil storage.\nWell, crude oil curves turn into backwardation in Q4 last year and are not at all supporting floating storage.\nSo far this year, we've seen three VLCC spot fixtures reported on a vessel that's either 20 years or older than that.\nAnd this is out of the 660 VLCC fixtures we recorded.\nSo again, I want to highlight this because it is important and it's very important looking at the previous slide, where we are in the cycle on oil being transported.\nIf it is so that the effective tonnage actually hasn't grown over the last couple of years, then we're closer to balance than we might think we are.\nSo let me sum up on Slide 11.\nDemand and supply of oil continues to rise.\nBut we have to admit the Delta-type infections cloud the outlook, in particular in Asia.\nWe see asset prices remain firm, steel prices continue to rise.\nAnd the activity is very good on the yards but for non-tanker assets.\nAt the same time, the tanker fleet continues to age, the overall order book shrinks and the potential delivery window moves further out, should demand for tankers pick up.\nOPEC+ plan to add about 400,000 -- no.\n400,000 barrels per day each month until the end of the year.\nThis means in total 2 million barrels per day of increased supply.\nAnd go back to the math for -- we then would need 60 to 65 VLCC equivalents by the end of the year.\nOil in transit continues to rise.\nAnd the big question mark is obviously, when do we reach the inflection points?\nI would like to draw your attention to the chart at -- below or at the bottom of the slide.\nI showed you this last quarter as well.\nAnd as the orange dot indicates, this is where we were in March this year.\nSo we're -- basically, we're gradually digging ourselves in from negative year-on-year growth in global oil trade into positive territory.\nAnd since last, Frontline has increased its position significantly.\nWe have secured attractive financing and are ready to capitalize as we sail on toward the expected recovery.\n",
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"content": "frontline q2 net loss of $26.6 million.\nq2 net loss -26.6 million usd.\nq2 diluted loss per share 0.13 usd.\nnet loss of $26.6 million, or $0.13 per basic and diluted share 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: These are indeed volatile times, although maybe not as volatile as we hope for in freight.\nQ3 '21 marked the bottom of tankers post COVID-19.\nThis is seasonally a low point in the markets, but everything seems to have been amplified in these times we currently live in.\nTowards the end of the quarter, we actually started to see a recovery in demand for freight as export volumes grew, which has continued into the fourth quarter.\nRight now, we are, as of the rest of the world, worried about the implication of this new omicron variant of the COVID-19 virus.\nWhat will OPEC plus do in that respect and will something come out of the ongoing Iranian nuclear talks in Vienna?\nWell, let's start with the facts on Frontline's third quarter and look at the highlights on Slide 3.\nQ3 '21 performance reflects the challenges the tanker markets faced this quarter.\nIt is, however, a proof that our business model, our efficient operations, our modern fleet, and very hardworking team managed to outperform most of our peers.\nIn the third quarter, Frontline achieved $10,500 per day on our VLCC fleet; $7,900 per day on our Suezmax fleet; and $10,700 per day on our LR2/Aframax fleet.\nSo far in the fourth quarter, we have booked 79% of our VLCC days at $21,600 per day; 72% of our Suezmax days at $17,900 per day; and 64% of our LR2/Aframax days at $16,000 per day.\nAll numbers in this table are on the load-to-discharge basis.\nBut I do think they show that the markets have indeed recovered from the third quarter, although we have yet to see rates reaching for these guys.\nI'll now let Inger take you through the financial highlights.\nFollowing the acquisition that we did of the eight VLCCs in the first half of the year, we have been busy on the financing side.\nAnd in the third and the fourth quarter, we have entered into term loan facilities and obtained financing commitments for a total amount of up to $507 million to partially financed the acquisition on the two 2019 built VLCCs and also the six new building contracts.\nThese facilities will finance 65% of market value.\nThey will carry an interest rate of LIBOR plus a margin of 170 basis points.\nAnd they will have an amortization profile of mostly 20 years but also 18, commencing from the delivery date from yard.\nWhen we factor in 33.4 million available under the term loan facility entered into November 2020 to partially finance the delivery of the last LR2 tanker, we have established bank debt of up to $540.4 million.\nThe company has also raised gross proceeds of 51.2 million under the equity distribution agreement and also net cash proceeds of approximately 67 million through the sale of four LR2 tankers.\nAnd following this, remaining commitments as per September 30th for Frontline's new building program consisting of one LR2 tanker and the six VLCCs and for the acquisition of the 2019 built VLCCs is fully funded.\nThrough these new financings, we reduced our borrowing costs, and we also reduced our industry-leading cash breakeven base, providing significant operating leverage and sizable returns during periods of market strength, and help protecting our cash flows during periods of market weakness.\nFrontline has also extended the terms of the senior unsecured revolving credit facility of up to $275 million by 12 months to May 2023, leaving Frontline with no loan maturities until 2023.\nFrontline achieved total operating revenues net of voyage expenses of $69 million and adjusted EBITDA of $17 million in the third quarter of 2021.\nWe reported net loss of 33.2 million or $0.17 per share and adjusted net loss of 35.9 million or $0.18 per share in the third quarter.\nThe adjustments consist of a 1.2 million gain on derivatives and 0.2 million gain on marketable securities, and a 1.3 million amortization of acquired time charters.\nThe adjusted net loss in the third quarter increased by 12.7 million compared with the second quarter.\nAnd this increase in loss was driven by a decrease in our time charter equivalent earnings due to lower TCE rates and the recognition of a gain on the marketable securities sold in the second quarter of 4 million.\nThis was partly offset by a decrease in ship operating expenses of 3.2 million, primarily as a result of lower dry-docking costs.\nThen let us take a look at the balance sheet on Slide 5.\nThe total balance sheet numbers have increased with 6 million in the third quarter.\nAnd the balance sheet movements in the quarter are primarily related to taking delivery of the LR2 tanker Front Favour, in addition to ordinary debt repayments and depreciation.\nAs of September 30th, 2021, Frontline has 190 million in cash and cash equivalents including undrawn amounts under our senior unsecured loan facility, marketable securities, and minimum cash requirements.\nFrontline's remaining new building and this acquisition capex of 659.4 million as per September 30th, 2021 is fully funded by a 540.4 million in estimated debt capacity and also the 118.2 million in cash raised with the ATM and the sale of the four LR2 tankers, which I mentioned.\nThe company has also no debt maturities until 2023, as I also mentioned.\nThen let's take a closer look at cash breakeven rates and opex on Slide 6.\nWe estimate average cash cost breakeven base for the remainder of 2021 of approximately $21,400 per day for the VLCCs, $17,800 per day for the Suezmax tankers, and $14,100 per day for the LR2 tankers.\nAnd the fleet average estimate is about $17,600 per day.\nThese rates are the all-in daily rates that our vessels must earn to cover the budgeted operating costs and dry dock, estimated interest expenses, TC and bareboat hire, installments on loans, and G&A expenses.\nWe recorded opex expenses in the third quarter of $8,200 per day for the VLCCs, $7,200 per day for the Suezmax tankers, and $8,800 per day for the LR2 tankers.\nWe dry docked two LR2 tankers in the third quarter and expect to dry dock one VLCC and one Suezmax tanker in the fourth quarter.\nThen the graph on the right-hand side of the slide shows free cash flow per share and free cash flow yield basis current fleet and share price of November 26 as alternative TCE rates.\nLet's take an example, if we assume historic Clarkson TCE rates for non-ECO vessels in the period 2000 to 2021, November 2021, adjusted them for Frontline fleet scrubber and ECO vessels, Frontline will have a free cash flow yield of 38%.\nFree cash flow yield potential increases with higher assumed TC rates and also on a fully delivered basis.\nWith this, I leave the word to Lars again.\nLet's move over to Slide 7 and look at the third quarter tanker market.\nSo tanker rate bottomed at -- during Q3, and this is seasonally kind of the normal weakest moment of the year.\nBut I think it's safe to say that this is not a normal year.\nWe actually haven't had any normal year since 2019.\nSo global oil consumption averaged 98.6 million barrels per day.\nThat's up 1.9 million barrels from the second quarter.\nSupply averaged 96.8 million, also increasing by close to 2 million barrels per day.\nBut we continue to grow then kind of very close to 1.8 million barrels per day of inventories.\nOPEC plus supply rose an average of 1.4 million barrels per day.\nAnd I think it's important here to note that a lot of the key OPEC suppliers came out of their peak demand period, which is when they burn fuel for electricity generation, and basically for cooling.\nAnd this normally happens in September, so toward the end of the quarter.\nWe saw strong demand growth in North America and in Europe, while the Asian demand recovery was muted also in the third quarter like we saw in the second quarter.\nWhat was special about the quarter that we went through was that oil and energy prices were extremely volatile.\nWe saw natural gas prices, coal prices, also other commodities that are affected by energy prices rise rapidly during the quarter.\nAnd all the markets kind of performed strongly as we came to the end of the quarter.\nI think it's important to note here, if you look at the graph on the left-hand side at the bottom of the slide, so total world consumption is now actually not that far off from where we started in January '19 -- sorry, in January 2020 before the pandemic hit us.\nAnd in December, we're actually -- some market commentators actually arguing for us to end up in or at 100 million barrels per day.\nWhat we have seen, which is on the slide on -- sorry, the chart on the right at the bottom of the slide, is that oil in transit has developed quite well during the last couple of months.\nWe saw that during Q3, we remain at this kind of depressed level were kind of oil in transit increased and then decreased again and increase and you have kind of this choppy movement.\nBut now as we went into November, we started to see that this oil and water, which is basically a picture of demand or utilization in the tanker fleet increased rapidly to where we are now.\nSo let's move to Slide 8 and have a look at the order books.\nSo tanker ordering was obviously muted during third quarter.\nWe saw one Suezmax order and eight LR2/Aframax orders.\nNo VLCCs were reported ordered as far as we could see in the quarter.\nWhat did happen though was that the delivery window for ordering in any kind of useful number of tankers is now starting to get limited for '24 even.\n2023 is destined to show very few VLCC and Suezmax deliveries.\nNew building prices are indicated at very high levels.\nThere hasn't been much price discovery in this market, particularly for the VLCCs as no kind of newbuilds has been ordered really during the last four to five months.\nBut it's obviously governed by a combination of high steel prices and low availability.\nAnd basically, the considerations that shipowners need to make now, if you are to go into the market and order a VLCC, say at 110 or 115 or $120 million depending on who you speak to, you're actually making a bet on steel prices come 2023.\nSo this is obviously a bet that a lot of people are hesitant to take at this point in the curve.\nThe VLCC order book is now at 71 units, that's a little bit north of 8% of the existing fleet.\nBut we still have this situation where 113 VLCCs will be above or past the 20-year mark during that period as the current order book delivers.\nFor Suezmax, there are 41 units in the order book and 116 will be passing 20 years using the same metrics.\nOne thing that's kind of changed a little bit during the third quarter is that recycling has started to show some promise.\nAnd let's move to Slide 9.\nSo with the record high recycled steel prices, activity is finally accelerating.\n20 -- as you see on the chart at the top there, so 2017 and 2018 were the last big periods for vessel retirement.\nAnd now in Q3 alone, we saw close to 0.76% of the global tanker fleet sold for recycling.\nWe are in a situation now where alternative use for tankers is extremely limited.\nAs most of you may know, that kind of in earlier markets, you've had the opportunity to either convert a ship for storage or even it could be converted into a vessel, so basically an oil-producing unit.\nThis -- obviously, these markets are closed as it is right now.\nAnd we also see that during the pandemic, it's becoming evident that the capacity for recycling was seriously contracted.\nSo basically, there has been COVID pandemic in countries like India, Pakistan, and Bangladesh.\nSo basically, year to date, we've seen 15 VLCCs, 11 Suezmaxes, 18 Aframax, and eight LR2s that are reported sold for demolition.\nAnd broadly speaking, this amounts to actually close to 2% of the existing fleet.\nSo basically, we believe that this might accelerate going forward as the recycling values are still extremely strong.\nThen let's move to Slide 10.\nSo there's a lot of noise in the market currently.\nBut I believe we'll need a few weeks to learn more about this variant to even know where we're heading.\nWhat we do know is that in the recent weeks, we've had kind of a message of U.S. releasing oil from their strategic petroleum reserve.\nThere are obviously other x again factors playing up as well, but let's focus on this one.\nhave released volumes from their SPR on a few occasions over the last 18 months.\nAnd despite U.S. inventories being below five-year averages, this country is actually not particularly short of crude oil.\nAnd after the recent releases, we have actually observed slightly higher exports with a significant part of the volume going to Asia and particularly so in October and November this year.\nAnd it's obviously not the SPR volume itself that is directly kind of heading into Gulf Coast and being exported.\nBut it's basically there is an ample kind of supply of oil in U.S. And what an SPR release creates is that you depress the local prices for crude and this basically makes that crude attractive to Chinese or Asian buyers.\neffort and release from their SPRs.\nBut apart from India, none have been very specific on volume.\nAnd we have to remember that these Asian countries are far more sensitive to severe supply disruptions and -- because they have very limited domestic production capacity.\nAnd the Northern Asian region is facing record-high energy prices as they now head into winter.\nSo whether it be released -- whether it's oil will be released at all from the SPR now after having a $10 drop in oil prices is obviously the question.\nBut if it should happen, it could actually trigger a ton-mile increase.\nSo let's move to the summary and let's go through a couple of things that are at play right now.\nSo demand and supply of oil continues to rise, but the latest virus version is obviously now clouding the outlook.\nTanker markets have recovered since Q3 '21, but it's still challenged by oil supply not fully at pre-pandemic levels.\nTanker recycling, I think this is a very important thing to note that tanker recycling has finally started to make an impact on vessel supply.\nAnd then we have all these exogen factors that we really don't know much of at this point.\nSPR release, opex strategy going forward.\nThey just postponed the meeting for a couple of days in order to find out more on the virus outbreak and the resumed Iranian nuclear talks in Vienna.\nSo there's a lot of stuff that is going to happen over the next couple of weeks.\nOil in transit continues to rise and energy prices are at record highs as the Northern Hemisphere is heading into winter.\nI think the most important part here is that Frontline's financial commitments are now fully funded with reduced overall funding costs, and we are indeed well-positioned as the story of this market unfolds.\nFinally, I've used this graph below before, and it just year on year basically various segments and how the trades are performing.\nAnd we do see that for tankers, it's actually showing a growth of 3.8% year on year in October compared to October 2020.\nSo tankers have been lagging all the other asset classes in shipping for a while, but now we're actually starting to perform with.\n",
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"content": "frontline q3 net loss at $33.2 mln.\nq3 net loss -33.2 million usd.\nq3 diluted loss per share 0.17 usd.\nreg-fro - third quarter and nine months 2021 results.\nnet loss of $33.2 million, or $0.17 per basic and diluted share for q3 of 2021.\nreported spot tces for vlccs, suezmax tankers and lr2 tankers in q3 of 2021 were $10,500, $7,900 and $10,700 per day, respectively.\nadjusted net loss of $35.9 million, or $0.18 per basic and diluted share for q3 of 2021.\nfor q4 of 2021, we estimate spot tce on a load-to discharge basis of $21,600 contracted for 79% of vessel days for vlccs.\nfor q4 estimates $17,900 contracted for 72% of vessel days for suezmax tankers and $16,000 contracted for 64% of vessel days for lr2 tankers.\nboard of directors has decided not to pay a dividend for q3 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: These statements are based on management's expectations, plans and estimates of our prospects.\nToday's statements may be time sensitive and accurate only as of today's date, Thursday, July 22, 2021.\nWe assume no obligation to update our statements or the other information we provide.\nAlso on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.\nOur team delivered another great quarter, highlighted by strong operating results, robust development leasing and more investment for growth.\nOur efforts were supported by the overall economy and the industrial real estate sector continued to gain momentum throughout the second quarter.\nDue to strong second quarter performance and the overall strength of the sector, we are increasing our FFO guidance, which Scott will walk you through shortly.\nPer CBRE flash report, net absorption was a healthy 85 million square feet in the second quarter, while completions came in at a three year quarterly low of 52 million square feet.\nCompletions were impacted by reduced construction activity in 2020 as well as the continuing limited availability of readily developable land in highly sought-after locations.\nThrough the first half of this year, net absorption was 150 million square feet, outpacing new supply of 106 million.\nIn the second quarter, we were successful in driving occupancy while continuing to increase rental rates on new and renewal leasing.\nIn-service occupancy at quarter end was 96.6%, an increase of 90 basis points from the end of last quarter.\nThis increase in occupancy was accompanied by a 15.7% increase in cash rental rates on new and renewal leasing.\nThe strength and breadth of tenant demand also carried over to our development investments evidenced by 1.2 million square feet of development leases signed in the second quarter and third quarter to date.\nWe are pleased to announce that our 250,000 square foot building at First Logistics Center at 78/81 in Central Pennsylvania is now 100% leased to a leading consumer products company.\nThis takes care of the largest vacancy among our completed developments.\nAlso in Pennsylvania, we successfully leased the 100,000 square foot First Independence Logistics Center to the United States Postal Service.\nIn Houston, at our First Grand Parkway Commerce Center, we signed two leases totaling 117,000 square feet, bringing the two building 372,000 square foot project there to 55% leased.\nIn Dallas, we just leased 97,000 square feet at First Park 121 to a logistics provider, bringing the two building 345,000 square foot phase of that park to 64% leased.\nThis is in addition to the 125,000 square foot pre-lease at the last phase of the park that we started in the second quarter as discussed on our last call.\nWe also achieved significant new leasing at our developments in process.\nIn South Florida, we pre-leased 100% of the 259,000 square foot Building two at First Park Miami to a logistics and transportation company.\nThis building is scheduled for completion in the fourth quarter and the lease is expected to commence in mid-first quarter of 2022.\nThis same tenant also pre-leased 50% of our next start in that park, which I will discuss shortly.\nWe also leased 100% of the soon-to-be completed 141,000 square foot First 95 Distribution Center in Pompano.\nThe lease will commence by October 1.\nGiven the strong demand and the ability of our team to replenish our pipeline with profitable development opportunities, we're excited to share several new development starts.\nIn Nashville, we were successful in winning a 692,000 square foot build-to-suit with a leading specialty e-commerce retailer.\nCompletion is slated for the third quarter of 2022.\nOur projected investment is $59 million and with a projected cash yield of 6.4%.\nTaking advantage of the tenant demand we are seeing in South Florida, at First Park Miami, we will start a 219,000 square footer known as Building 1.\nAs I just noted, we inked a lease for 50% of the space in advance of going vertical.\nTotal estimated investment is $39 million with a targeted cash yield of 5.3%.\nWe are also well positioned for future growth at that park.\nIn addition to what's already underway, I remind you that we can develop another 405,000 square feet on land we own today, and we control another 59 acres developable to 1.3 million square feet for a total build-out of up to 2.5 million square feet.\nAlso in Florida, in the Orlando market, we are starting First Loop Logistics Park.\nFirst Loop is a 4-building project totaling 344,000 square feet with an estimated investment of $45 million and a cash yield of 5.6%.\nIn Seattle, we've launched First Steele, a 129,000 square footer.\nEstimated total investment is $24 million, with a targeted cash yield of 4.7%.\nThe site can also accommodate a 700,000 square foot building, which is permit-ready.\nThis location is proximate to major parcel hubs for UPS, FedEx and the U.S. Postal Service, where tenants serve strong East Coast consumption zones.\nOur total projected investment for the first building is $125 million with completion targeted for the third quarter of 2022 and an estimated cash yield of 5.1%.\nIn summary, these newly announced development starts totaled 2.5 million square feet with an estimated investment of approximately $291 million and a cash yield of 5.4%.\nIncluding these planned new development starts, our developments in process totaled 5.7 million square feet with a total investment of $608 million, at a cash yield of 5.8%, our expected overall development margin on these projects is approximately 50%.\nWe are excited about this robust pipeline and what it means for future cash flow growth.\nTo further bolster our development pipeline, we acquired the remaining 138 acres at our PV303 joint venture for $21.5 million.\nThis price reflects a $10.2 million reduction from our share of the gain and are earned promote from the joint venture.\nThis purchase closes out a very successful JV, which generated a largely unlevered 54% IRR for the partners and gives us another prime landholding to serve tenants' needs in this high-demand logistics corridor.\nIn addition, just last week, we closed on a 95-acre site in the Inland Empire East submarket of Banning for $27 million that can accommodate up to a 1.4 million square footer.\nVacancy in the Inland Empire East is just around 2%, and there are limited sites that can meet customer requirements in this size range.\nIn total, our balance sheet land today can support more than 12.5 million square feet of new investments and our share of the Camelback joint venture is around 3.8 million square feet.\nSo we are very well positioned for future growth.\nSecond quarter building acquisitions were comprised of an 81,000 square foot distribution facility in Orlando and a 33,000 square foot regional warehouse in Denver.\nTotal investment was $18.4 million, and the combined stabilized cash yield is 5.6%.\nMoving on to sales.\nDuring the quarter, we sold three properties and one unit for $26.2 million at an in-place cap rate of approximately 5.4%.\nWe also sold one land parcel for $11 million.\nIn total, we have sold $104 million year-to-date and have reached the low end of our sales guidance range of $100 million to $150 million.\nLet me recap our results for the quarter.\nNAREIT funds from operations were $0.48 per fully diluted share compared to $0.40 per share in 2Q 2020 and our same-store NOI growth for the quarter on a cash basis, excluding termination fees, was 2.1% helped by an increase in rental rates on new and renewal leasing, rental rate bumps embedded in our leases and lower bad debt expense, slightly offset by a decrease in occupancy and an increase in real estate taxes.\nSummarizing our leasing activity during the quarter, we commenced approximately 3.5 million square feet of leases.\nOf these, 1.1 million were new, two million were renewals and 400,000 were for developments and acquisitions with lease-up.\nTenant retention by square footage was 71.1%.\nCash rental rates for the quarter were up 15.7% overall, with renewals up 12.1% and new leasing up 22.7%.\nAnd on a straight-line basis, overall rental rates were up 29.5% with renewals increasing 27% and new leasing up 34.4%.\nMoving on to the capital side.\nAs Peter mentioned, we closed on two financing transactions this month for which the pricing demonstrates the strength of our balance sheet.\nFirst, we amended our line of credit which was scheduled to expire this October.\nOur new deal is for $750 million and it matures in four years with two six month extension options.\nThe interest rate is LIBOR plus 77.5 basis points, a pricing reduction of 32.5 basis points from our previous facilities credit spread.\nWe also financed our $200 million term loan that was due to mature earlier this month.\nThe new term loan matures in July 2026 and has an interest rate of LIBOR plus 85 basis points.\nThis is a 65 basis point reduction in the credit spread compared to our previous term loan.\nWith our interest rate swaps in place, the new fixed interest rate on the term loan is 1.84%.\nGiven the strength of our credit metrics, the line of credit and term loan provide for pricing at a BBB plus, Baa1 level, which is one notch better than our current credit ratings of BBB flat, Baa2.\nThis favorable pricing will be maintained as long as our consolidated leverage ratio as defined in the applicable agreements remains less than 32.5%.\nReflective of these two executions, the weighted average maturity of our unsecured notes, term loans and secured financings was 6.5 years with a weighted average interest rate of 3.4%.\nAt June 30, our net debt plus preferred stock to adjusted EBITDA is 4.9 times.\nIn the second quarter, we paid off $58 million of mortgage loans at an interest rate of 4.85%, which leaves us with no other maturities for the remainder of the year.\nOur guidance range for NAREIT FFO is now $1.89 to $1.97 per share with a midpoint of $1.93, which is a $0.03 per share increase at the midpoint, reflecting our second quarter performance and an increase in capitalized interest due to our announced development starts.\nKey assumptions for guidance are as follows: quarter end average in-service occupancy of 96% to 97%, an increase of 25 basis points at the midpoint.\nPlease note that our occupancy guidance now assumes that the lease-up of the 644,000 square foot former Pier one space will occur next year.\nDue to additional leasing in our portfolio, we were able to essentially backfill more than enough space as an offset and raise our occupancy guidance.\nSame-store NOI growth on a cash basis before termination fees of 3.75% to 4.75%, an increase of 25 basis points at the midpoint due to our second quarter performance.\nPlease note that our same-store guidance excludes the impact of approximately $1 million from the gain from an insurance settlement.\nOur G&A expense guidance remains unchanged at $33 million to $34 million, and guidance includes the anticipated 2021 costs related to our completed and under construction developments at June 30, plus the expected third quarter groundbreakings of First Park Miami Building 1, First Loop Logistics Park and First Steele.\nIn total, for the full year 2021, we expect to capitalize about $0.07 per share of interest.\nImportantly, our pipeline of future projects is the strongest it's been since the great recession, which positions us well to continue to drive long-term growth and value for shareholders and serve the space requirements of our tenants.\n",
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"content": "q2 earnings per share $0.40.\nq2 ffo per share $0.48.2021 ffo guidance increased $0.03 at midpoint to $1.93 per share/unit.\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 management's expectations, plans and estimates of our prospects.\nToday's statements may be time sensitive and accurate only as of today's date, Thursday, October 21, 2021.\nWe assume no obligation to update our statements or the other information we provide.\nAlso on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.\nOur team continued its strong performance in 2021 by delivering another great quarter, highlighted by increased in-service occupancy, new development leasing and continued strong growth in rental rates on new and renewal leasing.\nAs importantly, we were also successful in readying land for new development starts and replenishing our pipeline with strategic land acquisitions.\nI'll discuss those successes in more detail shortly, but let me first update you on the overall strength of the U.S. industrial market.\nPer CBRE EA, net absorption was a healthy 120 million square feet in the third quarter, while completions came in at 79 million square feet.\nThrough the first three quarters of this year, net absorption was 292 million square feet, significantly outpacing new supply of 193 million.\nIn our portfolio, we grew occupancy 50 basis points to finish the third quarter at 97.1%.\nCash, same-store NOI increased 6.9% and cash rental rates for new and renewal leases were up 22.8%.\nLooking at rental rate growth for the full year.\nAs of today, we have signed roughly 98% of the 2021 expirations and including new leasing, our overall cash rental rate increase is 15.3%, which puts us on pace to top our previous company record of 13.9% in 2019.\nWith respect to 2022 expirations, we're off to a great start with 29% of renewals signed and a cash rental rate increase of 19%.\nLet me move now to the primary driver of our external growth, our Development program.\nAs most of you know, as part of our underwriting process and risk management discipline, we operate with a self-imposed speculative leasing cap.\nDue to continued robust fundamentals in the industrial market, the strength of our balance sheet and growth in our portfolio and the significant opportunities we have to create shareholder value through new investments, we've increased our speculative leasing cap by $175 million, bringing the total to $800 million.\nNow, let me walk you through our recent land acquisitions, as well as three exciting new development starts that will put some of the incremental cap capacity to good use.\nDuring the third quarter, we closed on three development sites, totaling 122 acres for $59 million.\ntwo are in the Inland Empire East and the third is in Denver.\nIn total, these sites can accommodate up to 2.1 million square feet of new development.\nAnd one of the new Inland Empire East sites, we are starting our First Pioneer Logistics Center, a 461,000 square foot cross-dock facility.\nOur total projected investment is $73 million, with a targeted cash yield of 6.8%.\nThe Inland Empire continues to be one of the strongest logistics real estate markets in the U.S., helped by significant net absorption from activity related to the two largest ports in North America.\nMarket vacancy in the Inland Empire is sub-2%, and market rents have grown more than 80% since we went under contract on this site in early 2020.\nWe look forward to adding this prime asset to our Southern California portfolio, which represents approximately 23% of our rental income, as of the end of the third quarter.\nMoving to the East Coast.\nWe are starting another development in South Florida to serve the strong tenant demand, we have experienced there, with our recent leasing successes at First Park Miami and First 95 Distribution Center.\nFirstGate Commerce Center will be a 132,000 square foot, Class A distribution facility in the infill Coral Springs submarket.\nMarket rents in Broward County have grown 15% to 20% since the end of 2019.\nOur total estimated investment is $24 million, and our targeted cash yield is 5.5%.\nIn the fourth quarter, we acquired a site in Bordentown, New Jersey, just off of Exit 7, on the Jersey Turnpike, for $8 million.\nWe immediately started construction, a First Bordentown Logistics Center, a 208,000 square foot facility.\nWe look to build upon our past successes in this location, where our two prior developments were leased near-construction completion.\nThe Central New Jersey market has been exceptionally strong, with asking rents up 34% versus last year, according to a recent market report from CBRE.\nOur total projected investment is $33 million, with an estimated cash yield of 5.8%.\nIn summary, these three planned fourth quarter starts total approximately 800,000 square feet, with an estimated investment of $130 million and a cash yield of 6.3%.\nIncluding these planned starts, our developments in process totaled 6.4 million square feet, with a total investment of approximately $725 million.\nAt a cash yield of 6%, our expected overall development margin on these projects is approximately 65%.\nWith development as our primary driver of external growth, we're also focused on replenishing our land holdings.\nIn the fourth quarter to date, in addition to the New Jersey site, I just discussed, we also acquired a total of 10 acres in the Inland Empire and Northern California for a total of $10 million.\nAs of today, adjusted for our planned fourth quarter starts and the aforementioned land acquisitions, our balance sheet land can support approximately 12.5 million square feet of new development.\nOur share of the Phoenix Camelback joint venture is an additional 3.8 million square feet.\nIn total, that's north of 16 million square feet and represents approximately $1.7 billion of potential new investment activity.\nNow, let me update you on our recent Development leasing successes.\nWe just leased the entire 548,000 square footer at First Park @ PV303, in Phoenix, at completion, to a leading omnichannel retailer.\nAs part of this lease, we are also expanding the building, another 254,000 square feet, for a total of 802,000 square feet.\nThe total estimated investment for the project, including the expansion is $72 million, and the estimated cash yield is 6%.\nThe tenant is expected to take occupancy of the just-completed space by year-end, with the expansion ready for use in the second quarter of 2020.\nWe also leased 100% of our 303,000 square foot First Wilson Logistics Center in the Inland Empire that will be completed in the first quarter of 2022.\nWith a cash yield of 8.7%, we substantially outperformed our underwritten yield.\nThis lease further showcases the rapid rental rate growth in the Inland Empire that I discussed earlier.\nWe are pleased that we have land sites in this high-growth market that can support another 2.8 million square feet of development.\nAs another example of the strength of the Southern California market and our platform, we just leased our Laurel Park redevelopment project in the South Bay.\nThis property is very well suited for port-centric warehouse distribution users, given its great location and highly sought-after yard for surface use.\nOur first year yield is 7.5% on our $21 million investment, which represents a margin of around 150%.\nMoving on to sales.\nDuring the quarter, we sold six properties and four units for $14 million.\nAnd in the fourth quarter, we have sold four additional buildings in Detroit, totaling $7 million, bringing our year-to-date total to $126 million.\nGiven current visibility on our disposition pipeline, we now expect sales for the year to total $175 million to $225 million, a $75 million increase from the prior midpoint of $125 million.\nLet me start by summarizing our results and leasing stats for the third quarter.\nNAREIT funds from operations were $0.51 per fully diluted share, compared to $0.49 per share in 3Q 2020.\nExcluding approximately $0.04 per share of income related to the final settlement of an insurance claim, 3Q 2020 FFO was $0.45 per share.\nOur cash basis same-store NOI growth for the quarter, excluding termination fees, was 6.9%, primarily due to higher average occupancy, an increase in rental rates on new and renewal leasing, rental rate bumps and lower bad-debt expense, slightly offset by an increase in free rent.\nWe commenced approximately 2.4 million square feet of leases.\nOf these, 500,000 were new, 1.4 million were renewals and and 500,000 were for developments and acquisitions with lease-up.\nTenant retention by square footage was 85%.\nCash rental rates for the quarter were up 22.8% overall, with renewals up 21% and new leasing up 27.5%.\nAnd on a straight-line basis, overall rental rates were up 36.2%, with renewals increasing 34.9% and new leasing up 39.5%.\nMoving on to some capital markets activity.\nAs previously announced in early July, we closed on two financing transactions.\nFirst, we expanded our line of credit to $750 million and improved our pricing to LIBOR plus 77.5 basis points, a reduction of 32.5 basis points, compared to our prior facility.\nThe maturity is now pushed out five years, including our two six-month extension options.\nWe also refinanced our $200 million term loan.\nThe new term loan matures in July 2026 and has an interest rate of LIBOR plus 85 basis points, a reduction of 65 basis points in the spread, compared to our prior facility.\nWith our interest rate swaps in place, the new fixed interest rate on the term loan is 1.84%.\nOn the equity side, through our ATM, we issued 1.1 million common shares, at a weighted average price of $55.35 per share, for total net proceeds of $59 million to help fund the new investments, Peter spoke about.\nOur guidance range for NAREIT FFO is now $1.93 to $1.97 per share, which is a $0.02 per share increase at the midpoint, reflecting our third quarter performance and an increase in capitalized interest due to our announced development starts.\nKey assumptions for guidance are as follows: in-service occupancy at year-end of 96.75% to 97.75%.\nThis implies a full year quarter-end average in-service occupancy of 96.5% to 96.8%, an increase of 15 basis points at the midpoint.\nFourth quarter same-store NOI growth, on a cash basis, before termination fees of 6% to 7.5%.\nThis implies a quarterly, average same-store NOI growth for the full year 2021 of 4.3% to 4.7%, an increase of 25 basis points at the midpoint due to our third quarter performance.\nPlease note that our full year same-store NOI guidance excludes the impact of approximately $1 million from the gain from an insurance settlement.\nOur G&A expense guidance is now $34 million to $35 million, an increase of $1 million at the midpoint, and guidance includes the anticipated 2021 costs related to our completed and under-construction developments at September 30, plus the expected fourth quarter starts of First Pioneer Logistics Center, First Gate Commerce Center, and First Bordentown Logistics Center.\nIn total, for the full year 2021, we expect to capitalize about $0.08 per share of interest.\nWe're excited about our growth prospects, as we continue to put into production our landholdings that can currently support more than 16 million square feet of value-creating developments.\nWe are also focused on replenishing our pipeline with new sites in higher-barrier markets.\nWe continue to benefit from robust sector fundamentals that are reflected in strong net absorption, high occupancy levels and increasing rents.\n",
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"content": "q3 ffo per share $0.51.\nincreased 2021 ffo guidance by $0.02 at midpoint to $1.95 per share/unit.\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 management's expectations, plans, and estimates of our prospects.\nToday's statements may be time sensitive and accurate only as of today's date, Thursday, February 13, 2020.\nWe assume no obligation to update our statements or the other information we provide.\nAlso on the call today are Jojo Yap, our Chief Investment Officer; Peter Schultz, Executive Vice President; Chris Schneider, Senior Vice President of Operations; and Bob Walter, Senior Vice President of Capital Markets and Asset Management.\nWe finished 2019 with an excellent fourth quarter to cap up another successful year.\nFor 2020, we expect more of the same, leveraging our platform to generate more cash flow growth and value creation.\nOccupancy at year end was a very strong 97.6% and full year cash rental rate growth was 13.9%, a Company record.\nBoth of these metrics reflect continued strong tenant demand for logistics space, and the great work of our leasing and operations professionals.\nWe developed a number of high quality facilities at strong margins, and replenished our pipeline with the acquisition of several exciting new sites and target markets, particularly Miami.\nIn addition, we continue to shape our portfolio to drive long-term growth as we further increase our capital allocation to higher barrier markets.\nBefore we get into the specifics of the quarter, let me provide you with a quick overview of the national industrial market.\nAccording to CBRE Econometric Advisors, new supply for 2019 was 224 million square feet compared to net absorption of 183 million.\nThis marks the first time since 2009 that new supply exceeded net absorption.\nDespite this, our outlook for 2020 is similar to that of 2019.\nVacancies remain low and excess new construction continues to be concentrated primarily in larger format buildings in certain sub-markets, most notably Atlanta, Dallas, and Houston.\nWe continue to see new tenant requirements from a range of industries across all of our markets.\nSo the overall environment remains very favorable for strong demand and rent growth.\nThat's also the case for our portfolio.\nWe've signed leases for approximately 60% of our 2020 rollovers at a cash rental rate increase of more than 9%.\nIncluded in these results is the long-term renewal of our largest rollover, a 675,000 square foot single tenant building in Central Pennsylvania.\nOur expirations for the balance of 2020 are fairly granular.\nFor the full year, we expect cash rental rate growth of approximately 10% to 14% on our new and renewal leasing.\nTurning now to a few highlights from our development program.\nIn the fourth quarter, we placed in-service seven developments totaling 2.1 million square feet with a total investment of $165 million.\nIncluded in this total is our 556,000 square footer at First Aurora Commerce Center in Denver.\nAs evidence of the strength of this market, we signed a long-term lease for 100% of the space, which commenced shortly after completion of construction.\nIn total for 2019, we placed in service 13 buildings totaling 4.4 million square feet with an estimated investment of $325 million.\nThese assets are 91% leased with an estimated cash yield of 6.7%.\nThis represents an expected margin of 42% to 52%.\nAt the mid-point, that would translate to a little over $1 per share in NAV accretion.\nAt year end, our pipeline of completed developments in lease-up and under construction totaled 3 million square feet with a total estimated investment of $277 million and a projected cash yield of 6.9%.\nThey are 36% leased and have an expected margin of approximately 40% to 50%.\nThis pipeline includes a few new starts in the fourth quarter on both Coast and in Dallas.\nStarting on the West Coast, First Redwood Logistics Center II is a 72,000 square foot building in the Inland Empire West, with an estimated total investment of $12.6 million.\nCompletion is set for the third quarter with a cash yield of 5.2%.\nIn Los Angeles, one mile north of the Port of Long Beach, we acquired a 1.8 acre site for $6 million.\nIt's leased as a surface lot with an in-place yield of 5.4%.\nIn Northwest Dallas, we broke ground on our 435,000 square foot multi-tenant building at Phase 2 of our First Park 121 with an estimated investment of $31.2 million and a targeted cash yield of 6.7%.\nThis building is 77% pre-leased.\nWe expect to complete this development in Q3.\nMoving across the country to South Florida, we've been very active in expanding our development pipeline there.\nWe broke ground on our First Cypress Creek Commerce Center, a three building park totaling 374,000 square feet on land for which we have a 50-year ground lease.\nOur estimated total investment for the building is $35.6 million, with a targeted cash yield of 7.1% and completion is slated for Q4.\nWe also acquired seven acres of land and broke ground on First Sawgrass Commerce Center, a 104,000 square footer in Broward County, estimated investment is $15.3 million, with a targeted yield of 5.8%, completion is expected in Q3.\nOn our last call, we discussed our 19.6 acre covered land investment in South Florida for $19.8 million.\nRecall this site has three below market ground leases that are currently yielding 3.5%.\nWe also added another 9 acre site in the Miami market for $8.6 million on which we can develop 131,000 square feet.\nThus far, in the first quarter of 2020, we're very pleased to announce the acquisition of a new land site we call First Park Miami.\nWe acquired 63 developable acres in Medley, a great infill location where land is difficult to come by.\nOur acquisition price was $48.9 million and we can build 1.2 million square feet in total on the site.\nWe will begin the first phase of development this summer, with three multi-tenant buildings totaling approximately 600,000 square feet.\nTotal estimated investment for these three buildings is approximately $90 million reflecting land, pre-development and construction costs.\nOur target stabilized yield is in the mid-5s.\nFor the year, building acquisitions totaled 542,000 square feet for $67 million with an expected stabilized cap rate of 5.4%.\nSo far in the first quarter of 2020, we've acquired our first building in the East Bay market of Northern California.\nThe property is a 23,000 square footer in the I-880 Hayward submarket, purchase price was $4.9 million, and our expected yield is 5.3%.\nWe completed $155 million of sales in the fourth quarter, comprising 3.6 million square feet and one land parcel.\nThese sales were consistent with our ongoing portfolio management efforts that support better long-term cash flow growth.\nWith these sales, our market footprint has significantly changed.\nThe largest portion of these dispositions came from the sale of substantially all of our Indianapolis portfolio which totaled $98 million and 2.7 million square feet.\nOther notable sales included two buildings in St. Louis totaling $13 million and 245,000 square feet.\nWith just one building remaining in each of these markets, we've moved those properties to the other category in the portfolio reporting section of our supplemental.\nThus far, in the first quarter, we sold 226,000 square feet in Tampa for $26.5 million.\nWith this sale, we've now effectively exited the Tampa market with just leased land remaining there.\nOur efforts in Florida are now focused in the South Florida and Orlando markets.\nGiven the leasing progress and rollover status of our portfolios in each of these three markets, we felt the time was right to further simplify our market exposure and redeploy these proceeds into higher rental growth opportunities.\nFor 2019, dispositions totaled $261 million and comprised 5.2 million square feet and four land parcels.\nThese figures exclude the sale on Phoenix recognized for accounting purposes in the third quarter of 2019 that is scheduled to close in the third quarter.\nFor 2020, our guidance for sales is $125 million to $175 million.\nAs is typical, we expect the majority of 2020 sales to be back-end loaded.\nNote this guidance does not include the sale of the Phoenix asset I just mentioned.\nBased on our strong 2019 performance and outlook, which Scott will discuss shortly, our board of directors declared a dividend of $0.25 per share for the first quarter of 2020.\nThis is $1 per share annualized, which equates to an 8.7% increase from 2019.\nThis dividend level represents a payout ratio of approximately 64% of our anticipated AFFO for 2020 as defined in our supplemental.\nAnother note on AFFO.\nAt our last Investor Day in November of 2017, we discussed our opportunity to achieve adjusted funds from operations of $200 million in 2020.\nIf we achieve the mid-point of our overall guidance for the year, we will deliver on that opportunity.\nThis would represent compound annual growth of 9% over the period.\nIn the fourth quarter, diluted earnings per share was $0.76 versus $0.40 one year ago.\nAnd for the full year, diluted earnings per share was $1.88 versus $1.31 for the prior year.\nNAREIT funds from operations were $0.45 per fully diluted share compared to $0.42 per share in 4Q 2018.\nExcluding a $0.01 of income related to insurance settlements for damaged properties, 4Q 2018 FFO was $0.41 per share.\nFor the full year, NAREIT FFO per share was $1.74 versus $1.60 in 2018.\nAs Peter noted, occupancy was 97.6% down 10 basis points for the prior quarter.\nIn the fourth quarter, we commenced approximately 4.1 million square feet of leases, 757,000 square feet were new, 1.3 million were renewals, and 2.1 million square feet were for developments in acquisitions with lease-up.\nTenant retention by square footage was 81.4%.\nSame-store NOI growth on a cash basis excluding termination fees was 2.1% and for the full year 2019, cash same-store growth before lease termination fees was 3.1%.\nCash rental rates were up 9.7% overall, with renewals up 8.2% and new leasing 12.4%.\nOn a straight line basis, overall rental rates were up 20.4% with renewals increasing 18.5% and new leasing up 23.8%.\nFor the year, cash rental rates were up 13.9% overall which is a Company record and on a straight line basis, they were up 26%.\nMoving on to a few balance sheet metrics.\nAt the end of 4Q, our net debt plus preferred stocks to adjusted EBITDA is 4.6 times and at December 31st, the weighted average maturity of our unsecured notes, term loans, and secured financings was 5.8 years with a weighted average interest rate of 3.9%.\nThese figures exclude our credit facility.\nOur NAREIT FFO guidance is $1.77 to $1.87 per share with a mid-point of $1.82.\nExcluding a $0.01 per share of costs related to severance from the closure of our Indianapolis office and costs related to projected vestings of equity awards for retirement eligible employees, FFO guidance is $1.78 to $1.88 per share with a mid-point of $1.83.\nThe key assumptions for guidance are as follows.\nQuarter-end average in-service occupancy for the year of 97% to 98%, we anticipate first quarter occupancy will have a typical seasonal dip, which could be as much as 75 basis points to 100 basis points.\nOur bad debt expense assumption for 2020 is $2 million consistent with last year's assumption.\nOne of our largest tenants, Pier 1 Imports has been in the news lately.\nOur guidance assumes that Pier 1 will continue to occupy our 644,000 square foot facility in Baltimore for the entire year, as this facility is a critical part of their supply chain and I note that they are current on their rent.\nAlso for your information, the expected FFO from the lease to Pier 1 for the period of March through year end is approximately $2.5 million.\nSame-store NOI growth on a cash basis before termination fees is expected to be 4% to 5.5%.\nAnd our cash, same-store metric for the first two quarters is expected to be higher than the remainder of the year due to the benefit of burn off free rent related to developments.\nOur G&A guidance range is $31 million to $32 million which excludes a $0.01 per share of severance costs from the closure of our Indianapolis office and costs related to projected vesting of equity awards for retirement eligible employees.\nPlease also note that besides the normal annual increase in expenses, G&A also includes incremental costs related to a new compensation plan, the compensation committee put in place in 2020, which is more tilted toward total stock return than the prior-plan.\nGuidance also includes the anticipated 2020 costs related to our completed and under construction developments at December 31st, plus the planned start of First Park Miami.\nIn total, for the full year of 2020, we expect to capitalize about $0.03 per share of interest related to our developments.\nThe impact of any future gains related to the final settlement, two insurance claims from damaged properties and guidance also excludes the potential issuance of equity.\nWe're excited about our new developments through which we can serve the logistics needs of our customers while expanding our portfolio in key markets and creating value for shareholders.\n",
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"content": "q4 earnings per share $0.76.\nq4 ffo per share $0.45.\ncash rental rates were up 9.7% in 4q19 and 13.9% in 2019.\ncash same store noi grew 2.1% in 4q19 and 3.1% for year.\nfirst industrial realty trust - excluding approximately $0.01 per share/unit income related to insurance settlements, q4 2018 ffo per share was $0.41.\nexpect to deliver additional growth in rental rates and cash flow in 2020.\nsees 2020 ffo (nareit definition) earnings per share $1.77- $1.87.\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 going to give an overview of our fourth quarter and year-end results.\nAfterward, I'll pass the call to George for his comments.\nWe reported funds from operations or FFO of $17.5 million or $0.16 per share for the fourth quarter of 2020 and $79.4 million or $0.74 for the year ended December 31, 2020.\nDuring the fourth quarter, we worked with tenants that were impacted by the pandemic and had a significant write-off of one large tenant that filed for bankruptcy in late December that resulted in a $3.1 million charge against our revenue.\nAs part of making decisions on write-offs, we determine whether a lease is collectible or not.\nIf we determine it's not collectible, we write off the receivables and don't report any current rents, unless they're paid in cash.\nSo, part of the loss we wrote-off is from receivables, which is more of a one-time charge and part of the loss are current rents that we didn't collect.\nThese write-offs reduced revenue on the income statement.\nDuring Q4, we had write-offs and lost rent of about $3.1 million which is primarily from a tenant bankruptcy that I noted and on a year-to-date basis, the total write-offs were about $3.8 million or about 1.5% of our annual rental income.\nGoing forward, the amount of lost rents from tenants we wrote off would be reduced by any cash rents we receive from them.\nWe also reached agreements with a number of tenants on rent deferrals using lease amendments, modifications and other tenant agreements.\nThe total of rents deferred by us during Q4 were about $300,000 and for the year totaled about $1.75.\nThese agreements generally result in us being repaid or made whole -- with the whole -- as part of the $1.75 million we did occur about $200,000 of GAAP and FFO impact from them this year.\nWe're working with other tenants that are having issues and we'll provide updates periodically like we have here.\nTurning to our balance sheet at December 31, '20, we had $923.5 million of unsecured debt, excluding [Phonetic] $3.5 million drawn on our line of credit.\nIn December, we sold a property in North Carolina for $89.7 million and applied $87.3 million of the proceeds against debt.\nWe will be providing more color on that transaction later.\nWith the proceeds from the sale, we applied $50 million against $150 million term loan that matures in November and the remainder one against the drawn balance of our line of credit.\nAt year-end, between cash on hand and availability on our line, we had total liquidity of about $601 million.\nWe disclosed some ratios in our supplemental filing that were impacted by the $3.1 million write-off we incurred in late December.\nOur net debt to EBITDA ratio was impacted because the charge reduces EBITDA and we then annualize that for the fourth quarter for this measure.\nExcluding this charge, our net debt-to-EBITDA ratio would have been 7.8 times compared to 8.5 times at September 30 and that decrease would be primarily a result of the debt reduction.\nOur interest and debt service coverage ratios were also impacted and would have been 3.26 times.\nWe disclose our calculations of ratios in our supplemental filing and the calculations I'm referring to are in the footnotes on Pages 4 and 10 in case you're interested in looking at them.\nAs a reminder, all of our debt is unsecured and we have no debt maturities until November when $155 million of term loans will be due.\nOur debt is at fixed rates other than the $3.5 million on the line which is at a floating rate.\nI would like to start my portion of this earnings call by recognizing the many different people that contributed to helping Franklin Street successfully navigate the challenges of our business in 2020 that was so impacted by the COVID-19 pandemic.\nIt has been one of the most challenging and collaborative efforts I have ever seen in business.\nAll of these efforts are ongoing as we begin 2021 and at the end of the day, are ultimately directed toward FSP's customers, our valued tenants, each one of them grappling with their own challenges, responses and business realities resulting from the pandemic.\nFor 2021, we are focused on two primary objectives; leasing progress and debt reduction.\nFrom a leasing perspective, we anticipate the potential for growing office space demand in our markets as a result of improved economic situation due to increasing access to both therapeutics and of course now the vaccines.\nWe believe that users of office space are now reconsidering the office densification trends of the past approximately 20 years.\nWe also believe that even with the continuation of some planned for level of remote work-from-home flexibility, the potential reversal or slowing of office densification could bode well for future office space absorption.\nOur 2021 leasing focus includes both increased economic occupancy and longer-term renewals of existing tenants.\nJohn Donahue will give more color to these leasing thoughts in just a minute.\nAs for debt reduction efforts in 2021, FSP intends to pursue several property dispositions from its portfolio where valuation objectives have been met and where we believe embedded value may not be accurately reflected in the price of our common stock and then apply those proceeds from dispositions, primarily for the repayment of debt.\nWe believe that further debt reduction will provide greater financial flexibility and position the Company for stronger shareholder returns.\nAccordingly, we have introduced full-year 2021 disposition guidance in the range of approximately $350 million to $450 million in aggregate gross proceeds.\nJeff Carter will talk about this more later in the call.\nAt the end of the fourth quarter, the FSP portfolio including redevelopment properties was approximately 83.8% leased which is a decrease from 84.3% leased at the end of the third quarter.\nThe decrease was primarily attributable to the disposition of Emperor Boulevard in December.\nThe average leased occupancy of the portfolio for calendar 2020 was approximately 83.6%.\nFSP leased approximately 1.130 million square feet during calendar 2020, which included 368,000 square feet of new leases and approximately 150,000 square feet of expansions with existing tenants.\nDuring the fourth quarter, we finalized over 500,000 square feet of renewals and expansions with existing tenants.\nAlthough demand for office space had slowed down during the holidays in the fourth quarter, the prospective tenant activity at FSP assets in January and February has been gaining momentum, specifically for the Sunbelt assets.\nFSP is currently tracking approximately 700,000 square feet of potential new leases and renewals.\nThere are approximately 300,000 square feet of new tenant prospects that have shortlisted FSP properties.\nIn addition, we are engaged with existing tenants for approximately 400,000 square feet of renewals.\nBarring any surprises, the potential for total net absorption over the next three months to six months is approximately 200,000 square feet.\nThis includes new prospects, and potential expansions.\nWe here at Franklin Street Properties hope that everyone is safe and healthy in these uncertain times.\nI wanted to start my comments today by sharing four key priorities for FSP during 2021.\nThe first will be ongoing efforts to work as partners with our tenants to navigate the COVID-19 pandemic together.\nFSP recognizes and appreciates that our tenants' health and safety are essential.\nThe second is to continue working to lease vacancies and on renewing or expanding existing tenants in order to grow occupancy and value within our portfolio.\nThe third will be to build upon our December 23 sale of Emperor Boulevard with additional but select dispositions, estimated to be in the range of $350 million to $450 million for full-year 2021 and then to utilize such proceeds primarily for the repayment of debt in order to gain greater financial flexibility and to position FSP for stronger shareholder returns.\nI will describe our thoughts on this subject further in my comments ahead and fourth will be a continued commitment to our strategy of owning high-quality office properties within the US Sunbelt and Mountain West where we continue to see strong long-term job and population growth potential.\nMore specifically on the dispositions front and following the sale of Emperor Boulevard in December, FSP will look to pursue additional dispositions of select properties, particularly where we believe that embedded value exists, that may not be appropriately reflected within our current share price and then to utilize such proceeds primarily for the repayment of debt under our revolving line of credit and term loan facilities as well as for any special distributions necessary to meet REIT requirements.\nThe determining factor for FSP on potential dispositions in 2021 will be an assessment of whether a respective property has achieved its near-term valuation objective.\nWe believe that further debt reduction will provide greater financial flexibility and position FSP for stronger shareholder returns.\nWith this in mind, we are currently refining our target list of properties within our portfolio that we believe may have met their respective near-term valuation goals.\nWe anticipate that these potential disposition assets are likely to include properties from our smaller opportunistic markets as well as some from our larger markets and we wish to point out that regardless of where any specific properties are sold during 2021 that FSP remains committed to our Sunbelt and Mountain West strategic market emphasis where we believe that long-term business and population growth has the potential to exceed the national average.\nAt this time, the highest likelihood is that the majority of potential sales would occur in the second half of 2021.\nProceeds from potential dispositions under review are currently estimated to be in the range of $350 million to $450 million for full-year 2021, which again would be intended primarily to be used for the repayment of debt.\nWe will update the market regularly on our efforts with this objective, which will be influenced by the COVID-19 pandemic and resulting investor appetite.\nAnd at this time, we'd like to open up the call for any questions.\n",
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"content": "franklin street properties corp - $0.16 ffo (funds from operations) per share for fourth quarter 2020.\nfranklin street properties - anticipated dispositions in 2021 estimated to result in gross proceeds in range of about $350 million to $450 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: I am Ian Hudson, the Company's Chief Financial Officer.\nAlso with me on the call today is Jennifer Sherman, our President and Chief Executive Officer.\nThese documents are available on our website.\nIn addition, we will file our Form 10-Q later today.\nI'm going to begin today by providing some detail on our third quarter results before turning the call over to Jennifer to provide an update on our performance, current market conditions, recent acquisition activity, and our outlook for the remainder of the year.\nIn summary, our businesses were able to deliver meaningful year over year improvement in net sales and earnings and an adjusted EBITDA margin at the high end of our target range, despite the effects of higher material costs and widespread supply chain disruption.\nConsolidated net sales for the quarter were $298 million, up $19 million or 7% compared to last year.\nConsolidated operating income for the quarter was $34.3 million, up $300,000 or 1% compared to last year.\nConsolidated adjusted EBITDA for the quarter was $47.4 million, up $1.5 million or 3% compared to last year.\nThat translates to a margin of 15.9% in Q3 this year compared to 16.4% last year.\nNet income for the quarter was $29.2 million, up $3.9 million or 15% from last year.\nThat equates to GAAP earnings for the quarter of $0.47 per share, up 15% from $0.41 per share last year.\nOn an adjusted basis, earnings per share for the quarter was $0.48 per share, an improvement of 14% compared to $0.42 per share last year.\nBoth our GAAP earnings per share and adjusted earnings per share for the third quarter of this year included benefits from a tax planning strategy executed during the quarter, which resulted in approximately $3.3 million more in discrete tax benefits being recognized in Q3 this year compared to Q3 of last year.\nIn the aggregate, these higher tax benefits represented approximately $0.05 of our year over year earnings per share improvement.\nOrder intake for the quarter was again outstanding with orders of $350 million, representing an increase of $85 million or 32% compared to last year.\nConsolidated backlog at the end of the quarter set another new company record of $487 million.\nThat represents an increase of $183 million or 60% from the end of last year.\nIn terms of our group results, ESG's net sales for the quarter were $249 million, up $18 million or 8% compared to last year.\nESG's operating income for the quarter was $30.8 million compared to $33 million last year.\nESG's adjusted EBITDA for the quarter was $42.7 million compared to $43.9 million last year.\nThat translates to an adjusted EBITDA margin of 17.1% in Q3 this year compared to 19% last year.\nESG reported total orders of $292 million in Q3 this year, an improvement of $72 million or 33% compared to last year.\nSSG's net sales for the quarter were $49 million this year, up 1% compared to last year.\nSSG's operating income for the quarter was $7.6 million, up from $7.4 million last year, while its adjusted EBITDA for the quarter was $8.5 million, up from $8.2 million last year.\nThat translates to an adjusted EBITDA margin for the quarter of 17.3%, up 50 basis points from last year.\nSSG's orders for the quarter were $58 million, up $13 million or 27% compared to last year.\nCorporate operating expenses for the quarter were $4.1 million compared to $6.4 million last year.\nTurning now to the consolidated income statement where despite the year over year sales increase, gross profit decreased by $1.7 million.\nConsolidated gross margin for the quarter was 23.8% compared to 25.9% last year.\nWith steel and other commodity costs continuing to increase and chassis constraints delaying certain shipments out of our backlog, we experienced a slightly higher unfavorable price cost headwind of around $5 million during the quarter, about $2 million higher than we had previously anticipated.\nWith the various pricing actions we have taken, including repricing of our backlog at a number of businesses, we are expecting to see improvement beginning in the fourth quarter with more price realization expected as our backlog turns.\nAs a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down 160 basis points from Q3 last year.\nOther items affecting the quarterly results include a $200,000 increase in acquisition related expenses, a $200,000 increase in other income, and a $100,000 reduction in interest expense.\nTax expense for the quarter decreased by $3.3 million, largely due to the recognition of the tax planning benefits that I just mentioned.\nOur effective tax rate for the quarter was 12.8% compared to 23.1% last year.\nAt this time, we expect our full year effective tax rate to be approximately 18%.\nOn an overall GAAP basis, we therefore earned $0.47 per share in Q3 this year compared with $0.41 per share in Q3 last year.\nTo facilitate earnings comparisons, we typically adjust our GAAP earnings per share for our unusual items recorded in the current or prior year quarters.\nIn the current year quarter, we made adjustments to GAAP earnings per share to exclude acquisition related expenses and purchase [Technical Issues] On this basis, our adjusted earnings for the quarter were $0.48 per share compared with $0.42 per share last year.\nLooking now at cash flow, where we generated $16 million of cash from operations during the quarter, up 8% from Q3 last year.\nThat brings the year to date operating cash generation to $55 million.\nTowards the end of the quarter, we increased our borrowings in anticipation of the Ground Force acquisition, which we completed in early October for an initial payment of $43 million.\nWe ended the quarter with $164 million of net debt and availability under our credit facility of $240 million.\nOur current net debt leverage ratio remains low.\nWith our financial position remaining strong, we have significant flexibility to pursue strategic acquisitions, invest in organic growth initiatives, and return cash to stockholders through dividends and opportunistic share repurchases.\nOn that note, we paid dividends of $5.5 million during the quarter, reflecting a dividend of $0.09 per share, and we recently announced a similar dividend for the fourth quarter.\nWe also funded share repurchases of $3.2 million during the quarter at an average price of $38.44.\nOur teams again delivered growth in both the top and bottom line, while achieving an adjusted EBITDA margin toward the high end of our target range despite well documented widespread supply chain disruption and a very challenging commodity cost environment.\nWe entered the quarter with delivery commitment dates from our chassis suppliers that positioned us well to satisfy our sales and delivery expectations for the second half of the year.\nHowever, as the quarter progressed, we began to experience significant delays in delivery dates from most of our chassis OEM partners with deliveries pushed out weeks or months with little notice.\nIn many circumstances, we received a week's notice of the delay.\nBeyond chassis, we are experiencing some other supply chain tightness ranging from pumps to electronic components, but for the most part, we have to date been able to navigate through the difficulty, but it remains a challenging situation.\nChassis delivery delays are significantly disrupting our production schedules and hampering our ability to maximize production efficiencies and deliver products to our customers.\nThe team has worked tirelessly to mitigate the impact of this short term disruption by continuously adjusting production schedules in an effort to satisfy record customer demand, but we are not operating at our usual level of efficiency.\nWhile the teams have performed admirably, we estimate the delays in chassis deliveries and various other part shortages along with the constant production schedule adjustments caused an adverse top line impact of approximately $30 million during the quarter.\nImportantly, none of these orders are lost or canceled, but the shipment timing out of our backlog has been pushed out to reflect the revised chassis delivery dates.\nAs we did last year with the pandemic, so far this year our businesses have been able to navigate through a variety of supply chain related issues and deliver an EBITDA margin of almost 16% demonstrating that as a company we are more resilient than in the past, and we continue to believe that at this level of margin performance we would rank within the top decile of our specialty vehicle peers.\nPerformance at these levels during turbulent times is both a real testament to the efforts of our teams and the successful diversification of our revenue streams and end market exposures that has taken place over the last several years through a combination of organic growth initiatives and M&A.\nAs it was in Q2, our aftermarkets business was again an area of strength, providing a favorable shift in mix during a seasonally strong third quarter.\nOverall, our aftermarket revenues in Q3 this year were up $12 million or 18% over last year, growing to represent a higher share of ESG's revenues for the quarter at around 30%.\nRental activity and demand for used equipment continues to be strong with rental income in Q3 up 29% year over year and used equipment sales exceeding $10 million for the third successive quarter.\nAs we approach the winter months, we expect that rental activity may be seasonally down in comparison to the peak periods of Q2 and Q3, but we expect used equipment demand to remain strong given the current tightness in the supply chain and longer lead time.\nDemand for our product offering continues to be as strong as ever as demonstrated by our outstanding third quarter order intake of $350 million, contributing to another record backlog, reflecting strength across our end markets.\nThis settlement has been widely shared by our customers and dealer partners and seems to be further solidified by the economic stimulus package, which passed earlier this year.\nIn that package, approximately $350 billion was earmarked for state, local, and territorial governments for a variety of purposes including the maintenance of essential infrastructure such as sewer systems and streets.\nAs a provider of equipment used for these essential services like store cleaning and street sweeping, we stand to benefit meaningfully from any additional aid that may be provided to state and local sources for these purposes.\nConversations with our dealer channels suggest that the first $175 billion tranche has started to be distributed by the treasury in May with the second tranche expected next year.\nThis is supported by the ongoing strength of U.S. municipal orders, which were up 50% for both the quarter and year to date period with notably strong demand for street sweepers and sewer cleaners.\nIn fact, so far this year, our U.S. municipal orders for street sweepers are up $46 million or 84% over last year, while sewer cleaner orders are up $45 million or 64% over the same period.\nWe are also seeing strong municipal demand within SSG with most of its order improvement this quarter resulting from higher demand for public safety equipment in both domestic and international markets.\nWithin our industrial end market, we've also seen a 50% year over year improvement in domestic orders.\nThe improvement has been almost across the board, but notably for our TRUVAC safe digging trucks and for our Guzzler industrial vacuum motors, which collectively were up $45 million or 87% year over year.\nSimply put, supply chains cannot keep pace with the momentum in demand that we are currently seeing in almost all of our end markets.\nI would now like to spend a minute on our acquisition of Ground Force Worldwide, which we completed in early October.\nGround Force is headquartered in Post Falls, Idaho, and is a leading manufacturer of specialty material handling vehicles that support the extraction of metals with its current product portfolio, including fuel and lube trucks, water trucks, dump bodies, and rock spreaders.\nGround Force also supports the recurring aftermarket needs of its customers through parts and service offerings.\nThe acquisition further bolsters our position as an industry leading, diversified industrial manufacturer of specialty vehicles for maintenance and infrastructure markets with leading brands of premium, value adding products, and a strong supporting aftermarket platform.\nOver the last 12 months, Ground Force generated revenues of approximately $34 million with an EBITDA margin within our group target range.\nThe acquisition augments our current materials' hauling portfolio by adding a range of specialty vehicles that support the extraction of metals, demand for which is expected to benefit from vehicle electrification and other green initiatives.\nThe transaction is also expected to provide opportunity for long term value creation through operational improvement and organic growth initiatives while also providing a platform for further acquisitions in this space.\nAlthough it has only been one month, we are encouraged by the strong order demand that Ground Force has seen for its products.\nDeist is the parent company of Switch-N-Go and Bucks Fabricating, both of which are located in Pennsylvania.\nLike Ground Force to MRL, this was another proprietary deal underlying our strong reputation in the industry.\nThrough its Switch-N-Go business, Deist designs, manufactures and sells interchangeable truck body systems for Class three to seven vehicles in the work truck industry.\nDepending on the application, this interchangeable system allows for the use of multiple bodies on a single chassis, helping customers to optimize their asset utilization and providing the potential to reduce their carbon input, footprint.\nBucks designs, manufactures, and sells a full line of waste hauling products including front, rear loading containers and specialty roll off containers.\nOver the last 12 months, Deist has generated revenues of approximately $41 million with a double-digit EBITDA margin.\nThe Deist acquisition represents another attractive product line extension and expands our presence into new end markets such as tree care and waste hauling.\nWith many common partners within our existing distribution channels, the acquisition creates an attractive opportunity to develop and deliver innovative new products and solutions to our customers and optimize the distribution of our products.\nWe expect that both acquisitions will be accretive within the first year.\nThe acquisitions reiterate our expectation that M&A will continue to contribute meaningfully to our future growth.\nTurning now to our outlook for the rest of the year.\nWe continue to see strong momentum in our markets as evidenced by the 50% improvement in both U.S. municipal and industrial orders so far this year.\nWith a record backlog, demand for our products is outpacing the current capacity of our supply chain.\nWhen we raised our guidance last quarter, we assumed no significant delays in deliveries from our chassis suppliers.\nHowever, during the quarter, such delays were more prevalent than we had anticipated causing increased disruption to our production schedules.\nWe expect that the volatile supply chain environment will continue for the rest of the year, and therefore, we are adjusting our full year adjusted earnings per share outlook to a new range of $1.68 to $1.78.\nThe size of our range is reflective of the highly volatile environment in which we are currently operating, but performance at that level would represent the company's second best year ever in terms of EPS.\nOur new outlook range also excludes the impact of a one-time non-cash pre-tax pension settlement charge of approximately $11 million, which we expect to incur in the fourth quarter in connection with the defined benefit pension annuitization project.\nWe remain encouraged by the long-term opportunities for all of our businesses, which would be further bolstered by the infrastructure legislation recently passed by Congress.\nWe are already starting to see the benefits from the economic stimulus packages, which started to be made available to municipalities earlier this year.\nAnd we also expect the Infrastructure Bill, with $550 billion in new spending, we could see capital equipment demand increase to support infrastructure investments in areas such as roads, bridges, electrification, broadband, clean energy and water, and public transportation buildup.\nWe are a leading manufacturer of specialty infrastructure and maintenance equipment and anticipate increased demand for the majority of our product offerings including equipment sales and rentals of dump trucks and trailers, safe digging trucks, road marking equipment, sewer cleaners, and street sweepers while also benefiting our new acquisitions, Ground Force and Deist.\nWith our recent capacity expansions, we are well positioned to respond once the current supply chain constraints improve.\nOver the last several years, we have transformed our end market exposure and implemented a revenue diversification strategy that has enabled us to adjust as needed to market conditions.\nWith an ongoing focus on 80-20 principle, Federal Signal has become a more resilient business delivering a consistent level of EBITDA margin above many of our peers.\nAs Ian noted in his comments, our financial position and liquidity are strong, enabling us to pursue strategic acquisitions like Ground Gorce and Deist.\nOur current M&A pipeline continues to be very active.\nWhile we continue to make progress on our vehicle electrification road map and we'll soon be initiating customer trials and demonstrations of our hybrid three wheel Pelican Sweeper.\nWe have also solidified an agreement with a development partner for the hybrid system integrated into our plug-in, hybrid Broom Bear.\nOur electrification road map also includes all electric versions of our truck mounted sweepers, and we are collaborating with more than one chassis OEM on designs that will provide uncompromised performance for our customers.\nWe anticipate field trials to begin in 2022.\nOur ongoing commitment to environmental, social, and governance initiatives also position us well in the communities in which we operate and is a differentiating factor in our ability to attract labor at most of our facilities.\nRecently, we took a survey, and in our three largest facilities, which comprise almost half of our U.S. hourly workforce, we currently have approximately 20 hourly job openings out of almost 1,000 positions.\nOn that note, we recently issued our second annual Sustainability Report, which highlights many of our accomplishments in this area including our project 85 initiatives to increase vaccination rates across the organization.\nAlthough we continue to make progress on this initiative, we still are experiencing some COVID-related disruptions at certain facilities.\n",
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"content": "compname reports q3 adjusted earnings per share $0.48.\ncompname reports third quarter results including 32% increase in orders and record backlog; signs definitive agreement to acquire deist industries, inc..\nq3 adjusted earnings per share $0.48.\nq3 gaap earnings per share $0.47.\nq3 sales rose 7 percent to $298 million.\nsees fy adjusted earnings per share $1.68 to $1.78.\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'm Ian Hudson, the company's Chief Financial Officer.\nAlso with me on the call today is Jennifer Sherman, our President and Chief Executive Officer.\nThese documents are available on our website.\nIn addition, we will file our Form 10-K later today.\nJennifer is going to start today with her perspective on our performance, and then I will provide some more detail on our fourth quarter and full year financial results.\nJennifer will then go over our outlook for 2021 before we open the line up for any questions.\nI'm immensely proud of how our teams have managed through these challenging times.\nIt's hard to believe that it's been a little over a year since the first COVID-19 patient was reported in the U.S. Since the outbreak of the pandemic, the health and safety of our employees has been our highest priority, and we worked quickly to implement a host of measures to establish a safe work environment for our employees.\nThese steps have included adjusting our office spaces and production processes at our facilities to comply with safe distancing guidelines.\nDuring 2020, we invested in temperature screening capabilities at most of our facilities, issued a mandatory face mask policy, provided our employees with additional paid time off and made at-home test kits available for free to our employees and their family members.\nAs the national COVID-19 vaccine distribution has gotten under way, it is clear to me that vaccinating our workforce is the single most effective tool at our disposal to protect our employees and customers and keep our businesses operating efficiently.\nIn a nutshell, putting this pandemic behind us is critical to our long-term success.\nSo with that in mind, we recently kicked off a companywide effort to raise awareness about COVID-19 vaccines, assist eligible employees in gaining access to available vaccines and encourage participation levels.\nThrough the pandemic, our businesses have worked closely with local health departments.\nIn Illinois, where we have three of our largest manufacturing facilities, many of our employees are now eligible to receive vaccine as essential workers.\nIn partnership with the local health department, we have organized an on-site vaccination event in March for all eligible employees at that site.\nI'm extremely appreciative to everyone that helped make this happen and hope that we can host similar events at our facilities in other states when our employees become eligible.\nIn addition to protecting our employees, one of our objectives in launching this initiative is to provide comfort to the customers and suppliers with whom we frequently interact in-person that our high percentage of our customer-facing employees have received a vaccine.\nWe also want to provide a mechanism to encourage eligible employees to feel more comfortable traveling to support our customers.\nSharing the same sentiment as others, we are anxious to move beyond COVID.\nDuring the fourth quarter, with the resurgence in cases across much of the country, many of our businesses experienced COVID-related disruptions.\nThe fact that we are able to navigate through these issues and deliver strong results was a real testament to our teams.\nThere is no doubt that these remain tumultuous and uncertain times.\nHowever, this experience has confirmed my strong belief that our workforce is unparalleled in its passion, commitment and grit.\nAnd while we may have some challenging days or periods, I am confident that we will ban together and work through these challenges as we have many others.\nOverall, our performance in the fourth quarter represented a strong finish to 2020, a year in which we delivered the second highest adjusted earnings per share in the company's history, surpassed only by the $1.79 per share reported in 2019.\nThe despite the impact of the pandemic on our top line, I was pleased with how our teams responded quickly, taking actions to control costs, which not only preserved our EBITDA margin but improved it by 40 basis points on a year-over-year basis.\nIn fact, both of our groups exceeded the upper end of their current target EBITDA margin ranges in 2020.\nWhile many companies can serve capital in 2020, we were proactive in taking a number of actions to position the company well for 2021 and beyond as we continue to focus on our long-term growth objectives by funding strategic investments to support the future growth of the company in three critical areas.\nFirst, we have made significant investments in our existing plants to add additional capacity to support our long-term growth and to gain operational efficiencies through the use of newer machinery and equipment.\nWe recently completed our plant expansion at Vactor, and are making progress on expansions of our manufacturing facilities in Rugby, North Dakota and Lake Crystal, Minnesota.\nEarlier in the year, we also completed the expansion of our MRL facility in Billings, Montana.\nSecond, we continue to invest in new product development, and we are seeing the benefits from these efforts with an estimated $200 million of revenue in 2020 being generated from the sales of products introduced in the last three years.\nAmong those products was the 2100 I full-size tower cleaner, which we launched in 2018.\nThe 2100 I sewer cleaner introduced intelligent controls on the truck and was entirely designed around our customers' needs for ease of use and operability.\ntwo years following the launch, we continue to see strong results from that product line and positive customer feedback on the design.\nDuring 2020 and on the back of our success with the 2100 I, we launched a smaller sewer cleaner and a truck jetter machine that incorporates the same intelligent controls as the 2100 I. The initial response to these products has been very positive.\nTBEI, our dump bodies business was also successful in bringing several new products to market in 2020, addressing specific customer needs or improving our competitive positioning.\nA few examples, I would note, are the launch of the J Craft Apex dump body, which features smooth sides with no seems in a tough dump body that results in a significantly better flow of materials for the end user and the DuraTuff, which is a heavy-duty abrasion resistant dump body with a simplified design that allows us to manufacture and fulfill the needs of our customers within a lead time of approximately six weeks which is much shorter than manufacturers of competitor products.\nOverall, revenues from these new products accounted for nearly 10% of TBIS overall revenues during a year in which TBI delivered the highest EBITDA margin under our ownership.\nWithin SSG, we've increased our recurring revenue streams through Commander one, a product that leverages our existing installed base of outdoor warning siren and provides a unique differentiator for Federal Signal siren control equipment.\nOf our total R&D spend in 2020, approximately 20% was invested in electrification projects, and we are pleased to report that during the fourth quarter, we received our first orders for our hybrid electric street sleeper.\nElectrification will continue to be an important initiative for the company moving forward.\nThird, we reacted quickly to introduce several new digital marketing tools to enhance the customer experience of our customers under reclaiming Tomorrow Together initiative.\nThese tools, which include virtual equipment demonstrations and digital training academies allow us to reach our customers in a new way.\nWe also launched our e-commerce site in the fourth quarter, which initially focuses on certain product lines within our safety and security Systems group.\nOur strong cash flow generation supports not only these organic growth initiatives but also ongoing debt repayment, cash returns to shareholders and acquisitions.\nIn June of 2020, we completed the acquisition of PWE.\nAnd last week, we completed the acquisition of OSW equipment and repair.\nIn October of 2020, we issued our inaugural long-form sustainability report.\nI'm incredibly proud of the progress we've made on our environmental, social and governance initiatives and thrilled to share are many accomplishments through the issuance of this report.\nWith our commitment to continuous innovation, strong governance, and reduced resource consumption, we continue to build and deliver equipment that has beneficial impacts to both the environment and human safety.\nWe are proud to be a company whose products have inherent environmental and social importance, and we hope that our pride is evident upon reading the report.\nLet me now spend a minute on our recent acquisition, OSW.\nOSW is a leading manufacturer of dump truck bodies and a custom upfitter of truck equipment and trailers and is headquartered in Snohomish, Washington with an upfitting location in Tempe, Arizona, and a service center in Edmonton, Alberta.\nSince acquiring TBEI in 2017, the geographic expansion of our existing platform of market-leading dump bodies and trailers has been an important strategic initiative.\nThe acquisition of OSW represents a highly strategic transaction, adding three premier brands that serve attractive infrastructure, construction and other industrial end markets on the West Coast, Arizona and in parts of Canada.\nWe have previously noted that our dump truck businesses have a general correlation with new housing starts.\nThe region in which OSW operates along the West Coast, have been the fastest-growing areas in the country in the last five years.\nTo capitalize on that growth potential and expand its reach, OSW completed two acquisitions in recent years and represents a good anchor tenant for future growth on the West Coast.\nWith its main operations located in Washington state where the coronavirus pandemic first hit in the U.S., OSW's financial performance was adversely impacted in 2020.\nHowever, it is a company with strong brands, several long-term contracts with municipalities and a reputation for making quality products.\nThe acquisition will also extend our current product offerings by filling in several gaps in the TBEI's existing trailer portfolio.\nAlthough we expect this acquisition to be neutral to our 2021 earnings, the acquisition provides considerable opportunity for long-term value creation through the application of our 80/20 improvement principles, organic growth initiatives and additional bolt-on acquisitions.\nOverall, our fourth quarter results represent a strong finish to the year.\nBefore I talk about the fourth quarter, let me highlight some of our full year results.\nConsolidated net sales for the year were approximately $1.13 billion, down about 7% compared to the prior year.\nOperating income for the year was $131.4 million compared to $147.1 million in the prior year.\nConsolidated adjusted EBITDA for the year was $182.2 million compared to $191.3 million in the prior year.\nThat translates to a margin of 16.1% for the year, up 40 basis points from the prior year and above the high end of our target range.\nGAAP earnings for the year equated to $1.56 per share compared to $1.76 per share in 2019.\nOn an adjusted basis, we reported full year earnings of $1.67 per share compared to $1.79 per share in the prior year.\nFor the rest of my comments, I will focus mostly on comparisons of the fourth quarter of 2020 to the fourth quarter of 2019.\nConsolidated net sales for the quarter were $295 million compared to $314 million in the prior year.\nConsolidated operating income for the quarter was $33.8 million compared to $36.4 million in the prior year.\nOn an adjusted basis, consolidated operating margin was 12%, up 10 basis points from the prior year.\nConsolidated adjusted EBITDA for the quarter was $47 million compared to $48.5 million in the prior year.\nThat translates to a margin of 15.9% for the quarter, an improvement of 50 basis points over the prior year.\nIncome from continuing operations for the quarter was $26 million compared to $29.7 million in the prior year.\nThat equates to GAAP earnings per share of $0.42 per share for the quarter compared to $0.48 per share in the prior year.\nOn an adjusted basis, earnings per share for the quarter was $0.44 per share, which compares to $0.48 per share in the prior year.\nOrders for the quarter were $276 million, down from record levels in the prior year quarter, but up $10 million or 4% from the third quarter of 2020.\nThat momentum continued into 2021, with strong order intake in January, contributing to a backlog of $330 million at the end of last month.\nThat represents an increase from $304 million at the end of 2020.\nIn terms of our fourth quarter group results, ESG sales were $238 million compared to $252 million in the prior year.\nESG's adjusted EBITDA for the quarter was $44.2 million, up 1% from the prior year.\nThat translates to an adjusted EBITDA margin for the quarter of 18.6%, above our target range and up 120 basis points from the prior year.\nOur aftermarket revenues for the quarter were up about 11% year-over-year, again contributing to the strong margin performance.\nOverall, our aftermarket revenues represented roughly 25% of ESG's revenues for the quarter, which is up from 21% in the prior year period.\nSSG sales for the quarter were $57 million compared to $62 million in the prior year.\nSSG's adjusted EBITDA for the quarter was $11.2 million compared to $12.6 million in the prior year, and its adjusted EBITDA margin for the quarter was 19.6% compared to 20.3% in the prior year.\nCorporate operating expenses for the quarter were $9.8 million compared to $8.4 million in the prior year with the increase primarily related to unfavorable fair value adjustments of certain post-retirement reserves, which represented a headwind of about $0.02 in the quarter and higher M&A expenses.\nTurning now to the consolidated income statement, where the decrease in sales contributed to a $5.6 million reduction in gross profit.\nConsolidated gross margin for the quarter was 25.7% compared to 25.9% in the prior year.\nAs a percentage of sales, our selling, engineering, general and administrative expenses for the quarter were down 40 basis points from the prior year.\nOther items affecting the quarterly results include a $700,000 increase in acquisition-related expenses, a $1.1 million increase in other income and a $600,000 reduction in interest expense.\nCompared to the prior year, tax expense for the quarter increased by $2.8 million, largely due to the recognition of fewer discrete tax benefits than in the prior year quarter.\nAlthough it was up on a year-over-year basis, our effective tax rate for the quarter was lower than we expected at around 23%, primarily due to the recognition of benefits associated with stock compensation activity and other discrete items, which collectively added about $0.03 to our fourth quarter EPS.\nFor 2021, we currently expect a tax rate of approximately 24%.\nThat rate includes an estimate of tax benefits associated with stock compensation activity, similar to those recognized in recent years.\nOn an overall GAAP basis, we, therefore, earned $0.42 per share in the quarter compared with $0.48 per share in the prior year.\nTo facilitate earnings comparisons, we typically adjust our GAAP earnings per share for unusual items.\nDuring the fourth quarter, we made adjustments to GAAP earnings per share to exclude acquisition-related expenses, pension-related items, coronavirus-related expenses and purchase accounting expense effects.\nOn this basis, our adjusted earnings for the quarter were $0.44 per share compared with $0.48 per share in the prior year.\nLooking now at cash flow, where we generated $57 million of cash from operations in the quarter, bringing the total amount of operating cash generation for the year to $136 million.\nThat represents a year-over-year improvement of $33 million or 32%.\nThe improved cash flow facilitated a $30 million debt reduction in the quarter as well as continued strategic investments in new machinery and equipment and other organic growth initiatives like the expansion of several of our manufacturing facilities.\nIn 2021, we are currently anticipating that our capex, including investments associated with ongoing plant expansions will be lower than in 2020 and in the range of between $20 million and $25 million.\nWe ended the year with $128 million of net debt and availability of $280 million under our credit facility.\nAs a reminder, we executed a new five year $500 million credit facility in July of 2019.\nWe also have the option to trigger an increase in our borrowing capacity by an additional $250 million for acquisitions.\nOur net debt leverage remains low even after factoring in the OSW acquisition that we completed last week.\nWe remain committed to our long-term capital allocation priorities of investing in organic growth initiatives, pursuing strategic acquisitions and funding cash returns to shareholders.\nOn that note, we paid a dividend of $0.08 per share during the fourth quarter, amounting to $4.9 million, and we recently announced that we are increasing the dividend by 13% to $0.09 per share in the first quarter.\nThat concludes my comments.\nAnd now I would now like to turn back the call to Jennifer for our outlook for 2021.\nLooking forward, we remain focused on delivering strong results while continuing to execute on our long-term strategy.\nOur strong balance sheet provides opportunities for us to drive both our organic growth initiatives and pursue additional strategic acquisitions like OSW.\nOver the last several years, we have transformed our end market exposure and implemented a revenue-diversification strategy that has enabled us to adjust as needed to market conditions.\nOur aftermarket business has grown to represent about 1/4 of ESG's revenues, and we see additional opportunities to grow that business.\nFor example, late in 2020, we accelerated an initiative at one of our FS solution centers to expand our parts offerings by in-sourcing manufacturing of certain parts that we had previously procured from third parties.\nWe have also worked to develop strong contingency planning protocols, continue our journey of 80/20 and invest for growth.\nWe are closely monitoring the potential actions that the new administration may take to boost the economy, including potential federal stimulus packages that may be provided at the state or local level to aid municipalities whose budgets have been impacted by the pandemic and a potential infrastructure bill.\nWhile there's still uncertainty as to the magnitude and timing of any federal stimulus package, I would like to provide a framework of what we know and what we believe the potential benefit to Federal Signal could be.\nThe initial proposal under the American Rescue Plan, COVID relief package call for approximately $1.9 trillion of economic stimulus with initial projections of approximately $350 billion going to state, local and territorial governments with the goal of keeping frontline workers employed, distributing the vaccine, increasing testing, reopening schools and maintaining essential services.\nAs the provider of equipment used for these essential services like sewer cleaning and street sweeping, Federal Signal is well positioned to benefit from additional aid that may be provided to state and local sources for these purposes.\nWe have recently completed our annual market planning process with our dealer partners, and they remain cautiously optimistic about market conditions in 2021, noting that both corporate and sales tax collections appeared to have held up better than originally anticipated, which should add stability to their revenue sources.\nAlthough the dollar amounts that have been cited in the potential infrastructure bill are uncertain, it is clear that the U.S. is in desperate need of renewed investment in its infrastructure.\nAn estimated 47,000 bridges and 40% of our highways are in need of replacement, whereas entire sewer systems have exceeded their useful life cycles.\nWe expect that a long-term infrastructure bill will provide visibility for project planning, I could see capital equipment demand increase in such areas as roads, bridges, broadband, clean energy and public transportation build-outs.\nWe anticipate that this would provide benefits for the majority of our product offerings, including equipment sales and rentals of dump truck and trailers, safe digging trucks, road marking equipment, sewer cleaners and street sweepers.\nWithin our industrial markets, we continue to be bullish about our prospects with respect to our safe digging initiative and are monitoring further developments on the regulatory front.\nWe are also optimistic that the recent increase in oil prices could generate increased demand for the sale and rental of our industrial products.\nWe have positioned Federal Signal in a manner in which we fully participate in the post-pandemic recovery by increasing capacity within our facilities, reducing lead times to a level where we can better respond to customer needs, investing in new product development and gaining market share.\nOn the flip side, we are anticipating that some of the cost savings that resulted from actions taken in 2020 are expected to return in 2021, representing an estimated year-over-year expense headwind of approximately $8 million.\nLike many companies, we have noted an increase in material costs over the last several weeks, and we are responding accordingly.\nWe are also monitoring the availability of chassis at certain locations linked to a nationwide shortage in semiconductors and expect to be proactive where appropriate, so that any supply chain disruption is minimized.\nThis could have more of an impact on TBEI.\nAs we get more visibility into the year, including the timing of widely available vaccine, we are committed to increasing our target EBITDA margin range.\nOn the M&A front, our deal pipeline remains active and some of the logistical challenges that were experienced in 2020 have started to ease a little.\nWe continue to believe that M&A will be an important part of our future growth.\nNow turning to our outlook.\nWe are encouraged by conditions in our end markets and the ongoing execution against our strategic initiatives and are monitoring the potential for additional tailwinds.\nAs a reminder, seasonal effects typically result in our first quarter earnings being lower than subsequent quarters.\nMainly due to the pandemic, 2020 was a bit of anomaly in that regard.\nWe started off 2020 with record production levels during the first quarter at our largest facility and minimal impact from the pandemic, which did not meaningfully impact our operations until the last few weeks in March.\nIn the first quarter of 2020, we also recognized a benefit of approximately $0.02 per share associated with fair value adjustments to certain reserves.\nAs a result, in 2020, our first quarter represented a higher share of our full year earnings than we typically would expect.\nWhile we are very encouraged with recent order trends, including the sequential quarterly order improvements that we experienced since the second quarter of 2020, our operations are still being impacted by disruptions associated with the pandemic.\nThese factors range from operational inefficiencies related to employee absenteeism, to the impact of the recent lockdown measures that have been put in place across much of Canada, most notably in Ontario.\nIn addition, several of our businesses have been impacted by the adverse weather conditions that much of the U.S. has been experiencing in recent weeks.\nFor example, our three facilities in the Houston area and our dunk truck facilities in Alabama and Mississippi had to be closed for several days due to the harsh weather conditions.\nFortunately, we did not experience any significant damage to our operations, but we did lose several days of production.\nConsidering the factors impacting the first quarter, we currently anticipate the second half of 2021 to be stronger than the first half.\nThere still remains uncertainties surrounding COVID, commodity costs and chassis availability.\nYet despite this, we are expecting a strong year in 2021 with top line growth, double-digit improvement in pre-tax earnings and adjusted earnings per share of between $1.73 and $1.85.\n",
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"content": "q4 adjusted earnings per share $0.44 from continuing operations.\nq4 earnings per share $0.42 from continuing operations.\nq4 sales $295 million versus refinitiv ibes estimate of $291.6 million.\nsees q4 adjusted earnings per share $1.73 to $1.85.\nsees q4 sales $295 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: Information required by SEC Regulation G relating to these non-GAAP financial measures are available on the Investors section of our website, www.\nfortive.com, under the heading Investors quarterly results.\nWe completed the separation of our prior Industrial Technologies segment through the spin-off of Vontier Corporation on October 9, 2020.\nAnd have accordingly included the results of the Industrial Technologies segment as discontinued operations.\nAll references to period-to-period increases or decreases and financial metrics are year-over-year on a continuing operations basis.\nWe were very pleased with our second quarter results.\nAs you can see on slide three, our performance once again highlighted the benefits of our strategy to provide differentiated connected workflow solutions for our customers, creating a portfolio with enhanced resilience and long-term earnings power.\nDuring the quarter, we capitalized on accelerating point-of-sale trends across a number of our larger businesses, continued growth from our software offerings and improving conditions across our key end markets.\nAgainst this backdrop, we delivered core revenue growth and adjusted operating profit margins that exceeded the high end of our guidance, driving exceptional earnings growth and free cash flow conversion.\nAs we highlighted at our Investor Day on May 19, we are building on the foundation of our advantaged hardware positions and expanding our software capabilities to address our customer's critical workflow needs and accelerate their ongoing digital transformation.\nIn the second quarter, our SaaS offerings delivered low double-digit growth, and we also drove significant improvement across our professional services offerings.\nWe continue to see strong momentum at eMaint, including increasing demand from its expansion into the food and beverage, pharmaceutical and healthcare verticals.\nGordian and Accruent both had strong quarters as they executed on opportunities provided by increasing demand from facility owner operators and improvements in access to customer sites.\nBoth companies are well positioned to capitalize as customers focused on post-COVID return to work challenges and digital transformation priorities.\nCenters also performed very well in the quarter as access to hospital customers improved, executing on strong demand for its SaaS offerings among existing and new independent delivery network customers.\nLooking across the portfolio, we continue to be excited about our expanding offering of EHS workflow solutions, which are well positioned to meet the significant long-term sustainability requirements of our customers.\nISC and Intellect performed well, capitalizing on strong broad-based growth across end-markets and key geographies.\nAt the same time, we are excited with the early progress at ehsAI where the company closed its largest deal to-date in its first joint marketing campaign with Intelex and generated strong growth in its sales pipeline.\nThroughout the second quarter, we continue to apply the Fortive Business System across the portfolio to drive innovation, growth and share gains.\nDeployment of our lean portfolio management toolset, which significantly accelerates the efficiency and impact of R&D investments, achieved a greater than 40% increase in our on-time program delivery.\nThe application of FBS and digital analytics and search optimization generated 25% growth in digital traffic, from pre-pandemic levels across the portfolio.\nMeanwhile, the use of FBS growth tools has accelerated innovation at Fluke Health Solutions over the past 18 months and continues to drive excellent top line performance.\nWe have created good early momentum in our partnership with Pioneer Square Labs including the recent spin-in of TeamSense, a provider of innovative workflow solutions to streamline communications with hourly workers.\nThis marks the first business incubated at Pioneer Square Labs to be integrated into the Fortive portfolio.\nWhile still very early, we are pleased with the progress thus far at TeamSense and are excited to develop additional technologies that accelerate safety and productivity solutions for customers within our core markets.\nIn early July, we announced the acquisition of service channel.\nThe transaction brings a differentiated high-growth software business with an integrated service provider network and significant proprietary data assets to the portfolio, enhancing our ability to meet the evolving needs of facility owners around the world.\nFollowing the expected closing of the acquisition in Q3, we will have significant balance sheet capacity supported by our strong and resilient free cash flow generation.\nAs we highlighted at our Investor Day, we see substantial runway across our $40 billion served market for disciplined capital allocation to accelerate our strategy.\nTurning to a quick summary of the results in the quarter on slide four, we generated year-over-year total revenue growth of 26.7% as revenue strength exceeded the high end of our guidance.\nAdjusted operating margin was 22.2% while adjusted earnings per share was $0.66, representing a year-over-year increase of 53.5%.\nGiven the outperformance for both top line and our adjusted operating margin we delivered $282 million of free cash flow, which represented 118% conversion of adjusted net income.\nOn slide five, we take a closer look at the Intelligent Operating Solutions segment.\niOS posted total revenue growth of 31.2% in the second quarter.\nThis included mid-20% core growth in North America, low 30% core growth in Western Europe and low 20% core growth in China.\nFluke's core revenue increased in the mid-30% range.\nFluke also grew by mid-single digits on a sequential basis as we continue to see robust demand across its businesses, highlighted by growth at Fluke Industrial.\nFluke Industrial generated share gains across a range of key channel partners and retail accounts as point-of-sale accelerated through the quarter.\nFluke's broader ii900 Acoustic Imaging product line also continues to perform very well, as revenue approximately doubled in the quarter on strong growth across both Western Europe and North America.\nFluke Networks also performed well, driven by the recent launch of its LinkIQ product line, which continues to exceed initial expectations tied to office reopenings and network modifications.\nIn Fluke reliability, our efforts to accelerate performance of Pruftechnik are gaining traction as we took advantage of increasing demand for alignment and other services, while eMaint also delivered another strong quarter.\nWith the accelerated pace of orders at Fluke, we did see some backlog build due to supply chain responsiveness.\nIndustrial Scientific increased by mid-teens, driven by strong execution in instruments and rental as demand from oil and gas markets rebounded and the business continued its expansion into new end markets.\nThe company's iNet offering remained resilient, increasing by mid single-digits with net retention solidly above 100%.\nIntelex grew by high single-digits in Q2, reporting a record revenue quarter.\nIntelex continues to leverage FBS and has driven improvements in lead generation and funnel conversion.\nAlso in the second quarter, Intelex disclosed multiple deals for its enhanced ESG platform to help customers launch, scale and optimize their sustainability programs and meet increasing demand for transparency on a growing set of critical non-financial reporting metrics.\nAccruent grew by mid single-digits in the second quarter with low double-digit growth in its SaaS business.\nAccruent generated strong sales and bookings for its Meridian solution for engineering document management and its maintenance connection, CMMS offerings.\nThe business also capitalized on the strong demand for its EMS event, workspace and resource scheduling offerings as companies plan and execute their return-to-work strategies.\nThe company continues to generate new customer logo wins and improving growth in recurring bookings.\nImportantly, Accruent also delivered improved performance in its professional service business, which generated mid single-digit growth as customer site access continue to improve.\nGordian increased by mid-teens, driven by low 20% growth in the procurement business and high teens growth in estimating.\nGordian generated a record month for procurement revenue in June with accelerating time lines for key projects across a number of large customers.\nThis included increased project spend by the New York City Department of Education and School Construction Authority.\nMoving to Slide six.\nPrecision Technologies segment posted a total revenue increase of 25.1% in the second quarter.\nThis included low 20% growth in North America, mid-20% growth in Western Europe and mid-teens growth in China.\nTektronix increased by approximately 30%, with another quarter of strong demand across its product businesses, including accelerating point-of-sale trends in each of its major regions.\nBoth mainstream and performance of oscilloscopes had a strong quarter with high demand for semiconductor, industrial manufacturing and communications applications.\nTektronix service business again showed its stability and resilience increasing by low teens.\nTektronix continues to benefit from the accelerated focus on driving innovation with Q2 new product introductions performing very well, including its family of automated test solutions for high-speed data transfer.\nIn the second quarter, Tektronix held six regional innovation form events, which stimulated the adoption of its tech scope platform, resulting in accelerated funnel creation for the company's broader hardware and software offerings.\nSensing Technologies increased by low teens in the second quarter with growth driven by continuation of the broad market recovery.\nSensing performed very well in China with another quarter of mid-teens growth, driven by demand for factory automation solutions.\nElsewhere, Anderson-Negele continues to make progress with its approval of its paperless process recorder IoT solution aimed at the dairy industry with broader commercial rollout expected in the second half of the year.\nSensing also continues to drive market share gains elsewhere across its portfolio, particularly etc.\n, led by its differentiated critical environment solution and strong demand across its HVAC customers.\nPacSci EMC grew in the low 20% range, with the business seeing some alleviation of the COVID-related shutdowns and approval delays that impacted shipments in previous quarters.\nPacSci EMC continues to see good growth in the commercial space market with the resumption of launches by OneWeb providing recurring revenue for smart controllers and initiators.\nAlso on July 20, we were excited to watch the company's mission-critical technology, ensure safe and reliable separation of Blue Origin's new Shepherd capsule from its booster during its maiden voyage.\nMoving to Advanced Healthcare Solutions on Slide seven.\nTotal revenue increased 21.8%, including 11% core growth.\nThis included high single-digit core growth in each of North America, Western Europe and China markets.\nASP grew by high single digits in the second quarter, led by strong growth in Western Europe and China.\nASP also realized improved growth in North America, highlighted by high single-digit growth in the US.\nOverall, ASP grew its consumable revenue high teens as the rate of elective procedures across most geographies continue to improve.\nWhile elective procedure volumes increased on a year-over-year basis, Q2 volumes came in a bit lower than expected at approximately 93% of pre-COVID levels, which was consistent with the Q1 exit rate.\nASP also continued to expand its global installed base of terminal sterilization capital equipment, which grew at a 3.5% annualized rate in Q2.\nWe expect this continued installed base expansion to provide an additional tailwind to consumable revenue as procedure volumes normalize going forward.\nCensis increased in the mid-20% range with mid-teens growth in its CensiTrac SaaS offering as well as strong growth in its professional services business.\nMany hospital customers are now allowing access to vendors which resulted in a significant increase in activity in the second quarter, particularly with integrated delivery networks.\nFluke Health Solutions increased by low double digits even as it lapped a sizable COVID-related revenue tailwind in the prior year.\nFHS saw high-teens growth from its Optimize and OneQA software solutions, which benefited from accelerated growth investments over the last 18 months.\nWith that, I'll pass it over to Chuck, who will take you through some additional details on our margins, free cash flow and balance sheet.\nWe delivered solid margin performance in Q2 and driven primarily by strong fall-through on our revenue outperformance.\nAdjusted gross margins were 57.3%, up 100 basis points on a year-over-year basis.\nThis increase reflected 130 basis points of price realization as we delivered another quarter of solid performance managing price cost across the portfolio.\nQ2 adjusted operating profit margin was 22.2%, 170 basis points above the high end of our guidance, also driven by stronger volume and high associated fall-through.\nWe reported 240 basis points of core operating margin expansion, including 570 basis points of core OMX at the iOS segment.\nBoth Fluke and Tektronix delivered strong core operating margin expansion through disciplined option of FBS to drive sales conversion as demand accelerated across their end markets.\nAt the same time, strong contributions from some of the acquired pieces of our portfolio, including ISC, Gordian, Censis and LANDAUER also contributed to the margin outperformance across the segments.\nOn Slide eight, you can see that in the second quarter, we generated $282 million of free cash flow, representing a 118% conversion of adjusted net income.\nFree cash flow over the trailing 12 months increased 15% to $943 million.\nToday, our net leverage is approximately 1 time and we expect net leverage to be around 1.2 times at year end, including the funding of the acquisition of the service channel, but excluding any additional M&A.\nThis gives us significant capacity to continue to deploy toward our key capital allocation priorities.\nTurning now to the guide on slide nine.\nGiven the strong performance in the second quarter and the improvement in our outlook for the rest of the year, we are once again raising our 2021 guidance.\nFor the full year, we now expect adjusted diluted net earnings per share to be $2.65 to $2.75, representing a year-over-year growth of 27% to 32% on a continuing operations basis.\nThis assumes total revenue growth of 13.5% to 15%, adjusted operating profit margins of 22.5% to 23.5%, and an effective tax rate of 14% to 14.5%.\nIt also assumes total revenue growth of 8.5% to 11% in the second half of 2021.\nWe continue to expect free cash flow conversion to be approximately 105% of adjusted net income for the full year.\nWe are initiating third quarter adjusted diluted net earnings per share guidance of $0.62 to $0.66, representing year-over-year growth of 24% to 32%.\nThis assumes total revenue growth of 11.5% to 14.5%, adjusted operating profit margin of 21.5% to 22.5% and an effective tax rate of 14% to 14.5%.\nFor the third quarter, we expect free cash flow conversion to be approximately 105% of adjusted net income.\nWith that, I'll pass it back to Jim for some closing remarks.\nBefore I move to questions, I want to provide a quick update on our sustainability and inclusion and diversity efforts, which is shown on slide 11.\nDuring our Investor Day program on May 19, we introduced an accelerated greenhouse gas reduction goal, which now targets a reduction of 50% in greenhouse gas intensity for Scope 1 and Scope 2 emissions by 2025 relative to our 2017 base year.\nDuring the second quarter, we also issued our 2021 sustainability report, which included Fortive's second annual GRI index, first annual SASB index and the 2017 to 2020 greenhouse gas emissions profile.\nDuring the quarter, we also became a signatory to the UN Global Compact, committed to alignment with the task force and climate-related financial disclosure by 2022 and announced our 2025 aspirational inclusion and diversity goals.\nWe continue to make significant strides and are highly committed to accelerating our sustainability and inclusion and diversity progress in the coming years.\nAcross all three of our strategic segments, we are expanding on strong established positions with offerings that address the critical workflow needs of our customers and markets with attractive long-term growth drivers.\nOur strong earnings and free cash flow performance in the first half of this year clearly demonstrated the benefits of this strategic focus and the momentum building in our portfolio.\nAs we look ahead, we will continue to invest and expanding the capabilities of the Fortive Business System as we accelerate operating improvements and innovation to increase the value we offer to our customers.\nWith strong free cash flow and significant M&A capacity we are well-positioned to pursue the key organic and inorganic growth initiatives that will drive consistent double-digit earnings and free cash flow growth in the years to come.\nThat concludes our formal comments.\n",
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"content": "sees fy adjusted earnings per share $2.65 to $2.75 from continuing operations.\nsees q3 adjusted earnings per share $0.62 to $0.66 from continuing operations.\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: Information required by SEC Regulation G relating to these non-GAAP financial measures are available on the Investors section of our website, www.\nFortive.com, under the heading, Investors Quarterly Results.\nWe completed the separation of our prior Industrial Technologies segment through the spin-off of Vontier Corporation on October 9, 2020.\nAnd have accordingly included the results of the Industrial Technologies segment as discontinued operations.\nAll references to period-to-period increases or decreases and financial metrics are year-over-year on a continuing operations basis.\nEarly in the third quarter, Fortive celebrated its fifth anniversary as an independent public company.\nThis quarter, we continue to demonstrate the success of the strategy we outlined in 2016 to enhance growth and margins across our businesses through the successful execution of the Fortive Business System, the acceleration of innovation and the impact of disciplined capital allocation.\nOur third quarter results were highlighted by 32% growth in adjusted earnings per share.\nWe continue to generate significant revenue momentum throughout the quarter, realizing 9.1% core revenue growth and order growth of just over 20% against the backdrop of strong broad-based demand.\nStrong execution and application of FBS helped to generate 325 basis points of core operating margin expansion, along with very strong free cash flow despite widespread supply chain disruption.\nIn the third quarter, our software businesses grew by low-double-digits, supported by strong demand and improving net dollar retention.\nIn total, we now have almost $750 million of annualized software revenue across the portfolio with double-digit organic growth profile as well as a high share of recurring revenue and high operating margins.\nIn August, we closed the acquisition of service channel, adding another differentiated high growth software asset to our Intelligent Operating Solution.\nThe service channel acquisition significantly enhances our strategic position in the facility and asset lifecycle market, extending our leading suite of offerings for facility owners and operators and providing a variety of potential avenues to deliver unique value added solutions in combination with Gordian and Accruent.\nAs you can see on slide four, across Fortive, we continue to invest in product development to drive organic growth and enhance our competitive position.\nMany of our investments in organic innovation are focused on enabling digital transformation across our customer base.\nThis includes vertically tailored software offerings at Tektronix and Fluke Health, emerging IoT solutions in sensing as well as early progress with new tools for improved workforce management at TeamSense.\nIn addition, our investment can afford continue to drive data analytics and machine learning opportunities across all of our businesses.\nOur success and accelerating the pace of innovation across our portfolio is demonstrated by example, such as the Fluke ii900, a groundbreaking product which was recently recognized as test measurement inspection product of the year at the 2021 electronics industry awards.\nWe continue to build the strength of our talent base to accelerate progress across Florida.\nThis quarter, we announced a number of important additions and promotions to the senior leadership team, including the appointment of Olumide Soroye as President and CEO of Intelligent Operating Solutions, the promotion of Tami Newcombe to President and CEO of Precision Technologies and the promotions of Justin McElhattan and Bill Pollak to Group President roles within iOS.\nThese moves highlight how we are building leadership capacity through a combination of internal development and external hires aimed at adding differentiated skill sets and experiences to our senior team.\nWith Olumide and Tami as well as Pat Murphy now leading advanced healthcare solutions, we have significantly increased the depth of our leadership within all three of our segments.\nTurning to a quick summary of the results in the quarter on slide five.\nWe generated year-over-year total revenue growth of 12%, core growth of 9.1% and orders growth of just over 20% with backlog increasing by 40% year-over-year.\nAdjusted operating margin was 22.8%, while adjusted earnings per share with $0.66, representing a year over year increase of 32%.\nThe strong adjusted operating margin performance helped us to deliver $252 million of free cash flow, which represented 105% conversion of adjusted net earnings.\nOn slide six, we take a closer look at the intelligent operating solution segment.\niOS posted total revenue growth of 16.6% in the third quarter with core growth of 13.1%.\nThis included low teens growth in North America, high teen's growth in Western Europe and mid single digit growth and China.\nFluke's core revenue increased by mid teens with very strong demand trends continuing across its end markets and major geographies.\nFluke's performance was highlighted by high teen's revenue growth at Fluke industrial, which also generated order growth of greater than 20%.\nFluke's industrial imaging business continues to perform well paced by momentum from innovation across its acoustic imaging product lines, which doubled year-over-year in the third quarter.\nFluke Network had a very strong quarter driven by innovation such as Link IQ product line.\nFluke's efforts to expand its recurring revenue base sought further progress in Q3, including strong performance across both its service offerings and an email which generated high teens growth in revenue and fast bookings for the quarter.\nThe combination of robust order growth and supply chain constraints in Q3 led to strong backlog that we're carrying into the fourth quarter and 2022.\nIndustrial scientific revenue increased by mid teens, as instruments and rental business continued their strong recovery.\nThe ISC team has done an excellent job using FBS tools to accelerate product redesign initiatives, which have helped alleviate component supply challenges and limit impact on delivery times to customers.\nIntelex grew by mid teens and posted another record revenue quarter.\nIntelex is seeing solid FPS driven improvements in its upsell process to support higher net dollar retention.\nAlso in Q3 intellect signed an exclusive partnership deal with data Moran [Phonetic], which enables Intelex customers to manage their full lifecycle of their ESG strategy including materiality analysis and risk identification.\nAccruent grew by low single digits in the third quarter while seeing strong bookings greater than 20%.\nThis booking strength was paced by continued demand for occurrence Meridian engineering, document management, and maintenance connection CMF offerings.\nAccruent also continues to see strong demand for its EMS event, workspace and resource scheduling solution to support emerging hybrid office models as customers execute their return to work plans.\nAmong the notable new customer wins for the EMS solution in Q3 were several leading global financial services providers.\nAccruent and also continue to see improve performance in its professional services business, which generated low double digit growth.\nGordian increased by mid teens with strong growth in procurement and in estimating in the third quarter Gordian continued to see increasing project volume as well as higher average dollars per project.\nGordian has also seen success from its expansion into healthcare with significant demand for its facility solutions from hospital customers.\nAfter completing the acquisition of service channel at the end of August, we are obviously early in our ownership but we're very pleased with what we've seen thus far and are excited to have them join Florida.\nSpecifically service channel continues to demonstrate strong momentum in its large enterprise retail business, with several large customer wins in Q3, including Walgreens, which will roll out automation software across their more than 10,000 locations, and the third largest mobile carrier in North America as they transform their facility management program.\nMoving to slide seven.\nThe Precision Technology segment posted a total revenue increase of 8.9% in the third quarter, with core growth of 7.7%.\nThis included high single digit growth in North America and high teens growth in Western Europe.\nChina grew low single digits but saw strong continued momentum and demand with double digit order growth in the quarter.\nTektronix through high single digits with strong demand trends across its product portfolio and double digit order growth.\nGrowth was led by the performance of its mainstream oscilloscope, with a greater than 30% increase supported by new extensions to the six series MSO product line.\nTektronix continued to see traction from its efforts to expand in data centers and other related wired communications applications, delivering a number of key customer wins, including Lenovo and Ericsson.\nThroughout the third quarter, Tektronix did an excellent job deploying FBS countermeasures to navigate sustained supply chain challenges while also delivering significant price realization.\nEven with the strong execution, given the continued robust pace of demand from its customers, Tektronix increased its backlog by more than 70% versus a year ago.\nSensing Technologies increased by low double digits in the third quarter.\nSensing reported strong growth across each of its major regions with robust order momentum across its key end markets.\nSetra registered additional market share gains with its HVAC offerings in Q3 and continues to generate strong growth across a range of critical environment applications, including hospital isolation rooms and pharmaceutical manufacturing.\nPacific Scientific EMC grew by mid-single digits, including improved momentum across its commercial customer base.\nPay continues to see significant growth opportunities in its aircraft and space end markets with strong momentum across its critical safety technology offerings.\nMoving to Advanced Healthcare Solutions on slide eight, total revenue increased 9.3%, while core revenue increased 4.7%.\nThis included mid-single-digit growth in North America and low single-digit growth in China.\nWestern Europe saw high-teens decline based on a difficult prior year comp at Invetec, partially offset by strong growth at ASP and Fluke Health.\nASP grew by low single-digits in the third quarter, highlighted by a strong capital equipment performance, including low double-digit growth in terminal sterilization capital.\nASP continues to benefit from the solid sales execution driving the consistent expansion of its global installed base.\nConsumables revenue grew by low single-digits, led by high single-digit increase across all geographies outside of the United States.\nIn the U.S., the spike in COVID-related hospitalizations, led to a notable decline in elective procedure volumes toward the end of the quarter, resulting in global electric procedures at approximately 88%, of pre-COVID levels for the period.\nWhile we expect only nominal improvement in electric procedure volume in Q4, longer term, we expect ASP's consumable revenue will benefit from procedure volume normalization and growth in its global installed base.\nCensus increased in the low 40% range, highlighted by very strong growth in professional services and related hardware.\nIt CensiTrac SaaS offering, grew mid-teens as it continued to benefit from new customer additions as well as good momentum with up-selling and cross-selling to existing customers.\nCensis continues to have open access to customer sites.\nAnd saw strong sustained order growth throughout the quarter.\nFluke Health Solutions increased by high single-digits with continued strength in North America and Western Europe, tied to market share gains with OEM customers through the continued deployment of FBS growth tools.\nFHS executed very well throughout the quarter, driving significant price realization and managing through supply chain constraints to open new market opportunities.\nFHS continues to benefit from partnership efforts with the Ford, driving lower customer churn at Landauer using the Ford's predictive modeling tools.\nThe company continues to see good early traction from software innovation efforts with 30% growth year-over-year in Q3.\nInvetech declined by mid-single digits, which was better than expected against the tough prior year comp that included significant COVID-related tailwinds.\nThe company continues to see strong demand across the diagnostics and life science verticals.\nAnd expect to end the year with significant order momentum and a healthy backlog to carry into 2022.\nWith that, I'll pass it over to Chuck, who will take you through some additional details on our margins, free cash flow and balance sheet.\nWe delivered another quarter of strong margin performance in Q3, using FBS tools to deliver strong pricing and successful value engineering to implement component substitutions across a variety of hardware businesses.\nThis FBS execution and the continued strength of our software businesses helped deliver adjusted gross margins of 57.3%, in Q3.\nThis reflects 90 basis points of expansion on a year-over-year basis, as we accelerated to 220 basis points of total price realization.\nQ3 adjusted operating profit was 22.8%, reflecting solid execution across the portfolio, including counter measures enacted in the face of ongoing supply chain challenges.\nWe had strong margin performance across all of our segments, resulting in 325 basis points of core operating margin expansion.\nOn slide nine, you can see that in the third quarter, we generated $252 million of free cash flow, representing a 105% conversion of adjusted net income.\nFree cash flow over the trailing 12 months increased 22% to $991 million.\nOur current net leverage is approximately 1.6 times and we expect net leverage to be around 1.3 times at year-end, excluding any additional M&A.\nTurning now to the guide on slide 10, we are raising the low end of our full year 2021 adjusted diluted net earnings per share guidance to $2.70, resulting in a range of $2.70 to $2.75 for the year.\nThis represents a year-over-year growth of 29% to 32% on a continuing operation basis.\nThis assumes that total revenue growth of 14% to 14.5%, adjusted operating profit margins of 23% to 23.5%.\nAnd an effective tax rate of approximately 14%.\nWe continue to expect free cash flow conversion to be approximately 105% of adjusted net income for the full year.\nWe are also initiating fourth quarter adjusted diluted net earnings per share guidance of $0.74 to $0.79, representing year-over-year growth of 6% to 13%.\nThis assumes total revenue growth of 6.5% to 8.5%, adjusted operating profit margin of 23.5% to 24.5% and an effective tax rate of approximately 15%.\nThe adjusted diluted net earnings per share guidance also excludes, approximately $12 million of anticipated investments in strategic productivity initiatives that we expect to execute before the end of the year.\nFor the fourth quarter, we expect free cash flow conversion to be approximately 125% of adjusted net income.\nWith that, I'll pass it back to Jim for some closing.\nWe're very pleased with our performance in Q3.\nWe worked diligently to countermeasure supply chain challenges, that persisted throughout the quarter and which we expect to continue into 2022.\nOur teams are doing an excellent job, deploying FBS to navigate those headwinds, while also delivering strong margin performance and free cash flow generation.\nLooking across our end markets, the demand backdrop we're seeing is very strong with significant momentum in our order flow, driving continued growth in our backlog and double-digit growth across our software businesses.\nWhile continuing our focus on execution, we're investing in innovation, expanding our base of leadership talent and pursuing additional capital deployment opportunities, as we look to enhance our competitive advantage and pave the way for consistent double-digit earnings and free cash flow growth in the years to come.\nThat concludes our formal comments.\n",
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"content": "sees fy adjusted earnings per share $2.70 to $2.75 from continuing operations.\nsees q4 adjusted earnings per share $0.74 to $0.79 from continuing operations.\nq3 revenue rose 12 percent to $1.3 billion.\nqtrly adjusted earnings per share from continuing operations $0.66.\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: Information required by SEC Regulation G relating to these non-GAAP financial measures are available on the Investors section of our website, www.\nfortive.com under the heading Investors, Quarterly Results.\nWe completed the divestiture of the Automation and Specialty Business on October 1st, 2018 and accordingly have included the results of the A&S business as discontinued operations for historical periods.\nWe completed the separation of our prior Industrial Technologies segment through the spin-off of Vontier Corporation on October 9, 2020 and have accordingly included the results of the Industrial Technologies segment as discontinued operations.\nAll references to period-to-period increases or decreases and financial metrics are year-over-year on a continuing operations basis.\nToday, we are pleased to announce our fourth quarter 2020 results, which reflect a strong finish to the year.\nFor the quarter, we delivered adjusted diluted net earnings per share of $0.70, an increase of 19% year-over-year as well as total revenue growth of 4.9%, which exceeded the high-end of our guidance and included a return to positive core growth.\nThe quarter underlie the increased resilience of our portfolio and represented a continuation of the sequential improvement in top-line performance that we have seen since late in Q2.\nDespite the continued challenges associated with the COVID-19 pandemic, our disciplined application of the Fortive Business System help drive more than 100 basis points of core operating margin expansion and a 39% increase in free cash flow.\nThe better topline performance in Q4 reflected a combination of durability across the recurring revenue portions of our portfolio and clear improvement at Fluke and Tektronix.\nThe strength of our recurring revenue, which now accounts for approximately 39% of our total revenue provided an important source of stability throughout 2020.\nIn Q4, this is most notable among our SaaS offerings, which generated low-teens growth.\nThe application of FBS customer success tools also continue to deliver improvements in net revenue retention, which climbed greater than 101% for the full year.\nOur SaaS performance helped to offset the challenges the software businesses are having with customer site access for the provision of services as well as extended timelines for contract renewals.\nThe fourth quarter also saw Fluke and Tektronix return to positive growth.\nBoth have seen steady improvement since the middle of Q2 driven by better point of sale trends across major geographies and continued successful new product launches.\nOn January 19th, we disposed-off our remaining 19.9% ownership stake in Vontier through a tax efficient Debt-for-Equity Exchange.\nThis transaction represents the final step in the Vontier separation.\nWith the combination of the Vontier spin proceeds, the Debt-for-Equity Exchange and our continued strong free cash flow, we have reduced our net debt by approximately $3 billion since the beginning of Q4 with a net leverage ratio currently at approximately 1.3 times, we have significant capacity to pursue key capital allocation priorities.\nWith that, let's turn to the details of the quarter on slide four.\nAdjusted net earnings were $252.9 million, up 19.3% from the prior year and adjusted diluted net earnings per share was $0.70.\nTotal sales increased 4.9% to $1.3 billion with core revenue up 0.7%, reflecting continued sequential improvement from the prior quarter.\nAcquisitions contributed 260 basis points of growth and favorable foreign exchange rates increased growth by 160 basis points.\nWe are particularly pleased to deliver adjusted gross margins of 58.5%, representing a new high for Fortive, which highlights the significant portfolio transformation accomplished over the last few years.\nGross margins also benefited from our ongoing investment in innovation, continued application of FBS growth tools and another quarter of strong pricing.\nAdjusted operating profit margin was 23.2% for the quarter.\nThis reflected 130 basis points of core margin, operating margin expansion, including positive core OMX for each of the segments.\nThis was the second consecutive quarter with greater than 100 basis points of core OMX.\nThe Q4 margin performance also contributed to 50 basis points of positive core OMX for the full year 2020.\nDuring the fourth quarter, we generated $313 million of free cash flow, representing conversion of 124% of adjusted net earnings and an increase of 39% year-over-year.\nIncluding this fourth quarter contribution, our full-year 2020 free cash flow was $902 million, representing conversion of 120% of adjusted net earnings and an increase of 44% year-over-year.\nOur 2020 free cash flow performance in particular showed the resilience of our portfolio and the power of the Fortive Business System to drive consistent, strong increases in free cash flow.\nIn Asia, core revenue increased by low single digits, highlighted by high single-digit growth in China and mid single-digit growth in India.\nContinued strength in China was broad-based, led by mid 20% growth at Sensing, mid-teens growth at Fluke, and high-teens growth at Advanced Sterilization Products.\nThe strength in China and India was offset by declines in most of the rest of Asia.\nWestern Europe core revenue increased by high single digits in the fourth quarter with high-teens growth at Fluke Health Solutions, high single-digit growth in Tektronix, and mid-single digit growth in ASP.\nNorth America core revenue was down slightly in the fourth quarter, as low teens growth at Tektronix and high-single digit growth at Censis was primarily offset by declines at ASP and Industrial Scientific.\nFluke improved to flat core growth in North America, driven by strong performance at Fluke Calibration and a return to growth at Fluke Industrial.\nTurning to our segments.\nIntelligent Operating Solutions posted a total revenue increase of 3.2% despite a 0.3% decline in core revenue.\nAcquisitions increased growth by 170 basis points while favorable foreign exchange rates increased growth by 180 basis points.\nCore operating margin increased 280 basis points.\nThis price realization, improved mix and higher volumes of Fluke resulted in segment level adjusted operating margin of 28.7%.\nFluke's core revenue returned to positive growth in the fourth quarter, increasing by low single-digits.\nFluke saw another quarter of strong growth in China, which increased by mid-teens in addition to seeing continued improvements in North America and Western Europe, which were flat and down low-single digits, respectively.\nPoint of sale showed improvement with North America still negative, but better sequentially, western Europe turning positive and China continuing at positive high single-digit rate.\nFluke saw a strong performance in Fluke Calibration and Fluke Digital as well as solid growth in Fluke Industrial.\nFluke Digital was led by another strong quarter from eMaint, including low double digit SaaS growth.\nFluke continued to see momentum from recent product launches including its ii900 Sonic Imager, which was launched in November.\nIndustrial Scientific core revenue declined by mid single digits in the fourth quarter.\niNet continued to see good growth, which is more than offset by continued oil and gas related pressure at ISC's instrumentation and rental businesses.\nSeparately, Intelex continued to perform well with revenues increasing by low double digits.\nThe fourth quarter also represented a record bookings quarter for Intelex, which has seen strong traction in its expansion into Western Europe.\nIntelex is benefiting from the implementation of FBS, which contributed to the successful rollout of enhanced sales funnel management and digital marketing lead generation tools.\nIn November, Intelex also completed the acquisition of ehsAI, a leading provider of artificial intelligence and machine learning for the automation of permitting and regulatory compliance management.\nThe addition of ehsAI significantly enhances Intelex ability to deliver applied intelligence and advanced analytics to a broad range of customers.\nAt Accruent, we also saw significant sequential improvement, driven primarily by strong growth in its SaaS offerings.\nWhile Accruent declined by low single digits for the quarter, its SaaS business increased by mid-teens.\nAccruent also continued to apply FBS to drive improvement and churn in the quarter, bringing net retention for the year to greater than 100%.\nDespite some continued pressure from customer site access issues, Accruent has seen good bookings for its Meridian Engineering and Information Management offering, as we partner with customers on their digital transformations and highly regulated markets such as life science and pharma.\nWe also continue to bring new offerings to market to address return to work requirements, including a recent win for Accruent's EMS space management software product for Cushman & Wakefield.\nGordian declined by high single digits due to headwinds associated with budget challenges and uncertainty across state and local government and higher education customers as well as continued site access issues.\nGordian's RSMeans business grew low single digits, driven by mid-teens growth for its SaaS offering, supported by the successful implementation of virtual platforms for training and onboarding.\nGordian also saw signs of improvement in project activity in its job order contracting business toward the end of the quarter.\nTurning to our Precision Technologies segment, we posted a total revenue increase of 2.3% with a 0.17% increase in core revenue.\nFavorable foreign exchange rates increased growth by 160 basis points.\nCore operating margin increased 30 basis points, resulting in segment level adjusted operating margin of 22.2%.\nTektronix delivered mid single-digit core growth in the quarter with low-teens growth in North America and high single-digit growth in Western Europe.\nTektronix continued to benefit from better point of sale trends in both regions with significant improvement from Q3.\nChina saw a low-single digit decline due primarily to the negative impact of the expansion of trade restrictions, partially offset by good year-over-year point of sale growth and momentum from small and medium enterprise customers.\nLooking across the product lines, the improved topline performance in Q4 was driven by low double-digit growth in both Keithley and the mainstream mixed signal oscilloscope platforms.\nGrowth in mainstream oscilloscopes continues to be led by the 6 Series line of scopes, which has seen strong demand for the new 6 and 8-channel versions since they were introduced in Q3.\nSensing Technologies declined low single digits in the fourth quarter.\nSensing performed well in China with mid 20% growth, driven by gains and critical environment applications etc and increased OEM demand for Hengstler, Dynapar's factory automation offerings.\nNorth America revenue increased slightly while Western Europe declined low single digits with both regions showing clear sequential improvement.\nSensing's improved topline performance was primarily due to continued strength in medical and semiconductor end markets.\nSetra has recently launched AIIR Watch Negative Pressure machine for isolation room applications has performed well, generating strong initial orders since its launch early in the quarter with orders from a range of customers across medical offices, long-term care facilities, and schools.\nPacSci EMC declined low single digits, as it continued to face COVID-19 related pressures across certain elements of its supply chain.\nThe company did see sequential -- clear sequential topline improvement versus the third quarter as well as another quarter of strong bookings.\nEMC enter 2021 in a strong backlog position, as its leading technology and innovation capability continue to drive strong demand.\nMoving to Advanced Healthcare Solutions.\nTotal revenue increased 12% with a 2.6% increase in core revenue.\nAcquisitions added 830 basis points to growth while favorable foreign exchange rates increased growth by 110 basis points.\nCore operating margin increased 50 basis points resulting in segment level adjusted operating margin of 24.1%, up significantly versus Q3 and driven by strong margin lift at ASP, as we continue to exit the transition service agreements.\nASP declined mid single digits, as pandemic related pressure on elective procedure volumes remained a headwind.\nElective procedure volumes averaged approximately 93% of pre-COVID levels across the company's major markets, but were lower than anticipated and did not see slowing -- and did see slowing toward the end of the quarter.\nASP continued to perform well in Western Europe with mid single-digit growth in addition to high-teens growth in China.\nIn the US, ASP declined low single digits, as growth in capital placements from improved sales execution and funnel management partially offset the weakness in consumables revenue.\nASP service business continues to perform well with the ongoing deployment deployment of FBS tools helping to drive service sales and optimize service delivery processes.\nWith additional day to closings in Q4 in early 2021, approximately 99% of ASP's global revenue is now fully under our control and off of transition service agreements.\nCensis grew by high single digits in the quarter.\nSite access at hospitals improved early in the quarter, only to then reverse as the quarter progressed.\nCensis' topline performance was led by its SaaS-based CensiTrac offering, which grew low double digits, driven by a combination of new customer acquisitions and successful upselling of its existing customers.\nThis growth was partially offset by high single-digit decline in professional services revenue tied directly to the ongoing challenges with customer site access.\nFluke Health Solutions generated mid single-digits growth in Q4.\nFHS grew slightly in North America against a challenging comparison.\nThis growth was led by strong performance across both Fluke BioMed and the Landauer radiation monitoring business.\nFHS continues to see good initial momentum across the two software platforms introduced over the past 12 months.\nOneQA, which enhances workflow efficiency and test automation for biomedical customers and Optimize [Phonetic], which provides tracking and optimization of radiation dose management for Radiology Departments.\nBoth platforms reflect FHS' focus on bringing forward software and AI enabled revenue models to build on its strong and existing recurring revenue base.\nInvetech had another strong quarter with greater than 50% growth.\nThe company saw a significant sales and order momentum throughout the year, including a strong finish in December.\nThis growth was led by Invetech's design and engineering offering, which more than doubled on a year-over-year basis in Q4.\nThe company saw a strong growth in the diagnostics market, driven by near-term projects to develop rapid testing capabilities for COVID-19 as well as strong demand from the cell therapy market tied to the production for next generation therapeutics.\nOn slide 11, we highlighted the progress made in 2020 with respect to our corporate social responsibility efforts, which is one of our key strategic initiatives.\nThroughout the year, we enhanced the rigor and integrity of our data collection by transitioning our EHS, sustainability and risk assessment processes to the Intelex platform.\nOur enhanced data analytics improve insights to accelerate our sustainability efforts and give greater transparency to key stakeholders.\nTo support inclusion and diversity, our Employee and Friends Resource Groups focused on improving employee connections across the organization while utilizing FBS to enhance their impact.\nWe also expanded our commitment to the CEO in Action Pledge by participating in the 2021 Racial Equity Fellowship, aimed at promoting corporate best practices to address systemic racism and social injustice.\nWe are using FBS tools to develop standard work for greenhouse gas accounting and reporting and scaling energy kaizen efforts more broadly across the portfolio.\nThis has resulted in making substantial progress toward our greenhouse gas reduction goals, which we expect to achieve ahead of schedule.\nFinally, Fortive employees around the world continue to support our local communities through our efforts in our annual Day of Caring with over 35,000 hours of service in 60 worldwide communities.\nWe are living our values to achieve our CSR goals and we're excited to continue driving progress in the years ahead.\nTurning to guidance on slide 12.\nWe're instituting formal earnings guidance for the full year and the first quarter of 2021.\nFor the full year, we expect adjusted diluted net earnings per share to be $2.40 to $2.55, representing year-over-year growth of 15% to 22% on a continuing operations basis.\nThe annual guidance assumes core revenue growth of 4% to 7% and an adjusted operating profit margin of 22% to 23% and an effective tax rate of approximately 14%.\nWe also expect free cash conversion to be approximately 105% of adjusted net income.\nWe are also initiating our first quarter adjusted diluted net earnings per share guidance of $0.56 to $0.60, representing year-over-year growth of 22% to 30%.\nThis includes assumptions of 5% to 8% core revenue growth and adjusted operating profit margin of 21.5% to 22.5% and an effective tax rate of 14%.\nWe also expect free cash conversion to be approximately 75% of adjusted net income.\nI'm tremendously proud of how our teams rose to meet the many challenges posed by the COVID-19 pandemic, with a focus on keeping our employees safe, helping frontline workers combat the virus and continuing to provide our customers with our essential technologies.\nDespite these challenges, we made substantial progress across a range of strategic imperatives over the course of the year.\nThe focus and dedication of our team around the world enabled us to significantly transform the portfolio while transitioning to a work-from-home environment and ensuring continued execution across the portfolio to deliver strong margin performance and consistent free cash flow growth.\nAs a result of that hard work and a significant progress it enabled, we're in a strong position as we turn our focus to 2021, while navigating some of the continued challenges in the near term.\nWith a portfolio comprised of leading businesses that are well positioned in attractive markets, considerable opportunity to accelerate our growth through continued investments in organic innovation and acquisitions and the support of a strong culture rooted in the Fortive Business System, we're very excited about the road ahead.\nThat concludes our formal comments.\n",
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"content": "q4 revenue $1.3 billion versus refinitiv ibes estimate of $1.29 billion.\nsees fy 2021 adjusted earnings per share $2.40 to $2.55 from continuing operations.\nsees q1 adjusted earnings per share $0.56 to $0.60 from continuing operations.\nqtrly adjusted diluted net earnings per share from continuing operations were $0.70.\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 speakers are Jim Owens, H.B. Fuller President and Chief Executive Officer; and John Corkrean, Executive Vice President and Chief Financial Officer.\nFirst, a reminder that our comments today will include references to organic revenue, which excludes the impact of foreign currency translation on our revenues.\nWe believe that discussion of these measures is useful to investors to assist their understanding of our operating performance and how our results compare with other companies.\nUnless otherwise specified, discussion of sales and revenue refers to organic revenues and discussion of EPS, margins or EBITDA refers to adjusted non-GAAP measures.\nMany of these risks and uncertainties are and will be exacerbated by COVID-19 and resulting deterioration of the global business and economic environment.\nLast evening, we reported first quarter results, which built upon the momentum we saw in Q4 of last year.\nOrganic revenues this quarter were up 10.5%, adjusted EBITDA was up 30% and adjusted earnings per share of $0.66 was nearly doubled last year's first quarter.\nThe H.B. Fuller team gained share and reduced operating expense in each of our businesses in 2020, which created the momentum that is delivering exceptional financial performance to begin fiscal 2021.\nMarket innovation and exceptional service led to the share gains as H.B. Fuller solved customer problems faster than competition and growth accelerated as demand continued to strengthen in the first quarter.\nAs we reported last March, COVID-19 impacted our fiscal Q1 of 2020 only in China and by about $15 million in revenue, $4.5 million in EBITDA and $0.06 of EPS.\nExcluding this impact, our revenues were up 8% organically, EBITDA was up 23% and earnings per share was up 65%, exceptional results.\nH.B. Fuller works with our customers to solve their toughest adhesive problems.\nIn today's remote work environment, this means collaborating in new ways and delivering market-driven innovation faster than ever.\nFor example, we proactively developed and qualified new engineering adhesives for mobile devices, automotive, electronics, electronic vehicle batteries and solar panels to name just a few.\nThese innovations helped drive one of our strongest quarters for engineering adhesive sales growth.\nWe created technology and branding opportunities with the new line of GorillaPro MRO adhesives and there will be more H.B. Fuller marketing innovation in the year ahead.\nWe work with Hygiene, Health and Consumable customers to develop innovative applications and to ensure supply to meet high demand for their products.\nAs a result, we substantially grew our sales across the majority of our HHC end markets in the first quarter.\nH.B. Fuller's revenue growth was also broad based geographically in the quarter with organic growth in all three of our geographic regions.\nImportantly, our growth came with positive incremental margins driven by product mix, reduced expenses and structural efficiencies resulting from our business realignment last year.\nEBITDA margin increased 190 basis points year-on-year.\nRaw material cost increased from where we exited 2020, but we're still relatively neutral on a year-over-year basis in the first quarter and in line with our expectations.\nRaw material cost going forward will increase at a faster rate than originally anticipated due to increased demand, reduced inventories and supply constraint.\nWinter storm Uri in the Gulf Coast in February has created additional tightening in the United States and is impacting global supply.\nSupply has become tight for commodity materials, which make up a smaller portion of our portfolio.\nAs the year progresses, this will also have an impact on the supply and pricing of the specialty materials, which make up the majority of our purchases.\nMost suppliers have made good progress in recovering from Uri.\nHowever, the rate of recovery going forward will mostly depend on the output rates of the impacted assets and the time it takes for supply chains and inventory levels to fully recover.\nWe have done a very good job of serving customers thus far by working closely to manage inventories and available materials.\nOur contracted positions with our suppliers, backward integration of key polymers and global breadth have helped us manage the supply crisis thus far.\nThe breadth of our adhesive chemistry and the diversity of our raw materials has meant that no single material has had a large impact on us and has enabled us to help customers find alternatives when short supply exists.\nThe near-term disruptions we are navigating in the US are considerable, but they are temporary and supply is expected to normalize to a more balanced level in the coming months.\nOur planning assumptions anticipate that the risk of supply disruption will lessen as we exit the second quarter and we do not anticipate that it will have a material impact on our ability to meet demand.\nHowever, we now expect year-on-year raw material inflation to be in the range of 5% to 8%.\nH.B. Fuller has done a remarkable job in supporting customers through supply shortages and we also have implemented over $100 million in annualized price adjustments that are effective in Q2 and will enable us to continue to seamlessly serve our customers.\nSome of these were effective on February 15, with most effective March 15 and April 1.\nWe are preparing for further price adjustments, if needed in Q3.\nThese price adjustments will fully offset the impact of raw material increases.\nNow let me move on to discuss performance in each of our segments in the first quarter on Slide 4.\nHygiene, Health and Consumable Adhesives' first quarter organic sales increased 7.6% year-over-year, continuing the strong performance trend in this business unit in 2020.\nSales increased versus last year across the majority of our HHC markets with strong growth in Packaging, Tissue & Towel and Tape & Label and good growth in hygiene in particular.\nHHC segment EBITDA margin was strong at 13.3%, up 180 basis points, margin improved versus last year, reflecting volume leverage, restructuring benefits and good expense management.\nConstruction Adhesives' organic revenue was down 10% versus last year as winter storm Uri, extreme weather and material supply issues across much of the United States impacted construction activity as we started the year.\nConstruction Adhesives' EBITDA margin declined versus last year reflecting these issues.\nUnderlying operational improvements from the GBU restructuring were offset by lower volume and the impact of severe weather.\nUri temporarily disrupted operations at our construction adhesive facilities in Texas in February.\nBoth plants have now been fully up and running since early March.\nAside from these near-term impacts, demand for Construction Adhesives continues to be strong for residential builds and remodeling.\nDemand has also begun to improve on the commercial roofing side.\nWe are planning for both top-line performance and margins to improve significantly over the rest of the year.\nEngineering Adhesive results were extremely strong with organic revenue up 21% versus last year, reflecting share gains and improving end market demand.\nSales increased versus last year across the majority of our EA markets with the strongest growth in electronics and new energy.\nWe expect continued strength and double-digit full year growth in this segment.\nEngineering Adhesives' EBITDA margins were strong at 15.4%, up 300 basis points compared with Q1 last year, reflecting strong volume leverage and good expense management.\nLooking ahead at our full year results, our planning assumptions are that COVID-related shutdown impacts will remain but continue to decrease as vaccines are rolled out around the world.\nWe anticipate that many raw materials will be tied through the summer as supply chains normalize and demand continues to be strong.\nWe anticipate continued improvement in underlying demand in each of our business units, driving volume growth in 2021 versus 2020.\nGrowth in some end markets such as commercial construction and aerospace will improve at a slower pace and may not return to 2019 levels of activity this year.\nWhile Engineering Adhesives demand is expected to moderate from first quarter levels, which reflect some pent-up demand, we expect end market demand will likely be strong for the entire year.\nOverall, when considering our strategic pricing actions, coupled with the solid volume growth in HHC, improved performance in Construction Adhesives and strong demand in Engineering Adhesives, we now expect full year revenue growth of high single digits to low double-digits versus 2020.\nI'll begin on Slide 5 with some additional financial details on the first quarter.\nNet revenue was up 12.3% versus same period last year.\nCurrency had a positive impact of 1.8%.\nAdjusting for currency, organic revenue was up 10.5% with volume accounting for all of the growth.\nPricing had a neutral impact year-on-year in the quarter.\nYear-on-year adjusted gross profit margin was 26.7%, up 20 basis points versus last year, driven by the higher volume.\nAdjusted selling, general and administrative expense was up 2.9% versus last year.\nSG&A was down 170 basis points as a percentage of revenue, reflecting savings associated with our business reorganization, lower travel expense, general cost controls, offset by higher variable comp than last year.\nNet other income increased by $3 million versus last year, driven primarily by increased income on pension assets.\nNet interest expense declined by $2 million, reflecting lower debt balances.\nThe adjusted effective income tax rate in the quarter was 27.5%, up 180 basis points versus the adjusted tax rate in the first quarter last year, driven primarily by mix of income and tax related to the global cash strategies.\nAdjusted EBITDA for the quarter of $101 million is 30% higher than the same period last year, driven by strong top-line growth, particularly in Engineering Adhesives, restructuring savings and good cost management, partially offset by higher variable compensation.\nAdjusted earnings per share was $0.66, up 94% versus the first quarter of last year, reflecting strong operating income growth and lower interest expense associated with our debt reduction.\nCash flow from operations in the quarter of $36 million was up from last year, reflecting strong income growth, partly offset by higher working capital requirements to support the strong top-line performance.\nWe continue to reduce debt paying down $16 million in the quarter compared to $6 million during the same period last year.\nRegarding our outlook, based on what we know today and the planning assumptions that Jim laid out earlier, we anticipate revenue to be up high single-digits to low double-digits versus 2020 and EBITDA to be between $455 million and $475 million as continued strong volume growth and pricing actions offset higher raw material costs.\nWe expect cash flow to be strong for the rest of the year, allowing us to maintain our target to pay down approximately $200 million of debt during 2021.\nWe were very pleased with our strong start in the first quarter, which follows a strong fourth quarter, both of which greatly outperformed predominantly non-COVID quarters from the prior year.\nWe are growing through our strategy of delivering sustainable innovation and high value solutions and we are in a great position to continue to grow our business as global economies continue to open up in 2021.\nThis year, we will focus on three critical priorities to profitably grow our business in a dynamic environment.\nOur top priority is to drive continued volume growth as we support our customers success in the current high demand and supply constrained environment.\nThis means continued growth through innovation, leverage of remote servicing tools as a new standard and finding creative ways to address any raw material shortages we see in the coming months.\nOur second imperative is to strategically manage pricing aligned to the value we deliver in this inflationary environment.\nOur company has built pricing tools and in-depth training in anticipation of the day when material inflation returned.\nAnd we are already executing with speed and precision to maintain and grow our business while pricing to value.\nOur third priority, to help fuel our growth will be to release productive capacity through our operational excellence programs.\nOur 2020 operations investment was centered on creating the operational discipline and metrics that enable more productivity per employee work hour.\nIn a low capital-intensive business like ours, this helps to reduce cost and increase capacity.\nWe will also deliver an additional $200 million of debt reduction in 2021, moving the company closer to our net debt target of 2 to 3 times EBITDA.\nOn our conference call a year ago in March of 2020, I told you that because of our extraordinary collaboration with customers, a robust global operations and supply chain and our unmatched expertise and adhesive innovation, I was confident that H.B. Fuller which strengthened its position in this industry, setting ourselves apart from competition and enabling us to grow as global economies recover.\nI was confident that we would emerge as an even stronger company than prior to the pandemic.\nOur stronger performance throughout 2020 and our exceptional results in the first quarter are proof that my confidence was well founded.\nThis company is built on an agile business model where people collaborate remotely with each other, with customers and with suppliers around the globe.\nIn a changing world, these attributes of agility, collaboration and flexibility have enabled H.B. Fuller to excel.\nAs working conditions changed, supply and demand fluctuated and as supply constraints emerged, the H.B. Fuller team has been first and fastest among adhesive companies at addressing challenges.\nGrowing the business this year in a period of economic recovery presents exciting opportunities and unique challenges.\nIn 2021, our business priorities are squarely focused on capturing share and managing inflation risks as we continue to build on our rising leadership position in the global adhesives industry.\nOur culture of collaboration and innovation and our improving operational execution gives me confidence that we are strongly positioned to continue to deliver sustained value for our shareholders in 2021 and in the years ahead.\nOperator, please open up the call so we can take some questions.\n",
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"content": "compname posts q1 adjusted earnings per share $0.66.\nq1 adjusted earnings per share $0.66.\nraises its full year guidance on stronger outlook for revenue and ebitda growth.\nanticipates high-single digit to low double-digit revenue growth, and adjusted ebitda in range of $455 million to $475 million for fiscal 2021.\nsees full year raw material costs to increase 5% to 8% versus 2020.\nexpects to pay down additional $200 million of debt in 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: Fuller president and chief executive officer; and John Corkrean, executive vice president and chief financial officer.\nFirst, a reminder that our comments today will include references to organic revenue, which excludes the impact of foreign currency translation on our revenues.\nWe believe that discussion of these measures is useful to investors to assist the understanding of our operating performance and how our results compare with other companies.\nUnless otherwise specified, discussion of sales and revenue refers to organic revenues; and discussion of EPS, margins or EBITDA, refers to adjusted non-GAAP measures.\nMany of these risks and uncertainties are and will be exacerbated by COVID-19 and resulting deterioration of the global business and economic environment.\nLast evening, H.B. Fuller reported strong fourth quarter results, including 15% year-over-year revenue growth, a $134 million of EBITDA at the high end of our guidance and $1.09 of adjusted EPS.\nOrganic revenue was up 15% versus 2020 and increased 20% compared with the pre-COVID fourth quarter of 2019.\nWe had double-digit organic revenue growth in all three segments as a result of our innovation efforts, pricing strategies and service levels.\nWe also saw significant margin recovery with gross margin up 340 basis points versus the third quarter as a result of decisive pricing actions taken during the year.\nAnd we continue to pay down debt in the quarter to substantially reduce our debt-to-EBITDA ratio to 3.3 times from 4.1 times a year ago.\nWe delivered on our commitments in the quarter as we have all year, despite a rise in virtually every cost associated with serving our customers and unprecedented supply chain challenges.\nOur global team of 6,500 employees again demonstrated outstanding operational execution in this environment.\nAt the beginning of 2021, we set three operating priorities: volume growth, pricing to value and improved productivity and operational capacity.\nWe delivered on all three of these priorities throughout the year.\nVolumes are up, productivity has improved.\nAnd in the fourth quarter, we saw significant benefits from our strategic pricing actions.\nWe took swift actions early and throughout the year, as persistent inflation impacted our raw materials.\nAnd in the fourth quarter, our pricing actions enabled us to catch up with material inflation and restore our margins.\nIn 2021, we implemented over $450 million of annualized price adjustments overcoming the annualized value of raw material cost inflation.\nWhile inflation and supply chain management have been important drivers of the results this year, it's the overall strategy, the culture and the organizational capability that we've built that is enabling the company's success.\nOur strategy is to deliver innovative adhesive solutions to customers faster than our competition, to collaborate effectively within our technical teams and with our global suppliers, to solve challenges and serve customers first and fastest.\nAnd to do that while consistently demonstrating H.B. Fuller's values and principles as a great place to work.\nIt is this culture and strategy that is enabling our success.\nOur ability to execute today is a result of the organization we've built and designed over the last several years.\nIn 2019, we reorganized into three global business units centered on 30 end markets, each focused on the needs of customers within that segment.\nWe invested in our supply chain and manufacturing systems to promote flexibility, and we streamlined the organization, better aligning all employees with our strategic objectives.\nBecause of these actions, our agility, speed to market and operational efficiency have increased, enabled us to successfully navigate widespread inflationary pressures, shipping disruptions, raw material shortages and numerous COVID-related impacts.\nShortages still persist for many, especially chemical raw materials, for plastic and metal packaging and shipping containers, but we continue to effectively leverage our global footprint and our sourcing capabilities to deliver for our customers.\nMost importantly, we continue to capture new opportunities and gain share across end markets by delivering innovative adhesive solutions to meet new consumer needs and greater demand for sustainable goods.\nFuller roofing adhesives led the way to a 29% increase in this segment sales over the fourth quarter last year as we help customers deal with labor shortages.\nOur innovative sprayable bonding roofing solutions increases installation speed with more efficiency and is approved for use in all VOC regulated markets.\nOur new level-setting products, ready-to-use grouts, mortars and pressure-sensitive adhesive products enable new flooring to be installed more quickly and more reliably.\nIn 2021, we won significant new business in engineering adhesives with our solutions in support of sustainable markets, including electric vehicles, energy-efficient insulated glass, automotive electronics and solar panels.\nAnd in hygiene, health and consumable adhesives, we are delivering innovation to meet increasing demand for more efficient and environmentally friendly packaging.\nIn 2021, we launched new adhesives that decompose with no residue or microplastics, while at the same time, managing demand spikes, supply chain delays and raw material shortages to deliver record levels of adhesives for our customers.\nNow let me move on to Slide 4 to discuss fourth quarter segment performance in a little more detail.\nStrong performance continued in our hygiene, health and consumables segment, where organic revenues increased by 13% year over year with double-digit growth in most of our end markets and very strong results in packaging applications, tapes and labels, tissue and towel and health and beauty.\nHHC organic revenues also increased 18% versus the pre-coated fourth quarter of 2019, demonstrating strong underlying consumer demand and share gains.\nHHC segment EBITDA margin of 13.6% reflected the absorption of significantly higher raw material costs, as well as increased variable compensation compared with last year, offset by strong pricing.\nEBITDA margin was up 160 basis points sequentially versus the third quarter, as strong pricing gains are driving higher margins as we exit the year.\nConstruction adhesives had an extremely strong quarter, with organic revenues up over 29% versus the prior year and up 31% compared with Q4 of 2019.\nYear-over-year performance improvements in all three construction end markets were driven by volume growth associated with improving market conditions and share gains, as well as outstanding pricing execution.\nConstruction adhesives EBITDA margin of 16.3% increased significantly year over year, up by 390 basis points.\nCA's EBITDA margin also improved by 390 basis points over the third quarter of this year, driven by volume leverage and pricing gains.\nThe construction adhesives team drove extensive operational improvements in 2021.\nThey have met strong demand in an extremely challenging environment and the business is positioned with strong momentum as we enter 2022.\nEngineering adhesives delivered another strong quarter of results.\nOrganic revenue increased 13% year on year, led by strong double-digit growth in new energy, recreational vehicles, insulated glass, woodworking, technical textiles and footwear.\nEngineering adhesives EBITDA margin remained strong at over 15% and up slightly versus Q3 on strong pricing execution, offset by higher raw material costs and higher variable compensation expense.\nLooking ahead to 2022, we will pursue continued growth opportunities and share gains in a business environment where we believe that underlying demand remains strong and that cost inflation will persist.\nWe anticipate the continued solid demand for hygiene and health products, packaging, paper tissues and towels will continue into 2022.\nAnd we anticipate construction adhesives end markets will show strong improvements for the first half of 2022, with commercial activity improving throughout the year and residential activity remaining solid.\nAnd we believe that engineering adhesives end market demand will also remain strong given a backlog of consumer demand for electronics, vehicles and durable goods.\nIn total, our base case planning assumptions are for organic growth in the low-teens, driven by pricing and modest volume growth.\nOur current outlook is for raw material costs to continue to increase in 2022 versus the fourth quarter 2021 exit rate.\nThe inflation we're seeing in Q1 is sizable, though less than the fourth quarter of 2021.\nWe expect the raw material increases to be broad-based across the businesses and relatively consistent by region, with Asia showing less inflation to start the year at EMEA and the Americas.\nWe will continue to price the value and will remain vigilant regarding raw material inflation.\nWe have over $100 million in pricing actions taking effect in Q1, and we will take whatever pricing actions are necessary in 2022 to fully offset raw material cost increases and enable us to restore margins.\nAgainst a challenging economic backdrop, our performance in 2020 and in 2021 demonstrated that our business is diverse and resilient, our operations are nimble and we are executing our strategy well.\nAnd we expect to continue to outperform our end markets again in 2022 as we face the challenges ahead.\nI'll begin on Slide 5 with some additional financial details on the fourth quarter.\nFor the quarter, revenue was up 15.4% versus the same period last year.\nCurrency had a positive impact of 0.5%.\nAdjusting for currency, organic revenue was up 14.9%, with volume up 1.4% and pricing having a favorable impact of 13.5% year on year in the quarter.\nAdjusted gross profit margin was 27.1%, down 40 basis points versus last year as pricing more than offset raw material increases from a dollar standpoint in the quarter, but not from a margin standpoint.\nHowever, gross profit margin was up 340 basis points versus the third quarter of this year, driven by pricing execution.\nAdjusted selling, general and administrative expense was up year on year, reflecting higher travel and other investments to support growth, as well as higher variable compensation related to the company's strong fiscal 2021 performance.\nFor the full year, adjusted SG&A as a percentage of revenue was 17.2%, down by 130 basis points versus 2020.\nAdjusted EBITDA for the quarter of $134 million was up 9% versus last year and at the high end of our planning assumptions for the quarter, reflecting strong top-line performance, driven by good pricing execution and construction adhesives market share gains.\nAdjusted earnings per share were $1.09, up versus the fourth quarter of 2020, despite a higher tax rate in Q4 2021, which drove a negative year-on-year impact of about $0.10 per share.\nOur results for the full fiscal year were also very strong.\nFull year organic revenues grew 15% versus fiscal 2020.\nAdjusted EBITDA increased by 15% year on year, and adjusted earnings per share was up 22%.\nFor the year, cash flow from operations continued to be strong, while absorbing higher working capital requirements to support the significant sales growth and higher raw material costs throughout 2021.\nAnd we continued to reduce debt in the quarter, paying off about $40 million of debt driving our net debt to EBITDA to 3.3 times as of the end of the year.\nWith that, let me now turn to our guidance for the 2022 fiscal year.\nBased on what we know today, we anticipate full year double-digit organic revenue growth in the range of 10% to 15%, and we estimate that currency will have a negative impact on revenue of about 2% to 3%.\nWe expect adjusted EBITDA to be between $515 million and $535 million, representing a 10% to 15% year-on-year increase, as pricing leverage and operational efficiencies more than offset higher raw material costs.\nWe expect our 2022 core tax rate to be between 27% and 29%, compared to our 2021 core tax rate of about 27%.\nWe expect full year interest expense to be between $65 million and $70 million and the average diluted share count to be about 55 million shares.\nThese assumptions would result in full year adjusted earnings per share in the range of $4 to $4.25.\nAll of this guidance reflects the fact that H.B. Fuller will have one additional reporting week in fiscal 2022 compared to 2021.\nWe estimate that the extra week will have a favorable impact on full year revenues of approximately 2% compared with full year 2021 and a favorable impact on full year EBITDA of approximately $8 million to $10 million versus 2021, all occurring in the fourth quarter.\nTaking the extra week into consideration, as well as the typical seasonality of the business, we expect to realize 20% to 21% of full year EBITDA dollars in the first quarter.\nAfter we reported strong fiscal 2020 results a year ago, I said that investors should continue to expect differentiated performance from H.B. Fuller.\nI can say confidently today that we have demonstrated this in 2021: significant volume growth, rigorous execution of our price-to-value strategy and greater productivity and operational capacity enabled us to deliver a record level of revenue, volume and profit performance in 2021.\nIn 2022, we are positioned to again deliver double-digit organic revenue growth and nearly 20% earnings per share growth as we build upon the momentum we created in the last couple of years.\n2020 Demonstrated the resiliency of our diversified portfolio of market-leading solutions in difficult end market conditions.\nWhile 2021 showcased our ability to grow faster than our competitors and seize growth opportunities through our agile customer-centered collaborative business model.\nFull year 2021 organic revenue increased by 15%, led by 10% volume growth and strong contributions from pricing.\nFull year EBITDA dollars also increased 15% as we mitigated bottom-line impacts from the extreme raw material inflation.\nOur momentum accelerated in the fourth quarter as margins expanded, which positions us well for another strong year in 2022.\nIn 2021, we also continued to increase the share of high-value adhesives in our portfolio.\nWe did this by pursuing and winning high-growth opportunities, including new wins in electric vehicles, sustainable buildings, compostable packaging, e-commerce packaging, solar panel sealants and new medical adhesives.\nThese wins exemplify the innovation that has driven the strategic repositioning of our portfolio over the last decade toward specialized, higher-margin adhesive solutions.\nIn 2010, we were a $1.3 billion company with a sizable portion of our sales in non-specified applications.\nIn 2021, we're a $3.3 billion company with less than 10% of our sales in non-specified applications.\nGrowth in specialized adhesive products in our portfolio has driven compounded double-digit growth in EBITDA dollars and a significant EBITDA margin improvement over that time period.\nIn 2022, we will continue to invest in innovation and organically expand our portfolio of specialized adhesive applications.\nAnd where appropriate, we'll also make inorganic investments.\nWe have a strong track record of acquisitions and are viewed as a sought-after buyer within the industry, given our scale and proven integration strategy.\nWhile we have an improved balance sheet and an exciting pipeline of opportunities, we will remain disciplined buyers and committed to our strategic balance sheet target of debt-to-EBITDA below three times.\n2021 was a remarkable year with enormously complex global supply issues and volatile inflationary headwinds.\nAnd H.B. Fuller lived up to the challenge: we served our customers, supported our employees and delivered consistently for our shareholders under exceptional business environment.\nWe've made tremendous strides in our business over the last decade, and we accelerated our performance in 2021 with double-digit top and bottom-line growth.\n2022 is positioned to be another record year for H.B. Fuller with both the top and bottom line projected to grow double digits again.\nOur company strategy and our execution capability is leading to year-over-year growth and margin expansion, which has us well-positioned to continue this performance beyond '22 into the years ahead.\nOperator, please open the call so we can take some questions.\n",
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"content": "q4 adjusted earnings per share $1.09.\nsees fy adjusted earnings per share $4.00 to $4.25.\nq4 revenue rose 15.4 percent to $897 million.\nsees fy2022 double-digit organic revenue growth of 10% to 15% including strong contribution from pricing.\nsees fy2022 adjusted ebitda of $515 to $535 million; up between 10% and 15% year over year.\ncapital investments are planned to be in the range of $100 to $110 million for fiscal 2022.\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'm joined by Bill Furman, Greenbrier's chairman and CEO; Lorie Tekorius, president and COO; Brian Comstock, executive vice president and chief commercial and leasing officer; and Adrian Downes, senior vice president and CFO.\nFiscal 22 is off to a good start, driven by strong commercial performance, disciplined management of our production capacity and continued growth of our railcar and lease fleet.\nMomentum in our business is being sustained.\nFirst quarter of fiscal 2022 continued our strong ordered trajectory.\nAs a result, Greenbrier posted its fourth consecutive quarter with book-to-bill ratio over one times.\nNew railcars orders and actually were at 1.5 for this quarter.\nNew railcar orders of 6,300 units were worth 685 million, were across a broad range of railcars.\nWe ended the quarter with a backlog of approximately three billion, the highest level about three years.\nOur order intake for the first quarter alone represents 35% of new orders received during all of fiscal 2021.\nOur recent partnership with U.S. Steel Corporation and Norfolk Southern Railway to design and launch new high strength steel gondolas having multiple environmental benefits demonstrates this momentum.\nIn addition, in a moment, our chief commercial and leasing officer, Brian Comstock will share more about this and some other exciting customer focused initiatives.\nAnd I should mention in terms of backlog do we have booked another 200 million of rebody work which is sizable but not counted in our backlog.\nWe are now ramping up '21 active production lines in North America and approximately eight internationally.\nImportantly, we are harnessing our flexible manufacturing footprint to extract more production from each line.\nWe expect this to increase in deliveries to increase over the course of the year.\nMeat production requirements we recently expanded our global workforce by about 10%.\nIntensive management of safety, hiring and supply chain issues continue.\nContinued success in these areas is key to maintaining our strong start to the year, specifically on the supply chain, our global sourcing team continues to do an exceptional job of mitigating disruptions to support increased production.\nOur wheels repaired parts business is now known as Maintenance Services.\nThe new name doesn't change the back of this business unit endured a challenging quarter.\nLabor markets and supply chain direct disruptions have both impacted its profitability.\nNaturally, this lowered our consolidated margins which were below our expectations to begin with.\nAs we speak to the changes, we're making to improve the performance of our Maintenance Services business unit.\nGreenbrier leasing continues to perform very well.\nOur investment activity has considerably outpacing initial targets.\nAsset utilization, a key performance metric for the leasing business is high at 97.1% for the portfolio that is well-diversified across car types and strong lessee credits as well as maturity ladders.\nAdditionally, we exceeded the initial investment target for GBX leasing by $200 million to a portfolio of $400 million in only nine months of operations.\nThis reflects the strong momentum in the business and our core manufacturing markets in North America.\nThe Omicron variant of COVID-19 were suddenly following the end of the quarter.\nAs a result of well-established safety protocols, our operations have not been significantly impacted at present by the rising cases globally and in North America, but we are closely tracking the rapid community spread of this variant and we're taking all appropriate precautions.\nWe continue with safeguard protocols and we will enhance these as dictated by best practices as well as adhering to local health authority requirements in the locations where we operate.\nIn the U.S. and Europe, it appears this wave might peak in the coming months.\nThere are indications that the current variant carries milder symptoms than previous versions of the virus, particularly for those who are double vaccinated and those with boosters.\nNonetheless, we must remain vigilant.\nAfter two years, the full contours of the pandemic remain dynamic and unpredictable.\nOur resolver is effectively to manage Greenbrier through evolving COVID challenges and that resolver remains steadfast.\nOur outlook remains unchanged except that we believe it is growing to be much more positive.\nWe maintain a positive outlook for the fiscal year for a variety of reasons.\nThese are supported by industry metrics as well as operating momentum, driven by a strong order book, demand backlog and manufacturing ramping.\nFor example, a portion of idle railcars in North America decreased to 32% in July to just below 20% by December.\nIndustry forecast for 2022 and 2023 are very encouraging, as Brian Comstock will share with you.\nAll this suggest that industry fleet utilization is nearing 80%.\nAnd again, Brian Comstock will add more on these points in a minute and we can talk in questioning and answering.\nLorie Tekorius who will be Greenberg's CEO in March takes the helm in very important and exciting time in the long history of Greenberg.\nI became the CEO, when we were founded, when my partner and I cofounded a small asset leasing business in 1981.\nWe entered manufacturing with the acquisition of Gunderson in 1985 and have continued to build on those two foundations.\nToday's manufacturing is our largest unit, comprising about 80% of our total annual revenues.\nBut manufacturing is both driven and complemented by a robust commercial and leasing business, as well as asset management services.\nToday, our asset management maintenance services touch about one-third in the North American fleet.\nIt's been a remarkable journey for me and for the company.\nGreenbrier steadily grown industry footprint and today is the leading railcar manufacturer in North America, allowing us to operate and scale.\nWe also now operated in four continents serving global railcar markets worldwide, with similar market shares issue this.\nAll of this has been accomplished through the hard work of remarkable people without guidance through their capacity for innovation, discipline management, and unyielding focus on the needs of our customers, as well as our workforce, and other stakeholders.\nWe've purposely built the company to grow at scale across business cycles.\nUnder Lorie's administration, she plans to do more of that along with some new initiatives of row.\nAs global railcar markets emerge from a cyclical trough, one that was really exacerbated by the pandemic.\nI'm proud of what the Greenbrier team has accomplished and the market leading positions we've achieved.\nI'm also proud of the significant value we've created for our shareholders.\nI expect that this will continue for many decades to come.\nAs Greenbrier continues to drive innovation as an industry, broaden its footprint globally and by product line and expand this leasing and services business.\nI also would like to congratulate two directors who served throughout almost the last 18 years to 20 years on our Board, Duane McDougall and Donald Washburn.\nNext week, we'll put out a brief congratulatory note marking this milestone, but I want to assure them that we remember them.\nI no doubt the Greenbrier will flourish under her administration.\nAnd before I get into the details on the quarter, you may have noticed and I think they'll reference that renamed two of our reporting segments.\nWe'll prepare in parts segment and now maintenance services and leasing and services is now leasing and management services.\nThe new names more closely reflect the customer solutions we provide and have no impact on the financial results.\nGreenbrier's fiscal Q1 reflected continued labor challenges in the United States, competitive pricing from orders taken during the depths of the pandemic troughs, and production and efficiencies from line changeover and ramping of capacity.\nI am proud of our employees around the world that continue to perform well, even as uncertainty about.\nIt is certainly an understatement to say that increasing headcount safely by several thousand employees, and increasing production rates by 40% to 50% is challenging.\nSo with an experienced leadership team, we'll meet this opportunity to scale our operations all up keeping our workforce healthy and safe.\nSafety across our organizations has been and will continue to be our number one priority.\nAnd the quarter just ended, we delivered 4,100 units, including 400 units in Brazil.\nDeliveries decreased by about 9% sequentially, which primarily reflects the timing of syndication activity, and line changeovers in North America.\nOur global manufacturing continues to take a measured approach to increasing production rates and activities as they work through orders taken during this process.\nOur global sourcing team continues to perform minor miracles on a regular basis, ensuring we avoid significant production delays.\nOur maintenance service business was significantly impacted by labor shortages exacerbated by the COVID pandemic.\nThese shortages impact throughput, billing efficiencies and profitability.\nWe've made a number of changes to our hiring and training practices, and we're seeing improved retention rate that maintenance cycle times can be 75 to 90 days.\nSo it takes some time for the benefits of these changes to flow through the operation.\nFurther, this business was impacted by lower real change our volume.\nI do believe the team has made the necessary changes that will lead to positive results over the course of fiscal 2020 and our maintenance services.\nOur leasing and management services group had a good quarter with strong fleet utilization and the integration of a previously disclosed portfolio purchased in September.\nBetween the portfolio assets and origination from Greenbrier, GBX leasing grew by approximately 200 million in the quarter.\nAnd as of quarter end, that fleet is valued at nearly 400 million, nearly doubling in value across the quarter.\nImportantly, this growth reflects a continued disciplined approach to portfolio construction, underwriting and credit quality standards.\nWe are not pursuing growth at all costs.\nIn addition to managing our lease fleet, our Management Services or GMS group continues to provide creative railcar assets solution for over 450,000 railcars in the North American freight industry.\nWhen other positive developments subsequent to quarter end, is that our leasing team successfully increased the size of our 300 million nonrecourse railcar warehouse facilities by 50 million to 350 million.\nOur capital markets team executed well this quarter, and we expect syndication activities to grow throughout the year, similar to our overall cadence of delivery.\nSyndication remains an important source of liquidity and profitability for Greenbrier.\nLooking ahead, we see strong momentum for fiscal 2022 and beyond.\nWe have talented employees and experienced management who are focused on driving results and shareholder value.\nI'm very excited about the long-term opportunities for Greenbrier.\nAnd now Brian Comstock will provide an update on the current railcar demand environment.\nAs mentioned in October, I remain excited about the momentum we are seeing in all of our markets globally.\nIn Greenbrier's first quarter, we had a book-to-bill 1.5 reflecting deliveries of 4,100 units and orders of 6,300 units.\nThis is the fourth consecutive quarter with a book-to-bill ratio exceeding one times and reflective of this strengthening environment.\nNew railcar backlog of 28,000 units with a market value of three billion provides strong multiyear visibility.\nThese are the type of demand environments where Greenbrier's flexible manufacturing is a vital differentiator.\nIn addition to new railcar orders, we recently received orders to rebody 1,400 railcars, as part of Greenbrier railcar refurbishment program.\nThis program is an important part of our growing partnership with our customers to sustainably repurpose North America's aging fleet, to ensure that rail remains the most environmentally friendly mode of surface transport.\nAs of November 30th, our modernization backlog included 3,500 units, valued at $200 million.\nThis is a valuable business that is additional to our new railcar backlog and absorbs production capacity.\nEach gondolas unloaded weight is reduced by up to 15,000 pounds.\nNorfolk Southern will initially acquire 800 of these Greenbrier engineered gondolas.\nThe work done by Greenbrier and our partner promises significant benefits to all three companies and the freight transportation industry as a whole, as we lead the way to a net zero carbon economy.\nOne item we are clarifying is the $800 gondolas will be part of the Q2 order activity.\nIn December, we also announced Greenbrier's joining of the RailPulse coalition.\nI'm personally excited about the prospects of this technology with the goal to aggregate North American fleet data onto a single platform.\nThis has a potential to improve safety and operating efficiency, while providing enhanced visibility to customers, reinforcing rails competitive share of freight transportation.\nGreenbrier's leased fleet utilization ended the quarter at over 97%.\nWe continue to see improved lease pricing in term on all new lease originations and lease renewals as well as continued strong demand for leased equipment.\nNorth American industry delivery projections saw an increase in nearly 49,000 units in 2022 and over 60,000 units in 2023, given the strong reduction in railcars and storage that continue to congestion as the pores, which is impacting traffic and overall economic growth.\nWe believe, these projections are very reasonable and see similar dynamics in Europe.\nAs you can see from our recently announced initiatives, Greenbrier's global commercial and leasing team remains focused on providing innovative solutions to our customers.\nNow over to Adrian for more about our Q1 financial performance.\nI'll discuss a few highlights and I'll also provide an update to our fiscal 2022 guidance.\nHighlights for the first quarter include revenue of $550.7 million, deliveries of 4,100 units which include 400 units from our unconsolidated joint venture in Brazil.\nAggregate gross margins of 8.6%, reflecting competitive new rail car pricing from orders taken earlier in the pandemic and labor shortages.\nSelling and administrative expense of $44.3 million is down 20% from Q4, primarily as a result of lower employee-related costs.\nNet gain on disposition of equipment was $8.5 million, like many leasing companies we periodically sell assets from our lease fleet as opportunities arise.\nWe had an income tax benefit of 1.4 million in the quarter primarily reflect the net benefits from amending prior year tax returns.\nNon-controlling interest provides the benefit of 5.2 million, primarily resulting from the impacts of line changeovers and production ramping at our Mexico joint venture.\nNet earnings attributable to Greenbrier of 10.8 million or $0.32 per diluted share and EBITDA of 42.2 million or 7.7% of revenue.\nMoving to liquidity, Greenbrier has a strong balance sheet.\nLiquidity of 610 million is comprised of cacheable reforms of the ten million and available borrowings of nearly 200 million.\nWe are well positioned to navigate any market disruptions we expect to persist into calendar 2022.\nAs mentioned last quarter, our cash receivable spends at 106 million as of November 30, and we expect to receive most of these refunds in the second quarter of fiscal 2022.\nThis refund is an addition to Greenbrier's available cash and borrowing capacity.\nLiquidity is important to support the working capital needs of the business as we significantly increase new railcar production beginning in '21 and into 2022.\nLiquidity also enables Greenbrier to invest in growth, as demonstrated by the railcar portfolio purchase in Q1 and the expansion of GBX leasing at a pace exceeding our initial announcement.\nIt has also allowed us to continue to pay dividends throughout pandemic during a time of economic uncertainty.\nGreenbrier's board of directors remains committed to a balance to find the capital.\nI believe that our dividends program enhances shareholder value and attracts investors.\nToday, we announced the dividends are $0.27 per share, which is our thirty-first consecutive dividend.\nAs of yesterday's closing price, our annual dividend represents a yield of approximately 2.3%.\nSince 2014, Greenbrier returns nearly 370 million of capital to shareholders through dividends and share repurchases.\nAdditionally, you may have noticed an increase of approximately 70 million and Greenbrier's notes payable balance, when compared to the prior quarter.\nThis non-cash increase is a result of Greenbrier adopting a new accounting standard, which simplified accounting for convertible notes and no longer requires the calculation of debt discount and associated equity components.\nWe believe the standard provides better transparency to how the convertible notes appear on our balance sheet.\nAnd to be clear Greenbrier did not incur any impact of liquidity or cash flows as a result of this adoption.\nBased on current business trends and production schedules, we're adjusting Greenbrier's fiscal 2022 outlook to reflect the following.\nIncrease deliveries by 1,500 units, now to a range of 17,500 to 19,500 units, which includes approximately 1,500 units from Greenbrier-Maxion in Brazil.\nSelling and administrative expenses are unchanged and expect to be approximately 200 million to 210 million for the year.\nGross capital expenditures of approximately 275 million in leasing and management services, 55 million in manufacturing, and 10 million in maintenance services.\nGross margin percent is expected to steadily increase over the course of the year from high-single-digits in the first half to between low-double-digits and low-teens by the fourth fiscal quarter, as railcar's orders during the pandemic trough are delivered and conditions in the maintenance services business improve.\nWe expect deliveries to continue to be back half waited with a 45%, 55% split.\nAs reminders in fiscal 2022 approximately 1,400 units are expected to be built and capitalized into our lease fleet.\nThese units are not reflected in the delivery guidance provided.\nWe consider a railcar delivered on a lease Greenberg's balance sheet and is owned by an external third-party.\nAs mentioned in the commentary earlier on the call, momentum continues to build in our business.\nAnd I'm excited about what the future holds for Greenberg.\n",
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"content": "q1 earnings per share $0.32.\ndiversified new railcar backlog as of november 30, 2021 was 28,000 units with a value of $3.0 billion.\ngreenbrier companies - for 2022, expects increased deliveries of 17,500 - 19,500 units including about 1,500 units in greenbrier-maxion (brazil).\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: They will provide an update on Greenbrier's performance and our near-term priorities.\nAnd with that, I will hand the call over to Bill.\nGreenbrier adhered to disciplined management program throughout this year of the pandemic.\nOur simple core strategy since March 2020 has been number one, to maintain a strong liquidity base and balance sheet; number two, to safely operate our factories, while generating cash, reducing costs and adjusting to reduce demand for our products and services, that reduction and demand was clearly shown in this quarter's results; number three, to prepare for economic recovery and forward momentum in our markets.\nWe believe we're now solidly in this recovery phase.\nWe believe that our Q2 just completed in February will be the most challenging quarter of our fiscal year, particularly affected by very bad weather in North America.\nThere's good reason to be optimistic as vaccines expanded in the United States.\nVaccinations will bolster already accelerating infection and mortality rates and allow America to turn the corner on the pandemic at last.\nGlobally, we are prepared for the pandemic to take a longer course toward resolution.\nSadly, we learned last week that Greenbrier lost two more employees, our sixth and seventh loss to COVID-19.\nMerala Nisioh [Phonetic], 58 was a assistant to the plant manager at our Severin, Romanian facility where she worked for over 32 years.\nWe also lost Luis Martinez aged 43.\nLuis was maintenance manager in our factory in Tlaxcala, State of Mexico -- in the State of Tlaxcala in Mexico.\nHe's been with Greenbrier since December 2017.\nHe was survived by his wife and four children ages, 19, 17, 11 and five.\nWe mourned the loss of Merala and Luis.\nAnd we're extending support and prayers to their family and to colleagues who worked with them.\nOur results in the second quarter reflect the current -- temporary difficulties in the operating environment, particularly in North America, but also in Europe and Brazil, and I emphasize temporary.\nIn addition to lower production levels related to the market downturn and as earlier mentioned, severe weather conditions impact our second quarter results in North America.\nOn a much more positive note, revenue, aggregate gross margin and EBITDA, all improved sequentially month-by-month during the quarter, indicating positive momentum.\nOur order pipeline of inquiries took a big jump in March.\nWe completed our GBX joint venture post quarter with Steve Menzies and funded the first $100 million tranche of railcars from a newly established $300 million non-recourse credit line established for this business.\nOur financial results were also positively impacted by tax benefits related to the creation of GBX Leasing joint venture and additional capitalization of railcars into the Greenbrier leasing fleet in our second fiscal quarter.\nAdrian Downes, our CFO, will touch on this in a few minutes.\nFinally, post quarter and almost all in the month of March, we received orders for another 1,700 railcars with an approximate value of $190 million on top of the 3,800 railcars orders received during the quarter worth $440 million in all 5,500 cars worth about $630 million in the space of four months or more.\nIn recent weeks, North American rail traffic grew in year-over-year comparisons, including double-digit increases in grain and intermodal loadings.\nThe added traffic has driven year-to-date rail velocity down by nearly 6% compared to the same period in 2020 or about 2 miles an hour.\nSlowing rail velocity, as all of you know, impacts cars and storage and demand for new railcars.\nConsider that about 148,000 cars have been taken out of storage in North America alone since the peak storage levels of last year, storage statistics have fallen now to 378,000 units, well below what we believe to be the frictional level of storage, 400,000 cars.\nAt that point, new cars need to be built.\nWith returns of cars serviced, higher scrap pricing and tax benefits for construction of new, more efficient and environmentally friendly equipment, we expect this trend to continue.\nThroughout the course of the pandemic, we've been laser-focused on maintaining our strong liquidity position.\nWe ended the quarter with over $700 million of liquidity, including nearly $600 million of cash and another $115 million of available borrowing capacity.\nWe expect to add another $100 million shortly.\nNow let's talk for a moment about our plan for recovery.\nVital to our ongoing success is the ability to rapidly align production capacity and execution with our forward view of the market.\nWe began to reduce capacity prior to the onset of the pandemic as our industry was already entering a weaker period due to PSR.\nCOVID-19 compelled us to take a series of further actions to protect the enterprise and to ensure Greenbrier attained its strongest possible financial position.\nWe have maintained long-term profitability over the years by prioritizing our manufacturing flexibility and refusing to allow our unique manufacturing platform to become a mere commodity.\nRefinement of our go-to-market strategy, adding GBX Leasing to our successful formula of direct sales, syndications and partnerships with operating lessors will reinforce our recovery.\nWe reactivated a number of North American production lines in March, and several of our production lines are already booked well into or through fiscal 2022.\nThe inquiry rate for new manufacturing business has picked up dramatically.\nWe expect a continued high rate of commercial activity to continue April, May, and beyond.\nConsistent with our earlier forecasts that the second half of calendar 2021 would be the time of a V-shaped recovery.\nForecast for rail traffic fundamentals in North America support Greenbrier's outlook that we are entering a period of sustained and expanding railcar [Indecipherable].\nFTR Associates projects the total rail traffic will grow by 5.7% year-over-year in 2021 and intermodal traffic will grow by 6.4%.\nIn North America, that's even more bullish and closer to 7% for 2021.\nIn February, the Purchasing Managers' Index reached its highest level since February 2018.\nAt the same time, however, supply chain disruptions that have been evident for months persist with congestion at West Coast ports, and these continue to weigh in the North American traffic flows.\nStrong consumer demand, manufacturing growth and Fed policy on lower interest rates, along with low-cost funding available globally will continue to spur economic recovery from the COVID-19 crisis.\nFederal stimulus spending in the US is at extraordinary levels.\nAlso, a federal infrastructure bill will provide additional stimulus for a sustained growth into 2022 and probably beyond.\nOther bills in the work -- in the works at past should enhance US job growth and further incent the construction of more efficient, environmentally friendly railcars.\nIn Europe, the large EU recovery and resiliency facility will begin to impact EU economy, and money remains plentiful and cheap.\nA wave of pent-up consumer and investment demand is expected to materialize, although vaccine rollout has been slower than in America.\nIn the meantime, rail freight has continued to perform well through the latest rounds of lockdowns and restrictions.\nOrder rates have ticked up dramatically with EU.\nEU policy and congestion and the environment is attempting to shift transportation from truck to rail, which is three to four times more fuel efficient and produces less congestion and better air quality in cities.\nRail freight traffic has actually grown over pre-crisis levels in some countries.\nIn the UK, rail may turn out to be one of the few beneficiaries of Brexit as trade flows are rerouted to accommodate new circumstances.\nLonger term, broad scale economic European reforms to address climate change are ushering in an era of mode of shift from freight -- for freight from polluting and congested road travel to efficient higher-speed rail service.\nThis will drive significant growth in railcar demand in the years to come, above and beyond replacement demand growth.\nAnd the fleets in EU countries are aging.\nMany cars are already well past the time for replacement.\nFinally, in Brazil, the continued impact of COVID-19 has left the country's health system in a very weak condition.\nGreenbrier Maxion continues to operate well in a stressful environment.\nDemand for its products is strong.\nEarlier, we rightsized this business and it has a strong and profitable backlog.\nAbout 30% of our present backlog is in Europe and Brazil.\nWe expect tailwinds from both regions.\nOur approach globally continues on course to emphasize safe operations of all of our facilities under essential industry status.\nWe continue to plan for robust liquidity and ongoing cost containment and to execute on the growing number of orders we expect, while maintaining pricing discipline and control of costs, especially on steel and components.\nEntering the second half of our fiscal year, Greenbrier enjoys an industry-leading manufacturing leasing and services franchise on three continents, and we've achieved scale.\nOur business outlook is significantly improving, which will bring advantages from that scale.\nDespite the lingering uncertainty created by COVID-19, the one thing I'm certain about is that our franchise will benefit strongly from all the things I've mentioned in these remarks today.\nMeanwhile, we will continue to preserve our strong liquidity position, make prudent business decisions about deployment of capital, grow our market opportunities, manage our manufacturing capacity judiciously.\nWe will do all this with -- at all times respect for our customers, for our workforce and through diversity and environmentally sound policies.\nOur team continues to work hard to accomplish these goals and to maintain focus as better days draw closer as the COVID chill on society melts away.\nNow over to you, Lorie.\nI too am proud of how Greenbrier employees responded in our second quarter.\nWe expected it to be a challenging operating quarter, but the extreme winter weather that impacted every location in North America added an additional test.\nI was impressed with the creativity and commitment shown to ensure operations continued as seamlessly as possible.\nOver the last several quarters, Greenbrier has balanced right-sizing our global footprint and production capacity with maintaining our ability to respond quickly as recovery begins.\nThe first six months of the fiscal year were painful, but we're seeing improved demand in each of our markets, and we've recently restarted several production lines in North America and are poised to flex our manufacturing footprint as conditions evolve.\nAs you heard from Bill, we remain focused on executing our COVID-19 protocols by focusing on employee safety and maintaining our liquidity to ensure we're prepared for the emerging economic recovery.\nRegarding the second quarter activity, Greenbrier delivered 2,100 units in the quarter, including 400 units in Brazil.\nWe received orders for 3,800 units in the quarter valued at approximately $440 million.\nInternational order activity accounted for nearly half of the orders in the quarter and the average sales price in backlog increased sequentially reflecting a more favorable mix of railcars.\nOur book-to-bill ratio of 1.8 times resulted in a growing backlog to 24,900 units valued at $2.5 billion.\nOur global manufacturing performance was not indicative of its true value.\nWhile a positive gross margin was achieved, the team's operational execution was tremendous in a challenging environment.\nNow bear with me while I throw some numbers at you.\nCompared to Q1, our deliveries in Q2 were down 37% and that followed a 45% decline from Q4 to Q1.\nAnd then, further if you were to do a year-over-year comparison, you guys like all these year-over-year comparisons of Q2, manufacturing revenue was down 59% on 54% lower deliveries.\nWith such a steep decline in revenue and production, it's effectively impossible to quickly cost cut your way to profitability.\nIt was more a matter of weathering the short-term pain for the longer-term goal of responding effectively to increasing activity.\nOver the next six months, the manufacturing team will be focused on increasing production rates quickly and efficiently, while maintaining employee safety, quality and customer satisfaction.\nVolumes in our wheels and parts business improved sequentially, although still well below normal winter level.\nThe volume and mix of work continue to lag in our repair business, although we are seeing some early signs of increased activity and improved efficiency as we right-size those operations.\nWe've well-positioned shops that serve our customer base in an efficient and safe manner, and our network is prepared for the return of more normalized activity levels later in the calendar 2021.\nOur leasing and services team continues to navigate the downturn well with fleet utilization improving sequentially during a time when approximately 25% of the total North American railcar fleet and storage.\nGreenbrier's capital market team had a relatively quiet quarter with 100 units syndicated.\nThis lower volume is reflected of the lower production rates in the prior two quarters and the types of railcars being produced.\nOur Management Services Group added another 38,000 new railcars under management during the quarter, bringing total rail cars under management to 445,000 or about 26% of the North American fleet.\nAfter quarter-end, we finalized the formation of GBX Leasing.\nThe joint venture is an exciting development for us and an opportunistic deployment of our capital.\nThe JV achieved several important goals for Greenbrier.\nFrom a commercial standpoint, it's a strong complement to our integrated business model of railcar manufacturing and services that further enhances our distribution strategies to direct customers, operating lessors, industrial shippers and syndication partners.\nWe expect the joint venture will help Greenbrier continue to grow its diversified customer portfolio with the focus on industrial shipper customers and small batch production to leverage long-standing customer relationships and capabilities gained through the acquisition of the manufacturing unit of ARI.\nWe've realized significant cost synergies following the US manufacturing acquisition, and we expect that this joint venture will result in meaningful commercial synergies.\nFinancially, GBX Leasing delivers clear benefits.\nOver the long term, it reduces our exposure to the new railcar order and delivery cycle by creating a new annuity stream of tax-advantaged cash flows and sound portfolio practices, including asset diversity, staggered lease terms and debt maturities.\nAdrian will discuss the tax benefit shortly.\nGBX Leasing will acquire approximately $200 million of railcars per annum from Greenbrier with the initial portfolio identified from leased railcars on our balance sheet or in backlog.\nThe joint venture will be levered about 3-to-1 debt to equity during the initial $300 million traditional non-recourse warehouse facility, of which we've drawn the first $100 million and those transition to a more traditional asset-backed securities financing as time progresses.\nGBX Leasing will be consolidated in our financial statements, and we plan to provide additional supplemental information to illustrate the performance and benefits of this exciting new venture.\nLooking ahead, I'm optimistic about a recovery in calendar 2021 that will primarily benefit our fiscal 2022.\nAnd while the first six months of '21 were difficult, we still expect gross margins in the low-double-digit to high-single-digit range, and we'll continue controlling costs to improve financial performance.\nGreenbrier remains healthy with strong liquidity and no near-term debt maturities.\nWe have leadership positions in our core markets in North America, Europe and Brazil, and see early signs of recovery in each geography.\nAnd you can see that, particularly with what Bill mentioned, our recent orders for 1,700 railcar units in just the first month of our Q3.\nThe decisive actions we've taken over the last 12 months have positioned Greenbrier to exit the pandemic economy a stronger and leaner organization.\nAnd now, Adrian will provide commentary on the quarterly results.\nDuring the quarter, Greenbrier continued managing for near-term stability, while positioning for a strong recovery.\nObviously, the pandemic has had a major impact on our revenue and delivery levels.\nNonetheless, we were able to achieve positive margins in each segment as a result of our flexible manufacturing footprint and aggressive cost reductions.\nReduced deliveries and revenue is a power driver of bottom line performance even in the face of dramatic reductions and payroll, overhead and SG&A.\nPerformance did improve each month within the quarter, and we exited the quarter with positive momentum increasing production rates to build sequential momentum in Q3 and Q4.\nA few quarterly items I'll mention include revenue of $296 million; book-to-bill of 1.8 times made up of deliveries of 2,100 units, including 400 units from Brazil and orders of 3,800 new units; aggregate gross margin of 6%; selling and administrative expense of $43 million, flat sequentially and 20% lower than Q2 of fiscal 2020.\nNet loss attributable to Greenbrier was $9.1 million or a loss of $0.28 per share.\nEBITDA was negative $1 million.\nThe effective tax rate in the quarter was a benefit of 62%, due to the net operating losses and tax benefits from accelerated depreciation associated with capital investment in our leasing assets.\nThese deductions will be carried back to earlier high tax years under the CARES Act, resulting in a $16 million tax benefit in the quarter and cash tax refunds to be received in fiscal 2022.\nWe also incurred $2.5 million of incremental pre-tax costs specifically related to COVID-19 employee and facility safety.\nThese costs will continue for the foreseeable future.\nMoving to liquidity, we have continued managing for near-term balance sheet strength and are positioned for a recovery.\nIncluding borrowing capacity of $115 million, Greenbrier's liquidity remains healthy at $708 million plus another approximately $100 million of initiatives and process.\nCash in the quarter ended at $593 million, reflecting $48 million of inventory purchasing to support higher production levels beginning in Q3 and the $44 million increase in leased railcars for syndication.\nHistorically, tax receivables have been included in the accounts receivable line in our balance sheet, but to improve transparency, we separated this activity in the quarter to provide a more accurate picture of operating receivables as well as the future tax refunds I just mentioned.\nCapital expenditures, net of equipment sales, in the quarter was $9.2 million.\nLeasing and services capital spending is expected to be about $90 million in 2021, with about 42% of that already occurring in the first half of the year.\nThis capital spending includes GBX Leasing, which began operations in Q3 and approximately $130 million of leased railcar assets were transferred into the JV at that point, including some assets, which were already on our balance sheet at the beginning of the year.\nAn additional approximately $70 million of assets will be newly built or transferred later this year.\nManufacturing and wheels repair and parts capital expenditures are still expected to be about $35 million for the year with spending focused on safety and required maintenance.\nWe continue to have healthy cushions in our debt covenants.\nAnd while we have no significant debt maturities until late calendar 2023 and calendar 2024, we are proactively evaluating opportunities to extend maturities and capitalize on the low interest rate environment.\nGreenbrier's Board of Directors remains committed to balanced capital deployment.\nAuthorization of share repurchases remains in effect through January 2023.\nAnd today, we're announcing a dividend of $0.27 per share, our 28th consecutive dividend.\nSince the start of our program, the growth of our dividend represents a compound annual rate of 9%.\n",
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"content": "q2 loss per share $0.28.\nq2 revenue $296 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: They will provide an update on Greenbrier's performance and our near-term priorities.\nThe recovery in our markets we forecast for the second half of this calendar year is now well underway.\nGreenbrier follows a disciplined strategy throughout the pandemic and as a result, the company is in a very strong position.\nLast year, we articulated our strategy centered on continuing safe operation of our facilities as critical supply infrastructure under U.S. Presidential policy number 21, U.S. Department of Homeland Security and U.S. Department of Transportation.\nWe also emphasized building and sustaining a strong liquidity position to withstand worst case scenarios, eliminating all non-essential spending, reducing our fixed cost, rightsizing our labor force to reduced pandemic demand.\nOur actions were purposeful, and particularly regarding employee safety and those issues related to our cost base and manufacturing capacity.\nGreenbrier has a flexible business plan and a flexible manufacturing strategy, along with scalable manufacturing, these are central to Greenbrier's response not only in the V-shaped downturn, but in the improving market outlook and the upturn and strong economic recovery.\nThis phase of our strategy is equally important.\nIt presents novel challenges and operational risk as we add a large number of new production lines, many involving product changeovers, manufacturing line additions and new designs.\nSimultaneously, we must safely and I emphasize safely integrate large numbers of new or furloughed manufacturing employees.\nFortunately, our management team is seasoned and experienced at managing these operating dynamics.\nWe are confident in our ability to execute.\nOf course, COVID-19 continues to be an issue we are addressing.\nReduced contagion rates among our workforce in the U.S., in Mexico and Europe are very good to see.\nBrazil remains a hotspot.\nBut because we are proactive, cases among our Brazilian colleagues remain relatively low.\nDespite these measures, we recently lost another colleague Jorge Telis to COVID-19.\nJorge worked in the paint department at our Greenbrier Sahagun, otherwise known as plant 2 facility in Mexico.\nHe was in his early 40s and he worked in Greenbrier for over four years.\nJorge is the eighth member of the Greenbrier family we have lost to COVID-19.\nWe are supporting his family through this difficult time.\nAs vaccines become more widely available around the world, it is essential to remember that COVID-19 is a dangerous and increasingly contagious disease.\nWe are urging and incenting our employees to get vaccinated.\nAs new COVID variance appear globally, we will remain attentive and defend our employees and our stakeholders against this continued very real threat.\nI'm pleased to see that Greenbrier's financial results for the quarter demonstrate strong solid performance.\nLorie and Adrian will cover our detailed results later in the call.\nFor now, I will simply say that we are very pleased.\nQ3 earnings moves Greenbrier solidly into the black [Phonetic] for fiscal 2021 through nine months after a very weak first half, and the outlook is strong for the fourth quarter and 2022.\nImportantly, our liquidity position also remains strong.\nAt the end of the third quarter of 2020, we announced we achieved liquidity target of $1 billion despite some challenging quarters.\nSince then, Greenbrier continues to maintain almost that level of liquidity, including cash and additional available borrowing on our debt facilities.\nFuture tax refunds and other initiatives underway.\nIn the third quarter, we also executed a strategic debt refinancing, taking advantage of the opportunity to do so in these markets where money is reasonably available and interest rates are cheap.\nWe extended maturities on our convertible notes to add another four years of favorable interest rates.\nLiquidity is important during a steep recovery cycle of these steep cycle, remembering that this is a 100 year pandemic that everyone has had to navigate.\nAnd this part of the cycle requires increased working capital and so we're pleased that we will have the working capital to deal and navigate through this time, particularly with supply chains being a little royal.\nWe are balancing efficient management of working capital and protecting our supply chain, ensuring production and labor continuity.\nOur COVID strategy along with the three-year strategy of achieving scale in our business are producing solid results.\nOur international backlog now is about a third of our of our base.\nThe results in the third quarter reflect both a steady recovery in our markets as well as Greenbrier's ability to manage through some of the most challenging quarters in the company's history and in fact, in the -- over the last 100 years.\nDuring our last two calls I discussed many of the steps Greenbrier was taking to prepare for economic recovery and positive momentum in our markets.\nThis momentum is reinforced as we prepare Greenbrier's three-year plan and navigates as we achieve greater scale and efficiency.\nA greatly reduced and leaner cost structure achieved during the pandemic should also be a boost to our business unit efficiency and our financial momentum.\nWe are joined today by an important guest, Brian Comstock.\nBrian is Greenbrier's Executive Vice President and Chief Commercial & Leasing Officer.\nHe is here to share a little bit more about our outlook on the commercial side of our business.\nAcross the economy, there are positive indicators and data points that indicate a sustained recovery in rail.\nIn North America, the latest U.S. economic indicators reflect growing optimism with GDP consensus forecast growth continuing to be revised up.\nThrough May, North American rail traffic was up 12.1%.\nLoadings were led by increases in grain, intermodal and auto.\nWe expect to see continued near-term demand for intermodal units and grain Covered hoppers as both segments continue to set monthly volume records.\nThese segments should remain highly active well into 2022.\nOverall, system velocity has slowed approximately 2 miles per hour due to robust rail freight recovery.\nSlowing rail velocity as everyone knows, decreases railcars and storage and increases demand for new railcars.\nCertain railcar types are in tight supply, including intermodal units, boxcars and gondolas.\nThese fleets are almost fully deployed with over 95% utilization.\nTotal North American railcar utilization is nearly 80% as of June 1st.\nSince the peak last year, over a 160,000 cars have been taken out of storage in North America, bringing the number of storage cars to approximately 360,000 units.\nWith higher scrap pricing and proposed tax benefits for construction of new, more efficient and environmentally friendly equipment, we expect the trend of declining cars and storage to continue.\nWe are also seeing robust activity in the railcar conversion market with the recent 1,000 tank car conversion order.\nThe increase in commodity prices almost -- across almost every important sector has captured our attention.\nThe current price for steel is more than three times higher than the August 2020 price.\nGreenbrier continues to utilize price indexing and material escalation pass-throughs to protect gross margin dollars.\nAlthough elevated steel prices can be a potential headwind, order cadence remains robust.\nIn Europe, longer-term broad scale economic reforms to address climate change are ushering in an era of modal shift for freight, from polluting and congested road travel to efficient higher speed rail service.\nThis modal shift will drive growth in railcar demand in the years to come.\nThis growth is in addition to the replacement demand as the fleets in the EU countries are aging, with many cars already well past the time for replacement.\nGreenbrier's backlog in Europe was strong at the end of the third quarter.\nOur focus has now turned to ramping up manufacturing output to meet the market demand with several production lines already booked well into fiscal 2023.\nFinally, in Brazil, the economy is improving.\nOur visibility is a good and we are experiencing our highest levels of backlog since we entered the market.\nGreenbrier's global commercial team continues to see strengthening in new railcar inquiries and orders.\nIn the fiscal quarter -- third fiscal quarter, Greenbrier won orders for 3,800 railcars totaling $400 million and our backlog as of May 31st was 24,800 units valued at $2.6 billion.\nSubsequent to quarter end, the commercial team has booked nearly 3,000 additional orders for intermodal, automotive, covered hoppers and gondolas.\nI want to emphasize the conversion activity I spoke to earlier is not reflected in the new railcar orders or backlog.\nOverall, pipelines are strong and I'm optimistic this momentum will carry into fiscal 2022.\nNow over to Lorie for more about our Q3 operating performance.\nToday, we are reporting results from operations that are significantly better than our results for the first half of our fiscal 2021.\nOur employed produced a great quarter after a challenging first six months.\nOne thing we've learned over the last 18 months is the resiliency and flexibility are vital in an ever evolving pandemic setting.\nAnd while it's too early to declare victory, especially as COVID variance emerge, our flexible operating model is responding quickly and efficiently as well as safely to the improving demand environment.\nWe delivered 3,300 units in the quarter, including 500 units in Brazil.\nOur Q3 deliveries increased 57% from the second quarter.\nOur global manufacturing performance this quarter shows that operating leverage of higher production rate which will continue in Q4.\nThis strong performance is against the backdrop of adding almost a 1,000 employees.\nBrian mentioned the significant increase in raw material pricing and the volatility in the supply chain.\nSo I'd like to highlight the outstanding job our purchasing and sourcing group is doing.\nThis group is ensuring that our facilities have the materials and components to continue uninterrupted production, at times, that means even collaborated with our suppliers to work with their suppliers to make certain that we have the material we need for our customers.\nOver the remainder of fiscal 2021 and into 2022, the manufacturing team is focused on building high quality railcars while maintaining employee safety.\nIncreased car loadings and rail traffic also began to benefit our wheels repair and parts business in the third quarter.\nEach of the units that comprise our GRS business experienced double-digit revenue growth and strong sequential margin improvement.\nThe margins achieved by GRS in Q3 are the highest since the reintegration of our repair business in 2019.\nThe GRS management team continues to evaluate our footprint and refine our operations around quality, efficiency and safety, with a focus on being a key service provider to our customers.\nThe business is prepared for stronger activity levels and I'm cautiously optimistic that the demand recovery we've seen so far will continue to gain momentum for this business unit.\nOur leasing and services team had a strong and quite busy quarter.\nGBX Leasing was formed and $130 million of the initial $200 million railcar portfolio was contributed to the joint venture.\nThis activity was levered 75% or 3:1, so about $100 million was funded from the non-recourse warehouse credit facility.\nWe'll will continue to fund assets into GBX Leasing as they become available in Q4 and beyond.\nAnd we also have several growth opportunities on the radar.\nFrom a commercial standpoint, GBX Leasing is a strong complement to our integrated business model that enhances our distribution strategy to direct customers, operating lessors, industrial shippers, and our syndication partners, while also creating a new annuity stream of tax-advantaged cash flows.\nGBX Leasing is consolidated in the leasing and services segment of our financial segment with our partner's share of earnings deducted in the net earnings attributable to non-controlling interest line.\nOur capital market team, also part of leasing and services, syndicated 200 units in the quarter and yielded valuable operating leverage.\nOur syndication model provide several tools to generate revenue and off-net margin.\nSummer part of our normal course of business and others are available to be deployed opportunistically.\nIn Q3, we completed an asset sale transaction on favorable terms, which generated increased revenue and margin.\nWe expect syndication activity to increase meaningfully in the fourth quarter.\nOur management services group also helps in leasing and services is a major strategic customer value.\nWe continue to drive growth in this business through a combination of onboarding new customers, expansion of services within the existing customer base, and growth and customer fleets, including the GBX Leasing service.\nAt the end of Q3, Greenbrier was providing management services on 445,000 railcars or about 26% of the total North American fleet.\nPositive operating momentum is building as we enter fiscal 2022.\nGiven the strong performance in Q3 and continuing into Q4, we expect to exit the year with gross margins in the teens and further decisive actions taken over the last 15 months, Greenbrier is a stronger and leaner organization and is well positioned to benefit from the emerging economic recovery.\nGreenbrier's Q3 results were much improved after a challenging first six months of fiscal 2021, a few highlights from the quarter.\nOur revenues of $450 million which increased over 50% from Q2.\nEach operating units increased sequentially, although increased production across North America and Europe was the largest driver.\nWe achieved month-over-month momentum coming out of lower production levels in our second fiscal quarter.\nBook-to-bill of 1.2 times made up of deliveries of 3,300 units, which included 500 units from Brazil and orders of 3,800 new units.\nThis is the second consecutive quarter that book-to-bill exceeded 1 times.\nAggregate gross margin of nearly 16.7%.\nIn the quarter, we recognize the benefit from long-standing international warranty and contingencies after the expiration of the warranty period and final resolution of the contract.\nExcluding this activity, manufacturing margin would have been in the low double digits.\nSelling and administrative expense of $49 million increased sequentially, reflecting start-up costs from the formation of GBX Leasing and higher employee-related costs.\nAdjusted net earnings attributable to Greenbrier of $23.3 million or $0.69 per share excludes $3.6 million or $0.10 per share of debt extinguishment losses, EBITDA of $53 million or 11.7% of revenue.\nThe effective tax rate in the quarter was a benefit of 64%.\nThis primarily reflects the tax benefits from accelerated depreciation associated with capital investments in our lease fleet, primarily GBX Leasing.\nThese deductions will be carried back to earlier high tax years under the CARES Act, resulting in a tax benefit in the quarter and cash tax refunds to be received in fiscal 2022.\nWe also recognized $1.9 million of gross costs, specifically related to COVID-19, employee and facility safety.\nThese costs have been trending down, but we expect to continue spending for the foreseeable future to ensure the safety of our employees.\nGreenbrier continues to have a strong balance sheet and we are well positioned for the recovery that is emerging, including cash of $628 million and borrowing capacity of over $220 million, Greenbrier's liquidity remains healthy at $850 million plus another $149 million of initiatives in process.\nIn the quarter, Greenbrier began extending the maturities of its long-term debt with the issuance of $374 million of 2.875% senior convertible notes due in 2028.\nConcurrently, we retired $257 million of senior convertible notes due in 2024, and maybe from time-to-time retire additional 2024 notes in privately negotiated transactions within the limitations of applicable securities regulations.\nAs part of the convertible note issuance process, we repurchased $20 million of our outstanding common stock.\nThe principal balance of the new convertible notes will be settled in cash with the flexibility to choose either cash or share settlement for any amounts paid over par.\nThe cash interest expense of the notes is about half of the cash cost of high yield notes.\nTurning to capital spending, leasing and services is expected to spend approximately $130 million in 2021, reflecting continued investments into our lease fleet, primarily at GBX Leasing to maximize the tax benefits I spoke to earlier.\nManufacturing and wheels repair and parts capital expenditures are still expected to be about $35 million for the year, with spending focused on safety and required maintenance.\nSpending will be higher in Q4 than in the prior few quarters as we supports the increasing production and business activity levels.\nWhile we have extended the debt maturities of a portion of our capital structure, we will continue to opportunistically extend maturities as it makes sense for the rest of Greenbrier as long-term debt.\nToday, Greenbrier's Board of Directors announced a dividend of $0.27 per share, which is our 29th consecutive dividend.\nLooking ahead, Greenbrier expects the fourth quarter to be the strongest performance of the year.\nIn addition, a full quarter of increased production rates and increased business activity creates positive momentum into fiscal 2022.\n",
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"content": "q3 adjusted earnings per share $0.69.\nq3 revenue $450 million versus refinitiv ibes estimate of $489.4 million.\nexpects q4 to be strongest performance of year.\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, Greenbrier announced that effective March 1, our founder, Bill Furman will transition to the role of Executive Chairman and the appointment of Lorie Tekorius as Greenbrier's next CEO and President.\nIn addition to Bill and Lorie, Brian Comstock, Executive Vice President and Chief Commercial and Leasing Officer; and Adrian Downes, Senior Vice President and CFO are participating in today's call.\nAs Justin indicated earlier today, we announced our Board of Directors has elected Lorie Tekorius, Greenbrier's current President and Chief Operating Officer to be the Company's next Chief Executive Officer, a position she will assume on March 1, 2022.\nLorie and I along with the Board have been working toward this goal for several years.\nTogether, we've built a very strong talent bench.\nI'm very pleased with the teams we have in place for the future, and I'm also pleased with the strategy that Lorie has evolved which I think will take the Company to higher peaks.\nI want to take this opportunity to congratulate Lorie.\nLorie, I know you will do an outstanding job as Greenbrier's next CEO and I look forward to working with you through the transition.\nI'm very proud of you.\nEveryone joining us today should understand our joint commitment to ensure the smoothest possible transition.\nWhen Lorie become CEO, I will concurrently assume the newly created role of Executive Chair until September 2022, when I will retire from an executive position.\nIn this role, my focus is on continuing to work with our Board of Directors as well as support Lorie in her transition to CEO.\nI will manage as Board member until 2024.\nThis transaction -- transition is coming at an important and exciting time for the Company.\nAs we've discussed over the past several quarters, the recovery in our end markets is gaining momentum.\nOur fiscal fourth quarter was Greenbrier's strongest quarter of the year.\nGreenbrier's fiscal fourth quarter was in fact our fifth quarter in a row with increased new railcar order activity.\nIt was also Greenbrier's third consecutive quarter with a book-to-bill ratio over 1 leading to a book-to-bill of 1.33 for fiscal 2021.\nThe spread of the Delta variant has created challenges worldwide for business and society, and it has made the pace of the recovery partly unpredictable.\nIt continues to impact Greenbrier on a personal level.\nBoth vaccinated and un-vaccinated individuals across our workforce have experienced isolated COVID-19 infections during the fourth quarter.\nI was one of them along with my wife, Jane, despite being both double vaccinated.\nFortunately, our symptoms were mild and we have fully recovered.\nSadly, however, we recently lost another colleague, Pedro Gonzalez [Phonetic].\nPedro was an 18-year veteran of the GRS Kansas City wheel shop.\nHe was the 10th member of the Greenbrier family we have lost due to COVID-19.\nWe are supporting his family during this difficult time.\nWe are urging people to get vaccinated and to keep social distancing.\nThe health and safety of our employees is paramount.\nWe continue to maintain a vigilant posture, particularly as we integrate new manufacturing employees in response to expanding production capacity.\nOf course, the virus is not the only issue to be faced.\nGlobal markets have been impacted by labor shortages, supply chain disruptions, volatile commodity markets and other disruptive headwinds.\nThese factors persist into Greenbrier's fiscal 2022, and this is all in addition to what I would term the regular challenges for a manufacturing, maintenance and leasing business as we transition from low production after a rapid downturn and then a rapid spike-up and employment rates to higher employment and greater levels of production activity.\nSo, this is an environment that demands a disciplined strategy we've adhered to since the outset of the pandemic.\nIt also demands our best efforts.\nSpecifically, our strategy has been to first maintain a strong liquidity base and balance sheet, next, to survive the COVID-19 and economic crisis by safely operating our factories while generating cash flow.\nEveryone knows that in an upturn, cash is required to replenish working capital and for growth.\nAnd finally, we needed to prepare for and manage well during the economic recovery and the forward momentum in our markets which is now well underway.\nOur actions have been purposeful and successful and the result of a strong team effort, a flexible approach and scalable manufacturing capacity or both central to Greenbrier's response to an improving market outlook.\nThe demand outlook is strong.\nIt is strong in all of our markets globally, notwithstanding the impact of elevated steel and other input prices to our customers' decision-making processes.\nI'm proud of how seamlessly our teams are ramping up to '22 production lines by the end of November from just nine lines of operation at lower rates of production, only nine years ago -- nine months ago, sorry.\nThis phase of our strategy has presented novel challenges and operational risks as we add a large number of new production lines, many involving product changeovers and adding new people.\nSafety, availability of labor and supply chain constraints are key priorities for Greenbrier to manage as production increases.\nImportantly, our liquidity position remains strong, maintaining it remains a top priority.\nWe're balancing efficient management of working capital with protecting our supply chain and ensuring production continuity.\nBefore I conclude today and hand the call over to Lorie, I would like to remind our listeners that we do not expect to the market recovery to follow a smooth straight line.\nOur industry is still recovering from the shock caused by the pandemic.\nUncertainties and obstacles do remain.\nIt is clear, however, that our strategy has produced and is producing results, and I believe, we are well on the other side of where we have been.\nWe are also pleased to recently increased the scale of our leasing fleet through our GBX Leasing joint venture.\nOur lease investment provides Greenbrier tax advantaged cash flows.\nIt reduces and in the future will continue to reduce exposure to the inherent cyclicality of freight transportation, equipment manufacturing and other sources.\nAt GBX Leasing, we are building a long-term annuity stream with solid credits, longer and balanced maturity ladders and product diversity.\nWhile doing so, we are foregoing some immediate revenue recognition in the short term to build for the future.\nAll factors considered, Greenbrier is extremely well positioned to navigate the months ahead and deliver further value to our shareholders.\nBefore electing Lorie as CEO, we thought it is important that she sketch out her strategy for the future.\nShe spent four to five months in thoughtfully putting together that strategy.\nIn the future, we'll be happy to share the changes that this will bring, but as a headline we look to technology, diversification and services and other ways to take the cycle out of the inherent manufacturing business cycle and growth of the future.\nI want to express my appreciation to Bill and the Greenbrier Board for appointing me Greenbrier's next CEO.\nI'm honored and humbled to follow Bill as only the second CEO in Greenbrier's history.\nBill and I have worked together toward this goal for some time and I feel well prepared.\nI look forward to continuing to work with Bill on this transition and to build on the strong established foundation he created with our senior management team.\nToday, we're reporting results from operation that continue the momentum from Q3.\nVolatility seems to be the new norm and Greenbrier's employees rose to the challenge.\nThe resiliency, flexibility and focus allowed Greenbrier to produce great results in addition to providing excellent levels of service and the production of quality railcars.\nSupply chain and labor force shortages in the United States were two of the most notable and unfortunately common challenges we're managing today.\nIn the quarter, Greenbrier delivered 4500 railcars, including 400 units in Brazil.\nQ4 deliveries increased 36% from Q3, reflecting manufacturing successful ramping of production over the last six months.\nThis is our highest level of production and deliveries since fiscal 2020 and we're pleased to see another quarter of double-digit growth.\nOur global purchasing group continues to do an outstanding job, even as disruptions spread from basic raw materials and components to resins, paint and industrial gases.\nOur global sourcing team has rapidly responded to changing supply dynamics and continues to take measures to ensure we avoid significant production delays or line introduction.\nAnd while hiring is currently challenging in the US, we're fortunate to have a strong and talented labor pool in Mexico, allowing us to add over 500 employees during the quarter and over the last nine months, we've added nearly 2000 employees in our manufacturing business.\nSafety continues to be a priority as we bring back our workforce in a measured manner.\nIn our North American network of maintenance and parts operations or Greenbrier Rail Services, we continue to make improvements in how we manage our operations and interface with our customers, including license [Phonetic].\nThe continued focus on safety resulted in a record setting Q4 and full year safety performance.\nThese positive strides were somewhat offset by labor shortages impacting operating efficiencies and an obsolete inventory adjustment in Q4.\nExcluding the inventory adjustment, gross margins would have been similar to Q3.\nI'm confident we'll be able to leverage the improvements made in GRS for 2022 and beyond.\nOur leasing and services group which include our GBX Leasing operations had another busy quarter.\nNearly 70 million of railcars were contributed into GBX Leasing in Q4, bringing the total market value of assets in fiscal 2021 to almost $200 million.\nSubsequent to year end, we acquired a portfolio of 3600 railcars, a portion of which will also be held in GBX Leasing.\nThis purchase provides commodity, age and credit diversity.\nOur GBX Leasing fleet is valued at $350 million at the end of September and continues to gain momentum.\nAs a reminder, GBX Leasing is currently utilizing a non-recourse warehouse credit facility, a portion of which we expect to term out in the next few quarters with more traditional long term railcar financing.\nOur enhanced leasing strategy will provide revenue and tax-advantaged cash flow offsetting the cyclicality of railcar production.\nOur capital markets team syndicated 1000 units in the quarter and continues to generate liquidity and profitability.\nIn fiscal 2022, we expect syndication activity to increase meaningfully as overall demand and production levels rise.\nAnd in the next few weeks, Greenbrier will be publishing its Third Annual ESG Report.\nI'm excited about the progress shown in the report on a variety of areas and congratulate our internal ESG team for providing a valuable summary of how Greenbrier is serving its stakeholders.\nLooking ahead, we continue to see positive momentum in fiscal 2022.\nEmerging from an economic recession and cyclical trough can be challenging in the best of times, but with the ongoing impact of the pandemic, labor shortages and supply chain disruptions, this year is going to be a completely different type of challenge.\nI'm pleased that we have talented employees and a strong management team with significant industry experience to guide Greenbrier through the next few quarters.\nI remain excited about the long-term opportunities for Greenbrier and proud to be leading into the next part of our journey as a company.\nAnd now, Brian Comstock will provide commentary on the railcar demand environment.\nWhile it feels like much has occurred over the last three months, overall, the economy continues to be trending in a positive direction and economic indicators point to a sustained recovery in rail.\nWhile this recovery seems to be more unpredictable, we continue to think about it as a sharper V-shape recovery with a sustainable crust.\nNow, instead of discussing industry statistics, I'm going to focus on a few important things from 2021 and how we are approaching 2022.\nIn Greenbrier's fourth quarter, we had a book-to-bill of 1.5, reflecting deliveries of 4500 units and orders of 6700 units.\nThis is the third consecutive quarter of growth in our book-to-bill ratio.\nFor fiscal '21, Greenbrier generated orders of 17,200 units and deliveries of 13,000 units, which equates to a book-to-bill of 1.3.\nInternational order activity accounted for approximately 30% of this new railcar order activity.\nNew railcar backlog grew by 2000 units or nearly $400 million of value to 26,600 units with an estimated market value of $2.8 billion.\nOperations in each continent we operate in are carrying backlog that supports production well into fiscal 2022.\nNotably, we ended the fiscal year with a record backlog for Europe, where we have many production lines booked into fiscal 2023.\nGreenbrier's lease fleet utilization ended on August 21 at roughly 94% and has grown to over 96% year to date.\nAdditionally, we are seeing improved lease pricing and term on all new lease originations and lease renewals.\nWe have seen recovery in all of our markets.\nWe have also seen significant increases in raw materials, components and shortages of basic supplies.\nWe are seeing traffic congestion throughout the network, especially at the ports where a record setting number of ships are waiting to be offloaded underlining the fact that when you shut down large portions of the global economy, turning it back on is not as easy as just flipping a switch.\nThere will be disruptions and unintended consequences.\nHowever, we continue to see growth opportunities in our global markets.\nEurope is beginning to see the benefits of a broad scale economic reforms to address climate change.\nWe are in the early days of a model shift to freight from polluting and congested road travel to efficient higher speed rail service.\nWe believe this model shift will drive significant growth in railcar demand in the years to come.\nThis growth is in addition to replacement demand as fleets in EU countries are ageing with many cars already well past the time for replacement.\nEqually as exciting is the future of the North American market.\nRight now, we are seeing a return to replacement demand levels, but imagine what will happen when the United States follows a similar path as Europe.\nFreight rail is one of the more sustainable solutions because of its environmental friendliness.\nSimilar to Europe, we see an extended period of substantially higher demand except it involves one of the largest freight rail fleets and systems in the world.\nWith all that being said, Greenbrier's global commercial team is focused on not only the basic blocking and tackling of new railcar orders, leasing and service solutions, but also in continuing to develop a more comprehensive and integrated approach for our customers globally.\nNow over to Adrian for more about our Q4 and full financial performance.\nGreenbrier's Q4 performance represents the strongest quarter of our fiscal 2021 year as a result of the continuing momentum we've been seeing in our end markets.\nI will speak to a few highlights from the quarter and provide a general overview of fiscal 2022 guidance.\nHighlights for the fourth quarter include revenue of $599.2 million, an increase of over 33% from Q3.\nAggregate gross margins of 16.4%, driven by stronger operating performance as a result of increased production rates, syndication activity and lease modification fees.\nSelling and administrative expense of $55.4 million increased sequentially as a result of higher employee-related costs.\nAdjusted net earnings attributable to Greenbrier of $32.9 million or $0.98 per share excludes $1.2 million or $0.03 per share of debt extinguishment losses.\nEBITDA of $70.4 million or 11.8% of revenue.\nThe effective tax rate in the quarter was a benefit of 14.5%.\nThis reflects the tax benefits from accelerated depreciation associated with capital investments into our lease fleet.\nThese deductions will be carried back to earlier high-tax years under the CARES Act, resulting in a tax benefit in the quarter and cash tax refunds to be received in fiscal 2022.\nI'm very proud of the close collaboration between our leasing and tax teams that maximized this benefit to Greenbrier over the course of fiscal 2021.\nIn the quarter, we recognized $1.6 million of gross costs specifically related to COVID-19 employee and facility safety.\nIn 2021, we spent nearly $10 million, ensuring our employees and facilities could operate safely.\nThe quarter also included an unfavorable adjustment for labor and materials in our lease business as well as unfavorable excess and obsolete inventory adjustments of fields repair and parts.\nAdjusted net earnings for the year attributable to Greenbrier was $37.2 million or $1.10 per share on revenue of $1.7 billion and excludes $4.7 million net of tax or $0.14 per share of debt extinguishment loses.\nEBITDA for the year was $145.2 million or 8.3% of revenue.\nGreenbrier has a strong balance sheet and with liquidity of $835 million comprising cash of $647 million and available borrowings of $188 million, we are well positioned to navigate the market disruptions that we expect to persist into calendar 2022.\nYou may have noticed the tax receivable has grown to a $112 million as of August 31.\nWe expect to receive most of these refunds in the second quarter of fiscal 2022.\nThis is an addition to Greenbrier's available cash and borrowing capacity that I just mentioned.\nIn the fourth quarter, Greenbrier completed almost $1.1 billion of debt refinancing, extending the maturities of our domestic revolving facility and two term loans into 2026 and 2027.\nIn addition to the GBX Leasing, railcar and warehouse credit facility, Greenbrier's Legacy lease fleet is partially levered with a $200 million six year term loan while the remaining fleet assets serve as collateral in Greenbrier's $600 million US revolving facility.\nAlso in the quarter, we repurchased an additional $20 million of senior convertible notes due in 2024 and maybe from time to time retire additional outstanding 2024 notes in privately negotiated transactions within the limitations of applicable securities regulations.\nOverall in fiscal 2021, Greenbrier completed $1.8 billion of financing activity including $1.5 billion of debt refinancing and the creation of the $300 million GBX Leasing warehouse credit facilities.\nWe have effectively doubled the maturity profile of our existing cash at favorable interest rates and removed the 2023 refinancing risks.\nGreenbrier's Board of Directors remains committed to a balanced deployment of capital designed to protect the business and simultaneously create long-term shareholder value.\nOur Board believes that our dividend program enhances shareholder value and attracts investors.\nToday, we announced a dividend of $0.27 per share, which is our 30th consecutive dividend.\nBased on current business trends and production schedules, we expect Greenbrier's fiscal 2022 to reflect deliveries of 16,000 to 18,000 units, which include approximately 1,500 units from Greenbrier Maxion in Brazil.\nSelling and administrative expenses are expected to be approximately $200 million to $210 million.\nCapital expenditures of approximately $275 million in leasing and services, $55 million in manufacturing and $10 million in wheels repair and parts.\nGross margins to be lower in the first half of the year, reflecting a few primary factors.\nProduction reflects more competitive pricing taken during the pandemic 9 to 12 months ago.\nEarly in the year, we will have some operating inefficiencies due to product line changeovers and continued production ramping.\nAs production rates stabilize, operating efficiencies will increase benefiting margins.\nMore production is scheduled for syndication or leasing fleet activity and will be on the balance sheet until final disposition is decided.\nWe expect margins to improve over the course of the year as we work through less profitable mix, achieve production efficiencies and other factors.\nWe expect deliveries to be back half weighted with a 40% front half, 60% back half left [Phonetic].\nAs Bill mentioned earlier on the call, the introduction of GBX Leasing and our shift and leasing strategy has an impact on our production and delivery activity.\nHistorically, we would build a railcar with a lease and syndicate it a few quarters later.\nNow, in addition to direct sales and syndication activity, a portion of production will be capitalized into our lease fleet.\nWhile this activity reduces revenue and margin in the near term, it creates a long term stable platform of repeating cash flows and income and is part of our strategic shift to smooth the impact of the new railcar demand cycles on our results.\nIn fiscal 2022, approximately 1400 units are expected to be built and capitalized into our lease fleet.\nThese units are not reflected in the delivery guidance provided.\nWe consider a railcar delivered when it leaves Greenbrier's balance sheets and is owned by an external third-party.\nWe have an experienced management team that has a track record of success in identifying and taking advantage of opportunities as well as managing through the challenges and factors we described earlier.\nAs a result, we are optimistic that our operating momentum will continue into fiscal 2022, albeit in a non-linear fashion.\n",
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"content": "compname reports q4 adjusted earnings per share $0.98.\nq4 adjusted earnings per share $0.98.\nq4 revenue $600 million.\nappointment of lorie tekorius as company's next ceo and president, effective march 1, 2022.\ngreenbrier companies - well-positioned to navigate challenges of increasing production rates safely, while ensuring labor and supply chain continuity.\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 be referencing it today on the call as it provides you with additional detail on this quarter's performance.\nActual results and events could differ materially from those discussed today.\nIn addition, we will be discussing some non-GAAP financial information during the call today.\nYou can find reconciliations of our non-GAAP measures to the most comparable GAAP measures in the earnings supplement.\nWe've had a very strong second quarter, and are excited to share with you many of the details.\nOur second quarter financial results outpaced expectations with revenue growing 6.8% year-over-year on a same-store basis, and adjusted EBITDA growing 48% as compared to the prior year second quarter.\nThat marks our third consecutive quarter of adjusted EBITDA growth to the prior year.\nAdjusted EBITDA of $116 million in the second quarter brings our LTM adjusted EBITDA to $453 million.\nWithin the quarter, the company repaid approximately $46 million in debt under our 5-year Term Loan B. This was done with asset sales and with excess cash flow.\nThis brings our total principal balance under our term Loan B below $1 billion.\nWe also finished the quarter with $159 million of cash on hand.\nEqually as important, we continue to make tremendous progress on our long-term strategy and against our five strategic pillars.\nAs a result, our digital revenue is now 32.2% or about 1/3 of total revenue.\nAnd importantly, the digital category is growing strongly, up 33% in Q2 over prior year.\nWe had previously laid out a clear vision and strategy for the company, and we've continued to make progress on that strategy.\nAccelerating digital subscription growth is our first pillar and remains our top priority.\nWe ended the second quarter with approximately 1.4 million digital-only subscribers, adding 160,000 new net subscribers in the quarter.\nThis subscriber growth for the company outpaced our previous high, which we set during the first quarter of this year, with 120,000 net new adds.\nAnd our TAM for growth in the digital subscription category is quite large.\nWith the 174 million unique visitors per month in the quarter, as measured by Comscore, Gannett has the sixth largest digital reach across all domestic peers.\nWe are actively working to further expand our customer base through new product launches that will attract a younger audience and through continued investment in diversifying our high-quality local, regional and national content.\nDuring June, USA TODAY launched a new crossword subscription product.\nAnd in July, we fully launched our USA TODAY news subscription product.\nPrior to these rollouts, virtually all of our digital-only subscriber volume stemmed from our initial paid digital strategy for our local properties, which is still very early stage.\nWith a subscriber model at USA TODAY, a new subscription product, a portfolio of new content subscription products in the pipeline and data, driving our decisions based on what our consumers and customers are engaging with, is leading to steady progress toward our goal of 10 million digital-only subscribers by 2025.\nOur digital-only subscription growth is rooted in the highly valued and unique content, our USA TODAY NETWORK produces.\nJust to remind you, the USA TODAY NETWORK includes over 250 local media markets as well as our USA TODAY publication.\nCombine this with our data-driven growth strategies, ongoing cross-functional efforts to run experiments that drive both subscriber acquisition growth as well as strengthen subscriber engagement and retention on our platform leaves us very optimistic about our opportunities to perform in this category.\nThe engaging and quality journalism, our national and local markets produce was evidenced by the impressive accolades our team received in the second quarter.\nI'd like to congratulate our team at the Indianapolis Star for winning a 2021 pullet surprise for national reporting alongside partners at the Marshall project, AOL.com and the Invisible Institute for a year-long investigation into police dog attacks.\nIn addition, the Louisville Courier Journal was named a finalist for two politer price categories, breaking news and public service for its coverage and relentless investigation into the fatal shooting of Breonna Taylor and the ensuing 180 days of unrest.\nThis marks five Pulitzer winners and four finalists awarded two Gannett journalists in the last four years.\nGreat work by the team.\nIn addition to the Pulitzer Prize, the Louisville Courier Journal and ABC News 2020 were named the winner of a prestigious Peabody award, which honors excellence in storytelling, reflecting the social issues and emerging voices of our day for outstanding work on the joint investigative documentary titled, Say Her Name: Breonna Taylor.\nThe Courier Journal collaborated with ABC News on the 2-hour documentary, and brought Gannett's knowledge and expertise together in a compelling and vital display of visual journalism.\nUSA TODAY NETWORK South region won the grand prize in the Robert F. Tenet Book and Journalism Awards for their series called Confederate Reckoning.\nDozens of journalists across five states worked on the project, which explores the shadow of racism in the American South.\nAnd finally, the USA TODAY NETWORK received several wins from the Society of Professional Journalists, Sigma Delta Chi national awards honoring the staff at USA TODAY and in Milwaukee, Indianapolis and Nashville.\nThe scope of these accolades reflects the impact our local to national news presence has on the communities we serve.\nAs we move to our second pillar in our strategy, which is accelerating growth off of our platform for Digital Marketing Solutions, I want to reiterate why we are so bullish about this business.\nFirst, this business has many similarities to a subscription or SaaS model in that it has a very high revenue and client retention from period-to-period.\nWe have historically retained 96% to 97% of customer revenue month-to-month, akin to a SaaS or subscription product.\nThere are over 30 million small businesses in the U.S., and those businesses are increasingly dependent on a digital strategy to grow their businesses and more importantly, to generate and manage leads.\nWe serve these businesses with our digital platform that helps our business partners establish and optimize their digital presence.\nWe assist them with optimizing their marketing spend across an increasingly complex online digital ecosystem while optimizing their lead management process.\nFinally, given our long-standing involvement and knowledge of the communities in which we operate, we believe that we have a true advantage at successfully reaching the small and medium-sized business segment.\nStarting this quarter, we are providing you with additional visibility into our DMS business by providing more information about our client counts, ARPU and revenue retention period-to-period.\nWith that, let me take a moment to discuss some of our DMS highlights from the second quarter.\nOur platform for our Digital Marketing Solutions segment generated revenue of $110 million in the second quarter, and that represented double-digit growth up 21.5% compared to the prior year on a same-store basis, and importantly, up 7.6% sequentially to Q1.\nOur core platform business, which we view as customers using our proprietary digital marketing services platform, grew 33% over the prior year, accompanied by significant improvement in ARPU, which we also saw, we saw a 12% sequential growth in terms of revenue over the first quarter, and that was in line with customer growth sequentially of 13% from the first quarter.\nSo strong growth as measured by all metrics in this category generated off of our platform.\nThe growth of revenue and client count is coupled with strong segment adjusted EBITDA margins as well.\nOur margins were 11.4% in the second quarter.\nThat's up from 9% in the first quarter and represents our strongest quarterly performance to date for this segment.\nWe are proud of the progress the Digital Marketing Solutions business has made over the past several quarters and are very optimistic about the opportunity for sustained long-term growth in this segment off of our platform.\nWe have included a deeper dive of Digital Marketing Solutions segment of our Digital Marketing Solutions segment, along with other key metrics in our earnings supplement, which Trisha mentioned, is available now on our Investor Relations website at investors.\nOur third strategic pillar is optimizing our traditional business across circulation and advertising.\nWithin the second quarter, we've added content to Sunday newspapers in 19 markets and will further expand that to more markets in the third quarter.\nWe've included more local news, regional coverage, sports and puzzles, and the customer feedback and early data is very positive.\nImproving retention and stabilizing our home delivery print circulation subscriber base is a strategy that impacts our results over the long term, and we are committed to making the investment in our newsrooms and in content in order to improve the lifetime value of our subscriber base.\nOur fourth pillar is prioritizing investments in our growth businesses.\nLast week, Gannett announced an exclusive strategic partnership with Typical U.S. in the sports gaming and bedding area.\nTypical U.S. is the U.S.-based sports book of Typical Group Ltd., which is the leading sports book provider in Germany.\nWith this announcement, Typical became the exclusive sports betting and iGaming provider for Gannett in the U.S. The 5-year agreement includes $90 million in media spend by Typical with Gannett, along with incremental incentives payable to Gannett for customer referrals and the ability for Gannett to acquire up to a 4.99% stake -- equity stake in Typical U.S. With a highly engaged audience of more than 46 million sports fans, over 500 dedicated sports journalists and more than 200 sports sites in our portfolio, Gannett is uniquely positioned to reach sports and gaming enthusiasts.\nThe partnership with Typical also enables Gannett to add additional value for our subscribers and loyal readers as we enhance the great sports content we already provide with Typical's incredible expertise and analysis, betting insights and odds.\nWe expect this partnership to be a huge value creator for Gannett.\nIn the quarter, Gannett also launched its inaugural NFT, which was truly a companywide effort with proceeds benefiting the Air Force Space and Missile Museum Foundation and the Gannett Foundation.\nThe first newspaper delivered to the Moon collection highlighted our unique content and our ability to use technology as we find meaningful ways to bring communities together and engage new audiences.\nGiven the vast content we've produced through our 100-plus year history, there's a tremendous archive for us to use as we ideate and explore how to bring these archives to life as compelling digital offerings.\nIt's a creative and innovative space, and we'll continue to experiment as we look to unlock the unrealized large value of our archived content.\nFinally, we saw live events begin to accelerate slightly in the quarter, although the ongoing impacts of the pandemic have muted a more robust return.\nWe held 81 events in the second quarter, with approximately 20% of them held in person.\nOur 81 events is up from 13 events in Q1 of this year and up from 75 events in Q2 of 2020.\nThe slight increase in the number of events from Q2 2020 to this quarter resulted in 4.4% revenue growth versus the prior year in our events category.\nWhile the Delta variant continues to slow the rebound of in-person events, we are hoping for more favorable conditions in the back half of the year.\nAlso last night, we aired the first ever national USA TODAY High School Sports Awards, co-hosted by Rob Gronkowski and Michael Strahan, which celebrated the best in high school sports across the country.\nThese awards, the largest high school sports recognition program in the country featured student athletes from the communities we serve, alongside professional talent such as Shaq, Aaron Rodgers, Kevin Garnett, Lindsey Vonn, just to name a few.\nThis is a prime example of our deep local engagement, combined with our national infrastructure that fuels our confidence in the long-term opportunity in our events business, and our belief that this can be a significant driver of growth for the company in the future.\nAs we look to the third quarter, we will continue to build on the early foundation set through the first half of this year.\nWe expect same-store revenue in the third quarter to grow in the low single digits as compared to the prior year.\nWe expect adjusted EBITDA to grow year-over-year again for the fourth consecutive quarter.\nAnd we expect margins in the third quarter to be in line or slightly better than our first half of the year performance in 2021.\nAs mentioned, this would represent our fourth consecutive quarter of growth and contribute to significant full year 2021 adjusted EBITDA growth as compared to 2020, which we've mentioned on the last couple of earnings calls.\nWe are very pleased with the strong execution by our team in the second quarter and the significant progress we have made against each of our key strategic growth initiatives.\nFor Q2, total operating revenues were $804.3 million, which was an increase of 4.9% as compared to the prior year quarter.\nOn a same-store basis, operating revenues increased 6.8% as compared to the prior year quarter, which was the quarter most significantly impacted by the COVID-19 pandemic.\nAdjusted EBITDA totaled $115.8 million in the quarter, which was up $37.8 million or 48.4% year-over-year.\nThe adjusted EBITDA margin was 14.4%, up from 10.2% in the prior year quarter and 12.9% in Q1.\nThis performance reflects the impact of year-over-year revenue growth while holding adjusted EBITDA expenses relatively flat.\nThese are strong results, particularly considering that the prior year benefited from approximately $150 million of largely temporary cost reductions put in place in response to the pandemic.\nOn the bottom line, we achieved $15.1 million of net income and $30.1 million of adjusted net income attributable to Gannett in the second quarter.\nMoving now to our segments.\nThe Publishing segment revenue in the second quarter was $724.5 million, up 4.2% as compared to the prior year quarter and up 5.6% year-over-year on a same-store basis.\nCurrent advertising revenue increased 10.7% compared to the prior year on a same-store basis as a result of the pandemic's impact in the prior year.\nDigital advertising and marketing services revenues increased 35.9% on a same-store basis, reflecting strong operational execution from our national and local sales teams.\nDespite a slightly smaller audience base compared to last year's peak new cycle, which was driven by the pandemic and the political environment, digital media revenue increased 46.9% versus the prior year.\nNational sales of digital advertising grew 77% as compared to the prior year and over 49% on a 2-year basis.\nWe saw strong national demand for both our owned and operated and third-party properties.\nDigital classified revenues declined 19% on a same-store basis.\nWhile this is a significant improvement as compared to the Q1 results of down 31.3%, digital classified was negatively impacted in the period as a result of lower automotive business, which is reflective of supply constraints impacting the automotive industry.\nIt is also worth noting that Q2 of 2020 was the last period that benefited from our previous relationship with Cars.com.\nMoving now to digital marketing services.\nDigital marketing services revenue in the Publishing segment grew 41% year-over-year and 17.2% quarter-over-quarter.\nThese results reflect the highest digital marketing services revenue from the Publishing segment to date, and it reflects both an increase in the number of clients sequentially over the past quarters as well as an increased ARPU as compared to the prior year.\nMoving now to circulation, where revenues decreased 9.2% compared to the prior year on a same-store basis, which compares favorably with Q1 same-store trend of down 12.9%.\nHome delivery trends declined slightly due to the prior year impact of seasonal visitors staying longer in certain of our markets as a result of the pandemic.\nAlso with regard to single copy, it is still significantly impacted by the ongoing pressure of the pandemic as a result of lower business travel, but it continued to show improvement year-over-year and was down 5.1% on a same-store basis as compared to down 31.5% in Q1.\nRecord digital-only subscriber growth yielded 40% growth in digital-only revenue.\nDigital-only subscribers grew 41% year-over-year to approximately 1.4 million subscriptions.\nDigital-only ARPU was essentially flat year-over-year as we continue to focus on growing the overall volume of our subscriber base.\nAdjusted EBITDA for the Publishing segment totaled $114.2 million, representing a margin of 15.8% in the second quarter.\nThat represents an expansion of 120 basis points over Q1 and the prior year.\nFor the Digital Marketing Solutions segment, total revenue in the first quarter was $110 million, an increase of 21.5% on a same-store basis and a substantial improvement in year-over-year trends.\nAs compared to Q1 2021, revenue grew $7.8 million or 7.6% on growing client counts -- or client accounts.\nThose that utilize our proprietary digital marketing services platform increased from 13,600 clients in Q1 to 15,300 clients in Q2, a 12.7% sequential increase.\nComparing to the prior year quarter, the core business, which accounts for 95% of the revenue in the Digital Marketing Solutions segment, increased 32.9% year-over-year.\nWhile the average client count declined year-over-year from 16,100 in Q2 of 2020 to 15,300 in 2021, that decline is attributable to the alignment of the product suite and platforms that took place in late Q3 2020, bringing together the legacy ThriveHive and ReachLocal systems onto a single platform.\nSeveral low dollar and low-margin products were eliminated from the portfolio, which had the impact of reducing overall client count by approximately 2,500 customers.\nThe more focused combined products will help fuel the year-over-year growth and the increase in ARPU from $1,600 per month in Q2 of 2020 to $2,300 per month in Q2 of 2021.\nAdjusted EBITDA for the Digital Marketing Solutions segment totaled $12.5 million, representing a strong margin of 11.4% in the second quarter, above our Q4 2020 and Q1 2021 levels and the strongest margin to date within the segment.\nThis margin growth is a result of solid execution by the direct and local market sales teams as well as an improved product portfolio.\nOur Q2 net income attributable to Gannett was $15.1 million and includes $48.2 million of depreciation and amortization.\nThe company's effective tax rate for the quarter was primarily driven by valuation allowances on nondeductible interest expense carryforwards as well as the deferred tax impact associated with the increase in the U.K. statutory rate, which will be effective in 2023.\nNet income in the quarter benefited positively from a significant reduction in integration and reorganization costs as the vast majority of the reorganization costs tied to the Gannett acquisition are behind us.\nAdditionally, we are benefiting from our improved capital structure.\nIn Q2, our interest expense was approximately $35 million, which is down 39% from the prior year.\nLet's now turn to the balance sheet.\nOur cash balance was $158.6 million at the end of Q2, resulting in net debt of approximately $1.3 billion.\nOur ending Q2 cash balance was impacted by an optional $35 million debt repayment we made during the quarter.\nCapital expenditures totaled approximately $8.2 million during Q2, reflecting investments related to digital product development, technology and operating infrastructure.\nFree cash flow in the second quarter was $23.1 million, which reflects interest payments of approximately $36.4 million.\nFree cash flow in the quarter was burdened from a working capital perspective by approximately $42 million as a result of the timing of our employee payroll and seasonality associated with accounts receivable.\nWe ended the quarter with approximately $1.5 billion of total debt, comprised primarily of $991 million of 5-year term loan and $497 million of the 2027 convertible notes.\nDuring the quarter, we repaid $450 million of debt funded through $11.2 million of real estate sales and excess cash flow.\nWe continue to optimize our real estate and asset portfolio, and we completed 28 real estate transactions for approximately $11 million in proceeds during the quarter.\nAdditionally, we expect to generate $80 million to $100 million of incremental asset sales during the second half of this year, of which approximately $20 million has already been completed in July.\nWe remain confident in our ability to achieve our first lien net leverage goal of below 1 times adjusted EBITDA by the end of 2022.\nIn summary, we are very pleased with the strong execution and financial results in the second quarter, which, as Mike noted, demonstrates solid progression against each of our strategic priorities.\nWe look forward to and anticipate continued adjusted EBITDA growth in Q3 and strong performance in the back half of 2021.\n",
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"content": "q2 revenue rose 4.9 percent to $804.3 million.\nqtrly digital revenues rose 33%.\nqtrly same store revenues increased 6.8% compared to 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: These statements reflect the participants' expectations as of today, but the actual results could be different.\nParticipants also expect to refer to certain adjusted financial measures during the call.\nAnd Tom George, our chief financial officer who will review our Q2 results in more detail and provide direction for Q3.\nFollowing an incredibly strong start to fiscal '22 we delivered an outstanding second-quarter performance as our top line accelerated even further ahead of the pre-pandemic level and we produced record Q2 earnings per share that well exceeded our expectations.\nWith much stronger revenue highlighted by robust full-price selling and good expense management our second-quarter profit for our footwear businesses also set a new record.\nThe levels at which our business performed during the first half of the year following a challenging fiscal '21 reflect a strong competitive position of our retail and branded concepts, close connections with our customers, and the compelling execution of our footwear-focused strategy to transform our business and deliver these results.\nWe are a stronger company coming out of the pandemic.\nOur results highlight the work we've done to accelerate online sales and enhance our store and omnichannel offerings, as we create and curate leading footwear brands to be the destination for our consumers' favorite fashion footwear.\nOur teams continue to do a superb job providing the right product our customers are looking for combined with exceptional service and differentiated shopping experiences.\nOur outperformance was driven by better than anticipated results across the board with all businesses exceeding pre-pandemic profit levels.\nAs excited as we are with the progress we are making, we are even more excited about our strategy and our future opportunity to build upon this foundation and drive growth, profits, and shareholder value.\nI'll begin by providing some highlights from the quarter.\nBoth revenue and adjusted operating income exceeded pre-pandemic levels increasing 14% and 346%, respectively, over fiscal year '20 two years ago and higher operating profit delivered a record Q2 earnings per share of $1.5, compared with a loss of $1.23 last year and positive $0.15 two years ago all on an adjusted basis.\nAdditional highlights include delivering another strong quarter of digital results with double-digit operating profit to achieve a 19% digital penetration.\nThis was driven by a 97% increase in digital revenue compared to fiscal year '20 as we retained almost 80% of last year's volume, which was elevated due to store closures.\nNext, driving much higher conversion and transaction size to deliver store sales that were almost at pre-pandemic level, increasing gross margin by 640 basis points versus last year and 50 basis points compared to fiscal '20, driven primarily by higher full-price selling, leveraging adjusted SG&A by 230 basis points compared to pre-pandemic levels and further strengthening of our already strong balance sheet and cash position, enabling a balanced approach of investing in our business while also returning capital to shareholders going forward.\nAs the vaccine rollout continued and economies on both sides of the Atlantic more broadly reopen, consumers aided by government stimulus stepped up their footwear purchasing in the quarter and chose to shop with our brands to satisfy their pent-up demand.\nWe were pleased that every channel contributed to the beat versus expectations.\nDigital has been a key strategic initiative and the investments we've made have allowed us to double our e-commerce business in two years.\nHowever, we've also talked about how much our customers enjoy our store experience and the important role of our stores as a strategic asset in a compelling omnichannel offering, which proved out once again this quarter.\nSo turning now to discuss each business in more detail beginning with Journeys.\nThe Journeys team once again did a tremendous job capitalizing on current market momentum and achieved record revenue and operating profit in the second quarter, marking the third consecutive quarter with record profitability.\nJourneys performance, as we emerge from the pandemic, highlights the competitive advantage the business has built and how we are leveraging those advantages to further separate ourselves from the rest of the industry as the destination for fashion footwear for teens.\nLeaning into decades of experience and its unparalleled vendor partnerships, Journeys definitely navigated global supply chain disruptions to secure a supply of the brands and styles most coveted by its customers.\nThe current fashion cycle, which has been shifting more to casual products, plays into Journeys' wheelhouse with strengthened the assortment across the board highlighted by the balance in its top 10 brands evenly split in the quarter between casual and fashion athletic.\nOn-trend merchandise assortments and effective consumer engagement through social and other channels fueled strong demand and full-price selling with particular strength in women's and kids.\nBoth store and e-com revenue were up compared to pre-pandemic levels with digital leading the way even with much higher conversion rates and transaction size driving store volumes.\nOver in the UK shoe delivered a solid top-line increase compared to the second quarter two years ago.\nAs government-mandated lockdowns were lifted and the retail sector experienced its first quarter of mostly uninterrupted operations for the first time since before Christmas.\nSchuh business rebounded steadily driven by pent-up demand and our successful efforts to drive sales of multiple pairs and even as consumers increasingly returned to physical shopping Schuh retained much of the online gains from a year ago.\nResulting in online contributing almost 45% of total sales.\nThe UK retail market is going through a highly disruptive phase with a strong consumer propensity to shop online and with many retail bankruptcies reshaping the landscape.\nThe Schuh team is taking advantage of this disruption utilizing its advanced digital offering to strengthen consumer connections during the lockdown and those efforts are paying off.\nAs the market reopens and shoppers once again have the choice to engage with the brand either online or in-store.\nMany of the product and brand trends driving Schuh's performance, as usual, are the same as Journeys, but with a slightly heavier tilt toward fashion athletic.\nAnother highlight of the second quarter was the more rapid than expected pace of Johnston and Murphy's recovery boosted by an improving market environment and strong demand for many of the brand's newest product offerings.\nWith the number of social events and family gatherings increasing and more customers returning to in-person shopping retail traffic improved each successive month during the second quarter.\nBuilding upon the gains in the first quarter.\nAt the same time, e-commerce revenue grew strongly increasing over 50% compared to pre-pandemic levels, as customers chose the digital channel to engage with the brand.\nWe were especially pleased with the performance of J&M's new athletically inspired casual assortment.\nSell-throughs were very strong with many new items selling out in both our direct-to-consumer channels, as well as in the wholesale channel where J&M gained significant market share.\nThese product launches accompanied by enhanced marketing campaigns are attracting a younger customer validating our efforts to reimagine the storied J&M brand beyond its dress-shoe roots into a modern lifestyle brand with broad consumer reach.\nWith second-quarter sales nearing pre-pandemic levels combined with strong full-price selling J&M's operating profit exceeded pre-pandemic levels.\nA remarkable turnaround compared to last year.\nThese trends are adding to our optimism for continued improvement whenever America begins the return to office phase hopefully later this year.\nRounding out the highlights from the quarter, licensed brands revenue more than doubled versus a year ago reflecting the growing contribution from the Levi's footwear license we acquired in January 2020.\nOperating profit improve versus pre-pandemic levels although not at the rate we expected due to higher freight costs, which are temporarily pressuring near-term margins.\nWe continue to be very pleased with how Levi's product is selling in accounts ranging from department stores to Journeys to Journeys kids to family footwear.\nThis has led to a strong order book for the back half and reinforces our excitement about the potential to create value by combining powerful brand licenses with our fully integrated footwear sourcing capabilities.\nTurning now to the current quarter, we have been pleased with our results today as sales track ahead of pre-pandemic levels in August and we are several weeks into the all-important back-to-school selling season.\nLast year back-to-school with like none before, since most children began the school year learning remotely.\nThis year, the vast majority of students are beginning the school year in person which is driving more robust sales while the Delta variant back to work timing and other factors will drive different patterns of consumption in the back half.\nWith a healthy and resilient consumer and the strength of our offerings, we remain confident in our ability to drive sales above the fiscal '20 level for the remainder of the year.\nWe will work hard to continue to successfully implement strategies to overcome the inventory, supply chain, labor, cost pressure, and other headwinds that are endemic in our industry today.\nTom will give additional details on our outlook.\nShifting gears, our footwear focus strategy is working and is delivering results.\nThis strategy was implemented before the pandemic leverages our strong direct-to-consumer capabilities across footwear retail and brands and the synergies between platforms.\nDriving this strategy are six strategic pillars that emphasize continued investment in digital and omnichannel.\nDeepening our consumer insights driving product innovation, reshaping our cost base, and pursuing synergistic acquisitions all to transform our business and exceed the expectation of today's consumers whose needs have rapidly advance.\nIn addition, COVID has provided us the real opportunity to transform our business at a faster rate and we are on a very good pace to deliver growth and improved operating margins.\nWhile each of the six pillars is important to achieving our future objectives, I'd like to expand on just a few of our initiatives which are driving results while Tom will discuss reshaping the cost base.\nOur strong digital growth highlights the progress we're making with this key strategic initiative.\nData-driven consumer insights, more robust CRM, and enhanced marketing are key to increasing consumer engagement and driving our next big wave of growth.\nSchuh is taking advantage of the market disruption brought on by the pandemic to invest further in new customer prospecting through digital marketing designed to target weakened competitors' customers.\nAs well as geo-targeting where competitors' physical locations have closed.\nThese efforts have helped contribute to an increase of new online customers of more than 100% compared to pre-pandemic levels.\nJourneys marketing efforts are gaining leverage by focusing on influencers who the team consumer viewed as more authentic creating a more organic experience that further builds upon the trust Journeys have established with this customer This content is being delivered through social media channel and SMS helping to drive a significant increase of 50 plus percent of new online customers.\nIn addition, Journeys continues to make progress implementing an upgraded integrated customer database with enhanced CRM capabilities, which will improve customer retention and acquisition and provide a clearer view of customer lifetime value.\nTo keep up with this increase in digital demand Journeys is wrapping up testing and bringing online another bespoke e-commerce fulfillment module, which doubled capacity ahead of the ramp-up of demand for online orders during the holiday.\nWe are underway rolling out North America new point of sale hardware and software along with new tablets advancing our efforts to digitize our stores and enhance the omnichannel shopping experience.\nFor consumers, tablets facilitate easy access to the full assortment anywhere in our system and upgrade our client telling effort and mobile checkout allows consumers to skip the checkout line.\nFor employees, this new technology creates efficiencies across a variety of in-store tasks such as new hire onboarding and employee training and communication.\nWith J&M's accelerating recovery, we can put greater focus on the next phase of reimagining the brand.\nProduct innovation and technology is at the center of differentiating J&M's casual products and commanding more premium price points.\nLaunches of the athletically inspired Amhurst and Activate collections and the expansion of the J&M golf collection were highly successful this spring and another major step moving the brand beyond its dress shoe origins.\nJ&M's design team is focused on expanding its technology toolbox with innovation including the access chassis system, which offers optimal support comfort and flexibility; TrueForm, which delivers superior cushioning and lightweight comfort; and Smart Degree, which is temperature regulation technology.\nNew product design and technology coupled with consumer insights and amplified marketing messaging will be the winning formula to grow J&M as a fresh lifestyle brand with a broader consumer reach.\nTurning to ESG, we continue to advance these efforts including the establishment of our board's ESG subcommittee and we are working toward the publication of a comprehensive ESG report next year.\nAgain, these are just a few of the initiatives that are driving the positive transformation for Genesco.\nWe look forward to updating you on our continued progress and on other initiatives.\nBefore turning the call over to Tom.\nWe've continued to superbly navigate a dynamic and challenging environment with the health and safety of each other in mind and I continue to be amazed by your drive and determination.\nGenesco's future is so bright because of you all.\nFinally, our thoughts are with our neighbors to the west of us in Nashville affected by the devastating floods last week and those impacted this week by Hurricane Ida.\nAs Mimi mentioned, total Q2 results far exceeded our expectations and last year across the board.\nFor comparison purposes, we believe that comparing to two years ago our fiscal '20 provides the most meaningful assessment of current performance and the return of our business to pre-pandemic levels.\nHowever, when comparing to fiscal '20 I would like to remind everyone how our strategy has changed our business.\nE-commerce has become a larger percentage of sales and our license brands segment has become a larger piece of the total as well due to the acquisition of Togast and strong Levi's sales.\nThese changes come with an overall lower gross margin rate due to the impact of direct shipping expense and the expansion of our wholesale volume, which should be more than offset with lower SG&A from these businesses while these changes will reshape the P&L.\nThey have a positive impact on operating margins and an added benefit of a less capital-intensive business model.\nTurning back to Q2 results, I'm pleased to report that not only did the second quarter continue, but it accelerated the sequential improvement of our operating results since the onset of the pandemic.\nHigher revenue and gross margin combined with SG&A that remains well managed led to significantly higher operating income versus fiscal '20.\nIn Q2 adjusted earnings per share of $1.5 compared to $0.15 in fiscal '20.\nIn terms of the specifics for the quarter, consolidated revenue was $555 million up 14% compared to fiscal '20 driven by continued strength in the e-commerce, which is up 97% versus fiscal '20 taking overall digital sales to 19% of our retail business compared to 10% in fiscal '20.\nDigital growth combined with much higher wholesale revenue drove strong sales improvements for Journeys, Schuh, and licensed brands compared to pre-pandemic levels while J&M made significant strides narrowing its revenue GAAP.\nWe did not provide overall or store comp results for Q2, as our comp policy removes any stores that are closed for seven consecutive days either this year or last year and therefore, we feel that overall sales is a more meaningful metric.\nWith stores open for 97% of the possible days in the quarter, overall store revenue was down only 1% versus fiscal '20.\nConsolidated gross margin was 49.1% up 50 basis points from fiscal '20 driven by full-price selling partially offset by the mix shift toward licensed brands and higher shipping costs from higher penetration of e-commerce while e-commerce puts pressure on our gross margin rate.\nAs I mentioned it comes with a lower cost structure and double-digit operating income.\nJourneys' gross margin increased 220 basis points driven by lower markdowns in both stores and online.\nSchuh's gross margin decreased 200 basis points due entirely to the higher shipping expense from the shift in the e-commerce channel mix.\nJ&M's gross margin increased 570 basis points, benefiting from fewer markdowns taken on pack and hold inventory and higher full-price selling.\nFinally the revenue growth of licensed brands typically our lowest gross margin rate negatively impacted the overall mix by 90 basis points.\nAdjusted SG&A expense was 45.3% a 230 basis point improvement compared to fiscal '20, as we leverage from higher revenue and ongoing actions around expense management.\nThe largest year-over-year savings came from occupancy costs driven by the UK government program, which provides property tax relief, rent concession across our businesses, and ongoing rent savings on renewals.\nThese savings were partially offset by higher incentive compensation driven by improved profitability and increased marketing expenses needed to drive traffic in both stores and online.\nAs the multi-year shift in consumer traffic continues toward online and away from brick and mortar, our organization has been intently focused on the critical effort to right-size occupancy costs to be in line with store traffic.\nThe pandemic has exacerbated the transition to digital and we continue to have even greater traction on rent reductions.\nYear to date through Q2, we have negotiated 75 renewals and achieved a 29% reduction in rent expense in North America.\nThis is on top of a 22% reduction for 123 renewals last year.\nThese renewals are for an even shorter-term average in approximately two years compared to the three-year average we have seen in recent years.\nWith over 40% of our fleet coming up for renewal in the next couple of years.\nThis will remain a key priority for us going forward.\nIn summary, the second quarter's adjusted operating income was $21.1 million versus fiscal '20s $4.7 million.\nAll operating divisions achieved higher operating income compared to fiscal '20 led by Journeys nearly 170% increase.\nOur adjusted non-GAAP tax rate for the second quarter was 25%.\nTurning now to the balance sheet, Q2 total inventory was down 27% compared to fiscal '20 on sales that were up 14%.\nAs we remain challenged keeping pace with the consumer demand levels and with delivery delays.\nOur ending net cash position was $284 million, $70 million higher than the first quarter's level driven by strong cash generation from operations.\nAs a reminder we currently have $90 million remaining on our board authorized share-repurchase plan and we have a solid track record of returning cash to our shareholders.\nCapital expenditures were $8 million as our spend remains focused on digital and omnichannel and depreciation and amortization was 11 million.\nWe closed eight stores and opened three during the second quarter.\nWe will not be providing guidance for the third quarter or full fiscal '22.\nHowever, I would like to provide some color around our expectations using the pre-pandemic fiscal '20 as the reference point.\nAs we transition into Q3, thus far we have experienced a more normalized back-to-school selling season for Journeys and Schuh, but as expected the impact from the stimulus, has moderated and due to the spread of the Delta variant, there are more questions around when customers will begin returning to their offices, which will impact J&M's trend and whether Delta will disrupt in-store shopping.\nSupply chain disruptions persist pressuring both the top line and product cost.\nNow getting to more specifics of Q3 starting with revenue, we expect higher revenue compared to fiscal '20 levels given the strength of our assortment.\nThis is mainly due to constant continued strength from Levi's business and growth at Journeys and Schuh.\nJ&M will likely remain under the fiscal '20s level.\nDirectionally, the overall sales increase for Q3 compared to fiscal '20 could be up mid to high single digits.\nFrom a channel perspective, the highest growth will once again come from wholesale and direct.\nWe expect gross margin rates for Q3 will be somewhat under fiscal '20 levels due to substantial pressure from import freight increases at J&M and license brands from supply chain disruptions.\nWe expect the retail promotional environment to remain favorable offsetting the ongoing pressure from higher e-commerce penetration in the higher shipping costs that come with it.\nAs well as the impact of licensed brands growth on our business model as previously discussed.\nWe expect that Q3 adjusted SG&A will be a little better as a percentage of sales than in fiscal '20.\nSequentially, we will not see the large SG&A leverage we saw in Q2 as revenue growth will be lower in the benefits from some government relief programs will be less than Q2.\nThat being said compared to fiscal '20, higher revenue will boost leverage in both occupancy and selling salaries partially offset by higher marketing and performance-based compensation as we anticipate higher bonus expenses than fiscal '20.\nIn summary, we expect the operating income to be similar to fiscal year '20 levels and the margin rate to be somewhat lower than fiscal year '20.\nDue to these factors in particular the increased import freight in our branded businesses.\nFor taxes we expect the Q3 tax rate to be around the 25% we saw in Q2.\nThe annual tax rate is expected to be approximately 30%.\nIn addition, when comparing results we had some expense pick-ups like rent abatements in the back half of fiscal '21, particularly in Q4.\nWe don't expect to recur in the back half this year.\nNext, I would like to provide a brief update on our cost savings initiative.\nGiven the shift of our business from stores to digital accelerated by the impact from the pandemic, we continue to make progress on reshaping our cost structure and allocating resources toward digital growth.\nAs a reminder, our target for the year is to identify savings in operating expenses of $25 million to 30 million on an annualized basis or approximately 3% of total operating expenses.\nThe entire organization is focused on this critical initiative and I am pleased to report that we've made significant progress toward our target.\nThe teams have identified over $20 million in savings with the largest amount coming from rent and the remainder in several areas, including increased, selling salary productivity, travel conventions, inner store freight, marketing compensation, and other overheads.\nThese savings benefit primarily the store channel and its profitability.\nThe cost savings initiative is a key pillar in our strategy to transform our business.\nDesigned to reflect the more capital efficient model focusing on driving further improvements, in return on invested capital, and allowing for improved flexibility in our operating model.\nGoing forward, we see opportunities to be less dependent on store capital expenditures, have lower lease obligations and continue to drive efficient use of inventory.\nThese results emphasize that we are the right team and the right strategy to continue to drive shareholder value.\n",
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"content": "q2 sales $555 million versus refinitiv ibes estimate of $522.4 million.\nqtrly e-commerce sales increased 97% from q2 two years ago.\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 is Mimi Vaughn, our board chair, president, and chief executive officer.\nThese statements reflect the participants' expectations as of today, but actual results could be different.\nParticipants also expect to refer to certain adjusted financial measures during the call.\nWe hope you're all staying safe and healthy.\nAs we announced earlier this week, we are pleased to report that Tom George has been appointed interim chief financial officer of Genesco, replacing Mel Tucker, who stepped down last month.\nTom has almost 30 years of CFO experience and deep roots in brands and retail, most recently in footwear at Deckers brands.\nWe look forward to adding Tom's valuable expertise to support the continued growth of our business and very much look forward to Tom joining our leadership team.\nTom's appointment is effective December 14, and in the interim, I have assumed the responsibilities of chief financial officer, working closely with Dave, Brent Baxter, our chief accounting officer; and Matt Johnson, our treasurer, who together have formed the office of the CFO.\nThese leaders and the rest of our talented finance team are ensuring that the transition will be seamless.\nDave will return later in the call to review the financials.\nI'm incredibly pleased with how well our organization performed during the third quarter as we navigated through a back-to-school season like none other.\nIt's a privilege to lead a team that is facing the challenges brought by COVID-19 head on, serving our consumers extremely well through digital and omnichannel, making progress on our strategic initiatives and quickly returning the company to profitability.\nThrough all this, we continue to operate with protocols to ensure our highest priority, the health and safety of our people and customers.\nAs you'll hear today, Journeys and Schuh are businesses serving teens and young adults that represent the large majority of our revenue, have both performed well under recent pressure.\nThis speaks to the strong strategic market positions, both concepts have built over time and their ability to capitalize on the accelerated shift to online spending.\nIn todays channel less world, where there are no barriers to shopping anywhere the consumer wants, Journeys' and Schuh's recent performance underscores the tremendous loyalty they've developed with their customers and the compelling proposition they offer to new customers.\nJohnston & Murphy enjoys a strong strategic position with great heritage as well.\nHowever, the pandemic has hit J&M's dressier competitive space harder, extending the time frame for turning this business around.\nAll in all, our teams executed with excellence, managing their businesses well as they reacted to rapidly changing dynamics during the quarter.\nIn the U.S., there was nothing normal about the cadence of back to school.\nThe selling season that's usually marked by a sharp acceleration in weekly sales starting in late July and running through Labor Day did not pack the punch that it usually does as school districts across the country delayed or suspended the return to in-person learning.\nAs we expected, we did see an extension of the selling season through September and into October.\nHowever, in total, back to school was down year over year and more heavily tilted to online.\nMeanwhile, back-to-school timing in the U.K. was consistent with historical patterns but far more consumers shopped online for their school needs than ever before.\nStores were open for about 95% of the possible days in the quarter compared to about 70% during the second quarter.\nWhile we continue to face traffic levels that are down well into the double digits, our store teams are driving record levels of consumer conversion that helps to materially offset this headwind.\nOur businesses online, on the other hand, experienced strong gains in both traffic and conversion.\nWe've said before, our e-commerce sales were nicely profitable prior to the pandemic and as we reap the benefits of the many investments we've made, e-comm is driving even greater profitability.\nNew customers continued to deliver increased volumes as new website visitors were up almost 40%, driving an almost 60% in new customer purchases.\nThe combination of these drivers led to a total revenue decrease of 11% year over year.\nThis result was better than we expected due mainly to stronger sales at Journeys and represents a meaningful improvement from last quarter's 20% decline.\nThe drop in-store volume was partially offset by another strong quarter of digital growth with comps up over 60%.\nWhile gross margins were down compared to last year, due primarily to lower margins at J&M and a mix shift among our businesses, the drop improved sequentially from the second quarter as less promotional activity as Schuh was necessary and Journeys' gross margins increased.\nWith sales and gross margin improving over last quarter combined with increased profitability in our e-comm channel, our bottom line swung solidly back into positive territory.\nThe return to profitability yielded positive operating cash generation in the quarter.\nEqually encouraging was the health of our inventories which were down more than 20%, allowing for fresh receipts of holiday merchandise.\nIn addition, the significant effort we invested with our landlord partners seeking rent abatements during the time our stores were closed, paid dividends and will bring even greater benefit next quarter.\nWe appreciate our landlord partners' willingness to find mutually beneficial solutions and hope to expeditiously reach conclusion with those discussions we have not yet concluded.\nSo turning now to discuss each business in more detail.\nJourneys' third-quarter results are influenced heavily by back to school with more than two-thirds of elementary, middle and high school students attending school only virtually to begin the year, the quarter got off to a difficult start.\nSame-store sales were down double digits in August, although e-commerce remains strong.\nThe business had an inflection point in early September as comparisons began to ease, accelerated significantly over the remainder of the month and remain strong in October as we captured our fair share of late back-to-school demand.\nWhile we were not able to fully make up for the lost volume in August, we were encouraged that store comps were nicely positive in both September and October, and e-commerce growth was even stronger than earlier in the quarter.\nComfort continued to be the fashion choice of the pandemic and Journeys' offering of casual product resonated strongly with consumers.\nWhile teens always have a big complement of fashion athletic footwear in their closets, when fashion swings toward nonathletic or what we call casual footwear, Journeys is especially well-positioned among its competition to deliver this assortment.\nThis spring a range of comfortable sandals and other casual products sold through well.\nThis fall, our consumers' appetite for boots began early and more robustly in the season than we have seen in many years.\nWhile the casual part of Journeys' assortment has been gaining ground over fashion athletic all year, Q3 delivered the largest quarterly growth so far.\nThese gains have been especially pronounced in women's and kids' as we've seen throughout the year.\nOn the other side of the Atlantic, back to school at Schuh unfolded similarly to previous years with schools starting on time and most students returning to in-person learning.\nWith its best-in-class digital capabilities, Schuh was ideally positioned to capitalize on this digital shift and capture the vast majority of lost store volume through digital sales.\nE-commerce generated almost 45% of Schuh's sales in the quarter, even with most stores being opened.\nWhile store traffic was still down considerably, back to school gave consumers a reason to shop and helped drive traffic increases -- decreases to less negative levels.\nThe blend of better store and much better online sales allowed Schuh to gain market share during the quarter.\nWith positive comps in total and only a slight decline in year-over-year revenue from closed stores, coupled with cost savings, Schuh delivered a solid year-over-year operating profit increase.\nA noteworthy achievement under difficult conditions.\nWith less competitive discounting pressure and more scarcity in supply of the brands itself, Schuh pull back significantly on promotional activity versus the second quarter which helped performance as well.\nLike Journeys, Schuh's casual assortment gain ground over its fashion athletic assortment with boot sales driving a good portion of the pickup.\nWhile performance improved from the second to the third quarter with the introduction of its fall assortment, Johnston & Murphy continues to find itself in a tough environment.\nIts customer has fewer reasons to shop with many continuing to work from home and most large social gatherings and events postponed or canceled.\nIn addition to store traffic being down over 50% for the quarter, some of J&M's airport and street locations have yet to reopen which further impacted retail sales.\nA bright spot was boot sales which began selling earlier in the season this year.\nWhile J&M historically has been known for its dressier product, the team initiated work years ago to evolve Johnston & Murphy into a full lifestyle brand with a range of footwear and apparel offerings from dressier to more casual.\nHighlighting the traction we've already made, casual and casual athletic represented about 60% of footwear during our last fiscal year and apparel and accessories drove 40% of total sales.\nLooking forward to the coming year, J&M has focused 90% of new product development on the expansion of its casual offering to include casual athletic, leisure, rugged outdoor and performance which follows upon its highly successful reentry into Gulf this spring.\nLeading these efforts is a new Head of Product Development, who joined J&M earlier this year and brings a successful track record developing casual brands.\nAs the J&M customer returns to work and socializing which we hope with the recent medical advances will be sooner than later, J&M's assortment will be ready for the post pandemic lifestyle.\nSo turning now to the current quarter.\nWe believe we have the right assortments and are ready for this holiday season.\nThat said, consumer demand has been very different this year due to the pandemic and its impact on consumer behavior and the economy which has caused us to take a conservative approach to our outlook.\nIn November, we faced headwinds from the reclosure of stores in North America and the U.K. as we carefully monitor and adhere to each country's and region's health requirements.\nAnd as a result, we're closed for more than 10% of the possible operating days in the month.\nThe biggest impact was in England and Ireland, where we had the best potential to make up some of these sales online and most stores have reopened at this time.\nFollowing strong gains in September and October, sales moderated and November got off to a slower start against robust comparisons a year ago.\nWe were encouraged to see trends improve quite a bit around mid-month, providing the business with good momentum heading into Black Friday.\nFor the Black Friday weekend itself, as expected, traffic was more subdued than usual.\nIn spite of the choppiness, November sales were in line with our expectations with an even heavier mix of digital versus store sales.\nThe lion's share of the holiday season remains ahead of us.\nOutside of Cyber Week, digital sales were normally strongest during the earlier part of December.\nWith recent investments across mobile, our platforms, our websites and our distribution centers, we're prepared to handle what we anticipate will be record holiday digital volumes.\nWe've helped the customer adjust to the pandemic online by introducing services like Klarna at Journeys this summer which is a pay in four installment option that is driving much larger transaction size and offering technology on our website that helps customers determine what size is best to order.\nWith the ability to fulfill online orders via our distribution centers or from any of our almost 1,500 store locations, we're well-positioned to meet the surge in demand.\nEarlier this year, we upgraded our inventory locating an order brokering system to provide greater inventory accuracy which is critical during this peak sales period.\nThis system also allows functionality such as tiering stores to protect inventory in our highest volume stores, enabling us to better optimize sales across our network.\nEven with the acceleration in online demand, the majority of holiday sales will still take place in our physical locations.\nOur stores become even greater strategic assets as we get closer to Christmas and customers don't want to risk online orders not arriving in time.\nThis is the first year we'll have holiday comparison data in our workforce management system since we implemented it last year.\nThis technology proved invaluable in managing the unusual traffic patterns during back to school and will enable us to rapidly add or remove labor to optimize store staffing levels during this unusual holiday season.\nThis holiday will be about execution, something we do well that will differentiate us among others.\nWe've also developed some terrific marketing campaigns, adjusted for what we learned during the pandemic to drive traffic and sales in this important holiday selling season.\nWe've increased digital marketing spend substantially and are leveraging our CRM systems to inform our digital, social and other advertising efforts.\nAs conditions normalize and we make further progress on our strategic initiatives, I am confident we'll emerge strong and be well-positioned with more than enough liquidity to take advantage of the many opportunities the pandemic has presented.\nWe appreciate your efforts all year round, but really especially in this busy holiday season in the midst of the pandemic.\nWhen I'm certain you'll go the extra mile to delight our customers.\nI'm also so proud of the work our teams are doing in the communities we serve including donating shoes and masks and supporting our diversity and inclusion initiatives.\nFinally, we wish you and your family's happiness and good health this holiday season.\nAnd with that, I'll pass the call back over to Dave.\nWe were very pleased under the circumstances with our performance in Q3 and the return to profitability against the backdrop of the pandemic.\nIn Q3 sequential improvement compared to the prior two quarters in both revenue and gross margin, along with a lower tax rate and a small pickup in SG&A drove results back to nicely positive levels with adjusted earnings per share of $0.85 compared to $1.33 last year.\nFor the third quarter, ending cash was $115 million, with borrowings of $33 million for a net cash position of $82 million.\nJust a little below second-quarter's levels.\nWe entered the quarter with $299 million of cash.\nAnd during the quarter, operations generated $5 million while we spent $8 million on capital projects and paid down $178 million in borrowings using $184 million in total.\nIn addition, we continue to have outstanding rent payables as we remain in active negotiations with a number of our landlords.\nWhile the business environment continues to be fluid, we are confident we have adequate liquidity to navigate these challenging times and decided to pay down the majority of our revolver balances in both North America and U.K. during the quarter.\nAs a reminder, early this year, we increased our North American ABL borrowing capacity to $350 million.\nfacility replacing an expiring one.\nTurning to the specifics of the quarter.\nConsolidated revenue was $479 million, down 11% compared to last year driven by a lower back-to-school revenue, continued pressure at J&M and the impact from store closures during the quarter.\nRobust e-commerce comp of 62% was offset by a decline in-store revenue of 22% driven by a comp decline of 18%, while our stores were closed for 5% of the possible operating days during the quarter.\nDigital sales increased to 21% of retail business from 11% last year.\nOur comp policy removes any stores that are closed for seven consecutive days.\nAnd therefore, we are providing both overall and comp sales by business to give better insight into performance.\nOverall, sales were down 10% for Journeys with comp sales down 6% while store traffic was down well into double digits, much higher conversion and transaction size lifted Journeys' comps.\nAt Schuh, overall sales were down 3%, while sales were up 1%.\nAt J&M, overall sales were down 45%, and comp sales were down 43%.\nOur licensed brands, overall sales were up 91% due to Togast acquisition.\nConsolidated gross margin was 47.1%, down 210 basis points from last year, 100 basis points of which was related to J&M.\nConsistent with last quarter, increased shipping to fulfill direct sales pressured the gross margin rate in all of our businesses, totaling 50 basis points of the total overall decline.\nJourneys' gross margin increased 110 basis points driven by lower markdowns.\nSchuh's gross margin decreased 320 basis points, more than half of which was due to increased e-comm shipping expense with the balance due to higher penetration of sale products.\nJ&M's gross margin decrease of 1,370 basis points was due to more close outs at wholesale, incremental inventory reserves and higher markdowns at retail.\nFinally, the combination of lower revenue at J&M, typically our highest gross margin rate of our businesses and the revenue growth of licensed brands, typically our lowest gross margin rate negatively impacted the overall rate mix.\nAdjusted SG&A expenses were down 11%.\nAnd as a percentage of sales, leveraged 10 basis points to 44.1% as we realized the collective benefits of our organization's disciplined actions to manage expenses and relief from government programs.\ngovernment programs which provides property tax relief.\nThe next largest areas of savings came from bonus expense and the reduction in store selling salaries.\nCompensation expense benefited from reduced operating hours and government salary relief provided in Canada and the U.K. Given the added cost of driving customer traffic to our stores and websites, our organization is intently focused on the strategic initiative of reshaping the cost structure.\nOne of the most impactful areas has been a multiyear effort centered around occupancy costs, and we have achieved even greater traction this year with the pandemic.\nIn addition to the rent abatement savings, we have negotiated 58 renewals year-to-date and achieved a 28% reduction in cash rent or 27% on a straight-line basis in the U.S., this was on top of an 11% cash rent reduction or 8% on a straight-line basis or 160 renewals last year.\nThese renewals are for an even shorter-term, averaging approximately one and a half years compared to the three year average we saw last year, with almost a third of our fleet coming up for renewal in the next 24 months, we should make substantial progress here.\nIn summary, the third-quarter's adjusted operating income was $13.9 million versus last year's adjusted operating income of $26.7 million.\nBoth Schuh and licensed brands generated operating income increases over last year, while Journeys was lower and J&M saw the largest year-over-year decline.\nOur adjusted non-GAAP tax rate for the third quarter was 4% reflecting the impact of foreign jurisdictions for which no income taxes were recorded.\nTurning now to the balance sheet.\nQ3 total inventory was down 22% on sales that were down 11%.\nJourneys' inventory was down 28% on sales that were down 10%.\nSchuh's inventory was down 22% with sales that were down 8% on a constant currency basis.\nBoth Journeys and Schuh will continue to chase inventory during Q4, adding fresh merchandise to increase these levels.\nJ&M's inventory was down 3% on sales that were down 45% reflecting the pack-and-hold inventory and the level of reserves we believe will be adequate to better rightsize the current inventory levels.\nCapital expenditures were $8 million as we -- as our spend remains focused on digital and omnichannel and depreciation and amortization was $11 million.\nWe closed seven stores and opened seven during the quarter.\nGiven the continued uncertainty due to the pandemic, we are not providing guidance this quarter, but we'll share some current thoughts on the business going forward.\nQ4 revenue usually is dependent upon performing well during what are traditionally, the peak volume times of the holiday season.\nThis year, we are more conservative about those consumer peaks materializing.\nTherefore, thinking about revenue, the year-over-year percentage decline in overall sales in the fourth quarter could be just a little bit more than the decline in the third quarter as a result of this.\nThat said, if consumer demand is stronger during the peaks, we believe we are well-positioned to capture our fair share which would result in us exceeding these levels.\nThis does not contemplate any additional store closures or restrictions beyond what we know today which could be a bigger headwind.\nFor the month of November, stores were open for about 88% of the possible operating days and currently, 97% of our stores are open.\nStores have also been operating on more limited hours.\nGross margin rates versus last year for Q4 should be in the range of the decrease we saw in Q3.\nThe Q3 headwinds of higher e-commerce penetration, J&M gross margin pressure and the negative impact from the mix of businesses we expect will persist into Q4.\nWe expect SG&A in Q4 to leverage quite a bit from last year's levels, as we continue to benefit from ongoing cost reduction efforts and get some substantial help from rent abatements.\nWhile the annual tax rate is expected to be approximately 18%.\nI'd like to highlight that in the fourth quarter, we expect it to be approximately 40%.\nIn conclusion, I would like to echo Mimi's comments on our amazing teams, who have executed so admirably throughout this entire year.\nFrom store closings and reopenings through an unprecedented back-to-school season and now in the middle of the most important holiday season, the talent and perseverance shown during this challenging year leaves me with much to be admired and appreciated.\n",
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"content": "compname reports q3 adjusted earnings per share $0.85.\nq3 non-gaap earnings per share $0.85 from continuing operations.\nq3 sales $479 million versus refinitiv ibes estimate of $457.2 million.\nco is not providing guidance at this time.\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 reflect the participants' expectations as of today, but actual results could be different.\nParticipants also expect to refer to certain adjusted financial measures during the call.\nWith me on the call today is Mimi Vaughn, board chair, president, and chief executive officer.\nAnd Tom George, chief financial officer, will review Q3 results in more detail and provide guidance for Q4.\nAs we announced last month, and you just heard, I'm very pleased we've removed interim from Tom's title.\nTom brings almost 30 years of CFO experience and deep roots in brands and retail, most recently at Deckers Brands.\nHe has been a tremendous asset to the organization since joining us a year ago, helping guide the business through a period of significant recovery and growth.\nWe're excited he's part of our leadership team and will continue to benefit from his knowledge and expertise as we grow Genesco going forward.\nNow onto recent performance.\nBuilding off an extremely strong first half of the year, we delivered another record earnings per share that well exceeded our expectations, fueled by a very successful back-to-school selling season.\nAs expected, sales were up considerably from last year, but what's most exciting is the double-digit increase over pre-pandemic level.\nWe entered the pandemic in a position of strength, are navigating the pandemic well and will enter the post-pandemic phase even stronger.\nWhile the current market conditions have presented a number of external challenges, including supply chain disruptions, labor shortages and wage increases, elevated freight expense, and other cost pressures, we are managing through them adeptly.\nThis quarter's performance highlights the differentiated competitive positions of our retail and branded concepts, strong consumer engagement, and the strategic advantages delivered through our footwear-focused strategy as we work to transform our business.\nIn particular, our results spotlight Journeys and Schuh as the leading destinations for teen and youth fashion footwear.\nCustomers view them as unparalleled fashion authorities, validating whatever brands they're currently selling and are increasingly turning to our concept for their branded footwear needs.\nand the U.K. as students largely return to in-person classes in the U.S. for the first time.\nSales at Journeys and Schuh exceeded pre-pandemic level.\nAnd while sales volumes typically moderate after the back-to-school rush, we were very encouraged that demand accelerated throughout the quarter and remained strong into October.\nI'll call out for Q3 overall was the robust consumer appetite for in-person shopping even as the number of COVID cases spiked, which allowed us to drive a 30% increase in store sales over last year.\nAlthough traffic is still below pre-pandemic levels, it improved across the board to the best levels we've seen.\nOur ability to capitalize on the increased demand would not have been possible without the commitment and drive of our store teams who worked tirelessly to prepare and execute a successful back-to-school.\nCongratulations to our entire field organization on a job well done.\nThese results reinforce our view that kids like to shop in person even if they begin their shopping journey online, making our stores a strategic asset working in tandem with our digital capabilities.\nI'll now provide some key highlights from this important back-to-school quarter.\nThird quarter revenue of $601 million increased 25% versus last year and 12% versus two years ago.\nAnd revenue growth, better-than-expected gross margins, and expense leverage resulted in an operating income increase of almost 70% over pre-pandemic levels and record earnings per share of $2.36 compared with $0.85 last year and $1.33 two years ago, all on an adjusted basis.\nAdditional highlights include: the robust store sales I've already talked about plus another quarter of strong digital growth; digital sales, which come with double-digit operating margins, increased 11% year-over-year and 79% compared to fiscal '20.\nWith this, our e-commerce business now represents 18% of total retail sales and is approaching $0.5 billion; next, increasing gross margin by 210 basis points versus last year, driven primarily by higher full-price selling and price increases while being flat with fiscal '20 in spite of the changing mix of our business and some freight expense pressure; leveraging adjusted SG&A by 260 basis points compared to pre-pandemic levels, as we make progress on efforts to reshape our cost structure; and finally, restarting our share repurchase activity by buying back $31 million of Genesco stock, demonstrating our strong financial position, confidence in our future, and commitment to a strong track record of returning capital to shareholders.\nAs excited as we are about this quarter, we are even more excited about driving our strategy forward to deliver additional growth, profits, and shareholder value.\nSo, turning now to discuss each business in more detail.\nStrong consumer demand for a variety of brands and styles drove continued momentum as Journeys achieved record third quarter revenue and operating profit, marking the fourth consecutive quarter of record profitability even while operating with inventory almost 30% below pre-pandemic levels.\nLeveraging its industry-leading vendor partnerships and deep talent and experience, Journeys merchants selected and secured a compelling assortment of footwear most desired by its team customer.\nThe current fashion cycle, which I've been describing as shifting more into casual, plays into Journeys strength with a nicely diversified assortment.\nHowever, for this back-to-school, performance was strong in several categories across both casual and fashion athletic.\nNine of the top 10 brands experienced year-over-year growth in the quarter.\nIn addition, the in-person back-to-school also drove a big pickup in non-footwear sales, like backpacks, with non-footwear up over 50%.\nWith consumers willing to spend more for full-priced items, coupled with higher footwear ASPs, Journeys also experienced a nice lift in gross margins.\nDirect sales held on to most of last year's very strong gains as Journeys increased social media and digital advertising, driving an almost 30% increase in online conversion versus two-year-ago results.\nRecent market research validated that our strategies are further building the strength of the Journeys brand as Journeys share of teen footwear purchases and likelihood to be considered as a go-to place for shoes have both increased nicely since the last time the research was conducted.\nWe were also very pleased with Schuh's back-to-school performance as Q3 constant currency sales increased almost 20% above pre-pandemic sales.\nAlthough students attended school in person last year, this year, shoppers increasingly return to physical retail, and our store teams drove higher conversion and more multi-sales on the best traffic of the year.\nThe return to stores did not impede the growth of online with direct sales notching large gains on top of last year's meaningful growth as the e-commerce channel more than doubled on a two-year basis.\nFueling this growth were several back-to-school key marketing campaigns and increased spending.\nThe fashion trends driving Schuh's business are largely the same ones driving Journeys, and several of Schuh's top 10 brands experienced growth in the quarter as well.\nAdditionally, Schuh's success managing through COVID strengthened its key vendor partnerships, boding well for the future with even better access to products.\nTurning now to our branded side.\nOur plan to reimagine Johnston & Murphy for a more casual, more comfortable post-pandemic environment is delivering tangible results.\nHardest hit by COVID, J&M is tracking well ahead of its turnaround goals.\nSales improved further in Q3, both online and in stores but are still below two-year-ago levels due to the extended delays of return to the office and lower inventories from supply chain disruption.\nDelayed deliveries and much stronger-than-expected demand put J&M's inventory almost 50% below two-year-ago levels.\nWe are especially pleased with the performance of J&M's new athletically inspired casual product.\nCasual footwear now makes up more than 70% of DTC footwear product sales with casual athletic increasing 120% versus last year.\nJ&M's marketing strategy in which we highlight innovation and technology features new products such as the bags, which was presented in the September advertising campaign and resulted in an 80% sell-through by the end of the month.\nIn addition, J&M's apparel business, highlighted by printed woven shirts and knits, increased by over 30% versus two years ago, endorsing efforts to position J&M as a modern lifestyle brand with broader consumer reach.\nRounding out the discussion, Licensed Brands, unfortunately, saw the biggest challenges from supply chain disruption, which led, among other things, to much higher-than-expected freight costs.\nOn a positive note, there was strong demand for both Levi's and Dockers footwear in value and full-price channels, which positions the business for improved profitability and supply challenges subside.\nTurning now to the current quarter.\nWe have trend-right assortments and are well-prepared for the holiday season, which many will celebrate together for the first time in two years.\nWe were very pleased with our results in November, as sales tracked nicely ahead of pre-pandemic levels, and the boot season is off to a good start with boots as a key part of our fourth quarter mix.\nFor the Black Friday weekend itself, we were also pleased with the results.\nWhile supply chain issues will continue to require close management, we have taken many actions to best prepare our businesses to meet our holiday sales expectations.\nGiven the recovery and confidence we have, we are returning to giving guidance.\nWe expect adjusted earnings for fiscal '22 to be between $6.40 and $6.90 per share.\nWe regard this guidance as a range, but somewhere close to the middle reflects our best current belief of where we would come out, representing an increase of about 45% over fiscal '20.\nTom will give more guidance details later in the call.\nOur footwear-focused strategy is delivering results.\nCOVID has provided the real opportunity to transform our business at a more rapid rate and we are on a very good pace delivering growth and improved operating margins and EPS.\nThis new direction leverages our strong direct-to-consumer capabilities across footwear retail and brands and the synergies between platforms.\nDriving this strategy are six strategic pillars that emphasize continued investment in digital and omnichannel, deepening consumer insights, driving product innovation, reshaping our cost base, and pursuing synergistic acquisitions, all to transform our businesses and exceed the expectations of today's consumer whose needs have advanced.\nI'd like to give a brief update about some of the work underway.\nWe have rolled out at Johnston & Murphy in the U.S., new point-of-sale hardware and software, along with new tablets advancing efforts to further digitize our stores and enhance the omnichannel shopping experience.\nFor consumers, tablets allow easier access to the full merchandise assortment anywhere in our network.\nMobile checkout allows consumers to skip the checkout line.\nThe new software enables new payment methods like Venmo, and we are able to upgrade our clienteling efforts.\nFor employees, the new technology creates efficiencies across in-store tasks, such as visual merchandising and new hire onboarding.\nAfter the holidays, we will roll out this technology at Journeys and will benefit from these capabilities in our next fiscal year.\nJourneys research shows that while our digitally native Gen Z customer interacts with us across several digital touchpoints, up to 75% intend to make their purchases in-store, requiring investment to provide a compelling store experience.\nJourneys also brought online a bespoke e-commerce packing module with carton on-demand capabilities, which is helping speed fulfillment of online orders during this peak holiday period and keep up with a much higher digital demand.\nAn added benefit is we are able to keep our stores well stocked for in-person shopping.\nFinally, Journeys piloted on its website and pleased with the conversion results plans to roll out augmented reality software, which enables customers to virtually try on and visualize what a pair of shoes would look like on their feet.\nBuilding deeper consumer insights is another pillar where Journeys is dedicating substantial effort starting with first-party data.\nOur methods for capturing first-party data and being able to identify Journeys' customers continue to improve.\nBecause of the trusted relationships we have with our team, consumer, and their parents, the efforts of our people to collect customer information in stores, combined with our notable online growth, has improved visibility.\nAnd we're currently able to identify 80% of Journeys' customers.\nIdentified customers enter the Journeys' marketing ecosystem and depending on their preferred method of communication receive a combination of digital, email, SMS, social, and direct mail marketing.\nIn parallel, we're in the process of moving our customer database in-house, cleansing our existing data, and populating a data lake.\nAlong with the customer segmentation from our primary research, this will enable us to invest in differentiated marketing content that drives consumer engagement, whether we're speaking with the consumer who love shoes and wants to stand out or the consumer who cares a lot about fitting in and wearing shoes their friends were.\nIn a fragmented industry and knowing our teams enjoy wearing a variety of footwear brands, our aim is to drive loyalty, further consolidate their purchases and take a larger share of our customers' closets.\nTouching now on ongoing initiatives of giving back to our communities.\nIn the fall, Journeys ramped up efforts across North America in partnership with a nonprofit candidate, Journeys employees in 73 cities came together to build and donate 1,500 skateboards to underserved use.\nIt was the largest employee-driven giveback campaign in our history, with more high-impact events to come.\nWe're advancing our ESG program on this and on other fronts, with the key milestone being the start of an enterprisewide carbon footprint assessment as we work toward publishing a comprehensive ESG report next year.\nI'm continually inspired by the drive and the dedication of our people and saw so many examples over Black Friday weekend, as you're all going the extra mile to serve our customers so well.\nWe continue to execute well on our strategy.\nThird quarter results exceeded our expectations in pre-pandemic fiscal year '20 levels.\nWe achieved better-than-expected sales, margins, and SG&A leverage, all on significantly lower inventory levels.\nBefore I get into the details of the quarter, I want to remind you, we believe that comparing to our pre-pandemic fiscal '20, two years ago provides the more difficult and often most meaningful assessment of our business.\nHowever, when comparing to fiscal year '20, keep in mind how our strategy has changed our business.\nE-commerce has become a larger percentage of sales along with wholesale sales for licensed brands.\nThese changes come with an overall lower gross margin rate due to the impact of direct shipping expenses and the expansion of our wholesale volume.\nHowever, this should be more than offset with lower SG&A from these businesses.\nWhile these changes are reshaping the P&L, they have a net positive impact on operating margins and an added benefit of a less capital-intensive business model.\nIn terms of the specifics for the quarter, consolidated revenue was $601 million, up 12% compared to fiscal '20.\nJourneys grew 7% while Schuh grew 17% on a constant currency basis, and we doubled our licensed brands business.\nRegarding J&M, we are pleased with the continued momentum we are seeing.\nWe were 8% below fiscal year '20 levels, and we continue to narrow the gap.\nFrom a channel perspective, we experienced increases in all channels.\nE-commerce was up 79% to fiscal year '20 and accounted for 18% of total retail sales, up from 11% in fiscal year '20.\nWith stores opened 99% of the possible days during the quarter, we are going back to providing comparable sales information versus last year for the stores open in both periods.\nOn a year-over-year basis, Journeys and Schuh drove positive overall comps of 15% and 23%, respectively, while J&M comps were positive 77%.\nWe were very pleased with gross margins, which were up 210 basis points to last year and flat at 49.2% versus two years ago.\nStrong full-price selling and price increases offset the channel mix impact of increased e-commerce and wholesale and increased logistics costs.\nIncreased logistics costs put approximately 70 basis points of pressure on Q3 gross margin were the greatest drag in our branded businesses.\nJourneys gross margin was up 140 basis points to fiscal year '20, driven by more full-price selling and higher footwear ASPs.\nWhile Schuh's gross margin was down 180 basis points to fiscal year '20 due to a higher e-com mix and higher shipping expenses.\nJ&M's gross margin was up 230 basis points to fiscal year '20, benefiting from strong full-price selling, which also drove the release of slow-moving inventory reserves.\nFor J&M, additional logistics costs put 240 basis points of pressure on J&M's Q3 margins.\nFinally, licensed brands gross margin was down 150 basis points to fiscal year '20, as we experienced 740 basis points of pressure on Q3 margins from additional logistics costs, which more than offset margin improvements in the business.\nAdjusted SG&A expense was 41.6%, a 260 basis point improvement compared to fiscal '20 as we leverage from higher revenue and ongoing actions to manage expenses.\nIn addition, we experienced leverage in selling salaries and depreciation, partially offset by deleverage in marketing expenses.\nAs part of the SG&A discussion, I would like to provide a brief update on our $25 million to $30 million cost savings initiative.\nI'm pleased to report we have identified the full amount of the target for this fiscal year.\nA significant portion of the savings is from rent reductions with the remainder in several areas, including travel, conventions, inter-store freight, compensation, and other overheads.\nThe full effect of these savings will be realized by the end of fiscal year '23.\nThese savings are part of the ongoing multiyear effort of reshaping our cost structure by improving store channel profitability.\nRegarding rent reductions, year to date through Q3, we have negotiated 129 renewals and achieved a 19% reduction in rent expense in North America on a straight-line basis.\nThis was on top of a 22% reduction or 123 renewals last year.\nThese renewals are for an even shorter term, averaging approximately two years compared to the three-year average we have seen in recent years.\nWith 40% of our fleet coming up for renewal in the next couple of years, this remains a key priority.\nIn summary, third quarter adjusted operating income was $45.2 million, a 7.5% operating margin compared to $26.7 million or 5% for fiscal year '20.\nThis quarter's profitability provides strong evidence of the operating margin expansion opportunity achievable with our footwear-focused strategy.\nOur adjusted non-GAAP tax rate for the third quarter was 23%.\nTurning now to the balance sheet.\nQ3 total inventory was down 28% compared to fiscal '20 on sales that were up 12%.\nAs we remain vigilant in keeping pace with consumer demand in the face of delivery delays.\nOur strong net cash position of $267 million and our confidence in the business enabled us to repurchase 522,000 shares of stock for $30.6 million at an average price of $58.71 per share.\nWe currently have $59 million remaining on our share repurchase authorization.\nRegarding capital allocation, our first priority is to invest in the business then continued to return cash to our shareholders through opportunistic share repurchases.\nCapital expenditures were $15 million, and depreciation and amortization was $10 million.\nWe closed five stores during the third quarter to end the quarter with 1,434 total stores.\nNow, turning to our outlook.\nGiven the recovery and confidence we have, we are returning to providing annual guidance.\nBased on the strength of our performance this year to date, current Q4 visibility, and expectations for a more normal holiday selling season, we expect fiscal year '22 sales to grow 9% to 11% compared to the pre-pandemic fiscal year '20.\nFor adjusted earnings, we expect a range of $6.40 to $6.90 per share.\nOur best current expectation is that earnings will be near the midpoint of this range, an increase of 45% over fiscal year '20 pre-pandemic levels.\nNote that our full year guidance does not anticipate any further significant supply chain disruptions nor increased negative consumer or economic impact from COVID, including new COVID variants.\nAlthough our plan going forward is not to provide quarterly guidance, given the current timing of restarting formal guidance, we would like to provide insights into Q4.\nNote that all the comparisons we make are to pre-pandemic fiscal '20 Q4.\nImplicit in the annual guidance is an expectation for Q4 sales growth versus fiscal '20 at the midpoint to be in the mid-single digits.\nQ4 adjusted earnings per share would range from $2.22 to $2.72 per share.\nAnd again, our best current expectation is for earnings to be near the midpoint of this range.\nWe expect gross margin rates for Q4 to be relatively flat versus fiscal year '20 levels with a possible 30 basis point swing in either direction.\nWe believe the promotional environment will remain favorable, and this range represents the degree of full-price selling we could achieve.\nSimilar to Q3, we expect channel mix as well as increased logistics costs to pressure gross margins.\nIncreased logistics costs are expected to pressure gross margins by 130 basis points and will offset to some extent these improvements in full-price selling.\nWe expect Q4 adjusted SG&A as a percentage of sales to deleverage in the range of 180 to 200 basis points compared to fiscal year '20.\nThis is driven primarily by increased advertising and marketing costs, particularly in brand advertising and digital marketing related to cost per click and higher performance-based compensation associated with the expected improvement in annual results, partially offset by leverage in occupancy cost.\nAs a reminder, fiscal year '20 Q4 performance-based compensation was relatively low, and this year's level reflects the improved performance that we have experienced on a year-over-year basis.\nOne more factor worth mentioning on the Q4 SG&A rate is we are not expecting the same amount of onetime government relief or rent abatements we experienced in Q3 this year or last year in Q4.\nOur guidance assumes no additional share repurchases for the remainder of the fiscal year, which results in Q4 weighted average shares outstanding of approximately 14.3 million.\nFurthermore, for Q4, we expect the tax rate to be approximately 28%.\nIn summary, this all results in an expected Q4 operating margin below FY '20 levels in large part driven by cost pressures unique to the fourth quarter this year.\nWe have the right team and the right strategy to continue to drive shareholder value.\n",
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"content": "q3 non-gaap earnings per share $2.36 from continuing operations.\nq3 sales rose 25 percent to $601 million.\nsees fy adjusted earnings per share $6.40 to $6.90 from continuing operations.\nqtrly same store sales increased 25% over last year.\nsees fy22 sales to be up 9% to 11%, compared to fiscal 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: These statements reflect the participants' expectations as of today, but actual results could be different.\nParticipants also expect to refer to certain adjusted financial measures during the call.\nWe hope that you are all staying safe and healthy.\nI'd like to begin by welcoming Tom, who with almost 30-years of CFO experience and deep roots in brands and retail, has been a tremendous addition to our team as we drive the recovery in our business and the return to profitable growth.\nWe concluded an incredibly challenging year with a fourth quarter that exceeded our expectations across the board.\nOur performance was driven by record digital revenue and superb all-around results at Journeys, highlighted by our stronger-than-anticipated store volume.\nAs it did throughout fiscal '21, our organization successfully navigated difficult operating conditions to serve our customers this time during the all-important holiday selling season.\nI could not be more proud of how well our teams have also executed during the pandemic.\nThey have faced each new challenge in a very dynamic environment with tenacity and ingenuity while operating under protocols to ensure our highest priority, the health and safety of each other and our customers.\nBefore we get into a review of fourth-quarter performance, I'd like to highlight some of the major accomplishments from fiscal '21.\nStarting with the significant and unfamiliar task of efficiently closing and then swiftly reopening our entire fleet of nearly 1,500 retail locations, some of them multiple times.\nCapitalizing on the accelerated shift to online spending, achieving record digital revenue of $450 million, an increase of almost 75% year over year while also fueling record profitability for this channel, driving record conversion rates in stores, helping us to partially offset the impact from lower traffic levels and store closures.\nIncreasing market share in Journeys and Schuh, which represent a large majority of our revenue with their ability to retain sales in this face of the pandemic disruption.\nConserving capital and reducing operating expenses by 15% compared with fiscal '20, generating cash flow of over $130 million to ensure healthy liquidity.\nAnd so finally, delivering sequential improvement every quarter.\nIn particular, bottom line results reflect the strong foundation we built for the digital channel prior to the pandemic.\nOur online business generated double-digit operating margins before COVID-19 due to our focus on full price selling, disciplined marketing spend and shipping and return policies to reinforce profitability.\nOur overall performance under difficult circumstances also reflects the strong competitive positions of our retail concepts prior to COVID-19 and our success capitalizing on opportunities to further strengthen the leadership positions of our teen and young adult footwear businesses.\nIn today's channel-less world, where our consumer can shop anywhere the consumer wants, Journeys and Schuh's results underscore the tremendous loyalty they've developed with their existing customers and compelling proposition they offer new customers.\nSo turning now to the fourth quarter.\nThe work we did to have the right assortments and right holiday campaigns helped deliver Q4 results then are ahead of expectations in spite of some store closures not anticipated in the U.K. and Canada and supply chain delays and disruption.\nWhile we continue to face softer traffic levels than one year ago across our retail businesses, Journeys stores posted a nice improvement compared with the third quarter as more shoppers visited Journeys locations during the peak weeks leading up to Christmas.\nOur store teams once again drove very strong levels of the customer conversion to help materially offset the headwinds from less traffic.\nMeanwhile, our business online, especially mobile, experienced very strong gains in both traffic and conversion, with new customers, again, driving increased volumes.\nNew website visitors were up 40%, contributing an almost 50% growth in new customer purchases, and we delivered another strong quarter of this digital growth with comps up 55%.\nThe combination of these factors led to a total revenue decrease of 6% versus last year, with stores open about 90% of the possible days in the quarter.\nThis result was better than we expected due mainly to the stronger store sales at Journeys and that represents a meaningful improvement from last quarter's 11% decline in Q2's 20% decline.\nWhile gross margins were down compared to last year, the gap narrowed for the third consecutive quarter and the sequential improvement was driven by an increase at Journeys due to the strong full price selling.\nAs a result of decisive cost containment actions, along with onetime benefits, including substantial rent abatements recognized in the quarter, we drove total expenses down twice as much as revenue on a percentage basis.\nInclusive of the rent abatements, operating income was up year over year.\nBy tightly managing inventory throughout the year, we had the flexibility and confidence to bring in new fresh product.\nHowever, much lower year-end numbers that also reflect the disruption in the supply chain which caused delays, especially at Journeys and Schuh, where we would have liked to have received product earlier.\nTurning now to discuss each business in more detail.\nLet's start with Journeys and begin by congratulating our team on its impressive results across the board.\nJourneys delivered record operating profit in the biggest quarter of the year in the midst of a pandemic.\nFourth-quarter top line results matched last year's levels as the merchant team skillfully interpreted trends making the right product calls and its store and digital teams delivered an exceptional customer experience.\nWhen our stores were open this year, Journeys that customers were enthusiastic to shop our physical locations and engage with our people.\nAnd over the holidays, we were pleased by the strong appetite to shop our stores.\nWith replenishment orders for many key styles arriving post holiday, combined with the first wave of these checks from the December stimulus program delivered early in the new year, the business accelerated as January progressed, leading to a strong finish to the quarter.\nComfort reigns as the fashion choice of the pandemic and Journeys' offering of casual product continued to resonate strongly with consumers.\nWhile teens always have a big complement of fashion athletic footwear in the closets when fashion swings toward non-athletic or what we call casual footwear, Journeys' is especially well positioned among its competition to deliver this assortment.\nThis Fall and winter, our consumers' appetite for the Boots began early and our boot business was good.\nAnd our casual business was even better, especially in women's and kids.\nFollowing a good back-to-school season, Schuh came into the fourth quarter with this positive momentum and a strong assortment of high demand brands and styles.\nwith Schuh stores closed for about two-thirds of the possible days in the quarter.\nFortunately, with best-in-class digital abilities, Schuh was able to capture a significant portion of lost store volume through its digital channel, and total sales were down only 13%, capping off a year in which Schuh, like Journeys, gained market share.\nAs with Journeys, Schuh's casual assortment gained ground over its fashion-athletic assortment with the boots and casual strong throughout the quarter and women's leading the way.\nMeanwhile, Johnston & Murphy's casual footwear offering and apparel categories were, again, the bright spots for the brand in what still remained a very tough environment due to the work-from-home trend and significantly fewer social gatherings during the pandemic.\nThe plan going forward is to accelerate the work started years ago to evolve J&M into a footwear first lifestyle brand, with a range of footwear and apparel from dressier to more casual.\nDespite the challenging year, and there were some solid proof points that this strategy continues to gain traction including the success in the innovative XC4 collection through the relaunch of golf.\nFor the upcoming year, J&M has focused 90% of new product development on our expansion of its casual offering to include casual athletic, leisure, rugged, outdoor and performance.\nWe brought in a new Head of Product Development, who brings a successful track record developing casual brands to aid in these efforts.\nAnd so as our customer returns to work and socializing, which we hope will be sooner than later, J&M's assortment will be ready for the post-pandemic lifestyle and further void by J&M core customers increased level of savings during the pandemic.\nSo turning now to the current quarter.\nEarly February extended January's positive momentum until we hit the offset of income tax refunds, which were delayed by a few weeks this year.\nNevertheless, February sales came in, and in line with our expectations, and in March, we have seen an uptick as refunds began to catch up.\nLooking ahead, while great progress is being made on this front, we expect the environment to remain fluid in the near-term until the vaccine is more fully rolled out.\nIn terms of how this shapes our results, it means the first half will show an improvement to last year, given easier comparisons due to the COVID shutdowns, but we will still be under pressure from store closures especially in the U.K., which is expected to be shut down until shortly after Easter.\nWe anticipate store traffic will also continue to be affected across all geographies this spring.\nThese dynamics will further pressure our results in these low volume months, when in normal times, fixed operating expenses makes it challenging to breakeven.\nStimulus will help, we will see how much, and we are also optimistic about a greater recovery in the back half.\nBut what we're most excited about is we see opportunities to solidify the digital gains we've made and capitalize on the ongoing industry consolidation to further expand our market share.\nAs many challenges as COVID-19 has now created for our company, it has also provided us the real opportunity to transform our business at a faster pace.\nWe've learned a lot and will work hard to accelerate the initiatives and investments we plan to also achieve these goals and exceed the expectations of the consumer whose needs have advanced.\nWe were pleased with our performance in Q4 as we handily exceeded our expectations in all facets of operating results.\nBuilding upon our strong return to profitability in the Q3, sequential improvements compared to the prior quarters in revenue, gross margin and SG&A due to some help from rent abatements, drove higher operating income than last year.\nA higher tax rate offset the higher operating income, resulting in adjusted earnings per share of $2.76, compared to $3.09 last year.\nTurning to the specifics for the quarter.\nWhile comps were up 1%, consolidated revenue was $637 million, down 6% compared to last year, driven by continued pressure at J&M and the impact from store closures during the quarter.\nA robust e-commerce comp of 55% was really offset by a decline in-store revenue of 19%, driven by a comp decline of 10%.\nWhile our stores were closed for 10% of the possible operating days during the quarter.\nDigital sales increased to 27% of our retail business from 17% last year.\nConsolidated gross margin was 45.8%, down 110 basis points from last year.\nAs we have experienced all year, increased shipping to fulfill direct sales that pressured the gross margin rate in all our businesses totaling 80 basis points of the overall decline.\nNotably, Journeys' gross margin increased 210 basis points driven by lower markdowns.\nSchuh's gross margin decreased 410 basis points due to the increased e-comm shipping expense.\nJ&M's gross margin decrease of 1,690 basis points was due to more closeouts at wholesale, higher markdowns at retail and incremental inventory reserves.\nSo, finally, the combination of lower revenue at J&M, typically the highest gross margin rate of our businesses and the revenue growth of licensed brands typically our lowest gross margin rate negatively impacted the overall mix by 50 basis points.\nThe largest year-over-year savings came from the occupancy costs, driven in large part by the execution of about $18 million of rent abatements with our landlord partners who provided support for the time stores were closed and savings from the U.K. government program, which provides property tax relief.\nThe next largest areas of savings came from the reduction in-store salaries -- store selling salaries, driven by our effective use of workforce management tools and from lower bonus expense.\nThese savings were partially offset by increased marketing expenses needed to drive traffic in both stores and online.\nWe took the most significant cost actions at J&M evident by the 29% reduction in SG&A in the Q4 and our 25% reduction for the full year.\nIn addition to the rent abatement savings, our organization has been intently focused on a multiyear effort centered around occupancy cost, and we have achieved even greater traction with the pandemic.\nWe negotiated 123 renewals this year and achieved a 23% reduction in cash rent or 22% on a straight-line basis in North America.\nThis was on top of an 11% of cash rent reduction or 8% on a straight-line basis for 160 renewals last year.\nThese renewals are for an even shorter-term averaging approximately one and a half years compared to the three-year average that we saw last year, with almost one-third of our fleet coming up for renewal in the next 24 months, this will remain a key priority for us going forward.\nIn summary, the fourth quarter's adjusted operating income was $64.7 million versus last year's $59.3 million.\nOur adjusted non-GAAP tax rate for the fourth quarter was 37.5%.\nTax initiatives under the CARES Act and then other provisions generated a onetime $65 million permanent income tax benefit for Fiscal year-end '21.\nThis permanent benefit is excluded for non GAAP reporting.\nTurning now to the balance sheet.\nQ4 total inventory was down 20% on sales that were down 6%.\nThe levels of Journeys and Schuh are also lower than we would like given the delays in the supply chain.\nFor the fourth quarter, our ending net cash position was $182 million, $100 million higher than the third quarter's level, driven by strong cash generation from operations.\nThe year-end cash balance that benefited from both the lower inventory levels as well as rent payables that will be trued up once remaining COVID related deals are fully completed and executed.\nCapital expenditures were $6 million as our spend remains focused on digital and omnichannel and depreciation and amortization was $11 million.\nWe closed 16 stores and opened none during the fourth quarter, capping off the full year in which we closed 33 stores and opened 13.\nNow looking forward to fiscal '22, given the uncertainty remaining within this pandemic, we are not providing specific guidance for Q1 or the full fiscal year.\nThat said, I do want to share some high-level thoughts on how we are thinking about our business.\nTo do this, we think it's best to use the pre-pandemic fiscal '20 as the reference point as there is simply too much noise in our fiscal '21 results, for drawing informative comparisons for future expectations.\nThinking about Q1 revenue, although we expect a nice recovery compared to fiscal '21, we will be below fiscal '20 levels.\nThis is mainly due to Schuh with major store closures expected through the most of Q1 and continued pressure on J&M.\nDirectionally, the overall sales decline for Q1 compared to fiscal-year end '20 could be in the neighborhood of the 11% decline we experienced in the past third quarter.\nWe will have more stores closed than in the fourth quarter.\nOur view does not really contemplate additional store closures or restrictions beyond what we know today.\nIn addition, we have not included any stimulus from the most recent bill in our forward-thinking, which historically is a tailwind.\nGross margin rates for Q1 will be below fiscal '20 levels, more than that 210 basis point decline we experienced this past third quarter.\nThe increase in closed stores will drive higher e-commerce penetration and the higher shipping costs that come with it.\nAdditionally, we anticipate the negative headwind from J&M to continue into Q1.\nNow we expect SG&A dollars in Q1 to be below FY '20 Q1 levels, inclusive of some onetime benefits.\nHowever, there will be some deleveraging due to the sales volume likely in the neighborhood of 100 basis points.\nThis is driven by closed stores and lower store volumes as the fixed store occupancy expense causes deleverage.\nIn summary, it will be really difficult to turn a profit in Q1 as is typical during our lower volume quarters of the year.\nCombined with the seasonality of our business, we are expecting more than 100% of our full year earnings to also come from the third and fourth quarters.\nEven though we are expecting an overall loss in Q1 since that loss is generated in foreign jurisdictions for which there is no-tax benefit, we expect a tax expense related to a small amount of U.S. earnings in Q1.\nThe annual tax rate is expected to be approximately 32%.\nFor fiscal '22, capital expenditures will be between $35 million and $40 million and centered on digital and omnichannel investments, which comprised about 75% of this amount.\nMimi will talk further about the initiatives for the coming year.\nThis does not include another $16 million net of tenant allowance related to the move to a new headquarters location, which were delayed because of the pandemic.\nBut which was precipitated by the landlord's plan to demolish our current building.\nWe estimate depreciation and amortization at $48 million.\nWe currently plan to open up to 15 new stores, mainly at Journeys.\nNew store leases will be designed to minimize our risk by including landlord support on the build out costs variable rent and kick out opportunities.\nWe currently plan on closing about 35 stores, but discount could go up or down based on our ability to obtain short-term lease deals at attractive rents.\nOur strong year-end cash position enables us to invest in our business.\nWe had now moderated capital expenditures with the onset of the pandemic and expect to catch up with some of our initiatives.\nIn addition we plan to increase our inventory levels to drive increased back half sales.\nThese investments will be funded by our earnings and a net inflow of cash from our tax planning initiatives.\nAlso, we anticipate this year's numbers will include bonus expense.\nAs a reminder, our EVA program pays for year-over-year improvement and we paid no bonus in the year we just finished.\nFor this year, we are assuming an average of 14.6 million shares outstanding this assumes no stock buybacks under our current $100 million Board authorization, of which $90 million is remaining.\nAnd now turning to discuss in general, our cost structure.\nGiven the accelerated shift of our business from stores to digital and impact from the pandemic, we must reshape our cost structure.\nInitially, we believe we can reduce operating expenses by as much as around $25 million to $30 million, approximately 3% on an annualized basis.\nThis is a good start to a multiyear profit improvement plan to rebound from the pandemic and to enable investments in growth, while also at the same time, improving operating margins and return on invested capital.\nWe will provide more detail as the year progresses.\nI have been extremely impressed with the talent and drive of the team since I arrived.\nI'm confident that we have the right people who are focused on the right priorities to drive the organization forward as we move into the next fiscal year.\nAs I said, COVID-19, and has provided us the opportunity to transform our business at a faster pace as we emerge from the pandemic and to build our company into an even stronger position.\nWith online behavior advancing by several years, we need to accelerate these many of our digital and omnichannel initiatives in our pipeline.\nThe investments we have made paid huge dividends this year, importantly, as a footwear-focused company, digital provides the platform to drive profitable growth across all our concepts.\nThe pandemic also drove or hastened a number of our consumer trends that play into the sweet spots of our two largest businesses, Journeys and Schuh, such as an increased emphasis on comfort and greater casualization.\nWhile this was already the direction Johnston & Murphy was headed, we're accelerating progress here as well.\nA year ago, I have described the outcome of our five-year planning process and the six strategic growth pillars around which we aligned our business.\nWhile the past year only reinforce that we are focused on the right areas, we reevaluated our initiatives to take further advantage of the significant changes that are under way in our industry.\nI'll walk you through the pillars and briefly highlight select initiatives for fiscal '22.\nThe first pillar is build deeper consumer insights to strengthen customer relationships and brand equity.\nData-driven consumer insights and the more robust CRM capabilities are key to driving our next big wave of growth.\nNot only do we have robust information for our online customers.\nBut in North America, 70-plus percent of store customers trust us enough to give us their data as well, providing a very strong foundation on which we continue to build.\nWe also implemented a completely new CRM system in fiscal '21 at Schuh, aimed at increasing frequency of shopping and average order value.\nOur new campaigns delivered results that exceeded our expectations.\nThis new CRM system will create the basis for the launch in fiscal '22 of the loyalty program that incentivizes customers to consolidate their purchases across brands at Schuh, through recognition and rewards.\nLikewise, over at Journeys, we just finished an evaluation of how to take Journeys' CRM capabilities to the next level and enable us to introduce a loyalty program for Journeys in the future.\nThe second pillar is intensify product innovation and trend insight efforts.\nI've talked about J&M's product innovation, which then uses proprietary technology to differentiate the brand from competitors as it fast tracks development of a broader casual offering.\nAdditionally, we're excited to reap the benefits of last year's Togast acquisition, which advanced our strategy of growing the branded side of Genesco.\nBeyond acquiring new talent and additional sourcing these capabilities, we secured the rights to the Levi's footwear license for men's, women's and kids in the U.S.\nWe are leaning in not only to the gender, but also the category opportunities in areas like slippers, flip flops and slides.\nLevi's is one of the most recognized consumer brands with our heritage dating back almost 170 years.\nThe Levi's brand halo and casual aesthetic are a perfect fit with pandemic fashion preferences and we are very optimistic about the growth prospects here as demand in the channels for this product returns.\nNext, I'll discuss the third and fourth pillars together.\nAccelerate digital to grow direct-to-consumer and maximize the relationship between what's physical and digital, with a series of initiatives we have under way.\nWhile we doubled e-commerce in the five years leading up to the pandemic, we aim to double the business again in a much shorter period by leveraging the 75% comp increase we achieved last year.\nAnd to do this, in North American stores, we're launching the initial rollout of BOPUS, an offering we've had in the U.K. that drives around 20% of Schuh's online purchases and steers customer traffic to its stores.\nAs the lines between physical and digital further blur, we're tackling last mile innovation by also rolling out this capability, along with buy online, ship to store and ultimately, offerings important to our customers like curbside pickup.\nThe foundational project for this effort was last fall's upgrade of our inventory, locating and order brokering system which provides the requisite improved inventory accuracy.\nBuilding on this, we will install new store point-of-sale software and hardware to accelerate the digitization of our stores and provide a platform for new capabilities, including mobile checkout, line busting and features to make non selling tasks more efficient.\nThese projects plus the completion of another bespoke e-commerce picking module at the Journeys distribution center comprise the greater part of our capital spend in fiscal '22 and which Tom highlighted as being significantly more concentrated in the digital and supply chain.\nThe fifth pillar is reshape the cost base to reinvest for future growth.\nSo, as our business transforms, we require a cost structure that supports an omnichannel business, while our stores remain a critical strategic asset in this omnichannel world, we've been working to evolve historical rent and selling salary models.\nTom just took you through our cost initiatives, and I want to reinforce that working with our landlord partners to find a solution that rightsizes rent to match traffic levels is a big part of this endeavor.\nFinally, the sixth pillar pursue synergistic acquisitions that add growth and create shareholder value, we are also pursuing reactively rather than proactively until we recover further from the pandemic.\nSo now to conclude, as I reflect on my first year as CEO, I have been truly amazed by these executional excellence and resilience of our entire organization as we navigated a year like none other.\nGenesco's success can be traced directly back to you who have stepped up in so many ways right from the very beginning of the pandemic.\n",
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"content": "compname reports q4 non-gaap earnings per share from continuing operations of $2.76.\nq4 non-gaap earnings per share from continuing operations $2.76.\nq4 same store sales rose 1 percent.\nq4 sales $637 million versus refinitiv ibes estimate of $617.6 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: These estimates are subject to some risks and uncertainties.\nAdditional information regarding these factors is contained in the company's 10-K, 10-Q and 8-K filings.\nRevenue was essentially flat against the second quarter last year, but operating earnings are up $125 million and net earnings are up $112 million.\nEarnings per share are up $0.43.\nTo be a little more granular, revenue on the defense side of the business is up against last year's second quarter by $308 million or 4.2%.\nThe Aerospace is down $352 million, pretty much as planned.\nOperating earnings on the defense side are up $98 million, or 14.3%, and operating earnings in Aerospace are up $36 million on a 390 basis point improvement in operating margin.\nThe operating margin for the entire company was 10.4%, 140 basis points better than the year-ago quarter.\nFrom a slightly different perspective, we beat consensus by $0.07 per share on somewhat lower revenue than anticipated by the sell side.\nHowever, operating margin is 20 basis more than anticipated, coupled with a somewhat lower share count.\nThis led to the earnings bit.\nOn a year-to-date basis, revenue is up $596 million or 3.3%, and operating earnings are up $129 million or 7.3%.\nOverall, margins are up 40 basis points.\nThe defense numbers are particularly good with revenue up $752 million or 5.2%, and operating earnings up $143 million or 10.3%.\nOn the Aerospace side of the business, revenue on a year-to-date basis is down $156 million or 4.3%, but earnings are up $16 million or 4% on a 90 basis point improvement in operating margins.\nThe quarter was also very strong from a cash perspective.\nFree cash flow of $943 million is 128% of net income.\nCash flow from operating activities was 151% of net income.\nIn summary, we enjoyed a very good growth in the defense businesses in the quarter and had a very solid quarter from an earnings perspective across the board.\nThe year-to-date results give us a solid start to the year and enable us to raise our forecast for the full year, which I will share with you at the end of these remarks.\nLet me put the aerospace results in some recent historical context so as to put our performance into our perspective where it can be understood.\nAs you recall that in April of last year, we told you we were cutting production as the result of certain supply chain issues.\nIt subsequently became clear that there was a reduction in demand related to COVID-19 that resulted in additional cuts to production.\nThose production cuts were implemented slowly over the ensuing months and reached their low point this quarter.\nYou may also recall that I told you last quarter that the second quarter would be the most challenging for Gulfstream because of these preplanned production cuts.\nOn the good news side of the story, we had anticipated renewed post-COVID demand in the second half of this year and planned increased production for the second half.\nIn short, you will see more deliveries, revenue and operating earnings in the second half as a result.\nWith that, let me turn to the aerospace results in the quarter.\nAerospace had revenue of $1.6 billion and operating earnings of $195 million, with a 12% operating margin.\nRevenue was $352 million less than the year-ago quarter or 17.8% as a result of fewer planned aircraft deliveries.\nOn the other hand, operating earnings are up $36 million or 22.6% on a 390 basis point improvement in margins.\nFrom a pure operating perspective, we did very well.\nFrom an order perspective, the quarter border long is spectacular.\nIn dollar terms, Aerospace had a book-to-bill of 2:1.\nGulfstream alone had a book-to-bill of 2.1:1, even stronger if expressed in unit terms.\nThis is the strongest order quarter in number of units in quite some time.\nIt was all the more remarkable in that it did not include any fleet sales.\nAs previously discussed, sales activity truly accelerated in the middle of February and continued on through the remainder of the first quarter.\nThe pipeline that developed in that quarter rolled over into the second quarter as is obvious from these results.\nWe continue to experience a high level of interest activity and a growing pipeline.\nFrom a new product perspective, the G500 and G600 continue to perform well.\nMargins are improving on a consistent basis and quality is superb.\nWe have delivered 115 of these aircraft to customers as we speak.\nThe G700 has approximately 1,600 test hours on the five test aircraft.\nWe remain on track for entry into service in the fourth quarter of 2022, but much remains to be accomplished, particularly with respect to the certification of the new Rolls-Royce engine.\nLooking forward, we have planned 32 deliveries in the third quarter and 39 in the fourth.\nIf all goes well, we may be able to bring in a few more forward from the first quarter of 2022 to meet current demand.\nTurning to Combat Systems.\nAll of the comparisons in combat systems quarter over quarter sequentially and year-to-date are quite favorable.\nCombat systems had revenue of $1.9 billion, up 8.3% over the year-ago quarter.\nWhile ordinance and tactical systems did well, the primary source of growth was combat vehicles at both land systems and european land systems.\nSo all in all, very good growth.\nIt is also interesting to observe that combat systems revenue has grown in 17 of the last 19 quarters on a quarter over the year-ago quarter basis.\nFor the first half of the year, combat systems revenue of $3.7 billion, is $257 million or 7.4% over the first half of last year.\nOperating earnings for the quarter at $266 million are up 11.3% on higher volume and a 40 basis point improvement in margin.\nFor the first half, combat systems earnings of $510 million are up $48 million or 10.4% over the last year's first half.\nThe quarter was also good for combat systems from an order perspective with a 1:1 book-to-bill, leaving a modest increase in total backlog.\nDemand for our products, particularly our combat vehicles, remain strong with Europe leading the way.\nAbrams main battle tank demand is also increasing and the Stryker remains the combat vehicle of choice for multiple U.S. Army missions and operations.\nThis was an impressive performance once again by Combat Systems.\nRevenue of $2.54 billion is up $65 million over the year-ago quarter.\nIt is also up sequentially in year-to-date.\nIn the quarter, the growth was led by the DDG-51 and T-AO volume.\nSubmarine construction was stable with increases in Virginia Block V and Columbia, offset by a decline in Block IV and engineering.\nFor the first half, revenue is up $302 million or 6.4%.\nThis is very impressive continued growth.\nIn fact, revenue in this group has been up for the last 15 quarters on a quarter versus the year-ago quarter basis.\nOperating earnings are $210 million in the quarter, up $10 million or 5% on operating margins of 8.3%.\nYou may recall that we experienced a strike at bath last year.\nI am pleased to report that our relationship with the union is strong, and we are both committed to improving bath performance.\nNASSCO is coming down the learning curve on the ESG and is nearing completion on the first of the new oilers.\nRepair was also strong.\nElectric both performance remains strong.\nAnd while early in the Columbia first ship construction contract, the program remains on cost and schedule.\nThe segment has revenues of $3.16 billion in the quarter, up $98 million from the year-ago quarter or 3.2%.\nThe revenue increase supplied by information technology, mostly associated with the ramp-up of new programs, was almost 10%.\nMission systems experienced a modest decline in revenue driven by the sale of our space antenna business last year and a shortage of chips for certain products, which we are working to remedy in the second half.\nOperating earnings at $308 million are up $61 million or 24.7% on a 9.7% operating margin.\nEBITDA margin is an impressive 13.7%, including state and local taxes, which are a 50 basis point drag on that result.\nMost of our competitors carry state and local taxes below the line.\nTotal backlog grew $95 million, so good order activity in the quarter with a book-to-bill of 1:1 and good order prospects on the horizon.\nThe book-to-bill at IT was a little better than 1:1, and somewhat less at Mission Systems.\nThis is particularly good performance in light of the continued delays by the customer in making contract awards.\nIn total, GDIT has nearly $34 billion in submittals awaiting customer decision with most representing new work.\nIn addition to these submittals, our first half order book does not reflect approximately $4.6 billion of awards made in GDIT that are now in protest, including two sizable contracts challenged by a competitor.\nThese delays are pushing work we anticipated delivering in the second half of 2021 to 2022.\nWhile new award activity has generally been slower, new requests for proposals have remained robust.\nGDIT's hefty submittals in the first half reflect significant customer demand for modernization and securing IT infrastructure in the wake of COVID.\nBusiness has the opportunity to submit another nearly $20 billion in proposals through the end of the year.\nThis concludes my remarks with respect to a very strong quarter and first half.\nI'll start with our cash performance in the quarter.\nFrom an operating cash flow perspective, we generated over $1.1 billion on the strength of the Gulfstream order book and additional collections on our large international combat vehicle contract.\nIncluding capital expenditures, our free cash flow, as Phebe noted, was $943 million, or a 128% net earnings conversion.\nYou may recall that for the past several years, our free cash flow has been heavily weighted to the back half of the year.\nSo the strong quarter derisks that profile somewhat and reinforces our outlook for the year of free cash flow conversion in the 95% to 100% range.\nLooking at capital deployment.\nI mentioned capital expenditures, which were $172 million in the quarter or 1.9% of sales.\nThat's down from last year, but our full-year expectation remains in the range of 2.5% of sales.\nWe also paid $336 million in dividends and spent approximately $600 million on the repurchase of 3.3 million shares.\nThat brings year-to-date repurchases to 7.9 million shares at an average price of just under $173 per share.\nWe have 279.5 million shares outstanding at the end of the quarter.\nWe repaid $2.5 billion of notes that matured in May, in part with proceeds from $1.5 billion in notes we issued in May.\nWe also issued $2 billion of commercial paper during the quarter to facilitate the repayment of those notes and for liquidity phasing purposes, but we expect to fully retire that CP before the end of the year.\nAfter all this, we ended the second quarter with a cash balance of just under $3 billion and a net debt position of $11.4 billion, consistent with the end of last quarter and down more than $900 million from this time last year.\nAs a result, net interest expense in the quarter was $109 million, down from $132 million in the second quarter of 2020.\nThat brings the interest expense for the first half of the year to $232 million, down slightly from $239 million for the same period in 2020.\nWe repaid another $500 million of notes on July 15, as we continue to bring down our debt balance this year and beyond.\nAt this point, we expect our interest expense for the year to be approximately $425 million.\nThe tax rate in the quarter and the first half at 16.3% is consistent with the full-year expectation.\nSo no change to our outlook of 16% for the year.\nOrder activity and backlog were once again a strong story in the second quarter with a 1:1 book-to-bill for the company as a whole.\nAs Phebe mentioned, order activity in the aerospace group led the way with a twice book-to-bill, while combat and technologies each recorded a book-to-bill of 1:1 on solid year-over-year revenue growth.\nWe finished the quarter with a total backlog of $89.2 billion.\nThat's up over 8% over this time last year.\nAnd total potential contract value, including options and IDIQ contracts, was $130.3 billion.\nFinally, a quick note on the operating results in the technologies group.\nYou'll recall in the second quarter of last year, we recognized a loss of approximately $40 million on an international contract that resulted from scheduled delays caused by COVID-related travel restrictions.\nWe formally closed out this matter with the customer this quarter.\nAnd despite the fact that our activity on the contract has been dormant for over a year, the accounting rules required us to reverse approximately $45 million of previously recognized revenue in the quarter.\nWithout this reversal, the technologies group would have seen organic growth of 6.4% in the quarter.\nNow let me do my best to give you an updated forecast.\nThe figures I'm about to give you are all compared to our January forecast, which I will not repeat.\nIn our aerospace, we expect an additional $200 million of revenue with an operating margin of around 12.4%, which is 10 basis points below what we previously forecasted.\nThis will result in an additional $10 million of operating earnings.\nThere could be some upside here if we can squeeze out a few more planes in the year.\nWith respect to the defense businesses, combat systems should have another $100 million of revenue and add another 10 basis points of operating margin.\nSo total revenue of $7.4 billion and operating margin number around 14.6%.\nMarine Systems has an additional $300 million and 10 basis points of improved margin.\nSo annual revenue of $10.6 billion with an operating margin around 8.4%.\nTechnology revenue will be down $200 million from our previous forecast but adds 30 basis points of operating margin.\nSo annual revenue of $13 billion with an operating margin of around 9.8%.\nSo on a companywide basis, we see annual revenue of about $39.2 billion and an overall operating margin around 10.6%.\nThis rolls up to earnings per share around $11.50, $0.45 to $0.50 better than our forecast going into the year.\n",
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"content": "backlog at end of second-quarter 2021 was $89.2 billion.\ntotal estimated contract value, sum of all backlog components, was $130.3 billion at end of 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: These estimates are subject to some risks and uncertainties.\nAdditional information regarding these factors is contained in the company's 10-K, 10-Q and 8-K filings.\nWe will also refer to certain non-GAAP financial measures.\nWe beat consensus by $0.09 per share on somewhat lower revenue than anticipated by the sell side.\nHowever, operating margin is up about 40 basis points more than anticipated.\nThis led to the earnings beat.\nRevenue is up 1.5% against the third quarter last year.\nOperating earnings were up less than 1%.\nNet earnings are up 3.1% and earnings per share are up 5.9%.\nThis is all reasonably good, but the real story for us is the sequential results.\nHere, we beat last quarter revenue by 3.8%, operating earnings by 12.6%, net earnings by 16.7%, and earnings per share by 17.6%.\nOn a year-to-date basis, revenue is up $733 million or 2.7%.\nOperating earnings are up $137 million or 4.8%, net earnings are up $140 million, and earnings per share are up $0.64, a strong 8.5%.\nWe had a powerful quarter from a cash perspective.\nCash flow from operating activities was $1.47 billion, that is 171% in net earnings.\nFree cash flow was $1.275 billion, 148% of net income.\nThis follows a very strong cash quarter performance in the second quarter.\nIn summary, we enjoyed a good quarter in almost all important respects.\nAt the outset, let me remind you that in April of last year, we announced that we were cutting production as a result of certain supply chain issues.\nShortly thereafter, it became clear that there was a reduction in demand related to COVID.\nThat resulted in additional cuts to production.\nThose production cuts were preplanned and implemented slowly over the ensuing months and reached their low point in the second quarter of this year.\nWe had anticipated renewed post-COVID demand in the second half of this year and planned increased production for the second half with 32 planned deliveries in the third quarter and 39% in the fourth quarter.\nIn fact, demand accelerated in mid-February, a full four months earlier than we had anticipated.\nThis created opportunities but also operations and supply chain challenges for us, particularly for 2022.\nOn balance, it is a rich problem to have.\nWith that, let me turn to the Aerospace results in the quarter.\nAerospace had revenue of $2.07 billion and operating earnings of $262 million, with a 12.7% operating margin.\nWe managed delivery of 31 aircraft as opposed to the 32 planned, one slipped into the fourth quarter on customer preference.\nRevenue is $91 million more than the year-ago quarter, up 4.6% on one fewer aircraft delivered.\nOn the other hand, operating earnings are down $21 million, on a 160 basis point degradation in margins.\nThis was the result of an additional $28 million in G&A expenses driven by higher R&D expense and around a $20 million settlement of a supplier claim related to the allocation of warranties after the end of G550 production.\nThis was offset, but only in part by improved gross margins on delivered aircraft and better margins in the Gulf Street service centers.\nThe real story here is the quarter-over-quarter sequential improvement.\nSales, earnings and margins are ramping up as planned.\nI will not dwell on these numbers.\nFrom an order perspective, the quarter boarded on the spectacular.\nIn dollar terms, aerospace had a book-to-bill of 1.6:1.\nGulfstream alone had a book-to-bill of 1.7:1.\nThe second quarter was the strongest order quarter in the number of units that we have seen in quite some time.\nThis quarter was slightly better.\nAs previously discussed, sales activity truly accelerated in the middle of February and continued on through the remainder of the first quarter.\nThe pipeline that developed in that quarter rolled over into the second quarter and increased demand continued through the third quarter.\nWe continue to experience a high level of interest activity and a solid pipeline.\nAs a result of the order activity, Gulfstream backlog this quarter is the highest in the last six years.\nFrom a new product perspective, the G500 and G600 continued to perform well.\nMargins are improving on a consistent basis and quality is excellent.\nWe have delivered 131 of these aircraft to customers through the end of the quarter with 20 scheduled for delivery in the fourth quarter.\nThese are the metrics of a successful program building further momentum.\nThe G700 has approximately 1,800 test hours on the five test aircraft.\nThe new Rolls-Royce engine is performing well, but much remains to be accomplished.\nWe remain on track for entry into service in the fourth quarter of 2022 with the G800 to follow in six to nine months.\nAs I mentioned earlier, we had planned 32 deliveries in the third quarter and came up on short.\nThe slip was attributable to customer preference.\nWe implanted for 39 in the fourth and LAD-1 that slipped into the quarter.\nIf everything goes as planned, we will deliver 40 aircraft in the fourth quarter.\nThe story in combat systems quarter-over-quarter sequential and year-to-date is all about operating excellence and continued strong margin performance.\nCombat systems had revenue of $1.745 billion, down 3.1% from the year-ago quarter.\nHowever, earnings are up 2.2% over the year ago quarter on the strength of an 80 basis point improvement in operating margin, yet another example of strong operating leverage from Combat systems.\nFurther that theme on a year-to-date basis, Combat system revenue was up $201 million or 3.8%, while operating earnings are up a significant 7.4% on a 50 basis point improvement in operating margins.\nwith the brigade of Abrams main battle tanks per year and half of brigade of Strykers per year.\nDomestic upside is possible from the MPF program where our vehicle is performing well.\nIn the near term, we are stable internationally, but opportunity rich in the intermediate period with order potential in Poland, the Czech Republic, Romania, Denmark and Switzerland.\nYou may have read in the press about some noise and vibration issues in Ajax that have emerged during the programs test phase.\nWe are working very closely with both the British Army and the Ministry of Defense and are confident that both technical issues can be resolved.\nIn summary, this quarter was an impressive operating performance once again by the Combat Systems Group.\nTurning to marine systems.\nRevenue of $2.64 billion is up $232 million, above 9.6% over the year ago quarter.\nThe current quarter revenue growth was distributed fairly evenly across the three shipyards.\nIt is also up sequentially and year-to-date.\nYear-to-date revenue was up 7.5%.\nThis is very impressive continued growth.\nIn fact, revenue in this group has been up for the last 16 quarters on a quarter over year ago quarter basis.\nOperating earnings are $229 million in the quarter, up $6 million or 2.7% on an operating margin of 8.7%.\nOn a sequential basis, operating earnings are up $19 million, on a 40 basis point improvement in margins.\nElectric boats performance remained strong, and while still early in the Columbia first ship construction contract, the program remains on cost and schedule.\nWe had a particularly strong quarter in our ship repair business, continuing to support our navy customer.\nThroughout the group, we have a solid backlog of new construction and repair work, and our programs are well supported in the FY '22 budget.\nIn summary, revenue growth is clearly visible.\nThe real opportunity given this steady revenue visibility is margin improvement over time.\nThis segment had revenue of $3.120 billion in the quarter, down $130 million from the year ago quarter or 4%.\nThe revenue decrease was attributable to Mission Systems from timing on several programs in part driven by chip shortages.\nOn the other hand, information technology grew revenue against the year ago quarter at a rate of 1.4%.\nOperating earnings of $327 million are up $13 million or 4.1% on a 10.5% operating margin.\nEBITDA margin is a truly impressive 14.4%, including state and local taxes, which are a 50 basis point drag on that result.\nMost of our competitors carry state and local taxes below the line.\nThis quarter revenues decrease will impact the year, and we now expect revenue to be around $12.6 billion or $400 million less than our second quarter update.\nEarnings will, however, remain the same on better margins.\nTotal backlog remains relatively consistent over all comparator periods.\nSo good order activity in the quarter with a book-to-bill of 1:1 and good order prospects on the horizon.\nThe book-to-bill at GDIT was a little better than 1:1 and somewhat less emission systems.\nThe pipeline remains active at both businesses.\nFrom an opportunity perspective, cybersecurity is a top priority throughout the government and the budget calls for tens of billions of dollars in unpiloified in both the defense and civil spaces.\nThis is a significant opportunity for which we are well positioned to support our customers' needs, particularly as more and more customers move toward a zero trust model.\nSo that concludes my remarks with respect to a very good quarter and first nine months.\nAs we look toward the end of the year, we expect performance to be in line with the update to guidance that we gave you on the last call, except as I referenced in my remarks about mission systems.\nHowever, earnings per share guidance remains unchanged.\nI'll start with our cash performance in the quarter.\nOperating cash flow was $1.5 billion in the quarter, once again on the strength of Gulfstream orders and from continued strong cash performance from our technology segment.\nIncluding capital expenditures, our free cash flow was $1.3 billion or a 148% net earnings conversion.\nThrough the first nine months, our conversion rate is 91%, approaching our full-year outlook for free cash flow conversion in the 95% to 100% range.\nFor those of you who followed us for some time, this performance through the first nine months of the year is better than we've seen in the past several years, and gives us good line of sight to achieving the upper end of our target cash range for the year.\nLooking at capital deployment.\nCapital expenditures were $196 million in the quarter or 2% of sales.\nThat puts us a little under the 2% of sales for the first nine months, so trending somewhat below our forecast for the year.\nWe're still projecting full year capex in the range of 2.5% of sales.\nSo that obviously implies an uptick in spending in the fourth quarter.\nWe also paid $332 million in dividends and spent $117 million on the repurchase of 600,000 shares in the quarter.\nThat brings year-to-date repurchases to 8.5 million shares at an average price of just under $174 per share.\nWe repaid $500 million of notes that matured in July.\nAnd although there were no new issuances, we ended the quarter with $2 billion of commercial paper outstanding.\nWe expect to fully retire that balance before the end of the year.\nSo we ended the third quarter with a cash balance of just over $3.1 billion and a net debt position of $10.5 billion, down more than $800 million from last quarter and down $1.4 billion from this time last year.\nWith the scheduled CP repayment in the fourth quarter, we expect to end the year with a net debt balance below $10 billion for the first time since 2018.\nAs a result, net interest expense in the quarter was $99 million, down from $118 million in the third quarter of 2020.\nThat brings the net interest expense for the first nine months of the year to $331 million, down from $357 million for the same period in 2020.\nThe tax rate in the quarter was 15.3%, bringing our rate to 15.9% for the first nine months, consistent with our full-year outlook, which remains around 16%.\nOrder activity and backlog were once again a strong story in the third quarter with a 0.9 times book-to-bill for the company as a whole, bringing us to a 1:1 ratio for the first nine months and a 1.2 times ratio for the trailing 12 months.\nAs Phebe mentioned, the order activity in the Aerospace group led the way with a 1.6 times book-to-bill in the quarter, while technologies recorded a book-to-bill of one-to-one.\nForeign exchange rate fluctuation resulted in a $300 million reduction in backlog in the quarter, with the majority of that impact in Combat Systems.\nWe finished the quarter with a total backlog of $88.1 billion, that's up 8% over this time last year, and total potential contract value, including options and IDIQ contracts was $129.6 billion.\n[Operator instructions] Operator, could you please remind participants how to enter the queue?\n",
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"content": "q3 revenue $9.6 billion.\nsignificant gulfstream order activity continues.\nbacklog at end of quarter was $88.1 billion, up 8.1% from year-ago 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: These estimates are subject to some risks and uncertainties.\nAdditional information regarding these factors is contained in the company's 10-K, 10-Q, and 8-K filings.\nEarlier today, we reported fourth-quarter revenue of $10.5 billion, net earnings of $1 billion, and earnings per diluted share of $3.49.\nThis is, in most respects, a very solid quarter, even though we missed consensus by $0.05.\nI have more to say about that shortly.\nDespite the adverse impact of the pandemic, we achieved most of our operational and financial goals, added dramatically to our backlog, and had a very good cash quarter.\nBecause of the adverse impact to the economy caused by COVID-19, I'll devote less time to the quarter-over-quarter comparisons and spend more time on the sequential improvement that tells a compelling story of recovery.\nI'll go through that in some detail as I give you my thoughts on the business segments.\nAs we indicated that it would be, the final quarter is our strongest.\nIt is quite remarkable that we came within $0.02 of the very strong pre-pandemic fourth-quarter 2019.\nOn a sequential basis, suffice it to say that revenue is up 11.1%, operating earnings are up 20.6%, net earnings are up 20.1% and earnings per share are up 20.3%.\nSo all in all, a solid quarter with good performance even compared to the year-ago quarter but really good sequentially.\nFor the full year, we had revenue of $37.9 billion, down from 3.6% from the prior year, net earnings of $3.17 billion, and earnings per fully diluted shares of $11, once again, modestly below consensus.\nOur business was strengthened by significant growth in the backlog to a year-end record high of $89.5 billion.\nThe same is true of total estimated contract value at $134.7 billion.\nThe total company book-to-bill was 1.1 to 1 for the year, led by the particularly strong order performance of Electric Boat.\nThe strong order intake across the board positions the company well for 2021 and beyond.\nOur cash performance for the quarter and the year was stronger than expected with a conversion rate of 91% of net income for the year.\nJason will have more fulsome comments on this subject in his remarks.\nLet me review the quarter, paying particular attention to sequential comparisons and the full year in the context of each group, and provide some color as appropriate.\nAerospace revenue of $2.4 billion is up 23.3% over the third quarter on the strength of the delivery of 40 aircraft, 34 of which were large cabin.\nWhile this was the strongest delivery quarter of the year, it fell short of our expectations by three aircraft, two of which delivered after the first of the year for reasons related to customer preference.\nThe third aircraft had a willing customer but was not ready for delivery by year-end.\nThat one is on us.\nFor the full year, revenue of $8.08 billion is off 17.6% from the prior year.\nNevertheless, operating earnings are still over $1 billion, far away the industry leader.\nFourth-quarter operating earnings of $401 million is 41.7% better than the third quarter on the strength of higher revenue and a 220-basis-point improvement in operating margin.\nHowever, the shortfall against consensus for the quarter and the year is found in the three anticipated deliveries that slipped into this year.\nThis should not, in any respect, diminish the outstanding performance of Gulfstream in this environment.\nFurthermore, margins increased on a sequential basis throughout the year, ending at 16.5% in the fourth quarter.\nAt midyear last year, we told you to expect revenue of about $8.4 billion with earnings of $1.13 billion.\nWe finished the year with revenue of $8.1 billion and earnings of $1.08 billion.\nThe entire shortfall is attributable to 127 deliveries versus our expectation of 130.\nAll in all, still within the 125 to 130 deliveries we gave you right after the initial shock to the economy caused by the pandemic became manifest.\nOn the order front, activity in the quarter was very good, and the pipeline remains quite active.\nThe book-to-bill at Aerospace in the fourth quarter was 0.96 to 1, dollar-denominated.\nFor the year, the book-to-bill was 0.88 to 1.\nThis order activity was, in my view, quite good in the midst of a pandemic-induced depression.\nWe are of the well-considered view that order activity will improve further as travel restrictions are lifted and the economy begins its recovery.\nLet me give you some thoughts on our product portfolio.\nFirst, the G500 and G600 unit manufacturing costs continued to decline, and we are producing superb quality.\nWe had 92 units of this family of aircraft in service at year-end.\nAnecdotally, the G500 led the order book in the fourth quarter.\nNext, some in the analyst community have expressed concern about the continuing demand for the G650, which first entered into service eight years ago.\nAt the end of this year, we had 436 G650 in service, an average of 54 a year.\nThe 650 continues to be in demand, but not at that level.\nI can add anecdotally that in the fourth quarter, it was a close second to the G500 demand.\nIt remains a strong competitor to anything in the air and will remain a strong contributor to our revenue and earnings for the next several years.\nFinally, on the new product development front, all five G700 flight-test aircraft are flying and have over 1,000 hours of test flight.\nWe appear to be on track for entry into service in the fourth-quarter 2022.\nThat will stimulate both revenue and earnings next year.\nIf you've been following our Aerospace R&D spend, you know that there's more to come on this subject.\nRevenue in the quarter of $1.96 billion is essentially the same as the year-ago quarter.\nOperating earnings of $309 million are $25 million or 8.8% ahead of the final quarter of 2019 on the strength of 140 basis point improvement in operating margin to 15.8%.\nFor the full year, revenue of $7.2 billion is up $216 million, a 3.1% increase after a 12.3% growth in 2019 despite a revenue decline at ELS, driven by COVID shutdowns in Spain earlier in 2020.\nOperating earnings of $1.04 billion are up $45 million, a 4.5% increase.\nBy the way, this performance is consistent with the initial guidance we provided earlier in the year.\nIn the U.S., our Army customer is continuing its modernization, which provides steady demand for our combat vehicles and munitions businesses.\nThe fourth quarter had some nice order activity, including a contract for Abrams Version 3 with a ceiling of $4.3 billion and additional Stryker SHORAD orders with the ceiling of up to $1.2 billion.\nOutside the U.S., we are beginning to see increased demand as our NATO allies start to emerge from COVID-constrained activity, including over $200 million of Canadian ammunition orders in the quarter.\nIn short, this group has had quite positive revenue growth for several years now, continued its history of strong margin performance, had very good order activity, and has a strong pipeline of opportunity as we go forward.\nThis is once again a good news story.\nMarine fourth-quarter revenue of $2.9 billion is up $292 million, a compelling 11.4% increase over the year-ago quarter.\nOperating earnings of $247 million are up $48 million against a good fourth quarter in 2019.\nImportantly, there is an 80-basis-point improvement in operating margins.\nThe results are much the same sequentially.\nRevenue was up $452 million, and earnings are up $24 million or 10.8%.\nFor the full year, revenue was almost $10 billion, up $796 million or 8.7%.\nOperating earnings for the year of $854 million are up by $69 million or 8.8%.\nThis is the highest quarterly and full-year earnings ever for the Marine group.\nIn our midyear guidance to you, we anticipated revenue of about $9.6 billion and operating earnings of $845 million.\nWe came in above that for both revenue and earnings.\nIn response to significant increased demand from our Navy customer that you can see in these results, we continue to invest in each of our yards, particularly at Electric Boat to prepare for Block V and the new Columbia ballistic missile submarine.\nSo suffice it to say that we're poised to support our Navy customer as they increase the size of their fleet and deliver value to our shareholders as we work through this very large backlog and improve our return on invested capital.\nFinally, the Technologies group, which consists of GDIT and Mission Systems, is reported together for the first time in a while.\nYou may recall, we used to report this group as then constituted as Information Systems and Technology.\nThis new reporting reflects the way we manage these businesses with group executive vice president, Chris Marzilli, reporting to me.\nWe have also discovered that in this era of end-to-end solutions melding technology, hardware, and software, these business units increasingly go to market together, seeking to provide end-to-end systems and support solutions.\nWe will, however, continue to provide operating transparency by providing company-specific data where appropriate.\nJason will have more to say about this in his remarks.\nThis is, of course, the group in the defense segment that has had the most impact from COVID-19 with the most remote participation from employees and the most difficult to access in customer locations.\nWith all that said, let's turn to the results and commentary on the group and specific businesses.\nFor the quarter, Technologies had revenue of $3.23 billion, off less than 1% sequentially.\nOperating earnings of $352 million are up $38 million or 12.1% on a 120-basis-point improvement in margins.\nAs you would expect, given the environment, revenue for the first full year is off $711 million or 5.3%, and earnings are off $100 million or 7.6%.\nIt is well to remember that these revenue and earnings numbers exclude the SATCOM business that we sold in the first half of last year.\nAll considered, the group performance showed good strength, and earnings guidance from us was close.\nRevenue came in at $350 million, below our guidance, $12.65 billion versus $13 billion, but margins, particularly at GDIT, were better, leading our earnings forecast to be on target.\nFrom a margin perspective, GDIT was at 7.9%, up 40 basis points sequentially.\nMission Systems, at 16.2%, was up 290 basis points over the last quarter.\nFor the full year, the group's free cash flow exceeded 150% of full-year imputed net earnings, the strongest performance within General Dynamics.\nGDIT's performance was even stronger.\nIt was the best quarter cash performance in its history.\nThe group enjoyed a tremendous order quarter with significant wins by GDIT in four major programs, all of which are IDIQ contracts.\nAs a result, under our conservative accounting policy, these awards are found in total estimated contract value rather than in unfunded backlog.\nJason will get into this more in his remarks as well.\nEach quarter in the past, I've tried to give you some insight about GDIT.\nOnce again, let me share some thoughts.\nThe fourth quarter was an extension of the momentum GDIT built throughout the year despite COVID headwinds.\nThey remained focused on what they could control in an otherwise turbulent year, supporting customers and their employees while controlling costs, converting cash, and winning new business.\nOn the new business front, GDIT won several large deals in key technical focus areas, including cyber, cloud, and artificial intelligence.\nThese wins drove GDIT's total estimated contract value up $2 billion or 11% as compared to both the third quarter and year-end 2019.\nAs you will see in our guidance, GDIT is poised for very nice growth in 2021.\nThe first thing I'd like to address is our cash performance for the quarter and the year.\nThat resulted in free cash flow for the year of $2.9 billion, a cash conversion rate of 91%, nicely ahead of our anticipated 80% to 85% of net income.\nTo put this in context, our cash from operations for the year of $3.9 billion was less than $20 million shy of the highest annual operating cash flow we've ever had, notwithstanding the impact of COVID on our operations in 2020.\nIn fact, our free cash performance for the year was just short of achieving our original pre-COVID cash forecast, so really a remarkable outcome.\nThis was the result of outstanding performance across the business to close out the year, most notably in the Aerospace group, which began to draw down its inventory that we've been discussing for some time, and the Technologies group, which continues to generate superb cash flows, as Phebe mentioned, in this case, in excess of 150% of imputed net income for the year.\nAnd as you'll recall, at this time last year, we negotiated a path forward on our large international contract in Combat Systems, including a revised progress payment schedule that liquidates their receivables balance over the next three years.\nAs part of that agreement, we received two payments of $500 million each last year, and we received the next progress payment earlier this month in accordance with the revised schedule.\nSo that OWC will continue to unwind, as we've discussed on past calls.\nOf course, Marine Systems continues with its significant facilities improvements in support of the unprecedented growth on the horizon.\nTo that point, we had capital expenditures of $345 million in the fourth quarter for a full-year total of nearly $1 billion or 2.5% of sales.\nYou may recall, we had expected our capex to peak in 2020 at roughly 3% of sales due to these shipyard investments.\nAs you might expect, given the impact of the pandemic, we've managed the timing of this capex spend prudently, and the result is three years, '19, '20, and '21, at roughly 2.5% of sales.\nThis timing fully supports our Columbia and Block V build plan at Electric Boat.\nWe then expect to trend back down and return to the more typical 2% range by 2023, consistent with our previous expectations.\nThe net result is that we expect cash performance to continue to improve in 2021 to the 95% to 100% conversion range with year-over-year growth in free cash flow in 2021 and beyond.\nWe ended the year with a cash balance of just over $2.8 billion and a net debt position of approximately $10.2 billion, reflecting a $1.7 billion reduction in the fourth quarter.\nOur net interest expense in the fourth quarter was $120 million, bringing interest expense for the full year to $477 million.\nThat compares to $110 million and $460 million in the comparable 2019 periods.\nOur next scheduled debt maturities are for $2.5 billion in the second quarter and $500 million in the third quarter of this year.\nDue to the timing of our cash flows, we may be in the commercial paper market for a transition period.\nBut overall, we expect interest expense to drop to approximately $420 million in 2021.\nWe also paid $315 million in dividends in the fourth quarter, bringing the full year to $1.2 billion.\nAnd we repurchased 700,000 shares of stock in the quarter, bringing us to just over 4 million shares for the year for $600 million or $148 per share.\nWith respect to our pension plans, we contributed $480 million in 2020, and we expect that to decrease to approximately $360 million in 2021, the majority of that in the second half.\nTurning to income taxes.\nWe had a 15.4% effective tax rate in the fourth quarter, resulting in a full-year rate of 15.3%, consistent with our previous guidance.\nLooking ahead to 2021, we expect a full-year effective tax rate of around 16%.\nNext, I'd like to alert you to two accounting changes that we've made in the fourth quarter, one related to segment reporting and the other related to pensions.\nThe segment change is the one that Phebe alluded to earlier and relates to our GDIT and Mission Systems businesses.\nAs the federal IT services and defense electronics markets have evolved in recent years, we've seen a significant increase in the customers' prioritization of these capabilities and a shift to large-scale, end-to-end, highly engineered solutions that require critical mass and a broad array of technology services and hardware offerings to meet these customer demands.\nAnd more recently, the COVID-19 pandemic has only accelerated these trends with an expansion of remote connectivity and an added sense of urgency around required technology investments.\nAs you've seen, we've responded to these trends over the past several years to further solidify our position as a market leader in this space, including the combination of our C4 and ISR businesses to form Mission Systems and, of course, the acquisition of CSRA to reposition GDIT as a leader in this market.\nWith these integrations now complete, along with some considerable portfolio shaping and realignment, we are seeing the market dynamics continue to evolve.\nThe two businesses share the same defense, intelligence, and federal civilian customer base and increasingly go to market together to meet these customers' needs.\nIn addition, we're seeing considerable commonality and a significant complementary pull-through in their core offerings.\nSo we will now be reporting them as one technology segment to better reflect the way we're running the business as we position them to best compete in this robust market.\nTo be clear, we'll continue to provide transparency into the individual revenues and associated programmatic detail for each business, but of course, that becomes somewhat of a mixed bag as they increasingly engage in joint pursuits.\nWith respect to pensions, we've adopted an accelerated method for amortizing actuarial losses for our government pension plans to better align the timing under GAAP with when the costs are allocated to contracts.\nBecause these costs are recovered on our contracts, this change had no impact on our net income or cash flow.\nHowever, you'll note some differences between captions on the balance sheet and income statement as this accounting change has flowed through the financial statement.\nIn particular, this reduces our corporate operating earnings, which we expect to be a negative $85 million in 2021, and increases our other income, which is below the line, which we expect to be approximately $90 million in 2021.\nThe impact of these two income statement line items is equal and offsetting, so no impact to net income.\nAnd lastly, a little color on backlog.\nAs of the end of the year, our funded backlog, total backlog, and total estimated contract value are all up compared to a year ago and, as Phebe mentioned, at record highs.\nAs an indication of the steady improvement since the peak of the disruption from the pandemic, Aerospace book-to-bill returned to 1 times in the quarter, consistent with Phebe's remarks on what we're seeing in terms of Gulfstream demand.\nMarine Systems had an outstanding quarter with a book-to-bill of over 4 times due to the exercise of the $9.5 billion option for the Columbia construction contract, providing opportunity for further long-term top- and bottom-line growth for Marine Systems.\nAnd a little bit of color on order activity for the Technologies group for the quarter.\nThey had a very nice quarter with some notable awards, including the final resolution on the DEOS program with a potential value of $4.4 billion; the EMITS contract in support of the U.S. Army in Europe; the State Department's GSS 2.0 contract with a potential value of $3.3 billion; and a contract with the Air Force to develop a digital engineering environment.\nImportantly, given the conservative approach we take to reporting backlog, the preponderance of the value associated with these contracts doesn't show up in orders or backlog at the time of award.\nIn fact, only a portion of the awards shows up even in our IDIQ potential contract value.\nThis is quite different from the way most of the peer group approaches this, so worth spending a moment on it.\nThe way we book these awards is to conservatively estimate initial near-term value in the IDIQ category.\nThen as the program progresses and the customer exercises orders, that value moves into the backlog and ultimately gets reported as revenue.\nAnd over time, incremental amounts of IDIQ value are added to that bucket as our visibility into the program evolves.\nAs a result, over half of the group's annual orders and revenue come out of this potential contract value category.\nSo the headline numbers you see in the firm backlog belie the outstanding performance in the quarter, as reflected in the total estimated contract value for the group of just over $41 billion.\nThat concludes my remarks.\nWith that, I'll turn to our expectations for 2021.\nSo let me provide our operating forecast initially by business group and then on a companywide roll-up.\nIn Aerospace, we expect revenue to be about $8 billion, essentially flat with 2020.\nOperating margins will be about 12.5%, leading to operating earnings of $1 billion, maybe slightly more.\nSo what is driving this forecast and, in particular, the lower margins in 2021 when revenue is similar to 2020?\nYou will recall that I told you last quarter, we will deliver 13 fewer G550s as that airplane is no longer in production.\nThis leaves us with 13 fewer aircraft, not including the three slips from 2020.\nSo all up, 10 fewer aircraft.\nThis reduction in revenue will be made up by a roughly $500 million increase in services across Jet Aviation and Gulfstream at about 10% lower operating margin.\nThere are a lot of other puts and takes, but this gives you the big picture for the lower anticipated margins.\nBy the way, our forecasted production delivery considers our backlog, our fourth-quarter orders, and our take on current demand.\nI fully expect 2022 will have better revenue and earnings, stimulated by the entry into service of the G700 in the fourth quarter and improving demand across the product lines as the economy recovers.\nIn Combat Systems, we expect revenue of about $7.3 billion, an increase of approximately $100 million over 2020.\nWe expect the operating margin to be about 14.5% and operating earnings to exceed last year by $20 million or 2%.\nWe look for revenue, earnings, and margin rate to grow quarter over quarter during the year with a particularly strong fourth quarter.\nAfter several years of good revenue growth, 2021 and 2022 will have modest growth.\nGrowth should resume in 2023 and beyond as several developmental programs move into production.\nThe Marine group is expected to have revenue of approximately $10.3 billion, an increase of over $300 million.\nOperating margin in 2021 is anticipated to be around 8.3%, driven in large part by increased work on the first two cost-plus Columbia submarines, which have conservative initial booking rates.\nWe anticipate growth at each of the yards.\nThe long-term driver of growth here is the submarine work, which will expand significantly.\nOur biggest upside opportunity in this group is to outperform the forecasted revenue line.\nWe expect revenue in the Technologies group of $13.2 billion, $580 million more than 2020.\nThis is a growth of 4.5% with GDIT growing at a rate of 7.1%.\nMission Systems will be essentially flat with organic growth of 3%, offset by the SATCOM divestiture.\nWe expect earnings of $1.25 billion, about $50 million more than 2020.\nThis implies an overall margin of 9.5% with GDIT returning to 7% or more.\nSo for 2021, companywide, we expect to see approximately $39 billion of revenue, up over $1 billion from 2020, and operating margin at 10.5%.\nThis all rolls up to a forecast range of $11 to $11.05 per fully diluted share.\nOn a quarterly basis, we expect earnings per share to play out much like it has in prior years with Q1 about $2.20 and progressively stronger quarters thereafter.\nLet me emphasize that this plan is purely from operations.\nIt assumes a 16% tax provision and assumes we buy only enough shares to hold the share count steady with year-end figures so as to avoid dilution from option exercises.\nSo much like last year, beating our earnings per share guidance must come from outperforming the operating plan, achieving a lower effective tax rate, and the effective deployment of capital.\nI should leave you with this one final thought.\nOur strong cash flow in 2020 and our anticipation of a 95% to 100% conversion rate in 2021 leaves us with the ability to engage in a share repurchase program this year to enhance the earnings per share figures I have just given you.\nWe will see how that plays out.\nI'll be more specific about this after the end of the first quarter.\nBack to you, Howard.\nAs a reminder, we ask each participant one question and one follow-up question so that everyone has a chance to participate.\nOperator, could you please remind participants how to enter the queue?\n",
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"content": "q4 earnings per share $3.49.\nq4 revenue $10.5 billion versus refinitiv ibes estimate of $10.78 billion.\ncompany-wide operating margin for q4 was 12.3%, up 90 basis points from the prior 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: This is Matt Eichmann.\nI'm joined by Ole Rosgaard, Greif's president and chief executive officer; Larry Hilsheimer, Greif's chief financial officer; and Matt Lady, Greif's vice president of corporate development and investor relations.\nWe will take questions at the end of today's call.\nIn accordance with regulation fair disclosure, please ask questions regarding issues you consider important because we're prohibited from discussing material, nonpublic information with you on an individual basis.\nActual results could differ materially from those discussed.\nToday is my first quarterly earnings call as Greif's president and chief executive officer.\nAnd I'm excited to be with you.\nMy plan today is: to review the state of our business; to briefly share our new Build to Last strategy and its key components; to introduce Greif's new executive leadership team; and finally, to engage meaningfully in a Q&A session.\nOur fiscal 2022 is off to an outstanding start.\nWe delivered record financial results in the first quarter despite a challenging operating environment, complicated by the pandemic, supply chain disruptions, and inflationary pressures beyond our control.\nWe also announced the pending divestiture of our 50% ownership in the flexible products and service business for outstanding value, solidified our net leverage position, and increased our profit expectations for fiscal 2022.\nThese accomplishments results from disciplined operational execution and the commitment of our global Greif team.\nI would like to briefly share our new Build to Last strategy review.\nI will summarize the strategy's high points today as we will dive much deeper into it at our investor day on June 23 and review our continued growth plans.\nThe Build To Last strategy consists of four missions: creating thriving communities, delivering legendary customer service, protecting our future, and ensuring financial stream.\nMission 1, creating thriving communities.\nIt's about achieving zero-harm environments and creating an even more engaged, diverse, and inclusive workplace in the future.\nThriving communities will help us win in the war for talent.\nOur second mission, delivering legendary customer service involves finding ways to serve customers better each day.\nThis mission includes implementing new technologies that will increase our agility and help us deliver faster and more comprehensive customer solutions.\nLegendary customer service, combined with Greif's unmatched global portfolio and product offerings, forms a powerful business competitive advantage.\nMission 3, protecting our future.\nIt's about embracing a low-carbon world and further enhancing our focus on product circularity.\nGreif is already a sustainability leader today, evidenced by our recently awarded fourth consecutive EcoVadis Gold rating.\nBut we will take additional steps to mitigate risks associated with climate changes and capture opportunities related to product circularity and sustainable solutions for our customers.\nFinally, our fourth mission.\nEnsuring financial strength entails generating high-margin EBITDA growth to deliver a growing sustainable profit and cash flow stream that enhances shareholder value creation.\nThe Build to Last strategy is founded upon our bedrock, the Greif Way, which has guided our business for many years and remains the focal point of our culture.\nI look forward to sharing more about Build To Last with you at our investor day.\nI'm fortunate to be surrounded by an exceptional team charged with helping to activate the Build To Last brand.\nThese extraordinary service leaders possess extensive industry knowledge and a demonstrated commitment to disciplined operational execution and customer service excellence.\nTheir rich and diverse set of skills and experiences along with proven records of performance will drive even greater success at Greif in the future.\nI hope you will join us at investor day in June to interact with them.\nFinally, before jumping into our results, I would like to announce some changes to our investor relations team.\nMatt Eichmann, who you know well, has been promoted to chief marketing and sustainability officer effective March 1.\nMatt has done an outstanding job representing Greif to the investment community the last six years, and I'm excited to have him take on this exciting leadership opportunity.\nMatt Lady, who currently leads our corporate development team, has added the role of Investor Relations to these responsibilities.\nMatt Lady has extensive buy-side experiences and has been instrumental in executing Greif's acquisition strategy and portfolio changes since joining our team almost four years ago.\nI'm confident that Matt Lady will be a strong leader in the Investor Relations role and will build upon Matt Eichmann's efforts to improve investor communications, share insights on our business and financial condition, and ensure that leaders across Greif understand what our investors and owners expect of us.\nGlobal Industrial Packaging delivered an outstanding first quarter results.\nGlobal large plastic drums and IBC volumes grew by roughly 8% and 11% per day, respectively, versus the prior-year quarter.\nGlobal steel drum volume fell by 4% per day versus the prior year due to customer supply chain and labor issues despite strong underlying demand.\nSimilar to quarter 4, the biggest volume shortfall was in APAC, reflective of our decision to implement strategic pricing actions and supply chain disruptions that negatively impacted our customers' operations.\nGenerally speaking, our end markets remain healthy.\nCustomers report solid order backlogs and strong underlying demand, but continue to face external supply chain disruptions and labor challenges.\nWe also hear that our customers' customers have depleted inventory levels, which should eventually translate to a tailwind for Greif.\nGIP's generally stronger volumes and higher average selling prices resulted in significantly higher segment sales year-over-year.\nThe business' first quarter adjusted EBITDA rose by roughly $35 million due to higher sales, partially offset by higher raw material costs.\nDuring the quarter, we continued to experience favorable price cost conditions.\nGiven timing, inventory costs and the structure of our price adjustment mechanisms, we anticipate GIP's price/cost benefit to deteriorate as we move later into the fiscal year.\nFinally, we received several questions about our Ukrainian and Russian businesses that I want to address directly.\nThis is an evolving situation that we continue to monitor and assess continuously with a dedicated task force.\nWe are appalled by the ruthless aggression we have witnessed in the Ukraine over the last several days.\nWe operate one flexibles plant in the country that has been temporarily closed.\nOur primary focus has been and will continue to be the safety and well-being of our Ukrainian colleagues and assisting them and their families any way we can.\nIn Russia, we operate nine facilities.\nThe business predominantly source raw materials locally and service local customers.\nIt possesses a very minimal cross-border exposure and contributes less than 3% to total company operating profit annually.\nWe do hedge roughly half of our ruble exposure.\nIn times of crisis, we lean on our values and use the Greif way to guide our direction, while extremely upset and aghast by the aggressive actions taken by the Russian government.\nAs with our Ukrainian colleagues, our focus is on all Greif people.\nWe remain in full support of our Russian colleagues and continue to operate in Russia with also their well-being as our priority.\nIn January, we announced an agreement to divest our 50% ownership in FPS.\nAlthough we have worked closely with our joint venture partner in the last 12 years, we evolve to have differing views on the future of this business.\nThe sale of our 50% stake in flexibles will generate net cash proceeds of approximately $123 million, subject to customary closing conditions.\nWe anticipate the deal closes by the end of March 2022, and have incorporated the divestitures impacts into our financial fiscal '22 guidance.\nUntil we refine this further, you can assume FPS ballpark annual adjusted EBITDA contribution to be roughly $35 million.\nFor context, seven years ago when FPS was struggling, we tried to market considering that this position with virtually no interest.\nNow we're selling our half of FPS for substantially more than the best offer at that time for the entire business.\nThe team has driven considerable improvements in the business and demonstrated professionalism throughout.\nPaper packaging's first quarter sales rose by roughly $129 million versus the prior year due to stronger volumes and higher published containerboard and boxboard prices.\nAdjusted EBITDA rose by roughly $24 million versus the prior year due to higher sales, partially offset by higher raw material, transportation, and utility costs, including a significant $42 million drag from significantly higher OCC costs.\nSimilar to the fourth quarter, volume demand across the business remains strong.\nAt quarter end, our combined build backlogs still exceeded eight weeks.\nFirst quarter volumes in our CorrChoice [Inaudible] system were up roughly 0.5% per day versus the prior year.\nE-commerce, automotive parts, food, and durables demands all remained very solid.\nFirst quarter [Inaudible] core volumes were up by 4.6% per day versus the prior year, with demand strong across almost all end markets.\nI will now turn you over to our CFO, Larry Hilsheimer, on Slide 9.\nBy my count, this is the 13th consecutive quarter that we have met or exceeded consensus expectations.\nFirst quarter adjusted EBITDA rose by $58 million year-over-year despite an OCC index headwind of $42 million and roughly $33 million of nonvolume-related transportation and manufacturing labor inflation.\nAbsolute SG&A dollars rose $17 million versus the prior-year quarter, mainly due to higher health, medical, and incentives costs, but fell 200 basis points on a percentage of sales basis.\nBelow the line, interest expense fell by $8 million versus the prior-year quarter, due primarily to refinancing our 2021 euro notes with a low rate bank debt.\nWe expect interest expense to fall further as we utilize proceeds from the flexes divestment on debt repayment and also benefit from having refinanced on Tuesday, our 6.5% 2027 senior notes with additional bank debt, utilizing a mix of floating and fixed rates below 3.5%.\nOur first quarter non-GAAP tax rate was roughly 31% and significantly higher year-over-year due to increased pre-tax income, with a higher proportion of that income in the U.S., and less positive discrete items than the prior year.\nEven with significantly higher tax expense, our first quarter adjusted Class A earnings per share was still more than double to $1.28 per share.\nFinally, first quarter adjusted free cash flow was $19 million cash outflow and lower year-over-year, primarily due to higher capex-related maintenance and organic growth investments in IBCs, plastics, and specialty corrugated products.\nOur core capital priorities remain unchanged: reinvest in the business to create value and support growth; return excess cash to shareholders via an attractive and growing dividend; and maintain a compliance leverage ratio between 2 times to 2.5 times.\nAs promised, we're back comfortably within our targeted leverage ratio range and anticipate further downward bias in the near future.\nBalance sheet strength provides us with financial flexibility to pursue value-accretive opportunities.\nAnd we are currently finalizing our strategic planning process to determine the focus of growth activities going forward.\nWe will share more with you at investor day in June.\nWe are increasing our fiscal 2022 guidance despite eliminating flexibles income for the period of April 1 to October 31, which was present in the guidance we issued at Q4.\nWe have overcome that headwind and increased the midpoint of our adjusted earnings per share guidance by $0.45 to $6.60 per share for fiscal '22, reflective of solid first quarter performance, announced paper price increases, and lower interest expense.\nWe have deliberately kept a wider range than normal given uncertainty introduced by the unfortunate events in Europe.\nWe now anticipate generating between $380 million and $440 million of adjusted free cash flow in fiscal '22.\nWhile our profit expectations have increased since Q4, that improvement isn't fully reflected in free cash flow, primarily due to higher anticipated cash taxes and increased working capital, largely due to announced price increases.\nFinally, you will find a slide with key modeling assumptions in the appendix of today's deck for use as needed.\nIt is important to take a step back from time to time and look at the bigger picture when considering investment opportunities.\nAt Greif, we don't run our enterprise with a quarter in mind.\nInstead, our value creation model is focused on performance over the long term.\nAs I've just shown on the prior slide, we have a track record of delivering on our guidance expectations.\nThe execution discipline we've demonstrated to grow profits over the long haul, no matter the circumstance, has fueled sustained outperformance you will see here relative to a broader bucket of industrial companies.\nDespite sustained outperformance, we continue to trade at a substantial discount relative to other packaging firms, which mystifies us.\nClearly, I understand that it is investors who determine our value.\nHowever, our opinion is that our equity deserves a much closer look given the substantial discount present in our stock today.\nI am very proud of our team's first quarter performance.\nAs Greif's legendary customer service comes together, with execution discipline and unmatched product portfolio, a proven and disciplined capital allocation strategy, and sustainability leadership to form a value-creation engine that benefits our shareholders and other stakeholders alike.\nLooking ahead, we are well-positioned to benefit from ongoing strength and improving trends in our key end markets, and our future is bright.\n",
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"content": "q1 earnings per share $1.28 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: Today, we will discuss non-GAAP basis information.\nWhile we continue to face operational and financial challenges associated with COVID-19, we remain pleased with the performance of our diversified business units.\nDuring the first quarter, we experienced favorable cost trends, which resulted in better-than-expected financial performance.\nWe also completed the transition of our D. Ray James, Moshannon Valley and Rivers Correctional facilities to an idle status.\nAs we had previously disclosed, these three facilities had contracts that were not renewed by the Federal Bureau of Prisons and thus closed at the end of January and March, respectively.\nAttorney General to not renew Department of Justice contracts with privately operated criminal detention facilities.\nOur financial guidance assumes that our remaining BOP contracts will also not be renewed, resulting in three additional BOP facilities closing during 2021.\nWith respect to the U.S. Marshals Service, unlike the Bureau of Prisons, the agency does not own and operated facilities.\nThe U.S. Marshals contract contractor facilities, which are generally located near federal courthouses, primarily through intergovernmental service agreements and, to a lesser extent, direct contract.\nWe are cooperating with the U.S. Marshals Service in assessing various alternatives as to how to comply with the executive order.\nDuring the first quarter, we were notified by the U.S. Marshals that it would not renew the contract for the Queens Detention Facility in New York, which expired on March 31.\nWe currently operate four additional detention facilities that are under direct contracts and eight detention facilities that are under intergovernmental agreements with U.S. Marshals.\nThe four direct contracts are up for renewal at various times over the next few years, including two in late '21.\nPresently, our 2021 guidance reflects only the nonrenewal of our Queens contract, and we will continue to monitor the scope and implementation time line of the president's executive order.\nAs noted earlier, the executive order applies only to the Department of Justice.\nImmigration and Customs Enforcement are not covered by the executive order since ICE is an agency of the Department of Homeland Security.\nOur ICE processing centers are highly rated by national accreditation organizations and have provided high-quality and culturally responsive services for over 30 years under both Democratic and Republican administrations.\nOur ICE processing centers have been operating at reduced capacity throughout the pandemic as ICE has reduced operational capacity across all facilities to promote social distancing practices.\nThe federal government has also put in place Title 42 public health restrictions at the Southwest border which result in the immediate removal of single adults apprehended by border patrol.\nNotwithstanding these challenges associated with COVID-19, our employees have demonstrated significant strength and dedication.\nWe have continued to provide humane and compassionate care to all those entrusted to our facilities and programs.\nFrom the beginning of the public health crisis, our company and our staff took steps to mitigate the risks of the novel coronavirus.\nThese mitigation initiatives have included a focus on increasing testing capabilities, including investing approximately $2 million to acquire 45 Abbott Rapid COVID-19 devices and testing kits.\nWe also installed bi-polar ionization air purification system at select secure service facilities, representing a company investment of approximately $3.7 million.\nWe have provided continued access to face masks and personal hygiene products.\nWe have implemented social distancing pursuant to directives from our government agency partners.\nWe have been working closely with our government agency partners and local health departments to make COVID-19 vaccinations available at all of our facilities.\nWe recognize that in addition to the challenges that I've just discussed, there have been concerns regarding our future access to financing.\nWe have adopted a proactive and multifaceted approach to address these challenges.\nWe are focused on debt reduction and deleveraging.\nIn 2020, we reduced our net debt by approximately $100 million.\nDuring the first quarter, we reduced net debt by approximately $57 million and we've set a goal of paying down between $125 million and $150 million in net debt in 2021.\nThis past month, our board suspended our quarterly dividend with the goal of maximizing our debt reduction, deleveraging and internally funding growth.\nWhile GEO currently intends to maintain our corporate tax structure as a REIT, our board has determined to undertake a review of our current corporate tax structure, which is expected to be completed by the fourth quarter of this year.\nWe've also implemented ongoing review of assets for potential sale.\nIn the first quarter, we sold our interest in Talbot Hall, New Jersey reentry center with net proceeds of over $13 million.\nIn February of 2021, we issued $230 million and 6.5% exchangeable senior notes due 2026 in a private offering.\nWe used a portion of the net proceeds to redeem the outstanding amount of $194 million of senior notes due 2022 and use the remaining net proceeds to pay related transaction fees and expenses for general corporate purposes.\nWith the 2022 maturity having been successfully addressed, we also intend to consider alternatives in due course to address our subsequent maturities.\nWe believe these initiatives are in the best interest of our shareholders and other stakeholders as we work to address our debt maturities, enhance our long-term shareholder value.\nToday, we reported first-quarter revenues approximately $576 million and net income attributable to GEO of $50.5 million.\nOur first-quarter results include a $13 million pre-tax gain on real estate assets and a $3 million pre-tax gain on the extinguishment of debt.\nExcluding these gains, we reported first-quarter adjusted net income of $0.28 per diluted share.\nWe also reported first-quarter AFFO of $0.60 per diluted share.\nOur first-quarter results reflect better-than-expected operating cost trends across our business units, which resulted in better-than-expected performance.\nMoving to our outlook, we have updated our full-year 2021 financial guidance to reflect the better-than-expected cost trends in the first quarter of the year and lower expected maintenance capex for the year.\nWe expect full-year 2021 net income attributable to GEO to be in a range of $141 million to $150 million on a full-year 2021 revenues of approximately $2.23 billion to $2.25 billion.\nWe expect full-year 2021 adjusted net income to be in a range of $1.02 to $1.10 per diluted share.\nWe also expect full-year 2021 AFFO to be in a range of $2.23 to $2.31 per diluted share.\nWe expect full-year 2021 adjusted EBITDA to be in a range of $395 million to $406 million.\nOur updated guidance continues to assume a slow recovery from the COVID-19 pandemic throughout this year.\nAs we had previously guided, our 2021 projections account for the nonrenewal of three additional BOP contracts that have option periods expiring in 2021: the Great Plains Correctional facility in Oklahoma, which expires on May 31 and for which we have already received notice of nonrenewal from the BOP; and the Big Spring and Flight Line correctional facilities in Texas, which are set to expire at the end of November.\nAdditionally, the BOP has decided to discontinue its contract for the county-owned and managed Reeves County Detention Center 1 and 2 effective this month.\nAnd thus, our management consulting contract with Reeves County for that facility has ended as well.\nWith respect to the U.S. Marshals, our 2021 guidance reflects only the previously announced nonrenewal of our Queens facility contract on March 31.\nWe will continue to monitor the scope and implementation time line of the president's executive order.\nMarshals facility in Eagle Pass, Texas, which we expect to achieve normalized operations over the course of 2021.\nFor the second quarter of 2021, we expect net income attributable to GEO to be in a range of $35 million to $38 million on quarterly revenues of $558 million to $563 million.\nWe expect second quarter 2021 AFFO to be between $0.57 and $0.59 per diluted share.\nAs a reminder, our second-quarter results reflect lower payroll tax expenses than our first-quarter results because payroll taxes are front-loaded, resulting in higher expenses during the first quarter of each year compared to all subsequent quarters.\nMoving to our capital structure.\nAt the end of the first quarter, we had approximately $290 million in cash on hand.\nMore recently, we drew down an additional $170 million on our revolving credit facility, resulting in approximately $460 million in cash on hand and leaving approximately $14 million in additional borrowing capacity under our revolver.\nAs with our prior drawdown, our decision to further draw on our revolver is a prudent and precautionary step to preserve liquidity, maintain financial flexibility and obtain additional funds for general corporate purposes.\nWe will continue to proactively examine our options to address our funded indebtedness, including our near-term maturities.\nAs part of this effort, we refinanced the outstanding amount of $194 million of our senior unsecured notes due 2022 earlier this year by issuing $230 million in new 6.5% exchangeable senior unsecured notes due in 2026.\nWith the 2022 maturity having been successfully addressed, we also intend to consider alternatives in due course to address our subsequent debt maturity.\nAs a prudent part of this effort, we intend to review various capital structure alternatives and we have engaged Lazard as financial advisors and Skadden Arps as legal advisors to assist in that process alongside our existing corporate counsel, Akerman.\nWith respect to our capital expenditures, as we had previously announced, we have canceled approximately $35 million in capex previously planned for 2021.\nWe now expect total capex in 2021 to be $69 million, including $14 million for maintenance capex.\nWith the goal of maximizing the use of cash flows to pay down debt, deleverage and internally fund growth, our board suspended our quarterly dividend payments last month.\nWe have been focused on paying down debt and deleveraging for over a year.\nIn 2020, we paid down approximately $100 million in debt.\nDuring the first quarter of the year, we paid down approximately $57 million in net debt, which represents substantial progress toward our previously articulated objective of reducing net debt by $125 million to $150 million in 2021.\nWe are also continuing to evaluate potential cost-saving opportunities, as well as the potential sale of several company-owned assets.\nDuring the first quarter, we sold our interest in the Talbot Hall reentry facility in New Jersey, which resulted in net proceeds to GEO of approximately $13 million.\nI'd like to provide you a brief update on our GEO secure services business unit.\nDuring the first quarter of 2021, our staff continued to address the challenges associated with the COVID-19 pandemic.\nFrom the start of the pandemic, we have implemented several mitigation initiatives.\nWe put in place policy and controls consistent with guidance issued by the Centers for Disease Control and Prevention, including practices and procedures related to quarantine, cohorting and medical isolation.\nWe have continuously exercised paid leave and paid time-off policies to allow our employees to remain home as needed.\nWe have made face masks and cleaning supplies available at all of our facilities.\nWe have focused on increasing testing capabilities at all of our secure services facilities, including the deployment of Abbott rapid test devices that allow us to screen new arrivals at intake, so that positive COVID-19 cases can be properly quarantined and isolated.\nTo date, we have administered over 100,000 COVID tests to those in our care across our secure services facilities.\nWe have also made a significant company investment to install bi-polar ionization systems at select secure services sites.\nThese air purification systems can reduce the spread of airborne bacteria and viruses.\nMore recently, we have been working closely with our government agency partners and local health departments to make vaccinations available at our facilities, allowing each jurisdiction's vaccine guidelines.\nTo date, over 18,000 vaccinations have been administered at our secure services facilities.\nWe continuously evaluate our mitigation steps and will make adjustments based on updated guidance by the CDC and other best practices.\nMoving to our recent operational activity.\nRay James, Moshannon Valley and Rivers correctional facilities were not renewed by the Federal Bureau of Prisons and ended at the end of January and March, respectively.\nOur facility and regional staff worked closely with the BOP during the first quarter to complete the ramp-down and deactivation of these three facilities.\nAs we have discussed, in January of this year, the president issued an executive order directing the U.S. Attorney General to not renew Department of Justice contracts with privately operated criminal detention facilities.\nAs a result, we have been preparing operationally with the expectation that our remaining contracts with the BOP will not be renewed when their current option periods expire.\nWe have already received notice from the BOP that the contract for our Great Plains Correctional Facility in Oklahoma will not be renewed when the current option period expires on May 31.\nThe BOP has also decided to discontinue its contract for the county-owned and managed Reeves County Detention Center 1 and 2, effective this month.\nAnd therefore, our management consulting agreement with Reeves County for that facility has also ended.\nAdditionally, the current option periods for our Big Spring and Flight Line facilities in Texas expire at the end of November 2021.\nAnd our current expectation is that those two contracts will not be renewed by the BOP.\nMarshals do not own and operate their facilities.\nThe U.S. Marshals contract for bed capacity, which is generally located in areas near federal courthouses to house pre-trial offenders who have been charged with federal crimes.\nMarshals contract for these facilities, primarily through intergovernmental service agreements and, to a lesser extent, through direct contracts.\nWe were notified by the U.S. Marshals that the agency would not renew the contract in our company-owned Queens detention facility in New York, which expired on March 31.\nThe four direct contracts are up for renewal at various times over the next few years, including two in late 2021.\nWith respect to our ICE processing centers, the executive order does not cover agencies outside the Department of Justice.\nOur ICE processing centers are highly rated by national accreditation organizations and provide high-quality, culturally responsive services in a safe and humane environment.\nTypical amenities at our processing centers include flat-screen TVs in the housing units, multipurpose rooms, outdoor covered pavilions and artificial turf soccer fields.\nAll those entrusted in our care provided culturally sensitive meals approved by registered dietitian, clothing, 24/7 access to healthcare services and full access to telephone and legal services.\nHealth care staffing at our ICE processing centers is approximately more than double that of our state correctional facilities, which is needed to provide appropriate treatment for individuals who have numerous and diverse health and mental health needs.\nWe have provided these high-quality professional services for over 30 years under Democratic and Republican administrations.\nI'd like to briefly update you on our GEO care business unit.\nConsistent with the efforts undertaken by our GEO secure services facilities, our company and our employees have remained focused on implementing COVID-19 mitigation strategies.\nAll of our residential facilities in GEO reentry and GEO youth services have put in place quarantine and cohorting policies and additional entry screening measures.\nWe have also focused our efforts on increased sanitation, testing and deploying face masks.\nWe have allowed our employees to exercise paid leave and paid time off to remain home as needed.\nWe will continue to evaluate our mitigation steps, and we'll make adjustments as appropriate and necessary based on updated guidance by the CDC and other best practices.\nDespite the challenging operational environment, our employees have continued to deliver high-quality rehabilitation and reentry programming to those in our care, often in innovative ways, including through virtual technologies.\nWe recently published our 2020 GEO continuum of care annual report, which highlights the accomplishments of our employees and our programs.\nAmong the innovative initiatives implemented by our continuum of care team during the pandemic was the creation of the GEO academy, which allowed us to transition our academic programs to technology-based programming.\nWe also launched GEO academy career services in an effort to partner with community employers under our vocational programs to increase employment opportunities for our post-release participants.\nOur recently released continuum of care annual report also highlights the accreditation that our Florida facilities received in 2020 from the Commission on Accreditation of Rehabilitation Facilities based on the quality and strength of our substance abuse treatment programs.\nThe continuum of care annual report also emphasizes the importance of our post-release support services.\nDuring 2020, GEO allocated $1.7 million to address basic community needs of post-release participants such as transitional housing, treatment, transportation, clothing, food, education and job placement assistance.\nThroughout the year, our post-release support team helped more than 3,600 individuals returning to their communities.\nFurthermore, the statistics disclosed in our continuum of care annual report show that released individuals who received our post-release support services experienced significantly lower recidivism rates over one- and two-year periods than those who did not participate in our post-release support program.\nOur GEO continuum of care program is part of GEO's contribution to criminal justice reform.\nWe believe that it provides a proven successful model on how the 2.2 million people in the criminal justice system can be better served and changing how they live their lives.\nOur award-winning program is not in competition or in conflict with other national initiatives regarding offender sentence reforms.\nIn fact, we applaud these efforts.\nOur efforts seek to draw national attention to the many still incarcerated in need of a more structured and comprehensive approach to rehabilitation.\nWe believe that the success of our continuum of care also positions GEO to pursue quality growth opportunities.\nDuring the first quarter of 2021, we were awarded a new contract with the Federal Bureau of Prisons for a 118-bed residential reentry center in the Tampa, Florida area, which we expect to activate in the second half of 2021.\nAdditionally, during the first quarter, we activated two new day reporting center sites and were awarded a contract for a third additional day reporting center in California, bringing our nationwide total to 80-day reporting centers.\nWe believe that these important contract wins are representative of the quality of our rehabilitation and reentry services.\nWhile we continue to face operational and financial challenges associated with COVID-19, we remain pleased with the performance of our diversified business units.\nWe believe our company remains resilient and is supported by real estate assets and contracts entailing essential government services.\nWe've provided high-quality professional services for over 30 years under both Democratic and Republican administrations and under legislative branches controlled by both parties.\nWe recognize that there have been concerns regarding our future access to financing and the recent federal policy actions have resulted in the nonrenewal of some of our contracts.\nTo address these challenges, we've established a focus on debt reduction and our board has suspended our quarterly dividend.\nOur board has also begun a review of our current corporate tax structure as a REIT to be completed by the fourth quarter.\nWe recently completed the refinancing of our senior note due 2022, and we are evaluating the potential sale of company-owned assets.\nWe believe these initiatives are in the best interest of our shareholders as we work to address our debt maturities and enhance long-term shareholder value.\nOn May 15, Blake will be succeeded by James Black, who has 23 years of service with GEO.\nThat completes our remarks, and we'd be glad to take questions.\n",
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"content": "sees fy adjusted ffo per share $2.23 to $2.31.\nsees q2 adjusted ffo per share $0.57 to $0.59.\nsees q2 revenue $558 million to $563 million.\nsees fy revenue $2.23 billion to $2.25 billion.\nexpect that remaining secure services contracts with bop will not be renewed when current contract periods expire.\nnotified by usms that it would not renew contract for company-owned queens detention facility in new york, which ended on march 31.\nfocused on debt reduction, deleveraging, and internally funding growth.\nboard has determined to undertake an evaluation of geo's structure as a reit.\ncompname reports q1 adjusted ffo per share $0.60.\nq1 adjusted ffo per share $0.60 .\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: As you all know, the COVID situation around the world continues to be very fluid depending on the specific countries, levels of vaccination and other government actions.\nThe US is clearly ahead of the curve, and the consumer is behaving strongly exhibiting signs of a response to pent-up demand, being much more comfortable going out and shopping in stores, and very willing to spend in apparel and accessories.\nWe have been observing these trends since mid-March when the stimulus checks were made available.\nCanada is still under various restrictions at present.\nAnd in Europe, most countries were in multiple degrees of lockdowns until recently, and we experienced significant store closures during the quarter as a result.\nThe great news here is that most countries have now reopened and so are our stores.\nWe are thrilled with this development as our business is very large there.\nAnd while our Asia businesses were less impacted by lockdowns, the consumer seems less motivated to resume shopping in our stores at levels comparable to the pre-pandemic era.\nLet me get now into our results for the first quarter.\nWe believe that the most relevant comparison to understand our relative performance this year is against our results for the pre-pandemic period, which is our fiscal year 2020.\nWe are extremely pleased with our fiscal 2022 first quarter performance, which exceeded our expectations for revenues and profitability across all channels.\nDuring the period, our revenues reached $520 million doubling last year's results and were only 3% below revenues in the LLY period.\nDuring the quarter, we delivered a 5% adjusted operating margin, which is remarkable.\nThe operating margin expansion was over 94[Phonetic] points versus LLY and was fueled by improvement in gross margin of almost 700 basis points and a lower SG&A rate of over 200 basis points.\nAdjusted operating profit was $26 million in Q1, which compares to an adjusted operating loss of $109 million last year as we faced the most challenging time of the pandemic.\nThis also compares to an adjusted operating loss of $22 million in the LLY first quarter period, a $48 million improvement.\nIn addition to the improvements in the macro environment that I mentioned, this performance, both top and bottom line is a direct result of the transformational work that we have done at Guess?\nover the last 15 months.\nThis transformation touched every area of our business.\nIncluding initiatives to elevate our brands and our product, the acceleration of our e-commerce business, the optimization of our global footprint and brand portfolio, the reorganization of our team globally and the execution of significant cost reductions throughout our operations.\nThis company has been relevant and thriving for 40 years because of its strong business sense, an incredible foresight into the future of not only consumer preferences but also dynamic business models.\nThe leadership and commitment to action of our Co-Founder and Chief Creative Officer, Paul Marciano, has inspired yet another transformation for our company.\nTo execute this transformation, it required great teamwork and an enormous effort from our associates all over the world.\nI want to express how proud we are of what our entire team has accomplished under very challenging circumstances.\nI believe these results showcase four key implications for our go-forward business.\nFirst, after closing 140 retail locations and renegotiating over 340 store leases in the past 15 months, the company is operating with a new occupancy model.\nMany unprofitable locations have closed forever.\nLease costs for most of the renegotiated leases are meaningfully lower and in many cases rents are now variable based on sales.\nThis model is contributing to a lower occupancy cost structure across markets and is bringing profitability to the North America retail business that the company has not seen in years.\nSecond, we have a healthier retail business with more full price selling and less promotional activity, which is delivering higher product margins.\nWe are pricing our product based on perceived value, which in many cases is higher than the historical price for comparable products, and we are selling more of it at full price.\nThese are structural changes to our retail business model, which will enable strong flow-through to profitability as we grow our sales.\nThe third key implication relates to our e-commerce business.\nOur e-commerce business in North America and Europe grew 61% in Q1 and delivered a very high level of profitability.\nThis is a key growth vehicle for our future.\nFourth and last, the work that we have done to streamline our cost structure has resulted in a more efficient operating model and a lower SG&A load to support our business.\nSo we now have the flexibility to strategically reinvest some of the savings in growth driving initiatives like marketing and further development of omnichannel capabilities.\nMost of the transformational changes that we executed are permanent and will contribute to further operating margin expansion for our company.\nFor the current fiscal year 2022, we now have a clear line of sight to a 300 basis point expansion of our operating margin compared to the LLY fiscal year 2020 period, which we closed with a 5.6% adjusted operating margin.\nLonger term, we expect this to result in the acceleration of at least one year to reach our 10% operating margin goal by fiscal year 2024 versus our original estimate of fiscal year 2025.\nAs you can imagine, I'm very excited about this.\nNow let me tell you about some of the trends that we saw in the business in the first quarter.\nIn the US, customer traffic levels are still negative versus LLY, but have increased substantially, fueling our sales improvement, most likely a result of pent-up demand, stimulus checks and vaccine rollouts.\nWe continue to see record levels of conversion and better full price sell-throughs.\nIt is clear that along with the macro factors impacting our sales, the customer is responding well to our offerings.\nSo we see customers getting back out into our stores.\nAnd we are also seeing category performance trends that indicate that they are getting out of the house for multiple occasions.\nWhile our Athleisure and essential lines continue to perform well, we have seen a material uptick in our sales in dressier products, including denim, dresses, high heels and our Marciano collection.\nIn Europe, we are still dealing with significant government-mandated capacity constraints, which have resulted in a more muted traffic recovery at this point.\nHowever, conversion in that region has increased materially driving the sales comp improvement.\nWe continue to see stronger performance in categories like Athleisure and handbags versus the dressier products in the US, where the vaccine rollout is much more advanced.\nIn Asia, traffic is still under pressure as the consumer remains sensitive to the COVID situation, especially in Japan, where we are still seeing government-mandated lockdowns.\nThe product categories that have performed better in this environment include dresses, outerwear and denim.\nOur wholesale and global licensing businesses are performing very well, indicating that our product is resonating with our wholesale customers, and our brand is gaining market share.\nIn Europe, the Fall/Winter season that we recently closed have orders up single digits to last year with fewer accounts but higher average orders, and our licensing business grew over 14% in Q1 versus LLY.\nFeedback from our licensees on our brand has been super encouraging.\nWe've spoke in depth about our strategic business plan in March, including our six strategic objectives.\nThey are organizational culture, brand relevancy, product excellence, customer centricity, global footprint optimization and functional capabilities.\nToday, I will touch on a few initiatives related to these objectives.\nLet me start with an update on the important topic of ESG.\nwill publish its fourth sustainability report, which is prepared in accordance with GRI and SASB standards and is undergoing reasonable assurance procedures by KPMG.\nAs you know, having our sustainability data assured and verified constitutes a leading practice in the industry.\nRegarding brand relevancy, as you know, we are currently focused on elevating our brand.\nPaul has been driving this game-changing initiative, including the development of our one global line, the elevation of the starting of our assortment and the quality of our products and how the brand is represented across all touch points globally.\nThere is no one in the world that knows the Guess?\nbrand better than Paul Marciano.\nUnder his leadership, the product teams have worked really hard to improve the materials that we use, maintain our focus on sustainability and increase perceived value for each item in our collections, and the results are amazing.\nI have said this before, we now have the best product I have seen in all my years at Guess?\nNext, Paul and the creative teams are working on elevating the customer experience through our websites and in our stores, and we will be remodeling key stores where appropriate to elevate our image and maximize sales.\nRegarding our customer centricity initiative, our team is laser-focused on the full implementation of the Salesforce Customer 360 suite that we have mentioned in the past.\nWe have just completed the implementation of the marketing cloud solution and are now focusing on service cloud, which includes the integration of data to develop what I call one view of the customer.\nNext, I want to touch on our global footprint optimization.\nWe have discussed the great strides that we have made this year in closing unprofitable stores, including flagships and renegotiating brands.\nAt the same time, we have our eye out for strategic new store opportunities where the economics make sense.\nCurrent conditions in the real estate market are prime for us as a result of the massive levels of store closures that took place across the world over the last year.\nWe are also testing some short-term pop up models with different product capsules like Athleisure, for example, using limited capex to expand our footprint and customer base and test future locations.\nIn short, we believe in the power of the store portfolio as a key pillar of our omnichannel strategy, and we are investing in our growth.\nOur last strategic objective is regarding functional capabilities.\nDuring the quarter, we opened a new distribution facility in Poland to service our Eastern Europe e-commerce business.\nThis initiative will result in significant savings related to processing and transportation costs as well as improved service levels.\nIn summary, we continue to make progress on the key initiatives of our strategic plan and we can see the benefits already.\nSo how are we approaching the rest of this year?\nWe are optimistic about the market recovery based on our experience in the US, where vaccination levels are high and the consumer is willing and capable to spend more in our product categories.\nPeople are starting to go out, socialize and attend events.\nAnd I cannot think of another brand better positioned for those occasions than our own.\nTo capitalize on this opportunity, Paul plans to invest more aggressively in marketing and advertising for the upcoming seasons.\nWe also want to prepare our business to respond to an increase in demand.\nWe are maintaining f capacity to buy additional inventory in key strategic categories like denim, handbags, essentials and dresses, and we are focusing the additional buys on more seasonless products.\nIn addition, we are equipped to fast track product to chase sales in the back half of the year.\nAll in all, for the year, we are increasing our outlook on revenue for the year from down high single digits to down mid-single digits.\nThis may prove conservative if the changes in consumer demand in the US are sustained and replicated in other countries.\nBut at present, we believe it is more prudent to plan our business as these developments are more temporary.\nIn closing, I want to say that I have been very fortunate throughout my career, but only a few times I have felt that the company was truly at an inflection point.\nToday, I strongly believe that Guess?\nis at an inflection point, and we are now set up to capitalize on the work that we have done.\nWe have a powerful global brand that enjoys strong momentum in the market.\nWe have amazing product across all categories.\nWe have transformed the model into a dynamic business with significant digital acceleration and big opportunities to increase market share and expand margins.\nAnd Paul and I have a great leadership team that is highly committed to take the company to the next level of growth, profitability and value creation.\nThe stars are aligned, and I couldn't be more excited about our future.\nWith that, let me pass it to Katie to review our financials and outlook in more detail.\nI'm excited about our financial performance this quarter, which truly exceeded our expectations by almost every measure.\nWe saw a sequential improvement in sales performance across our businesses, and the structural changes that we have made to our cost and margin model over the last 15 months allowed us to capitalize on this improvement in demand for our product in a big way.\nAs a result, we delivered an adjusted operating profit in Q1 for the first time in 6 years, with every of our segments delivering higher profit than pre-pandemic LLY.\nI could not be more proud of our results.\nNow let me take you through the details.\nFirst quarter revenues were $520 million, down 3% to LLY in US dollars and 5% in constant currency.\nThis performance exceeded our expectations, driven by sales momentum in our European wholesale and e-commerce channels, US retail business as well as our global licensing business.\nOverall, the decrease in revenue is attributable to permanent store closures and negative same-store sales as a result of pandemic related traffic decline.\nI want to note that these permanent store closures are really accretive to profitability, representing about $10 million of incremental operating profit in the first quarter.\nAdditionally, government restrictions for our retail operations in Europe and Canada had a material negative impact on our sales with these temporary store closures worth about 12% of sales versus LLY for the total company during the quarter.\nOn the other hand, this quarter we benefited from an anticipated shift in European wholesale shipments from Q4 of last year, which is worth about the same amount.\nSo overall, these two one-time factors offset each other.\nI'm happy to report that we continue to see sequential momentum in our e-commerce business, which was up 61% for the quarter in North America and Europe.\nThis compares to 38% in Q4, 19% in Q3 and 9% in Q2.\nLet me get into a bit more detail on sales performance by segment.\nIn Americas retail, revenues were down 12%.\nThe decline has driven almost entirely by temporary and permanent store closures.\nStore comps in the US and Canada were down 1% in constant currency, a vast improvement to Q4, which was down 21%.\nSame-store sales were positive in the US, but Canada remains challenging as they struggle with the pandemic.\nThe improvement in sales was driven mostly by improved traffic trends, while conversion in AUR remain high.\nTourist centric stores continued to underperform nontourist centric stores by a wide margin during the quarter.\nHowever, over the last few weeks, our tourist stores have picked up, indicating that at least domestic travel could be resuming.\nIn Europe, revenues were up 15%.\nThe wholesale business showed strong growth over LLY, benefiting from the shift in shipment timing.\nHowever, our retail business was negatively impacted by lockdowns and operating restrictions.\nStore comps for Europe were down 17% in constant currency, still muted by the increase in COVID levels in that region, but also an improvement to last quarter, which was down 26%.\nE-commerce sales continue to gain momentum.\nThis channel is helping us to mitigate some of the headwinds caused by the COVID crisis now, but will also be a key enabler of growth for us in this segment in the future.\nIn Asia, revenue was down 35%.\nThis was driven by permanent store closures and negative store comps of down 25% in constant currency.\nSales comps in South Korea and China were down in the high teens, however, other areas in the region, like Japan were down over 50% as they continue to struggle with COVID outbreaks.\nOur Americas wholesale sales were down 2% to LLY, this business has shown consistent improvement quarter-to-quarter.\nWe are happy to see sales in this business back to pre-pandemic operating levels, but this time with much higher profitability.\nLicensing revenues also outperformed and were up 14% to LLY in Q1, driven by strong performance in handbags, fragrance and footwear.\nGross margin for the quarter was 40.7%, almost 700 basis points higher than 2 years ago.\nOur product margin increased 20 basis points this quarter versus LLY, primarily as a result of higher IMU, which increased 300 basis points, partially offset by business mix.\nOccupancy rate decreased 660 basis points.\nAbout half of the decrease is a result of business mix driven by the increase in wholesale, and the rest is attributable to permanent store closures, rent release and lease renegotiations.\nThis quarter, we booked roughly $6 million in rent credits for fully negotiated rent release deals, mostly in Europe.\nThere are still some negotiations with our landlords that are outstanding as we continue to extend our conversations to address the second round of temporary store closures.\nAdjusted SG&A for the quarter was $186 million compared to $204 million 2 years ago, a decrease of $19 million or 9% and better than our expectations.\nWe continue to benefit from changes to our expense structure, lower advertising spend and a decrease in expenses related to permanent store closures versus LLY.\nIn addition, there was a benefit of about $7 million from government subsidies, mainly in Europe, which was partially offset by higher variable expenses related to the growth of our e-commerce businesses.\nAdjusted operating profit for the first quarter was $26 million versus an adjusted operating loss of $22 million in Q1, 2 years ago.\nOur first quarter adjusted tax rate was 28%, up from 11% two years ago, driven by the mix of statutory earnings.\nI'm really proud of the status of our balance sheet.\nI will take you through some details comparing now to last year, not LLY.\nInventories were $405 million, up 3% in US dollars and down 4% in constant currency versus last year.\nWe feel good about our inventory position and believe we have the right assortment to satisfy demand throughout the year.\nWe ended the first quarter with $395 million in cash.\nCash was $419 million in the prior year.\nHowever, remember that we have proactively drawn down on our credit lines in Q1 and paid them back in Q2.\nOn a net basis, we grew net cash by $115 million from the prior year.\nOur receivables were $306 million, up from $240 million last year.\nThis increase is a result of the timing shift in the wholesale shipments into this quarter.\nWe are, however, collecting from our accounts materially faster than last year, with DSO in Europe down about 20% this quarter.\nOur payables are up as a result of better payment terms with our vendors as well as a higher portion of fresh inventory on our books.\nCapital expenditures for the quarter were $9 million, up from $6 million in the prior year as we begin to strategically reinvest in technology and select remodels.\nFree cash flow for the quarter was negative $65 million, an increase of $3 million versus negative $68 million last year.\nSo now let's talk about next quarter and the rest of the year.\nThe current environment is still uncertain.\nAnd as a result, we are not going to provide formal guidance, but I will walk you through how we are thinking about the near-term future.\nAgain, I'm going to anchor our commentary on LLY.\nFor both the second quarter and the full year, we are raising our revenue expectations from down high single digits to LLY to down mid-single digits as permanent store closures and pandemic related traffic declines are partially offset by continued momentum in our global e-commerce and wholesale businesses.\nBecause of both the temporary and permanent store closures, we don't think sales comps are the best way to understand our retail performance.\nIn addition, as you know, our business model has a few dimensions to it, which are moving in different directions.\nSo I'm going to focus on total revenue by segment to break this out for you guys.\nIn Americas retail, we continue to see performance roughly follow trends in Q1 and expect total revenue declines for Q2 and the rest of the year to be in line with our Q1 performance, which was down 12% versus LLY, primarily impacted by permanent store closures.\nIn Europe, Q1 was impacted positively by the shift in wholesale and negatively by temporary store closures.\nThese are now being lifted in many of the countries in which we operate, Germany being the biggest exception at the moment.\nWe believe the stores will operate at higher levels of productivity than over the past year but still below LLY.\nE-commerce will continue to grow, but at more modest levels given that we are reopening the stores and mapping strong growth from last year.\nTogether with our expectations for wholesale revenue cadence, we anticipate revenue in Q2 for our Europe segment to be roughly flat to LLY and grow modestly for the full year.\nIn Asia, we are expecting a Q2 revenue decline similar to that in Q1, but the back half of the year will be slightly better as we anniversary softer performance in LLY.\nIn Americas wholesale, based on our current order book, Q2 will perform better than Q1, and revenue should be flat to LLY for the full year.\nLastly, in licensing, we had a very strong first quarter, but we are modeling for the year to be down to LLY given the challenges in the wholesale business globally right now.\nAs Carlos mentioned, this may prove to be conservative, but we want to keep inventory lean and if demand exceeds our expectations, we know that we have the capabilities to react.\nIn terms of profit, adjusted gross margin in the second quarter is expected to be around 400 basis points better than LLY, driven primarily by lower occupancy costs as well as improved IMUs and lower promotions.\nWe anticipate that the adjusted SG&A rate will be up 150 basis points as cost savings are offset by lower sales levels and reinvestments and business expansion initiatives, including advertising.\nFor the full fiscal year 2022, we expect operating margin to expand by approximately 300 basis points to LLY.\nThis would bring operating margin for the year to around 8.6% versus LLY adjusted operating margin of 5.6%.\nIn closing, it's truly an exciting time to be a Guess?\nAfter over a year of navigating the company through an extremely turbulent time in our global history, the dust is finally settling.\nAnd even though the near-term macro environment may still be uncertain, I can see very clearly that our business is now primed to gain market share and bring those dollars to the bottom line with a more profitable model, now we need to execute.\n",
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"content": "q1 revenue $520 million versus refinitiv ibes estimate of $497.4 million.\nquarterly americas retail comp sales including e-commerce increased 6% in u.s. dollars and 5% in constant currency.\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 hope you're all safe and healthy in light of the current challenges.\n, we continue to control what we can control, and to make the health and well-being of our teams, our customers and the communities we serve, our highest priority.\nFortunately, with good planning and careful execution, we have been able to protect our people effectively.\nI'm very pleased to report that our team continues to excel in this environment.\nAt times like these resilience, the ability to adapt, fast decision making and strong execution are proving critical to win and our team has exhibited every one of these trades at every turn.\nThis crisis continues to test us all and now with second waves in multiple places, it is clear that we are not running a sprint by the Marathon.\nWe continue to stay focused on servicing our customers well; managing our cost structure tightly; optimizing margins and controlling our inventories balance sheet and liquidity.\nYou are doing a great job and you make us very proud.\nI will now spend a few minutes on our results for the third quarter and then I will touch on how we are approaching the holiday selling season.\nAfter that I will comment on our strategic business planning process and highlight key accomplishments for the period.\nI'm pleased to report that we had a very good third quarter where we exceeded our top line expectations and delivered a very strong bottom line, reporting adjusted earnings per share of $0.58 versus $0.22 last year.\nIn the quarter, we more than doubled our adjusted operating profit and achieved an adjusted operating margin of 9.7%, which represents a 600 basis points expansion versus last year.\nIt's worth noting that we delivered strong earnings on an 8% decrease in revenues for the period.\nIn a very challenging environment, we achieved very solid gross margin performance and deliver healthy operating margin expansion in most of our businesses.\nThe most significant improvement was driven by our business in Europe, which benefited from increased wholesale revenues.\nWe enable the increased revenues when we elongated the fall winter season shipping window and canceled the development of the pre-spring-summer line.\nThis proved to be a great strategy and represented a revenue increase in the period for Europe of about $50 million.\nTotal Q3 revenues for Europe increased 16% and operating profit exceeded $51 million delivering a margin expansion of 900 basis points for the period.\nAs we continue to focus on key product categories that represent the foundation of our business for women's and men's.\nDuring the quarter essentials, active wear, denim, accessories and shoes outperform the overall business.\nWe managed our balance sheet well and ended the period with cash and equivalents of $365 million and inventories 24% below last year's levels.\nAs we look into the holiday season, we believe that we are well positioned with our product; our marketing plans and our teams preparedness across the globe.\nLet me give you some color of what we are experiencing in our business now and then Katie will quantify the financial impact of each factor.\nStarting with retail, customer traffic into our stores continues to be challenged by the pandemic, especially during traditionally high traffic periods like Black Friday.\nThat said those customers coming into the stores have a higher intention to purchase and this has consistently resulted in higher conversion rates.\nTemporary government mandated shutdowns are also impacting several markets, especially in Europe and Canada, where we have significant businesses.\nWe are pleased to see that our e-commerce business is accelerating, partially offsetting the negative store trends.\nRegarding our wholesale business in Europe, as I mentioned, we made the decision to cancel the development of the pre-spring-summer line to consolidate the development of spring-summer products into one main collection versus two in the past.\nThis change will result in a smaller percentage of the shipments of that main collection occurring in the fourth quarter, that compared to last year.\nWith the majority of the shipments to be completed in Q1 of next year.\nIn connection with this, we recently closed the spring-summer sales campaign, which delivered orders that were only slightly below the two collections combined in the previous year.\nThis results exceeded our expectations and demonstrate the great momentum that the brand is enjoying with our wholesale customers across Europe.\nI believe that many of our wholesale customers are concentrating their price within fewer, stronger, highly reliable brands and we are clearly one of those preferred brands.\nSo we are getting a bigger share of their base.\nWe continue to plan our business based on expected demand and size, our inventories and expenses accordingly.\nWe are confident in our assortments and our product ownership and have been pleased to see that the level of promotional activity in the marketplace remains moderate.\nAs we said in our previous call, we are in the process of updating our strategic business plan and we will schedule an event to share our plan at a later date.\nLet me just confirm today that we still believe that the opportunities we had identified to expand operating margins by 500 basis points are still intact.\nFor now, I will update you on the progress that we are making on some of our key initiatives and how we are leveraging the crisis to accelerate change.\nI will speak specifically about the elevation of our brand, our customer centricity initiative and our organizational development strategy.\nElevating the customers' perception of our brand starts with our product; product in our business has always been and continues to be king; offering a consistent line of product across all markets is a very ambitious goal when you have a global presence that reaches nearly 100 countries.\nI am thrilled to report that for the first time ever, we now have one global line of products across all categories; including women's and men's apparel, at leisure, lingerie, all accessories including handbags, footwear, kids MARCIANO for women's and men's and jewelry.\nHaving one global line will enable us to represent our Guess?\nbrand consistently across all markets and significantly reduce product development costs throughout our supply chain.\nHundreds of starts per season, which in the past were developed in each region and now represented by one common line for all markets.\nJust as an example, the new line development for the next pre-fall/winter season for Guess?\napparel resulted in a style reduction of 38% and this is after expanding the offering with multiple colors per stall, for e-commerce that represented a 7% increase of product choices online.\nI think that Paul and the product teams in all of our regions did an incredible job to make this happen.\nIt took strong vision, tremendous courage and great teamwork to achieve this, and deliver a line of product that can serve all global markets effectively.\nTo elevate the brand takes a strong commitment to raise the quality of everything we do.\nThis commitment starts with the quality of our products.\nIn order to accomplish this, we reviewed every product, challenge the styling, Guess?\nDNA alignment, the quality and sustainability of full [Phonetic] fabrics and materials; make and fit; perceived value and price.\nToday, we have a line that speaks to a larger audience with consistent stalling between genders solidly grounded in the Guess?\nDNA, offering a strong point of view on differentiation in the marketplace.\nWe have beautiful products offering our customers tremendous value for the price and quality of each item.\nI strongly believe that our product strategy will contribute to profitable market share gains.\nWe continue to make great progress with our sustainability goals.\nIn fact PR News recently named Guess?\nthe winner for best sustainability CSR Report 2020.\nWe were honored to be recognized alongside iconic global brands like PepsiCo and Johnson & Johnson.\nOur commitment to elevate the quality of everything we do is also impacting other areas of the business; including the customer experience in stores, our websites, digital media and marketing campaigns.\nThe focus assortments and boutique feeling that you experience when you walk into our stores now represent a stark contrast to what we had a year ago.\nI just visited stores in Italy a few weeks ago, I was very impressed with the overall experience.\nAs an example for next summer in Europe, we planned an SKU reduction in stores of about 35% and then SKU expansion online of 9%.\nWe planned to run the business with an omnichannel customer focus, regardless of where the customer chooses to shop and engage with our brand.\nOur goal is to leverage our entire assortment and inventory ownership with omnichannel capabilities; such as buy online, ship from store or buying store from our larger assortment online and ship from the e-commerce warehouse.\nThese capabilities are available in the Americas today and will be fully implemented in Europe next year.\nNext is our initiative about customer centricity, which we introduced last year.\nAs you know since the pandemic began, we have been working hard to accelerate the implementation of our plan.\nWe are pleased to report that we have completed the implementation of the salesforce platform in the US and Canada and all over Europe except for Russia, which is scheduled for next February.\nWe are very pleased with the speed and overall performance of the platform and are confident it enables a significantly faster and improved customer experience, better conversion and engagement and it will contribute to significant growth of our digital business.\nWe also made significant progress with our Customer 360 project.\nThis suite has also been developed by salesforce and is an integrated tool to optimize customer data capture, journey engagement, personalized marketing and results analysis.\nWe have already implemented the customer service and marketing cloud solutions, which are part of the suite and we are currently working on the social studio obligation.\nWe plan to complete the full implementation of the Customer 360 solution by the end of next year.\nThe third initiative relates to our global organizational development strategy.\nWe plan to optimize performance management and accountabilities.\nWe'll be eliminating redundancies across our global organization, leveraging technology to do a lot more with less in every area of our operation.\nOur goal is to complete the implementation of this project by the end of next year as well.\nIn closing, since Guess?\nstarted 40 years ago, the company has always adapted its business very effectively to the challenges presented by the market, the environment and new customer preferences.\nThroughout its entire history, this company has evolved successfully time and time again.\nI strongly believe that today presents our company with yet another opportunity to transform our business and increase our earnings power.\nI also believe that we have the team to accomplish this and I look forward to the years of growth to come.\nWith that, let me pass it to Katie.\nSo today is my one-year anniversary at Guess?\n, exactly a year ago we were presenting our strategic business plan to you, little did I know then that we were going to have the year that would follow.\nToday, I am very proud to report our results for the third quarter, which I believe demonstrate the power of agile planning and solid execution.\nIn the midst of a very challenging environment, we delivered substantial sequential improvement in sales, exceeding our expectations, significantly expanded operating margins and tightly managed inventory and working capital.\nWe are extremely happy with our liquidity position, which is especially strong given the extraordinary circumstances that we have faced so far this year.\nThis is evidence that we've been able to adjust our cost structure and capital spending to partially offset the deceleration in demand that our industry has experienced throughout the pandemic.\nBut as importantly as knowing what the cut is knowing when and where to invest to fuel future growth in the company, while maintaining liquidity and profitability.\nWe continue to support our efforts in digital and omnichannel initiatives, as well as investments to support long-term cost savings.\nAnd we continue to return value to our shareholders.\nOur Board has approved the payment of the cash dividend again this quarter.\nAs I said, last time we spoke, our long-term capital allocation strategy has not changed.\nNow, let me take you through some of the details on our performance for the quarter.\nLet's start with sales.\nThird quarter revenues were $569 million, down 8% in US dollars and 10% in constant currency.\nThe biggest driver in our improvement versus last quarter was wholesale in Europe, which was up 39% in constant currency versus last year.\nAs Carlos mentioned, we elongated the fall/winter season shipping window and canceled the development of the pre-spring/summer line, which resulted in higher revenues this quarter versus last year.\nIn retail store comps in the US and Canada were down 23% in constant currency in line with Q2 as momentum in the US was offset by softening in Canada, due to traffic declines as a result of the pandemic.\nEurope and Asia, both showed an improvement in store sales this quarter.\nStore comps were down 18% in Europe in constant currency, we have strong momentum was tempered in the last week of the quarter by shutdowns, due to the second wave of the pandemic.\nStore comps were down 17% in Asia in constant currency, driven by strengthening in China and Korea.\nAcross the globe, we continue to see traffic declines, partially offset by significantly higher conversion with our tourist-centric stores experiencing a tougher recovery.\nOur e-commerce business in North America and Europe was up 19% for the quarter, an improvement from up 9% in Q2, driven by momentum in Europe.\nOur Americas wholesale business was down 34% in constant currency, still under pressure from the deceleration in demand, but improving each quarter.\nLicensing revenues also improved versus Q2, down 12% in Q3.\nGross margin for the quarter was 42.1%, 480 basis points higher than prior year.\nOur product margin increased by 200 basis points this quarter, primarily as a result of higher IMU, as well as lower promotions.\nOccupancy rate decreased 280 basis points as a result of business mix and rent relief.\nThis quarter we booked roughly $8 million in rent credits for fully negotiated rent relief deals, mostly in Europe.\nWe continue discussions with our landlords and we'll realize any additional credits as the negotiations are finalized and signed.\nAdjusted SG&A for the quarter was $184 million, compared to $206 million in the prior year, a decrease of $22 million.\nWe continue to benefit from changes to our expense structure particularly more streamline hourly labor-staffing at the store level, corporate headcount and travel reductions and lower professional fees.\nIn addition, there were some one-time benefits from government subsidies and decreased advertising in the period versus last year, but these were offset by higher variable costs associated with wholesale shipments.\nAdjusted operating profit for the third quarter was $55 million, a 140% more than the operating profit in Q3 last year of $23 million.\nOur third quarter adjusted tax rate was 16%, down from 24% last year, driven by the mix of statutory earnings.\nInventories were $393 million, down 24% in US dollars and 25% in constant currency versus last year.\nWe ended the third quarter with $365 million in cash versus $110 million in the prior year, and we had an incremental $260 million in borrowing capacity.\nCapital expenditures for the first nine months of the year were $12 million, significantly lower than what we spent in the same period of the prior year.\nFree cash flow for the first nine months of the year was an inflow of $83 million, an increase of $162 million versus an outflow of $79 million last year.\nThis year we benefited from lower capital expenditures, extended payment terms with our vendors and unpaid rent to landlords while we finalize negotiations.\nIn addition, last year's outflow included the non-recurring payment of the $46 million European Commission fine.\nGiven the continued level of uncertainty in the current environment, we are not going to provide formal guidance.\nHowever, let me walk you through how we are thinking about the fourth quarter.\nWe expect fourth quarter revenues to be down in the low to mid-20s to prior year.\nAs Carlos mentioned, there are three main factors driving this decrease.\nAs the pandemic persist worldwide, we expect the continued pressure on customer traffic to negatively impact store sales.\nAt the same time, the momentum in our e-commerce business will partially offset this decline.\nWe expect the net effect of these two trends to represent approximately half of the revenue decline in the fourth quarter.\nOur businesses in Europe and Canada are currently being impacted by government mandated store closures.\nWell, at the height of the closures in November, we had over 200 stores closed, more than half of these have reopened and we expect further openings in the coming days.\nThese temporary closures, as well as some permanent closures are expected to represent a quarter of the decline.\nThe last quarter of the revenue decrease is a result of the shift of wholesale shipments in Europe for the spring/summer collection into next year.\nIn terms of profit, gross margin in the fourth quarter is expected to be slightly down to last year, as IMU improvement is expected to be more than offset by deleverage on lower sales.\nGiven the expected level of revenue, the seasonality of our business, as well as the mix, we expect SG&A as a percent of sales to delever by approximately 400 basis points versus the prior year.\nIn closing, I am very pleased with how our company continues to navigate this crisis.\nWe have proven that our brand is relevant and resilient.\nWe continue to showcase our team's ability to manage the business through a very fluid situation.\nAnd while we realize that our path to growth may not be linear over the next few months given the uncertainty around the global health crisis, we are as confident as ever in our long-term strategic initiatives.\n",
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"content": "compname reports q3 adjusted earnings per share $0.58.\nq3 adjusted earnings per share $0.58.\nnot providing detailed guidance for q4 or full fiscal year ending january 30, 2021.\nqtrly asia retail comp sales including e-commerce decreased 15% in u.s. dollars and 18% in constant currency.\nexpect revenues in q4 of fiscal 2021 to be down in low to mid-twenties.\nduring q3, continued to experience lower net revenue compared to same prior-year period as it remained challenged by lower 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: Comments will also reference certain non-GAAP or adjusted measures.\nBefore turning the call to Carlos, I would like to mention that we will be participating in a fireside chat at the Virtual Morgan Stanley Global Consumer Conference on Wednesday, December 1 at 9:55 AM Eastern.\nWe hope to see you there.\nI am very pleased to report another strong performance this quarter, which exceeded our expectations for revenue growth, operating margin expansion and bottom line results.\nRevenues increased 13% for the quarter versus last year and adjusted operating profit reached $70 million delivering an adjusted operating margin of almost 11% and adjusted earnings per share of $0.62 versus $0.58 last year and $0.22 in the pre-pandemic third quarter.\nThis performance was driven by the hard work, vision and dedication of our teams around the world, the business transformation that we have executed on the amazing product and strong momentum of the Guess brand.\nWe are very proud of all of you.\nI strongly believe our Company is positioned better than ever to extend its distribution, gain market share and increase profitability.\nWe have a strong balance sheet and solid cash generation power to support our business growth and return excess cash to our shareholders.\nOur Board's commitment is evident with the previously announced plans to our unused $200 million share repurchase authorization.\nAnd today's approval to double our dividend.\nWe firmly believe our stock is trading below its intrinsic value and plan to execute share repurchases opportunistically.\nOver the last two years, we have successfully executed a full transformation of our business and what better prove that our strategy is working, than our results this fiscal year, when we are guiding to double our operating margin and profit from pre-pandemic levels.\nThe first piece of this transformation is the innovation of our brand, including launching our first global line innovating the quality and sustainability of our product, upgrading our marketing and visual merchandising, optimizing full price selling, remodeling our store fleet and enriching the customer experience.\nPaul has led this critical initiative and together with the product and creative teams, they have been doing an incredible job.\nThe second piece of the transformation is the reset of our business model.\nWe have optimized our distribution in both retail and wholesale by removing unproductive stores and accounts, reducing our product offering to result in a single business with more productive SKUs from our global line.\nWe have also remained laser focused on margin expansion with improvements coming from IMU optimization, longer occupancy and cost reductions, including the consolidation of certain functions in Europe.\nAs a natural extension of these efforts, during the third quarter, we completed an intra entity transfer of certain intellectual property rights from the US to Switzerland, more closely aligning our IP rights with our business operations.\nWe are operating in a more capital-efficient way turning inventory faster with less non-productive assets.\nThis transformation has repositioned this Company's ability to deliver strong growth, significant profitability and superior shareholder returns into the future.\nSustainability remains a key focus for our brand and we are committed to being part of the solution to climate change.\nWe have aggressive internal targets to reduce corporate greenhouse gas emissions by 50% and supply chain emissions by 30% by 2030 and to achieve net zero by 2050.\nIn fact, last month, we signed an open letter to G20 leaders calling for policies that align with this goal.\nWe also supported the United Nations Conference of Youth to ensure the collective youth voice on climate negotiations is heard.\nWe are actively working on our climate action roadmap that includes store efficiency measures, investment in renewables and changes to the way that we create and produce our product, I couldn't be prouder of our leadership in this very important area.\nLet me add some color to our third quarter results.\nOur retail and wholesale businesses in North America have remarkable performance in the period with significant increases in operating profit and margin expansion.\nOur licensing business also reported strong quarter, all driven by the strong momentum our brand is enjoying in the marketplace.\nOur Europe segment performed well positively impacted by a shift in business to LLY due to the timing of inventory receipts, and I am proud to say that we closed the spring-summer order book for our European wholesale business this quarter with orders up 12% to LLY.\nAnd our sales campaigns for the pre-fall-winter season is looking promising for double-digit growth as well.\nThese results clearly signal that we are continuing to gain market share.\nOur Asia segment had a challenging quarter and continues to be impacted by the COVID situation on government restrictions in several countries including China, Japan and Taiwan.\nI am really encouraged by the momentum that we saw in the third quarter in our top line which of course starts with our brand and our product.\nWe had strong performance in dresses, sweaters outerwear and denim as well as our high-end Marciano brand.\nNorth America saw a pop in the mid-tops while Europe remained strong in athleisure.\nOur men's business outperformed in North America, and in accessories sales of handbags and watches were solid in both regions.\nI believe, the strength that we have been seeing in categories like denim, Marciano, handbags, dresses and outerwear bodes well for the future as these provide us key levers to drive same-store sales growth.\nGuess is a true lifestyle brand and is poised to capitalize on current consumer trends.\nCasualization is here to stay, which will help fuel our continued growth in categories like denim.\nWe have a diversified denim offering with silhouette including skinny, straight leg, mom jean and mini flare and see this as key opportunity for future growth.\nAt the same time, we see consumers returning to social activities and fashion-oriented which is seen in other key areas of our business like dresses and Marciano.\nRegarding our store fleet, we opened 55 new stores so far this year, most of which were pop-ups with new gas and factory stores, but also specialty conference like accessories, activewear, Marciano, kids and our Gen Z concept Guess Originals.\nWe continue to believe that we have substantial whitespace for new stores in many of our markets and stores are a key pillar to represent a lifestyle attributes of our brands, provide a tool for new customer acquisition will complete the omnichannel experience.\nIn connection with the elevation of our brand, we embarked on our remodeling program that will ultimately touch roughly 630 stores.\nIncluding new stores, this would represent 80% of our entire fleet in Europe and North America by the end of next year.\nWe continue to invest in technology including upgrades to our store infrastructure to drive efficiencies and enhance the customer experience.\nOur e-commerce business continues to grow with sales in North America and Europe in the third quarter, up 15% to last year and 37% to LLY.\nThis is a source of both revenue and profitability growth for our brand and it represents a material go forward opportunity for us.\nAnd we continue to make progress on our customer centricity initiatives including omnichannel capabilities and advanced data analytics and customer segmentation.\nIn Europe, we are rolling out omnichannel and ship from store capabilities in all countries and we have launched a new gift card application for the holidays.\nRegarding customer analytics, we have nearly 6 million contactable customers in our databases in North America and Europe and have added 1 million new customers this year so far.\nOver 85% of this customers provide us with their mobile phone number and over 20% with their home address.\nSo we can leverage SMS marketing and mailers.\nAs part of the Customer 360 projects, we recently launched our CRM platform, which gives us a 360 view of our customer and enable us to improve the way we segment and personalize our communication marketing and promotional strategies.\nThis is fully implemented in Europe and early results are very promising.\nThe same application will be implemented in North America next year.\nWe'll continue to drive innovation in this area and fund investments in technology and customer analytics.\nRegarding inventory and the supply chain, it will come as no surprise that our product development cycle has been impacted by the unprecedented challenges that the world is facing on the supply and logistics side.\nOur team is doing an incredible job mitigating this challenges to the extent possible.\nOur work to consolidate our vendors going from over 500 to around 135 as well as the execution of the global line which reduce SKUs by over 40% has enabled us to leverage higher volumes to push through production.\nWe have ordered product in advance to allow for extended lead times and our inventory levels at the end of Q3 reflect this.\nWe maintain a globally diversified sourcing strategy which has helped us to limit impacts when areas experienced disruptions.\nWe are also moving roughly 10% of our apparel sourcing to locations that are closer to the final distribution to get out and tighten costs as well as exploring alternative shipping methods like to change to move product faster between China and Europe and we are certainly investing in air transportation when it makes sense to get our product in time to sell.\nThis year, we have gone through above at 7% usage of air freight versus a prior average of about 3%.\nIn addition, as with the rest of the industry, we are experiencing increases in raw material cost like cotton.\nWe have contracts for certain raw materials that cover us into Q3 next year and simultaneously are looking at alternative options like recycled cotton made of post-consumer waste products.\nAll of this is obviously resulting in elevated costs which we have built into our outlooks.\nImportantly, we have been successful in increasing prices with AURs up 15% to 20% alongside our innovation and product quality to mitigate the impact this cost increases are having on our profitability.\nAs of the end of Q3, we had over a $100 million of inventory in transit representing almost 25% of our total ownership compared to 12% in pre-pandemic Q3.\nA lot of this product will support our post holiday business primarily to service our European wholesale business and our on-hand inventory today is completely aligned with our demand expectations for the upcoming holiday season.\nI feel strongly about our plans for the holiday business.\nWe have a lot of newness coming to stores.\nOur assortment and the elevated quality of our product is clearly resonating with our customers as evidenced by our strong start to the fourth quarter.\nIn North America, traffic is gaining momentum recently and we are experiencing good conversion and strong AURs.\nRecent improvement in trends in our tourist location suggests that we are getting a boost from the change in travel restrictions implemented in the US earlier this month.\nIn Europe, we have also seen positive sequential momentum in sales comps at the start of the quarter driven by material increases in traffic as AUR also remain strong.\nAs we have done all year, we plan to continue to be less promotional than in the past, especially with store wide level discounts.\nWe are increasing marketing to fuel the customer acquisition.\nWe are expanding the use of direct mail and catalog pieces planning to send out 1.2 million pieces during the quarter as well as increasing our investment in digital marketing to drive traffic to our sites.\nWe have bought key product feature in our marketing campaigns in significant debt.\nWe have also added video capabilities to show product attributes more effectively.\nWhen you put it altogether, we see top line growing in excess of 20% in the fourth quarter period versus last year and operating profit exceeding $100 million.\nThis represents an increase in both the top and bottom line to our previous outlook for the year and Katie will give us more color on this in a few minutes.\nLooking past this year, we remain confident in our longer-term goals to reach revenue of $2.8 billion and operating margins of 12% in fiscal year 2024.\nIn closing, let me just say that I could not be prouder of what our team has accomplished in the last 2.5 years since I've been back.\nWe have highly dedicated people who share an incredible passion to pursue our purpose.\nAnd on this team when we commit to something we deliver.\nWe committed to elevating our brand we are delivered.\nI think Paul and our product teams have done extraordinary work with this and today, we have one line of product for the entire world across all categories and our products are the best they have been in our Company's history, highly elevated, of great quality and very consistent with the DNA of the Guess brand.\nWe committed to transforming the business we are delivering.\nWe have reacted to every aspect of our business model including our store portfolio, digital business, sourcing and logistics operations and systems infrastructure.\nWe also committed to expanding our margins and we are delivering here too.\nWe now expect to reach an 11% operating margin this year, double our margin of two years ago and well ahead of our initial plans.\nWhile these are all significant accomplishments, I strongly believe that the best is yet to come for us.\nWe are in an inflection point at Guess, and I'm very confident that our business is well positioned to generate superior returns in the future and our results will be here to prove it.\nYou have our commitment.\nWith that, let me pass it to Katie to review our financials in more detail.\nI'm excited to tell you more about our financial performance this quarter which truly exceeded our expectations.\nWe tripled earnings to pre-pandemic levels and are raising both our top and bottom line outlook for the year.\nThe brand is showing strong momentum going into the holiday season and despite the challenging supply chain we have the products to support that demand.\nThese results are again a testament of our organization's commitment to win, flexibility to adapt during volatile times and pure grit.\nI love being part of this passionate team.\nNow, let me take you through the details on the quarter.\nThird quarter revenues were $643 million, up 13% to last year and up 4% compared to LLY.\nThis exceeded our expectations as our Americas Retail, European wholesale and licensing businesses all outperformed.\nOverall, the 4% revenue increased to pre-pandemic LLY with the result of growth in our European business driven by wholesale including shift to sales from Q2 to Q3 as well as e-commerce.\nThis was partially offset by permanently closed stores and negative same-store sales in Europe and Asia.\nExcluding sales from the over 170 stores that we have closed since the pandemic, Q3 revenue would have been up 9% to LLY.\nAnd let me just remind you that these stores are accretive to operating profit by about $20 million on a run rate basis.\nLet's talk a bit about sales performance by segment.\nIn Americas Retail, revenues were up 30% versus last year and down 5% versus LLY, better than our expectations.\nAgain this quarter, the declines for LLY was driven entirely by permanent store closures which are worth roughly 7% of sales.\nSo we're constantly US and Canada were up 2% in constant currency versus LLY.\nSame-store sales in the US remain positive despite continued negative traffic trends with positive conversion and AUR growth over 20%.\nI'm happy to report that sales in our over 70 stores in Canada have improved substantially driven by a material increase in traffic in that region as the pandemic there is beginning to wane.\nThis quarter, we continue to be a lot less promotional lapping also four events on holidays like Labor Day that we didn't do this year, which has an impact on our topline, but of course a benefit to our bottom line.\nI can help to point out the increase in profitability that we have brought to this segment that is allowing us to capitalize on our positive sales trends.\nOperating margin in Q3 was over 14% versus less than 1% in the prior two years and operating profit is 15 times what it was in pre-pandemic LLY even on lower sales, what an incredible business transformation.\nIn Europe, revenues were up 3% versus last year and 19% versus LLY.\nThe increase to LLY is primarily a result of growth in our wholesale business.\nAs you may recall from last quarter, our shipments for the fall-winter season were a few weeks away due to challenges with the supply chain.\nSo we had a shift in sales from Q2 into Q3.\nBut even absent the shift, this business had positive momentum and we are gaining market share here.\nWhile our retail business continues to be pressured by pandemic-related traffic declines, we saw a significant sequential improvement in our sales since last quarter.\nStore comps for Europe were down 13% in constant currency versus LLY, a 7% improvement from down 20% last quarter as a result of improved traffic and continued increases in AURs.\nIn Asia, revenue was down 8% in the last year and 31% to LLY, nearly half of this decline was driven by the permanent store closures.\nOur store comps were down 25% in constant currency versus LLY, 5% better than Q2 with negative sales comps in South Korea and China more moderate than other areas in the region.\nThis region has struggled with the resurgence of COVID-19 as well as the lack of consumer confidence which is deeply impacting our sales.\nOur Americas wholesale sales were up 64% to last year and 5% to LLY driven by higher sales in the US and licensing revenue continues to outperform, up 37% to last year and 20% to LLY in Q3 driven by strong performance in shoes, perfumes and watches.\nTotal company gross margin for the quarter was 45.7% more than 800 basis points higher than two years ago.\nOur product margin increased 340 basis points this quarter versus LLY primarily as a result of lower promotions and higher IMU, partially offset by business mix and increased freight, which was worth about 100 basis points this quarter.\nOccupancy rates increased 500 basis points driven by business mix, lower rents and permanently closed stores.\nAdjusted SG&A for the quarter was $223 million compared to $206 million two years ago.\nThe increase is the result of variable costs for both the e-commerce and wholesale businesses, mostly in Europe which grew materially into LLY as well as higher performance based compensation.\nAdjusted operating profit for the third quarter was $70 million versus $55 million last year and $23 million two years ago.\nThis is a 27% increase to last year and an over 200% increase to pre-pandemic levels.\nOur balance sheet remains strong.\nWe ended the third quarter with $391 million in cash, $26 million higher than last year's sales at the end of Q3.\nOur cash balance was impacted by an $80 million US tax payments made in connection with the IP transfer that Carlos mentioned.\nWe expect to receive this amount in Switzerland over the next 5 to 10 years.\nInventories were $482 million, up 23% in US dollars and 22% in constant currency versus last year and down 8% in constant currency to LLY.\nThis increase reflects our strategy to secure good in advance of the holidays and Q1 in light of the global supply chain disruptions and elongated transit times.\nYear-to-date capital expenditures were $41 million up from $12 million in the prior year, but below pre-pandemic levels, mainly driven by investments in new stores, remodels and technology.\nFree cash flow for the first three quarters of the year was negative $41 million driven down by the $80 million US tax payments that I previously mentioned.\nExcluding the tax payments, our free cash flow would have been positive $39 million.\nLet me touch on capital allocation.\nWe are confident in our ability to generate sustainable and profitable growth and ample free cash flow.\nAs a result, we have the runway not only to fund our growth initiatives, but also return incremental capital to our shareholders.\nAs you recall, last quarter we expanded our share repurchase program to $200 million.\nToday, we announced that our Board of Directors has approved a 100% increase in our quarterly dividend from $0.1125 to $0.225.\nAs a reminder, our dividend was announced earlier [Phonetic] before we executed the $300 million convertible notes to fund share repurchases in April of 2019.\nNow let's talk about our go-forward expectations.\nWe are raising our outlook for the fourth quarter and the full fiscal year.\nFor the fourth quarter, we are expecting revenue to be down mid-single digits versus LLY driven by timing in our wholesale business and permanently closed stores partially offset by growth in our e-commerce business.\nI wanted to note that in light of the recent developments with the pandemic in Europe, we have built in more prudent assumptions for revenues for a European retail business in the fourth quarter.\nIn terms of profit, adjusted operating margin for the fourth quarter is expected to be about 100 basis points better than LLY.\nGross margin is expected to expand by around by 500 basis points to LLY driven primarily by business mix, lower occupancy, lower promotions and improved IMU.\nAnd as with the rest of the industry, we are seeing some cost pressures, particularly in freight, which are built into these numbers.\nWe anticipate that the adjusted SG&A rate will be up around 400 basis points as cost savings are offset by business mix, investments in labor and higher incentive-based compensation.\nFor the year, we now expect revenue to be down in the low single digits versus LLY and adjusted operating margin to reach just over 11% for the year versus 5.6% in LLY.\nThis represents a doubling of adjusted operating margin with margin expansion of over 550 basis points to our pre-pandemic business despite a lower revenue base.\nTo break it down for you, this margin expansion comes from about 250 basis points of lower promotional activity, 200 basis points of IMU improvement, 150 basis points of lower occupancy expense and 200 basis points of channel mix and onetime benefits.\nThis was partially offset by about 150 basis points of higher inbound freight and 100 basis points of increases in G&A, mostly higher performance-based compensation for this year.\nWe are very confident in the sustainability of these margin improvements.\nWe realized that the current environment of significant demand and limitations in product availability have triggered broad increases in margin in our industry.\nIn our case, most of our margin improvement has come from concrete changes in our business model that Carlos walked you through earlier and are not circumstantial but more permanent in nature.\nThis margin expansion combined with the potential for future top line growth at Guess is very powerful.\nFor these reasons, we remain confident in our longer term goals, and we look forward to sharing our outlook for the next fiscal year with you when we report Q4.\n",
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"content": "q3 adjusted earnings per share $0.62.\nq3 revenue $643 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: We are very pleased with our fourth quarter earnings performance, which was significantly ahead of our expectations.\nIn the period we delivered adjusted earnings per share of $1.18 compared to $1.22 last year.\nWhile our revenues were 23% below last year and in line with our expectations, our digital businesses accelerated more than what we had anticipated, posting a 38% revenue increase in North America and Europe and our licensing business also outperformed.\nOffsetting these improvements were lower retail revenues due to additional store closures and restrictions, mostly in Europe and Canada and an anticipated shift in wholesale shipments in Europe into Q1.\nIn spite of the revenue decline we managed our business well and delivered an adjusted operating margin of 11.4% in the period, only 70 basis points below last year.\nThe main driver of the outperformance for the quarter was our gross margin, which increased 240 basis points versus last year.\nWith this performance we closed a challenging but rewarding year for our Company.\nWhile we experienced a significant revenue contraction of 30% in the year due to the pandemic, we were very proactive and lead the business carefully managing inventories well and controlling expenses tightly.\nAll considered, we were able to reverse our first quarter adjusted operating loss of $109 million to close the year with an adjusted operating profit of $20 million.\nWe ended the year in a good inventory position.\nWe have the right product and our ownership is appropriate to service our business well in the new fiscal year.\nAs with the rest of our industry, we have experienced disruption in our supply chain both to sourcing and transportation, which has caused some delays in product deliveries globally.\nHowever, given the fact that we were operating with restrictions in some regions, we were able to appropriately allocate the product to service our demand.\nThese conditions have resulted in limited supply, contributing to less promotional activity across the industry from which we are benefiting.\nIn addition to time, these delays caused an increase in transportation costs.\nOf course, we have been prioritizing shipments and choosing alternative transportation options to minimize this cost.\nWe believe that the port congestion delays, including the recent event in the Suez Canal, will be normalized by the summer, and we have made provisions to anticipate the receipt of goods wherever possible to mitigate further delays.\nDuring the year, we prioritized our investments in our digital and omnichannel initiatives and rationalized our global store footprint and expense structure.\nWe also returned value to our shareholders via dividends and we purchased $39 million of our shares.\nWe closed the year with a strong balance sheet with $469 million in cash.\nI am encouraged by our trends entering the new year.\nIt is clear that the customer is responding well to our products and assortments.\nOur digital channels are accelerating, our wholesale business shows we are gaining market share and when our stores are open, they are performing well with solid product sell-throughs.\nOur customer traffic is showing sequential improvement while still significantly below pre-COVID levels.\nAt the same time, our conversion continues to meaningfully exceed pre-COVID levels.\nIn the US, we are experiencing a considerable acceleration in our direct to consumer businesses since the stimulus checks were announced.\nWe are confident in our business as we emerge from this pandemic.\nAs vaccination levels increase across different countries in the upcoming months, as we have seen in the US, the consumer will be inspired to venture out and buy new clothes.\nOur product assortment is ideal for post-pandemic business in our industry.\nI believe that lifestyles have been forever altered by the pandemic and casualization is here to stay.\nI am pleased that we expanded our line to include categories like athleisure and essentials to support this lifestyle.\nBut we also have rich assortments of dressier apparel and accessories for multiple occasions which will resonate as our customers begin to socialize again.\nwe flourish in times like this.\nThere is a strength of character that is present in the Guess?\nOur founders had this since day one and Paul has that same strength and commitment for our Company, our team and our Guess?\nbrand today, something he demonstrates every single day with this work.\nThe proof of courage in Guess?\nis evident with every decision we make, always running the business with a long-term view, leading our team with a clear vision to build the Company and the value of our brand for the next generation, not just the next quarter.\nOur capacity to adapt to each and every change in the industry and the business has been validated by the multiple business model changes our Company has endured successfully over the last 40 years.\nFrom our denim category assortment to our lifestyle offering and brand image, from own businesses to licensed ones, from wholesale to retail, from a domestic business to a global one, from bricks and mortar retail to an omni-channel model, I strongly believe that our Company's ability to adapt to change is the foundation of our business success and value creation.\nI will now pass the call to Katie and I will return to review and update our five-year strategic plan.\nI'm happy to report that we finished this fiscal year strong with our fourth quarter earnings significantly exceeding our expectations despite higher COVID resurgences across the globe.\nWith revenue in line with our outlook, but margin significantly higher than expected, we were able to deliver $74 million in adjusted operating profit.\nWe saw operating profit increases to prior year in all of our business segments except for Europe which was significantly impacted by government mandated store closures and a shift in wholesale shipments.\nWe also saw a nice momentum in our e-commerce business, which was up 38% for the quarter in North America and Europe versus 19% in Q3 and 9% in Q2.\nAnd let me take you through the details.\nFourth quarter revenues were $648 million, down 23% in US dollars and 26% in constant currency.\nStronger than expected momentum in our European digital business and an increase in licensing revenue was offset by the impact of continued COVID resurgences.\nThe impact of temporary store closures on our sales versus prior year for the total Company during the quarter was about 10%, mostly in Europe, but also in Canada.\nWe had some anticipated shifts in European wholesale shipments which were worth about 6% of total Company sales to prior year.\nExcluding these two factors, the 23% Q4 sales decline would have been a decline of about 7%.\nNow let me get into the detail on sales performance by segment.\nIn Americas Retail revenues were down 24% in constant currency where negative store comps and temporary and permanent store closures were partially offset by growth in our e-commerce business.\nStore comps in the US and Canada were down 21% in constant currency, slightly better than Q3, which was down 23% as continued sequential improvement in US sales was offset by softening in Canada due to traffic declines as a result of the pandemic.\nThe underlying trend in the US showed even greater recovery.\nHowever, the business was hurt by restrictions on capacity and consumers avoiding crowds on what are typically the busiest shopping days of the year.\nIn fact, if we remove the five super high-volume days in Q4 from the sales calculation, our Q4 store sales comp in the US and Canada would have been about 5% better than what we reported.\nIn Europe, revenues were down 32% in constant currency.\nAs you know, the region started experiencing increased lockdowns and operating restrictions at the end of Q3, which continued to the end of the fourth quarter and remain in place today.\nStore comps for Europe were down 26% in constant currency, significantly impacted by the increase in COVID levels in that region.\nOur e-commerce sales, however, accelerated nicely in the fourth quarter and helped to mitigate some of these headwinds.\nAs Carlos mentioned, the wholesale business in Europe in Q4 was down to prior year as a result of the planned shift in shipments for the spring, summer collection into next year.\nIn Asia store comps were down 22% in constant currency driven by a resurgence of the virus in some of those markets like Korea.\nOur Americas Wholesale business was down 14% in constant currency compared to down 34% last quarter and 49% in Q2, still under pressure from the deceleration in demand, but showing vast improvement quarter-to-quarter.\nLicensing revenues were strong, up 12% to prior year in Q4, driven by continuing recovery in the business, but also some timing in sales.\nGross margin for the quarter was 42.6%, 240 basis points higher than prior year.\nOur product margin increased 140 basis points this quarter primarily as a result of higher IMU, as well as lower promotions.\nOccupancy rate decreased 100 basis points as a result of rent relief and business mix, partially offset by deleverage on sales.\nThis quarter we booked roughly $15 million in rent credits for fully negotiated rent relief deals across Europe, North America and Asia.\nThere is still some negotiations with our landlords that are outstanding and we are also extending our conversations with landlords to address the second round of closures.\nAdjusted SG&A for the quarter was $202 million compared to $237 million in the prior year, a decrease of $35 million or 15% and better than our expectations.\nWe continue to benefit from changes to our expense structure, lower advertising spend and a decrease in expenses related to permanent store closures versus last year.\nIn addition, there were some one-time benefits from government subsidies, mainly in Europe, which were partially offset by higher variable expenses related to the growth of our e-commerce business.\nAdjusted operating profit for the fourth quarter was $74 million versus $102 million in Q4 of last year.\nOur fourth quarter adjusted tax rate was 7%, down from 17% last year, driven by the mix of statutory earnings.\nInventories were $389 million, down 1% in US dollars and down 5% in constant currency versus last year.\nOur inventory levels in Europe were artificially high due to the timing of inventory receipts and the increase in in-transit inventory due to the transit delays that Carlos mentioned earlier.\nWe ended the year with $469 million in cash versus $285 million in the prior year and we had an incremental $272 million in borrowing capacity.\nCapital expenditures for the year were $19 million, down from $62 million prior year.\nFree cash flow for the year was $183 million, an increase of $50 million versus $133 million last year.\nThis year, we benefited from lower capital expenditures, extended payment terms with our vendors and unpaid rents.\nIn addition, last year's outflow included the non-recurring payment of the $46 million European Commission fine.\nThis was a strong finish to a tough year.\nFor the fiscal year, we lost almost $800 million or 30% of our sales versus prior year as a result of the pandemic.\nHowever, we were still able to maintain positive adjusted operating profit of $20 million, $130 million lower than prior year, allowing for only 16% of those lost revenues to flow through to our bottom line.\nThis demonstrates the tremendous control that we have over what we can control and a super dynamic global environment.\nThis year we expanded product margins, executed over $30 million in rent abatement and relief, cut SG&A by over 20% and managed our capital very tightly, all the while we had our eye on the future of our brand, positioning this Company to win as we emerge from the pandemic.\nWe returned value to our shareholders reinstating our dividend in Q3 and completing $39 million of share repurchases at an average price of $10.\nAnd while COVID will remain a near-term headwind, there is reason to be hopeful as vaccines roll out.\nNow let's talk about our near-term future.\nGiven the continued level of uncertainty in the current environment, we are not going to provide formal guidance.\nHowever, I will walk you through how we are thinking about the first quarter.\nI'm going to anchor our comparisons to the pre-COVID Q1 of fiscal year 2020, which ended May 4th, 2019 as this past year's fiscal first quarter is clearly not a normalized comparison.\nWe expect first quarter revenues to be down in the high single digits to fiscal year 2020 as pandemic-related shutdowns and traffic declines are partially offset by continued momentum in our global e-commerce business and the favorable timing of our wholesale shipments in Europe.\nQuarter-to-date, we have seen sales comps at our retail locations of down 4% in the US and Canada, down 19% in Europe, and down 22% in Asia.\nOur business in Europe continues to be impacted by government mandated store closures.\nCurrently, we have over 240 stores closed with approximately 400 additional stores with reduced operating hours.\nE-commerce growth has continued to accelerate and is up 58% to prior year for the quarter-to-date in North America and Europe.\nLastly, as discussed, Q1 will benefit from the shift of wholesale shipments in Europe for the spring, summer collection from Q4 of this past year.\nWe estimate that the negative impact of the temporary store closures will roughly offset the positive impact of the wholesale timing for the quarter.\nIn terms of profit, adjusted gross margin in the first quarter is expected to be around 200 basis points better than fiscal quarter 2020, driven primarily by business mix as well as improved IMUs.\nWe anticipate that this margin expansion will be offset by an increase in adjusted SG&A expenses as a percent of sales as deleverage from lost revenue will be partially offset by the cost savings initiatives rolled out over the last year.\nFor full fiscal year 2022, we expect revenues down in the high single digits to the fiscal year 2020 barring COVID shutdowns past Q1.\nThis includes the resumption of a normal cadence for product development and shipments for European wholesale.\nAs you may recall, in response to the pandemic last year we made the strategic decision to elongate the fall-winter season shipping window and cancel the development of the pre-spring, summer line.\nWe are not planning on repeating this in fiscal 2022.\nWith that, I'll hand it back to Carlos to talk about the five-year strategic business plan.\nI'm very excited to share with you today my view of our future.\nThis past year was truly a year of crisis, but like Winston Churchill said we didn't let the crisis go to waste.\nDuring the year, we made great progress executing our strategic plan and were able to accelerate the implementation of several key initiatives.\nToday, we are confirming our strong belief that our opportunities for value creation remain intact for us.\nFurthermore, we remain committed to delivering net revenues of $2.9 billion and an operating margin of 10% by fiscal year 2025.\nI am confident that we have an opportunity to more than double our earnings per share to $3 and increase our free cash flow by 65% by fiscal 2025 respect to fiscal 2020.\nAs a result, we plan to more than double our return on invested capital to 26% by fiscal 2025 from 12% in fiscal 2020.\nLet me begin with a quick review of our key accomplishments last year.\nFrom the beginning of the pandemic, we focused on the areas we could control, including our capital availability and liquidity.\nWe managed our capital effectively and were able to return value to our shareholders through share repurchases and the reinstatement of our dividend when our visibility improved.\nWe were able to accelerate the implementation of our new sales force platform in the US, Canada and Europe, which is now fully complete.\nThis is a major milestone for us and the initial results are very strong.\nFor example in Europe, we have a faster platform with a homepage download over 3.5 times faster, a 13% lower bounce rate and an 18% increase in mobile conversion rate from our previous site.\nWe also rolled out omni-channel capabilities in Europe in addition to North America and we expanded our online product assortment globally.\nDuring the year, we were able to rationalize our store portfolio closing over 125 underperforming stores and renegotiating 290 leases at favorable terms.\nAs part of the store rationalization, we were successful in repositioning our business in China, partnering with four new franchisees in separate regions of the country to represent Guess?\nwith local market expertise and capital for expansion.\nAnd we also integrated our G by Guess?\nbrand into our GUESS Factory business in the US, converting almost 60 of our stores which have already shown very encouraging results.\nLast but not least, we identified ways to transform our business model.\nThis includes a global reorganization of our team, an omni-channel focus for our direct to consumer business, the development of our first global product line and the introduction of new product categories like athleisure and essentials.\nWe also worked hard to eliminate redundancies and streamline processes across our operations.\nLast year during our Investor Day we shared our purpose to inspire our customers to feel confident and passionate about their style and their future.\nwe dare to dream.\nThat same day we shared our vision for our organization and our commitment.\nThese constitute a timeless foundation for our team and our Company.\nAs I said, we see an extra ordinary opportunity to create significant value for our stakeholders over the next four years and beyond.\nThis starts with our opportunity to gain market share and all the markets and businesses that we operate.\nI believe the value of our offering represented by the quality, styling and price of our products is unmatched in today's marketplace.\nCapacity has been eliminated in our space, primarily as a result of substantial store closures.\nFurthermore, many of our wholesale customers have chosen to concentrate their buys with fewer, stronger brands and we are certainly one of them.\nSomewhat related to this is our opportunity for product category growth.\nI believe that we have an amazing assortment in key product categories such as denim, outerwear and handbags to expand our presence in the marketplace.\nAnd our new product lines like athleisure and essentials give us additional opportunity for growth.\nWhile we are currently in approximately 100 countries, we have whitespace in multiple markets where we are underdeveloped.\nChina, Russia, Poland and Germany are just good examples of this.\nOur opportunity for operating margin expansion has been well documented and the asset-light model that we are creating at Guess?\nwill contribute to our ability to more than double our return on invested capital in the next few years.\nLast year we also shared the six strategic objectives of our five-year plan.\nThis plan still constitutes the right roadmap for our future, despite the changes in the environment over the last year.\nOur six pillars are, one, organization and culture.\nWe will always strive to have a best-in-class team that works effectively and efficiently together.\nWe strive for our brands to be relevant with three key target consumer groups, heritage, Millennials and Generation Z customers.\nWe will design, make and distribute amazing product to support our customers' lifestyles.\nWe will always place the customer at the center of everything we do.\nFive, is global footprint.\nWe will develop an effective and profitable global distribution ecosystem.\nAnd six, functional capabilities.\nWe will always invest in our infrastructure to support our business well long term.\nFor our organization and culture objective we are organizing our teams, emphasizing global functional responsibilities and capitalizing on local market expertise and accountability.\nWe also plan to develop each market with an omnichannel approach where the accountability is placed on one team to develop all channels in the market instead of using a traditional approach with separate accountability by channel and business unit.\nwe strive to be a conscious capitalist organization and we consider our ESG priorities a driving force for change.\nWe have big goals to improve our environmental agenda and deliver 100% denim to be equal and 100% recycle synthetic materials and packaging by 2030.\nToday we are at 25%.\nbrand has always been in business with a strong and consistent point of view.\nWe know who we are and we know who we are not.\nOur brand well-protected is a lifetime asset.\nAnd it is for this reason that we have a plan to elevate our brand.\nQuality and consistency are key to strengthening our brand relevancy and the new customer environment.\nQuality starts with product, the quality of the materials we use, a sustainability focus on increased perceived value for each item are key to win in this area.\nWe plan to increase full price selling, reduce promotional activity and focus on certain key product categories.\nAnd last but not least, in order to elevate our brand we must elevate the customer experience across our Guess?\necosystem including stores, websites, wholesale partners and licensees all over the world.\nIn addition, collaborations, partnerships and unique go-to-market strategies are key to drive brand awareness and fuel new customer acquisition, especially for the younger consumers.\nOur next strategic pillar is about product excellence.\nIn our business, product is everything.\nWe have four key initiatives to fulfill this objective in the next four years.\nFirst is product quality, styling and assortment.\nSecond is our focus on key product categories.\nThey consist of women's and men's apparel, including denim, athelisure and essential products, handbags, footwear and kids.\nOur third product initiative is our one global line.\nAs we have said in the past, this initiative drives consistency in all markets, enables us to elevate the quality of our products and will result in significant efficiencies throughout our supply chain.\nOur fourth initiative regarding product is the expansion of our assortment to support our omnichannel business.\nThe next pillar is about customer centricity.\nWe have four big goals to optimize our strategy.\nCustomer data collection and analysis, the understanding of our customer segments, their journeys and their preferences, creation of a seamless customer experience using world-class tools and the optimization of customer engagement on brand loyalty programs.\nOn the heels of our sales force and omnichannel capability rollout, we are implementing Customer 360, a fully integrated suite developed by salesforce.\nThis solution will enable us to optimize data capture, dissect the customer journeys engagement, conduct personalized marketing and analyze the results of every activity and point of engagement.\nRegarding CRM and our loyalty program.\nWe have a rich global base with almost 5 million customers in all three regions and we see big opportunities to put the Customer 360 tool to work on this and grow this program in the next few years.\nRegarding our global footprint, I believe stores are a key component in our omnichannel network, a great environment to represent our lifestyle brand and our number one customer acquisition vehicle.\nWe have been very successful in rationalizing our global store fleet over the last few years and still have significant flexibility to optimize our portfolio as 80% of our leases worldwide are expiring in the next three years.\nWe made the decision to exit more than 15 unprofitable flagship locations, some of which have already been closed while others are planned to close later this year.\nAnd as I mentioned, we will continue to pursue opportunistic new store openings in those markets where we are underrepresented.\nAll together, we estimate that our plan will contribute to 200 basis points of operating margin improvement by fiscal year 2025 versus fiscal year 2020.\nNext I will touch on our functional capabilities.\nOver the next few years, we will focus on optimizing our product management, leveraging technology to become a true data-driven business and creating meaningful efficiencies across our global organization.\nWe think about product management optimization from end to end.\nThis means, product development, sourcing and production to distribution and logistics to inventory management.\nThere are a few key components to this plan.\nWe are migrating our suppliers to the most efficient places and consolidating vendors to achieve both operational and cost efficiencies.\nIn fact, over the last two years we have reduced our number of suppliers by over 60%.\nFaster lead times to market are more important now than ever.\nWe are digitalizing our product development processes, which could reduce lead times by up to two months as well as conducting capacity planning with our key vendors to react quickly to changes in demand.\nIn distribution and logistics we are developing an efficient global network that capitalizes on low cost labor regions and automation.\nInventory management is key to maximizing both sales and margin.\nWe are focusing on assortment planning, allocation, fulfillment and markdown optimization.\nI believe that becoming a data-driven organization is a key enabler to allowing us to compete effectively in the future.\nThis process is an evolution and must remain a constant focus for us.\nOur technology plan supports our strategic plan and is anchored in innovation and data analysis.\nSome initiatives, in addition to the technology work that we're doing on customer centricity, include modernizing and enhancing our systems to ensure a reliable, secure and integrated global infrastructure and a migration to the cloud.\nLastly, as a global organization we are focused on a true global infrastructure.\nThis means simplifying our business practices and eliminating system and process redundancies across the globe.\nIn Europe, we have a multi-channel, multi-country infrastructure in place.\nWe will leverage this model to streamline the organization and drive cost savings.\nThis is a big opportunity for us.\nThis is the last chapter in my professional journey and I am giving everything I have to make it extraordinary.\nI have a great partner in Paul, a great team, an incredible brand and a dynamic business.\nOur position in the market is strong and staying focused on this roadmap will allow us to grow our business very profitably.\nI am very confident in our team's ability to execute our plan and meaningfully grow the value of this great company.\nWith that, let me pass it to Katie.\nLet me give you some more color on the financials that fall out of the strategic plan.\nAs Carlos mentioned, we are confirming the commitment that we presented in December of 2019 to deliver 10% operating margins by fiscal year 2025.\nAnd while we still believe in sales growth for our brand over the next few years, I get particularly excited that the meat of our path to double earnings per share from fiscal year 2020 to $3 in fiscal year 2025 lies in the middle of the P&L, where we have the most control.\nAnd this past year is proof that we can execute what we can control.\nAs we did with Q1, we are going to anchor our comparisons in this conversation to the pre-COVID fiscal year 2020, which ended February 1st, 2020 for a more normalized comparison.\nIn terms of revenue we anticipate that we will reach $2.9 billion in fiscal 2025 versus $2.7 billion in fiscal 2020.\nMost of this growth is being fueled by our e-commerce business with growth in wholesale being offset by a decline in retail.\nAs a result, we see our e-commerce penetration of direct to consumer sales growing from 13% in fiscal year 2020 to 23% in fiscal year 2025.\nI'll mention that e-comm penetration was 22% this past year, but that was inflated a bit with the pandemic induced store closures.\nIn terms of adjusted operating margin, we see 440 basis points of growth over the next few years.\nThe vast majority, 400 basis points, is coming from operational efficiencies with the remaining 40 basis points coming from leverage on higher sales.\nStore portfolio optimization represents a large portion of the margin expansion, about 200 basis points.\nThis is higher than we had modeled pre-pandemic.\nWe expect 90 basis points of supply chain efficiencies primarily from better IMUs.\nWe've been very successful in expense streamlining this year and are working on longer term opportunities as well.\nWe anticipate 70 basis points of margin expansion from fiscal 2020 in this area.\nLastly is logistics which is expected to contribute 40 basis points of operating margin improvement.\nThe operational efficiencies that Carlos mentioned will be partially offset by variable costs associated with e-commerce growth.\nWe see the 400 basis points of operational efficiency falling roughly equally over the next four fiscal years as some of the initiatives require some lead time.\nI will say though that while the underlying savings will be present in fiscal year 2022 sales to leverage will slightly offset the impact on operating margin expansion from these savings.\nWith that I'll pass it to Fabrice to walk you through the rest of the five-year financials.\nProtecting our strong balance sheet and returning capital to shareholders was and remains the key priority for us.\nWe believe we can generate higher free cash flows over the next four years as we continue to remain disciplined on managing working capital and driving operating margin to 10%.\nAt the same time, we believe we can support our strategic plan with investment levels flat to 2020 of roughly $65 million.\nThis should result in $220 million of annual free cash flow by fiscal 2025, 1.7 times that of our fiscal 2020.\nTurning to capital allocation.\nOur picking order going forward will remain consistent.\nOur first priority is to make the investments that will enable the execution of our strategic plan.\nOur second priority is to return capital to shareholders through dividend and share repurchases.\nWe will continue to prioritize capital allocations throughout the technology and infrastructure that will support our transformation into a truly customer-centric, data-driven company.\nWe would invest in remodeling some of our key store locations across the globe and opening new stores in underpenetrated markets.\nOne of our key objectives is to improve our return on invested capital.\nOur plan provides a path to increase profitability from the smaller but more efficient portfolio of assets.\nAs we exit underperforming stores, optimize our working capital and migrate to a capital-light model where appropriate, our goal is to more than double return on invested capital to 26% by fiscal 2025, that is 12% in fiscal 2020.\nOur second priority is the dividend payment which we resumed in Q3.\nWe have been able to deliver significant shareholder value here in the past.\nAs a reminder, we repurchased slightly over 25% of our shares over the last two years at an average price of $15.76.\nWe believe that our five-year strategic plan provides a solid roadmap to value creation.\nAnd we will continue to approach share repurchases opportunistically when we believe that our stock is trading below its intrinsic value.\n",
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"content": "compname reports q4 adjusted earnings per share $1.18.\nq4 adjusted earnings per share $1.18.\nreaffirms plan to deliver 10% operating margin by fiscal 2025.\nnot providing detailed guidance for q1 or full fiscal year ending january 29, 2022.\nexpect revenues in q1 of fiscal 2022 to be down in high-single digits versus q1 of fiscal 2020.\nfor fy 2022, assuming no covid-related shutdowns past q1, we expect revenues to be down in high single digits versus fiscal 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: I'm joined by chairman and CEO, Larry Culp; and CFO, Carolina Dybeck Happe.\nAs described in our SEC filings and on our website, those elements may change as the world changes.\nWith that, I'll hand the call over to Larry.\nOur team delivered another strong quarter as orders, margins and cash improved.\nWhile the aviation market is showing continued signs of recovery and contributed to the quarter, our focus on continuous improvement and lean is driving broader operational and financial progress.\nAt the same time, we're managing through significant challenges that we'll discuss further today.\nStarting with the numbers on Slide 2.\nOrders were robust, up 42%, with growth in all segments in both services and equipment, reflecting continued demand for our technology and solutions and better commercial execution.\nIndustrial revenue was mixed.\nWe saw a continued strength in services, up 7% organically.\nAviation improved significantly, benefiting from the market recovery.\nEquipment was down 9% organically, largely due to supply chain disruptions, the Ford ventilator comparison in healthcare, and as expected, lower power equipment.\nAdjusted Industrial margin expanded 270 basis points organically, largely driven by operational improvement in many of our businesses, growth in higher-margin services at Aviation and Power, and net restructuring benefits.\nAdjusted earnings per share was up significantly, driven by Industrial.\nIndustrial free cash flow was up $1.8 billion ex discontinued factoring programs due to better earnings, working capital, and the short-term favorable timing impact of aircraft delivery delays.\nOverall, I'm encouraged by our performance, especially at Aviation.\nLet me share what gives me -- gives us confidence there.\nFirst, our results reflect a significant improvement in near-term market fundamentals.\nDeparture trends are better than the August dip and have recovered to down 23% of '19 levels.\nWe expect this acceleration in traffic to continue as travel restrictions lift and vaccination rates increase.\nOur results also reflect operating improvements.\nFor example, at Aviation's overhaul shops, our teams have used lean to increase turnaround time by nearly 10% and decrease shop inventory levels by 15% since the fourth quarter of 2020.\nThese improvements are enabling us to get engines back to customers faster and at a lower cost.\nNo business is better positioned than GE Aviation to support our customers through the coming up cycle.\nWe're ready with the industry's largest and youngest fleet, while we continue to invest for the next generation with lower carbon technologies, such as the CFM RISE program.\nThis platform will generate value for decades to come.\nWe're also clearly navigating headwinds as we close this year and look to 2022.\nWe're feeling the impact of supply chain disruptions in many of our businesses, with the largest impact to date in Healthcare.\nBased on broader industry trends, we expect companywide pressure to continue, at least into the first half of next year.\nOur teams are working diligently to increase supply by activating dual sources, qualifying alternative parts, redesigning and requalifying product configurations, and expanding factory capacity.\nWe're also focused on margins as we deploy lean to decrease inventory and costs as well as implement appropriate pricing actions and to reduce select discounts.\nOur C team -- our CT team in Japan, for example, has been experiencing higher customer demand, so we're making our production even more efficient to help offset the challenge of delayed inputs.\nThe team used value stream mapping, standard work and quarterly Kaizens to reduce production lead time once parts are received by more than 40% from a year ago.\nAnd there's line of sight there to another 25% reduction by the end of the year.\nWhile this is a single example within Healthcare, taken together with other efforts, and over time, these add up.\nAt renewables, we're encouraged by the U.S. administration's commitment to offshore wind development.\nproduction tax credit extension is creating uncertainty for customers and causing much less U.S. market activity in preparation for 2022.\nAs we've shared, a blanket extension, while a well-intended policy, has the unintended consequence of pushing out investment decisions.\nIn our business, given the lag between orders and revenue, the impact will continue through the fourth quarter and into '22.\nThis environment, along with inflation headwinds picking up next year, makes renewables' ongoing work to improve cost productivity even more urgent.\nGiven these puts and takes, we now expect revenue to be about flat for the year, driven by changes to some of our business outlooks, which Carolina will cover in a moment.\nImportantly, even with lower revenue, we're raising our margin and earnings per share expectations, underscoring improved profitability and services growth, and reflecting our strengthened operations.\nAnd we're narrowing our free cash flow range around the existing midpoint.\nLooking further out to next year, as our businesses continue to strengthen, we expect revenue growth, margin expansion, and higher free cash flow despite the pressures that we're managing through currently.\nWe'll provide more detail as usual during our fourth quarter earnings and outlook call.\nMoving on to Slide 3.\nChallenges aside, our performance reflects the continued progress in our journey to become a more focused, simpler, stronger, high-tech industrial.\nThe GECAS and AerCap combination is a tremendous catalyst, enabling us to focus on our industrial core and accelerate our deleveraging plan.\nJust last week, GE and AerCap satisfied all regulatory clearances for the GECAS transaction.\nAnd we're now targeting to close November 1.\nWe'll use the proceeds to further reduce debt, which we now expect to reach approximately $75 billion since the end of 2018.\nThis is enabling GE to look longer term even as we execute our deleveraging.\nAs we accelerate our transformation, lean and decentralization are key to improving operational results.\nThis quarter, we hosted our global Kaizen week in each of our businesses, with over 1,600 employees participating.\nJohn Slattery, the CEO of GE Aviation, and I joined our Military team in Lynn, Massachusetts for the full week, while our business CEOs joined their teams across the globe.\nLean is fundamentally about going to Gemba, where the real work is done, and is best learned in operations where you can see it, touch it, smell it firsthand.\nAnd in Lynn, we were there to serve those closest to the work, our operators.\nOur mission was to improve first-time yield on midframes, a key subassembly of the military engines we produce in Lynn, whose stubborn variability has been directly and negatively impacting our on-time delivery.\nBy the end of the week, we had improved processes for welding and quality checks on midframe parts, improvements that we're convinced will help us reach our goals for military on-time delivery by the middle of next year, if not earlier.\nAnd we can improve our performance on the back of these changes for years to come.\nThere are countless other examples of how our teams are leveraging lean to drive sustainable, impactful improvements in safety, quality, delivery, cost, and cash.\nThey reflect how we're running GE better and how we're sustaining these efforts to drive operational progress and lasting cultural change.\nOur significant progress on deleveraging and operational execution sets us up well to play offense in the future.\nOur first priority of course, is organic growth.\nThis starts with improving our team's abilities to market, sell, and service the products we have.\nThere are many recent wins across GE this quarter, but to highlight one, our Gas Power team delivered, installed, and commissioned four TM2500 aeroderivative gas turbines in only 42 days to complement renewable power generation for California's Department of Water Resources during peak demand season.\nThese turbines, using jet engine technology adapted for industrial and utility power generation, start and ramp in just minutes, providing rapid and reliable intermittent power, helping enhance the flexibility and sustainability of California's grid.\nAnd we're bolstering our offerings with innovative new technology that serves our customers and leads our industries forward.\nFor example, at renewables, our Haliade-X offshore wind turbine prototype operating in the Netherlands, set an industry record by operating at 14 megawatts, more output than has ever been produced by any wind turbine.\nFrom time to time, we'll augment our organic efforts with inorganic investments.\nOur recently announced acquisition of BK Medical represents a step forward as we advance our mission of precision healthcare.\nBringing BK's intraoperative ultrasound technology together with the pre and postoperative capabilities in our Ultrasound business creates a compelling customer offering across the full continuum of care, from diagnostics, through surgical, and therapeutic interventions as well as patient monitoring.\nNot only does BK expand our high-performing $3 billion Ultrasound business, but it also is growing rapidly with attractive margins itself.\nWe expect the transaction to close in '22, and I'm looking forward to welcoming the BK team to GE.\nAll told, we hope that you see that GE is operating from a position of strength today.\nWe delivered another strong quarter, and we're playing more offense, which will only accelerate over time.\nWe're excited about the opportunities ahead to drive long-term growth and value.\nOur results reflect our team's commitment to driving operational improvement.\nWe're leveraging lean across GE and our finance function.\nIn addition to Kaizen week that Larry mentioned, over 1,800 finance team members completed a full waste work week, applying lean and digital tools to reduce nonvalue-added work by 26,000 hours and counting.\nFor example, at renewables, our team streamlined and automated account reconciliations, intercompany settlements and cash applications.\nThis type of transactional lean frees up time so we can focus more on driving higher-quality, faster operational insights and improvement, helping our operating teams run the businesses more efficiently.\nLooking at Slide 4, I'll cover on an organic basis.\nOrders were robust, up 42% year over year and up 21% sequentially on a reported basis, building on revenue momentum heading into '22.\nEquipment and services in all businesses were up year over year, with strength in Aviation, renewables and Healthcare.\nWe are more selective in the commercial deals we pursue, with a greater focus on pricing in an inflation environment, economic terms and cash.\nTogether with targeting more profitable segments like services, we're enhancing order quality to drive profitable growth.\nRevenue was up sequentially, with growth in services, driven by Aviation and Power, but down year over year.\nEquipment revenue was down, with the largest impact in Healthcare and Power.\nOverall, mix continues to shift toward higher-margin services, now representing half of the revenue.\nAdjusted Industrial margins improved sequentially, largely driven by aviation services.\nYear over year, total margins expanded 270 basis points, driven by our lean efforts, cost productivity, and services growth.\nBoth Aviation and Power delivered margin expansion, which offset the challenges in Healthcare and renewables.\nConsistent with the broader market, we are experiencing inflation pressure, which we expect to be limited for the balance of '21.\nNext year, we anticipate a more challenging inflation environment.\nThe most adverse impact is expected in onshore wind due to the rising cost of transportation and commodities, such as steel and resin, impacting the entire industry.\nWe are taking action to mitigate inflation in each of our businesses.\nOur shorter-cycle businesses felt the impact earliest, while our longer-cycle businesses were more protected given extended purchasing and production cycles.\nOur service businesses fall in between.\nOur teams are working hard across functions to drive cost countermeasures and improve how we bid on businesses, including price escalation.\nFinally, adjusted earnings per share was up 50% year over year, driven by Industrial.\nOverall, we're pleased with the robust demand, evidenced by orders growth and our year-to-date margin performance.\nWhile we're navigating headwinds caused by supply chain and PTC pressure, these have impacted our growth expectations.\nWe're now expecting revenue to be about flat for the year.\nHowever, due to our continued improvement across GE, we are raising our '21 outlook for organic margin expansion to 350 basis points or more and our adjusted earnings per share to a range of $1.80 to $2.10.\nA major focus of our transformation has been strengthening our cash flow generation through better working capital management and improved linearity, ultimately to drive more consistent and sustainable cash flow.\nOur quarterly results show the benefits of these efforts.\nIndustrial free cash flow was up $1.8 billion ex discontinued factoring programs in both years.\nAviation, Power, and Healthcare all had robust free cash flow conversion in the quarter.\nCash earnings, working capital, and allowance and discount payments, or AD&A, driven by the deferred aircraft delivery payment, contributed to this significant increase.\nLooking at working capital, I'll focus on receivables, where we saw the largest operational improvement.\nReceivables were a source of cash, up $1.3 billion year over year ex the impact of discontinued factoring, mainly driven by Gas Power collections.\nOverall, strengthening our operational muscles in billings and collections is translating into DSO improvement, as evidenced by our total DSO, which is down 13 days year over year.\nAlso positively impacting our free cash flow by about $0.5 billion in the quarter was AD&A.\nGiven the year-to-date impact and our fourth quarter estimate aligned with the current airframer aircraft delivery schedule, we now expect positive flow in '21, about $300 million, which is $700 million better than our prior outlook.\nThis year's benefit will reverse in 2022, and together with higher aircraft delivery schedule expectations, will drive an outflow of approximately $1.2 billion next year.\nTo be clear, this is a timing issue.\nYou'll recall that we decided to exit the majority of our factoring programs earlier this year.\nIn the quarter, discontinued factoring impact was just under $400 million, which was adjusted out of free cash flow.\nThe fourth quarter impact should be under $0.5 billion, bringing our full-year factoring adjustment to approximately $3.5 billion.\nWithout the factoring dynamics, better operational management of receivables have become a true cross-functional effort.\nLet me share an example.\nOur Steam Power team recently shifted to this from a more siloed approach.\nLeveraging problem solving and value stream mapping, they have reduced average billing cycle time by 30% so far.\nSo only two quarters in, more linear business operations, both up and downstream, are starting to drive more linear billings and collections.\nWhile we have a way to go, more linear business operations drive better and sustainable free cash flow.\nYear to date, ex discontinuing factoring across all quarters, free cash flow increased $4.8 billion year over year.\nIn each of our businesses, our teams are driving working capital improvement, which together with higher earnings make a real and measurable impact.\nTaking the strong year-to-date performance, coupled with the headwinds we've described, we're narrowing our full-year free cash flow range to $3.75 billion to $4.75 billion.\nTurning to Slide 6.\nWe expect to close the GECAS transaction on November 1.\nThis strategic transaction not only deepens our focus on our industrial core, but also enables us to accelerate our debt reduction, with approximately $30 billion in consideration.\nGiven our deleveraging progress and cash flow improvement to date, plus our expected actions and better pass-through performance, we now expect a total reduction of approximately $75 billion since the end of 2018.\nGE will receive a 46% equity stake in one of the world's leading aviation lessors, which we will monetize as the aviation industry continues to recover.\nAs we've shared, we expect near-term leverage to remain elevated.\nAnd we remain committed to further debt reduction and our leverage target over the next few years.\nOn liquidity, we ended the quarter with $25 billion of cash.\nWe continued to see significant improvement in lowering GE's cash needs, currently at $11 billion, down from $13 billion in the quarter, taking this decrease due to reduced factoring and better working capital management.\nThis is an important proof point that we are able to operate with lower and more predictable cash needs, creating opportunities for high-return investments.\nMoving to the businesses, which I'll also speak to on an organic basis.\nOur improved results reflect a significantly stronger market.\nDeparture trends recovered from August.\nIt's early, but the pickup that began in September is continuing through October.\nBetter departures and customer confidence contributed to higher shop visits and spare part sales than we had initially anticipated.\nThe impact of green time utilization has also lessened.\nWe expect these positive trends will continue into the fourth quarter.\nOrders were up double-digits.\nBoth commercial engines and services were up substantially again year over year.\nMilitary orders were also up, reflecting a large Hindustan Aeronautics order for nearly 100 F404 engines along with multiple T700 orders.\nFor revenue, Commercial Services was up significantly, with strength in external spares.\nShop visit volume was up over 40% year over year and double-digits sequentially, with the overall scope slightly improved.\nWe continued to see higher concentration of narrowbody and regional aircraft shop visits.\nCommercial Engines was down double-digits with lower shipments.\nOur mix continues to shift from legacy to more NPI units, specifically LEAP, and lower production rates on GEnx.\nWe're also navigating through material fulfillment constraints, amplified by increased industry demand, which impacted deliveries.\nMilitary was down marginally.\nUnit shipments were flat sequentially, but up year over year.\nWithout the delivery challenges, Military revenue growth would have been high single-digits this quarter.\nGiven this continued impact, Military growth is now expected to be negative for the year.\nSegment margin expanded significantly, primarily driven by Commercial Services and operational cost reduction.\nIn the fourth quarter, we expect margins to continue to expand sequentially, achieving our low double-digit margin guide for the year.\nWe now expect '21 shop visits to be up at least mid-single-digit year over year versus about flat.\nOur solid performance, especially in services, underscores our strong underlying business fundamentals as the commercial market recovers.\nMarket momentum is driving very high demand while we navigate supply chain constraints.\nGovernment and private health systems are investing in capital equipment to support capacity demand and to improve quality of care across the market.\nBuilding on a 20-year partnership, we recently signed a 5-year renewal to service diagnostic imaging and biomedical equipment with HCA Healthcare, one of the nation's leading providers of healthcare.\nBroadly, we're adapting to overarching market needs of health system efficiency, digitization as well as resiliency and sustainability.\nAgainst that backdrop, orders were up double-digits, both year and versus '19, with strength in Healthcare Systems up 20% year over year, and PDx up high single-digits.\nHowever, revenue was down with a high single-digit decline at HCS, more than offsetting the high single-digit growth we saw at PDx.\nYou'll recall that last year, the Ford ventilator partnership was about $300 million of Life Care Solutions revenue.\nThis comp negatively impacted revenue by six points.\nAnd thinking about the industrywide supply shortages, we estimate that growth would have been approximately nine points higher if we were able to fill our orders.\nAnd these challenges will continue into at least the first half of '22.\nSegment margin declined year over year, largely driven by higher inflation and lower Life Care Solutions revenue.\nThis was partially offset by productivity and higher PDx volume.\nEven with the supply chain challenges, we now expect to deliver close to 100 basis point of margin expansion as we proactively manage sourcing and logistics.\nOverall, we're well positioned to keep investing in future growth, underscoring our confidence in profit and cash flow generation.\nWe're putting capital to work differently than in the past, supplementing organic growth with inorganic investments that are a good strategic fit.\nThese are focused on accelerating our precision health mission, like BK Medical.\nAnd we're strengthening our operational and strategic integration muscles.\nAt renewables, we're excited by our long-term growth potential, supported by new technologies like Haliade-X and Cypress and our leadership in energy transition despite the current industry headwinds.\nLooking at the market, since the second quarter, the pending PTC extension has caused further deterioration in the U.S. onshore market outlook.\nBased on the latest WoodMac forecast for equipment and repower, the market is now expected to decline from 14 gigawatts of wind installments this year to approximately 10 gigawatts in 2022.\nThis pressures orders and cash in '21.\nIn Offshore Wind, global momentum continues, and we're aiming to expand our commitment pipeline through the decade.\nAnd modernizing the grid is a key enabler of the energy transition.\nAnd we saw record orders, driven by offshore, where the project-driven profile will remain uneven.\nThis leads to continued variability for progress collection.\nOnshore orders grew modestly, driven by services and international equipment, partially offset by lower U.S. equipment due to the PTC dynamics.\nServices was the main driver, largely due to fewer onshore repower deliveries.\nEx repower, onshore services was up double-digits.\nEquipment was down to a lesser extent, driven by declines in the U.S. onshore and grid.\nThis was partially offset by continued growth in international onshore and offshore.\nFor the year, we now expect revenue growth to be roughly flat.\nSegment margin declined 250 basis points.\nOnshore was slightly positive, but down year over year.\nrepower volume, mix headwinds as new products ramp and come down the cost curve as well as supply chain pressure.\nOffshore margins remain negative as we work through legacy projects and continue to ramp Haliade-X production.\nAt grid, better execution was more than offset by lower volume.\nDue mainly to the PTC impact, we now expect renewables free cash flow to be down and negative this year.\nLooking forward, where we are facing headwinds, we're intently focused on improving our operational performance, profitability, and cash generation.\nLooking at the market, global gas generation was down high single-digits due to price-driven gas-to-coal switching.\nYes, you heard me right, gas to coal switching.\nHowever, GE gas turbine utilization continues to be resilient as megawatt hours grew low single-digits.\nDespite recent price volatility, gas continues to be a reliable and economic source of power generation.\nOver time, as more baseload coal comes offline and with the challenges of intermediate renewables power, customers continue to need gas.\nThrough the next decade, we expect the gas market to remain stable, with gas generation growing low single digits.\nOrders were driven by Gas Power services, aero, and steam, each up double-digits.\nGas equipment was down despite booking six more heavy-duty gas turbine as timing for HAs remain uneven across quarters.\nWe continued to stay selective with disciplined underwriting to grow our installed base.\nAnd this quarter, we booked orders for smaller-frame units.\nDemand for aeroderivative power continues.\nFor the year, we expect about 60 unit orders, up more than five times year over year.\nRevenue was down slightly.\nEquipment was down due to reduced turnkey scope at Gas Power and the continued exit of new build coal at steam.\nConsistent with our strategy, we are on track to achieve about 30% turnkey revenue as a percentage of heavy-duty equipment revenue this year, down from 55% in 2019, a better risk-return equation.\nAt the same time, Gas Power shipped 11 more units year over year.\nGas Power services was up high single-digits, trending better than our initial outlook due to strong CSA volume.\nWe now expect Gas Power services to grow high single-digits this year.\nSteam services was also up.\nMargins expanded year over year, yet were down sequentially due to outage seasonality.\nGas Power was positive and improved year over year, driven by services growth and aero shipments.\nWe remain confident in our high single-digit margin outlook for the year.\nSteam is progressing through the new build coal exit.\nAnd by year-end, we expect our equipment backlog to be less than $1 billion compared to $3 billion a year ago.\nPower Conversion was positive and expanded in the quarter.\nOverall, we're encouraged by our steady performance.\nPower is on track to meet its outlook, including high single-digit margins in '23 plus.\nOur team is focused on winning the right orders, growing services, and increasing free cash flow generation.\nMoving to Slide 8.\nAs a reminder, following the GECAS close in the fourth quarter, we will transition to one column reporting and roll in the remainder of GE Capital into Corporate.\nGoing forward, our results, including adjusted revenue, profit, and free cash flow, will exclude insurance.\nTo be clear, we'll continue to provide the same level of insurance disclosures.\nAt Capital, the loss in continuing operations was up year over year, driven primarily by a nonrepeat of prior year tax benefit, partially offset by the discontinuation of the preferred dividend payment.\nAt Insurance, we generated $360 million net income year to date, driven by positive investment results and claims still favorable to pre-COVID levels.\nHowever, this favorable claim trends are slowing in certain parts of the portfolio.\nAs planned, we conducted our annual premium deficiency test, also known as the loss recognition test.\nThis resulted in a positive margin, with no impact to earnings for a second consecutive year.\nThe margin increase was largely driven by a higher discount rate, reflecting our investment portfolio realignment strategy, with a higher allocation toward select growth assets.\nClaims costs curve continued to hold.\nIn addition, the teams are preparing to implement the new FASB accounting standard, consistent with the industry, and we're working on modeling updates.\nBased on our year-to-date performance, Capital still expects a loss of approximately $500 million for the year.\nIn discontinued operations, Capital reported a gain of about $600 million, primarily due to the recent increase in AerCap stock price, which is updated quarterly.\nOur priorities are to reduce functional and operational costs as we drive leaner processes and embrace decentralization.\nThe results are flowing through, with costs down double-digits year over year.\nWe are now expecting Corporate costs to be about $1 billion for the year, and this is better than our prior $1.2 billion to $1.3 billion guidance.\nAs you can see, lean and decentralization aren't just concepts.\nThey are driving better execution and cultural change.\nThey are supporting another strong quarter.\nThey are enabling our businesses to play more offense.\nAnd ultimately, they're driving sustainable, long-term profitable growth.\nNow Larry, back to you.\nOur teams continued to deliver strong performance.\nWe're especially encouraged by our earnings improvement, which makes us confident in our ability to deliver our outlook for the year.\nYou've seen today that our transformation to a more focused, simpler, stronger, high-tech industrial is accelerating.\nWe're on the verge of closing the GECAS-AerCap merger, a tremendous milestone for GE.\nStepping back, our progress has positioned us to play offense.\nWe just wrapped up our annual strategic reviews with nearly 30 of our business units.\nThese complement our quarterly operating reviews, but have a longer-term focus as we answer two fundamental questions: What game are we playing?\nAnd how do we win?\nThese reviews were exceptionally strong this year across the board, with the most strategic and cross-functional thinking we've seen in my three years, enabling us to drive long-term growth and value across GE, while delivering on our mission of building a world that works.\nWe're positioned to truly shape the future of flight with new technology for sustainability and efficiency, such as the recent Catalyst engine launch, the first clean sheet turboprop design entering the business in general aviation market in 50 years.\nTouching one billion patients per year, we're delivering more personalized and efficient care through precision health and combining digital AI within our products, including our new cloud-based Edison TruePACS, to help radiologists adapt to higher workloads and increased exam complexity with improved diagnostic accuracy.\nThrough our leadership in the energy transition, we're helping the world tackle the trilemma of sustainability, affordability and reliability from launching new tech platforms at renewables, such as the Haliade-X and Cypress, to our recently announced flexible transformer project with the Department of Energy, to growth in the world's most efficient gas turbines.\nTo be clear, we still have work to do.\nAnd as we do it, we're operating increasingly from a position of strength, serving our customers in vital global markets with a focus on profitable growth and cash generation.\nOur free cash flow will continue to grow toward a high single-digit percentage of sales level.\nAnd we have an opportunity to allocate more resources on capital deployment to support GE's growth over time.\nSteve, with that, let's go to questions.\n[Operator instructions] John, can you please open the line?\n",
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"content": "quarterly revenues $18.4 billion down 1%.\nnarrowing '21 fcf guide.\nsees 2021 earnings per share of $1.80 - $2.10.\nquarterly aviation revenue $5.4 billion, up 10%.\nsees 2021 free cash flow $3.75 billion - $4.75 billion.\nsees 2021 ge industrial organic revenue about flat.\nsees aviation market recovery beginning in 2h.\nremain on track to deliver high single-digit free cash flow margins over time.\nsees 2021 adjusted industrial profit margin expansion 350+ basis points.\nexpects revenue growth, margin expansion, and higher free cash flow in 2022.\npost aercap close, expect to reduce debt by about $75b since 2018.\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 is Ron Kramer, our Chairman and Chief Executive Officer.\nSuch statements are subject to inherent risks and uncertainties that can change as the world changes.\nFinally, from today's remarks will adjust for those items that affect comparability between reporting periods.\nWe're off to a great start in the first half of fiscal 2021 with our second quarter revenue increasing 12%, adjusted EBITDA up 41%, and adjusted earnings per share up 109% compared to the prior year quarter.\nThese results were driven by continued demand for our comprehensive consumer product categories and supported by a strong housing market and repair and remodel activity.\nOur strategic actions to optimize our business remain on plan and we are realizing the early benefits of this work today.\nHighlighting this success is our increased cash generation profile coupled with our EBITDA margin expansion in both CPP and HBP, which increased 220 and 190 basis points, respectively over the prior year period.\nOur AMES strategic initiative is progressing on plan and on budget.\nAs previously announced, this investment will consolidate operations, increase automation, support e-commerce growth, and create new data and analytics platform for AMES globally by the end of 2023.\nWe expect this to further improve margins in the years ahead.\nAs we move into our second year of managing our business during a global pandemic, we prioritize protecting our employees and we'll continue to do so as restrictions in the United States begin to ease.\nTurning to our segments.\nIn Consumer and Professional Products, we saw continued retail demand across all geographies and product lines.\nThe AMES strategic initiative remains on schedule for completion by the end of 2023 and we reiterate our expectation to realize annual cash savings of $30 million to $35 million, and inventory reductions of the same magnitude when the benefits of the initiative are fully realized.\nIn Home and Building Products segment, we continue to see healthy demand for both residential and commercial door products and we continue to see demand outstripping supply.\nIn Defense Electronics, telephonics revenue and profitability decreased from the prior year primarily driven by reduced volume due to the timing of work performed and deliveries on certain communications and surveillance programs as well as the divestiture of our SEG.\nTelephonic's actions to improve its operational efficiency continue with the work to consolidate three facilities into two, which will be completed in our fiscal fourth quarter.\nEarlier this month Telephonics was awarded $162 million five-year support contract from Lockheed Martin for our multi-mode maritime surveillance radars for the U.S. Navy's MHR-60R (sic) MH-60R maritime helicopters.\nWe continue to see additional opportunities for our products in domestic applications as well as through the MH-60 Romeo foreign military sales to countries like South Korea and Greece.\nBacklog in the quarter was $354 million with trailing 12-month book-to-bill of 1.1 times.\nTurning to our balance sheet.\nWe continue to have excellent flexibility in our capital structure to execute on organic and acquisition opportunities and return cash to shareholders through our quarterly dividends.\nWe've delevered to 3.1 times net debt-to-EBITDA marking two full turns of improvement over the prior year period.\nAdditionally, we have $176 million in cash and $363 million available on our revolving credit facility providing ample liquidity and putting us in an excellent position to capitalize on our active pipeline of acquisition opportunities.\nEarlier today, our Board authorized an $0.08 per share dividend payable on June 17, 2021 to shareholders of record on May 20, 2021.\nThis marks the 39th consecutive quarterly dividend to shareholders, which has grown at an annualized compound rate of 17% since we initiated in 2012.\nGriffons evolved over the past decade from a decentralized holding company to a highly centralized operating focus conglomerate.\nWe see growth through acquisitions driving our future capitalizing on our strong bench of management talent.\nAnd regarding our management, Steve Lynch, the President of Clopay Corporation will retire at the end of our fiscal year.\nSteve has served as the President of Clopay with distinction for the past 12 years, and has been part of Clopay since 2001.\nDuring his tenure, Steve navigated Clopay through the financial crisis of 2009 and subsequently has transformed the business into the industry leader it is today through building the company's facilities, equipment products, technologies, people and culture.\nSteve will continue working with Clopay as a consultant after his retirement.\nAnd effective with Steve's retirement, Vic Weldon will be appointed the new President of Clopay.\nVic is a 20-year veteran of Clopay having served in leadership roles across the business including supply chain, logistics, sales and operations, and has been Clopay's Chief Operating Officer since 2019.\nVic has played an instrumental role in making Clopay the company that it is today, including leading the integration activities of the Cornell acquisition, which we completed in 2018.\nVic is the ideal candidate to assume the role of President where he can apply his wealth of company, customer and industry knowledge to the role.\nWe're looking forward to Vic continuing Clopay's success.\nI'll start by highlighting our second quarter consolidated performance.\nRevenue increased by 12% to $635 million and adjusted EBITDA increased 41% to $67.8 million, both in comparison to the prior year quarter.\nAdjusted EBITDA margin increased 220 basis points to 10.7%.\nGross profit on a GAAP basis for the quarter was $170 million, increasing 12% over the prior year quarter.\nExcluding restructuring-related charges, gross profit was $174 million increasing 13.2% over the prior year quarter with gross margin increasing 30 basis points to 27.4%.\nSecond quarter GAAP selling, general, administrative expenses were $127 million compared to $226 million in the prior year quarter.\nExcluding restructuring-related charges from both periods selling, general and administrative expenses were $123 million or 19.3% of revenue compared to $122 million or 21.5% in the prior year quarter.\nSecond quarter GAAP net income was $17 million or $0.32 per share compared to the prior year period of $1 million or $0.02 per share.\nExcluding items that affect comparability from both periods, current quarter adjusted net income was $25 million or $0.48 per share compared to $10 million in the prior year or $0.23 per share.\nCorporate and unallocated expenses excluding depreciation were $12 million in the current year quarter in line with the prior year second quarter.\nOur effective tax rate excluding items that affect comparability from all periods for the quarter was 30% and for the year-to-date period it was 31.1%.\nCapital spending was $12 million in the second quarter compared to $9 million in the prior year quarter.\nDepreciation and amortization totaled $15.9 million for the second quarter compared to $15.7 million in the prior year second quarter.\nRegarding our segment performance, Q2 revenue for CPP and HBP increased over the prior-year quarter by 21% and 16%, respectively while DE decreased 26% or 19% excluding the impact of SEG disposition.\nAdjusted EBITDA for CPP and HBP increased over the prior year by 50% and 31%, respectively, Defense Electronics decreased 48%.\nDuring the second quarter AMES incurred pre-tax restructuring-related charges were approximately $7.5 million supporting the AMES strategic initiative, capital expenditure supporting the initiative was $3.2 million in the quarter.\nAt Telephonics, we are executing on our efficiency initiatives.\nWe have reduced headcount and we expect to complete the consolidation of our three Long Island-based facilities into two company-owned facilities by the end of this fiscal year.\nThe total cost for the facility consolidation will be approximately $4 million, which will primarily consist of capital expenditures occurring in 2021.\nRegarding our balance sheet and liquidity, as of March 31, 2021, we had net debt of $883 million and leverage of 3.1 times as calculated based on our debt covenants.\nThis is a two turn reduction from our prior year second quarter and a 0.3 turn reduction from our fiscal year-end.\nAs a reminder, Griffon uses cash in the first six months of its fiscal year, which will be more than offset by the generation of significant cash flow in the second half of the year.\nOur cash and equivalents were $176 million and debt outstanding was $1.06 billion.\nBorrowing availability under the revolving credit facility was $360 million subject to certain loan covenants.\nSo regarding our 2021 guidance, as most of you know, we typically provide guidance once a year during our November earnings call and generally do not update that guidance during the course of the year.\nThe guidance provided on our November call was revenue of approximately $2.4 billion and adjusted EBITDA, excluding unallocated one-time charges related to AMES and Telephonics initiative of $285 million or better.\nWith our second quarter behind us, we are continuing to see healthy demand for products across our portfolio, recovery in consumer activity and a strong housing market are contributing to a constructive macroeconomic environment and homeowner focus on outdoor living and repair and remodel projects continue.\nWhile we are seeing the expected headwinds from cost inflation, some supply chain disruptions and a tight labor market, we are managing through those effects.\nAs a result of our substantial outperformance in the first half of the year and with consideration to this year's Q3 and Q4 comparatives to strong prior year quarter results, we are expecting our fiscal 2021 performance will be substantially above our original guidance and in line with our trailing-12 months.\nThat produced approximately $2.5 billion of revenue and $320 million of adjusted EBITDA, excluding unallocated and one-time charges.\nWe expect continued growth in the second half of fiscal 2021 driven by a strengthening global economy, a strong housing and repair and remodel environment coupled with our industry-leading product portfolio.\nWe are active in evaluating potential acquisitions and opportunities to invest in our existing businesses and are actively exploring ways to further diversify and grow.\nWe're pleased with the progress we've made on driving long-term shareholder value however, there still are significant benefits to come from completing our strategic initiatives.\nOperator, we'll take any questions.\n",
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"content": "compname reports q2 earnings per share of $0.32.\nq2 earnings per share $0.32.\nq2 revenue rose 12 percent to $634.8 million.\nq2 adjusted earnings per share $0.48.\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: With me on the call is Ron Kramer, our Chairman and Chief Executive Officer.\nFinally, some of today's remarks will adjust for those items that affect comparability between reporting periods.\n2021 was a record year for Griffon.\nWe continued to see strong demand in our businesses, driven by a robust housing market and a leading product portfolio in the US and internationally, while effectively navigating a highly dynamic and challenging operating environment.\nGriffon entered 2021 with significant momentum, reflecting more time spent in and around the house and a renewed appreciation for a lifestyle, including the lawn, garden and the outdoors.\nDuring the course of the year, we continued to see healthy demand, but supply challenges across the global economy emerged and then escalated, creating increasing headwinds for us and the entire global economy, particularly in the second half.\nDespite these challenges in 2021 inclusive of Telephonics, we generated revenue of $2.5 billion, record segment adjusted EBITDA of $317 million and record adjusted earnings of $1.86 per share.\nOur businesses also continued to see unprecedented levels of backlog, which bodes well for continued momentum into 2022.\nOur record performance this year is a direct result of our being able to realize the benefits of the strategic actions we've taken to strengthen the Company and position ourselves for future growth and increased profitability.\nOur portfolio repositioning and strategic acquisitions along with the critical investments we made in infrastructure at our CornellCookson commercial door facility in Mountain Top Pennsylvania and our ongoing AMES strategic initiative have put us into a position to capitalize on the consistent strength of the housing market and homeowner activity.\nNotwithstanding our record levels of performance, we continued to be impacted by an increasingly difficult global operating environment.\nCOVID is better, but it's not over.\nParticularly in the second half of this year, labor, transportation and supply chain disruptions, both domestically and internationally affected our ability to meet market demand and disrupted the steady flow of our operations.\nOur customers affected by these same challenges continued to be desperate for product to restock their shelves and replenish their inventory levels, and have begun working more broadly across their supplier and vendor base to secure the product needed to meet the continued demand in the market given these inefficiencies.\nThis presents both challenges as well as opportunities across the competitive landscape.\nWe've also taken significant strategic actions this year with the goal of increasing value to our shareholders and enhancing our competitiveness.\nIn September, we announced the exploration of strategic alternatives, including a sale for Telephonics, our Defense Electronics business.\nTelephonics is a terrific company with a long history of impressive achievement and we are evaluating opportunities to realize the value of the business and focus our resources on areas where we believe we can achieve stronger growth.\nOn the acquisition front, we have an extremely active pipeline of high-quality businesses and we will continue to be optimistic about finding acquisition opportunities that are value enhancing and immediately accretive.\nLet's shift to the results for the year and give some more detail around the performance of the segments.\nStarting with Consumer and Professional Products, our AMES business.\nRevenue increased by 8% year-over-year and adjusted EBITDA increased 11%.\nThe increase in revenue benefited from increased volume and favorable price, mix and foreign exchange.\nAMES saw volume gains in international markets, largely driven by consumer activity catching up after earlier pandemic shutdowns and other demand disruptions.\nDomestically, US volumes were lower due to the labor, transportation and supply chain disruptions that have been widely reported and commented upon; despite these disruptions consumer demand appears to continue to be healthy.\nIn terms of profitability, increased material cost in the US, coupled with continued lag of price catching up with rapidly rising input costs have been and continued to be headwinds on margins.\nWe expect price and cost to reach parity at the end of our second quarter of 2022.\nTurning to Home and Building Products.\nOur Clopay business saw a record revenue and EBITDA, which increased by 12% and 18%, respectively.\nThe increase in revenue benefited from increased favorable price and mix and increased volume.\nWe saw broad strength across both residential and commercial products throughout the year.\nCommercial products, in particular, did well with heightened customer interest in the new products developed by CornellCookson, strong performance of core rolling steel product offerings and successful cross-selling of sectional doors through commercial channels.\nAnd with an infrastructure bill finally signed, the future looks bright for demand.\nEBITDA at Clopay benefited from the increased revenue, partially offset by continued price and cost lag, rapidly rising prices for steel, interruptions of supply of raw materials and chemicals, as well as significant shortages in labor continued to create challenges for the business, as evidenced by Clopay's unprecedented levels of backlog.\nWe announced the exploration of strategic alternatives for the business on September 27, and are now treating the business as a discontinued operation in our reported results.\nLazard, our banker, is actively working on these alternatives, which includes a sale.\nWe expect this process to conclude by the end of our second fiscal quarter ending March 2022.\nExcluding the contribution of the SEC -- SEG business, which we divested in the first quarter of 2021, Telephonics revenue in 2021 decreased by 15% year-over-year and EBITDA decreased by 15%.\nRevenue was impacted by reduced volume due to delayed awards in certain programs as well as decreased deliveries.\nEBITDA was likewise affected by the lower volume as well as by cost growth in surveillance systems, partially offset by favorable program performance in the radar systems and reduced operating expenses resulting from efficiency actions taken last November.\nWe expect increased sale and profit, including strong margin improvement, as the Company enters fiscal 2022.\nTurning to our dividend and balance sheet.\nOur record performance this year reduced our leverage to 2.8 times net debt to EBITDA, which is well below our stated target of 3.5 times and does not include the benefit from the Telephonics strategic process.\nThis balance sheet strength provides us with substantial flexibility to pursue value enhancing and immediately accretive acquisitions, while making strategic investments in our existing businesses.\nWe increased our dividend to $0.09 per share, which marks the 41st consecutive quarterly dividend paid to shareholders.\nOur dividend has grown at a 17% compound annual growth rate since our dividend program was started.\nSeparately, each year, we reach out institutional shareholders to discuss their views on a variety of subjects, including our governance practices.\nOver the past five years, we've refreshed approximately half of our independent directors, adding diversity and relevant expertise to our Board.\nAs we evolve, we are continuing this process.\nOur Board has adopted two amendments to our Certificate of Incorporation for submission to our shareholders at our 2022 annual meeting.\nThe first amendment will declassify the Board over a three-year transition period after the amendment becomes effective.\nThe second will reduce the percentage of voting power necessary to call a special meeting of shareholders.\nThese amendments will become effective upon the approval of our shareholders at our 2022 annual meeting.\nOur Board has also undertaken a commitment to further diversify with an objective that, by 2025, 40% of our independent directors will be women or persons of color.\nThese enhancements and refinements to our corporate governance practices will further align our interest with those of our long-term shareholders and contributing to maximizing shareholder value.\nI'll start by highlighting our fourth quarter consolidated performance on a continuing basis.\nRevenue increased by 3% to $570 million.\nSegment adjusted EBITDA increased 6% to $67 million, with related margin increasing 30 basis points to 11.7%.\nGross profit on a GAAP basis for the quarter was $156 million, increasing 1% compared to the prior-year quarter.\nExcluding restructuring-related charges, gross profit was $159 million, increasing 3% compared to the prior-year quarter, with gross margin decreasing 10 basis points to 27.9%.\nFourth quarter GAAP selling, general and administrative expenses were $123 million compared to $117 million in the prior-year quarter.\nExcluding restructuring-related charges, selling, general and administrative expenses were $120 million or 21% of revenue compared to $116 million or 21% in the prior-year quarter, with the increased dollars primarily driven by distribution, transportation and incentive costs.\nFourth quarter GAAP net income, which includes Telephonics, was $16 million or $0.30 per share compared to the prior-year period of $20 million or $0.41 per share.\nExcluding items that affect comparability from both periods, current quarter adjusted net income was $21 million or $0.40 per share compared to the prior year of $22 million or $0.44 per share.\nKeep in mind, the impact of the August 2020 equity offering on adjusted earnings per share was approximately $0.04.\nFourth quarter GAAP income from continuing operations was $13 million or $0.23 per share compared to the prior-year period of $21 million or $0.43 per share.\nExcluding items that affect comparability from both periods, current quarter adjusted net income was $18 million or $0.33 per share compared to the prior year of $17 million or $0.35 per share.\nThe impact of the August 2020 equity offering on adjusted earnings per share was approximately $0.03.\nCorporate and unallocated expenses, excluding depreciation, were $13 million in the quarter compared to $12 million in the prior-year quarter, primarily due to incentive costs.\nOur 2021 full-year effective tax rate, excluding items that affect comparability, was 31.7% compared to 33.7% in the prior year.\nCapital spending was $12 million in the fourth quarter compared to $11 million in the prior-year quarter.\nDepreciation and amortization totaled $13.3 million compared to $12.8 million in the prior-year quarter.\nRegarding our balance sheet and liquidity, as of September 30, 2021, we had net debt of $797 million, with leverage of 2.8 times calculated based on our debt covenants.\nThis is a 0.6 of a turn reduction from our prior-year fourth quarter.\nOur cash and equivalents were $249 million and debt outstanding was $1.05 billion.\nBorrowing availability under the revolving credit facility was $371 million, subject to certain loan covenants.\nRegarding guidance, our standard practice has been to provide a forecast of our performance for the coming year and maintain that guidance.\nAt the beginning of our fiscal 2021, we provided initial guidance that reflected our view of the ongoing risks associated with the pandemic and the economic recovery.\nHowever, at mid-year, we took the unprecedented step of updating guidance when our performance continued to be well in excess of initial guidance.\nWe are returning to our standard practice and providing guidance for fiscal '22, reflecting what we consider to be reasonable expectations for the year.\nOn a continuing operating basis, excluding the contribution of Telephonics, we expect revenue of $2.5 billion and segment adjusted EBITDA of $300 million for fiscal '22.\nExcluding both unallocated costs of $49 million and one-time charges of approximately $15 million related to the AMES initiative.\nIn terms of the phasing of our guidance, we expect significant margin compression in the first half of the year, particularly in the first quarter, as we recover price to offset significantly increased input costs.\nJust to dimension [Phonetic] the magnitude of the price increases we have realized and expect to realize, we secured multiple double-digit price increases in '21 and expect to realize additional double-digit price increases in the first half of fiscal '22.\nMargins are expected to gradually improve starting in the latter part of our second quarter and will reach more normalized levels by our fourth quarter, reflecting the pass-through of pricing to our customers and expected improvement in labor and transportation availability, along with improving reliability within our supply chain.\nFurther, our guidance incorporates the sales trends we are seeing as customers are diversifying their supplier base to find available product across a wider array of vendors and suppliers than before.\nThis diversification is resulting in shifts of market share and shelf space across our product categories.\nLikewise, we are diversifying our own supplier base and focusing our resources on those brands, channels, products and customers we had competitive strength and a good product mix and can maintain healthy margins.\nThis will result in shifts of both sales volume and mix throughout '22 and into '23, as we prioritize our resources to achieve our margin objectives.\nTotal capital expenditures for fiscal '22 are expected to be $65 million, which includes $25 million supporting the AMES initiative.\nDepreciation and amortization is expected to be $56 million, of which $9 million is amortization.\nWe expect to generate free cash flow in excess of net income, inclusive of the capital investment and other investments we are making at AMES.\nAs in prior years, we expect a similar pattern of cash flow with significant cash usage in the first half, followed by strong second half cash generation.\nAs a result of the expected margin compression in the first quarter and the timing of price cost parity expected to be reached in the second half of the year, our first half cash usage, particularly in the first quarter, will exceed historical levels.\nWe expect net interest expense of approximately $63 million for fiscal '22.\nOur expected normalized tax rate will be approximately 32%.\nAs is always the case, geographic earnings mix and any legislative action, including new guidance on tax reform matters, may impact rates.\nJust as a final comment on '22, we continue to believe that supply chain disruptions, inflationary trends and labor shortages will remain challenges, but the strength of our demand gives us a high degree of confidence in the outlook.\nWe continue to believe in the strength of our diversified holding company investment and operating-centric model.\nThis year marks the third fiscal year since we repositioned our business through divesting the Plastics business and acquiring ClosetMaid and CornellCookson.\nThese actions have fundamentally strengthened Griffon over the last three years.\nOur revenue, adjusted EBITDA and adjusted earnings per share have increased at a compound annual growth rate of 11%, 23% and 35%, respectively.\nOver this period, we generated $224 million in free cash flow, while cutting our leverage in half to 2.8 times.\nOur announcement of strategic alternatives for Telephonics marks another fundamental shift in our portfolio.\nWe'll realize additional value for shareholders, and this will allow Griffon to redeploy capital toward accretive acquisitions.\nOur M&A pipeline is active, and we are reviewing exciting opportunities to substantially bolster our existing businesses, as well as considering new opportunities that will further strengthen and diversify us.\nWe appreciate the importance of their work in order to deliver these excellent results.\nWe remain excited about our future.\nOperator, we're happy to take any questions.\n",
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"content": "compname reports q4 earnings per share $0.30.\nq4 adjusted earnings per share $0.33 from continuing operations.\nq4 adjusted earnings per share $0.40.\nq4 earnings per share $0.30.\ngriffon q4 earnings per share from continuing operations $0.23.\nq4 earnings per share from continuing operations $0.23 .\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 conference call slides have been posted on our website and provide additional information that may be helpful.\nSales totaled $374 million this quarter, a decrease of 8% from the first quarter last year.\nWhile acquisitions added one percentage point of revenue growth this quarter, changes in currency translation rates decreased sales by approximately one percentage point.\nNet earnings totaled $73 million for the quarter or $0.42 per diluted share.\nAfter adjusting for the impact of excess tax benefits from stock option exercises, net earnings totaled $65 million or $0.38 per diluted share.\nOur gross margin rate was 53.2% in the first quarter, approximately the same as last year.\nFavorable realized pricing nearly offset the adverse effects of lower factory volume, unfavorable product and channel mix and changes in currency translation rates.\nOperating expenses decreased by $3 million from the first quarter last year as reductions in volume and earnings-based expenses more than offset higher product development and occupancy costs.\nReported income tax rate was 11% for the quarter, approximately three percentage points lower than last year, primarily due to an increase in excess tax benefits related to stock option exercises.\nAfter adjusting for this effect and other nonrecurring tax benefits, our tax rate for the quarter was 20.8%, similar to last year.\ne grew $250 million on our $500 million credit facility during the first quarter to increase our cash position and preserve financial flexibility.\nThe proceeds from the advance are available to be used for working capital, general, corporate or other purposes.\nThis will add approximately $1 million to quarterly interest expense.\nCash flows from operations totaled $54 million in the first quarter as compared to $51 million last year, slightly above the first quarter last year.\nCapital expenditures totaled $19 million in the first quarter.\nWe also paid cash dividends of $29 million.\nFor the full year 2020, capital expenditures are expected to be approximately $70 million, including approximately $50 million for facility expansion projects.\nDuring the first quarter, we made share repurchases of approximately $90 million, including $8 million, which had not yet settled at the end of the quarter.\nCash used for repurchases was partially offset by issuances of $37 million.\nThe purchase of approximately 2.1 million shares in the first quarter will largely eliminate dilution in 2020.\nWe may make further opportunistic share repurchases going forward.\nDue to economic uncertainty, we have withdrawn our revenue guidance for the remainder of 2020.\nHowever, I will take a moment to talk about the effect of lower sales and unabsorbed factory costs in hypothetical terms.\nAs an example, the sales declined by 20% and factory volumes declined by an equivalent amount, while also maintaining our infrastructure then the unfavorable effect of unabsorbed cost on gross margin rate is expected to be about two to 2.5 percentage points.\nIf the sales declined by 30% and factory volumes declined by the same amount while maintaining our infrastructure, the unfavorable effect is expected to be about 3.5 or four percentage points on gross margin rate.\nAlthough, factory volumes are challenging, we expect that favorable realized pricing, lower commodity cost in our normal practice of implementing productivity improvement projects will also continue and will favorably contribute to gross margin rate.\nWith a revenue decline of 8% in the first quarter, we saw a decline in operating earnings of 14% or decremental margins of 47%.\nIf revenues declined similarly in the next quarter, we would expect a similar decline in profitability.\nAt a 30% decline in revenue, similar to current booking trends while maintaining our expense base, decremental margins are expected to be around 65%.\nAlthough, our decremental operating margins can be steep during periods of revenue decline, as shown in our historical trends, we are able to remain profitable with our current cost structure even with a substantial reduction in sales.\nFor final comments, looking forward to the rest of the year.\nBased on current exchange rates and the same volume and mix of products and sales by currency in the prior year, the effective exchange is currently expected to be a headwind of approximately 1% on sales and 3% on earnings in 2020.\nUnallocated corporate expenses are expected to be approximately $30 million for the full year 2020 and can vary by quarter.\nThe effective tax rate is expected to be approximately 20% to 21% for the full year, excluding any FX from excess tax benefits related to stock option exercises or other onetime items.\nRather than rehash the reported numbers, I'll try to shed some light on what we saw as Q1 progressed.\nComing into 2020, we had anticipated a difficult start to the year in our Asia Pacific business.\nThe declining order rates in the second half of 2019 and continued weakness in core automotive and industrial markets, we anticipated a tough Q1 for Asia Pacific when we issued our annual revenue outlook.\nWhat we haven't fully anticipated in our outlook, of course, was the global impact of the virus.\nThe broad-based shutdown of businesses in China compounded an already difficult Q1 for us in the region.\nOur Industrial segment is about 60% of our revenue in AP and suffered the worst.\nFrom an operations and supplier standpoint, we were able to work through the shutdowns in China without impacting our global ability to build and ship orders.\nOur business in the Americas and EMEA was generally in line with our outlook early in the quarter with particular strength in our Contractor segment.\nAs the virus hit EMEA and then the U.S., we saw our incoming order rate plummet, and while it's bounced around week-to-week, we've been running about 30% below prior years since mid-March.\nWhile there are a few end markets that remain positive, such as semiconductor and sanitary, those exposures for Graco are small.\nNearly all of our major end markets across regions and segments have experienced double-digit declines in recent weeks.\nSpecific to Contractor Americas, the propane channel outperformed the home centers in Q1, with both channels showing positive out-the-door sales.\nFrom incoming order rate perspective, in recent weeks, the pattern has reversed and home centers have been outperforming the propane channel.\nGlobally, Graco sales activity has been significantly hindered as access to industrial end users is difficult with stay-at-home orders in place, contractor selling events and other trade shows have been canceled and capital spending is being curtailed across industries.\nWith the exception of the short China shutdown I already referenced, all our major production and distribution facilities have remained open and fully operational.\nWhen it became clear that the virus is going to be a global problem, we established the goal for every Graco production facility worldwide.\nThe goal has two elements: one, no Graco employee or person living in their immediate household ends up in the ICU or dead; and two, we keep our operations running.\nTo this end, we've implemented a number of practices to try to protect those employees with the highest risk of having serious complications from the virus, up to and including sending some high-risk employees home with full pay until we feel comfortable they can return.\nFor the rest of our employees, we have people working from home, if they can be productive or practicing social distancing, sanitation and good hygiene if they need to be at work.\nWe've had a few people test positive, and I've been very proud of the reaction of other employees.\nThey stayed calm and cool and carried on.\nNone of our high-risk employees have tested positive.\nIt seems quite clear to me based upon what we know about the virus and consistent with Graco culture that we can manage safety without shutting down.\nDespite a significant drop in our bookings, my plan is to keep our payroll intact for the time being.\nIn addition, we will continue to make investments in our growth strategies, including our 2021 new product plans, our live based capital investments, new market initiatives and acquisitions.\nThis will pressure our P&L in Q2, and you can expect high decremental margins, as Caroline has outlined for you.\nOur balance sheet is solid.\nWe have a strong team.\nAnd for now, I prefer not to manage the short term to be less worse, but instead prepared to leap forward when conditions improve.\nWe took a measured approach during the 2008, 2009 crisis, and I believe our investors were amply rewarded over the following decade.\nIf business conditions do not improve, we will, of course, take appropriate actions.\nOur balance sheet and cash flow remains strong.\nWe borrowed $250 million under our revolving credit facility in order to increase our cash position and preserve our financial flexibility.\nWe will use the proceeds from borrowings to fund our strategic initiatives, including acquisitions and share buybacks, if good buying opportunities present themselves.\nDue to economic uncertainty, we're withdrawing our 2020 revenue guidance for the remainder of the year.\nIn conclusion, we expect the short term to be difficult with continuing declines in revenue and profitability.\nHowever, we will execute our growth plans and weather the storm.\nOur factories are running and employee morale remains high.\nOur long-term focus and global distribution channel will position us well to capitalize when our end markets rebound.\n",
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"content": "graco inc - withdraws 2020 revenue guidance due to economic uncertainty.\ngraco inc qtrly net sales $373.6 million, down 8%.\ngraco inc qtrly earnings per share $0.42.\ngraco inc qtrly adjusted earnings per share $0.38.\ngraco inc - q1 sales did not meet our expectations and deteriorated as quarter progressed.\ngraco inc - graco is well positioned financially and strategically to operate without making major changes.\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 conference call slides have been posted on our website and provide additional information that you may find helpful.\nSales were $454 million in the quarter, an increase of 22% from the first quarter of last year and an increase of 18% at consistent translation rates.\nThe effect of currency translation added 4 percentage points of growth or approximately $11 million in the first quarter.\nReported net earnings totaled $105.7 million for the quarter or $0.61 per diluted share.\nAfter adjusting for the impact of excess tax benefits from stock option exercises, net earnings totaled $101.6 million or $0.58 per diluted share.\nGross margin rates were strong in the quarter, up 120 basis points from the first quarter of last year as the favorable effects from currency translation, realized pricing and factory volumes were partially offset by the unfavorable impact on material costs and mix related to the significant growth in the lower margin contractor segment.\nWe saw material cost increase throughout the quarter, which negatively impacted our gross margin rate.\nAt current factory volumes, we expect that pricing and strong factory operating performance will continue to offset higher material costs for the remainder of the year.\nWe also experienced supply chain disruptions in the quarter with regards to logistics capacity and component availability across most of our factories.\nThe purchasing and manufacturing teams are working to address these disruptions and we are not currently losing orders or have had any of our manufacturing lines shutdown.\nWe expect these challenges to continue in the second quarter.\nOperating expenses increased $10 million in the quarter, including $2 million related to currency translation, $5 million of increases in sales and earnings based expenses and $2.5 million in new product development as we continue to invest in our growth initiatives.\nOther non-operating expenses decreased $5 million due to an improvement in the market valuation of investments held to fund certain retirement benefit liabilities.\nThe effective tax rate was 16% for the quarter, which is 5 percentage points higher than the first quarter of last year, due to a decrease in excess tax benefits related to stock option exercises.\nCash flows from operations totaled $102 million, compared to $54 million in the first quarter of last year.\nThe majority of this increase was due to an increase in earnings in the quarter.\nCapital expenditures were $21 million and dividends paid were $31.6 million.\nA few comments as we look forward to the rest of the year.\nBased on current exchange rates, the effect of currency translation will continue to be a tailwind for us with the full year effect estimated to be 2% on sales and 5% on earnings with the most significant impact occurring in the first half of the year.\nWe expect unallocated corporate expense to be approximately $30 million and can vary by quarter.\nOur 2021 full year tax rate is expected to be approximately 18% to 19%, excluding any effect from excess tax benefits related to stock option exercises.\nCapital expenditures are estimated to be $140 million, including $90 million for facility expansion projects.\nFinally, 2021 will be a 53 week year with the extra week occurring in the fourth quarter.\nQ1 was a solid quarter as we delivered growth in every segment and every region with the exception of process in EMEA which was down low-single-digits.\nIn addition to good performance by our commercial teams, I want to specifically recognize our manufacturing, purchasing, warehousing and logistics folks for successfully dealing with both external supply chain issues and rising material prices.\nContractor continued strong performance with record Q1 sales and earnings as revenue growth in all regions exceeded 30% for the quarter.\nResidential construction activity remains solid and the home improvement market is robust.\nContractor North America continues to see strong out-the-door sales in both propane and home center and we're working hard to keep up with the demand.\nFavorable volume and continued discretionary expense management drove solid operating earnings during the quarter.\nThe outlook for the Contractor business remains positive for the year, however, comparisons do get much tougher in the second half.\nThe Industrial segment grew low teens during the quarter, with improvement in all regions.\nOrder rates were strong throughout the quarter, with growth in all major product categories.\nOverall demand in this segment remains broad-based with many of our key end markets improving as customer facilities begin to reopen to outside vendors.\nProcess segment sales grew in Q1 with improving end market conditions, particularly in the Americas and Asia Pacific.\nAll major product categories were up with the exception of oil and gas and incoming order rates accelerated throughout the quarter.\nSimilar to industrial end market growth was broad-based and benefited from improved factory access.\nA couple of comments on our outlook as we head into the second quarter.\nIncoming orders remain solid and last year's second quarter was our trough.\nSo we expect a good Q2.\nSecond half comparisons will get significantly more difficult as our business accelerated in Q3 and Q4.\nAlthough the second half economic environment is uncertain, we will continue to aggressively pursue our key long-term growth strategies and investments.\n",
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"content": "compname reports qtrly diluted net earnings per common share, adjusted $0.58.\nqtrly diluted net earnings per common share $0.61.\nqtrly diluted net earnings per common share, adjusted $0.58.\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 will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion.\nOur conference call slide and our second quarter Form 10-Q are on our website and provide additional information on our quarter.\nYesterday, Graco reported second quarter sales of $507 million, an increase of 38% from the second quarter of last year.\nThe effects of currency translation added 4 percentage points of growth or approximately $12 million in the second quarter.\nReported net earnings were $110 million for the quarter or $0.63 per diluted share.\nAfter adjusting for the impact of excess tax benefits from stock option exercises, net earnings were $108 million or $0.62 per diluted share.\nGross margin rates were up 220 basis points from the second quarter of last year as a favorable effect from realized pricing, increased factory volume, product and channel mix and currency translation offset the unfavorable impact of higher product costs.\nMix was favorable in the quarter due to the strong sales in the higher margin Industrial segment.\nSupply chain constraints such as logistics capacity and component availability had an unfavorable impact in the quarter and will likely persist for the rest of the year.\nOn a sequential basis, gross margin rates were down 250 basis points as we saw cost pressures such as material, labor, freight and volume-based costs increased throughout the quarter.\nThe majority of these cost increase impact the Contractor segment as that is our highest volume business.\nWe also saw unfavorable mix on a sequential basis due to projects in Asia-Pacific in the Industrial segment.\nAt current cost and volume, we are estimating that realized price, strong factory performance and current production activity will offset the higher product costs on a full year basis.\nOur operating teams are working diligently to minimize the disruptions and have been effective at keeping pace with our incoming order rates.\nOperating expenses increased $27 million or 26% in the quarter.\nSales and volume-based expenses increased $18 million against a very low comparable in the prior year.\nNew product development and currency translation rates each increased operating expenses by $3 million.\nThe adjusted tax rate for the quarter was 18%.\nCash flows from operations are at $220 million for the year compared to $143 million last year.\nThis increase is due to the improvement in earnings in the quarter, partially offset by increases in accounts receivable and inventories that reflect the growth in business activities.\nSignificant uses of cash are dividend payments of $63 million and capital expenditures of $55 million, including $21 million for facility expansion projects.\nA few comments as we look forward to the rest of the year.\nBased on current exchange rates, the full-year favorable effect of currency translation is estimated to be 2% on sales and 5% on earnings, with the most significant impact having occurred in the first half of the year.\nWe expect unallocated corporate expense to be approximately $30 million and can vary by quarter.\nOur full-year adjusted tax rate is expected to be approximately 18% to 19%.\nCapital expenditures are estimated to be $150 million, including $90 million for facility expansion projects.\nFinally, 2021 will be a 53-week year with the extra week occurring in the fourth quarter.\nSales in the second quarter grew by double-digits in every segment and every region.\nBroad-based growth for the quarter and for the year continued in all major product categories, resulting in record quarterly sales and operating earnings.\nGrowth in Contractor continues.\nThis is its fourth consecutive quarter with near 30% sales growth.\nThe residential construction and home improvement markets have been strong in North America.\nDemand in EMEA and Asia-Pacific has accelerated, resulting in sales exceeding pre-pandemic levels.\nWe are optimistic that incoming order rates will remain good in all regions during the second half of the year.\nHowever, from a growth rate perspective, our comparisons become much more difficult due to the large increases experienced in the second half of last year.\nThe Industrial segment grew substantially during the quarter and for the year with sales volume either near or exceeding pre-pandemic levels in all regions.\nQuoting activity increased throughout the quarter as many of our key end markets continue to recover.\nIncoming order rates remain elevated as the pace of business accelerates worldwide.\nProcess segment sales grew 29% for the quarter and 17% for the year.\nSimilar to Industrial, sales volumes were also either near or exceeding pre-pandemic levels in all regions.\nEnd market growth remains broad-based with key product categories up for the quarter.\nThe strong recovery in both our lubrication and process pump businesses drove sales and earnings growth for the quarter in the segment.\nMoving on to our outlook.\nWe have reinitiated our revenue guidance for the full year 2021 and are projecting mid- to high-teens revenue growth on an organic constant currency basis.\nIncoming orders continue to be robust in all regions with the Industrial and Process segments now on a solid footing and should finish the year strong.\nFavorable operating conditions remain in Contractor.\nHowever, second half comparisons are challenging.\n",
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"content": "quarterly earnings per common share $ 0.63.\nquarterly earnings per common share, adjusted $ 0.62.\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: I'm here today with Pat McHale and Mark Sheahan.\nOur conference call slides have been posted on our website and provide additional information that may be helpful.\nSales totaled $439 million for the third quarter, an increase of 10% from the third quarter last year and an increase of 9% at consistent currency translation rates.\nAcquisitions added 1 percentage point of growth in the quarter.\nNet earnings totaled $114 million for the quarter or $0.66 per diluted share.\nAfter adjusting for the impact of excess tax benefits from stock option exercises and other non-recurring tax items, net earnings totaled $102 million or $0.59 per diluted share.\nThe sale of the company's UK-based valve business Alco, was finalized in July of 2020.\nImpairment charges totaled $300,000 in the quarter and $35.2 million year-to-date.\nNo additional impairment charges are expected from the sale.\nOur gross margin rate was up slightly compared to the third quarter last year.\nImproved factory volumes, lower material cost, the favorable impact of currency and realized pricing more than offset the unfavorable effect of product and channel mix, as sales in the Contractor segment increased, while sales in the Industrial and Process segments declined.\nGiven the growth in certain products in the Contractor segment, particularly products for the home center channel, factory capacity has strained.\nWe've managed the increase in demand levels by investing in additional production lines, moving employees from other factories, increasing contract labor and working over time.\nWe are making progress toward meeting current demand levels and continue to monitor the situation closely.\nOperating expenses in the quarter were comparable to the third quarter last year, as reductions in volume and earnings-based expenses offset higher product development costs.\nThe reported tax rate was 6% for the quarter, down 7 percentage points from last year.\nOn an adjusted basis, the rate in the quarter was 16% as compared to 20% in the first half of 2020.\nThe decrease in the rate from the first half is due to the impact of lower foreign earnings and earnings in countries with lower tax rates than the US rate.\nExcluding the effect from excess tax benefits related to stock option exercises, and other one-time items, our tax rate is expected to be 18% to 19% for both the fourth quarter and the full year.\nCash flow from operations totaled $263 million year-to-date as compared to $299 million last year, primarily due to lower operating earnings and increases in working capital.\nCapital expenditures totaled $46 million year-to-date as we continue to invest in manufacturing capabilities as well as the expansion of several locations.\nFor the full-year 2020, capital expenditures are expected to be approximately $85 million, including approximately $50 million for facility expansion projects.\nA few final comments, looking forward to the rest of the year.\nOn page 11 of our slide deck, we note our 6-week booking average through October 16th by segment.\nI would point out that there is an inherent volatility in order rates reflected in such a short period of time.\nNonetheless, we thought it would be helpful to provide current order rate data, so you can see what we are experiencing heading into the fourth quarter.\nSimilar to the last two quarters, our Industrial and Process businesses are still experiencing declines from a year ago.\nAlthough less severe than they were in Q2, while our contractor business remains strong.\nAs the US dollar continues to weaken, the effect of currency translation will continue to be favorable.\nAt current rates, the impact would have been negligible on sales and earnings for the full year, and have a full -- have a favorable impact to the fourth quarter of approximately 2% on sales and 3% on earnings, assuming the same mix of business as the prior year.\nDespite the unusual operating environment, we achieved record quarterly sales, driven by the strength of the North American construction market and a gradually improving Asia-Pacific region.\nThe Contractor segment, single handedly accounted for the company's sales growth for the quarter.\nIt's been Graco teamwork on full display.\nContractor grew in all regions during the quarter as customers have responded favorably to our new product offerings, residential construction activity has been solid and the home improvement market has been robust.\nThe Industrial segment declined low single-digits for the quarter.\nAlthough improved from Q2, business activity remains muted across most of our major end markets.\nAccess to industrial facilities is limited.\nFactory demand in many industries remains well below last year and appetite for capital spending is constrained.\nSome specific areas showing signs of life, such as spray foam, electronics and battery, aren't large enough to offset declines elsewhere.\nAsia-Pacific improved during the quarter, all those up against an easier comp from last year.\nAs you'll recall that industrial demand softened in the second half of 2019.\nReduced spending on travel, sound discretionary expense management, good factory performance and solid price realization resulted in improved industrial operating earnings for the quarter, despite the lower sales.\nThe Process segment declined low teens for the quarter and for the year.\nDemand in this segment vary significantly by end market with growth in our semiconductor and environmental businesses more than offset by declines in our diaphragm pump and lubrication businesses.\nWhile it's difficult to predict near-term economic conditions, we expect things to remain challenging for the short term.\nAs we've done throughout 2020, and through prior downturns, we intend to continue to fully execute against our strategies.\nWe're full scheme [Phonetic] ahead on our new product development initiatives, continue to make solid ROI capital investments in our factories are adding channel globally and are focused on finding profitable growth opportunities in attractive niche markets whether organically or by acquisition.\nWe've kept our workforce intact, morale is good and we expect to do well as economic conditions improve.\n",
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"content": "qtrly diluted net earnings per common share $0.66.\nqtrly diluted net earnings per common share, adjusted $ 0.59.\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 will provide a brief overview of our quarterly results before turning the call over to Mark for additional discussion.\nOur conference call slides and our third quarter Form 10-Q are on our website and provide additional information that you may find helpful.\nYesterday, Graco reported third quarter sales of $487 million, an increase of 11% from the third quarter of last year.\nThe effect of currency translation added two percentage points of growth or approximately $6 million in the quarter.\nReported net earnings were $104 million for the third quarter or $0.59 per diluted share.\nAfter adjusting for the impact of excess tax benefits from stock option exercises and certain nonrecurring tax adjustments, net earnings were $100 million or $0.57 per diluted share.\nGross margin was down 110 basis points from the third quarter of last year as the favorable effect from realized pricing, increased factory volume and currency translation were not enough to offset the unfavorable gross margin rate impact of higher product costs.\nThese higher product costs, such as material, labor and freight, decreased our gross profit by $14 million in the quarter with $10 million of this impacting the Contractor segment.\nAt current cost and volumes, we estimate that on a dollar basis, realized price and increased factory volumes will offset higher product costs for the full year; however, these costs will continue to be decremental to the gross margin rate.\nSupply chain constraints, such as logistics capacity and component availability, also had an unfavorable impact on our factory's ability to deliver in the quarter and will likely persist for the remainder of the year.\nThese challenges were predominantly felt in the Contractor segment as this is our highest volume business.\nOperating expenses increased $20 million or 19% in the quarter.\nSales and volume-based expenses increased $9 million, new product spending increased $2 million and changes in currency translation rates increased operating expense by $1 million in the third quarter.\nThe adjusted tax rate for the quarter was 18%.\nCash flows from operations are $357 million for the year compared to $263 million last year.\nThis increase is due to the improvement in earnings, partially offset by increases in working capital that reflects the growth in business activity.\nSignificant uses of cash are dividend payments of $95 million and capital expenditures of $83 million, including $33 million for facility expansion projects.\nA few comments as we look forward to the fourth quarter.\nSubsequent to the end of the third quarter, Graco entered into an agreement, in which approximately $63 million of pension obligations were transferred to an insurance company through the purchase of an annuity contract.\nThe annuity contract purchase will be funded with existing plan assets.\nThis arrangement is part of the company's effort to reduce the overall size and volatility of its pension plan obligations.\nWe expect to recognize a noncash pre-tax pension settlement charge of approximately $12 million in other nonoperating expense in the fourth quarter.\nBased on current exchange rates, the full year favorable effect of currency translation is estimated to be 2% on sales and 4% on earnings, with the most significant impact having occurred in the first half of the year.\nAlso for the remainder of 2021, we expect unallocated corporate expense to be approximately $26 million to $28 million.\nThe decrease from prior estimates is due to lower stock compensation expense for the year.\nOur full year adjusted tax rate is expected to be 18% to 19%.\nCapital expenditures are estimated to be $150 million, including $80 million for facility expansion projects.\nFinally, 2021 will be a 53-week year with the extra week occurring in the fourth quarter.\nSales in the third quarter grew high single digits, driven by the continued recovery in both our Industrial and Process segments.\nContractor North America had difficult comparisons from last year's record third quarter.\nContractor demand was solid in Europe and Asia with double-digit gains in both regions.\nHeading into the fourth quarter, business remains robust.\nFor the first three weeks of October, our global orders continued to outpace billings in all three segments.\nNormally, we don't talk about backlog since most of our business is book and ship.\nHowever, given the current environment, which is rife with component shortages and logistical disruptions, backlogs are worth mentioning.\nAt the end of the third quarter, our consolidated backlog was approximately $280 million, which is $25 million higher than what it was at the end of the second quarter, and $121 million higher than our backlog at the end of last year.\nOrders are abundant; however, our biggest challenge is getting the materials and components we need and then navigating the logistical challenges inherent in today's environment.\nWe expect conditions to remain this way for a while, and there is nothing unique to what Graco is experiencing when it comes to these issues.\nOne more thing before commenting on our segments.\nIt's anticipated that our planned pricing actions in 2022 will be enough to fully offset current cost pressures.\nOur annual pricing cadence has been appreciated by our channel partners and has tangible commercial value in the marketplace.\nNow turning to some commentary on our segments.\nI'll start with Contractor equipment.\nThe residential construction and home improvement markets remained strong globally.\nOn a dollar basis, incoming order rates have been relatively stable and overall demand has exceeded our expectations, given the surge that we experienced last year.\nContractor backlogs are elevated at $46 million, which is up $6 million from June and up $22 million from the same time last year.\nThe overall pace of business, including out-the-door sales, is robust.\nThe Industrial segment grew at high teens for the quarter, with year-to-date sales exceeding previous high set in 2018.\nWe experienced broad-based growth in all major end markets and reportable regions, which is a nice bounce back from what we faced a year ago.\nConsistent with our other businesses, the biggest challenge in this segment is getting product out the door.\nAnd user demand is very strong, and we anticipate this to continue for the balance of the year.\nProcess segment sales grew 21% for the quarter, with year-to-date sales exceeding previous high set in 2019.\nSimilar to Industrial, broad-based growth continues in all major end markets and reportable regions.\nThe recovery of both our lubrication and process pump businesses drove sales and earnings growth for the quarter in the segment.\nMoving to our outlook.\nWith demand persisting, we confirm our full year outlook of mid- to high-teen organic revenue growth on a constant currency basis for the full year 2021.\nWhile we expect continued headwinds from raw material costs, logistics, component availability in the fourth quarter, we believe we are positioned to deliver a record year.\n",
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"content": "qtrly diluted net earnings per common share $0.59.\nqtrly adjusted diluted net earnings per common share $0.57.\ncontinues to target mid to high teen organic sales growth on a constant currency basis for full-year 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: I'm here today with Pat McHale and Mark Sheahan.\nOur conference call slides have been posted on our website and provide additional information that may be helpful.\nSales totaled $470 million this quarter, an increase of 14% from the fourth quarter last year and an increase of 12% at consistent translation rates.\nNet earnings totaled $115 million for the quarter or $0.66 per diluted share.\nAfter adjusting for the impact of excess tax benefits from stock option exercises, net earnings totaled $106 million or $0.61 per diluted share.\nGross margin rates increased 130 basis points from last year's fourth quarter.\nRealized pricing and foreign currency were favorable in the quarter.\nMix was also favorable as we saw the margin impact of sales growth in our higher-margin industrial segment more than offset the continued strength in our lower margin Contractor segment.\nOperating expenses increased $7 million in the fourth quarter as compared to a year ago due to increases in sales and earnings based expenses and higher product development costs.\nThe reported income tax rate was 11% for the quarter, down 5 percentage points from last year, primarily due to an increase in tax benefits related to stock option exercises.\nAfter adjusting for the effect of stock option exercises, our tax rate for the quarter was 18%, slightly lower than the fourth quarter last year due to additional foreign income taxed at lower rates.\nCash flow from operations totaled $131 million in the fourth quarter and $394 million for the full year.\nDiscretionary cash outflows in the quarter included the final repayment of $125 million of the $250 million borrowed on the revolving credit facility in the first quarter.\nWe also made a voluntary contribution of $20 million to our U.S. pension plan.\nFor the full year 2020, dividends paid totaled $117 million and capital expenditures were $71 million.\nA few comments as we look forward to 2021.\nBased on current exchange rates and the same volume and mix of products and sales by currency, the effect of exchange is currently expected to benefit sales by 2% and earnings by 6% for the full year, with the most significant impact coming in the first half.\nUnallocated corporate expenses are projected to be $30 million and can vary by quarter.\nThe effective tax rate for the year is expected to be 18% to 19%.\nCapital expenditures are expected to be $115 million, including $80 million for facility expansion projects.\nWe may make share repurchases in 2021 by opportunistic open market transactions or short-dated accelerated share repurchase program.\nFinally, 2021 will be a 53-week year with the extra week occurring in the fourth quarter.\nThe second quarter in a row, the Contractor segment exceeded 30% growth and ended the year with record sales and earnings.\nContractor grew in all regions during the quarter and for the year.\nResidential construction activity remains solid and the home improvement market robust.\nContract North America saw strong out-the-door sales in both propane and home center and we continue to work hard to maintain adequate channel inventory.\nThe Industrial segment grew mid-single digits for the quarter, but still ended the year down 10%.\nCompared to the previous three quarters, activity improved in some key end markets like spray foam, electronics, and battery.\nAccess to industrial facilities remains limited but coating activity has improved.\nThe Asia-Pacific region was up versus last year's Q4, which was particularly weak.\nPrice realization, solid factory performance, and good expense management combined with improved sales resulted in strong Industrial operating earnings for the quarter.\nProcess segment sales declined 10% for both the quarter and the year.\nA number of markets in our Process segment remained challenged, particularly those related to the vehicle lubrication or oil and gas sectors.\nHeading into 2021, we expect challenging end market conditions to remain in place in our Industrial and Process segments for at least the first half of the year as lockdowns persist and access to customers remains limited.\nOur outlook for the Contractor segment remains positive as favorable conditions continue and demand has been solid to start the year.\nFrom the sales team to the shop floor, the Contractor team worked incredibly long hours, maintained a positive attitude, and were committed to doing whatever it took to get the job done.\nCulture matters and they are winners.\nWe exited the year with momentum and look forward to the fight again this year.\n",
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"content": "quarterly earnings per share $0.66; adjusted earnings per share $0.61.\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 am Patrick Suehnholz, Greenhill's Head of Investor Relations.\nAnd joining me on the call today is Scott Bok, our Chairman and Chief Executive Officer.\nThese statements are based on our current expectations regarding future events that, by their nature, are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions.\nFor a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe reported second quarter revenue of $43.2 million and a loss per share of $0.45.\nFor the year-to-date, we had revenue of $112.2 million and a loss per share of $0.34.\nRevenue for the year-to-date was 2% lower than our figure from last year when we had a slow first half that was followed by a strong second half.\nIndustry data makes clear that global M&A activity has been very strong for the year-to-date, we see that in what has been a significant increase versus last year and the year before in the number of new assignments we are winning.\nWe also see the result of a more active market in the number of deal announcements we are associated with, as shown on the transaction list we regularly update on our website.\nThis past quarter, we announced the second highest number of transactions in any quarter in our history and on a trailing four quarters basis, our number of transaction announcements is at the highest level ever by a meaningful margin.\nMany of those transactions have been for major companies but for the year-to-date, the sizes of deals that have completed have skewed toward the smaller end of the scale, resulting in soft year-to-date revenue.\nIn the second half, we expect the size of completed deals and related fee events to significantly increase such that we should get to a full-year revenue outcome that shows improvement over what was a respectable year for our firm in 2020.\nWe saw the first versus second half play out similarly to the way I'm describing both last year and the year before.\nOn a regional basis, for the full year we expect to show a stronger year than last year in the US and Canada and a much stronger year in Australia, offset by reduced revenue in Europe where we had a particularly strong revenue year last year.\nBy type of advice, M&A is where we are seeing the greatest opportunity.\nRestructuring activity is materially lower given the strength in credit markets, but we are making progress in our strategic initiative to be more active in financing advisory assignments of various kinds.\nIn the private capital advisory area, we continue to be busy with secondary transactions in Europe and Asia, including an increasing number of complex fund restructuring transactions, led by fund general partners.\nIn addition, over the course of the year-to-date, we've succeeded in building out a global primary fundraising team and we expect to start seeing revenue from that group already in the current quarter.\nIn all our businesses, we are making progress on our strategic initiative to do more business with financial sponsors.\nIn addition to two more recruits in the private capital advisory area.\nWe have other recruits in progress.\nWe already see this year as an important one in terms of recruiting and we should see more success in that regard in the second half.\nNow turning to costs, our compensation costs were lower than last year in absolute terms, given our objective to bring quarterly compensation more in line with quarterly revenue but our compensation ratio was still higher than our target range.\nOur objective is to bring the ratio down to our target range for the full year, while still paying our team increased compensation in absolute dollars.\nWhere we end up in terms of compensation cost and expense ratio for the year depends as always on our revenue outcome for the year.\nOur non-compensation costs were materially lower than last year and are running at a rate slightly better than our target.\nOur interest rate expense continues -- interest expense, rather, continues to trend lower given declining debt levels and continued low short-term interest rates.\nWe continue to estimate our annual tax rate will be in the mid-20% range after adjusting for the impact of charges relating to the vesting of restricted stock, which is consistent with our prior guidance.\nWe ended the quarter with $92.5 million of cash and $306.9 million of debt and we paid down another $15 million of that debt after quarter end.\nWe also declared our usual $0.05 quarterly dividend.\nAnd lastly as of quarter end, we have bought back 1.5 million shares and share equivalents for a total cost of $23.8 million and had an additional $26.2 million of repurchase authority available for the year ahead through next January.\nAs I said last quarter, our principal focus is on deleveraging but we also intend to continue to purchase shares in a prudent manner to further enhance the upside potential for continuing shareholders.\nOur employees currently own about half of the economics of the firm through stock and restricted stock and are thus fully aligned in trying to drive shareholder value in the quarters and years to come.\nTo sum up, we recognize that our first half is an outlier relative to peers in what is a strong M&A market.\nAt our smaller scale, the random timing of deal completions has a large impact and can result in a weak quarter or even multiple quarters.\nLast year, we saw that same phenomenon, yet with the help of a record quarter at year-end got to a very respectable full year result.\nThis year, we have the benefit of what is a significantly higher pace of new assignments and of deal announcements.\nLooking beyond this year, the same smaller scale that today results in greater quarterly volatility is what creates future upside potential for our shareholders.\nFirst, the strategic moves we are making should reduce future quarterly volatility as well as increase annual revenue.\nThe effort to develop a financing advisory business and to devote more resources to serving financial sponsors should be particularly important in diversifying and growing our revenue base.\nSecond, the successful rebuilding and expansion of our Private Capital Advisory business should also add to revenue diversity and scale starting later this year.\nAnd lastly, with our lower cost, declining debt and interest expense and much reduced share count, the benefits of increased revenue would be magnified in terms of net income and shareholder value creation.\nWith that, I will take any questions.\n",
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"content": "compname reports q2 revenue of $43.2 mln.\nq2 revenue fell 10 percent to $43.2 million.\nq2 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: I am Patrick Suehnholz, Greenhill's Head of Investor Relations.\nJoining me on the call today is Scott Bok, our Chairman and Chief Executive Officer.\nThese statements are based on our current expectations regarding future events that, by their nature, are outside of the firm's control and are subject to known and unknown risks, uncertainties and assumptions.\nFor a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.\nWe reported third quarter revenue of $88.6 million and earnings per share of $0.85.\nFor the year-to-date, we had revenue of $200.8 million and earnings per share of $0.55.\nRevenue for the year-to-date is up 17% from the same period last year.\nIndustry data makes clear that we continue to be in a very strong M&A market globally.\nFor our firm, that is evident in the significant increase in new client assignments we have won this year relative to last year and the year before.\nIt is also evident in the fact that on a trailing four quarters basis, the number of deal announcements, with which we are associated, is at an all-time high.\nWhile many of those transactions were for large companies, for the year-to-date, the sizes of deals we have completed have skewed toward the smaller end of the normal spectrum, resulting in a year-to-date revenue increase smaller than that of our peers.\nNonetheless, we are pleased with the progress we made in the third quarter, continue to expect a strong finish to the year and are confident that our revenue going forward will benefit from a reversion to the norm in terms of deal sizes and commensurate fees.\nOn a regional basis, for the year, we expect to show a stronger year than last year in the U.S. and Canada and a much stronger year in Australia, offset by reduced revenue in Europe, where we had a particularly strong revenue year last year.\nBy type of advice, M&A continues to be the area in which we see the most opportunity.\nRestructuring remains relatively slow given the strength of credit markets, but we are pleased with the progress of our new initiative to win more financing advisory assignments.\nIn the private capital advisory area, we've made great progress in building out our global team for both primary fundraising and secondary sale transactions, and both of those businesses now have strong assignment backlogs.\nAcross all our businesses, we are pleased with the progress in our new initiative to do more business with financial sponsors.\nWe are pleased with what we have accomplished in recruiting this year and remain focused on adding more senior talent in the months to come.\nNow turning to costs.\nOur compensation costs have been lower than last year in absolute terms given our objective to bring quarterly compensation more in line with quarterly revenue.\nOur compensation ratio of 50% for the quarter brought down the year-to-date ratio to 65%, and our objective is to bring that ratio down further by year-end, while still paying our team increased compensation in absolute dollars.\nWhere we end up in terms of compensation costs and expense ratio for the year depends as always on our revenue outcome for the year.\nOur non-compensation costs were materially lower than last year and are running at the low end of our target range for the year-to-date.\nOur interest expense continues to trend lower given a declining debt level and continued short -- lower short-term interest rates.\nWe continue to expect our annual tax rate to be in the mid-20% range before adjusting for charges relating to changes in the value of restricted stock upon vesting.\nWe ended the quarter with $100.4 million in cash and $291.9 million of debt.\nAnd after the quarter end, we made an additional voluntary debt repayment of $10 million.\nDuring the quarter, we repurchased more than 637,000 shares and share equivalents for a total cost of $9.5 million.\nAnd in October, we repurchased an additional 194,000 shares for a cost of $3.1 million.\nFor the year-to-date, we've used our cash flow to repay $45 million of debt and repurchased $36.4 million of shares and share equivalents.\nIn addition, we declared our usual quarterly dividend of $0.05 per share.\nAs I said last quarter, our principal focus is on deleveraging, but we also intend to continue to purchase shares in a prudent manner to further enhance the upside potential for continuing shareholders.\nOur employees currently own about half of the economics of our firm through stock and restricted stock and thus, are fully aligned in trying to drive shareholder value creation in the quarters and years to come.\nTo sum up, we are pleased with our revenue growth and profitability this quarter, and we are also pleased with our progress on our strategic initiatives.\nOur goal is to both increase our total revenue and to reduce our quarterly revenue volatility, and we aim to do that by expanding our client base to serve more financial sponsors and expanding our service offering to include more financing roles and more private capital advisory transactions.\nIf we succeed, our reduced cost, declining debt and interest expense and much reduced share count should together result in significantly greater earnings and shareholder value creation.\nAnd with that, I'll be pleased to take any questions.\n",
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"content": "greenhill & co q3 earnings per share $0.85.\nq3 revenue rose 58 percent to $88.6 million.\nq3 earnings per share $0.85.\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 certainly appreciate your joining us today to discuss Graham's first quarter fiscal 2022 financial results.\nIf you do not have the releases or the slides, you can find them on the Company's website at www.\nHe's on the call today with us and will be making some formal remarks.\nAlso joining us are Jeff Glajch, our Chief Financial Officer; and Dan Thoren, our President and Chief Operating Officer, who has been named effective with Jim's retirement, our new Chief Executive Officer.\nJim will start with his overview and then cover the brief results of the quarter.\nJeff will then review details of the financial results and then we'll have Dan close out with his remarks.\nThese risks and uncertainties and other factors are provided in the release and in the slide, as well as with other documents filed by the Company with the Securities and Exchange Commission.\nThese documents can be found on our website or at sec.gov.\nI'd like to point out that during today's call, we may also discuss some non-GAAP financial measures which we believe are useful in evaluating our performance.\nWe have provided reconciliations of comparable GAAP with non-GAAP measures in the tables accompanying today's release.\nI will begin my remarks at Slide 3 and provide a brief review of the financial results, before discussing my planned retirement.\nRevenue in the quarter was $20.2 million, $16.7 million was organic and $3.5 million was due to the acquisition of Barber-Nichols that closed June 1.\nDefense revenue was 35% of total revenue in the quarter.\nWe do expect that defense revenue will approach 50% of total quarterly revenue with Barber-Nichols fully in future quarters.\nThis acquisition and the shift in revenue mix is a major transformation for Graham and measurably advanced our diversification strategy.\nOn an organic basis, revenue was similar year-over-year.\nHowever, it was for different reasons.\nYou might recall that our first quarter last year operated at nominally 50% capacity due to COVID-19, thus impacting revenue and profitability due to under-absorption.\nIn the most recent quarter, our workforce utilization was at capacity.\nHowever, mix was very different.\nOrders from our crude oil refining and chemical/petrochemical markets were very low during the third and fourth quarters last fiscal year where non-Navy orders totaled $17.5 million for both quarters.\nConsequently, greater production resources were pulled into Navy backlog, which are lower margin due to first article work and also due to contract structure for a large order in backlog.\nThose headwinds work out of backlog across the next few quarters and largely behind us as we exit this current fiscal year.\nOrganic revenue and profitability are expected to improve across the fiscal year.\nOrders in the first quarter were $20.9 million and were principally organic.\nBarber-Nichols orders were $200,000 for the month of June.\nSomewhat encouragingly, there were strong orders from our crude oil refining market in the quarter that totaled $11.5 million.\nWe did have a significant win in the quarter for a domestic refinery revamping their facility to improve crude oil feedstock processing flexibility.\nThat particular win was gratifying for me.\nI still remember losing the original order to a domestic competitor in the mid-1990s.\nAnd now, 25 years later, we won back the installation and replaced the original supplier with our own vacuum systems.\nConsolidated backlog at June 30 was $236 million, of which 80% is for defense.\nImportantly, as we work through the more challenging margin backlog, that impacts the current fiscal year.\nMargin potential for our defense backlog improves measurably.\nBarber-Nichols acquisition provides additional market diversity to our profile as it also adds backlog for new markets including space and advanced energy industries.\nWhile we put considerable cash toward acquiring Barber-Nichols to strengthen and diversify revenue along with earnings, our balance sheet remains strong and our opportunity to drive our return on assets improves.\nAs announced earlier today and as Debbie had mentioned, I'm very pleased to confirm that I will retire effective August 31 at the end of this month and Dan Thoren will succeed me as President and CEO of the corporation.\nHe also will join our Board of Directors at that time.\nIt has been a tremendous honor and great privilege for me to serve Graham shareholders and the corporation as its Principal Executive Officer since 2006.\nI believe I am departing on a high note as this is an incredibly exciting time for the Company, considering first the strength of our organic defense strategy having advanced to preferred supplier status for many of the products the Company provides to the US Navy, and in some cases, we are now bidding on a sole-source basis.\nThe credit goes to Alan Smith and his team for executing well our defense strategy.\nSecondly, the progress we have had innovating execution to become successful in price-focused international crude oil refining and petrochemical markets.\nThe sales team has proven we can take market share, and also the operations team has shown we're able to realize or beat target margins.\nThirdly, the investments we've made in IT tools, systems and resources to leverage our installed base and the expected benefit that will provide.\nI believe crude oil refining and chemical/petrochemical customers will invest in existing facilities, with greater throughput before investing in new capacity.\nI feel we are ahead of competitors regarding commitment to the installed base.\nLastly, the transformational acquisition of Barber-Nichols creates a new strong growth platform for both organic and M&A expansion.\nI've had the opportunity to work with Dan through the acquisition process for over nearly three years and most recently, the last two months as he onboarded with the Graham team.\nI believe that Dan is well equipped to lead Graham and has a terrific and broad vision for the next phase of growth for the Company.\nI'm thrilled this acquisition has proved to be as transforming as we had envisioned.\nAnd part of that transformation is building out the bench strength of our leadership team.\nUltimately, over the last couple of months, it became more clear to me that this has provided for my succession plan as well.\nI'm thrilled that the Board saw the same potential in Dan that I had seen.\nAs a Graham shareholder, I'm looking forward to benefiting from the value of Dan's strategic direction.\nYou have my full support, not only through this transition, but well into the future.\nI have enjoyed our many conversations all these years and have very much appreciated your ongoing support.\nIf you can move to Slide 4.\nAs Jim mentioned, we had a very rough first quarter.\nAs I discuss that first quarter, I would like you to keep in mind that our full year guidance is unchanged.\nTherefore, we expect to see improvements as the year goes on and we expect sequential quarterly improvement across each quarter for the rest of fiscal 2022.\nSales in the quarter improved by $3.5 million, which was due to the one month that we owned Barber-Nichols.\nThe comparable quarter last year was early on during the COVID pandemic.\nAnd as Jim mentioned, we ran the Company at half capacity during that quarter.\nHowever, in that quarter, we did have a $5 million project which was recognized on a completed contract basis and because of COVID had shifted from fiscal 2020 into Q1 of 2021.\nGross profit and earnings per share were dramatically affected by a very poor mix of projects and some timing and some cost items.\nNamely, we had some liquidated damages due to COVID in the quarter and some timing of expenses which were pulled into Q1.\nWe also had a small amount of acquisition expenses, about $169,000 pre-tax, and the first month of purchase price accounting related costs for Barber-Nichols.\nTo clarify the latter, the purchase accounting amortization costs were $225,000 before taxes in June.\nBefore we move on, I want to mention that we expect approximately $2.7 million pre-tax and $2.15 million after-tax related to acquisition purchase accounting.\n90% of this is amortization costs, with the rest being a step-up in depreciation and inventory.\nWe will be filing an 8-K later this week with much more detail on the purchase accounting and pro forma income statements.\nWe expect the amount of amortization will be similar in fiscal 2023 as fiscal 2022 since we will have 12 rather than 10 months of amortization in fiscal 2023.\nIt will decrease in future years and level off at approximately $1.1 million pre-tax.\nOn to slide 5.\nWith the acquisition of Barber-Nichols, we have moved from a very inefficient to a much more efficient balance sheet.\nWe have added $20 million of low-cost term debt as part of the acquisition and we have access to a much larger revolving line of credit.\nThis term loan and the line of credit will provide ongoing flexibility.\nWe expect the acquisition of Barber-Nichols to be accretive in fiscal 2022, even with the $2.15 million or approximately $0.20 a share in added amortization costs.\nWe will continue to look for both organic and M&A-related growth opportunities and believe we have the financial strength to invest in both areas.\nWith the addition of Barber-Nichols, we believe there are some excellent opportunities in both arenas.\nOn to slide 6.\nOrders in the commercial markets picked up in Q1 off a very low base in the previous two quarters.\nWith a $236 million backlog, we are well positioned for long-term growth.\n80% of that backlog is in the defense market, which provides an excellent baseline for our business, not just this year, but in upcoming years as well.\nBefore I pass it over to Dan, I would be remiss if I didn't recognize Jim for his 37 years of service at Graham, the last 15 years being as leader.\nHe has transitioned Graham from a company which has -- which was capacity limited and had minimal growth engines to a much broader organization with strong footprints in defense and the Asian energy markets to couple with our long history in the United States and Middle East.\nLook nearly anywhere in the world and you will see Graham equipment in many world-class refining and petrochemical facilities.\nYou will also see Graham equipment playing a key role on US Navy vessels which support our country's national defense.\nI've known Dan for the past three years, including negotiating the acquisition with or perhaps against him during part of that time.\nDan is a very high character leader with a great history at Barber-Nichols and I expect him to do the same at Graham.\nOver the past many months when the Board members have asked for my view as Dan as a potential CEO, I was and continue to be unequivocal in my belief that Dan is the right CEO to take Graham forward.\nNow that I've set the bar high, Dan, I'll pass the call over to you.\nVery kind words, very kind introduction.\nI've spent two and a half years getting to know Graham, their leadership and at a high level their business.\nIndirectly, I've learned a little about their culture, their people, their customers and their Board.\nOver the last two months, I've met with the executive team, managers, employees, customers and the Board to understand the Company in more depth.\nThese interactions have helped me understand the proud engineering and manufacturing heritage at Graham, the importance of the Company in the community of Batavia, New York and how they have become a trusted partner to their customers across the world in the critical process industries that they serve.\nAs I go through my slides, I'll give you an idea of how we are developing our strategy to build upon our strong legacies while leveraging our opportunities in the defense and space industries.\nSpecifically, we'll be working to generate sustainable earnings growth, reduce that earnings volatility, improve operating performance, generate strong cash flows to reinvest in our business and provide a dividend to stockholders.\nThe ultimate goals are to provide an acceptable return to our stockholders and provide benefit to all of our stakeholders.\nNow let's focus on slide 7.\nWith Graham Corporation acquired Barber-Nichols, we recognize that the two businesses have individual strengths, serving their respective markets that we do not want to disrupt.\nOur strategy is to leverage the strengths of each as platforms that provide potential for both organic and inorganic growth.\nAs such, Graham operations and BN operations both operate under the Graham Corporation umbrella.\nAs we consider future capital investments, our plan is to add new companies and technologies with related engineered product that can stand alone yet collaborate to win bigger business.\nLeverage best practices between subject matter experts in the companies, share services across the organizations and provide career paths for key employees.\nWhen we do these things, each member company can remain focused and agile while accomplishing more than they could alone.\nAs you look at slide 7, this depicts our two platforms for expansion.\nBarber-Nichols is currently in space and defense predominantly.\nGraham manufacturing is currently in Defense, Energy and Petrochemical.\nFor the space industry, we believe there are acquisition opportunities in this expanding market as it gains more interest in private investment.\nWe will be looking for small acquisitions that we can tuck in as well as medium acquisitions that can stand on their own and are complementary to our current businesses.\nWe are also focused on internal investments to develop new products and technologies in that space industry.\nBoth Graham and Barber-Nichols are well engaged in the defense industries.\nWe'll be looking for new areas to provide value as well as internal investments and acquisitions that can help us grow into new and more sophisticated product.\nGraham has been a world leader in vacuum and heat transfer products for energy and chemical/petrochemical applications.\nAs Jim and Jeff had discussed over many years, the domestic market is flat and the international markets have room for growth.\nWe intend to focus on our domestic installed base and provide customers the support they need to keep those plants running at an optimized level.\nWe'll continue to invest in international markets and grow our presence around the world through our successful shared margin strategy.\nMore recently, both companies are seeing opportunities to engage in the alternative and clean energy markets through turbomachinery and heat transfer products.\nClean energy is actually an area where synergy between companies is possible.\nStrategically, we plan to both service and grow our legacy business while having the engineering and new product capability to participate in these new alternative and clean energy markets.\nNow each one of these markets that have gone over have their own risk and reward profiles.\nHaving teams focused in each area is paramount and we are well along with the organizational changes needed to successfully execute our strategies in each of the markets.\nLet's move to slide 8.\nAs Jim and Jeff discussed earlier, we look at fiscal '22 as a transition year, with a tough start, getting better sequentially by quarter.\nMeanwhile, we are seeing a stronger pipeline with more inquiries and new orders in the second quarter.\nGraham manufacturing second quarter orders are $9.5 million to date, while Barber-Nichols has booked $9.1 million.\nBased on the timing of customers' projects, we are holding our revenue guidance at $130 million to $140 million of which Barber-Nichols is expected to contribute between $45 million and $48 million.\nCombined, the Defense segment is expected to account for almost half of the revenue and EBITDA is expected to be in the $7 million to $9 million range.\nCapital expenditures are planned to be in the $3.5 million to $4 million range, including the Barber-Nichols capital expenditure.\nLet's go to slide 9.\nAs alluded to in my initial remarks, we are transforming Graham Corporation.\nBarber-Nichols was the initial transformational acquisition.\nWe will be looking to solidify the Barber-Nichols investment through further investment on its platform to enable growth in the defense and space industries as well as other industries as opportunities arise.\nCoincident with the acquisition, we believe we are at or near the bottom of the energy and petrochem cycle.\nWe have been preparing for an up-cycle expansion that we believe will start in FY 2023.\nOur welder training program has been very successful in refilling our pipeline of future employees.\nWe are qualifying additions to our supply base to enable additional capacity with the expectation of a potential up cycle.\nOur plans include expanding our international offices with sales, quality and project management personnel.\nBoth Barber-Nichols and Graham have leading market positions and strong brand recognition.\nWe believe that strong engineering, working hand-in-hand with customers on challenging applications and delivering high-quality products on time will enable us to maintain those brand strength and market leadership positions.\nAs we advance our transformation, we will be improving our market presence with linked and updated websites and social media.\nWe believe that this will expand our exposure to a broader audience that doesn't yet recognize our growth and earnings potential.\nPersonally, I have a strong interest in being a great corporate citizen and working with all of our stakeholders to build a better stronger business for us all.\nWith the BN acquisition, Graham puts its large cash reserves to work and created a more efficient balance sheet.\nAs we continue to improve our business and further our strong cash-generating capabilities, we'll intend to make smart choices to allocate that capital for further growth with a keen focus on returns.\nWe are very optimistic about this new combination and the future it presents for all of us.\nWhen you have a talented team of people that can see problems for your customers, work with them to design and build solutions to those problems and then shift when the markets change, you will be successful.\nAt Graham Corporation, we have that ability and we will be looking to add more.\n",
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"content": "q1 revenue $20.2 million versus refinitiv ibes estimate of $23.8 million.\nfiscal 2022 guidance remains unchanged.\nexpects about 35% to 40% of backlog will convert to revenue in last nine months of fiscal 2022.\nabout $25 million to $27 million of backlog related to defense industry is expected to convert to sales in fiscal 2022.\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 joining us today to discuss Graham's fiscal 2021 third quarter results.\nWe have -- we also have slides associated with the commentary that we are providing here today.\nIf you do not have the release or the slides, you can find them on the company's website at www.\nWe will then open the lines for Q&A.\nThese documents can be found on our website or at www.\nI also want to point out that during today's call, we will discuss some non-GAAP financial measures, which we believe are useful in evaluating our performance.\nQ3 sales were $27.2 million, up from $25.3 million in Q3 last year.\nOur COVID-19 impact in the quarter was small compared to Q1, but we still lost approximately $900,000 of revenue due to employee absences related to COVID.\nStrong sales in Asia supported our refining business.\nSales in the defense, the Navy market were $4.5 million in the quarter and now stand at $17.4 million year-to-date, approximately one quarter of our total sales through December.\nQ3 net income of $1.1 million or $0.11 per share, up from breakeven in Q3 last year.\nCash is still strong at $69.3 million.\nOrders in Q3 were in excess of $61 million, our strongest order recorded ever, driven by $52 million in defense orders.\nAlmost all of the defense orders will not start to convert to revenue until fiscal 2023 and beyond.\nOur backlog is now nearly $150 million, 70% of which is in the defense market.\nMoving on to Slide 5.\nI'll discuss the sales detail in the last slide with the quarter at $27.2 million.\nThe sales split in the quarter was 39% domestic and 61% international.\nLast year's third quarter was 53% domestic, 47% international.\nThe stronger international sales in the quarter were primarily driven by projects in Asia, particularly China where we had one large project, which was accounted for on a completed contract rather than a percent complete basis and a second project, which is in -- currently in process and is on -- being accounted for on a percent complete basis.\nGross profit increased to $6.2 million, up from $4 million last year primarily due to improved project mix as well as volume.\nGross margin was 22.9%, up 6 -- up 160 -- I'm sorry, up from 16% last year, which was a particularly poor quarter last year.\nEBITDA margins were 6.7% up from 0.7% in last year's third quarter.\nAnd as I mentioned earlier, net income was $1.1 million up from breakeven last year.\nLooking at our year-to-date results, sales in the first nine months of fiscal 2021 was $71.8 million, up from $67.5 million last year.\nThis is despite our challenging Q1 when the production was at 50% of capacity due to COVID impacts.\nYear-to-date sales are 52% domestic, 48% international compared with 65% and 35% respectively last year.\nGross profit year-to-date is $15.5 million, up from 13.7% last year and gross margin is up 130 basis points to 21.6%.\nYear-to-date, EBITDA margins were 5.6% versus 3.1% in the first nine months of last year.\nFinally, net income was $2 million or $0.20 a share, up from $1.3 million or 13% -- I'm sorry, $0.13 a share last year.\nAgain, the first quarter of this year had a loss due to COVID but we have more than recovered in the second and third quarter.\nCash is at $69.3 million, up $1.4 million from the end of Q2 but still down from $73 million at the end of fiscal 2020.\nThis is primarily due to timing of working capital.\nCash per share is $6.94.\nOur quarterly dividend remains firm at $0.11 a share and we have paid out $3.3 million year-to-date.\nCapital spending to-date is $1.5 million similar to last year and we expect this -- the total for the year to be between $2 million and $2.5 million in capital for the full year.\nFinally, as we are continuing to work on our acquisition pipeline and activities, COVID has not had an adverse impact on our efforts as we have built some very good relationships over time and these continue, however, many are now remote rather than in-person communications.\nI would ask that you refer to Slide 9.\nSales for the third quarter were $27.2 million.\nSales for the refining industry were $16.5 million up from $12.2 million.\n$9.4 million of the revenue were from two projects for the Chinese refining market.\nSales to the defense industry were $4.5 million and were up slightly year-on-year.\nWe continue to see improved backlog conversion as we grow our naval workforce.\nOn prior calls, we discussed first article or first-time fabrication work.\nWe are largely past that now for which is currently in our backlog.\nWe do plan to expand and take on new first article work, however, for now that type of heavy lifting is behind us.\nLastly, our annual guidance remains at $93 million to $97 million, which was communicated during our second quarter earnings call.\nThe fourth quarter is set up well for backlog conversion, however, there is always a few million dollars of in and out revenue within any quarter.\nMoving to Slide 10.\nWe experienced the second wave of COVID-19 infections in Western New York from November through the middle of January.\nThe company's COVID-19 protocols have been tested and have been proven to be effective in minimizing the spread of the virus within the company.\nAt the peak of the second wave in early January, the production departments were operating at no less than 90% capacity.\nDue to the outbreak, we temporarily paused our efforts to recruit skilled workers.\nAs of January 19th, we have lifted the pause and are actively recruiting skilled workers.\nI am pleased to report that we have several candidates in our pipeline.\nWe continue to prioritize improving our productivity in the Navy areas.\nProductivity enhancements are focused on build flows, faster welding processes, employee training, the creation of jigs and fixtures and lastly, applying lessons learned.\nThis chart illustrates how orders can vary considerably from quarter-to-quarter.\nA highlight though is the order level of the last two quarters from the defense industry, specifically orders for the U.S. Navy.\nThe orders for defense during the last two quarters were $65 million.\nThese orders can be large in value and will have multi-year conversion cycles.\nWe have visibility into the Navy's long term procurement plans.\nThat is a great help and lessens investment risk that may be needed to support growth associated with stronger defense segment revenue.\nWe are operating within challenging energy and chemical/petrochemical markets.\nLow oil prices due to supply and demand imbalance along with demand destruction for chemical and petrochemical derived consumer products have contracted orders within our more traditional non-defense end markets.\nIt is important to point out the defense strategy where $100 million of new orders were secured in the last 12 quarters, representing 30% of total orders has been a terrific counter balance to headwinds within our more traditional markets.\nAlso another set of actions were implemented about two years ago to change participation, success and execution plans within more price-sensitive international markets where we historically did not play.\nThat too has been executed successfully.\nAcross those same 12 quarters, $40 million in orders were won because of a different execution plan and different selling strategy.\nStated differently, approximately 60% of orders in the past 12 quarters were from our traditional markets or customers and 40% from strategies to broaden revenue streams.\nI commend our team for terrific effort on both strategies, it has really made a big difference in order level during the -- this pull back by our historic customers.\nLet's move on to Slide 13.\nThere is not too much different from last quarter to report.\nRefining is weak as an overall comment.\nThere are mid and large sized projects upcoming in India, China and for the Mid East and North Africa but overall, refining opportunities have contracted.\nAn active area within U.S. refining markets, however, is related to renewable diesel investment.\nThis is supported by tax policy under the Renewable Fuels Standard and California's Low Carbon Fuel Standards.\nThese are smaller, fast-moving projects, however, it has created demand for our products and that is important right now.\nThe Navy bookings pipeline remains healthy.\nOrders, they will be intermittent and likely not as strong as the past two quarters.\nNonetheless, we expect to build backlog within this segment during the next year with a book-to-bill above 1.\nThe chemical sector is still contracted.\nWe have not seen a change in spending by this market.\nGlobal markets need to lift up from the pandemic before we are to anticipate more typical order levels.\nShort cycle and plant MRO or plant maintenance, repair and operating spending is also pulled back.\nWhile defense orders have a positive outlook, order levels from our more traditional customers or markets are expected to stay sluggish.\nLet's move on now to Slide 14.\nThe two bright spots during this pandemic are our cash position that was highlighted by Jeff and our backlog.\nBacklog is $150 million with approximately $100 million for defense and $50 million for the company's more historic markets.\nThe operational benefits or synergies between defense and commercial markets permit effective utilization of our operating assets, while commercial markets and here I'm referring to, refining and chemicals/petrochemicals are contracted.\n45% to 50% of our backlog is anticipated to convert during the next 12 months.\nThe fourth quarter is now essentially set up for backlog conversion with, as Alan said, a few million dollars, which typically comes in and out in a quarter, thus we have high confidence for the full-year guidance.\nWith that, let's move on to the guidance page.\nWe guide to revenue for the full year to be between $93 million and $97 million, implying fourth quarter revenue between $21 million and $25 million.\nFull year gross margin should fall between 21% to 22%.\nSG&A expense at $17.3 million to $17.8 million for the full year and our effective tax rate is planned to be between 22% and 24%.\nIt is important to highlight that the guidance reflects, we do not have significant COVID-19 related disruptions or unforeseen impacts in our fourth quarter.\nI will close with a quick progress review on strategic initiatives.\nLet's move on to Slide 16.\nWe have had an effort to reduce the volatility of our business performance with greater focus on expanding our predictable revenue streams.\nThe Navy is one of those revenue streams as is revenue from our installed base.\nOur progress with the Navy has been -- or defense has been very strong.\nOur backlog has grown and importantly, we've moved our position from competitively bidding most opportunities to sole-source bidding under a larger percentage of those opportunities.\nSo that all is directionally very favorable.\nFor our installed base, with the pandemic and COVID, we've had difficulty gaining access to our plant -- customers' plant sites.\nHowever, we've been working on IT tools and data analytics to analyze different applications and different products so we can implement programmatic processes to drive proactively our installed base.\nThat's under way, but we have had a pause on building out our installed base team, however, there is work ongoing on the IT side.\nWe are also looking at acquisitions to build stronger, more predictable revenue.\nJeff and Chris have done a really -- Chris Johnston, have done a really fine job of bringing us some high-quality targets into the conversation and we have active dialog with those now and we're advancing those discussions.\nAnother initiative, and now this will be in an area of our project work.\nSo it does have variability, a cyclical nature to it, however, we have implemented some strategies to change how we participate in more price-sensitive markets, which is primarily in Asia.\nWe've been expanding and modifying our execution path there.\nI'd say that's gone remarkably well as we jumped into that segment of the sandbox in a different way the last couple of years.\n15% of our total orders since late in fiscal 2019 have come from this strategy.\nWe have had to be more measured in how we're evolving our organization and our structure to go after this work as we think about the upcoming income statement tied to the pandemic.\nHowever, this strategy has been executed well and has had an impact.\nYou may have recalled -- you might recall that we did win two very large projects in India in the recent past and we are queuing up two or three other projects that we're focused on, that we're going to pursue aggressively, and hopefully win those over the next three to six quarters.\nAnd then, ultimately, all of this rolls up into strengthening Graham's financial performance.\nOne of the key levers is operational throughput and expanding our revenue conversion here in Batavia.\nThat translates into building out our welding, machining and production workforce.\nAs Alan said, we did place that on pause, that additional team member build out in the last couple of months due to COVID, however, we have that back opened up.\nWe have 20 positions that we are hoping to fill over the next two years that would allow us to expand our backlog conversion and drive revenue growth.\nThat's a very important parameter and we have a very good program for accessing the direct labor and bringing them on board, putting them through our weld school and training labs and then, having them proficient and productive in a short period of time.\nI did mention earlier, another way to financial our -- improve our financial strength is the naval strategy and the evolution of competitively bid toward a higher percentage in sole-source bidding.\nThat has two benefits, one, it increases the predictability of future orders and asset-based loading and lessens the risk we would have around any capital investments to support the revenue growth.\nAnd then, secondarily, but not always, it can provide a stronger margin profile for that work.\nAlso, and Alan has mentioned this, as we get past the first article fabrications, we now can move into repetitively -- repetitive builds and then optimize our production workflows to drive productivity and shorten cycle times and that will lead to margin enhancement as well.\nObviously, our energy markets and petrochemical markets are in a rough spot.\nSo we will balance our investments to benefit us long term with realities of short term income statement pressure.\nAnd ideally, we have this fantastic balance sheet with an incredible amount of cash that we've had for quite some time and our focus -- the focus of our Board is to put that capital to use with an investment in new revenue streams.\nWould you please open the line?\n",
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"content": "q3 earnings per share $0.11.\nsees fy revenue $93 million to $97 million.\nas of december 31, 2020, graham had no debt.\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: If you do not have the releases or the slides you can find them on the company's website at www.\nJim will start with an overview of the acquisition and cover the results of the quarter in the year as well as provide our financial guidance for fiscal 2022.\nJeff will then review details of the transaction and we will have Dan discuss Barber-Nichols.\nThese risks and uncertainties and other factors are provided in the releases and in the slide decks as well as with other documents filed by the company with the Securities and Exchange Commission.\nThese documents can be found on our website or at sec.gov.\nI also want to point out that during today's call we will discuss some non-GAAP financial measures, which we believe are useful in evaluating our performance.\nWe appreciate you joining Graham's year end earnings call and also to join in our discussion about Barber-Nichols, a $70 million transformative acquisition we closed today.\nThis is truly an exciting day at Graham, one that benefits all stakeholders, Graham shareholders, employees at both Barber-Nichols and Graham, customers, suppliers, Arvada, Colorado and Batavia, New York communities from which we draw our workforce talent and create stable well paying employment and provide a place where employees are stimulated, challenged, developed, rewarded and able to build long-term careers.\nThus we will go through year-end results and quickly move into discussing the excitement surrounding adding Barber-Nichols to Graham Corporation.\nI will begin my remarks with Slide 3.\nLet me start by stating I am thrilled to have completed this acquisition.\nIt was nearly three years in the process to get this done, initially engaging with Barber-Nichols in late summer of 2018, when Jeff first visited.\nJust immediately identified BNI met most of the critical criteria for what Graham strategically wanted in an acquisition.\nAs we have discussed in the past, our process for identifying acquisition targets is to establish necessary key attributes of a target such as, but not limited to values and culture, IP protected products and market served operations model and revenue range.\nChris is responsible for developing the messaging for each target, creating the compelling reasons as to why Graham is an ideal strategic acquirer and outlining the value of a proposed combination.\nMost often the target isn't necessarily for sale, which was the case with BNI.\nFortunately Dan Thoren, the President of BNI was intrigued by Chris's messaging and agreed to have an initial discussion that took time to earn trust, develop relationships and establish the value contributions of both organizations to the combination and agree on terms of the transaction.\nJeff, Alan Smith, Chris and I were impressed right away by Dan and the BNI management team that are remaining with us as well as BNI's culture, which represents one of their most important assets.\nThe employee engagement, level of positivity, passion for the company and can do approach to their business all confirmed Dan and the BNI team have created something very special and extremely powerful.\nThe time it took to complete the deal permitted us to observe Dan and team in action and their ability to make stretch commitments and deliver on those commitments.\nWe first engaged with BNI at a time when they were ramping up calendar 2018 at $40 million, up from $30 million a year earlier.\nOver the ensuing two years, it was wonderful to observe the planning and forecasting processes and importantly their ability to deliver forecasted results culminating in $56 million of revenue for calendar year 2020.\nThis demonstrated to us that BNI has strong management capabilities and their systems at BNI have the necessary controls and that the business processes are scalable to drive future growth.\nBarber-Nichols is an outstanding company.\nWe are fortunate to have them become part of Graham Corporation effective today.\nJeff will go through the deal rationale in detail and Dan will provide an overview of Barber-Nichols.\nHowever, what I viewed compelling about Barber-Nichols was it fulfilled our goal of diversifying into the defense market, which provides greater stability, multiple year visibility, incredible long-term asset base loading.\nThe wonderful aspect about BNI products is there is no overlap with Graham's.\nWe serve the defense shipbuilders specifically the nuclear propulsion program while BNI serves offensive and defensive systems for the ships.\nIn addition, BNI serves the commercial space market with sophisticated and advanced technologies for rocket engine fuel systems and space life support systems.\nThis is expected to be an expanding long-term growth market due to the Internet of Things, growing communication networks and the ever-increasing way in which people throughout the world are interconnected.\nThus today we had new market segment revenue within the defense industry and also bring new markets such as commercial space, advanced power generation, alternative energy along with capabilities for system integration.\nImportantly, the acquisition of Barber-Nichols is a catalyst for immediate improvement in revenue and profitability with top line expanding approximately 50% due to the addition of BNI for the 10 months in fiscal 2022 that we own them and it provides a terrific platform for follow-on organic and acquisitive growth.\nI am very pleased and excited to have Barber-Nichols become part of Graham.\nActually, I've been remiss, I have mentioned Dan Thoren a couple of times.\nDan, is on the call as Deb had mentioned.\nDan was President and CEO of Barber-Nichols until this past May when he moved to Chair of the Board.\nDan joins Graham Corporation as President and Chief Operating Officer and will report directly into me.\nDan will be responsible for near and long-term performance of both Barber-Nichols and Graham's historic defense, energy and petrochemicals businesses.\nDan will work with Matt Malone, our Vice President, General Manager for Barber-Nichols.\nMatt is the current President and CEO at Barber-Nichols.\nDan also will work with Alan Smith, our Vice President and General Manager for Graham.\nYou're all familiar with Alan and the terrific job he has done as our General Manager.\nI'm really excited to get into the detailed discussion about Barber-Nichols, and its benefit to long-term shareholder return.\nHowever, let's walk through the fourth quarter and year-end results.\nI will take you through the fourth quarter performance, full year results and fiscal '22 guidance.\nJeff will walk you through the strategic rationale and deal structure and then Dan grabs the ball to provide an overview of Barber-Nichols.\nI am now referring to Slide 4.\nA key facet of our diversification strategy is to add revenue streams uncorrelated to energy.\nRevenue that is less volatile and provides a long runway for growth and importantly offers high levels of multiple year asset base loading.\nThe acquisition of Barber-Nichols fulfills that objective perfectly.\nMoreover, Graham's organic defense revenue reached 25% of consolidated sales and was in the mid $20 million range for fiscal 2021.\nWe expect modest growth in fiscal 2022 and then move into the mid $40 million range by fiscal 2025.\nComplemented by Barber-Nichols defense revenue, we believe the combination will quickly approach $100 million in defense sales.\nOur commitment to our installed base for crude oil refining and petrochemical markets will continue to bear fruit.\nEverything we read here and observe supports continued investment in existing assets for mature markets and new capacity capital investment in emerging economies.\nGraham's shift into competing in price sensitive segments of our energy and petrochemical markets, supported by innovation of our operations model has changed our participation and success in these previously underserved segments.\nThis strategy has been 10% to 15% of sales.\nLast year was at a comparable level in fiscal 2020.\nThe team has done well to navigate the selling cycle to get us in position to win and also -- sorry, and also the execution side working with the global supply chain for component fabrication has created cost efficiencies and execution capacity for us.\nImportantly, Alan and his team achieved margins projected for the orders completed thus far.\nA key business initiative is to expand the capacity of our production workforce.\nToday, we need to grow our capacity within our production workforce by 20% in Batavia.\nThat will permit backlog conversion velocity to improve and also expand margins due to operating leverage and reduction in subcontracting.\nEnergy and petrochemical markets feel different today than six months ago.\nThat is encouraging, however, the bid pipeline has a long way to rebuild before returning to pre-2020 levels.\nWe are watching this closely during the next few quarters, cost measures have not been taken due to the need to have depth across the company's sales, engineering, quality, manufacturing, IT and other critical departments.\nIt takes a long time to build a proficient knowledge worker at Graham.\nWe continue to evaluate near-term benefit and long-term implications of cost reduction measures.\nWe elected to protect the strength of Graham during this Black Swan event caused by COVID-19.\nLet's move on to Slide 5.\nFourth quarter sales were $25.7 million.\nDefense sales were strong at $6.5 million.\nAlso was revenue lift from short cycle sales, driven by the freeze in the US Gulf Coast region.\nAlso and importantly 15% to 20% of sales were due to our success penetrating the price sensitive segment of the refining market.\nEarnings per share was $0.04 with net income at $400,000.\nOn March 31, cash was $65 million of which approximately $40 million was used for the acquisition of Barber-Nichols.\nBacklog on March 31 was $137.6 million with $104 million for the defense market and acquiring Barber-Nichols approximately $100 million of backlog was added effective today.\nNearly $240 million multi-year backlog is a valuable asset for Graham.\nPlease move on to Slide 6.\nYear-over-year revenue increased to 11% and gross profit 14%.\nProfitability and margin were pressured due to decisions we made not to address business cost during the pandemic and also our inability to quickly expand production personnel.\nGovernment support during the pandemic has made it difficult to compel potential workers to join the Graham team.\nThis should improve in the coming quarters, but is a headwind now as we want to convert more existing backlog more quickly by having a larger production workforce.\nWe have the infrastructure but not the human resources.\nLet's move on to Slide 7.\nAlan Smith and the operations team performed remarkably in achieving full year revenue of $97.5 million.\nDue to COVID-19, full year throughput capacity was at 85% as an average of what our production workforce could produce if unaffected by lost time due to COVID.\nThis made planning and management of backlog conversion difficult.\nAlan and his team did fantastic even though that is not apparent in the results.\nHere too profitability and margins were under pressure due to under-absorption caused by 15% lower throughput and also strategic decisions to hold personnel at pre-COVID levels.\nOn to Slide 8.\nWe had strong defense bookings of $69 million for the year.\nEnergy and petrochemicals stayed mired due to demand destruction stemming from the range of implications of COVID-19.\nWe do have a terrific backlog that at March 31, as I said earlier was $137.6 million, up $25 million year-over-year.\nImportantly, and again Barber-Nichols adds roughly $100 million into our backlog bringing the combined total to just under $240 million.\n$40 million of Barber-Nichols backlog is expected to contribute to fiscal 2022 revenue for the 10 months we own them.\n40% to 45% of our organic backlog is expected to convert into revenue during fiscal 2022.\nNow let's move on to the guidance slide.\nFull year revenue range is $130 million to $140 million with $45 million to $48 million from Barber-Nichols and the remainder being organic revenue.\nAdjusted EBITDA is expected to be between $7 million and $9 million.\nOnce we complete purchase accounting treatment of the BNI acquisition, we will be in a position to provide gross margin and SG&A guidance.\nThis was an exciting start to the fiscal 2022.\nLarge elements of recent diversification strategies have come together to dramatically improve fiscal '22 results and more importantly reshape Graham's future with a path to stronger total shareholder returns.\nThe Barber-Nichols acquisition is transformative for Graham.\nThere is a platform for follow-on organic and M&A investment to propel growth.\nGraham's defense revenues in the mid $20 million range with growth anticipated to yield more than $40 million of revenue by fiscal 2025.\nImportantly, we are beyond first article operations and therefore margins should improve as well.\nJust as a reminder, first article operations are first time fabrications that involved production R&D, production of jigs and fixturing and defining ideal build flow or order of operations.\nOnce beyond first article work, productivity gains should be achieved.\nI am pleased by our success in winning work and previously underserved price focus segments of the energy and petrochemicals markets that represented 15% of sales fiscal '19 through '21.\nIt's also worth noting $7 million of new orders were secured during the month of May from the crude oil refining market.\nWe became involved in these opportunities in early 2019.\nIt is great to see significant order releases from this end market.\nBoth are from the installed base.\nOne is for US Gulf Coast refiner undertaking a revamp to enable use of lower cost, lower quality feedstocks.\nThe other is a Mideast refiner debottlenecking the refinery to provide more gasoline and diesel fuels to meet local demand.\nWith those remarks, I want to pass the call over to Jeff and Dan to walk through the acquisition.\nIf you could turn to the Barber-Nichols acquisition deck.\nIf you look at Slide 2, you will see we have a Safe Harbor statement similar to that which was in the earnings deck and I'll allow you to review rather than me reading through it.\nMoving on to Slide 3.\nIt's great to be speaking with you from Barber-Nichols here in Denver with Dan Thoren.\nAs Jim mentioned, we have been working at Barber-Nichols for quite a long time.\nMy first visit to the Denver facility was in August of 2018, when Dan was graciously willing to meet with me.\nBarber-Nichols which I may refer to as BNI is a great fit for Graham, since it meets all the criteria that most of you have heard me describe over the past several years.\nIt is clearly a transformative acquisition for Graham.\nCertainly the most exciting activity in my time at Graham and probably in the history of the company.\nIt will increase the size of Graham by 60% on a pro forma basis and immediately accelerates our diversification strategy.\nWe expect to see 10 months of revenue in fiscal 2022 or approximately 50% growth.\nBNI expands our defense business from $24 million in fiscal 2021 to a run rate of approximately $65 million to $70 million currently.\nSince there was no overlap with our current defense business, this dramatically expands our platform.\nBarber-Nichols also has a $10 million in the aerospace business which is mostly related to the space industry.\nThis will be another exciting market for us.\nLooking forward, we expect more than half of our business to come from defense and aerospace.\nThis is a fantastic complement to our refining and petrochemical platform.\nAlong with defense and aerospace, BNI offers us opportunities for growth in cryogenics and advanced energy.\nAs Jim mentioned with a backlog of $100 million in addition to Graham's backlog of $137 million, we have a combined backlog of nearly $240 million of which 80% is in defense and aerospace.\nThis increased multiyear visibility reduced volatility of revenue and earnings and ability to grow organically and via M&A across multiple platforms is exciting.\nWe clearly see some exciting organic growth opportunities.\nAnd yes, to be clear, once we have Graham and Barber-Nichols working well together, we intend to look for more M&A growth opportunities.\nChris Johnston and I are excited to engage with Dan to identify further businesses to add to BNI.\nAs part of the deal, the owners of Barber-Nichols wanted some skin in the game, so approximately $9 million in Graham shares were part of the purchase consideration.\nThis represent 610,000 shares or approximately a 6% increase in shares outstanding.\nI have mentioned numerous times that we would use a little equity if it made sense.\nClearly having the BNI owners, who are remaining with us post acquisition to ask me for a stake in Graham was another positive aspect of the deal.\nThe transaction is expected to bring some very nice accretion, though the initial purchase accounting will likely put a near term damper on it.\nFinally Barber-Nichols brings a strong management team, led by Dan Thoren who has nearly 30 years of Barber-Nichols, 24 of which as its President.\nDan is now ascending to President and Chief Operating Officer of Graham to utilize his capabilities across all of the combined company.\nMatt Malone, has taken over as the new President of BNI.\nMatt has strong leadership skills, a very high energy level which I expect will drive BNI toward a very successful future.\nThe remaining leadership team at BNI is similarly top notch.\nThis is a fantastic team that we are gaining along with the business.\nOn to Slide 4.\nLet me talk briefly about the deal structure.\nGraham paid $70 million made up of $61 million of cash and $9 million of stock for 610,000 shares.\nOut of the $61 million, $41 million was in cash from our balance sheet and we entered into a $20 million term loan for the remainder.\nThis leaves us with over $20 million of cash, so our net debt position is zero, but it gives us flexibility to go after future organic and M&A investments.\nThere is an earn out provision based on fiscal 2024, essentially the third year of the deal, which will allow up to $14 million in additional cash payments.\nThe earn out has a threshold, which if met would kick in at $8.75 million of EBITDA in fiscal 2024 and provide a $7 million payout.\nIf the EBITDA achieved that year is $11 million, the payout increases to a maximum level of $14 million.\nBetween those two EBITDA numbers the earn out would be interpolated.\nThis acquisition assumed no synergies.\nWe believe there will be benefits for the combined organization but not needing them to justify the deal was great.\nWill Graham bring some capabilities to Barber-Nichols, I believe so.\nBut just as likely I believe Barber-Nichols will bring new capabilities to our current Graham team.\nI mentioned Dan and Matt earlier, they will become Graham named executive officers at our Annual Meeting at the end of July.\nOn to Slide 5.\nAlong with the excitement of the acquisition, we also now have a far more efficient balance sheet.\nWhile having a lot of cash was comforting that dormant cash did not achieve a return for our shareholders.\nYou all know that I've desperately wanted to utilize that cash for growth and a stronger return.\nNow with Barber-Nichols, I'm confident that it will.\nWe have entered into a new bank relationship with Bank of America and it includes a $20 million term loan, which I mentioned earlier as well as a $30 million revolver.\nWe also have a $10 million accordion feature available on top of that $30 million revolver.\nWe do not expect to utilize the revolver much in the near term, but it will -- it provides us with more dry powder and flexibility going forward.\nWe continue to have a relationship with HSBC now with the $7.5 million cash secured facility for certain bank guarantees in geographies where they have a strong presence.\nOverall, our balance sheet will look much different, but in my view it will be far more efficient rather than overly conservative.\nWe are now using our balance sheet for growth today and more so going forward.\nOn to Slide 6.\nWhen our business development team that would be Chris and I, talked about an ideal fit for Graham, we could not have picked a better match than BNI.\nBefore I continue, I would like to recognize Chris Johnston again.\nHe has been working behind the scenes, most of you have not met him, but as I've told many of you, he does a fantastic job for both M&A and as well as organic opportunities for us.\nHe is a great partner and a great leader on our team.\nNow I'd like to speak briefly about Barber-Nichols and then we'll pass over to Dan to provide far more depth on the business.\nBarber-Nichols is based in Arvada, Colorado, the suburb of Denver.\nThey have a 55-year history of engineering, development and innovation.\nAs a former engineer myself, they have some real cool capabilities here.\nThey have over 150 employees, which is double what they had just four or five years ago.\nWe are looking forward to adding more employees at a similarly rapid pace to support Barber-Nichols' future growth.\nThey recently completed construction of a 43,000 square foot state-of-the-art manufacturing plant.\nThis is nearly double their facility size and I cannot wait to bring some of you through the facility for a tour.\nThe leadership team at BNI is outstanding and most importantly, the entire workforce is tremendously skilled, continually enhancing their training and extremely engaged.\nNow that I've set the bar high, I will pass over to Dan Thoren, Graham's new President and Chief Operating Officer, who will provide much more depth about Barber-Nichols.\nI'm happy to be with you and provide more background on BNI.\nWe'll just kind of hang out on Slide 6 here and I'll tell you more about us.\nBarber-Nichols is a team of about 150 engineers, machiners, inspectors, technicians, and support personnel that engineer and build specialty pump, turbine and compressor systems that are used in the highly sophisticated applications like submarines, rockets, physics research facilities, advanced power plants and thermal management systems.\nWe've talked a lot about numbers so far, but it's our people and the work environment that we nurture that make the numbers happen.\nWe have an amazing team.\nMany of us came from large aerospace defense or industrial companies.\nI came from a large aerospace company with 5,000 employees at my location.\nI walked into BNI when it had 35 people and I was amazed that these 35 people were doing what my company was doing with 5,000, albeit at a much smaller scale.\nI was sold on BNI and I decided I had to work there.\nMany of us who came from a much larger companies found they can-do, continual learning, relationship driven culture at BNI invigorating.\nWhile it's been tough during COVID, we do spend a lot of time helping our people understand the importance of what our customers are trying to do.\nWe excel when we are part of our customers team.\nWe are fully engaged during development of our equipment and their systems and we share our customers anticipation during first launch.\nOne last comment before we move to Slide 7.\nBNI leaders and employees like to have skin in the game, Jeff talked about this.\nOne of the alluring aspects of this transaction was the ability to have meaningful ownership in a micro-cap company like Graham.\nMost BNI stockholders took stock and many employees will now get to buy stock in their company.\nThat is a powerful incentive when you know your daily efforts will benefit you and your fellow investors.\nNow let's move to Slide 7.\nMost of Barber-Nichols business comes from defense and aerospace.\nThe US Navy is a large customer for submarine, Torpedo ejection systems and Torpedo power systems as well as aftermarket parts and overhaul.\nThermal management systems are used in a variety of power dense electronics and other power applications.\nFor Aerospace, our involvement is broader with thermal management systems, fluid management systems, propulsion and power systems that support vehicles and satellites and environmental control in life support systems for our heroes.\nSlide 8 is next.\nWhen Kim Nichols and Bob Barber started BNI, their first customer was the US Navy, for whom they designed high speed turbines.\nAnother near founder Jim Dillard got us involved in a prototype air turbine pump used for Torpedo ejection systems and US Navy submarines using a special manufacturing process called electrochemical machining.\nThis initial engineered product development focus has been leveraged into production manufacturing on several Navy programs.\nWe are now seeing full lifecycle with spare parts and overhaul of these systems.\nPlease turn to Page 9.\nNASA has been a front customer over the years and we designed and built several cryogenic pumps for them in our early years.\nMy first job with NASA was on the ground based trainer for the space shuttle manipulator arm.\nNASA also gave us our first opportunity to design and build a rocket engine turbopump using our cryogenic pump and hot gas turbine knowledge.\nThat early experience in 1997 through 2000 set us up well for the new space companies that have been busy developing commercial space launch services over the last 10 years.\nI'm now moving to Slide 10.\nBNI works across many markets and that ability has served us well over the years as all markets go through cycles.\nWhen we are able to move from one market in decline to another on its way up, we can manage our business much better.\nIn the physics research arena, BNI is known worldwide as a specialty cryogenic pump supplier.\nWe also work with all of the air separation giants that separate oxygen and nitrogen and argon and other gases into industrial gases.\nBNI's cryogenic blowers are installed in North American LNG import terminals and satellite test chambers around the world.\nSince day one, BNI has been involved in advanced energy systems, building and commissioning geothermal power plants and concentrated solar power systems.\nMore recently, we have been involved in fuel cell power plants making anode and cathode blowers.\nThe new administration plans to spend more money on alternate energy storage and power gen and we see opportunity in specialty pumps for hydrogen fueling systems.\nOn to Slide 11.\nSlide 11 gives another view of BNI from a product perspective.\nOne thing that jumps out that hasn't been apparent on the earlier slides is the motor generator controller product area.\nWhen I first joined BNI, we used generation one variable frequency drive to push 3,600 RPM motors to 5,000 RPM.\nThe higher speed provides a more power dense turbine machine.\nSince then we have driven pumps to 30,000 RPM and compressors to over 100,000 RPM.\nWe are now designing and building the electronic boxes that drive our motors and condition the power from our generators, sometimes doing both in the same machine.\nAs you can tell, I'm passionate about our people, our customers and our technologies.\nI'm also very excited to learn about the employees of Graham.\nTheir families and their dreams, their customers and their products, together, I believe we'll do some amazing things.\nJim, I think we're back to you, my man.\nI am now referring to Slide 12.\nOn the integration side, the operating models between BNI and Graham are different.\nGraham produces large complex welded fabrications to a very tight tolerances and BNI produces very tight tolerance highly machined fabrications.\nThe asset bases are different in Arvada for BNI and in Batavia for Graham.\nAlso, the markets or segments of the markets served by BNI and Graham are different.\nThe transaction value as Jeff had outlined is not predicated on realizing synergies.\nOf course, there may be some, however, Arvada and Batavia will run as independent operating businesses under one umbrella.\nInitial integration is related to benefit plans, accounting and finance systems and public company compliance and strategic capital investment governance.\nThere are BNI systems and program management processes Dan and Matt's Arvada business can share with Alan's defense team.\nAlso there are Batavia constraint management processes and performance improvement techniques, Allan's Batavia team can share with Matt's team in Arvada and working together to share best practices, we believe margin gains can be realized in both businesses.\nWith Dan Thoren in the Chief Operating Officer role, working with both Matt and Alan, the talent pool is now nearly 500 person combined organization that is deep and very strong.\nDan of course knows Barber-Nichols deeply and much has been shared with Dan about Graham and in the coming quarters Dan will learn more about Graham, it's people, our culture, our markets, our customers and our competitors in the passion that every Graham employee has for ensuring our customers are successful and that Graham is successful.\nI will be thrilled to continue to work directly with Dan in driving both businesses.\nLet's move on to Slide 13.\nThis graphic projects the transformation the BNI acquisition provides.\nFor fiscal 2021, Graham was approximately $100 million of revenue with an end market breakdown of 41% to refining, 25% to defense industries, 24% to chemical and petrochemical markets and 10% to various other end markets.\nA pro forma projection of fiscal 2022 following the BNI acquisition is for revenue to be between $130 million and $140 million comprised of 45% for defense, 26% for refining, 16% for chemical and petrochemical end markets, 6% to aerospace and 7% to other end markets served by the combined entity.\nExcitingly, there is further growth in defense by entering new programs, accelerating backlog conversion and from additional mergers and acquisitions.\nRefining end markets also provide growth simply from a recovery from the pandemic, also from strategies and acted to shift position in underserved price sensitive segments and our continued focus on the installed base.\nFor chemicals and petrochemicals like refining have the same growth options with strategic actions already enacted.\nAerospace and commercial space market is expected to grow.\nBNI with its cryogenic and triple pump technology is an important supplier to this market.\nThere is much growth runway in this end market.\nWith the addition of BNI growth prospects for Graham, Graham is becoming an outstanding industrial.\nI will conclude with Slide 14.\nThe acquisition of BNI, deployed capital to expand our presence and diversified revenue from the defense industry and also provide access to an expanding aerospace market.\nImportantly, it adds significantly to our less cyclical revenue streams that reduced financial results volatility.\nDefense and aerospace valuation multiples are stronger now than those in energy and chemicals due to end market fundamentals and visibility into future orders.\nAs we continue to grow defense and aerospace revenue, we anticipate that will enhance Graham's valuation multiple.\nA catalyst was needed to break out of the revenue range Graham was in.\nBNI provides that catalyst.\nAnd that fiscal 2022 revenue is expected to be approximately 50% stronger than without Barber-Nichols.\nBeyond 2022 with the addition of BNI it creates follow-on acquisition opportunities along with organic growth that is meaningful.\nOnce Graham's traditional refining and chemical markets get beyond the pandemic, that will provide further revenue and margin improvement.\nWe structured our balance sheet to take on low-cost debt and provide flexibility to invest in additional acquisitive growth or substantial organic investment that may be necessary as new defense, aerospace programs are secured.\nI trust you share the excitement that Jeff and I have about adding BNI to Graham and then having Dan join our leadership team.\nFiscal 2022 is an exciting new chapter for Graham.\nWe have talked a lot thus far, let us open the line now for Q&A.\n",
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"content": "compname posts q4 earnings per share $0.04.\nq4 earnings per share $0.04.\nq4 sales $25.7 million versus refinitiv ibes estimate of $24.7 million.\nrevenue in fiscal 2022 is expected to be $130 million to $140 million.\nexpects approximately 40% to 45% of backlog will convert to revenue in fiscal 2022.\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 Ramesh Shettigar, Vice President of Investor Relations and Corporate Treasurer.\nOn the call today to present our second quarter results are Dante Parrini, Glatfelter's Chairman and Chief Executive Officer; and Sam Hillard, Senior Vice President and Chief Financial Officer.\nThese statements speak only as of today, and we undertake no obligation to update them.\nGlatfelter delivered positive overall results versus expectations despite entering the quarter anticipating softer demand and market-related downtime associated with customer destocking for the Airlaid segment.\nThese outcomes were driven by a recovery in demand for tabletop products and strong performance from Mount Holly.\nAlso, consistent with the execution of our ongoing transformation and growth strategy, we announced the pending acquisition of Jacob Holm, a leader in the nonwoven sector.\nI'll provide more details about this important acquisition throughout the call.\nAs for second quarter results, we reported adjusted earnings per share of $0.18 and adjusted EBITDA of $28 million.\nslide three of the investor deck provides the highlights for the quarter.\nAirlaid Materials performed above expectations driven by a rebound in the tabletop category as in-person dining began to recover globally.\nMount Holly contributed favorably to the quarterly results following the team's excellent execution in closing the transaction, standing up a new integrated system and restarting production and shipping, all within 48 hours after closing.\nWe're excited for the ongoing opportunities we see with the addition of Mount Holly to the Glatfelter portfolio.\nWhile overall volume growth was healthy, we did experience lower-than-anticipated demand in hygiene products as customers continued to destock from elevated inventory levels maintained during the pandemic.\nWe expect the buying patterns in this category to return to more normalized levels during the third quarter and positively impact segment profitability in the second half of the year.\nComposite Fibers results were below expectations as unfavorable mix and higher-than-anticipated energy prices negatively impacted profitability.\nAnd while shipping volume was up meaningfully, inflationary headwinds proved to be challenging for this segment.\nThe pricing actions announced in the first quarter helped to address some of the raw material input cost pressures, but not enough to offset the higher-than-anticipated energy prices and logistics costs during the second quarter.\nWe expect a more meaningful benefit from the price increases to take effect in the third quarter.\nAt an enterprise level, our focus remains on the health and safety of Glatfelter people.\nOur efforts continue to keep all facilities operational as they did in the quarter, while ensuring uninterrupted supply of essential products to our customers despite the current evolving nature of the pandemic.\nIt goes without saying that 2021 has been a momentous year thus far in executing Glatfelter's ongoing transformation and growth strategy.\nIn May, we closed on the acquisition of Mount Holly, which has strategically positioned us to more fully benefit from the long-term growth in the health and hygiene category, while also being immediately accretive to earnings.\nI'll provide additional commentary on the Jacob Holm acquisition after Sam completes his review of our second quarter results.\nSecond quarter adjusted earnings from continuing operations was $8 million or $0.18 per share, a decrease of $0.04 versus the same period last year driven by pandemic-related softness in our Airlaid Materials segment reflected in our guidance last quarter.\nAlso noteworthy is that Q2 results include the acquisition of Mount Holly, reflecting six weeks of ownership during the quarter.\nslide four shows a bridge of adjusted earnings per share of $0.22 from the second quarter of last year to this year's second quarter of $0.18.\nComposite Fibers results lowered earnings by $0.01 driven by higher inflation in raw materials and energy.\nAirlaid Materials results lowered earnings by $0.06 primarily due to softness in the hygiene category and lower production as customers continued to destock from pandemic-driven elevated inventory levels.\nCorporate costs were $0.03 favorable from ongoing cost control initiatives.\nAnd interest, taxes and other items were in line with the second quarter of last year.\nslide five shows a summary of second quarter results for the Composite Fibers segment.\nTotal revenues for the quarter were 7.1% higher on a constant currency basis driven by higher selling prices of $2 million and the near doubling of our wallcover volume from the trough of the pandemic in 2020.\nExcluding metallized, shipments in the quarter were approximately 26% higher driven by strong growth in wallcover, technical specialties and composite laminates.\nThe food and beverage category, however, was impacted by shipping container shortages, thereby resulting in lower volumes during the quarter.\nThe strong demand overall required increased levels of production, driving a $3 million benefit to earnings.\nHigher wood pulp and energy prices negatively impacted results by $6 million, creating a significant headwind for this segment.\nWe continue to implement announced pricing actions, but during the quarter, selling price realization only partially offset the higher input costs.\nAnd currency and related hedging activity unfavorably impacted results by $600,000.\nLooking ahead to the third quarter of 2021, we expect shipments in Composite Fibers to be 2% to 3% higher sequentially, favorably impacting results by approximately $400,000.\nWe expect higher selling prices to fully offset raw material, energy and logistics inflation when compared to the second quarter.\nAnd operations are expected to be in line with the second quarter.\nSlide six shows a summary of second quarter results for Airlaid Materials.\nRevenues were up 5% versus the prior year quarter on a constant currency basis, supported by the addition of Mount Holly and a strong rebound in tabletop demand as in-person dining began to recover globally.\nDemand for hygiene products, however, was lower for the quarter as customers continued to destock from high inventory levels maintained during the pandemic.\nAs previously stated, we believe this decline is transitory.\nAnd as a result, we are projecting meaningful growth in Q3 in all product categories.\nAs evidence, demand for wipes has picked up materially in July, and hygiene has started to improve.\nWe expect more normalized buying patterns in all of our categories to return in the second half of the year.\nSelling prices increased from contractual cost pass-through arrangements with customers, but were more than offset by higher raw material and energy prices, reducing earnings by a net $800,000.\nOperations lowered results by $1.9 million mainly due to lower production in the quarter to manage inventory levels and better align with customer demand.\nAnd foreign exchange was unfavorable by $300,000 versus the second quarter of last year.\nFor the third quarter of 2021, we expect shipments in Airlaid Materials to be approximately 15% to 20% higher.\nSelling prices and input prices are both anticipated to be higher, but fully offsetting each other.\nAdditionally, we expect higher production levels to meet the strong customer demand and also to prepare for a Q4 machine upgrade.\nThe increased production is expected to favorably impact operating profit by approximately $1 million to $2 million sequentially in addition to the increased volume.\nslide seven shows corporate costs and other financial items.\nFor the second quarter, corporate costs were favorable by $1.9 million when compared to the same period last year driven by continued spend control.\nWe expect corporate costs for full year 2021 to be approximately $23 million, which is an improvement from our previous guidance of $25 million to $26 million.\nInterest and other income and expense are now projected to be approximately $11 million for the full year, lower than our previous guidance of $12 million.\nOur tax rate for the quarter was 33%.\nAnd full year 2021 is estimated to be between 38% and 40%, lower than our previous guidance of 42% to 44%.\nThe lower overall tax rate is driven by changes in the jurisdictional mix of pre-tax earnings, slightly offset by an increase in the U.K. rate.\nslide eight shows our cash flow summary.\nSecond quarter year-to-date adjusted free cash flow was lower by approximately $6 million mainly driven by higher working capital usage after adjusting for special items.\nWe expect capital expenditures for the year to be between $30 million and $35 million, with the reduction being driven largely by our better-than-anticipated execution on Mount Holly integration costs.\nDepreciation and amortization expense is projected to be approximately $60 million.\nslide nine shows some balance sheet and liquidity metrics.\nOur leverage ratio increased to three times at June 30, 2021, mainly driven by the Mount Holly acquisition we completed in May 2021, which increased our net debt by approximately $175 million.\nEven after this acquisition, we continue to maintain liquidity of approximately $200 million.\nThese figures do not include the recently announced pending acquisition of Jacob Holm, which Dante will cover more shortly.\nWe also have additional financing details located in the appendix of our investor deck.\nLooking ahead, we remain very optimistic about the prospects for the second half of the year and beyond as we continue building momentum for the company.\nDemand for Composite Fibers products is robust, and we expect that to continue for the foreseeable future.\nOur pricing actions are taking hold and will be a meaningful contributor to earnings in this segment as we offset inflationary pressures.\nWe will continue to work to mitigate the effects of input cost inflation and global supply chain constraints in order to optimize operations and deliver on strong customer demand.\nAirlaid Materials demand is strengthening across all categories.\nTabletop is benefiting from improved demand conditions as consumers resume leisure travel and in-person dining.\nJuly was very strong for wipes, and we believe we are exiting the period of demand weakness associated with destocking that took place during the first half of the year.\nAdditionally, demand in the hygiene category is beginning to recover with the second half of the year expected to return to more normalized levels.\nOur continued aggressive stance on cost control is contributing to maintaining an efficient cost structure, thereby improving EBITDA and free cash flow.\nAnd Glatfelter people are performing exceptionally well, responding to challenges, seeking new opportunities for growth and delivering on the Mount Holly integration and synergy realization.\nFrom a strategic perspective, I'm pleased with the accelerating pace of execution of our business transformation and growth initiatives.\nAs noted, we signed a definitive agreement to purchase Jacob Holm for $308 million.\nWe're very excited about this new addition to the portfolio, which will add meaningful scale, new technologies and product diversification and will expand Glatfelter's growth platforms and global footprint.\nJacob Holm is a leading producer of spunlace materials and sustainable nonwoven fabrics, providing access to new customers in the personal care, hygiene, industrial and medical categories.\nHeadquartered in Basel, Switzerland, the company has four manufacturing facilities, two in the United States and one each in France and Spain.\nThe company is organized in three operating units: Sontara Professional, a former DuPont business; Health & Skin Care and Personal Care.\nAs you can see from slide 12, their operating units offer an expansive product portfolio, covering diverse applications with a prominent customer base.\nIn the 12 months ending June 30, the Jacob Holm business generated revenue of approximately $400 million and EBITDA of approximately $45 million.\nOf these earnings, we believe $10 million to $15 million could be attributed to COVID-driven demand that is expected to normalize.\nWe project this transaction to be highly synergistic with significant value creation opportunities that will benefit all Glatfelter stakeholders.\nThrough product line optimization, operational improvements, strategic sourcing savings and cost reductions, we anticipate annual synergies of approximately $20 million within 24 months after closing.\nThe estimated cost to achieve these synergies is $20 million.\nThe acquisition is subject to customary antitrust regulatory review and is expected to close later this year.\nWhile we have obtained 100% committed financing for this transaction, we intend to finance the purchase with the issuance of a new $550 million senior unsecured bond.\nWith the Jacob Holm transaction, Glatfelter's net leverage is expected to increase from approximately three times to four times pro forma at closing when reflecting the COVID-adjusted EBITDA and synergies.\nThis acquisition will create an exceptional portfolio of premium quality, sustainable engineered materials with opportunities for the long-term growth that aligns well with post-COVID lifestyle changes.\nIt will also increase Glatfelter's global scale with pro forma annual sales of approximately $1.5 billion.\nAs you can see, these are exciting times at Glatfelter.\nslide 13 provides a brief snapshot of the breadth and depth of the company's evolution and recent transformation actions and outcomes.\nOur near-term priorities and value creation focus will be on integrating our new acquisitions with an emphasis on capturing synergies and deleveraging; accelerating innovation by fully utilizing our growing portfolio of technologies, assets and intellectual property; and exploring the next wave of growth investments, both organic and inorganic with continued balance sheet discipline.\nWe are truly generating momentum and accelerating the pace of execution as we build a new Glatfelter.\nThis concludes my closing remarks.\n",
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"content": "compname posts q2 earnings per share $0.03.\nq2 earnings per share $0.03.\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 Ramesh Shettigar, vice president of ESG investor relations and corporate treasurer.\nOn the call today to present our fourth quarter results are Dante Parrini, Glatfelter's chairman and chief executive officer; and Sam Hillard, senior vice president and chief financial officer.\nThese statements speak only as of today, and we undertake no obligation to update them.\nToday's earnings call marks the conclusion of a very pivotal year in Glatfelter's transformation as we successfully delivered on our commitment to scale up the company through two sizable acquisitions of leading engineered materials businesses.\nAt the same time, 2021 was also a very challenging year as we continue to navigate a pandemic that included severe macroeconomic headwinds.\nIn the first half of the year, our Airlaid segment was negatively impacted by customers destocking while the second half ended with unprecedented energy inflation in Europe and significant raw material price increases that adversely impacted all three segments.\nAs we closed out the fourth quarter, continued escalation in energy prices in Europe, raw material inflation, supply chain disruptions, and pockets of pandemic-driven labor constraints negatively affected our financial results.\nThe intensity with which these inflation factors unfolded was not fully anticipated, nor reflected in our previous guidance.\nAnd the timing of these events has handicapped the Jacob Holm acquisition from having the quick and positive start we had expected.\nDespite the significant impact of these external factors, we remain confident in the strategic rationale of our two acquisitions.\nMount Holly is in line with our near-term expectations and has the capability to over-achieve our original goals.\nAnd our new Spunlace segment provides scale and further expands our product and technology portfolio, which positions us favorably for the longer term.\nUltimately, our leading positions in the broader non-woven sector will facilitate our ability to deliver meaningful value to our shareholders and customers.\nWhile it is too soon to project when these extraordinary external pressures will dissipate, we are taking swift and aggressive steps to manage through this period of volatility.\nI will speak more about this later.\nIf you go to Slide 3 in the investor deck, provides the key highlights for the fourth quarter.\nWe reported adjusted earnings per share of $0.04 and adjusted EBITDA of $26 million.\nAirlaid materials performance was generally in line with expectations as contractual costs passed through arrangements protected margins from raw material inflation, although energy cost escalation in Europe was a drag on earnings.\nThis segment had a very good year-over-year profit growth, driven by the addition of Mount Holly and a strong recovery in the tabletop category.\nComposite fibers results were much lower than expectations, driven by the unprecedented rise in energy costs in Europe and higher raw material inflation.\nEnergy prices further spiked to record levels in the fourth quarter, negatively impacting earnings by approximately $4 million versus our prior guidance, which had already reflected about $1.5 million of energy inflation.\nTo combat this spike in costs, we introduced an energy surcharge in November for customers in all three segments to specifically target the recovery of mounting energy costs.\nVolumes were also lower as some price-sensitive customers, predominantly in the low [Inaudible] category, altered their buying patterns in response to the additional pricing actions we implemented.\nIn our Spunlace segment, results were lower than expectations, driven by higher raw material and energy costs, and a production delay at one of our manufacturing sites caused by a key raw material shortage that impacted shipments.\nThis is our first reporting quarter for the Spunlace segment since the October 29th acquisition date.\nThe integration work is well underway as we continue to focus on aligning processes, technologies, and commercial strategies while addressing the external factors impacting near-term results.\nI will elaborate more on Spunlace integration in my closing remarks.\nFourth quarter adjusted earnings from continuing operations was $1.6 million, or $0.04 per share, a decrease of $0.18 versus the same period last year.\nThis was primarily driven by an unprecedented increase in European energy prices and from higher interest expense related to the bond issuance completed in October to finance the Spunlace and Mount Holly acquisitions.\nSlide 4 shows a bridge of adjusted earnings per share of $0.22 from the fourth quarter of last year to this year's fourth quarter of $0.04.\nComposite fibers results lowered earnings by $0.15, driven primarily by significant inflationary pressures experienced in energy, raw materials, and logistics.\nAirlaid materials results increased earnings by $0.04, primarily due to strong volume recovery in the tabletop products category, as well as from the addition of Mount Holly results compared to the prior year.\nSpunlace results lowered earnings by $0.02, driven by inflationary headwinds experienced in energy and raw materials and unfavorable operations.\nCorporate costs were in line with the same quarter last year.\nInterest expense lowered earnings by $0.07, driven by the issuance of the new bond to finance the two acquisitions.\nTaxes and other items were $0.02 favorable due to a lower tax rate this quarter from a valuation allowance release of approximately $3 million.\nSlide 5 shows a summary of fourth quarter results for the composite fiber segment.\nTotal revenues for the quarter were 1.3% higher on a constant currency basis, mainly driven by higher selling prices of approximately $9 million.\nThis was a result of multiple pricing actions taken in 2021 and an energy surcharge in late November.\nHowever, this was not enough to mitigate the extreme prices for energy in Europe during the fourth quarter, and the relentless inflationary pressures in raw materials and logistics.\nShipments were down 11%, or nearly 3,900 metric tons with wall cover accounting for more than 75% of the decline.\nShipments for wall cover in Q4 2020 were very strong as the supply chain recovered from the shutdowns during the pandemic, creating a difficult comparison this quarter.\nIn addition, our pricing actions in wall cover to recoup the sharp rise in key raw materials such as wood pulp and the cost of energy did alter the buying patterns of some price-sensitive customers.\nPrices of energy, wood pulp, and freight continued to escalate in the fourth quarter and negatively impacted results by $16.6 million versus the same quarter last year.\nSequentially from Q3 of 2021, this impact was $5.4 million, primarily driven by rising energy prices in Europe, which escalated even further during the quarter despite the savings provided by our existing energy hedging program.\nThis was the single largest factor in missing our guidance for composite fibers in the fourth quarter.\nWe expect input costs, particularly energy prices, to remain relatively high in the near term.\nIn addition to our ongoing focus on managing costs and operational efficiencies, we are also assessing a variety of mitigating contractual actions with our customers, which Dante will cover in more detail.\nOperations were slightly unfavorable by $200,000, and currency and related hedging activity unfavorably impacted results by $900,000.\nLooking ahead to the first quarter of 2022, higher selling prices are expected to be fully offset by raw materials and energy prices.\nWe expect lower volume and market-related downtime to have a cost penalty of approximately $2 million.\nSlide 6 shows a summary of fourth quarter results for Airlaid materials.\nRevenues were up 48% versus the same prior year period on a constant currency basis, supported by the addition of Mount Holly and strong recovery in the tabletop category.\nShipments of tabletop almost doubled while wipes were 74% higher when compared to the fourth quarter of last year.\nAdditionally, demand for home care and hygiene products were lower by 2% and 3%, respectively, reflecting changes in buying patterns at year end.\nSelling prices increased meaningfully from contractual cost pass-throughs, as well as from price increases, including the 10% price increase action implemented in the third quarter for customers without cost pass-through arrangements.\nWe also implemented an energy surcharge on all customers served from Europe to offset rising energy costs.\nWhile these actions together helped the segment to offset the higher raw material prices, they fell short of recovering the higher-than-anticipated energy price increases, unfavorably impacting results by a net $1.2 million.\nOperations were lower by $1.7 million compared to the prior year, mainly due to higher spending and inflationary pressures.\nAnd foreign exchange was unfavorable by $1.2 million, mainly driven by the lower euro rate.\nFor the first quarter of 2022, we expect shipments to be 3% higher on a sequential basis with favorable mix, thereby improving operating profit by $1 million.\nSelling prices are expected to be higher but fully offset by higher raw material prices.\nAnd we expect energy prices to be fully offset by the energy surcharge, assuming energy does not continue to spike further.\nSlide 7 shows a summary of fourth quarter results for the Spunlace segment from October 29th acquisition date until the end of the year.\nRevenue for the segment was approximately $58 million in the quarter.\nShipments for the quarter were approximately 12,500 metric tons, which were slightly below our expectation of 13,000 metric tons.\nLower shipments were mainly driven by softer demand in the wipes category due to year-end inventory management by a large customer and from a production delay at one of our manufacturing sites due to raw material and labor availability.\nThe lower shipments, coupled with unfavorable mix, negatively impacted results by $700,000.\nThe segment also experienced higher-than-anticipated raw material inflation, particularly on synthetic fibers, as well as higher energy costs at its European sites, lowering profits by approximately $1.5 million.\nOperations were unfavorable from lower production, higher-than-anticipated waste rates, and COVID-related labor challenges.\nThe preliminary purchase price allocation resulted in depreciation and amortization of approximately $1.7 million after including the acquisition step-up to fixed and intangible assets.\nFor the first quarter of 2022, we expect shipments per month to improve in Q1, slightly outpacing the two-month run rate of ownership in 2021.\nWe expect higher raw material and energy costs on a sequential basis to outpace price increases and energy surcharges, and we expect improved operations.\nHowever, due to inflationary pressures, we expect a loss for the first full quarter at a similar run rate as the first two months of ownership, equaling approximately $2 million for the first full quarter.\nClearly, this projected loss outlook is being addressed, and Dante will cover several key actions we are taking going forward.\nSlide 8 shows corporate costs and other financial items.\nFor the fourth quarter, corporate costs were mostly in line with the same period last year.\nOur corporate costs for full year 2021 of $22.4 million were approximately $4.9 million lower than prior year and mostly in line with our guidance from last quarter.\nCosts related to strategic initiatives for the full year were $31 million, mainly pertaining to our two acquisitions and the associated financing.\nInterest and other income and expense for the full year was $15 million and in line with our previous guidance.\nFor 2022, we expect corporate costs to be approximately $27 million higher than 2021, where we had lower overall spending due to COVID, but in line with 2020 costs.\nOur tax rate for the full year was 32% lower than our previous guidance of 38% to 40%.\nThis was largely driven by the release of a valuation allowance of $3 million, reflecting a change in the recovery of deferred tax assets, primarily due to changes resulting from completing the recent Jacob Holm acquisition.\nGiven the unusual level of volatility in our tax rate components, which is highly dependent upon how much income we generate from within each of our respective jurisdictions, we are limiting our tax guidance to Q1 only rather than providing a full year tax rate projection at this time.\nWe expect our Q1 2022 tax rate to be between 48% and 50% on adjusted earnings and full year interest and other financing costs to be approximately $35 million, reflecting the recent bond issuance.\nSlide 9 shows our cash flow summary.\n2021 adjusted free cash flow was lower by approximately $10 million, driven mainly by lower cash earnings and capital expenditures.\nWe expect capital expenditures for 2022, including Spunlace and Mount Holly, to be between $45 million and $50 million, $7 million to $8 million of which pertains to Spunlace Systems integration costs, which we previously announced as costs associated with generating our targeted synergies.\nDepreciation and amortization expense is projected to be approximately $74 million, reflecting a full year of ownership for Mount Holly and Jacob Holm.\nSlide 10 shows some balance sheet and liquidity metrics.\nOur leverage ratio increased to 4.6 times as of December 31, 2021, versus year-end 2020 of 1.7 times, mainly driven by the Mount Holly acquisition for $175 million and the Jacob Holm acquisition for $302 million.\nWe successfully executed our previously mentioned $500 million bond offering in October 2021, and we still have ample available liquidity of approximately $260 million.\nOur near-term focus will be to successfully integrate Jacob Holm, realize the $20 million of expected annual synergies and actively de-lever the balance sheet.\nLooking ahead, 2022 will be a very important year for Glatfelter as we continue our integration efforts and navigate the challenging macroeconomic environment to optimize profitability and cash flow.\nWe're directing our focus on a short list of imperatives.\nOur top priority is to restore Spunlace profitability and drive the overall financial performance of this segment to levels more consistent with our legacy business.\nGiven its criticality, I have asked our chief commercial officer and 12-year Glatfelter executive, Chris Astley, to take full responsibility for the Spunlace P&L and all integration activities, including synergy delivery.\nChris' former experience as business unit president of the Airlaid materials segment, where his leadership significantly drove growth, accelerated innovation, and boosted profitability will be invaluable as we integrate this new business into Glatfelter.\nChris and his team will focus on driving with greater speed and urgency to achieve more consistent top-line growth and asset utilization, cost reduction, and margin expansion.\nSecondly, we're taking actions to reduce the volatility in the composite fiber segment by implementing raw material and energy costs passed through mechanisms like we have within our Airlaid business.\nThis construct is necessary for us to continue to supply high quality engineered materials to our customers while maintaining stable margins.\nOur objective is to move as many customers as possible to a dynamic pricing model with the goal of migrating approximately 50% of the revenue base to this new structure in '22.\nWhile it is likely energy prices will remain elevated in the first half of the year, we will continue to closely monitor price trends and work with our customers to implement additional pricing actions as warranted.\nAt the same time, we'll step up our cost reduction activities, focus on energy efficiency, and reduction, and continue to monitor the effectiveness of our energy hedging program during this period of dramatic price volatility.\nAdditionally, we're fully committed to achieving the synergies we announced for the two acquisitions and we'll continue to progress this work throughout the year.\nThe foundation is set for us to accelerate the profitability of the respective segments and mitigate the challenges of inflation.\nIn summary, I want to reiterate that we strongly believe in the strategic benefits of expanding and enhancing the Glatfelter portfolio with our recent acquisitions.\nAs a leading global non-wovens company, we have the most attractive set of manufacturing assets, technologies, and talent to support our customers needs, to bring new, innovative and sustainable engineered materials to market and to deliver meaningful value to shareholders.\nWhile 2021 was a challenging year, it was also a constructive year as we advanced our growth and transformation objectives.\nAs we look ahead at '22, we're redoubling our efforts to address the impacts of inflation, integrate our new acquisitions, and optimize profitability and cash flows.\nThis concludes my closing remarks.\n",
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"content": "q4 adjusted earnings per share $0.04 from continuing operations.\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 factors are detailed in the company's financial reports.\nYou should also note that we'll be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to GAAP data.\nOur core performance measures are non-GAAP measures used by management to analyze the business.\nIn the second quarter, GAAP net income was $449 million.\nHowever, GAAP earnings per share was a loss of $0.42 due to the GAAP accounting treatment required for the transaction entered into with Samsung Display.\nLet me take you through why this was the case.\nAs a reminder, on April 5, 2021, Corning entered into a share repurchase agreement with Samsung Display.\nAs part of the agreement, Samsung converted preferred stock into common stock, and Corning immediately repurchased 35 million shares of that common stock from Samsung.\nThe common shares were traded on the open exchange, so GAAP requires a special accounting treatment of the repurchase as an extinguishment of the original preferred shares.\nThe accounting treatment for an extinguishment of preferred shares is to record the difference between the repurchase price and the original book value in retained earnings.\nThis adjustment to retained earnings is also removed from net income available to common shareholders when calculating GAAP earnings per share.\nExcluding this, U.S. GAAP earnings per share would have been $0.52.\nDifferences between our GAAP and core results can also stem from non-cash mark-to-market gains or losses associated with hedging contracts.\nThey were de minimus this quarter.\nA reconciliation of core results to the comparable GAAP values can be found in the Investor Relations section of our website at Corning.com.\nYou may also access core results on our website with downloadable financials in the interactive analysts center.\nWe encourage you to follow along and they're also available on our website for downloading.\nToday we reported outstanding second-quarter results and we're on track for a strong year.\nVersus second-quarter 2020, sales grew 35% to $3.5 billion.\nEPS grew 112% to $0.53 on the higher sales and expanding margins.\nFree cash grew 65% to $471 million with first-half cash generation of $843 million.\nNo question, we're in great shape and we see a clear growth story playing out across our businesses.\nEach of our five segments grew sales by a double-digit percentage year over year, ranging from 16% for specialty materials to 80% for environmental technologies.\nNow, of course, 2020 was an easy compare so I think it's worth noting that even versus second quarter of 2019, we grew total company sales and earnings per share 17% and 18%, respectively.\nSince the second quarter of 2019, we've added more than half a billion dollars in quarterly sales.\nAbout $200 million is from Hemlock and more than $300 million is organic growth with about 70% of that coming from success of our more Corning content strategy and outperforming the competition.\nThe other 30% of organic growth is from rising with the market.\nIn each of our market access platforms, we're addressing significant and transformational trends.\nWe seek to drive content and expand our total addressable market by combining capabilities from our focused portfolio and prioritizing opportunities for more Corning.\nOur long-term strategy is built on a complementary set of three core technologies for proprietary, manufacturing, and engineering platforms, and five market access platforms.\nAnd the synergies among them allow us to create distinctive benefits for our customers, improve the return on our investments in R&D and reduce our capital intensity.\nWe create breakthrough products and processes by leveraging the synergies among our core capabilities, capitalizing on insights we gain through close collaboration with our customers and taking advantage of our existing plants and pilot facilities for early stage production.\nFor example, over the past few years, we have created new-to-the-world products including ceramic shield, tougher Gorilla Glasses, auto-grade glass, Valor drug packaging, Gen 10.5 display glass, innovative passive optical solutions that are dramatically increasing the ease and cost efficiency of network deployments.\nBut we're not just creators, we're also builders.\nWe do the manufacturing ourselves using processes that we invent and proprietary equipment that we design and build.\nWhen growth opportunities arise and demand exceeds our existing capacity, we build state-of-the art plants to manufacture products at scale.\nAnd we locate these plants in close proximity to our customers, a strategy that is likely to continue to pay off in a post-pandemic world.\nWe derisk these investments by requiring meaningful commitments from customers often including funding before beginning construction.\nWe last detailed our build investments with you in 2019 when we described our focus, create, build, extend value creation cycle.\nWe pointed out how our build projects were directly responding to customer needs and commitments.\nWe knew that carriers like AT&T and Verizon would need more fiber to densify their networks for 5G.\nWe knew that BOE would need glass for its Gen 10.5 panels, that car companies would need gasoline particulate filters to meet new regulations, that bio tech companies would need high density cell culture to support gene therapy, and that smartphone OEMs would need increasingly durable, scratch-resistant cover glass as they design thinner phones and bigger cameras.\nWe told you these build projects would increase our capacity to meet committed demand, and that as we delivered on that demand, they would increase our revenue and generate excellent returns.\nToday the build projects we undertook from 2016 to 2019 are collectively delivering return on invested capital above 20%.\nThey've helped us increase our sales run rate from $10 billion in 2015 and 2016 to our current run rate of $14 billion, and they've help us improve total company ROIC by three percentage points.\nImportantly each time we build, we increase our scale and we enhance the opportunity to extend our leadership and create new innovations.\nAnd because we're constantly improving our productivity and capabilities, we can often manufacture these innovations and drive revenue growth without building new facilities.\nNow we actually spend most of our time in this extend part of the cycle.\nIt's where we are today.\nIn this phase, we keep creating and extending until we're so successful that demand exceeds our capacity.\nAs we reapply our insights and repurpose our assets, our best-in-the world capabilities just keep getting better.\nEvery time we pursue an adjacent opportunity, we explore new combinations of capabilities.\nWe push the boundaries in areas where we already lead and we cross-train our people in deep and important ways.\nIn other words, we've created a positive feedback loop that expands our knowledge, increases the relevance of our capabilities, and enhances our value to customers.\nAnd this directly fuels our content strategy.\nWe aren't exclusively relying on people buying more stuff.\nWe're putting more Corning into the products that people are already buying.\nWith that in mind, let's look at some of the initiatives we're advancing across our market access platforms.\nIn mobile consumer electronics, we continue to help transform the way people interact with and use their devices.\nWe capture growth, increasing the value we offer on each of those devices.\nIn the quarter, consistent with our strategy to a customer commitments and support of build initiatives, Apple awarded Corning an additional $45 million from its advanced manufacturing fund to help expand our manufacturing capacity in the United States and to support our R&D.\nTo date, we've received $495 million dollars in total from Apple's fund.\nWe've also launched another chapter in our more Corning strategy with an important application of our capabilities to enhance the optics of smartphone cameras, which is a new category for us.\nThe social media experience is centered around photos.\nDevice designers are adding cameras and increased lens size.\nThey're also integrating more advanced capabilities such as telephoto, wide-angle lenses, and infrared sensors.\nThese features naturally increase the prominence of the lens surface area, which in turn increases the likelihood of scratches and damage, and to Corning.\nJust last week, we announced Gorilla Glass with DX and DX plus for mobile phone cameras.\nOur DX family increases image quality and camera durability by providing a composite glass material that combines low reflection with scratch resistance approaching sapphire.\nSamsung is the first adopter.\nOEMs are designing cleaner and safer vehicles with technology that enhances the driving experience.\nWe're uniquely suited to address these trends and we're pursuing $100 per car content opportunity across emissions, precision glass products, and auto glass solutions.\nAnd we recently entered a new product category in automotive, curved mirror solutions.\nOur solutions are enabling the augmented reality head-up display in Hyundai's new electric crossover, the IONIQ 5.\nThe system essentially turns the windshield into a display screen, letting drivers keep their eyes on the road while assessing navigation and speed information directly in their line of sight.\nAdditionally a new generation of gasoline particulate filters is helping us on our way to surpassing $500 million in annual GPF sales, well ahead of our original timeframe.\nTurning to life sciences.\nWe're delivering growth on multiple fronts.\nWe're seeing ongoing demand in support of the global pandemic response while inventions are helping advance the transition to cell and gene therapies.\nAnd we're making significant strides toward building a Valor Glass franchise, addressing a multi-billion dollar content opportunity in the pharmaceutical packaging market.\nIn the second quarter, we further increased Valor production capacity and secured additional customer wins.\nWe worked with Thermo Fisher and OPTIMA Pharma to create solutions that increase [Inaudible] filling speed by nearly 70%, thereby alleviating a critical bottleneck in the medical supply chain.\nOur collaboration features a combination of Corning's Valor vials and OPTIMA's ultra high-speed fill and finish solutions.\nThermo Fisher called the results \"a game changer in their ability to serve patients\".\nTurning to display, we've experienced the most favorable pricing environment in more than a decade and we announced a second moderate increase to our display glass substrate prices.\nStepping back, we're the lowest cost producer of display glass, which makes us significantly more profitable than our competitors.\nOur superior products, [Inaudible] capabilities, and deep customer relationships enable us to enhance our leadership position.\nMeanwhile the emergence of Gen 10.5 has given us a unique opportunity although the market for large size keys is expected and projected to grow at a double-digit CAGR through 2024.\nAnd Gen 10.5 provides the most economical approach for larger sets.\nWe recently hosted the official opening ceremony for our Gen 10.5 facility in the city of Wuhan.\nThis site is co-located with a large BOE plant, allowing Corning to deliver Gen 10.5 glass substrates more efficiently to our customer for its production of large-sized display panels.\nGen 10.5 provides strong economics for our shareholders while creating options to use earlier generation fusion tanks for new applications such as automotive and cover glass.\nTo illustrate, remember that we launched our Gorilla Glass business back in 2007 by repurposing some of our existing fusion assets.\nOver time, repurposing has resulted in us avoiding more than a billion dollars in capital spending.\nFinally, let's look at optical communications.\nWe're energized by the momentum that is building in this business.\nWe see that momentum confirmed by multiple sources.\nFirst is network need.\nDemand on the network has only been increasing.\nBroadband usage for June was up 33% versus pre-pandemic levels, and up 10% versus June 2020, which was a peak quarantine period.\nGlobal 5G subscriptions have grown to almost $300 million, and they're on track to double that by the end of 2021 according to industry projections.\nThe second confirmation is customer commitments.\nAnd many of our customers are actually being quite public about their plans.\nWe believe we're in the early innings of a large capital deployment cycle across 5G, fiber to the home, and hyperscale data centers.\nOn AT&T's earnings call last week, their CEO said that by year end, they expect to have expanded their fiber footprint by 3 million locations, including both business and consumer customers.\nDeutsche Telekom's managing director recently shared that by 2024, they're planning to have about 10 million homes passed and 97% 5G coverage.\nHe said, \"The expansion of high performance networks is our top priority whether with 5G in mobile communications or fiber optic broadband expansion.\nTo achieve this we are massively increasing the investments in our network end quote\".\nAnd Microsoft CEO recently shared his perspective on expanding data center capacity to meet cloud demand.\nHe said, \"Digital adoption curves aren't slowing down.\nIn fact, they're accelerating and it's just the beginning\".\nOf course, the third confirmation is our order book, which is perhaps the most important indicator of growth over the next few quarters.\nHere, we're seeing year-over-year growth in double-digit percentages in both carrier and enterprise networks.\nDuring the quarter, we extended our technology and market leadership in optical communications by introducing new solutions that speed network deployment.\nWe launched Corning SM-28 contour fiber, which offers an industry first combination of superior bendability, compatibility with other fibers, and low signal loss.\nWe also launched Edge rapid connect solutions that increase fiber density and reduce customer installation time by up to 70%.\nAcross our markets, you can see that our value creation model is driving growth and that key trends are converging around our capabilities.\nWe're helping our customers move toward a world with nearly infinite and ubiquitous bandwidth with large lifelike displays where cars are cleaner, autonomous, and connected; where medicines are individualized, effective, and safe; and where you can do more from your mobile device protected by cover materials that are more and more capable.\nNow I'll wrap up my remarks today with one final point.\nI've always said that how we do things is as important as what we accomplish.\nSo I'd like to take a moment to emphasize that we're committed to making a difference wherever we can.\nWe're building on more than a century of honest respectful and fair behavior.\nAnd such behavior must continuously characterize all our actions, including progress toward improving our environmental, social, and governance programs.\nTo share insight into our approach, we recently issued our annual report on diversity, equity, and inclusion, and we published our first sustainability would play.\nOn all dimensions, Corning is operating exceptionally well, focused on providing value for all our stakeholders.\nAnd I look forward to updating you on our progress as we build on our momentum in the second half of the year.\nAs Wendell said, we are on track for a strong year.\nSecond-quarter results were outstanding.\nWe added almost $1 billion in sales year over year, a half a billion in sales over pre-pandemic levels, and we generated significant operating and free cash flow.\nWe also improved margins both sequentially and year over year, which contributed to our strong EPS.\nAcross the board, our progress has been very positive.\nIn particular pre-pandemic comparisons highlight our strength.\nWe are confident this momentum will continue.\nIn our markets, Corning's unique capabilities put us at the center of a substantial growth trend while our content strategy drives our performance.\nAnd we have a highly effective value creation model in place to deliver profitable growth and create shareholder value.\nNow let me walk you through the key metrics and drivers of our second-quarter performance.\nSales increased 35% year over year to $3.5 billion, a strong run rate.\nNet income was $459 million, up 111%, an earnings per share was $0.53, up 112% year over year.\nWe saw continued strength across our business segments.\nOptical communications delivered its third consecutive quarter of year-over-year growth and we expect to see that trend continue.\nDisplay technologies was up sequentially and year over year, and continues to experience the most favorable pricing environment in more than a decade.\nLife sciences and environmental outperform their markets and grew significantly versus last year's pandemic lows.\nSequentially gross margin improved 200 basis points to 37.8% and operating margin improved 120 basis points to 18.3%.\nOn a year-over-year basis, gross margin expanded 450 basis points and operating margin expanded 710 basis points.\nNow during the quarter, we continued to face supply chain disruptions and inflationary headwinds.\nPlanning and increased output allowed us to reduce costly airfreight but the sequential improvement was offset by increases in shipping rates and the cost of certain raw materials, such as resin, a key component in our optical and life sciences businesses.\nIn total, we felt about the same 150 basis points drag on margins as in Q1.\nNow while we don't expect significant improvement on the supply chain costs in the short term, we do expect them to normalize over time and we're taking mitigating actions, including raising prices in selected product lines.\nNow as is usual in the second quarter, operating expenses in dollars increased sequentially.\nThe increase was greater than in prior years because of a larger -- because of larger variable compensation accruals consistent with our rising outlook.\nFree cash flow was $471 million, up $186 million year over year.\nCumulative free cash flow for the first half of 2021 was $843 million.\nWe expect to generate significant free cash flow in the second half of the year and to suppress our 2020 total by a wide margin.\nNow let's take a closer look at the performance of each of our businesses.\nIn display technology, second-quarter sales were $939 million, up 9% sequentially and 25% versus 2020.\nNet income was $248 million, up 16% sequentially and 63% year over year.\nAnd Q2 sequential prices increased moderately as we implemented a price increase during the quarter.\nFor the third quarter, we are moderately increasing glass prices once again.\nWe believe the pricing environment will remain favorable going forward.\nThree factors will continue to drive this.\nFirst, we expect glass supply to remain short to tight in the upcoming quarters.\nSecond, our competitors continue to face profitability challenges at current pricing levels.\nAnd third, display glass manufacturing requires periodic investments in existing capacity to maintain operations.\nNow we receive a lot of questions on how pandemic has impacted the display industry.\nFor example, will there be fewer TVs sold in 2021 or in 2022?\nAnd what's the impact on the glass market?\nSo let me take a moment to explain our view.\nI'll focus on televisions since they represent about 70% of the glass market.\nSince LCD TV has emerged as mainstream technology in 2004, LCD's television units have only three times and never two years in a row an annual glass demand has never declined.\nAssess 2014 television set for units are typically range bound between 225 million and 235 million while average screen size grows about an inch and a half a year.\nIn 2020, global TV units increased 4% above the trend line to about 242 million.\nScreen size growth was about 1.2 inches, about 20% below trend.\nA lot of smaller TVs sold, probably to accommodate more people living working and studying from home.\nIn total, glass demand was up mid-single digits.\nNow entering the year, we expected and continue to expect the market to revert to trend, implying a decrease in TV units, especially smaller TVs, and for normal growth of one and a half inches in screen size to return.\nWe now have retail data through the first half of 2021 and it is largely confirmatory.\nTV units declined by a mid-single digit percentage year over year while average size growth returned to the one and a half inches per year trend.\nUnit volume for TVs, 65 inches and larger increased over 20% and smaller televisions were down by a high single digit percentage.\nNow consistent with math and history, the glass market grew.\nSo halfway through the year, our expectations for TV units being down year over year and seen -- screen size growing approximately one and a half inches are playing out.\nLooking ahead to 2022, we think TV units and screen size will continue to follow historical trends.\nThat means TV units will be within the typical range and average screen size will grow about one and a half inches.\nNow we have yet to see how the current holiday retail season plays out so we don't have enough information to definitively comment too much on next year but it is worth noting that TV units, which are declining this year, have never declined two years in a row.\nAnd next year is a world cup year and TV units have never declined in a world cup year.\nAnd finally, the biggest driver of retail glass growth in most years is the increase in screen size.\nWe would expect the average screen size to once again grow one and a half inches next year.\nNow where we find our views based on this year's holiday retail season, which is still in front of us, and we will keep you updated.\nLet's move to optical communications, which continues its growth in with sales surpassing a billion dollars, up 21% year over year and 15% sequentially.\nSales increased by a double-digit percentage in both carrier and enterprise network sequentially and year over year.\nNet income was $148 million, up 83% year over year and 33% sequentially.\nHigher volume and better operational performance drove the improvement.\nThe environment is extremely favorable.\nDemand on networks is at an all-time high.\nIn response, operators are expanding network capacity, capabilities, and access.\nThe pace of data centers builds is accelerating and capital spending by our customers is increasing.\nGovernments around the world are announcing and initiating plans to extend the reach of broadband.\nAll this points to the start of a strong sustained investment phase across the industry.\nWe are the market leaders and we're well-positioned to capture significant growth as network investment increases our solutions improve the speed and capital efficiency [Inaudible].\nAdditionally, Corning is the only large-scale Indian manufacturer of optical solutions, which allows us to innovate on important dimensions not available to competitors.\nOur broad customer base unquestioned technology leadership puts us squarely at the center of customer investments for fiber-to-the-home, rural broadband, 5G, and hyperscale data centers.\nIn environmental technology, second-quarter results for $407 million, up 81%year over year but down 8% sequentially.\nNet income improved year over year to $81 million and also grew sequentially, partly due to improved freight and logistics costs versus Q1.\nCar-related sales increased 68% year over year as vehicle production improved from pandemic lows and GPF adoption continues in Europe and China.\nAuto markets continue to be constrained by chip shortages, which impacted our automotive sales sequentially in the second quarter.\nWe are monitoring in-market demand and supply chain activity as we go through the second half of the year.\nWe remain on track to build a $500 million gasoline particular filter business ahead of our original timeframe.\nWe continue to innovate to solve our customer's most challenging problems and have recently begun to ship next-generation GPFs to help OEMs achieve even lower levels of emissions.\nIn diesel, sales grew 101% year over year driven by continued customer adoption of advanced after-treatment in China and continued strength in the North American heavy duty truck market.\nSpecialty materials delivered another outstanding quarter.\nFollowing first-quarter year-over-year growth of 28%, the second quarter was up 16% year over year with sales of $483 million.\nDemand remains strong for our premium cover glass materials and I.T. products.\nDuring the quarter, our premium glasses and services supported multiple new phone and I.T. launches, including 16 smartphones along with six laptops and tablets featuring Gorilla Glass.\nDemand also remains strong for advanced optics content used in semiconductor manufacturing, which are essential for deep ultraviolet and extreme ultraviolet or EUV lithography.\nNow investments and innovations that are moving toward commercialization resulted in lower net income than in 2020.\nAs we've noted before, newer innovations can face high costs as we develop and scale our manufacturing processes.\nWe anticipate that profitability will improve as we come up the learning curve and improve utilization.\nLife sciences second-quarter sales were $312 million, up 28% year over year and 4% sequentially driven by ongoing recovery in academic and pharmaceutical research labs and continued strong demand for bio production vessels and diagnostic-related consumables.\nNet income with $52 million, up 68% year over year and 8% sequentially driven by the higher sales and solid operating performance.\nSo our businesses performed very well and our markets are strong.\nThat said let me take a moment to reiterate our commitment to financial stewardship and capital allocation.\nOur fund -- our fundamental approach remains the same.\nWe will continue to focus our portfolio and utilize our financial strength.\nWe generate very strong operating cash flow and we expect that to continue going forward.\nWe will continue to use our cash to grow, extend our leadership, and reward shareholders.\nOur first priority for use of cash is to invest in our growth and extend our leadership.\nWe did -- do this through R&D investments, capital spending, and strategic acquisitions.\nOur next priority is to return excess cash to shareholders in the form of dividends and opportunistic share repurchases.\nThis year we increased our quarterly dividend by 9% and resumed share buybacks by repurchasing and retiring 4% of our outstanding common shares from Samsung Display.\nIn closing, we had an excellent quarter.\nOur performance relative to both 2020 and 2019 adds to our confidence that we are on track for an outstanding year.\nFor the third quarter, we expect core sales in the range of $3.5 billion to $3.7 billion and we expect earnings per share in the range of $0.54 to $0.59.\nOur value creation model is working.\nWe are pursuing opportunities that utilize capabilities from our focused and cohesive portfolio to drive growth.\nBy repurposing and reapplying capabilities, we're increasing our probability of success lower our cost of innovation and becoming more capital efficient.\nI look forward to sharing our progress with you as the year goes on.\nWith that let's move the Q&A.\nAnd, Katherine, we're ready for our first question.\n",
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"content": "compname reports q2 loss per share of $0.42.\nq2 gaap loss per share $0.42.\nq2 core earnings per share $0.53.\nqtrly gaap and core sales were $3.5 billion.\nin display technologies, second-quarter sales were $939 million, up 9% sequentially and 25% year over year.\nsees q3 core earnings per share $0.54 to $0.59.\nsees q3 core sales $3.5 billion to $3.7 billion.\nin optical communications, second-quarter sales were $1.08 billion, up 21% year over year.\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: Those statements involve risks, uncertainties, and other factors that could cause the actual results to differ materially.\nThese factors are detailed in the company's financial reports.\nYou should also note that we'll be discussing our consolidated results using core performance measures, unless we specifically indicate our comments relate to GAAP data.\nOur core performance measures are non-GAAP measures used by management to analyze the business.\nFor the third quarter, the largest differences between our GAAP and core results stemmed from noncash mark-to-market losses associated with the company's currency hedging contracts and noncash impairment charges.\nWith respect to mark-to-market adjustments, GAAP accounting requires earnings translation hedge contracts and foreign debt settling in future periods to be mark-to-market and recorded at current value at the end of each quarter, even though these contracts will not be settled in the current quarter.\nFor us, this decreased GAAP earnings in Q3 by $16 million.\nTo be clear, this mark-to-market accounting has no impact on our cash flow.\nOur currency hedges protect us economically from foreign exchange rate fluctuations and provide higher certainty for our earnings and cash flow, our ability to invest for growth, and our future shareholder distributions.\nOur non-GAAP or core results provide additional transparency into operations by using a constant currency rate aligned with the economics of our underlying transactions.\nWe're very pleased with our hedging program and the economic certainty it provides.\nWe received more than $1.7 billion in cash under our hedge contracts since their inception more than five years ago.\nA reconciliation of core results to the comparable GAAP value can be found in the Investor Relations section of our website at corning.com.\nYou may also access core results on our website with downloadable financials in the Interactive Analyst Center.\nWe encourage you to follow along.\nThey're also available on our website for downloading.\nToday, we reported strong third-quarter results that continue a year of outstanding sales growth, margin expansion, and significant cash generation.\nSales grew 21% year over year to $3.6 billion, a new all-time high.\nGross margin expanded 50 basis points sequentially and 70 basis points year over year to 38.3%.\nEPS grew 30% year over year to $0.56.\nAnd free cash flow of $0.5 billion brought cumulative free cash generation for the first nine months of 2021 to $1.3 billion.\nOur outstanding results in this period of global disruption are due to excellent execution at all levels of the company.\nAnd they're driven by a compelling set of long-term growth opportunities that we're capturing through our innovations and broad market access, as we strengthen our commercial relationships and scale operations to meet demand.\nLike everyone, we're dealing with numerous factors caused by the pandemic and the resulting inflation.\nIn this quarter, the largest macro impact was constraints in the automotive industry, stemming from chip and component shortages.\nAuto production in the third quarter is estimated to be down nearly 20% year over year and 9% sequentially.\nAs a result, we stepped down in light-duty sales.\nAcross our businesses, we prioritized delivering for our customers in a complex inflationary environment, and we have delivered despite incurring extra costs.\nNow we're taking additional actions, including pricing, to address these costs and maintain our ability to invest and support our customers.\nAnd you'll hear more from Tony on this in just a few minutes.\nAgainst this backdrop, we feel really good about our performance.\nIn the quarter, announcements with industry leaders illustrated the power of our portfolio, demonstrating not only our relevance across multiple markets but also our role as a key innovation partner.\nOur strong position stems from a complementary set of three core technologies for proprietary manufacturing and engineering platforms and five market access platforms.\nWe're leaders in each.\nWe generate growth opportunities by delivering combinations and new applications of these capabilities to help our customers to drive their industries forward.\nAnd in doing so, we drive more Corning content into the products people are already buying.\nLet me share some highlights from the quarter.\nIn Optical Communications, the industry is in the early innings of large deployments in support of 5G, broadband, and the cloud.\nMomentum is building, and we see it confirm high multiple sources.\nFirst is network need.\nDemand on networks is significantly higher than pre-pandemic levels.\nBroadband usage for September was up 32% versus pre-pandemic levels and up 9% versus September 2020, when remote work and school were largely in play.\nGlobal 5G subscriptions have grown to almost $0.5 billion this year.\nMore applications are moving to the cloud and global data creation is expected to grow at 23% compound annual growth rate from 2020 to 2025.\nVersus 2020, cloud revenue industrywide is up nearly 50%.\nThe second confirmation of strong industry momentum can be seen in the announcements from leading companies.\nOn AT&T's earnings call last week, their CEO said they're on a march to deploy fiber at scale.\nWe are working toward passing 5 million homes per year.\nIn the quarter, we announced a strategic investment to support their growth plans.\nSpeaking about our expanded collaboration.\nAT&T said the expansion of fiber infrastructure is central to the growth of broadband reach for consumers as well as business customers.\nFrance recently shared that they plan to reach 10 million more homes with fiber by the end of 2025 with their CEO saying, \"Our future is fiber\".\nCloud deployments are also expanding.\nMicrosoft CEO said that over the past year, they've added new data center clusters in 15 countries across five continents in support of their cloud business.\nThe third confirmation is our substantial increase in sales and continued order book momentum.\nThis is perhaps the most important indicator of growth over the next few quarters.\nWe are ramping capacity and we are energized.\nAcross the business, we're driving strong year-over-year sales growth, and we're outperforming the optical market as we continue to commercialize innovations that extend our competitive advantage.\nAnd as we provide more solutions to more customers at both the regional and national levels.\nDuring the quarter, we introduced the newest additions to our Evolv portfolio, which includes solutions designed to support real deployments.\nWe also introduced our Everon millimeter-wave indoor small cell systems, which deliver 5G-ready coverage in high-density environments, including office buildings, factories, hotels, hospitals, and classrooms.\nLet's turn to mobile consumer electronics.\nHere, we're helping transform the smartphone experience.\nAs we help our customers deliver new value to their users, we drive more of our content into each device sold.\nI displayed out well during the quarter with the launch of Samsung's Galaxy Z Fold3 and Galaxy Z Flip3.\nBoth devices feature Gorilla Glass Victus.\nNow they also utilize our new Gorilla Glass with DX on the lenses of the rear cameras.\nThis is more Corning in action.\nWe've expanded our capabilities into a new category, device cameras.\nEven though the lens is a fraction of the surface area we address with our cover materials.\nThe value we add is high, and we're capturing a very attractive opportunity to increase our revenue per device.\nSamsung is also featuring Gorilla Glass with DX on the new Galaxy Watch4.\nOEMs are designing cleaner, safer vehicles and distinguishing themselves with technologies that enhance the driving experience.\nCorning is uniquely sued to address these trends.\nAnd we're pursuing $100 per car content opportunity across emissions and auto glass solutions.\nIn the quarter, Jeep announced a product that brings our top technical glass into their iconic vehicles, the new Jeep performance parts windshield featuring Gorilla Glass is now a factory-installed option on the 2021 Wrangler and Gladiator.\nWe're making the windshields lightweight, durable, and up to three times more impact resistant than regular windshields.\nAdditionally, tighter emissions regulations continue to provide a strong content opportunity for our environmental solutions.\nOEMs need higher filtration performance, and we responded with a new generation of gasoline particulate filters.\nThe importance of our GPF business drives home my ongoing point.\nIt's not about more cars, it's about more Corning in those cars.\nSince 2017, our auto sales are up more than 40%, while global car sales are down 20%.\nWe're in a position of strength for two reasons.\nFirst, we are significantly more profitable than our competitors.\nSecond, the market for large-sized TVs is projected to grow at a double-digit compound annual growth rate through 2024.\nAnd we're the leader in Gen 10.5, which is the most economical approach for larger sets.\nWe've all seen the declines in panel pricing, and we're beginning to see panel maker utilization adjustments.\nNow longer demand provides us an opportunity to minimize expedited freight and to rebuild tanks that have operated beyond end of life.\nTaking these actions will allow us to keep our supply balance to demand.\nWe expect the overall glass supply to remain tight, and the glass pricing environment to remain attractive.\nTony will give you more details on our industry position and our outlook.\nFinally, in Life Sciences, we're delivering growth on multiple fronts.\nWe're seeing ongoing demand in support of the global pandemic response.\nAnd our inventions are helping advance the transition to cell and gene-based therapies.\nAdditionally, we're making progress on our multibillion-dollar content opportunity in pharmaceutical packaging.\nWe're expanding our comprehensive portfolio, advancing key partnerships, and building our customer base.\nCorning continues to support the pandemic response and its portfolio of advanced vials and pharmaceutical glass tubing has enabled the delivery of more than 3 billion doses of COVID-19 vaccines.\nOur high-volume manufacturing facility in North Carolina is now operational, which will help us scale with demand.\nIn total, we believe our efforts to address the pandemic are enabling permanent industry shifts.\nThat means a future pharmaceutical packaging landscape defined by enhanced patient safety, lower cost, minimal regulatory hurdles, and increased capacity for life-saving drugs.\nOther efforts that have gained increased attention during pandemic are finding broader long-term applications.\nWe introduced Corning Guardiant, a paint additive that uses a glass matrix to trapped copper ions, a powerful and long-used antimicrobial material.\nPaint with Guardiant has been proven to kill 99.9% of bacteria and viruses, including the 1 that causes COVID-19.\nThis month, PPG announced that their copper armor paint, powered by Guardiant received EPA registration and will be available in major US retail and home improvement stores.\nPPG noted that it's the first virus-killing paint in the United States.\nAnd our collaboration builds on an EPA statement to ascertain that public health would benefit from surfaces with built-in antimicrobial capabilities.\nI am proud of the many ways our people unleased the power of our portfolio in the quarter and what our performance says about Corning's strong position today.\nKey trends are converging around our capabilities as we become more and more vital to industry transformations driving the world forward.\nThis provides a compelling set of long-term growth opportunities.\nAnd we're executing well to bring those opportunities to life and make a difference wherever we can.\nNow I'll close by briefly looking back at 2019, when we outlined our priorities for growth and shareholder returns for the next several years.\nWe provided attractive targets as we laid out our plans to build an even bigger, stronger company that delivers sustainable results.\nToday, the growth drivers we laid out remain intact and we're delivering on our goals.\nWe are a bigger, stronger company than we were in 2019, and we are continuing to grow.\nTony will get into more specifics.\nBut I feel really good about our position and the progress that we've made.\nI look forward to updating you when we close out a strong year and as we grow again in 2022.\nStrong execution resulted in another outstanding quarter.\nWe are on track to reach $14 billion in sales and over $2 in EPS.\nWe're making significant progress extending our market leadership while scaling operations to meet demand, and we expect to grow again in 2022.\nDuring the third quarter, sales increased 21% year over year to $3.6 billion, led by the strength in Optical Communications and the strong performance in our other businesses.\nEPS grew 30% year over year to $0.56.\nSales and earnings reflect lower production levels in the automotive industry due to the semiconductor chip shortage.\nThe impact to Corning's results was approximately $40 million in sales and $0.02 of EPS.\nGross margin percent expanded 50 basis points sequentially and 70 basis points year over year to 38.3% despite a net impact of 150 basis points from supply chain challenges and inflationary headwinds.\nFree cash flow grew to $497 million with cash generation of $1.3 billion for the first nine months of the year.\nNow these achievements are particularly noteworthy because we are operating in the face of unprecedented logistical challenges and component shortages.\nDelivering for customers in this complex environment requires both decisive action and agility.\nOur ability to sense disruption and act quickly has been key to running our plants well and meeting our customers' needs.\nAnd we're leveraging our diversified global supply chain to continue to meet customer demand.\nIn fact, I'd be remiss if I didn't recognize the efforts of our global supply management and operations teams that have allowed us to maintain a steady supply of raw materials while finding creative shipping strategies.\nTheir actions have enabled us to effectively deliver for our customers, and they're providing actionable insight into the current dynamic environment.\nAt the same time, we continue to incur additional costs as we work to meet strong customer demand.\nAnd while we've been taking actions to mitigate them, certain costs continue to elevate in the third quarter.\nFor example, we were able to offset a significant portion of elevated freight costs, but resin prices increased again.\nTherefore, our margin is temporarily muted.\nGiven this ongoing inflationary environment, we have price increases underway across all of our businesses.\nWe saw some benefit from these actions in the third quarter and their impact should accelerate in the fourth quarter and into 2022.\nNow we don't expect the environment to improve in the short term, but our digital supply chain capabilities enable real-time visibility into emerging situations, allowing us to proactively address the issues.\nWe remain focused on meeting demand, expanding our margins, and protecting our ability to invest for customers.\nNow let's take a closer look at the performance in each of our businesses during the third quarter.\nIn Display Technologies, sales were $956 million, up 2% sequentially and 16% year over year.\nCorning's glass volume grew slightly and glass prices increased moderately sequentially as expected.\nGlass supply continues to be tight, and we continue to do everything we can to meet customer demand.\nWe expect fourth-quarter glass prices to be consistent with the third quarter.\nNow I know there's a lot of discussion about the display industry.\nBriefly, we expect the pricing environment to remain favorable as glass supply remains tight to balanced throughout 2022.\nNow as we've discussed previously, we based our perspective on what will happen in the display market on three main factors: retail demand, panel makers production, and glass makers' ability to supply the panel makers.\nWith those factors in line, I'll start with what I said about retail demand on our last earnings call in July.\nSince LCD televisions emerged as a mainstream technology in 2004, LCD TV units have only been down three times and never two years in a row.\nSince 2014, TV sell-through units are typically range-bound between 225 million and 235 million, which average screen size grows about 1.5 inches a year.\nIn 2020, global television units increased 4% above the trend line to about $242 million.\nScreen size growth was about 1.2 inches, about 20% below trend.\nA lot of smaller TVs sold probably to accommodate more people living, working and studying from home.\nEntering this year, we expected and continue to expect the market to revert the trend, implying a decrease in TV units, especially smaller televisions, and for normal screen size growth of 1.5 inches to return.\nWith that, we now have nine months of retail data under our belts, and it is confirmatory.\nTelevision units declined by about 10% year over year while average screen size growth is in line with the 1.5 inches per year trend.\nUnit volume for TVs 65 inches and larger increased by a mid-teen percentage, and smaller TVs were down by a mid-teen percentage.\nSo three quarters through the year, our expectation for TV units being down year over year and screen size growing approximately 1.5 inches are playing out.\nNow looking ahead to 2022, we think TV units and screen size will continue to follow historical trends and retail glass demand will be up.\nThat means television units will be within the typical range of 225 million to 235 million units and average screen size will grow about 1.5 inches.\nNow remember, television units, which are declining this year have never declined two years in a row.\nAnd next year is a World Cup year, and TV units have never declined in a World Cup year.\nFinally, the biggest driver of retail glass growth in most years is the increase in screen size.\nWe would expect the average screen size to once again grow 1.5 inches next year.\nIn summary, we expect glass demand at retail to be up by a high single-digit percentage in 2022 as measured in square feet.\nNow let's move from retail to panel makers.\nAfter a period of high production in 2020 and 2021 to meet strong demand, we are now seeing panel makers temporarily reducing their utilization given the lower 2021 retail demand that we told you about all year.\nAnd that is happening just as we would expect.\nNow finally, let's move to the glass industry, which struggled to meet demand in 2020 and 2021 as glass has remained tight.\nLike other glassmakers, we've depleted our inventories, expedited shipping and operated tanks beyond their targeted in the life.\nWe will use this period of temporarily lower panel maker utilizations to shut down end-of-life tanks and rebuild them with our latest technology.\nWe will also take the opportunity to work our way out of expedited shipping.\nThese actions keep our supply balanced to demand and will improve our operating cost going forward.\nBut rest assured, we will still have capacity to supply all of our customers' anticipated glass demand.\nWhen panel maker production ramps to meet the expected high single-digit retail demand growth in 2022, we will be fully prepared with our revitalized fleet of tanks.\nOverall, we believe glass supply will be tightly balanced throughout 2022.\nAnd since glass pricing is primarily driven by glass supply demand balance, we expect the pricing environment to remain favorable in Q4 and also throughout 2022.\nMoving to Optical Communications.\nWe saw strong growth across the business with sales exceeding $1.1 billion, up 24% year over year and 5% sequentially.\nNet income was $139 million, up 21% year over year.\nNet income declined 6% sequentially as increased raw material and shipping costs significantly impacted profitability.\nDuring the quarter, carriers spent more on 5G and broadband projects.\nThis, along with the continued strong pace of enterprise cloud data center builds drove our strong performance.\nDemand on networks is at an all-time high, setting the stage for significant investments in fiber infrastructure as operators expand network capacity, capabilities, and access.\nDuring the quarter, we announced a collaboration with AT&T.\nOur capacity expansion will allow AT&T to expand investments in fiber infrastructure, expand US broadband networks and accelerate 5G deployment.\nWe are well-positioned to capture significant ongoing growth and network and data center investment increases.\nOur solutions improve the speed and capital efficiency deployments.\nAdditionally, Corning is the only large-scale end-to-end manufacturer of optical solutions, which allows us to innovate on important dimensions not available to competitors.\nIn environmental technologies, our third-quarter sales were $385 million, up 2% year over year and down 5% sequentially.\nAs everyone knows, chip shortages is having a big impact on the auto industry.\nAt the start of 2021, global vehicle production was expected to be about 88 million.\nBy July, the industry was projecting below 85 million.\nAnd given continued chip and component constraints, forecasts now anticipate auto production around 75 million for the year.\nThis pullback in production began to impact us in the middle of third quarter, and we expect it to continue for the fourth quarter.\nWe estimate an impact on earnings per share in the third quarter of about $0.02, and we expect additional impact in the fourth quarter.\nThe good news is that when component shortages resolved, auto production will recover because the end market demand remains strong, and we will be prepared to meet the growing demand.\nSpecialty materials delivered sales of $556 million, up 15% sequentially and in line with the strong third quarter in 2020 when we introduced Ceramic Shield.\nWe've grown specialty sales every year from 2016 to today, despite smartphone unit sales being roughly flat.\nOver that five-year period, we've almost doubled our sales on a base of more than $1 billion.\nClearly, we're successfully executing our objective of driving more content into each device sold.\nAnd strong demand continues for our premium cover materials.\nDuring the quarter, our glass innovations were featured in 30 new devices, including smartphones, wearables, and laptops.\nDemand also remains strong for our advanced optics content used in semiconductor manufacturing as the broader end market continues to experience robust growth.\nIn the quarter, investments in innovations that are moving toward commercialization resulted in lower net income than in 2020.\nAs we've noted before, newer innovations can face high cost as we develop and scale our manufacturing process.\nWe anticipate that profitability will improve as we come up the learning curve and improve utilization.\nLooking into the fourth quarter, we're seeing typical volume declines in Gorilla Glass following the build supporting flagship customer product launches.\nLife Sciences third-quarter sales were $305 million, up 37% year over year, driven by ongoing demand to support the global pandemic response, continued recovery in the academic and pharmaceutical research labs and strong demand for bioproduction vessels and diagnostic-related consumables.\nOur Life Sciences segment is outpacing the overall industry as evidenced by a sales CAGR of 9% over the last three years.\nStepping back, we have made strong progress across all of our businesses.\nWe entered new product categories, announced collaborations with key industry leaders and contributed to significant industry advancements.\nWe're building a strong foundation for future growth.\nThis, combined with our consistent focus on innovation and deep commitment to RD&E is what continues to fuel and sustain Corning's leadership position across its markets.\nAs we look ahead to Q4, we expect core sales to be in the range of $3.5 billion to $3.7 billion and core earnings per share in the range of $0.50 to $0.55.\nProfitability is expected to decline sequentially due to the further reduction on automotive-related sales, as I mentioned, and lower Gorilla Glass sales following strong customer launches.\nThat said, we expect to close out 2021 with both top and bottom-line growth and another year of strong cash flow.\nAnd we expect our momentum to continue in 2022 with sales and earnings per share growth along with strong cash generation.\nNow I'd like to expand on Wendell's closing point.\nBack in 2019, we outlined our goals for growth and shareholder returns.\nWe said we would leverage our focused and cohesive portfolio to extend our leadership and capture significant growth opportunities, and we said that key trends would continue to converge around our capabilities.\nWhat we said back in 2019 still rings true to date, despite the pandemic and the resulting global disruptions.\nOur key growth drivers are all intact.\nSome are even accelerating.\nAnd we're on track or even ahead of the goals we laid out in 2019 in all our market access platforms.\nSince 2019, sales have grown at a 10% CAGR and ahead of the 6% to 8% target.\nNow we have been growing earnings per share at a rate consistent with sales, which puts us ahead of our target which -- I mean, puts us behind our target because inflationary pressures are clearly impacting profitability.\nBut we do expect that our cost and pricing actions will deliver significant improvement over time.\nAs we said we would do, we're also growing our return on invested capital.\nToday, our total company ROIC is in the double digits.\nOur most recent capacity expansions or as we like to call them, build investments are fully ramped, have enabled the $2.5 billion of sales we've added since 2019, and are delivering more than 20% ROIC.\nOur aggregate free cash flow generation for 2020 and 2021 is expected to be more than $2.5 billion.\nFinally, we remain steadfast in our commitment to investing in growth and extending our leadership while returning excess cash to shareholders through share repurchases and a 10% annual increase in our dividend.\nAs you might remember, we decided early in the pandemic to ensure the stability and flexibility of our financial position by building up our cash reserve.\nIn April, we resumed share buybacks with the Samsung transaction where we repurchased 4% of our fully diluted shares.\nConsistent with our strategy to opportunistically buy back shares, we plan to do more repurchases in Q4.\nIn summary, we've built a strong foundation over the last several years.\nOur capabilities are relevant to major growth trends across our markets.\nOur More Corning strategy is working, and we're executing through some very volatile end markets, expanding relationships and commitments with our customers extending our leadership position and generating outstanding sales, profits, and free cash flow.\nWith that, let's move to Q&A.\nMichelle, we're ready for our first question.\n",
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"content": "corning sees q4 core earnings per share $0.50 to $0.55.\nsees q4 core earnings per share $0.50 to $0.55.\ncorning - lower production levels in automotive industry due to chip shortage reduced sales by about $40 million and earnings per share by $0.02 in quarter.\nfor q4, corning expects core sales to be in range of $3.5 billion to $3.7 billion.\nq4 profitability is expected to decline slightly on a sequential basis.\nfor full year, on pace to reach $14 billion in sales and over $2 in eps.\nincurred additional costs that were elevated by inflation.\nhave price increases underway in all of our businesses.\nin display technologies, third-quarter sales were $956 million, up 2% sequentially and 16% year over year.\nin optical communications, third-quarter sales were $1.13 billion, up 5% sequentially and 24% year over year.\nqtrly core earnings per share $ 0.56.\nmarket for large-sized tvs is projected to grow at a double-digit compound annual growth rate through 2024.\nexpects glass pricing environment to remain favorable in q4 and in 2022.\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 factors are detailed in the company's financial reports.\nYou should also note that we will be discussing our consolidated results using core performance measures unless we specifically indicate our comments relate to GAAP data.\nOur core performance measures are non-GAAP measures used by management to analyze the business.\nFor the fourth quarter, the largest difference between our GAAP and core results stems from restructuring charges which are primarily noncash as well as noncash mark-to-market losses associated with the company's currency hedging contracts.\nWith respect to mark-to-market adjustments, GAAP accounting requires earnings translation, hedge contracts, and foreign debt settling in future periods to be mark-to-market and recorded at the current value at the end of each quarter, even though these contracts will not be settled in the current quarter.\nFor us, this reduced GAAP earnings in Q4 by $63 million.\nTo be clear, this mark-to-market accounting has no impact on our cash flow.\nOur currency hedges protect us economically from foreign exchange rate fluctuations and provide higher certainty for our earnings and cash flow, our ability to invest for growth, and our future shareholder distributions.\nOur non-GAAP or core results provide additional transparency into operations by using a constant currency rate aligned with the economics of our underlying transactions.\nWe're very pleased with our hedging program and the economic certainty it provides.\nWe've received one $1.7 billion in cash under our hedge contracts since their inception more than five years ago.\nA reconciliation of core results to the comparable GAAP value can be found in the investor relations section of our website at corning.com.\nYou may also access core results on our website with downloadable financials in the interactive analyst center.\nToday, we reported an outstanding finish to the year.\nEach of our segments grew sales and profits year over year and we continue to progress our strategic initiatives.\nFor the fourth quarter, sales were $3.3 billion, up 11% sequentially, and 17% year over year.\nOur operating margin expanded 500 basis points year over year to 19.4%.\nOperating income grew 18% sequentially and 58% year over year.\nEPS of $0.52 cents was up 21% sequentially and 13% year over year.\nWe generated $464 million of free cash flow in the fourth quarter, $948 million for the full year, and we finished the year with $2.7 billion in cash on our balance sheet.\nIt goes without saying, 2020 was an incredibly difficult year.\nWe joined the rest of the world to confront the pandemic, economic uncertainty, and social unrest.\nThroughout the year, we focused on our customers and executed on strategic priorities while protecting our people.\nFor more perspective on our performance, I'll share three observations: first, we demonstrated our ability to adapt rapidly and remain resilient in the face of uncertainty; second, our more Corning content strategy clearly contributed to our growth and our performance against our end markets; and finally, throughout this difficult period, we're embracing the opportunity to make a difference wherever we are with what we had to contribute.\nNow, I'll expand on my first observation.\nOur decisive actions and strong operational execution have resulted in continued leadership in the capabilities that make Corning distinctive.\nLike many companies, we focused on bolstering our financial strength, reducing production levels and operating costs, carefully managing inventory, reducing capital expenditures, and pausing share buybacks.\nHowever, it's not about what we cut but what we kept.\nWhile we adjusted production, we didn't reduce capacity keeping us positioned to meet increasing demand when the economy improved.\nWe continued to make strategic investments and advance major innovations with our customers to capture the growth playing out across our market-access platforms.\nAnd we developed multifaceted programs to protect our talent and preserve our capabilities.\nOur first-half actions generated significant cost savings in the second half of the year.\nAnd as the economy started showing signs of green shoots, we effectively adjusted our operations, keeping pace as demand started to recover in many of the markets we serve.\nOur results tell the story.\nOur sales were down 12% in the first half as most economies were impacted by pandemic-related lockdowns.\nBut in the second half, we improved sales 24% over the first, while growing operating income, 122%, returning to year-over-year growth and generating very strong free cash flow.\nFor the year, we generated almost $1 billion of free cash flow and our balance sheet remains very strong.\nWe expect this strong momentum to continue heading into 2021.\nWe will continue to adapt and focus on execution as we have proven that our approach is working.\nTurning to my second observation.\nIn all the industries we serve, important market trends continue to offer new challenges that Corning is just uniquely qualified to address and new opportunities to integrate more Corning content into our customers' products.\nIn this difficult year, we have proven that this is an especially powerful value creation letter.\nWe aren't relying exclusively on people buying more stuff, we're putting more Corning into the products that people are already buying.\nIn the fourth quarter, this strategy paid off as we grew sales year over year in every one of our businesses.\nAt the top were specialty materials with sales up 20% year over year, and environmental technologies up 19% year over year, both significantly outperforming their end markets.\nLast quarter, I described our innovations in mobile consumer electronics.\nLooking at how we're investing to create additional revenue streams and capture content opportunities.\nToday, our focus on our automotive market access platform.\nThe auto industry is undergoing major disruptions.\nAutomakers are designing cleaner and safer vehicles while featuring technology that provides immersive experiences were uniquely suited to address these trends.\nAnd for us, the opportunities are large.\nIn the range of $100 per car in Corning content, we're collaborating with more OEMs and we're offering more solutions to help move the industry forward.\nLet's look at two of our biggest successes right now starting with our automotive glass solutions business.\nWe're building strong momentum.\nOur advantaged solutions are enabling the very rapid shift toward in-vehicle displays that are interactive, that are integrated, and shaped.\nWe're collaborating with industry leaders across the auto ecosystem, including Visteon, LGE, BOE, and VIA Optronics to accelerate the adoption of our patented 3D ColdForm technology which enables lower-cost-shaped auto interiors.\nOur large-scale facility in Hefei, China is now fully operational and servicing our growing demand.\nAnd we continue to see strong adoption of our technology by auto OEMs. Our recent proof point is the new Mercedes-Benz Hyperscreen dashboard display, which features a Gorilla Glass cover nearly 5 feet wide.\nSimilarly, in environmental technologies, in a year when a global pandemic temporarily shut down OEM production, our proprietary gasoline particulate filter business still grew sales year over year.\nWhen we introduced GPF, we said our technology increased our content opportunity per car by three to four times.\nLike most of our innovations, it started with the customer challenge.\nEurope and China are addressing fine particular pollution with new emissions regulations.\nWe applied our expertise in ceramic science with our advanced manufacturing capabilities and extrusion to rapidly develop filters that efficiently trap ion particulates.\nAnd today, we're effectively helping automakers reduce these harmful emissions, meet new regulations, and produce some of the cleanest gasoline vehicles you can buy.\nDemand for our GPF has grown quickly.\nAnd with our market-leading product, we continue to win the majority of platforms awarded to date.\nWe're well on our way to building a $0.5 billion business.\nWe're actually ahead of schedule, and the content opportunity continues to grow.\nWe expect our GPF technology to migrate beyond Europe and China as other regions focus on improving air quality.\nAnd many new car models will soon be required to get even closer to near-zero particulate emissions.\nIn response, we recently introduced our next-generation GPF, featuring enhanced filtration capabilities.\nThey're launching in upcoming models as automakers prepare for the next wave of regulations.\nAcross our markets, we see a similar content story playing out as we respond to key industry challenges with more Corning solutions.\nLet me share some other accomplishments across our market-access platforms.\nIn life sciences, pandemic-related demand has highlighted our strength in the industry.\nAnd we achieved major milestones toward building a significant Valor Glass franchise in 2020.\nAt the start of the year, we entered a long-term supply agreement to provide Valor Glass vials for a portion of the currently marketed Pfizer drug products.\nSoon after, we were awarded $204 million in funding from the U.S. government to substantially expand domestic manufacturing capacity for Valor vials.\nToday, we're supplying Valor Glass to several leading COVID vaccine manufacturers.\nWe produce millions of Valor vials and shipped enough for more than 100 million doses, supporting multiple vaccine developers.\nIn our life sciences segment, the global health fight is driving strong demand for our consumable products.\nWe're supporting the development of treatments in vaccines, as well as mass testing efforts.\nWe received $15 million from the U.S. government to expand domestic capacity for robotic pipette tips which are used for COVID diagnostic testing.\nBioNTech recently recognized our contribution to their successful COVID vaccine development.\nTurning to mobile consumer electronics.\nWe launched the toughest Gorilla Glass yet, Victus.\nAnd it's already featured on six Samsung devices.\nCorning also invented the world's first transparent color-free glass-ceramic which is featured on the front cover of the latest iPhone.\nApple and Corning partnered to develop and scale the manufacturing of Ceramic Shield.\nIt offers unparalleled durability and toughness.\nI noted that specialty materials sales were up 20% year over year in Quarter 4.\nThey were up 18% for the full year in a smartphone market that declined 7%.\nIn optical communications, we returned to growth and we expect this growth to continue as customers increase spending to support growing bandwidth requirements.\nIn 2020, we introduced new and innovative solutions that help speed the deployment of 5G.\nWe launched our outdoor 5G-ready connectivity solutions, featuring compact easy-to-install terminals that can be deployed in any conceivable architecture.\nOperators can actually save up to $500 per terminal location, dramatically lowering installation cost and speeding up deployment.\nWe're also collaborating with Verizon to enable 5G millimeter-wave indoor deployments for their enterprise customers.\nWe're also working with Qualcomm Technologies to deliver indoor networks that are 5G ready, easy-to-install, and affordable.\nAnd we're collaborating with EnerSys to simplify the delivery of fiber and electrical power to small-cell wireless sites.\nRetail demand for TV and IT products remains strong.\nDemand for large-sized TVs continues to grow.\n75-inch sets were up more than 60% for the full year.\nLarge TVs are most efficiently made on Gen 10.5 plants.\nCorning is well-positioned to capture that growth with its Gen 10.5 plants in China including the two newest Gen 10.5 facilities in Wuhan and Guangzhou, which are now expanding production to meet customer demand.\nRamping these sites has been no small feat in the midst of a pandemic.\nWe are very proud of our innovative and dedicated expert engineering teams that rose to a host of unprecedented challenges to start-up tanks in both facilities.\nLooking ahead, Corning's long-term growth drivers and content opportunities are strong in each of our markets.\nAnd we believe some secular trends could accelerate as consumer lifestyles continue to change in the aftermath of the health crisis.\nAnd that leads to my third observation.\nWe're living through the kind of moment that tends to bring true character to light.\nAt Corning, our values are evident in our actions.\nWe've unleashed our capabilities to help combat the virus.\nAnd we're proud to be creating life-changing technologies that contribute to keeping people safe and help society address the challenges of the pandemic.\nWe also recognize, in these unprecedented times, that we have the opportunity to share resources and leadership on a range of important issues.\nWe've launched racial and social quality programs, and our Unity Campaign supports vital human services and emergency relief in our communities around the world.\nIn conclusion, on all fronts, Corning is executing well.\nWe're delivering outstanding results and making important progress across our strategic priorities.\nI am confident that we are entering the year with solid momentum and we expect to grow in 2021.\nOur more Corning strategy will continue to drive outperformance across the diverse industries that we serve.\nWe're not just counting on consumers buying more cars, TVs, or smartphones to grow.\nAnd I'm excited about how we're bringing our capabilities to bear in optical and life sciences, as operators expand their networks and we continue to support vital drug and vaccine development.\nWe feel good about our fourth-quarter results.\nOn a year-over-year basis, we grew sales and earnings.\nWe expect to grow again in the first quarter, and we expect to grow for the full year, driven by improving markets and our more Corning strategy.\nWe are building a bigger, stronger company that delivers sustainable results while remaining agile in our ability to respond to changing market factors.\nNow let me walk you through our fourth-quarter performance.\nIn the fourth quarter, we grew sales 11% sequentially and 17% year over year to $3.3 billion, exceeding expectations.\nExcluding the consolidation of Hemlock Semiconductor, sales grew 11% year over year, with every segment growing sales and net income.\nSpecialty materials and environmental technologies deli -- delivered particularly strong year-over-year sales growth, up 20% and 19%, respectively, both outperforming their underlying markets.\nOptical communications returned to year-over-year growth, and we expect that growth to continue.\nOur operating margin was 19.4%.\nThat is an improvement of 500 basis points on a year-over-year basis.\nWe grew operating income 18% sequentially and 58% year over year.\nEPS of $0.52 was up 21% sequentially and 13% year over year.\nWe generated $464 million of free cash flow in the quarter.\nCumulative free cash flow for the full year was $948 million.\nWe ended the year with a cash balance of $2.7 billion.\nWe entered 2021 in an excellent financial position.\nNow let's review the business segments.\nIn display technologies, fourth-quarter sales were $841 million, up 2% sequentially and 6% year over year.\nAnd net income was $217 million, up 11% sequentially and 21% year over year.\nRetail demand for TV and IT products remain strong remained strong during the promotional season in Q4.\nDisplay's full-year sales were $3.2 billion, and net income was $717 million.\nOur full-year price declines in 2020 were mid-single-digits.\nThe glass market and our glass volume were up mid-single-digits for the year.\nThe retail market was more robust than the industry -- than the industry expected, resulting in panel supply being tight for the second half of 2020.\nPanel makers ran at high utilizations and the industry drew down inventory to satisfy demand.\nThese dynamics also resulted in glass supply being tight, and more recently in shortage due to a power outage at a competitor's glass plant.\nNow let's look at 2021.\nWe expect the TV and IT retail markets to remain strong.\nWe remain confident that large-size TVs will continue to grow, and we are well-positioned to capture that growth with Gen 10.5, which is the most efficient gen size for large TV manufacturing.\nWe expect the glass market to grow a mid-single-digit percentage in 2021.\nWe expect glass supply to remain tight in the upcoming quarters.\nAs a result of these supply/demand dynamics, we are experiencing a very favorable pricing environment.\nWe expect Q1 2021 glass prices to be flat with Q4 2020.\nThis is significantly better than the sequential declines we've seen in any other first quarter over the last decade.\nGlass prices for some customers in some gen sizes may actually see a sequential increase.\nWe believe the following three factors will continue to drive the favorable pricing environment for the upcoming quarters: first, we expect glass supply to continue to be tight; second, our competitors continue to face profitability challenges at current pricing levels; and third, display glass manufacturing requires periodic investments in existing capacity to maintain operations.\nGlass prices must support acceptable returns on these investments.\nIn optical communications, fourth-quarter sales were $976 million, up 8% year over year and 7% sequentially.\nOur year-over-year growth can be attributed to broad improvements in demand for both carrier and enterprise customers.\nFourth-quarter core net income of $141 million was up 127% year over year, and 23% sequentially.\nThe improvement was driven by the incremental volume and favorable cost performance.\nWe have returned to growth in optical communications, and we expect that growth to continue.\nBandwidth demand is increasing and users are demanding higher performance connections.\nWe're seeing positive statements from customers on increasing investments in their optical networks.\nOur sales and order rates are picking up, and we're ready to capture demand as it materializes.\nWe are confident we will grow sales in optical communications for the year.\nWe continue to monitor and evaluate market demand signals to determine the magnitude of growth, and we'll keep -- we'll continue to keep you updated as we go through the year.\nIn environmental technologies, fourth-quarter sales were $445 million, up 19% year over year and 17% sequentially, ahead of expectations as markets continue to improve and GPF adoptions continued in China.\nNet income was $93 million, up 45% year over year and 35% sequentially, driven by strong operational performance globally and successful ramping of additional GPF capacity in China.\nFor the full year, sales were $1.4 billion and our performance was better than the underlying market.\nNet income was $197 million.\nWhile our full-year 2020 sales were certainly impacted by COVID-19, we are recovering faster than the market by increasing our content for both the automotive and diesel end markets.\nDespite severely -- severely challenged markets we saw year overgrowth in GPF sales.\nStrong GPF adoption continues in Europe and in China, where the China 6a regulation is being implemented nationwide this month.\nWe are ahead of our original timeframe to build a $500 million GPF business.\nSpecialty materials had an outstanding fourth quarter and a full year.\nQ4 sales of $545 million were up 20% year over year, full-year sales were $1.9 billion, up 18% year over year, despite a 7% decline in the smartphone market, driven by strong demand for our premium cover materials and our other innovations.\nNet income was $423 million, up 40% from 2019 on higher sales volume and strong cost performance.\nThe importance of computing and connectivity were amplified during the pandemic.\nOur new product innovations, including Ceramic Shield and Gorilla Glass Victus, as well as our EUV products in the semiconductor market were important contributors to our strong performance.\nNow before I get to our life sciences results, I'd like to note something of great importance to us.\nThroughout the pandemic, our life sciences market access platform has applied its broad capabilities and full product portfolio to help the world combat the pandemic.\nFrom our traditionally research-focused consumables to our bioproduction products to our transport media and, of course, our Valor Glass, we're playing a vital role in the development and supply of test kits and vaccines.\nNow, let's look at our segment results.\nLife sciences fourth-quarter sales were $274 million, up 7% year over year and 23% sequentially, driven by strong demand for COVID-related products, including bioproduction products used in clinical trials.\nNet income was $42 million, up 11% year over year and 50% sequentially.\nIn summary, we successfully navigated a very challenging year.\nWe strengthened our balance sheet, established growth in the second half, and generated a free cash flow of $948 million for the year.\nAs we look ahead, we have strong momentum coming into 2021 and expect year-over-year growth to accelerate in the first quarter.\nSpecifically, we expect core sales of $3.0 billion to $3.2 billion, compared to $2.5 billion in the first quarter last year, and earnings per share of $0.40 to $0.44, which is double last year's first-quarter earnings per share at the low end of the range.\nFor the full year, we expect growth in sales and earnings and we anticipate generating more free cash flow in 2021 than in 2020.\nAnd we will share more with you as the year progresses.\nLet's turn to our commitment to financial stewardship and prudent capital allocation.\nOur fundamental approach remains the same.\nWe will continue to focus our portfolio and utilize our financial strength.\nWe generate very strong operating cash flow, and we expect that to continue going forward.\nWe will continue to use our cash to grow, extend our leadership, and reward shareholders.\nOur first priority for our use of cash is to invest in our growth and extend our leadership.\nWe do this through RD&E investments, capital spending, and strategic M&A.\nOur next priority is to return excess cash to shareholders in the form of dividends and opportunistic share repurchases.\nIn 2021, we expect capex similar to 2020, as we have the capacity in place to meet higher sales.\nNow, we'll invest more if we require capacity to support additional growth, any additional capital investment would be supported by a customer commitment.\nWe'll keep you updated as we go throughout the year.\nGiven our expected strong free cash flow generation in 2021, we expect to increase our distributions to shareholders.\nThat includes reinstating opportunistic share repurchases sometime this year.\nIn closing, we're very pleased with our strong close to 2020, highlighted by growing sales and profitability.\nWe continue to focus on a rich set of opportunities.\nOur businesses are fundamental to the long-term growth drivers in the industries they serve, and our more Corning strategy continues to deliver sales outperformance relative to our end markets.\nAnd I look forward to sharing our progress as the year goes on.\nWith that, let's move to Q&A.\nOperator, we're ready for the first question.\n",
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"content": "q4 core earnings per share $0.52.\nqtrly core sales of $3.3 billion, up 11% sequentially and 17% year over year.\nin display technologies, q4 sales were $841 million, up 2% sequentially and 6% year over year.\nexpect year-over-year growth to accelerate in q1 of 2021.\noptical communications q4 sales were $976 million, up 7% sequentially and 8% year over year.\nexpect core sales of $3.0 billion to $3.2 billion for q1 of 2021.\nsees q1 earnings per share of $0.40 to $0.44.\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 the call today are Gary Coleman and Larry Hutchison, our co-chief executive officers; Frank Svoboda, our chief financial officer; and Brian Mitchell, our general counsel.\nSome of our comments may also contain non-GAAP measures.\nIn the fourth quarter, net income was $187 million or $1.69 per share, compared to $165 million or $1.45 per share a year ago.\nNet operating income for the quarter was $188 million or $1.70 per share, a per share increase of 9% from a year ago.\nOn a GAAP reported basis, return on equity for the year was 11.6%, and book value per share was $66.02.\nExcluding unrealized gains and losses on fixed maturities, return on equity was 14.5%, and book value per share grew 9% to $48.26.\nIn our life insurance operations, premium revenue increased 5% to $631 million, and life underwriting margin was $177 million, up 6% from a year ago.\nIn 2020, we expect life underwriting income to grow around 4% to 5%.\nOn the health side, premium revenue grew 7% to $275 million, and health underwriting margin was up 5% to $61 million.\nGrowth in premium exceeded underwriting margin growth, primarily due to lower margins at Liberty National.\nIn 2020, we expect health underwriting income to grow around 4% to 6%.\nAdministrative expenses were $61 million for the quarter, up 7% from a year ago.\nAs a percentage of premium, administrative expenses were 6.7%, the same as a year ago.\nFor the full year, administrative expenses were $240 million or 6.7% of premium, compared to 6.5% in 2018.\nIn 2020, we expect administrative expenses to grow approximately 6%, and to be around 6.7% of premium.\nI want to go through the fourth-quarter results at each of our distribution channels.\nI'll start out by saying I'm pleased with the sales growth in our agencies in 2019.\nI'm particularly pleased with the agent count growth and middle management increase we have seen across all of our exclusive agencies in 2019.\nAt American income, life premiums were up 8% to $297 million.\nAnd life underwriting margin was up 9% to $98 million.\nNet life sales were $59 million, up 9%.\nThe average producing count for the fourth quarter was 7,631, up 10% from the year-ago quarter and up 1% from the third quarter.\nThe producing agent count at the end of the fourth quarter was 7,551.\nNet life sales for the full-year 2019 grew 6%.\nThe sales increase was driven by increases in agent count.\nAt Liberty National, life premiums were up 3% to $72 million, and underwriting margin was up 4% to $18 million.\nNet life sales increased 13% to $15 million, and net health sales were $7 million, up 12% from the year-ago quarter.\nThe average producing agent count for the fourth quarter was 2,534, up 17% from the year-ago quarter and up 6% from the third quarter.\nThe producing agent count at Liberty National ended the quarter at 2,660.\nNet life sales for the full-year 2019 grew 9%.\nNet health sales for the full-year 2019 grew 11%.\nThe sales increase was driven by increases in agent count.\nTo better describe our nonagency business at Globe Life management insurance company, we have begun replacing the term direct response to direct-to-consumer.\nAnd our direct-to-consumer division at Globe Life, life premiums are up 4% to $209 million, and life underwriting margin was flat at $39 million.\nNet life sales were $30 million, up 2% from the year-ago quarter.\nFor the full-year 2019, net life sales were flat, due primarily to a decrease in juvenile mailing volume resulting from a decline in the response rates from our juvenile mailing offers.\nAt Family Heritage, health premiums increased 8% to $76 million, and health underwriting margin increased 7% to $19 million.\nNet health sales were up 19% to $18 million due to an increase in both agent productivity and agent count.\nThe average producing agent count for the fourth quarter was 1,228 up 9% from the year-ago quarter and up 8% from the third quarter.\nThe producing agent count at the end of the quarter was 1,286.\nNet health sales for the full-year 2019 grew 9%.\nThe sales increase was primarily driven by an increase in agent count.\nAt United American General Agency, health premiums increased 11% to $108 million, while margins increased 12% to $15 million.\nNet health sales were $32 million, up 7% compared to the year-ago quarter.\nTo complete my discussion of margin operations, I will now provide some projections.\nWe expect the producing agent count for each agency at the end of 2020 to be in the following ranges: American Income, 5% to 7% growth; Liberty National, 5% to 13% growth; Family Heritage, 2% to 7% growth.\nNet life sales for the full-year 2020 are expected to be as follows: American Income, 5% to 9% growth; Liberty National, 8% to 12% growth; direct-to-consumer, down 2% to up 2%.\nNet health sales for the full-year 2020 are expected to be as follows: Liberty National, 9% to 13%; Family Heritage, 8% to 12%; United American individual Medicare Supplement, relatively flat.\nI want to spend a few minutes discussing our investment operations.\nFirst, excess investment income.\nExcess investment income, which we define as net investment income less required interest on net policy obligations and debt was $63 million, a 1% increase over the year-ago quarter.\nOn a per share basis, reflecting the impact of our share repurchase program, excess investment income increased 6%.\nFor the year, excess investment income grew 5%, while on a per share basis, it grew 8%.\nIn 2020, due to the impact of lower interest rates, we expect excess investment income to decline by 2% to 3%, but on a per share basis, be flat to up 1%.\nNow regarding the investment portfolio, invested assets are $17.3 billion, including $16.4 billion of fixed maturities and amortized cost.\nNow the fixed maturities $15.7 billion are investment-grade with an average rating of A-, and below investment-grade bonds were $674 million, compared to $666 million a year ago.\nThe percentage of below investment-grade bonds to fixed maturities is 4.1%, compared to 4.2% a year ago.\nOverall, the total portfolio is rated A- compared to BBB+ a year ago.\nBonds rated BBB are 55% of the fixed maturity portfolio, down from 58% at the end of 2018.\nWhile this ratio is in line with the overall bond market, it is high relative to our peers.\nHowever, we have less exposure than our peers to higher risk assets such as derivatives, equities, commercial mortgages and asset-backed securities.\nWe believe that the BBB securities that we acquire, provide the best risk-adjusted, capital adjusted returns due in large part to our unique ability to hold securities to maturity regardless of fluctuations in interest rates or equity markets.\nFinally, we had net unrealized gains in the fixed maturity portfolio of $2.5 billion, $97 million lower than the previous quarter.\nNow as to investment yield.\nIn the fourth quarter, we invested $449 million in investment-grade fixed maturities, primarily in the municipal, industrial and financial sectors.\nWe invested at an average yield of 4.11%, an average rating of A+ and an average life of 31 years.\nFor the entire portfolio, the fourth-quarter yield was 5.41%, down 15 basis points from the yield of fourth-quarter 2018.\nAs of December 31, the portfolio yield was approximately 5.41%.\nFor 2020, at the midpoint of our guidance, we assumed an average new money yield of 4.10% for the full year.\nWhile we would like to see higher interest rates going forward.\nGlobal Life can thrive in a lower for longer interest rate environment.\nThe extended low interest rates will not impact the GAAP or statutory balance sheets under the current accounting rules, since we sell noninterest-sensitive protection products.\nWhile our net investment income, and to a lesser extent, our pension expense will be impacted in the continuing low interest rate environment, our excess investment income will still grow, it just won't grow at the same rate as the investors' assets.\nFortunately, the impact of lower new money rates on our investment income is somewhat limited as we expect to have an average turnover of less than 2% per year in our investment portfolio over the next five years.\nFirst, I want to spend a few minutes discussing our share repurchases and capital position.\nThe parent began the year with liquid assets of $41 million.\nIn addition to these liquid assets, the parent generated excess cash flow in 2019 of $374 million, as compared to $349 million in 2018.\nThe parent company's excess cash flow, as we define it, results primarily from the dividends received by the parent from its subsidiaries, less the interest paid on debt and the dividends paid to Globe Life shareholders.\nThus, including the assets on hand at the beginning of the year, we had $415 million available to the parent during the year.\nAs discussed on our prior calls, we accelerated the repurchase of $25 million of Globe Life shares into December of 2018, with commercial paper and parent cash.\nWe utilized $20 million of the 2019 excess cash flow to reduce the commercial paper for those repurchases, that left $395 million available for other uses, including the $50 million of liquid assets we normally retain as a parent.\nIn the fourth quarter, we spent $93 million to buy 930,000 Globe Life shares at an average price of $99.82.\nFor the full-year 2019, we spent $350 million of parent company cash to acquire 3.9 million shares at an average price of $89.04.\nSo far in 2020, we have spent $33.5 million to buy 322,000 shares at an average price of $104.20.\nThe parent ended the year with liquid assets of approximately $45 million.\nIn addition to these liquid assets, the parent will generate excess cash flow in 2020.\nWhile our 2019 statutory earnings have not yet been finalized, we expect excess cash flow in 2020 to be in the range of $375 million to $395 million.\nThus, including the assets on hand at January 1, we currently expect to have around $420 million to $440 million of cash and liquid assets available to the parent in 2020.\nAs noted on previous calls, we will use our cash as efficiently as possible.\nIt should be noted that the cash received by the parent company from our insurance operations is after they have made substantial investments during the year to issue new insurance policies, expand our information technology and other operational capabilities and acquire new long-duration assets to fund future cash needs.\nWith the parent company excess cash flows, if market conditions are favorable and absent alternatives with higher value to our shareholders, we expect that share repurchases will continue to be a primary use of those funds.\nWe believe a yield to return that is better than other available alternatives and provides a return that exceeds our cost of equity.\nNow regarding capital levels at our insurance subsidiaries.\nOur goal is to maintain capital at levels necessary to support our current rating.\nAs noted on previous calls, Globe Life has targeted a consolidated company-action-level RBC ratio in the range of 300% to 320% for 2019.\nAlthough we have not finalized our 2019 statutory financial statements, we anticipate that our consolidated RBC ratio for 2019 will be toward the higher end of this range.\nFor 2020, we will continue to target a consolidated company-action-level RBC ratio in the range of 300% to 320%.\nFinally, with respect to our earnings guidance.\nAs Gary previously noted, net operating income per share for the fourth quarter of 2019 was $1.70.\nIn addition, net operating income per share for the full-year 2019 was $6.75.\nThis was $0.01 above the midpoint of our previous guidance.\nPrimarily due to greater-than-anticipated life underwriting income at Liberty National and higher excess investment income.\nFor 2020, we are projecting that net operating income per share will be in the range of $7.03 to $7.23.\nThe $7.13 midpoint of this guidance is slightly lower than previous guidance due to higher-than-expected employee pension and healthcare costs in 2020.\nThose are my comments.\nThose are our comments.\n",
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"content": "compname reports q4 earnings per share $1.69.\nq4 operating earnings per share $1.70.\nsees fy 2020 operating earnings per share $7.03 to $7.23.\nq4 earnings per share $1.69.\nsees net operating income per share will be in range of $7.03 to $7.23 for year ending dec 31, 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: It's good to be with everyone.\nWe continue to see a customer-first culture taking hold throughout our stores, fulfillment centers, and corporate offices.\nMaintaining this emphasis on the customer will remain key as we work to grow across categories and new areas.\nDuring the quarter, we focused on expanding our selection, accelerating delivery speeds, and improving the customer experience.\nWe also made long-term investments in our infrastructure, talent, and technology.\nWe believe our emphasis on the long term is positioning us to build what will ultimately become a much larger business relative to where we are in 2021.\nWe've also been exploring emerging opportunities in blockchain, NFTs, and Web 3.0 gaming.\nWith this context in mind, here are a few recent initiatives of note.\nWe continued growing our catalog by adding new products across consumer electronics, PC gaming, and other categories with significant addressable markets.\nSome of the brands we've established new and expanded relationships with include Samsung, LG, Razer, Vizio, Logitech, and Asus just to name a few.\nSales attributable to these new and expanded brand relationships helped to drive growth in the quarter.\nWe also began implementing new assortment strategies within our stores, including an expansion of PC gaming merchandise across approximately 60% of U.S. locations.\nWith respect to hiring, we kept adding talent across the organization, including specialists with experience in e-commerce, UI/UX, blockchain, operations, and supply chain.\nOver the course of 2021, we have made more than 200 senior hires from some of the top technology companies.\nWe also recently added a new office in Seattle and have identified an office location in Boston, positioning us within two tech hubs with strong local talent markets.\nHaving footprints in these cities will help us attract and retain tech-focused teams with expertise in e-commerce and other areas.\nShifting gears to our fulfillment network, we've started shipping orders from Reno, Nevada while increasing shipments from York, Pennsylvania.\nOur expanded network is continuing to help us improve shipping times to customers across the U.S. Additionally, we recently announced a plan to hire up to 500 associates at our new customer care facility in South Florida.\nThe facility, which is now operational, will be a key part of our new U.S.-based customer care operation.\nLastly, we've further strengthened our financial position by securing a new $500 million ABL facility, which closed early in November and includes improved liquidity and terms.\nThe facility provides reduced borrowing costs, lighter covenants, and more flexibility.\nLet me now turn to our financial results for the quarter.\nNet sales increased 29.1% to just under $1.3 billion, compared to just over $1 billion during the same period in 2020.\nAs indicated in the past, long-term revenue growth is the primary metric by which we believe stockholders should assess our execution.\nSG&A was $421.5 million, or 32.5% of sales, compared to $360.4 million or 35.9% of sales in last year's third quarter.\nWe reported a net loss of $105.4 million, or $1.39 per diluted share, compared to a net loss of $18.8 million or loss per diluted share of $0.29 in the prior-year third quarter.\nThere were no one-time transformation, transaction, or related costs during the period.\nTurning to the balance sheet, we ended the quarter with cash and cash equivalents of over $1.4 billion, nearly $1 billion higher than the end of the third quarter last year.\nWe continue to maintain a sizable cash position even while front-loading investments in inventory to meet heightened demand and mitigate the full impact of global supply chain issues.\nAt the end of the quarter, we had no borrowings under our ABL facility and no debt other than a $46.2 million low-interest unsecured term loan associated with the French government's response to COVID-19.\nTotal liabilities compared to the third quarter of last year were down $262.1 million.\nCapital expenditures for the quarter were $12.5 million, bringing year-to-date capex to $40.7 million.\nWe anticipate capex will continue to increase as we make pragmatic investments in our infrastructure and tech.\nIn the third quarter, cash flow from operations was an outflow of $293.7 million, compared to an outflow of $184.6 million during the same period last year.\nIn order to meet customer demand and drive sales growth amid the tight supply chain, we grew our inventory to $1.14 billion as of the close of the quarter, compared to $861 million at the close of the prior year's third quarter.\nIn terms of our outlook, we're not providing formal guidance at this time.\nBefore wrapping up, I do want to quickly reinforce some key points about our go-forward operating philosophy.\nOur emphasis on the top line stems from our leadership team's significant e-commerce experience and belief that revenue growth is critical.\nWe believe revenue growth will translate to scale and market leadership.\nAnd from there, scale and market leadership will translate to greater free cash flows over time.\nOur focus on the long term means we will continuously prioritize growth and market leadership over short-term margins.\nI'll leave it there for this quarter.\nAs always, we appreciate all the enthusiasm and support from our customers, employees, and stockholders who we believe are the best in the world.\n",
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"content": "qtrly loss per share $ $1.39.\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, we will discuss our operational and financial results for the three months ended March 31st, 2020.\nAvi Goldin, our Chief Financial Officer, will follow my discussion with a deeper dive into the quarter's financial results.\nMy remarks today will focus on our operational results.\nI will also review the effects of the restrictions imposed, due to the COVID-19 pandemic, which had its first full month of impact in April following the quarter close.\nFinally, I'll touch on some of our promising growth opportunities.\nGenie Energy achieved very strong first quarter results.\nRobust growth in our customer base and strong electricity margins here in the US helped us achieve record levels of revenue and gross profit.\nOur global customer base surpassed both the 400,000 RCE and 500,000 meter milestones, powered by expansion in both our domestic markets and overseas books.\nHere in the US, Genie Retail Energy added a net 20,000 RCEs and 15,000 meters during the quarter.\nThe RCE over meter ratio has increased from our historical levels, reflecting our recent focus on adding high-quality, high consumption meters.\nGRE closed the quarter serving 330,000 RCEs comprising 384,000 meters.\nOverseas, where more of our customer base resides in apartments and average consumption is significantly lower, GRE International added 7,000 RCEs and 20,000 meters to close the quarter serving 72,000 RCEs comprising 148,000 meters.\nBy March 31st, we had increased our global customer base to 401,000 RCEs served and 532,000 meters.\nDuring the trailing 12 months, we increased our RCEs served by 20% or just over 68,000 and increased global meters served by 33% or 133,000 meters.\nPart of our success, growing our customer base is attributable to improvements in domestic customer churn profile that we have achieved over the past couple of years.\nWe have put into place initiatives across our business to mitigate churn, including customer service processes, acquisition and offering mix.\nCustomer churn in the first quarter decreased again to 4.7% per month from 5.3% per month in the first quarter of 2019.\nFor additional perspective, our average churn over the past 12 months is 5.4% versus 6.6% in the 12 months proceeding.\nAt Genie Energy Services, our Prism Solar unit delivered most of its outstanding orders to JP Morgan Chase.\nAs the solar market continues to evolve, we've begun to rightsize overhead and streamline Prism's operations.\nDiversity, meanwhile, continues to progress toward profitability after delivering the most successful year in its history in 2019.\nAt GOGAS, we still hope to complete the final well test in Northern Israel, as early as the close of the second quarter.\nWe have reduced cost and overhead to the bare minimum in the interim.\nTurning now to the impact of the coronavirus.\nDue to the timing of the impact, COVID-19 and associated public health measures did not significantly affect customer acquisition activities this quarter.\nWe suspended all door-to-door customer acquisition toward the end of March, at about the same time as most, if not all, other retail providers who use that channel.\nWe then pivoted to focus more resources on our other acquisition channels.\nIn April, after the quarter closed, the near-term impact of the pandemic became clear.\nWith quarantines in place in all of our markets, we nevertheless had a strong month highlighted by three developments.\nFirst, we benefited from an increase in per-meter electricity consumption, compared to the seasonally adjusted averages.\nResidential customers who comprise the great majority of our book are spending more time at home and consequently using more electricity.\nSecond, suspension of door-to-door customer acquisition across all of our geographic markets reduced our customer acquisition expense in April.\nDoor-to-door is typically our most expensive acquisition channel in the US and the alternative channels that we have transitioned to have lower costs.\nAnd finally, because one of the most potent drivers of the customer churn is door-to-door customer activity, engaged in by our competitors, the industrywide suspension of door-to-door programs further reduced our churn rate in April.\nOn the downside, the rate of gross customer additions here in the US has slowed somewhat, and the UK and Japan has virtually stopped.\nThe pandemic impact on customer acquisition is evolving rapidly, but we may see net meter attrition in the coming months.\nIn addition, we are closely monitoring the margin strength of the meters we have been adding through alternative channels.\nOverall, the near-term impact of the pandemic has demonstrated the resilience of our business.\nWe have made rapid adjustments to the evolving marketplace, and our steps are bearing fruit.\nThat said, like almost all businesses, we will do better over the long-term when our customers are prospering.\nBut we are well positioned to meet the challenges ahead and pursue our growth opportunities.\nHistorically, Genie Energy's growth has been driven primarily by access to new markets.\nWe are fortunate to have recently entered the large and dynamic electricity market in Texas, and our customer acquisition program there is performing well.\nWe've already added approximately 10,000 in our seasonal Lone Star State.\nOutside of Texas, we are looking at entering several new utility territories in the second quarter.\nAnd later in the year, two new states, Michigan and Georgia.\nOverseas, through our finish-based REP Lumo, we entered the electricity market in Sweden last month and have only just begun to scratch the surface of our two largest international markets, the UK and Japan.\nTo wrap up, the first quarter was exceptional with robust RCE and meter growth, lower churn, and as Avi will detail, strong financial results.\nWe have taken decisive action to calibrate our operations to address the early challenges of the pandemic and have abundant opportunities for growth, particularly in new markets.\nAs a result, our outlook remains positive.\nOur geographically diversified markets, liquid balance sheet and very low level of long-term debt put us in a great position to build on the first quarter's momentum.\nGenie's Board of Directors has been vigilant about returning value to shareholders.\nLast year, in addition to paying $0.30 in aggregate dividends to our common stockholders, we repurchased $5.6 million of common stock.\nToday, in light of the resilience of our business, its underlying strength and the abundant growth opportunities, Genie's Board of Directors has increased our quarterly dividend to $0.085, a 13% increase.\nNow with more on this quarter's financial results, here is our Chief Financial Officer, Avi Goldin.\nMy remarks today will cover our financial results for the three months ended March 31st, 2020.\nThroughout my remarks, I compare the first quarter 2020 results to the first quarter of 2019, focusing on the year-over-year rather than sequential comparisons removes from consideration the seasonal factors that are characteristic of our retail energy business.\nThe first quarter includes the peak heating season and is typically characterized by relatively high levels of electricity consumption, the highest level of natural gas consumption of any quarter of the year.\nThe first quarter's financial results were strong and included record levels of revenue and gross profit.\nAs the timing of events were skewed toward the second half of March, the COVID-19 pandemic did not significantly impact our first quarter financial results.\nConsolidated revenue in the first quarter increased $17.4 million to $104.1 million.\n$12.7 million of the increase was contributed by our Genie Energy Services division.\nRevenue jumped to $18 million on the fulfillment of outstanding solar panel orders by our Prism Solar subsidiary.\nGoing forward, we do not anticipate comparable order volumes or revenue.\nAnd as Michael indicated, we are taking steps to reduce costs and position that business for the future.\nGenie Retail Energy contributed $79.1 million in revenue, an increase of $2.6 million, compared to the year ago quarter.\nRobust growth in our electric meter customer base over the past 12 months drove a 17% increase in kilowatt hours sold, more than offsetting a slight decrease in per unit revenue.\nThis was partially offset by a decline in revenue contribution from the gas book as we experienced lower consumption and pricing per therm.\nAt Genie Retail Energy International, revenue totaled $7 million, an increase of $2.1 million from the year ago quarter.\nThe increase reflects customer base expansion at both Lumo and Finland and Genie Japan.\nAnd its results of operations are not consolidated in our revenue, gross profit or SG&A.\nConsolidated gross profit in the first quarter increased $3.3 million to $28.9 million, also a record for the company.\nGRE contributed $27.6 million of that total, an increase of $2.9 million from the year ago quarter, predominantly reflecting the increase in kilowatt hours sold, a modest increase in margin per kilowatt hour and a decrease in cost per therm sold.\nIncreased rates of customer acquisition at GRE drove an increase in consolidated SG&A expense to $19.5 million in the first quarter, $3.7 million higher than the year ago period.\nEquity and the net loss of investees, which is comprised of our investments in Orbit Energy and our minority stake in Atid, decreased to $379,000 from $797,000 in the first quarter of 2019, as we made no additional investments in either entity during the quarter.\nWe now expect to provide Orbit with some additional growth capital later this year.\nOur consolidated income from operations came in at $9.2 million, compared to $9.8 million in the year ago quarter, as the increase in customer acquisition expense narrowly offset the gain in gross profit.\nAdjusted EBITDA was $10.3 million, effectively even with the year ago quarter.\nEPS was $0.20 per diluted share, $0.01 below the year ago quarter.\nOur balance sheet remains very strong.\nAt March 31st, we reported $157.2 million in total assets, including $36.4 million in cash, cash equivalents and restricted cash.\nLiabilities totaled $71.5 million, of which just $2.2 million were non-current.\nAnd net working capital totaled $51.5 million, an increase of $10.3 million from our total three months ago.\nCash used in operating activities was $2.7 million in the first quarter of 2020, compared to cash provided by operating activities of $7 million in the year ago period.\nThe first quarter's operating cash flow is negatively impacted by the deliveries of Prism Solar, as we received payment for this activity upfront at the end of 2019, as well as the posting of cash collateral in support of certain hedge positions at GRE.\nTo wrap up, the strong financial results this quarter reflect the impact of our sustained investment in meter acquisition over the past year.\nLooking ahead, and as Michael discussed, though the COVID-19 pandemic creates uncertainty, its impact is likely to be mixed in the near-term with certain factors, improving performance and others working against it.\nWhile the long-term holds a greater uncertainty, we are confident that Genie is well positioned to continue to realize value for shareholders.\nAs Michael mentioned, supported by a strong outlook, the Board of Directors has approved an increase in the quarterly dividend to $0.085 a share, a 13% increase.\nThe indicative annual dividend rate is now $0.34 per share.\n",
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"content": "genie energy q1 earnings per share $0.20.\nq1 revenue rose 20.1 percent to $104.1 million.\nq1 earnings per share $0.20.\nat march 31, 2020, genie energy had $157.2 million in total assets, including $36.4 million in cash, cash equivalents and restricted cash.\nhas declared a q1 dividend of $0.085, a $0.01 increase from prior quarters.\ngenie energy - with our diversified markets, liquid balance sheet,very low level of long-term debt, are positioned to build on q1's terrific momentum.\ngenie's board of directors has increased our quarterly dividend 13% to $0.085 per share.\nour outlook remains positive.\nanticipate that covid-19 will have a mixed impact on our business operations and financial results.\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, we plan to start the call by educating investors about our current business and our growth strategy, followed by a discussion of the value proposition that we believe will drive business results and stockholder value going forward.\nI will also provide a review of our operational and high-level financial results for the three months ended June 30, 2021.\nWe believe Genie Energy offers unique investment opportunity within the energy space.\nGenie operates in two core parts of the energy industry, retail and renewables.\nOur global retail energy businesses are asset-light operations that market and resell electricity and natural gas to consumers and small enterprises in deregulated markets, while our renewables business sells services and installs solar solutions.\nCurrently, our U.S. retail business is the primary driver of our profits, but we believe the other segments have tremendous potential.\nOur current businesses are supported by our enterprise function, which is responsible for customer acquisition, risk management and customer care.\nOur marketing and sales professionals leverage deep data analysis to identify market opportunities and efficiencies that our sales and marketing teams can then exploit through a variety of sales channels, offering green or traditional options as well as fixed and variable rate plans.\nThis data analysis also allows us to segment current and potential customers with specific payback periods based on product and customer type, while also enabling us to bring a higher level of customer care and retention and also offer customer reward programs.\nFinally, our risk management function acquires both green energy and carbon-based supply and utilizing hedging strategies to reduce commodity volatility risk.\nFrom the total enterprise viewpoint, we believe three key areas differentiate us from the competition and will allow us to create outsized stockholder returns over time.\nFirst, we have derisked the company through market product and geographical diversification with retail energy operations across 16 U.S. jurisdictions, The U.K. and Scandinavia and the rapidly growing solar energy business in the U.S. Second, we differentiate ourselves from the competition through our strong balance sheet with minimal to no debt, an asset-light business model, which not only reduces our relative cost of capital that allows us to self-fund and invest in growth opportunities, such as expanding our international retail energy and domestic solar businesses.\nIt also provides us the flexibility to opportunistically grow our U.S. retail business through a disciplined approach to taking share in existing markets or enter new markets as conditions permit.\nFinally, we believe the operational excellence we have gained in deregulated markets in the U.S. helped drive growth and profits in our European business.\nUltimately, we believe these factors provide us with competitive advantages and will help us drive higher returns on the competition.\nMoving into each of our businesses, we have three reporting segments.\nTwo of these are emerging growth businesses, Genie Retail International and Genie Renewables, and the third, Genie Retail USA, consistently generates cash in up or down markets on an annualized basis.\nOur retail energy business operates under several different names in both the U.S. and Europe.\nOur core business today, Genie Retail U.S., is the largest and most mature of the three segments, generating the most revenue and highest margins and profits.\nIt currently operates in 15 states and Washington, D.C. under a variety of names reselling electricity from both carbon-based and green sources as well as natural gas.\nThis business has proven to be financially stable and has made money in a variety of market environments, which has allowed the company to remain principally debt-free and make disciplined investments in growth.\nThe competitive environment is fragmented with few large players and many independent small players.\nWe believe our competitive advantages, including our ability to self-fund expansion without borrowing, our strong risk management and trading programs that reduce commodity volatility, strong data and analytics capabilities and the depth and breadth of experience in our various sales channels.\nOur current U.S. strategy revolves around opportunistically taking incremental share in our existing 16 markets.\nWe also plan to leverage our installed base and marketing prowess to add new products and services.\nBottom line, we believe we have market-leading capabilities that will allow us to take share, introduce and upsell new products and successfully expand into new states as conditions warrant.\nWith respect to our current growth investments, we've been investing in and generating customer growth with expanding margins in Genie Retail International through an established presence in unregulated markets in the U.K. and Scandinavia.\nWe believe this opportunity is comparable to the U.S. opportunity with a few differentiators that we believe bode well for value creation.\nBetween The U.K. and Scandinavia, there are roughly 60 million energy meters installed with about 80% of them in The U.K.\nWe initially penetrated The U.K., which has shown strong growth, expanding margins and is now nearly capable self-funding continued growth.\nIn Scandinavia, we initially acquired our way into filling 2019, which similar to the U.K. is starting to mature, and we'll soon have the ability to sell on future growth in Finland while also expanding into new markets, such as our recent expansion into Sweden.\nOur Scandinavian strategy is to centralize our enterprise functions to efficiently manage operations and create significant operating leverage as we continue to gain scale and in the years to come, move into other markets such as Denmark, Norway and possibly others.\nFinally, moving to Genie Renewables, our strategy here today is to leverage our existing geographic footprint and sales channels in the U.S. to offer a range of residential and commercial solar solutions.\nWe aspire to capture a larger part of the solar value chain to both drive growth and higher margins.\nWhile we are not ready to talk in full detail publicly about these plans, we have a robust pipeline of solar installations and projects that we expect will generate meaningful revenue and profits.\nWe believe our Renewables segment has excellent potential, and we will provide more details as appropriate.\nToday, we benefit from diversification both at the state level and with our international operations in solar business.\nHowever, we realized that with three business segments, each of which is in a different stage of maturity, we have to prioritize growth investments and, therefore, can only take advantage of opportunities on a business-by-business basis.\nAdditionally, we believe that our valuation doesn't reflect the individual prospects and performance of each business as there are different value propositions for investors due to the higher growth in international energy operations and the moderate growth and cash flow generation of the U.S. retail business.\nGiven these factors, we have been conducting a strategic review of our businesses and are currently evaluating opportunities to unlock shareholder value by separating our international operations from the U.S. business, potentially through a spin-off to existing Genie stockholders of a new publicly traded entity as we don't believe the combined company is being valued appropriately by investors.\nWe believe doing so accomplishes several goals, and the rationale here is typical for companies carving out operations.\nFirst, with a dedicated management team, the international operation can be solely focused on aggressive expansion in current and new markets through both organic and inorganic mechanisms without diluting Genie Energy stockholders.\nWith less internal competition for resources, it will also allow Genie to grow more aggressively in its U.S. retail business through market share gains in existing markets as well as potential expansion into new states as well as provide additional capital to expand our renewables operations as discussed earlier.\nWe are currently still in the evaluation process, and we'll continue to provide updates on any material progress.\nNow I'll talk briefly about our second quarter business trends and results as well as provide some insight in the third and fourth quarter expectations.\nQ2 was a strong quarter despite ongoing issues related to COVID-19.\nWe did have some moving parts in the financials due to the sale of our Japanese business and in Texas as the Governor signed review legislation into law, which is expected to provide a minimum of $1.5 million of relief.\nWe hope and expect the relief amount to grow as the legislature in Texas continues to discuss fair outcomes from the February storm.\nIn the U.S., our door-to-door marketing efforts are still not back to full strength due to government restrictions, but they are growing again.\nThat growth, of course, continues to be dependent on what happens with Covid.\nIn the meantime, our U.S. Retail business contributed strong profitability even as the second quarter is usually the seasonally weakest part of our year.\nInternational operations revenue and gross profits increased as we continue to invest in our U.K. and Sweden operations and the Finland business recorded material profitability.\nThe Renewables division was still small, executed on another profitable quarter and is poised for both revenue and gross profit growth in the future.\nWe are excited about our potential and look forward to updating you further on the potential spin-off and other initiatives.\nNow over to Avi Goldin for his discussion of our Q2 financial results.\nMy remarks today cover our financial results for the three months ended June 30, 2021.\nThroughout my remarks, I compare second quarter 2020 results to the second quarter of 2020.\nFocusing on the year-over-year rather than sequential comparisons removes from consideration the seasonal factors that are characteristic of our retail energy business.\nI do want to point out, however, that the second quarter, like our fourth, is characterized by low commodity consumption relative to peak and cooling seasons during the first and third quarters, respectively.\nI'd also like to point out that there are some moving parts this quarter that make an apples-to-apples comparison somewhat challenging.\nFor example, we acquired the part of Orbit Energy that we didn't already own in the fourth quarter of 2020.\nSo our second quarter 2020 results were not fully consolidated into our financials as they are in the second quarter of 2021 under Genie Retail Energy International.\nOn the other side, we sold our Japanese operations in early 2Q '21, which generated a gain, but we recorded minimal revenue during the quarter.\nWhile in Q2 2020, a full quarter of Genie Japan revenue was recorded under Genie Retail Energy International.\nThat said, results this quarter were strong and comparable to the outstanding second quarter results we reported a year ago.\nConsolidated revenue increased 28% to $98 million, the highest level for any second quarter in our history.\nThe top line increase was generated predominantly by Genie Retail Energy International, where revenue increased to $28 million from $5 million in the year ago quarter.\nResults from Orbit Energy in the U.K. were not consolidating to repurchase the outstanding stake in the fourth quarter.\nIn the year ago quarter, Orbit generated $15 million in revenue.\nSetting aside the impact of consolidating Orbit revenue in the current period, the international business increased revenue by $8 million year-over-year, driven by the robust growth of our business in The U.K. and Scandinavia.\nRevenue at Genie Retail Energy, our domestic retail business, increased 1% to $67 million.\nElectricity and natural gas consumption per meter, both increased compared to year ago quarter, which suggests that the boost in per meter consumption we've seen since the shift to work from home could have an enduring impact.\nThe increase in assumption was augmented by higher average sales per commodity unit, partially offset by a decrease in overall meters served.\nThe net meter count decreased in the quarter as churn outpaced sales.\nBoth churn and sales are below historical levels as the industry continues to be limited and access to face-to-face marketing channels that traditionally drive growth.\nRevenue for our Renewables business was $2.3 million, a decrease from $4.6 million in the year ago quarter, when we delivered the remainder of a large solar panel manufacturing order at a very low margin.\nAs Michael mentioned, we are excited about the potential of this segment as we continue to expand into higher-margin renewables-focused businesses, including our community solar installations and community solar projects.\nConsolidated gross profit increased 22% to $24 million, a very strong second quarter results with increased contributions from all three of our reporting segments.\nConsolidated SG&A increased to $22.4 million from $16 million.\nThe increase was primarily at GRE International and reflects the consolidation of Orbit Energy, including Orbit customer acquisition expense, but also at Genie Retail Energy, driven by the partial resumption in door-to-door sales channel as well as other marketing spending.\nOur consolidated income from operations totaled $1.4 million compared to $2.7 million in the year ago quarter.\nThe key driver here was again the consolidation of Orbit Energy, which, while it is nearing the ability to self fund is still losing money as we continue to invest in customer acquisition.\nAdjusted EBITDA was $3.1 million compared to $3.5 million in the year ago quarter.\nAlthough the scale is small, it's worth noting that our renewables business achieved positive income from operations and adjusted EBITDA for the second straight quarter.\nGenie Energy's income per diluted share was $0.19 compared to $0.06 in the year ago quarter.\nOur bottom line benefited from a $4.2 million gain on the sale of Genie Japan and an unrealized gain of $2.9 million on marketable equity investments, predominantly our investment in holdings that are mark-to-market.\nTurning now to the balance sheet.\nAt quarter end, cash, restricted cash and marketable equity securities totaled $50.9 million at June 30, a strong increase from $41.7 million three months earlier and our highest levels in recent years.\nFrom a working capital perspective, we have more than fully recovered from the impact of winter storm area in the first quarter.\nTo wrap up, our operating results were strong even compared to outstanding year ago quarter, and our bottom line results were positively impacted by the nonroutine gains I mentioned earlier.\nOur balance sheet is in very good shape and provides us the flexibility to invest in the growth programs, as Michael discussed.\n",
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"content": "qtrly earnings per share $0.19.\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, we will discuss our operational and financial results for the three months ended September 30, 2020.\nAs in prior quarters, my remarks will focus on our operational results and key performance indicators.\nAvi Goldin, our Chief Financial Officer, will follow with a deeper dive into the quarter's financial results.\nGenie Energy added 21,000 net RCEs and 22,000 net meters during the quarter.\nInclusive of Orbit Energy, we ended the third quarter with the largest global customer base in our history, 442,000 RCEs and 558,000 meters.\nOur continued expansion has been driven by our long-term investment in customer acquisition and geographic diversification across our REP business.\nThis quarter, we again delivered growth in our global customer base while returning cash to our stockholders and reporting improved bottom line results.\nLet's start with our domestic retail supply business, Genie Retail Energy.\nGRE added 7,000 net RCEs and 1,000 net meters during the quarter.\nGRE's gross domestic meter adds in the third quarter totaled 44,000, a 4,000 meter increase from the previous quarter but still a 32,000 meter decrease from the pre-COVID-19 level we achieved in the third quarter of last year.\nThe relaxation of some public health measures over the summer enabled us to resume modest levels of in-person customer acquisition programs in some markets.\nWe should be able to return to more robust growth in upcoming quarters as we begin marketing in a few new utility territories, provided that governments continue to relax COVID-related selling restrictions.\nMonthly average churn fell to 3.7% from 3.9% last quarter and from 5.3% in the year ago quarter.\nThe decreases reflect our internal efforts to enhance customer retention, the slower pace of gross meter adds since COVID-19, the pandemic-related reductions on customer acquisition efforts by our competitors and the migration of our book toward fixed rate plans, which typically experience lower churn rates than variable rate plans.\nGRE's third quarter financial results were keyed by a surge in average electricity consumption per meter, which more than offset modest margin declines.\nMidsummer's warm weather and the transition to stay at home during the pandemic both significantly boosted residential demand.\nAt Genie International, we again delivered strong customer base expansion despite the challenges of the COVID-19 impacted environment.\nWe added 14,000 net RCEs and 21,000 net meters during the quarter.\nAt September 30, our International book held 92,000 RCEs and 182,000 meters, contributing 1/5 of our global RCEs and 1/3 of our global meters.\nInternational growth was led by our businesses in Scandinavia and the U.K., while pandemic restrictions severely constrained our ability to market in Japan.\nLumo Energia, our Helsinki-based supply business, delivered an especially strong quarter and entered a significant new market, Sweden.\nIn the U.K., where we operate through our Orbit Energy joint venture, our meter and RCE counts both increased more than 70% compared to the third quarter a year ago and generated revenue at an annual rate of more than $50 million.\nIn light of Orbit's rapid growth and promising potential, we bought out our JV partner's interest for $1.7 million last month.\nAnd beginning in the fourth quarter, we will consolidate Orbit's results as a wholly owned subsidiary.\nGiven the vast size of the U.K. market, the capable local management team in place and the favorable return on investment we've experienced to date, Orbit is on track to become EBITDA accretive within the next two years and to be a significant contributor to Genie's growth for many years to come.\nAt Genie Oil and Gas, we were able to begin our testing at Afek Ness 10 drilling site in Israel's Golan Heights last week.\nThe well's initial results were ambiguous, and it is the last site in GOGAS' exploratory program where we could still find clear-cut evidence of a commercially viable resource.\nWe could have test results this month, and if there's material news to share, we will share it.\nOur continued progress would not be possible without their dedication and flexibility.\nTake it away, Avi.\nMy remarks today cover our financial results for the three months ended September 30, 2020.\nThroughout my remarks, I compare the third quarter of 2020 results to the third quarter of 2019.\nFocusing on the year-over-year rather than the sequential comparisons removes some consideration of the seasonal factors that are characteristic of our Retail Energy business.\nResults this quarter were again very strong.\nWe delivered significant top and bottom line improvements from the year ago quarter, primarily due to strong domestic electricity demand and growth in our international markets.\nBy the end of the quarter, we enjoyed a significantly fortified balance sheet with enhanced liquidity.\nConsolidated revenue increased in the third quarter of 2020 by 12% to $96 million.\nRevenue at Genie Retail Energy, or GRE, our domestic REP segment increased 10% to $89 million on a significant increase in average per meter electricity consumption that Michael mentioned.\nStrong electricity demand more than compensated for decrease in profit per kilowatt hour sold.\nAt Genie Retail Energy International, the segment that comprises our REP operations outside of the U.S., revenue increased 92% to $5.8 million on meter growth and higher average revenue per meter.\nConsolidated gross profit, predominantly generated by GRE, increased 4% to $27 million as the increase in kilowatt hour sold offset a decrease in gross profit per kilowatt hour sold.\nGross margin decreased 240 basis points to 28.4% on the decrease in gross profit per kilowatt hour sold at GRE.\nOur consolidated SG&A spend decreased 3% to $19 million, as domestic restrictions on face-to-face customer acquisition programs during the pandemic slowed the pace of gross meter adds, which was only partially offset by higher spending on customer acquisition internationally.\nEquity and the net loss in equity method investees was $146,000 this quarter compared to $238,000 in the year ago quarter, reflecting our share of the results at Atid in Israel.\nWe did not put additional cash into our U.K. joint venture in the quarter nor in the year ago quarter.\nAs Michael mentioned, following quarter end, we acquired our partner's stake in the U.K. venture for $1.7 million.\nAs a result, we will be reporting our U.K. financials as part of our consolidated results going forward.\nConsolidated income from operations increased 22% to $8.5 million, while adjusted EBITDA increased 19% to $9.5 million.\nThe increase has resulted primarily from higher average consumption per meter and decreased domestic customer acquisition spend.\nAt GRE, income from operations increased 14% to $12.3 million, and adjusted EBITDA increased 13% to $12.6 million.\nThe loss from operations at Genie International was $1.6 million, and adjusted EBITDA loss came in at $1 million, both unchanged from levels in the year ago quarter.\nConsolidated earnings per diluted share increased to $0.24 from $0.18 in the year ago quarter.\nCash generated by GRE further strengthened our balance sheet.\nCash, cash equivalents and restricted cash increased to $49 million at September 30, 2020, from $42 million at the close of the second quarter, while working capital increased to $55 million from $49 million.\nTo wrap up, Genie delivered another very strong quarter and remains well positioned to continue delivering on its plan.\nThat concludes my discussion of our financial results.\nNow operator, back to you for Q&A.\n",
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"content": "compname reports q3 earnings per share $0.24.\nq3 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, we will discuss our operational and financial results for the three and 12 months period ended December 31, 2020.\nAlso I'll discuss the impact of Winter Storm Uri that struck Texas in February, the volatility in Japan's wholesale markets as well as our operational and strategic responses to those of events.\nAvi Goldin, our Chief Financial Officer, will follow with a deeper dive into the quarter's and full year's financial results.\nWe capped an outstanding 2020 with solid fourth quarter results.\nLet's start by looking at the most fundamental of our KPIs, our customer base.\nDespite the challenges of the global pandemic, we were able to increase our global customer base by 66,000 RCEs during the year to reach 440,000 RCEs at year-end, a 17% increase and a record for our Company.\nIn the fourth quarter, historically our slowest sales quarter, RCEs decreased slightly from 442,000.\nHere in the U.S., GRE's customer acquisition program, specifically face-to-face sales channels, has been constrained since last spring by COVID-19-related restrictions on in-person solicitation.\nOn the flip side, churn has also been lower because the COVID-related sales restrictions apply equally to our competitors.\nNevertheless, we added 28,000 domestic RCEs during the year to end the year with 337,000 RCEs despite a fourth quarter decline from 350,000 RCEs.\nAt GRE International, we increased our RCEs served by 58% during 2020 and a 12% during the fourth quarter to reach 103,000 RCEs at year-end.\nOur Scandinavian operation was the largest contributor to RCE growth year-over-year and sequentially.\nGiven the challenges of COVID-19, our team did an outstanding job in 2020 to continue building our customer base.\nWe are well positioned to build upon that success in 2021.\nNow, I'd address the weather and related challenges in Texas and Japan.\nAs you know, Texas was hit by an extremely powerful series of winter storms in mid-February.\nThe storms caused an unprecedented surge in electricity demand and at the same time, knocked some sources of supply offline.\nThat imbalance led the PUC to manipulate spot market prices, moving them from the usual sub-$50 per megawatt hour to $9,000 per megawatt hour, where they were artificially maintained by ERCOT, a Texas grid manager, for five full days around the clock.\nJust to give you an idea of how completely unprecedented this was, in the previous 10 years, energy prices only hit $9,000 without government interference for a total of 16 hours.\nOn top of these absurd prices for supply, Genie and other retail suppliers are being saddled with exorbitant load shedding and ancillary charges.\nFor reference, in the week before the storm, ancillary charges amounted to approximately $2 per megawatt hour, while during the storm the prices spiked to over $20,000 per megawatt hour.\nWhile we were fully hedged for colder-than-normal seasonal weather having bought power well in excess of what our customers demand on a normal winter day, the unprecedented increase in ancillary charges, the artificially sustained period of $9,000 per megawatt hour supply pricing and the extraordinarily high usage led to significant losses.\nSince the storm, our meter data has been updated numerous times and our bills have been reissued and resettled multiple times.\nAt this moment, the information we received to date from our supplier BP indicates that our costs as a result of the storm stand at approximately $12.8 million.\nWe believe that we are close to receiving the final information about our total losses.\nAnd when we have a complete accounting, we will provide it to you.\nWe are hopeful that new information and resettlements that have already been ordered by the PUC but not yet passed due to our bills will bring relief rather than add to the pain.\nWe will know soon enough.\nLet's not forget that what happened in Texas as a result of this natural disaster caused very real suffering to many people throughout the region.\nOur hearts go out to them.\nBut much of the suffering could have been prevented.\nThe mistakes of ERCOT, the PUC and the generators compounded the storm's damage and I commend Governor Abbott, Lieutenant Governor Patrick, and the many members of the legislature who have come out the call for the PUC to take immediate corrective actions.\nWe join them in asking the PUC to remove the financial repercussions for the decisions that culminated in epic market failure away from the REP industry and to be fairly distributed to the relevant market participants.\nHowever, to date, the PUC had allowed retailers who are protecting customers from the price increases that the PUC itself instituted to take the financial fall.\nThe injustice is grave and we intend to fight it using [Indecipherable] necessary to protect our shareholders, and we intend to come out of this stronger than ever.\nUnfortunately, Texas is not the only market where we faced unprecedented wholesale price spikes in the first quarter.\nEnergy suppliers in Japan, including at our subsidiary Genie Japan, were squeezed when generators were unable to meet a spike in demand caused by a recent cold snap.\nPrices on the Japan Electric Power Exchange surged to $2,390 per megawatt hour, becoming, for a while, the most expensive market in the world.\nWith only four of its 33 nuclear power plants operating, the country is heavily relying on LNG to meet short-term burst in demand.\nBut with less than two weeks of LNG supply and reserve, the country was unable to meet its needs after Korea and China snapped up the available supply.\nOnce again as a result of the generators' and regulators' mistakes, the retail suppliers are bearing the cost even though many, including Genie, were well hedged going into the season.\nWe have better information on the cost in Japan and our RCE base is smaller than in Texas, so we can say with some confidence that the hit in Japan will be approximately $2.5 million.\nAs a result of these two events, our operating results and balance sheet position will take a meaningful hit in the first quarter.\nOur management team and Genie's Board have adopted a plan to replenish our cash war chest, prudently grow our core business in the U.S., while maximizing cash generation, take operational steps to lower our risk profile and to reevaluate underperforming assets and reform or shed higher risk longer-term opportunities.\nIn light of this, we are pausing the dividend on our common stock to maximize our ability to grow the businesses that are generating rather than consuming cash.\nWe are also using this opportunity to progress our other growth businesses such as the demand for renewables, which leverage our existing strengths and strategic assets to align more fully with the prevalent changes under way as energy market shift to renewables and other cleaner supply sources.\nWe have already made some material strides in this regard.\nWe hope to share good accretive news about this in future quarters.\nWhile I'm disappointed in the Texas and Japan results, you can be sure that we will do everything in our power to recoup those losses.\nI'm confident that our tightened focus on Genie's best performing assets will yield good results for shareholders.\nMy remarks today cover our financial results for the three and 12 months ended December 31, 2020.\nThroughout my remarks, I will compare fourth quarter 2020 results to the fourth quarter of 2019, and full year 2020 results to full year 2019.\nFocusing on the year-over-year and quarterly comparison rather than sequential comparisons removes some consideration of the seasonal factors that are characteristic of our retail energy business.\nDuring the fourth quarter, we acquired the outstanding interest in Orbit Energy, our REP business in the U.K., and began consolidating its results on October 8.\nBecause we have concluded our exploration activities [Indecipherable], we no longer report Genie Oil as a separate segment.\nThis costs primarily related to the fourth quarter well test and the shutdown of operations [Indecipherable] are reported within our corporate results.\nTurning now to the fourth quarter and full year results.\nGenie's fourth quarter was comparable to the year ago quarter and capped off a very strong 2020, highlighted by record levels of consolidated revenue and income from operations, which drove significant top and bottom line improvements over 2019.\nFourth quarter 2020 consolidated revenue increased by $21 million to $103 million, primarily reflecting the consolidation of Orbit Energy in the fourth quarter of this year.\nQuarterly revenue at Genie Retail Energy, or GRE, our domestic REP segment, decreased $4 million to $70 million, primarily on decreased gas sales.\nBoth revenue per therm sold and meters served decreased compared to the year ago quarter, the latter because we have focused our efforts on acquiring more profitable electric meters in recent years.\nElectricity sales were relatively flat as increased consumption per meter was offset by decreased revenue per kilowatt hour sold.\nAt GRE International, the segment that comprises our REP operations outside of the U.S., revenue in the fourth quarter increased by $26 million to $32 million, reflecting the inclusion of Orbit results, following its consolidation and increases in meters served at Lumo Energia, our Scandinavian REP.\nGenie Energy Services fourth quarter revenue decreased from $1.2 million to $876,000 as revenue realized in the year ago quarter pursuant to Prism Solar's contract for solar panels with JPMorgan Chase was not repeated.\nPrism fulfilled that contract earlier this year.\nFull year 2020 consolidated revenue increased $64 million to $379 million, a record for our Company.\nGRE contributed $19 million of the consolidated revenue increase, posting revenue of $305 million as the COVID-driven shift to work-from-home drove higher per meter electricity consumption.\nThe increase in kilowatt hours sold more than compensated for decrease in revenue per kilowatt hour sold.\nGRE International revenue increased $33 million to $50 million in 2020, primarily reflecting the consolidation of Orbit results in the fourth quarter.\nGenie Energy Services revenue increased $12 million to $24 million in 2020, almost exclusively because of the JPMorgan contract revenues that were recognized in the first half of 2020.\nConsolidated gross profit in the fourth quarter, predominantly generated by GRE, was $22 million, unchanged from the year ago quarter.\nGross profit at GRE decreased by $4.3 million to $17.7 million as gross profit per kilowatt hour sold decreased and was only partially offset by increases in per meter electricity consumption.\nGRE International contributed $4.4 million in gross profit compared to negative gross profit of $288,000 in the year ago quarter.\nThe increase was primarily result of the inclusion of Orbit Energy's margin contribution for most of the fourth quarter as well as improved economics at Lumo Energia.\nFull year consolidated gross profit increased $14.8 million to $97.7 million.\nGross profit increased $7.6 million at GRE on the strength of increased per meter consumption post-COVID, which was offset by a decrease in gross profit per kilowatt hour.\nGRE International's growth and the consolidation of Orbit drove a $6.8 million increase in the segment's full-year margin contribution to $7.2 million.\nSG&A spend in the fourth quarter of 2020 increased $3.4 million to $22.7 million and full year 2020 SG&A increased $4.3 million to $77 million.\nBoth increases resulted primarily from the consolidation of Orbit Energy as well as increases in bad debt expense incurred as a result of our expanded presence in markets without POR programs.\nOur fourth quarter consolidated loss from operations was $1.1 million, compared to income from operations of $2.3 million in the year ago quarter, primarily as a result of the decrease in margin per kilowatt hour sold at GRE.\nGRE generated income from operations of $5.1 million, a decrease from $8.2 million in the year ago quarter, reflecting the decrease in margin per kilowatt hour sold as well as decreased gas sales.\nWe continue to invest in building our book overseas.\nGRE International's loss from operations was $2.9 million compared to $3.2 million in the year ago quarter.\nFull year 2020 income from operations increased $9.5 million and $19.3 million.\nThe improvement was primarily generated at GRE, where income from operations increased $9.2 million to $36.4 million on increased consumption, partially offset by narrowed margin per kilowatt hour sold.\nGRE's loss from operations narrowed to $7.6 million from $8.1 million.\nConsolidated adjusted EBITDA in the fourth quarter was $693,000 compared to $815,000 in year ago quarter.\nFor the full year, the increase in residential electricity consumption in GRE drove an increase in GRE's full-year adjusted EBITDA to $37.3 million, which in turn [Indecipherable] consolidated adjusted EBITDA by $13.9 million to $24 million.\nGenie Energy's earnings per diluted share increased to $0.01 from nil in the year ago quarter and for the full year 2020 increased to $0.44 from $0.10 in 2019.\nIn light of the situation in Texas that Michael highlighted, I'm particularly pleased by continued strength of our balance sheet.\nAt December 31, we had cash, cash equivalents, restricted cash and short-term investments totaling $48.3 million.\nWorking capital totaled $38.2 million.\nWe again have no debt at quarter end and non-current [Phonetic] liabilities totaled just $3.8 million.\nTo wrap up, results this quarter were generally consistent with year ago while the full year 2020 results were very strong with robust top and bottom line results.\nOur domestic business generated record levels of income from operations this year and again demonstrated its cash generation potential.\nThat concludes my discussion of our financial results.\nNow, operator, back to you for Q&A.\n",
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"content": "q4 loss per share $0.06.4q20 consolidated revenue increased 25.5% to $102.9 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: We encourage you to review all of these materials.\nToday, you will hear from our president and chief executive officer, Tom McInerney; followed by Dan Sheehan, our chief financial officer and chief investment officer.\nFollowing our prepared comments, we will open up the call for a question-and-answer period.\nOur actual results may differ materially from such statements.\nAlso, references to statuary results are estimates due to the timing of the filing of the statutory statements.\nWe are pleased to report another very strong quarter of operating performance, continuing the recent momentum in our businesses.\nU.S. life reported adjusted operating income of $93 million for the quarter, up from $71 million in the prior quarter and $14 million in the prior year period.\nThe results were primarily driven by LTC insurance, which reported adjusted operating income of $133 million, reflecting strong earnings from in-force rate actions, including higher benefit reductions as well as higher net investment income.\nIts results included very strong adjusted operating income, substantial growth in primary insurance in force, and robust capital sufficiency.\nDan will provide more details around Enact performance and its impact on Genworth's consolidated results.\nWe wanted to get another quarter with improved capital sufficiency in both Enact and our principal life insurance company, Genworth Life Insurance Company or GLIC.\nWe entered the fourth quarter with a strong cash position of approximately $638 million and exciting plans to further strengthen Genworth's balance sheet and advance our long-term growth agenda.\nLooking forward, we remain focused on five strategic priorities, which we are working on in parallel.\nAs a reminder, our priorities are to maximize the value of Enact, reduce our holding company debt, achieve economic breakeven and stabilize the legacy LTC portfolio, advance our LTC growth initiatives, and return capital to shareholders.\nEnact is a valuable business with a leading market position and attractive growth opportunities.\nWe monetize part of our ownership stake during the third quarter through the successful minority IPO, which created significant value for both companies.\nGenworth received aggregate net proceeds of approximately $529 million from the IPO.\nWe use those proceeds to retire in full our outstanding promissory note to AXA of approximately $296 million, nearly a year ahead of schedule.\nAfter the IPO, both Moody's and S&P issued upgrades to some of our ratings and outlooks as well as those of Enact, reflecting further improvement in our financial flexibility and credit risk profile.\nWe are proud of this outcome and the work we've done today to support these upgrades.\nAfter the IPO, our ownership of Enact decreased from 100% to 81.6%.\nWe intend to maintain our position for the foreseeable future.\nWe expect our majority ownership in Enact to generate a significant dividend stream and to be an important source of cash flow going forward.\nNext, I'd like to highlight the significant reduction in debt that we have achieved.\nInclusive of the $296 million AXA note repayment, we have reduced holding company debt by $1.5 billion year to date.\nWe are proud of this progress, which brings us closer to our target debt of approximately $1 billion.\nWe also made progress toward stabilizing our legacy LTC portfolio this quarter, primarily through our Multi-Year Rate Action Plan or MYRAP.\nWe have achieved approximately $323 million in rate action approvals year to date, including $117 million in the third quarter, which brings our cumulative total to over $16.3 billion on a net present value basis since 2012.\nPursuing these actual justified rate actions is critical to achieving breakeven on an economic basis for the legacy LTC business over time.\nSince 2019, the annual benefit from IFAs has more than offset our statutory losses from our legacy LTC products.\nIn 2021, this included the impact of a illegal settlement.\nAs you can see on Slide 11, IFAs are critical to ensuring that premiums exceed payouts, helping to mitigate the risk of large losses in our legacy LTC business in the near term.\nOver the longer term, we will reach a point when premiums will no longer exceed payouts and the losses that gave rise to our assumption for the shortfall will emerge.\nThat's why we're continuing to pursue IFAs while also addressing high risk LTC categories like policies with compounding benefit increases.\nWe're doing this by offering reduced benefit packages, which provide flexibility to policyholders facing a premium rate increases and which also limit tail risk to Genworth.\nWe're also developing care management initiatives to work to reduce both the likelihood of people needing care and the level of care they require.\nThrough IFA, benefit reductions, and care management, we are effectively working to mitigate both near-term and long-term risk associated with our legacy books.\nAnd as you can see on Slide 10, we've made excellent progress on the long-term challenge as benefit reduction options continue to be selected at a higher frequency by our policyholders.\nAs of September 30, 2021, approximately 43% of Genworth's LTC policyholders have opted some form of reduced benefit option.\nTaking a step back, the cumulative effect of rate increases, IFAs, achieved since 2013 has positioned us well to meet obligations over the intermediate term.\nWe've achieved over $16.3 billion in rate increases on a net present value basis against the current estimated $22.5 million shortfall in our legacy LTC business.\nThe continued focus on behalf of reductions in care management will help to reduce risk over the long term.\nWe are currently conducting our annual assumption review and expect to strengthen one of our assumptions for benefit utilization rate at the end of the year, just as that we have strengthened other assumptions to bring them in line with long-term expectations.\nThis assumption is a key driver of results and is expected to significantly increase our estimated shortfall, reflecting how our experience has evolved.\nWhen our best estimates change and require the strengthening of assumptions, policyholders benefit from strong reserves backing our liabilities.\nAnd as with prior assumptions strengthening, we continue to see broad based support from regulators for actuarially justified rate increases and fully expect these assumptions strengthening to be offset by allowed expansion of our multi-year right action plan.\nWith the combined effect of prior year IFAs, assumptions strengthening coupled with new IFAs, benefit reductions in care management, we remain confident in our ability to achieve economic breakeven.\nWe will share more details from our assumptions review on our fourth quarter call.\nI also want to highlight the excellent work being done by our U.S. life colleague led by president and CEO, Brian Haendiges.\nBrian joined Genworth as chief risk officer in 2020 and took on his current role in February this year.\nHe has been instrumental in further accelerating risk reduction in our legacy LTC blocks so that we are better positioned to pay benefits over the long term.\nHe will continue to play a key leadership role in this effort moving forward as well as helping us advance our strategic growth agenda in long-term care.\nBefore I move on to our LTC growth initiatives, I want to briefly touch on the upcoming changes to U.S. GAAP accounting under the new long duration target improvement or LDPI, standards that were issued by the Financial Accounting Standards Board.\nWe are preparing for the implementation of these new roles and expect to provide shareholders with a view on the expected impact sometime next year.\nI have the effective date in January of 2023.\nI want to note that the relative impact of these new accounting rules may be greater for Genworth Life Insurance Company compared to other life insurers, given that our U.S. life portfolio is weighted toward traditional long duration insurance liabilities, including long-term care insurance.\nAccordingly, we expect a material impact on our U.S. GAAP balance sheet and income statements upon adoption in 2023 and going forward, including a significant reduction of our U.S. GAAP book value or equity.\nGAAP book value for legacy life companies is expected to be significantly lower going forward under the new accounting.\nThe old U.S. GAAP long duration accounting was based on original pricing assumptions.\nThe new LDTI accounting will change from the original pricing regime to a best estimate or market-oriented accounting model.\nThe anticipated reduction in U.S. life's book value is a U.S. GAAP accounting change only.\nIt will not impact economic cash flows.\nThe best indicator of current and future economic cash flows for U.S. life and the legacy LTC business remains the statutory cash flow testing regime under statutory accounting.\ninsurance companies and improving dividends from operating insurance companies to their holding companies.\nStatutory accounting for U.S. life will not be impacted by the LDTI U.S. GAAP accounting changes.\nThe new rules will have no impact on cash or cash flow and they do not change U.S. GAAP accounting for now.\nAlso as a reminder, we view the value of our U.S. life insurance legacy business at zero, given that we do not expect insurance regulators to approve future dividends from our legacy life companies for the foreseeable future.\nAt the same time, we have no plans to contribute a holding company capital into the legacy life insurance businesses.\nThe legacy U.S. life insurance legal entity will continue to fund claims using their existing reserves, statutory capital of $2.5 billion as of the end of June, and the actuarially justified multi-year rate action plan.\nGiven the importance of our statutory results and statutory cash flow and statutory capital levels to our regulators and our reliance upon these results to track the progress and impact of our LTC multi-year rate action plan, we are including new supplemental statutory earnings and capital information in our slides today and plan to do so moving forward.\nNow turning to our next priority, advancing LTC growth initiatives.\nWe continue to work toward launching a new and innovative platform that will help address the societal need for long-term care in the U.S. The need for senior care is large and growing given by an aging population, longer life expectancy, increasing need for care, and rising care costs.\nAs reported in our Billion Dollar study published earlier this week.\nLong-term care needs -- continue to have significant impacts on aging Americans and their families.\nThe vast majority of Americans are unprepared financially and unsupported in navigating care and health needs in their daily lives.\nWhile we'll need a substantial, past [Inaudible] stand-alone LTC insurance offerings have been largely unsuccessful in addressing the needs of customers, who face these challenges, resulting in historically low LTC product penetration.\nMeanwhile insurers have struggled with an ineffective distribution model and unprofitable economics and have attempted to innovate only on the edges to increase lives insured with hybrid offerings.\nWe believe the market is ripe for innovation and that Genworth with our 40-plus years of LTC experience and expertise is uniquely prepared to capitalize on this opportunity.\nAs we've said before, we believe a successful reinvigoration of the U.S. LTC market will address both financing and services and ultimately will help to reduce the likelihood of people needing care and/or less than the cost of care that they need.\nOur long-term LTC growth strategy assumes that future revenues will be weighted more toward capital-light service and advice offerings versus risk-bearing highly regulated and capital-intensive LTC insurance products.\nWe believe future LTC products and services will require significantly less capital, have less risk, and produce higher returns for shareholders.\nWe believe the capital requirements will be moderate, given the anticipated lower level of risk.\nAs an initial step, we're working on expanding our services offering through our existing subsidiary CareScout, which is a leading provider of clinical assessments and care support solutions for insurers, healthcare organizations, and consumers.\nWe plan to invest a modest initial amount approximately $5 million to $10 million to recapitalize and scale this CareScout business so that we can offer more fee-based services going forward.\nBut at the same time, we're also working with a highly rated reinsurance partner on launching LTC insurance products with lower and more predictable risks than in the past.\nThe first product will be a low risk individual LTC insurance product with a significant amount of the risk we insured by our partner.\nHowever, we firmly believe that the ability to rerate LTC policies annually is absolutely critical success to future LTC insurance products.\nAccordingly, we don't intend to start writing new business until enough states support the need for annual rerating, enabling us to launch a business that a sustainable, scalable, and profitable we're engaging with our state insurance regulators on this topic and we're working toward launching our first new LTC insurance product with our reinsurance partner in the first half of next year.\nWe are still in early stages of engaging with rating agencies and other stakeholders and look forward to sharing our progress toward launching this new business on future costs.\nAs we chart a course to future growth, returning to capital -- returning capital to shareholders remains a top priority.\nAfter we receive our -- after we achieve our debt target of approximately $1 billion.\nWe plan to return capital to shareholders via regular dividend and or share buybacks while also making prudent investments in our LTC growth initiatives.\nThis commitment to shareholder is an important part of our story in the near to medium term.\nAnd over the longer term, we believe there is a significant opportunity to transform the LTC industry through the successful execution of our growth strategy.\nOur vision to build a leading profitable platform that offers holistic solutions to the challenges of aging is a unique value proposition in the marketplace and will put Genworth in a category of one.\nWe know that realizing this vision will take time and we can't do it alone.\nIt will take partnerships with other companies and continued collaboration with regulators and other stakeholders to bring these new solutions to market and create value over time.\nWe look forward to sharing updates in due course.\nThey have both served as important counsel and partners in guiding Genworth's progress.\nAs we move into the next phase of Genworth's journey on more stable footing, they each have decided that now is the right time to move on to their own next phases.\nWard's decision to retire comes after 24 years with Genworth, taking the company through its recovery from the financial crisis and its several strategic review processes throughout which he has built strong relationships within Genworth and the regulatory community.\nI respect her decision to depart Genworth to be closer to our family in New Jersey and I wish her and her family well.\nBoth positions will be filled by long-serving Genworth leaders, and I have every confidence and their ability to help lead Genworth through its next chapter.\nThis was another excellent quarter for Genworth, a strong financial performance and continued advancement toward our strategic priorities.\nNet income this quarter was $314 million.\nAnd with this quarter's $239 million adjusted operating income of $0.46 a share, we've reported more than $600 million in adjusted operating income so far this year.\nDuring the quarter, we fully retire the remaining principal amount of the September 2021 debt maturity of $513 million.\nWe also successfully executed Enact's IPO, generating $529 million in net proceeds that we use to pay off the remainder of our AXA promissory note of $296 million and further enhanced our liquidity position.\nEnact's NIW for the quarter was $24 billion and contributed its overall 10% year-over-year increase in insurance in-force.\nFor the third quarter, Enact reported adjusted operating income of $134 million to Genworth and a strong loss ratio of 14%.\nI would note the Genworth's third quarter adjusted operating income excludes an 18.4% minority interest since the Enact IPO date of September 16th of $4 million and adjusted operating income for the third quarter.\nEnact finished the quarter with an estimated PMR sufficiency ratio of 181%, approximately $2.3 billion above published requirements.\nThe improvement in the PMR sufficiency versus the prior quarter was driven by strong business cash flows and additional reinsurance credit.\nRegarding a fourth quarter dividend, Enact is evaluating economic and business conditions, including the resolution of forbearance-related delinquencies.\nAssuming these conditions remain supportive, Enact intends to recommend to their board the approval of a $200 million dividend.\nGenworth would receive its pro rata share of that dividend based on its ownership interest or approximately $160 million.\nLife segment, overall result was solid in the quarter at $93 million, driven by the continued strength of the LTC in-force rate action plan and variable investment income.\nMortality continue to be elevated in the quarter in part from COVID-19, which negatively impacted our life insurance results.\nLong-term care had adjusted operating income of $133 million, compared to $98 million in the prior quarter and $59 million in the prior year.\nAs we discussed last quarter, our overall GAAP margins are slightly positive.\nWe've established a GAAP-only profits followed by losses reserve, which covers projected losses in the future.\nAs of the third quarter, the pre-tax balance of this reserve was $1.1 billion, up from $625 million as of year end 2020.\nThis reduced LTC earnings by $129 million after tax during the quarter.\nEarnings from in-force rate actions of $304 million prior to profits followed by losses increased versus the prior year.\nThe Choice I legal settlement that we discussed last quarter favorably impacted our results by $48 million or $16 million after profits followed by losses.\nAs of quarter end, 42% of the settlement class have reached the end of their selection period and we expect the remaining class members to make their elections by mid-2022.\nWe also have an agreement for a similar settlement for PCS1 and PCS2 policy forms to still subject to final court approval, the process underway.\nIf approved in a timely fashion, we expect claimants to start making their elections mid to late 2022.\nAt this time, it's difficult to assess the overall impact of these legal settlements will have going forward as full implementation will take another one to two years.\nShifting to in-force rate action approvals to LTC, during the quarter, we received approvals impacting approximately $394 million of premiums with a weighted average approval rate 30%.\nYear to date, we received approvals impacting $871 million of premiums, the weighted average approval rate of 37%, up from the comparable period last year when we received approvals impacting $595 million in premiums with the weighted average approval rate of 29%.\nOur quarterly approvals are uneven.\nWe expect approvals in the fourth quarter and 2022 to be strong based on pending filings and regulators recognition of the importance of actuarially justified rate increases for Genworth and the industry.\nWe experienced favorable variable investment income in LTC again this quarter, reflecting higher limited partnership income, gains on Treasury Inflation Protected Securities and bond calls and mortgage prepayments.\nWhile we have seen very strong variable net investment income this year.\nWe do expect this investment performance to moderate over time.\nWe did not materially adjust our previously established COVID reserve for mortality during the quarter.\nas the pandemic continues to develop, mortality experience may fluctuate in the near term and we will increase or decrease the COVID-19 mortality adjustment accordingly.\nNew active claims have trended up gradually in 2021 although incidence remains lower than pre-pandemic levels and continues to drive favorable IBNR development during the quarter.\nPending claims submissions, which are a leading indicator of future new claim incidents, increased during the quarter and versus the prior year.\nWe expect to complete our claims assumption review in the fourth quarter while this work is ongoing and not completed.\nPreliminary indications are that our claim reserve assumptions are holding up in the aggregate.\nWe also plan to complete our review of assumptions related to our active life reserves as well as loss recognition testing and statutory cash flow testing in the fourth quarter.\nFor these updates, we're generally not including data from 2020 or later in setting any long-term assumptions as we do not yet have sufficient information around longer term effects of the pandemic.\nAs Tom mentioned, a key area of focus for this year's active life reserve review is the utilization trend assumption, which reflects our view of how benefit utilization will emerge in the future.\nAlthough our recent utilization experience has generally been favorable, we believe this is primarily driven by the pandemic and temporary in nature.\nAnother area of focus for the utilization assumption is the growth rate of the cost of care in our 2021 review as we compare our long-term assumption for our accumulated experience as well as to industry benchmarks.\nWhile the expected change in the long-term utilization assumption would significantly increase the $22.5 billion legacy shortfall, as Tom stated, we plan to offset the increase to an expansion of our multi-year rate action plan.\nWe also continue to focus our discussions with regulators on refining options available to policyholders and responding to adverse changes and experience in a timely matter.\nWe expect to finalize our assumption review in the fourth quarter and we'll share more detail about these updates and associated margin impacts at that time.\nTurning to life insurance, overall mortality for the quarter continue to be elevated versus historical experience, including the prior quarter and prior year.\nOur third quarter included an estimate of approximately $24 million after tax in COVID-19 claims based upon death certificates received to date.\nIn our term Universal Life and Universal Life products, we recorded a $30 million after tax charge for DAC recoverability, up from $13 million in the prior quarter.\nThe charges continue to reflect the unfavorable mortality experience and continued block runoff.\nLike LTC, we're generally not including data from 2020 or later in setting any long-term assumptions in life insurance.\nHowever, we're closely monitor in our elevated mortality experience in the context of the ongoing pandemic, including older age mortality as well as mortality improvement.\nWith respect to interest rates, we're focused on our long-term view of interest rates and current portfolio yields.\nOn a statutory basis, stand-alone testing of Universal Life products leverages a prescribed interest rate and we expect to increase statutory reserves in the fourth quarter to reflect the decrease in this rate.\nAny potential changes to our life assumptions could further negatively impact our statutory results or reduce GAAP earnings in the fourth quarter.\nIn fixed annuities, adjusted operating earnings of $28 million for the quarter was higher sequentially driven by favorable mortality and the change in reserves related to the increase in interest rates during the quarter.\nIn the runoff segment, our adjusted operating income was $11 million for the third quarter versus $15 million in the prior quarter and $19 million last year.\nVariable annuity performance was driven by equity market performance, which was unfavorable versus the prior quarter and the prior year.\nAdditionally mortality in the corporate on life insurance products was unfavorable in the current quarter.\nWe expect capital in Genworth Life Insurance Company, GLIC, as a percentage of company action level RBC to be approximately 290%, up from 272% at the end of the second quarter.\nDriving this result is U.S. life statutory earnings, which continue to benefit from higher LTC earnings from the impact of in-forced rate actions, including the benefit from the Choice I legal settlement.\nStatutory earnings to LTC are generally higher than GAAP earnings as the concept of profits followed by losses that I discussed earlier does not exist for statutory accounting.\nPage 12 of the investor deck highlights recent trends on a quarter lag in statutory performance for the consolidated life companies.\nStatutory earnings are also more aligned to taxable earnings, which have resulted in strong cash tax payments to the holding company over the last few quarters.\nAs Tom noted, with the implementation of LDTI on a U.S. GAAP basis, we plan to highlight the statutory results for our U.S. life insurance business as a part of our quarterly earnings process going forward.\nRounding out the results, adjusted operating income in corporate and other was $1 million and was improved from last quarter in the prior year, driven by lower interest expense and a favorable tax adjustment.\nTurning to the holding company, we ended the quarter with a very strong cash position of $638 million with no debt due until our $400 million maturity in August 2023.\nAs Tom mentioned, we've retired more than $1.5 billion of debt during 2021 while maintaining prudent cash buffers for forward debt service obligations.\nThis is outstanding progress toward our priority of reducing holding company debt to approximately $1 billion.\nMost notably, the net proceeds from the Enact IPO were $529 million, which enabled the full retirement of the AXA promissory note of $296 million.\nIntercompany tax payments were $96 million during the quarter and reflected a strong underlying taxable income of Enact and U.S. Life.\nLife trends normalize over time we continue to optimize Genworth's group taxable assets and do not anticipate paying federal tax in the near-term.\nWith our improved liquidity position, we intend to retire our 2023 debt maturity once Enact declares their dividend, moving us $400 million closer to our debt target.\nWe then anticipate retiring the 2024 debt maturity, leaving an improved debt ladder with the next maturity not until 2034.\nIn closing, once we've achieved our goal of reducing holding company debt to approximately $1 billion, we'll be positioned to return capital to shareholders.\nDividends from Enact are our main source of cash flow for the foreseeable future and I expect that we'll have a further assessment of future dividend stream in the next several months.\nWhile we that view, we continue to evaluate the optimal approach for shareholder returns.\nOur approach will be to find opportunities to return capital to shareholders while still building value over the long term.\n",
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"content": "q3 adjusted operating earnings per share $0.46.\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, you will hear from our president and chief executive officer, Tom McInerney, followed by Dan Sheehan, our chief financial officer and chief investment officer.\nOur actual results may differ materially from such statements.\nAlso, references to statutory results are estimates due to the timing of the filing of the statutory statements.\nSarah has been with Genworth for 10 years and she held several leadership roles in Genworth's finance organization.\nShe knows Genworth and our two businesses very well.\nWe refreshed Genworth's board of directors over the last two years with the addition of four new directors who received strong support at Genworth's May 2021 annual shareholders' meeting.\nAs more fully described in our proxy statement issued last April, our new directors bring excellent credentials to the board, and they've already stepped up to challenge management and guide the company forward.\nMelissa was appointed executive vice president and chief human resources officer.\nShe's a strong advocate for our people and understands the vital role they play in delivering current results and implementing our vision for the future.\nShe has played a leading role on Genworth's HR team, including working with Genworth's various businesses and functional units.\nShe will focus on our post-COVID strategy, our return-to-work arrangements, talent management and talent development of Genworth's key leaders and managers.\nGreg was named executive vice president and general counsel.\nGreg hails from Brooklyn and has a strong litigation background.\nHe led Genworth's litigation function for many years.\nHe was also instrumental in the resolution of the AXA litigation with Genworth and as Genworth's Chief Liaison with AXA in their ongoing legal dispute with Banco Santander.\nlife division for many years.\nLet me now turn to Genworth's outstanding performance for the full year 2021.\nGenworth's U.S. GAAP net income for the full year was $904 million.\nAdjusted operating income for 2021 was $765 million.\nAdjusted operating income was $1.48 per share, which is well above analysts' expectations and our own internal projections.\nThese outstanding results were led by a record year for NAT and adjusted operating income available to Genworth shareholders in 2021 was $520 million.\nlife and runoff achieved excellent financial results during 2021.\nFull year adjusted operating income for U.S. life and runoff combined was $321 million, led by strong LTC adjusted operating income of $445 million for the year.\nGAAP accounting regime based on new long-duration targeted improvement or LDTI rules, Genworth will also be highlighting U.S. life's statutory results.\nstatutory results when assessing the financial condition and performance of life insurers.\nTherefore, because of the importance that insurance regulators put on statutory accounting and the fact that future statutory results will be based on a consistent methodology, we think that highlighting these results going forward will provide important additional information for shareholders and investment analysts.\nWe have included our statutory information through September 2021 on pages 15 and 16 of the investor deck.\nlife statutory after-tax net income for the full year to be approximately $660 million.\nThe strong net income result was driven by outstanding results for LTC, with pre-tax statutory income of approximately $910 million in 2021.\nThe GLIC consolidated statutory balance sheet was significantly strengthened this year.\nWe expect GLIC's capital and surplus to increase from $2.1 billion at the end of 2020 to approximately $2.9 billion at year-end 2021.\nSimilarly, GLIC's negative unassigned surplus is expected to improve from negative $1.8 billion to approximately negative $1.0 billion at year-end.\nGLIC's RBC ratio at year-end 2021 is projected to be approximately 290, an increase of approximately 61 points from 229 at the end of 2020.\nThe significant improvements in the GLIC RBC ratio and statutory balance sheet were driven by excellent statutory net income in 2021, primarily from the strong LTC results.\nThe year-end statutory results in RBC calculations are preliminary as they are still under review and they will be filed with our year-end statutory filings.\nI'm very pleased with our strong statutory results for the year.\nMoving on from our strong 2021 financial results.\nI want to provide an update on the five strategic priorities we announced last year.\nThe first strategic priority is to maximize the value of our equity position in Enact to benefit Genworth's shareholders.\nGenworth's board considered several different options for Enact in 2021, including selling 100% of Enact, maintaining 100% ownership before deciding ultimately to move forward with a partial IPO.\nOur objective has always been to protect and ultimately unlock Enact's value, enabling us to maximize value for Genworth shareholders over the longer term.\nThe various third-party sale transactions we considered were either not supported by regulators or involves significant regulatory risks, which we would potentially delay the timing of returning cash proceeds to Genworth shareholders.\nGenworth therefore decided to proceed with a partial IPO and sold approximately 18.4% of Enact shares, which we believe was the best viable option for shareholders.\nGenworth's 81.6% retained interest will allow us to receive significant future cash flows from Enact to enable delevering at Genworth and return of capital to Genworth shareholders.\nBut at the same time, we retain future optionality with our holdings in Enact, including a tax-free spinoff to Genworth's shareholders, as well as other options.\nGenworth has decided that retaining our current holdings in Enact for the foreseeable future is the best option.\nAs we achieve our debt target and return capital to Genworth shareholders, we will continue to be open to other options in the future.\nIn the interim, we believe Enact has various levers to create near and long-term value, and Genworth will continue to advance initiatives that support Enact's value as the majority owner like debt reduction and other levers to further improve our holding company ratings, which we'll discuss later.\nI'm extremely proud of the significant progress achieved in 2021 on our second strategic priority, which is to reduce Genworth's holding company debt to approximately $1 billion.\nThis has been a long-term objective for the company because this amount of debt is much more appropriate given Genworth's annual operating cash flows to the parent holding company.\nWe reduced our outstanding debt by approximately $2.1 billion last year, including paying off the AXA promissory note and redeeming the $400 million of parent holding company debt due in 2023.\nWe now have approximately $1.2 billion of parent holding company debt outstanding.\nHowever, because Genworth ended the fourth quarter with cash of $356 million, our net debt position is already below $1 billion.\nWe will look to continue to reduce our debt to meet our target in the near term.\nLooking at other key indicators of balance sheet strength.\nOur U.S. GAAP debt to capital ratio at the end of the year was 13%, one of the lowest among life insurers that report this metric.\nLooking ahead, we expect Genworth's interest coverage ratio to improve significantly.\nAfter we retire the remaining of Genworth's $280 million of debt due in 2024, our pro forma cash flow coverage will be approximately five times based on a conservative view of projected future cash flows.\nWe are hopeful that with a substantial reduction in outstanding parent holding company debt in 2021, our improved cash interest coverage ratio, significant excess cash available to repurchase our outstanding 2024 debt, the long duration of the remaining 2034 and 2066 debt and the expectation of continued strong U.S. statutory net income that the rating agents will continue to upgrade the parent debt ratings over time.\nThe third strategic priority is perhaps the most important priority for the next several years.\nSince the end of 2012, Genworth has made outstanding progress on moving the legacy LTC portfolio closer to breakeven.\nWe continue to define our multiyear LTC rate action plan, or MYRAP.\nDuring 2021, Genworth delivered a new record for approved LTC rate increases of $403 million from 45 states on 173 separate rate filings.\nThe net present value of the 2021 LTC rate increases was approximately $2.3 billion.\nDuring the fourth quarter annual LTC assumption review, we made long-term assumption changes mainly to our benefit utilization trend assumptions based on cost of care growth.\n2021 margins reflect the updated unfavorable benefit utilization trend assumptions fully offset by higher model future in-force rate actions.\nOur 2021 LTC margins remain positive, in the $0.5 million to 1 -- $0.5 billion to $1 billion range, and the assumption update did not cause a financial statement impact in the quarter.\nDan will review the assumption changes in more detail during his remarks.\nWe have the strongest and most experienced LTC premium increase team in the industry, led by Jamala Arland.\nJamala Arland and her team are continuously improving the LTC projection models to capture more accurate data and determine the level of actuarial active premium increases to request.\nRegulators have a high regard of Genworth's LTC projection models, which have made the premium approval process more efficient.\nThese models have also helped us update the level of net present value, or NPV, from prior approved premium increases and benefit reductions given our new cost of care assumptions.\nIn addition to the approximately $2.3 billion NPV benefit from the $403 million of approved increases in 2021, the models project based on the latest assumption changes that the NPV achieved since 2012 has improved by an additional $2.8 billion compared to our earlier projections.\nAs of the end of 2021, Genworth now projects that the LTC premium increases and benefit reductions achieved since 2012 have improved the legacy LTC portfolio by $19.6 billion on a net present value basis.\nThis is a $5.1 billion increase from the $14.5 billion that reported at the end of 2020.\nI am incredibly proud of the progress we've made toward stabilizing the legacy LTC book through our holistic approach, and I look forward to sharing further updates in the future.\nThe four strategic priority is advancing Genworth's LTC growth initiatives.\nThis is an important long-term priority because we believe that Genworth can only stand on its own without ongoing support from Enact dividends if we bring the legacy LTC portfolio closer to breakeven and develop a viable growth strategy that Genworth investors believe is sustainable.\nIf we can achieve both objectives, it would facilitate the future spinoff of Genworth's 81.6% of Enact because the remaining Genworth business would be viable as a stand-alone public company.\nTo support our growth strategy, we are in the process of standing up a new business line, Global Care Solutions.\nAnd we have hired Joost Heideman as CEO to lead Genworth's LTC growth initiatives that will be developed within the new business line.\nJoost has approximately 30 years of experience in the insurance industry.\nHe has worked for both large global insurers and for venture capital has focused on new health insurance models in emerging markets.\nJoost worked with me at ING Group for over a decade, including stints helping me oversee ING's worldwide insurance and investment management businesses in over 40 countries and restructuring ING's very large side agency distribution channels in the emerging markets in Asia, Latin America and Eastern Europe.\nAfter leaving ING in 2014, Jos was chairman and CEO of Unive, a mutual life and health insurer in the Netherlands.\nHe was working with Dutch venture capitalist to develop a new digital health insurance venture in East Africa in 2020 until the COVID-19 pandemic halted that venture.\nI'm very pleased we were able to recruit Joost in 2020 as an outside consultant to help us develop our LTC growth strategies and that he will now be overseeing the implementation of those strategies as the CEO of global care solutions.\nBecause of the geopolitical challenges between China and the U.S., we have reduced our focus on China opportunities until those issues become more transparent.\nLTC businesses as part of our new global care solutions.\nThe first business will offer fee-based advice consulting and services in the aged care space.\nWe see meaningful opportunities to provide advice, consulting and services to address the needs of elderly Americans, their caregivers and their families.\nGenworth's CareScout subsidiary, led by Ed Motherway, currently provides some of these services.\nAcquired by Genworth in 2008, CareScout is a market leader in providing LTC care assessments and care support through our network of 35,000 clinicians nationwide.\nJoost and Ed will work together to further develop the long-term opportunities for CareScout.\nGenworth has not funded CareScout over the last five years as our focus had been directed toward seeking premium increases on our legacy LTC portfolio.\nWe see tremendous potential in the business as part of our LTC growth strategy, so we are making an investment of approximately $8 million in CareScout in the first quarter to expand its clinical assessment capabilities in care support solutions.\nThis investment will allow CareScout to extend their assessment services to help support the many healthcare organizations that are experiencing a high volume of patients, ongoing assessment staffing shortages and numerous work for disruptions due to the COVID-19 pandemic.\nWe expect this investment to triple the annual assessment revenues in the next few years to approximately $30 million.\nLonger term, CareScout and its future service affiliates are expected to provide a diversified source of capital-light fee-based revenues as we deploy new capabilities and solutions to meet the needs of a growing marketplace.\nOur CareScout and other service strategies are based on converting these considerable capabilities into a viable and scalable advice, consulting and service businesses for the elderly and their families.\nThe second LTC growth business strategy is based on transforming the existing LTC insurance market.\nThe new Genworth LTC products to be sold in the market will be designed to solve the myriad of issues that have plagued the legacy LTC insurance business.\nThe most important change is to transform the LT insurance market is to implement an annual rerating model.\nGenworth believes the primary problems with all insurers' legacy LTC insurance products were caused by the level premium regulatory model.\nLegacy LTC products were sold pursuant to a regulatory regime designed to make premium adjustments difficult to obtain even though it is impossible to price products with assumptions that will hold, and of course, they did not hold for 30 to 40 years.\nWe are in the process of finalizing Genworth's first new LTC individual insurance product.\nThe new product is priced for a mid-teen return using pricing assumptions that we believe are conservative.\nThe product has a maximum lifetime benefit of $250,000, and the pricing assumptions for the key LTC risk were interest rates, lapses, morbidity and mortality are based on Genworth's current experience and projections for these factors.\nHowever, because we understand that these pricing assumptions may not hold over the next 30 to 40 years, we will only write new business in states that will allow annual rerating to change premiums if pricing assumptions and market reality differ over time.\nWe have had extensive discussions with regulators, and we believe enough regulators support the concept of annual rerating to move forward with the product.\nHowever, because of regulatory issues with the need for large premium increases on Genworth's legacy books and the need for many states to change to their current rate stabilization rules, some of which require legislative action, we do not expect to be able to launch the new LTC product in most states right away.\nWe may, however, decide to accelerate the launch with a handful of states who seem enthusiastic about bringing a new innovative LTC product into their state's insurance market.\nI believe that these innovative forward-thinking states can help rebuild a robust long-term care insurance market that contributes to solving the massive long-term care funding crisis based in the country and that is at the core of Genworth's multifaceted growth initiatives.\nGenworth's current financial strength and ratings are also an issue for the viability of the new LTC product.\nWe have a new Genworth insurance company, which will only write new business and will not have any legacy LTC business.\nWe expect that 75% of the risk with a new LTC product will be reinsured with the A+ rated reinsurer, though the level of reinsurance that we expect to be reduced to 50% over time.\nPreliminary discussions with AM Best have provided a good understanding of their methodology around investment-grade ratings.\nGenworth expects to offer several additional new and innovative LTC products, including hybrid products and a nonguaranteed LTC benefit product in the future.\nGenworth's fifth strategic priority is returning capital to our shareholders.\nGiven that our net debt position is now below $1 billion, and we expect Enact to share their dividend policy later this year, we plan to consider initiating a capital management program later in 2022.\nWe'll have an update on Genworth's capital management plans on the next earnings call.\nIn closing, I'm very pleased with the strong operating performance and the progress on our strategic priorities achieved in 2021.\nWe have made outstanding progress on Genworth's turnaround, and I remain confident in our plans to drive shareholder value.\nThe fourth quarter was another excellent quarter for Genworth, with net income of $163 million and adjusted operating income of $164 million or $0.32 per share.\nIn the fourth quarter, we also continued to make significant progress on our debt management strategy.\nIn this quarter alone, we fully retired $400 million of debt due in August 2023 and reduced our February 2024 debt maturity by $118 million for a total of $518 million.\nEven with this debt management activity, we ended the quarter with a solid holding company cash and liquidity position of $356 million.\nTurning to the operating companies.\nFor the fourth quarter, Enact reported adjusted operating income of $125 million to Genworth and a strong loss ratio of 3%, driven in part by a $32 million pre-tax reserve release on pre-COVID delinquencies.\nI'll note that Genworth's fourth quarter adjusted operating income excludes 18.4% of minority interest, which accounted for $29 million of adjusted operating income.\nLast quarter, minority interest accounted for only $4 million of adjusted operating income due to the timing of the initial public offering in September.\nAbsent minority interest, Enact's adjusted operating income increased, largely driven by the favorable reserve development in the quarter.\nEnact saw a 9% year-over-year increase in insurance in-force growth, driven in part by $21 billion of new insurance written in the quarter.\nIn addition, Enact finished the quarter with an estimated PMIER sufficiency ratio of 165% or approximately $2 billion of published requirements.\nThe decline in the PMIER sufficiency versus the prior quarter was largely driven by the dividend they paid in the quarter.\nSubsequent to the quarter, in January, Enact executed an excess of loss reinsurance transaction, which will cover the 2022 production and is expected to provide approximately $300 million in PMIERs credit.\nReinsurance transactions are a key part of their credit risk transfer program that is designed to provide cost-effective capital relief and reduce loss volatility.\nWe're very pleased with Enact's performance for the full year and the fourth quarter, which included the payment of its first dividend as a public company.\nThe $1.23 per share dividend generated $163 million for Genworth.\nWith respect to our expectations for future dividends from Enact, Enact is evaluating its dividend policy and expects to initiate a regular common dividend around mid-2022.\nWe reported $41 million of adjusted operating income in the quarter, driven by the continued strength of LTC earnings from the multiyear rate action plan and variable investment income.\nMortality continued to be elevated in the quarter, in part from COVID-19, which benefited LTC earnings but negatively impacted our life insurance results.\nResults in the quarter also included charges in our term universal life and universal life insurance products of $102 million related to assumption updates and DAC recoverability testing.\nIn our long-term care insurance business, we reported strong results with fourth quarter adjusted operating income of $119 million compared to $133 million reported in the prior quarter and $129 million in the prior year.\nAs we discussed last quarter, while our overall GAAP margins are positive, we've established a GAAP-only profits followed by losses reserve, which covers projected losses in the future.\nThis reserve reduced LTC earnings by $121 million after tax during the quarter.\nAs of year-end, the pre-tax balance of the profits followed by losses reserve was $1.3 billion, up from $625 million at year-end 2020.\nOur fourth quarter adjusted operating earnings from in-force rate actions were $296 million after tax and before applying profits followed by losses, which increased from $225 million in the fourth quarter of 2020.\nThe legal settlement on our LTC choice one policy forms continued to favorably impact our results by $57 million or $14 million after profits followed by losses this quarter.\nThe choice one legal settlement applies to approximately 20% of our LTC policyholders.\nAs of quarter end, approximately 65% of the settlement class had reached the end of this election period.\nWe currently expect the remaining class members to make their elections over the course of this year.\nThere are two other similar legal settlements pending.\nThe one for our PCS 1 and PCS 2 policy forms comprises approximately 15% of our LTC policyholders and is subject to final court approval.\nShould the settlement be approved in the near term, we expect claimants to start making their elections in mid to late 2022.\nAdditionally, we've reached an agreement in principle for a settlement on our choice two policy forms, which covers approximately 35% of our LTC policyholders or as many policies as the two other settlements combined.\nThe choice two settlement is still subject to the execution of a formal agreement in the court schedule and ultimate approval.\nSubject to these events, we anticipate that we'll begin implementing an approved settlement by early 2023.\nWhile our financial results in 2021 have been favorably impacted by the choice one legal settlement and the other two settlements are expected to positively impact future financial results, it's difficult to quantify their overall impact on our financials as full implementation will take several years that is subject to specific policyholder elections.\nIn terms of LTC invoice rate action approvals, it was a record year for Genworth due in part to regulators' recognition of the importance of actuarially justified rate increases for Genworth and the industry.\nDuring the quarter, we received approvals impacting approximately $223 million of premiums with a weighted average approval rate of 36%.\nOn a year-to-date basis, we received approvals impacting nearly $1.1 billion in premiums with a weighted average approval rate of 37%.\nThis is favorable compared to the prior year when we received approvals impacting $1 billion in premiums with a weighted average approval rate of 34%.\nWe experienced favorable variable investment income at LTC again this quarter, reflecting higher limited partnership income, gains on treasury inflation-protected securities, bond calls and mortgage prepayments.\nWhile we saw a very strong variable net investment income in 2021, which is not subject to reductions from profits followed by losses, we do expect this investment performance to moderate over time.\nClaim terminations in the fourth quarter were higher versus the prior quarter and lower versus the prior year, as noted on page eight.\nWe made a minimal adjustment to our previously established COVID-19 mortality reserve for the quarter, decreasing the cumulative balance to $134 million.\nAs the pandemic continues, mortality experience may fluctuate, and the COVID-19 mortality adjustment would be reduced if mortality experience becomes unfavorable.\nNew active claims are higher than the prior year, but new claims incidence experience remains lower than pre-pandemic levels and continues to drive favorable incurred but not reported, or IBNR, claim reserve development.\nIn the fourth quarter, given the gradual increase in incidents, we reduced our COVID-19 IBNR claim reserve by $34 million, resulting in a cumulative balance of $75 million.\nWe completed our annual review of key actuarial assumptions in each of our product lines during the fourth quarter.\nOur assumptions for LTC claim reserves or disabled life reserves held up in the aggregate and the margin for policies not yet on claim included in our active life reserves remains positive.\nTherefore, we did not increase our reserves and there was no P&L impact from these updates.\nPlease note that the COVID-19 pandemic impact to the businesses were not considered when reviewing our long-term assumptions as they are not currently expected to be indicative of future trends or loss performance.\nAs part of the LTC active life margin testing process, we reviewed our long-term assumptions relative to experience.\nDuring this year's assessment, we updated several assumptions with respect to lapses, mortality, expenses, interest rates, and most significantly, benefit utilization trends.\nMargin testing results for the LTC block are shown on page nine.\nThese results remain positive in both the historical and acquired blocks.\nThe combined margin was approximately $500 million to $1 billion, which is consistent with the prior year's range.\nAs Tom outlined, given the expected future increase in the cost of care, we expect our long-term benefit utilization to trend higher than previously assumed.\nThis is one of our key long-term assumptions that impacts trends modeled over a 60-year period.\nPrior to this update, we had assumed that the long-term benefit utilization would improve over time.\nBased on our experience, it has not improved as much as we predicted, largely due to the cost of care growth driven both by broad-based inflation and minimum wage increases in some large states, among other factors.\nTherefore, we've increased the outlook for our future benefit utilization trend.\nSince margin testing remained positive, we're not required to increase our LTC active life reserves for policies not yet on claim as the model benefit from adjustments to our multiyear rate action plan offsets the approximately $4 billion impact from the assumption updates.\nI'm pleased that our progress on the multiyear rate action plan and other risk mitigation actions, combined with future actions, have allowed us to absorb these assumption updates without incurring any charges in our financial results.\nA multiyear rate action plan is essential to our strategy of proactively managing and mitigating adverse emerging experience.\nAnd with this updated trend assumption, it further emphasizes the ongoing need for rate actions.\nThe success of the multiyear rate action plan has strengthened our ability to pay claims in two ways.\nFirst, there is the increased premium revenue.\nSecond, in connection with approved rate actions and the legal settlements, we've managed our long-term exposure to generous product features, like lifetime benefits and compound inflation riders, as policyholders have elected benefit reductions to mitigate rate increases.\nAs evidenced on page 13, 44% of policyholders have selected reduced benefit or non-forfeiture options, which reduces our long-term risk.\nOur peak claim mirrors are over a decade away, and as always, we'll continue to monitor emerging experience to help evaluate the need for future changes.\nWe now project the need in aggregate for approximately $28.7 billion in LTC premium increases and benefit reductions on a net present value basis, which is important in our progress toward achieving economic breakeven on our legacy LTC block.\nWhile this amount has increased as a result of the assumption update, we are over two-thirds of the way there, having achieved $19.6 billion in rate actions since 2012.\nThe $19.6 billion we've achieved has grown significantly since last year, in part because of the value of our 2021 rate action approvals of $2.3 billion.\nAdditionally, the benefit utilization trend assumption update for higher cost of care growth increased the value of our previously achieved rate actions by $2.8 billion.\nThe remaining amount we have left to achieve is $9 billion, which has grown from last year, largely to offset the unfavorable impact from the assumption updates.\nBased on our proven track record and the strength of the multiyear rate action team and their process, our ability to close the remaining amount is achievable.\nAs I've shared before, we're managing the U.S. life insurance companies on a stand-alone basis.\nThrough capital and surplus, rate increases and reduced benefit options, we're working to ensure our ability to pay LTC benefits over the long term.\nTurning to our life insurance products.\nWe reported a fourth quarter adjusted operating loss of $98 million compared to operating losses of $68 million in the prior quarter and $20 million in the prior year.\nOverall mortality for the fourth quarter continued to be elevated versus expectations, though improved versus the prior quarter and prior year.\nThe fourth quarter included approximately $27 million after tax and COVID-19 claims based upon death certificates received to date.\nAs part of our annual assumption review, we made assumption updates on the term universal and universal life products as well for both mortality and interest rates, which resulted in a combined unfavorable impact of $70 million in the fourth quarter.\nIn our universal life products, we recorded a $32 million after-tax charge for DAC coverability testing compared to $30 million in the prior quarter and $50 million in the prior year.\nThese charges continue to reflect unfavorable mortality experience and block runoff.\nIn fixed annuities, adjusted operating earnings of $20 million for the quarter included the benefit from favorable mortality in the single premium immediate annuity products.\nIn the runoff segment, our adjusted operating income was $16 million for the fourth quarter compared to $11 million in the prior quarter and $13 million in the prior year.\nVariable annuity performance was driven by equity market performance, which was favorable versus the prior quarter though less favorable than the prior year.\nlife insurance company, statutory financials and cash flow testing results remain in process and will be made available with our year-end statutory filings.\nWe expect consolidated capital in Genworth Life Insurance Company, or GLIC, as a percentage of RBC to be approximately 290% at December 31, in line with the 291% at September 30.\nThis is due in part to the expected negative impacts of the life assumption updates and cash flow testing offset by the $170 million statutory capital benefit from the life block reinsurance transaction completed in the quarter.\nRBC is significantly higher than the 229% at December 31, 2020, due primarily to the favorable LTC statutory earnings in the year.\nThis increase was driven by the benefit from in-force rate actions, including the impacts from the choice one legal settlement, favorable investment performance and favorable terminations.\nWe expect GLIC consolidated year-end capital in surplus to be close to $3 billion as we've seen a strong trend throughout the year.\nPages 15 and 16 highlight recent trends in statutory performance for LTC and GLIC consolidated on a quarter-lag basis due to the timing of when statutory results are finalized.\nStatutory earnings for LTC are generally higher than GAAP earnings as the concept of profits followed by losses that I discussed earlier does not exist under statutory accounting.\nStatutory earnings are also aligned to taxable earnings, which have resulted in strong cash tax payments to the parent holding company throughout 2021.\nRounding out our results, we reported an adjusted operating loss in the corporate and other segment of $18 million, which was an improvement of $31 million from the prior year, reflecting lower interest expense given the reduction of holding company debt, as well as lower corporate expenses.\nTurning to the holding company.\nWe ended the quarter with $356 million of cash and liquid assets.\nPage 17 provides a detailed cash activity for the quarter.\nKey items in the quarter included the debt reduction of $518 million of principal, the dividend from Enact of $163 million, and $75 million in the intercompany cash tax payments, reflecting strong underlying taxable income from Enact and the U.S. life insurance business.\nThe holding company received $370 million in cash taxes in 2021.\nWe will continue to utilize holding company tax assets in 2022 and anticipate that the holding company will receive approximately $200 million in cash taxes in 2022, subject to ultimate taxable income generated.\nGiven our current tax position, we do not anticipate paying federal taxes in the near term.\nIn closing, when I think about where we started 2021, I'm incredibly proud of our financial results and the progress we've made against our strategic priorities.\nFor the full year 2021, net income was very strong at $904 million versus $178 million in 2020, and adjusted operating income was $765 million versus $310 million in 2020.\nEnact contributed $520 million in adjusted operating earnings to Genworth in 2021, and we're very pleased with LTC's $445 million in adjusted operating earnings.\nWhile statutory results are still in progress, we estimate full year after-tax statutory net income for the U.S. life insurance business of $660 million, driven by LTC's estimated $910 million of pre-tax statutory income.\nThroughout 2021, we improved our financial strength and flexibility each quarter, putting up strong operating results, driving efficiencies to reduce our annual run rate expenses by approximately $75 million, maximizing the value of our assets and reducing our debt and overall cost of capital.\nWith the completion of the Enact IPO, we achieved rating upgrades from Moody's and S&P at the parent holding company in recognition of the improved credit risk profile and increased financial flexibility.\nEnact was also upgraded by Moody's, S&P and Fitch, which has enabled it to expand its customer base and be more competitive against peers.\nIn 2021, we took a proactive approach to managing our holding company debt, which has strengthened our balance sheet as we head into 2022.\nWe retired over $2 billion in debt, including the AXA promissory note and of approximately $1.2 billion of parent holding company debt remaining as of year-end.\nWe plan to retire the remaining 2024 debt of $282 million ahead of its maturity date.\nAfter we retire the 2024 debt, our next debt maturity will be more than a decade away in 2034, and we would expect cash interest coverage to be approximately five times based on a conservative view of projected cash flows, which will be great progress.\nWhile it has been over 13 years since Genworth returned capital to shareholders, we plan on announcing more specific capital management plans later this year given the tremendous improvement in our financial condition achieved in 2021.\nThe timing is dependent on redeeming the remaining $282 million of debt due in 2024 and Enact's announcement of its future dividend policy.\nThe bottom line is that we've had a terrific year and are entering 2022 with a strong foundation and a clear path for the future.\nWe look forward to sharing more with you soon.\n",
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"content": "compname reports q4 adjusted operating earnings per share $0.32.\nq4 adjusted operating earnings per share $0.32.\nq4 earnings per share $0.32.\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 joining us today and hope you're staying safe and well.\nWe are pleased with the strong start to 2021 and ongoing recovery in our automotive and industrial businesses.\nThe GPC team remained focused on solid execution and in delivering strong financial results through improving sales trends, increasing operational efficiencies and enhancing customer value.\nThrough the quarter, we operated thoughtfully with the physical and mental well-being of our employees the top priority as our 50,000-plus GPC teammates are the core of our success.\nTurning now to our first quarter financial results.\nTotal sales for the quarter were $4.5 billion, up 9% from last year and significantly improved from the 1% sales decrease in the fourth quarter of 2020.\nGross margin was also a positive, representing our 14th consecutive quarter of year-over-year gross margin expansion and our teams in the field continued to do a great job of managing our expenses through ongoing cost actions and the carryover of expense reductions implemented last year.\nThese results drove a 41% increase in operating profit and an 8.1% operating margin, which is up 180 basis points from the first quarter of last year.\nOur strong operating performance drove net income of $218 million and diluted earnings per share of $1.50, up 88%.\nWe also continued to fortify our balance sheet ensuring ample liquidity and solid cash flow.\nWe are proud of our teams and we are encouraged by our results and we intend to build on this momentum throughout 2021.\nTurning now to our business segments.\nAutomotive represented 66% of total sales in the first quarter and Industrial was 34%.\nBy region, 73% of revenues were attributable to North America with 16% in Europe and 11% in Asia-Pac.\nTotal sales for Global Automotive were $3 billion, a 14% increase from 2020 and much improved from a 1% increase in Q4 of 2020.\nComp sales were up 8%, improved from a 2% decrease in the fourth quarter and segment profit margin was up 250 basis points, driven by strong operating results in each of our automotive operations.\nSales were driven by positive sales comps across all our operations with 15% comps in Europe and Asia-Pac, 7% comps in the US and 3% comps in Canada.\nThe ongoing global economic recovery, including financial stimulus in the US, improving inventory availability, favorable weather conditions and our focus on key growth initiatives were all sales drivers in the quarter.\nWe would add that while we continue to expect a reasonable level of inflation as we move through 2021, price inflation was not a factor in our first quarter sales.\nIn Europe, sales were much improved from Q4 as our team capitalized on the strengthening sales environment, despite lockdown throughout the region.\nIn addition, initiatives to grow key accounts, enhance inventory availability and the ongoing launch of the NAPA brand continued to prove effective in driving profitable growth and market share gains.\nFor the quarter, our teams in France and the UK outperformed in the region with strong double-digit sales comps.\nWe would also call out a much improved performance by our team in the Benelux region.\nThe strong sales recovery combined with excellent expense controls produced a 500-basis point improvement in operating margin.\nSo a terrific start to the year for our European operations.\nIn Asia-Pac, our Automotive sales remained in line with the mid-teen growth we experienced through the second half of 2020.\nFor the quarter both retail and commercial sales held strong as the region operated through multiple lockdowns associated with the pandemic.\nRetail sales, which represent over 40% of our total sales volume through our Repco stores continued to outperform posting a 33% increase in March and plus 24% in the quarter.\nOur commercial sales continued to accelerate as well posting double-digit sales growth in the quarter.\nWe continued to benefit from the strength in online sales, which reached record highs at three times pre-COVID levels.\nFinally building on the NAPA brand name has been well received and we remain focused on growing our NAPA presence in the region.\nSumming it up, this group continues to perform at a very high level on both the top and bottom lines, resulting in a 150-basis point improvement and profit margin for the quarter.\nIn North America comp sales in the US were up 7% helping this business post a 180-basis point increase in profit margins.\nIn Canada, we operated through a variety of regional lockdowns which impacted our larger markets of Ontario and Quebec.\nComp sales were up 3% and operating margin was up 130 basis points.\nSales in the US, which posted its strongest quarterly comp since the first quarter of 2015, were driven by solid growth in both the retail and commercial segments.\nThis was our first quarter of positive commercial comps since pre-pandemic and our team produced record sales volumes in the month of March.\nIn addition, both ticket and traffic counts were positive on both our retail and commercial transactions, marking our first increase in traffic counts since several quarters.\nBy region, the Atlantic, Midwest and West Groups posted the strongest growth, although we would also call out our Northeast Group, which produced solid growth in the quarter.\nThis is notable as this region of the US has been most affected by the COVID-19 lockdowns over the past 13 months.\nLikewise, we would add that product sales in categories such as batteries, tools and equipment and brakes were strong this quarter.\nWe are especially encouraged to see the rebound in our brakes business which generally is a positive indicator for our commercial business.\nOn the retail side, which continues to outperform with strong double-digit growth, we continued to drive sales via investments in retail specialists and store refreshes, as well as targeted promotions.\nWe would also call out our ongoing omnichannel investments and the increase in B2C online sales, which reached record levels in the quarter and were up 150% from the prior year.\nOur commercial sales, our other wholesale category of independent garage customers, continued to generate strong growth.\nWe have been encouraged by the number of new accounts we are serving.\nClearly our investments in increasing the number of professional salespeople on the street has been effective in attracting new customers to NAPA.\nWe were also pleased to see improved sales with our NAPA AutoCare and major account customers which posted positive sales growth for the first time in several quarters.\nSales to the fleet and government group were down year-over-year, but sequentially improved from the fourth quarter and we look for further improvement in sales for this segment.\nAs we look ahead, we are excited for the growth opportunities we see for our Global Automotive segment.\nWe expect further improvement in aftermarket fundamentals such as increased miles driven, a growing vehicle fleet and an increase in vehicles aged six to 12 years, all favorable for the industry.\nWe can assure you we remain focused on our initiatives to deliver customer value and ultimately sell more parts for more cars.\nThese plans include further enhancing our inventory availability, strengthening our supply chain and investing in our omnichannel capabilities.\nIn addition, we expect to expand our global store footprint with additional bolt-on acquisitions, changeovers and new greenfield stores to further enhance our competitive positioning.\nSo now let's discuss the global Industrial Parts Group.\nTotal sales for this group were $1.5 billion, flat with last year.\nComp sales were down 2%, improved from the 4% decrease in Q4 and reflecting the third consecutive quarter of improving sales trends.\nMarch was a breakout month with the North American Motion team posting a 7% increase in average daily sales and achieving record sales volumes.\nThis was a tremendous accomplishment and another turning point for GPC in our emergence from the pandemic.\nThe ongoing recovery over the last nine months is in line with the continued improvement in the industrial economy which you can see in several key indicators for our business.\nFor perspective, PMI was 64.7% in March, an increase of 4.2 points from December 31st.\nIn addition, industrial production increased by 2.5% in the first quarter, the third consecutive quarter of expansion, following the significant downturn in the second quarter of 2020.\nImportantly, we can see these positive indicators translating to more activity with our customers, which are operating at higher run rates as well as releasing capital project orders.\nThe strengthening sales environment, along with our initiatives to drive growth and control cost produced an 80 basis point margin improvement with segment profit margin at 8.3% versus 7.5% last year.\nDiving deeper into our Q1 sales.\nWe will start by saying that inflation remains a non-factor in our numbers thus far.\nThat said, we are seeing more pricing activity and expect another year of 1% to 2% price inflation from our suppliers.\nFor the quarter, we experienced improving sales trend among virtually all product categories and industries served.\nWe were especially encouraged by the recovery in the equipment and machinery aggregate and cement and wood and lumber sectors, all key industry groups for us.\nIn addition, we continue to benefit from the build-out of our omnichannel capabilities with digital sales up two times from the first quarter in 2020.\nA key driver of our digital growth relates to our inside sales center which is generating incremental sales to new Motion customers.\nWhile still a relatively small percentage of total sales, we are excited by the potential for future sales growth.\nWe also remain focused on growing our services and solution businesses to expand our expertise and sales opportunities in areas such as equipment repair, conveyance and automation.\nWe have made several bolt-on acquisitions to build scale in these areas and our services and solutions capabilities remain a key consideration in our overall M&A strategy for the Industrial business.\nto further ensure profitable sales growth, we continue to enhance our pricing and category management strategies.\nIn addition, we plan to continue to optimize our supply chain network and further improve our productivity, while delivering exceptional customer service.\nClosing out our Industrial comments.\nWe remain bullish about our Motion business and we are excited to see this team moving back into a growth mode.\nSo now I'll conclude my remarks by providing a brief update on our ESG initiatives.\nAs outlined in our Corporate Sustainability Report, GPC embraces our responsibility to innovate in ways that provide for our environment, our associates and the communities in which we operate.\nIn Q1 we expanded our training and development programs to ensure personal growth and enhance our comprehensive well-being program focused on the emotional, financial and physical health of our GPC teammates.\nAdditionally, we continue to make progress in the advancement of our corporate commitment to diversity and inclusion, we are actively recruiting talent that is representative of the communities we serve, training our teammates to mitigate unconscious bias and model inclusive behaviors while strengthening partnerships that support our D&I initiatives.\nFinally, we remain focused on our mission to be good corporate citizens where we both work and live.\nSince 1928, we have been giving back to communities and causes that make a difference and that legacy continues in 2021.\nFirst I want to congratulate the global GPC team on the performance this quarter.\nAs Paul mentioned, our team delivered solid performance in the first quarter and have strong momentum.\nThe environment has improved compared to 2020, but we remain cautious as global uncertainty continues to be a part of doing business each day.\nAreas of attention for us include COVID-19, inflation, global logistics and product and labor availability.\nWe also have more challenging year-over-year comparisons that will require sustained momentum during the second half of the year.\nDespite the uncertainty, the GPC team is energized and focused to deliver performance.\nI'll now share some additional perspective on our strategic initiatives in progress.\nThe foundation of our priorities is based on the customer experience and understanding their needs and working to exceed their expectations.\nWe are analyzing and listening to customer feedback and are corresponding to strength and opportunities.\nIn the simplest terms, our customers need us to be easy to do business with, reliable and helpful.\nThis independent data reinforces our priorities and serves as a guiding principle in terms of required action and strategic investment.\nTo deliver a best-in-class customer experience we have opportunities to simplify and integrate our existing operations.\nThe global teams are executing multi-year plans to realign teams, streamline processes, improve operational productivity and reduce costs.\nThese initiatives will not only create operating efficiency, but also enable faster team execution, deliver a better customer experience and accelerate profitable growth.\nI'd like to highlight a few initiatives that illustrate our efforts to simplify and integrate.\nFor example, we're working to optimize facilities footprint and coverage, simplify and integrate disparate legacy IT systems, streamline back-office support functions, offshore non-customer facing functional activities and centralize GPC indirect sourcing processes as a few examples.\nAs we simplify and integrate, we're simultaneously investing in our core business and positioning for the future.\nOur strong cash flow, solid capital structure and disciplined capital allocation provide the flexibility needed to continue to make these investments.\nKey pillars of our core investments include talent, sales force effectiveness, digital supply chain and emerging vehicle technologies.\nA few highlights of our progress across the key pillars during the quarter include.\nWe continue to take deliberate action across the globe to recognize high potential talent, infuse new capabilities into the organization and recruit diverse talent that is representative of the communities we serve.\nExamples include category management, digital, emerging vehicle technology and field leadership roles to name a few.\nTalent will always be a priority area of investment as we strive to be an employer of choice for teammates that share our GPC values and want to play a leadership role in our exciting future.\nTwo, sales force effectiveness.\nData and analytics to understand our unique customer segments, the different needs of each segment and associated strategies to serve the segment is a foundational element of sales force effectiveness.\nThe sales efforts reflect our omnichannel initiatives and include an increasing mix of both traditional selling and digital strategies.\nAs an example, the US automotive team revamped its sales intensity with new reporting tools to track customer visits, digital tools to communicate with field sales teammates and enhanced virtual product and skills training.\nIn addition, in 2021, the US automotive team adjusted compensation programs to better align incentives with profitable growth.\nAs I mentioned, digital is a foundational priority as we deliver a best-in-class customer experience and accelerate profitable growth.\nOur businesses delivered excellent performance via digital channels in the quarter.\nWe continue to see strong increases versus prior year across our global digital channels.\nDigital still represents a relatively small portion of our total sales and we're excited about the compelling digital vision our teams are executing.\nRelated, we continue to invest in foundational digital elements, including catalog, search and other critical customer experience elements, such as ease of ordering, pricing and analytics.\nOur supply chain initiatives are focused to ensure we have the right product available in the right market at the right time.\nWe are continuously executing inventory, facility, productivity, logistics and technology strategies to achieve this goal.\nOne solid example is the success the US Industrial team enjoyed with recent facility automation investments that delivered a 500% labor productivity improvement.\nOther select examples would be enhanced workforce management and delivery tracking tools in the US automotive business.\nLastly, emerging vehicle technologies.\nWe aspire to lead as it relates to the opportunities that emerging vehicle technologies present for our automotive industries.\nWe believe we have a unique position to leverage including our scaled global footprint, diverse portfolio, leading global brands, established customer-supplier relationships and one GPC team approach.\nThrough our planning process, we developed a multi-dimensional strategy to address electric vehicle trends.\nA few select highlights include the alignment of talent 100% dedicated to developing and executing EV strategies, product and category management strategies with existing and new SKUs, global supplier councils with existing strategic partners, advisory groups leveraging our 25,000 global repair center relationships and partnerships with strategic EV market participants.\nLastly, strategic bolt-on acquisitions are a key part of our GPC growth strategy.\nWe utilize acquisitions to acquire new customers, further penetrate existing priority markets, enter new geographies, acquire product and service capabilities and acquire talent.\nWe also believe our acquisition capabilities position us well as we selectively consider and test new business models.\nOur acquisition pipeline remains active and actionable given the fragmentation of our markets.\nWe believe our scale, market-leading brands, global footprint and unique culture position us to be an acquirer of choice.\nWe will remain selective and disciplined as we execute this important part of our strategy.\nSimilar to the approach utilized for our 2019 cost savings plan, the global teams develop tools in a monthly cadence to create visibility and status on initiatives.\nThis approach not only helps drive performance but also helps to share best practices around the globe as one GPC team.\nIn summary, I hope today's remarks reinforce our sense of focus and global teamwork.\nWe will remain agile as the global environment continues to evolve.\nAnd we will remain focused on what we can control as we execute through the balance of the year and beyond.\nAnd I'll now turn it to Carol to review the financial performance details.\nWe will begin with a review of our key financial information and then we will provide an update on our full-year outlook for 2021.\nTotal GPC sales were $4.5 billion in the first quarter, up 9% from last year and improved from the 0.7% decrease in the fourth quarter.\nGross margin was 34.5%, a 60-basis point improvement compared to 33.9% in the first quarter last year.\nOur steady progress in improving gross margin continues to reflect the positive impact of a number of initiatives, including our pricing and global sourcing strategies.\nAnd we also benefited from a sales mix shift to higher gross margin operations.\nWe would add that the level of supplier incentives in the quarter were in line with last year and neutral to gross margin.\nAnd as Paul mentioned earlier, there was minimal impact of price inflation in our first-quarter sales and this is true for gross margin as well.\nAs we move through the year, we will continue to execute on our initiatives to drive additional gross margin gains via positive product mix shifts, strategic pricing tools and analytics, global sourcing advantages and also strategic category management initiatives.\nOur selling, administrative and other expenses were $1.2 billion in the first quarter, up 4.6% from last year, or up 5.3% from last year's adjusted SG&A.\nThis reflects an improvement to 26.8% of sales this year, which is down nearly 100 basis points from 27.7% last year.\nSo tremendous progress and primarily due to the favorable impact of our cost savings generated in 2020 as well as ongoing cost control measures and also improved leverage on our stronger sales growth.\nOur progress in these areas was slightly offset by rising costs and freight expenses which we're closely managing and planned increases in our technology spend which supports our strategic initiatives as Will covered earlier.\nOur total operating and non-operating expenses were $1.3 billion in the first quarter, up 2.2% from last year or up 2.1% compared to last year's adjusted expenses.\nFirst quarter expenses include the benefit of approximately $20 million related to gains on the sale of real estate and favorable retirement plan valuation adjustments that are recorded to the other non-operating income line.\nAll in, our total expenses for the quarter improved to 28.1% of sales, down 190 basis points from 30% in 2020.\nTotal segment profit in the first quarter was $361 million, up a strong 41% on the 9% sales increase.\nAnd our segment profit margin was 8.1% compared to 6.3% last year, a 180 basis point increase.\nIn comparison to 2019, our segment profit margin has improved by 100 basis points.\nSo solid improvement and our strongest first quarter profit margin since 2015, a reflection of the positive momentum we're building in our businesses.\nOur net interest expense of $18 million was down from $20 million in 2020 due to the decrease in total debt and more favorable interest rates relative to last year.\nThe corporate expense line was $31 million in the quarter, down from $55 million in 2020 due primarily to the favorable real estate gains and retirement plan adjustment discussed earlier.\nOur tax rate for the first quarter was 23.8% in line with the reported rate last year and improved from the prior year adjusted rate of 26.5%.\nThis improvement primarily relates to the favorable tax impact of stock options exercised as well as the previously mentioned real estate gains and retirement plan adjustments.\nOur first quarter net income from continuing operations was $218 million with diluted earnings per share of $1.50.\nThis compares to $0.84 per diluted share in the prior year or an adjusted diluted earnings per share of $0.80 for an 88% increase.\nSo now let's turn to our first quarter results by segment.\nOur Automotive revenue for the first quarter was $3 billion, up 14% from the prior year.\nSegment profit of $236 million was up a strong 65% with profit margin at 8% compared to 5.5% margin in the first quarter last year.\nThe 250 basis point increase in margin was driven by the continued recovery in the Automotive business and the execution of our growth and operating initiatives.\nWe were pleased to have each of our automotive businesses expand their margins for the third consecutive quarter.\nIn addition, we're encouraged that our first quarter margin also compares favorably to the first quarter of 2019, up 120 basis points.\nSo a broad recovery across our operations and we look for a continued progress in the quarters ahead.\nOur Industrial sales were $1.5 billion in the quarter, flat with last year and improved sequentially for the third consecutive quarter, which is consistent with the strengthening industrial economy.\nOur segment profit of $125 million was up 10% from a year ago and profit margin was up 80 basis points to 8.3% compared to 7.5% last year.\nThe improved margin for Industrial reflects the third consecutive quarter of margin expansion in both our North American and Australasian industrial businesses and it's also up by 90 basis points from the first quarter of 2019.\nSo another quarter of strong operating results for Industrial, which we expect to continue with stronger sales growth projected through the remainder of the year.\nSo now, let's turn our comments to the balance sheet.\nWe continue to operate with a strong balance sheet and ample liquidity and the financial strength to support our growth strategy.\nAt March 31st, total accounts receivable is down 27% from last year, which is primarily a function of the $800 million in receivables sold in 2020.\nOur inventory was up 6% from the prior year and accounts payable increased 14%.\nAnd our AP to inventory ratio improved to 124% from 116% in the last year.\nWe are pleased with our progress in improving our overall working capital position and we continue to believe we have opportunities for further improvement.\nOur total debt is $2.6 billion at March 31, down $1 billion or 28% from last March and down $60 million from December 31st of 2020.\nWe significantly improved our debt position throughout the course of 2020 with the issuance of new public debt and a new revolving credit agreement that provide for expanded credit capacity and more favorable rates.\nWith these positive changes to our debt structure, our total debt to adjusted EBITDA has improved to 1.8 times from 2.5 times last year.\nAdditionally, we closed the first quarter with $2.6 billion in available liquidity, which is up from $1.1 billion at March 31st last year and in line with December 31st.\nWe also continue to generate strong cash flow, generating $300 million in cash from operations in the first quarter, which is up from $28 million in the first quarter last year.\nWith a strong start to the year, including the increase in net income and the improvement in working capital, we continue to expect cash from operations to be in the $1 billion to $1.2 billion range and free cash flow of $700 million to $900 million.\nOur key priorities for cash include the reinvestment in our businesses through capital expenditures, M&A, the dividend and share repurchases.\nWe invested $48 million in capital expenditures in the first quarter, an increase from $39 million in 2020.\nLooking forward, we have plans for additional investments in our businesses to drive growth and improve efficiencies and productivity.\nWe continue to expect total capital expenditures of approximately $300 million for the year.\nAs you heard from Will earlier, strategic acquisitions remain an important component of our long-term growth strategy.\nWe continue to cultivate a strong pipeline of targeted names and we expect to make additional strategic bolt-on acquisitions to complement both our Global Automotive and Industrial segments in the months and quarters ahead.\nIn the first quarter we paid a cash dividend of $114 million to our shareholders.\nThe Company has paid a cash dividend to shareholders every year since going public in 1928 and our 2021 dividend of $3.26 per share represents our 65th consecutive annual increase in the dividend.\nWe have actively participated in a share repurchase program since 1994.\nWhile there were no repurchases in the first quarter, the Company is currently authorized to repurchase up to 14.5 million additional shares and we will resume share repurchases in the months and quarters ahead.\nTurning to our outlook for 2021.\nIn arriving at our updated guidance, we considered several factors including our past performance, current growth plans and strategic initiatives, recent business trends, the potential for foreign currency fluctuations, inflation and the global economic outlook.\nIn addition, we consider the continued uncertainties due to market disruptions such as with COVID-19 and its potential impact on our results.\nWith these factors in mind, we expect total sales for 2021 to be in the range of plus 5% to plus 7%, an increase from our previous guidance of plus 4% to plus 6%.\nAs usual, these growth rates exclude the benefit of any unannounced future acquisitions.\nBy business, we are guiding to plus 5% to plus 7% total sales growth for the Automotive segment, an increase from plus 4% to plus 6% and a total sales increase of plus 4% to plus 6% for the Industrial segment, an increase from plus 3% to plus 5%.\nOn the earnings side, we are raising our guidance for diluted earnings per share to a range of $5.85 to $6.05, which is up 11% to 15% from 2020.\nThis represents an increase from our previous guidance of $5.55 to $5.75.\nWe enter the second quarter focused on our initiatives to meet or exceed these targeted results and we look forward to reporting on our financial performance as we go through the year.\nLooking ahead, the GPC team is excited for the ongoing recovery in the global economy and the growth prospects we see for both Auto and Industrial.\nOur strong balance sheet provides us the financial flexibility to pursue strategic growth opportunities and we remain focused on executing our plans to capture profitable growth, generate strong cash flow and drive shareholder value.\nAs a result, we are optimistic that we can deliver strong financial results in the quarters ahead.\n",
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"content": "q1 gaap earnings per share $1.50 from continuing operations.\nq1 sales rose 9.1 percent to $4.5 billion.\nraises 2021 outlook for revenue growth and diluted eps.\nsees 2021 total sales growth 5% to 7%.\nsees 2021 earnings per share $5.85 to $6.05.\nsees 2021 free cash flow $700 million to $900 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: We appreciate you joining us today.\nWe are pleased to report terrific financial performance driven by the consistent execution of our strategic priorities, and the ongoing recovery in the global markets.\nIn summary, the quarter was highlighted by, continued strong sales trends, which we believe led to market share gains, gross margin gains, then improved operational efficiencies that drove margin expansion, and record quarterly earnings, and the effective deployment of capital for growth and productivity investments, bolt-on acquisitions, the dividend and share repurchases.\nTaking a look at our second quarter financial results, total sales were $4.8 billion, up 25% from last year and improved sequentially from plus 9% in the first quarter.\nFor your additional perspective our second quarter sales were 12% higher than in Q2 2019.\nGross margin was also strong representing our 15th consecutive quarterly increase, and we further improved our productivity with the ongoing execution of our expense initiatives.\nAs a result, segment profit increased 35% and our segment margin improved 65 basis points to 9.2% which represents our strongest margin in two decades.\nAdjusted net income was $253 million and adjusted diluted earnings per share were $1.74, up 32%.\nTotal sales for Global Automotive were a record $3.2 billion, a 28% increase from 2020, and up 15% from the second quarter of 2019, and marks the first quarter in our 93-year history with auto sales exceeding the $3 billion mark.\nOn a comp basis sales were up 21% and on a two-year stack comp sales were up 8.5%.\nOur comp sales in the second quarter were driven by double-digit year-over-year comp sales in each of our automotive operations.\nAutomotive segment profit margin improved to 9.1%, up 30 basis points from 2020 and an increase of 90 basis points from 2019.\nThis expansion was supported by strong operating results across all of our operations.\nThe automotive recovery reflects our focus on key growth initiatives, as well as several market tailwinds and these include the broad economic recovery and strengthening consumer demand, favorable weather trends, inflation and our ability to pass along price increases to our customers.\nFinally, solid industry fundamentals, which have been further accelerated by a surge in used car market and improving miles driven.\nWhile these market tailwinds are encouraging, we also see continued headwinds, which we continue to closely monitor.\nThese would include the spread of the delta coronavirus variant and its potential impact on the global economy, global supply chain disruptions, ongoing labor shortages in our operations, and the impact of inflation on our cost such as wages and freight.\nTurning next to our regional highlights, our GPC teammates in Europe built on their excellent start to the year achieving the strongest sales growth among our operations with comp sales up 34%.\nEach concrete posted substantial sales growth while our U.K. team continues to outperform.\nThe positive momentum in Europe reflects improving market conditions and favorable weather trends, as well as our focus on key sales initiatives, inventory availability and excellent customer service.\nIn particular, we have seen exceptional results from our key accounts partners and the ongoing expansion and roll out of the NAPA brand.\nIn our Asia-Pac business, sales were in line with the mid-to-high teen comps we have had in this market now for four consecutive quarters, commercial sales outperformed retail, although both customer segments posted strong growth.\nThe Repco and NAPA brands performed well and collectively are capturing market share.\nThe NAPA network continues to build and we have now more than 50 NAPA locations operating across Australia and New Zealand, in addition to our 400 plus Repco stores.\nIn North America, comp sales increased 20% in the U.S. and were up 12% in Canada, where lockdowns in key markets such as Quebec and Ontario have been headwinds for several quarters now.\nSales in the U.S. were driven by strong growth in both the commercial and retail segments, with DIFM sales outperforming DIY for the first time since before the pandemic began to take hold in Q1 of 2020.\nThe strengthening commercial sales environment is significant for us, as it accounts for 80% of our total U.S. Automotive revenue.\nThe strong recovery in the commercial sector contributed to record average daily sales volume in our U.S. Automotive business in June.\nOur sales drivers by product category include brake, tools and equipment and under car, which all outperformed.\nIn addition, both retail and commercial ticket and traffic counts were strong for the second consecutive quarter, so another really positive trend.\nBy Customer segment, retail sales remained strong throughout the quarter with low double-digit sales growth on top of a healthy sales increase in the second quarter of last year.\nWhile the DIY market is pulling back from the highs of 2020, we are optimistic our ongoing investments will create sustainable retail growth.\nFor commercial sales each of our Customer segments posted double-digit growth, which we attribute to the broad automotive recovery and investments in our sales team, our sales programs and our supply chain among other initiatives.\nThis quarter our strongest growth was with our major account partners and NAPA AutoCare centers.\nWe were also pleased with the growth in sales to our fleet and government accounts.\nThis was the first quarter of positive year-over-year sales growth for this group, since before the pandemic, as they lag the overall automotive recovery in the U.S.\nWe view this improvement as a meaningful indicator for further growth in the quarters ahead.\nAs the automotive recovery continues, we expect our commercial sales opportunities to outpace retail, consistent with the long-term growth outlook of the aftermarket industry.\nWe are confident in our growth strategy and our initiatives to deliver customer value and sell more parts for more cars across our global automotive operations.\nWe also remain focused on enhancing our inventory availability, strengthening our supply chain, and investing in our omni-channel capabilities while expanding our global store footprint to further strengthen our competitive positioning.\nBut now, let's discuss the global Industrial Parts Group.\nTotal sales for this group were $1.6 billion, a 20% increase from last year, and up 7% from 2019.\nComp sales rose 16% and reflect the fourth consecutive quarter of improving sales trends.\nA strong sales environment combined with the execution of our operational initiatives drove a 9.5% segment margin, which is up a 130 basis point from both 2020 and 2019.\nThe ongoing market recovery over the last 12 months is in-line with the strengthening industrial economy and the overall increase in activity we have seen across much of our customer base.\nThe Purchasing Managers Index measured 60.6 in June, reflecting healthy levels of industrial expansion and marrying trends we have seen throughout the majority of this year.\nLikewise, industrial production increased by 5.5% in the second quarter representing the fourth consecutive quarter of expansion.\nDiving deeper into our Q2 sales, we experienced strong sales trends across each of our industries served and our product categories other than safety supplies, which had extraordinary sales in 2020 due to the pandemic.\nSeveral industry sectors stood out as their sales increased by 30% or more over last year, including equipment and machinery, automotive, aggregate and cement, equipment rental and oil and gas.\nIn addition, our newly added fulfillment and logistics industry sector experienced tremendous growth.\nIn the past several years of expanding this segment, we have found our broad offering of products and services fits well with the needs of these customers.\nTo drive this growth.\nWe remain focused on several strategic initiatives, which include the build-out of our Industrial omni-channel capabilities with solid growth in digital sales via Motion.com.\nOur new inside sales center, which was established in 2019, is generating incremental sales from new Motion customers and we see room for further growth.\nThe expansion of our services and value-add solutions businesses in areas such as equipment repair, conveyance and automation.\nOver the last few years we have made several bolt-on acquisitions to build scale and continue to target additional M&A opportunities to further enhance our capabilities in these key areas.\nEnhanced pricing and product category management strategies to maximize profitable growth the further optimization and automation of our supply chain network to improve operational productivity while delivering exceptional customer service.\nWe are encouraged by Industrial strong financial performance in the second quarter and the positive momentum we see in the overall industrial market.\nWe believe the Motion team is well positioned to capitalize on this momentum and enhance our market leadership position.\nSo in summary, each of our businesses did an exceptional job of operating through the quarter and we couldn't be more proud and grateful for their strong Q2 performance.\nI'd like to personally congratulate the entire global GPC team for the hard work an impressive result.\nThe teams continue to build momentum and execute well.\nWe remain focused on our defined strategic initiatives.\nAnd despite the global uncertainties that continue to impact our operations we're pleased with the strong sales growth, operating leverage and cash flow performance this quarter.\nLast quarter, we outlined our plan to create value as we leverage GPC global capabilities to simplify and integrate our operations, we do so to improve the customer experience, to increase the speed and efficiency of execution and to deliver winning performance.\nThis includes continuous investments to position GPC for near and long-term profitable growth.\nThe key pillars of our investments include talent, sales effectiveness, digital, supply chain and emerging technologies.\nAround the globe the teams executed well against our strategic priorities.\nFor example, on talent, we announced last month that Naveen Krishna joined the company, as Chief Information and Digital Officer.\nNaveen will help lead our strategy and execution for all technology and digital initiatives.\nHe comes to GPC with more than 25 years of technology experience with companies such as Macy's, Home Depot, Target and FedEx.\nOther examples of recent talent investments include category management, field sales and services, indirect sourcing, pricing, diversity equity inclusion, digital, data and inventory leadership to name a few.\nInvestment in our people is always a priority as we execute our mission to be an employer of choice.\nTo highlight other examples of our initiative momentum in local execution, Paul and I recently had the opportunity to spend time in person with our European team mates, and they showcased great examples of the strategic initiatives and winning team performance.\nFor example, we discuss details of the growth plans for a recent bolt-on investment Winparts, an online leader of automotive parts and accessories.\nWe expect this investment to provide new capabilities and accelerate our European digital vision.\nWe visited a best-in-class distribution facility in the Netherlands that increased operating productivity by approximately 20% over the past few years with the automation investments and process excellence initiatives.\nWe received an update on the consolidation of 10 back office shared service centers in France to one national location in France to drive cost and process efficiencies, and we saw first hand the power and differentiation of the NAPA brand in the local market.\nAlthough, these are only a few select examples in Europe in each of our automotive and industrial businesses, we see similar examples of focus, strategic execution that are delivering results.\nWe also executed well on our acquisition strategy during the quarter.\nThe M&A environment is active and we remain disciplined to pursue strategic and value creating transactions.\nFor example, in addition to WInparts, we completed several other bolt-on acquisitions to deliver growth, add capabilities and create value.\nThe North American and European automotive teams completed various store acquisitions that increase our position in key strategic geographies and extend existing customer relationships.\nOur automotive team in Asia-Pac, also executed two bolt-on strategic acquisitions including Rare Spares a market leader in the niche segment of automotive restoration parts and accessories and PARts DB, a leading cloud-based product and supplier data platform that will enhance our e-commerce and data capabilities.\nWe enter the third quarter with strong momentum, as our automotive and industrial markets recover and we execute our plans.\nWe continue to analyze and respond to areas that challenge our daily operations such as COVID-19, inflation, global logistics and product and labor availability.\nFor example, the global and local procurement teams partner closely with all levels of our suppliers to effectively assess product availabilities and delivery trends.\nWe have processes in place, backed with data and analytics to create visibility into direct and indirect inflation trends.\nWe utilize GPC scale and relationships including dedicated GPC resources in Asia to address our global logistics needs, and we continue to address labor challenges with competitive pay and benefits, flexible work programs, creative incentives to attract talent, a differentiated culture and compelling career opportunities.\nWe believe our team is well positioned to remain agile, as we focus on what we can control and navigate these macro global headwinds.\nOverall, we're very pleased with our performance through the first half of the year and look forward to sharing our continued progress next quarter.\nTotal GPC sales were $4.8 billion in the second quarter up 25%.\nOur gross margin improved to 35.3%, an increase from 33.8% last year or up a 120 basis points from an adjusted gross margin of 34.1%.\nOur improvement in gross margin was primarily driven by the increase in supplier incentives, although, we also continue to benefit from channel and geographical mix shifts positive product mix, strategic category management initiatives including pricing and global sourcing strategies.\nIn the second quarter, there was significant pricing activity with our suppliers, resulting in product cost inflation.\nWe were positioned to pass these increases on to our customers and the impact of price inflation was neutral to gross margin.\nWe estimate a 1.5% impact of inflation in automotive sales for the quarter and a 1% impact in industrial.\nBased on the current environment, we expect this to increase further through the second half of the year.\nOur total adjusted operating and non-operating expenses are $1.3 billion in the second quarter, up 28% from last year and 28.1% of sales.\nThe increase in last year reflects the impact of several factors including the prior-year benefit of approximately a $150 million in temporary savings related to the pandemic.\nThe balance primarily relates to the increase in variable costs on the $1 billion in additional year-over-year sales.\nAnd to a lesser extent, we experience rising cost pressures in areas such as wages, incentive compensations, freights, rents and health insurance, which we are managing.\nWe also invested in projects associated with our transformation and other strategic initiatives to drive growth and enhance productivity.\nSo overall, we continue to operate in line with our plans for the year and we remain focused on gaining additional efficiency in the quarters ahead, as you heard from Paul and Will.\nOn a segment basis, our total segment profit in the second quarter was $441 million, up a strong 35%.\nOur segment profit margin was 9.2% compared to 8.6% last year a 65 basis point year-over-year improvement and up a 100 basis points from 2019.\nSo strong operating results, and a reflection of the work we have done to streamline our operations and optimize our portfolio over the last several years.\nWe would add that for the full year, we continue to expect our segment profit margin to improve by 20 to 30 basis points from 2020 or 60 to 70 basis points from 2019.\nThis would represent our strongest margin in five years.\nOur tax rate for the second quarter was 27.2% on an adjusted basis up from 24.1% last year.\nThe increase in rate primarily reflects our higher U.K. tax rate, partially offset by stock compensation excess tax benefits.\nSecond quarter net income from continuing operations was $196 million with diluted earnings per share of $1.36.\nOur adjusted net income was $253 million or $1.74 per share, which compares to $191 million or $1.32 per share in the prior year, a 32% increase.\nTurning to our second quarter results by segment.\nOur automotive revenue was $3.2 billion, up 28% from last year.\nSegment profit was $291 million, up 33%, with profit margin improved to 9.1%, up 30 basis points from 2020 and a 90 basis point increase from 2019.\nWe attribute the margin gain to the positive market conditions in our automotive business and our team's intense focus on the execution of our growth and operating initiatives.\nWe're encouraged by the positive momentum we will carry into the balance of the year.\nOur Industrial sales were $1.6 billion in the quarter, up 20% from 2020.\nSegment profit of $150 million was up 38% from a year ago and profit margin improved to a strong 9.5%, a 130 basis point increase from both 2020 and 2019.\nSo with the strengthening sales environment and continued operational improvements, this group continues to post excellent operating results and we expect Industrial to perform well through the balance of the year.\nNow, let's turn our comments to the balance sheet.\nAt June 30th, our total accounts receivable is up 4% despite the strong sales increase, this is primarily due to the additional sale of $300 million in receivables in the second half of 2020.\nInventory was up 10%, consistent with our commitment to provide for inventory availability and our accounts payable increased 26%.\nOur AP-to-inventory ratio improved to 129% from 112% last year.\nWe remain pleased with our progress in improving our overall working capital position.\nOur total debt is $2.5 billion, down $700 million or 22% from June of 2020 and down $160 million from December 31 of 2020.\nWe closed the second quarter was $2.5 billion in available liquidity and our total debt-to-adjusted EBITDA has improved to 1.6 times from 2.9 times last year.\nOur team has done an excellent job of improving our capital structure over the last year.\nWe continue to generate strong cash flow with another $400 million in cash from operations in the second quarter and $700 million for the six months.\nFor the full year, we expect our earnings growth and working capital to drive $1.2 billion to $1.4 billion in cash from operations and free cash flow of $900 million to $1.1 billion.\nOur key priorities for cash remain the reinvestment in our businesses through capital expenditures, M&A, the dividends and share repurchases.\nWe have invested $90 million in capital expenditures thus far in the year and we expect these investments to pick up further in the quarters ahead, as we execute on additional investments to drive organic growth and improve efficiencies and productivity in our operations.\nAs Will mentioned earlier strategic acquisitions remain an important component of our long-term growth strategy.\nWe've used approximately $97 million in cash for acquisitions through these six months and we continue to cultivate a strong pipeline of targeted names and expect to make additional strategic and bolt-on acquisitions to complement both our Global Automotive and Industrial segments as we move forward.\nConsistent with our long-standing dividend policy, we have also paid a total cash dividend of more than $232 million to our shareholders through the first half of this year.\nThis reflects a 2021 annual dividend of $3.26 per share and represents our 65th consecutive annual increase in the dividend.\nFinally, as part of our share repurchase program, we have been active with share buybacks since 1994.\nIn the second quarter, we used $184 million to acquire 1.4 million shares.\nThe company is currently authorized to repurchase up to 13 million additional shares and we expect to remain active in this program in the quarters ahead.\nIn arriving at our updated guidance, we considered several factors, including our past performance and recent business trends, current growth plans and strategic initiatives, the potential for foreign exchange fluctuations, inflation and the global economic outlook.\nWe also consider the continued uncertainties due to the market disruptions such as with COVID-19 and its potential impact on our results.\nWith these factors in mind, we expect total sales for 2021 to be in the range of plus 10% to plus 12%, an increase from our previous guidance of plus 5% to plus 7%.\nAs usual, this excludes the benefit of any unannounced future acquisitions.\nBy business, we are guiding to plus 11% to plus 13% total sales growth for the Automotive segment, an increase from the plus 5% to plus 7%, and a total sales increase of plus 6% to plus 8% for the Industrial segment an increase from the plus 4% to plus 6%.\nOn the earnings side, we are raising our guidance for adjusted diluted earnings per share to a range of $6.20 to $6.35, which is up 18% to 20% from 2020.\nThis represents an increase from our previous guidance of $5.85 to $6.05.\nWe enter the third quarter, focused on our initiatives to meet or exceed these targeted results and we look forward to reporting on our financial performance as we go through the year.\nWe are pleased with our progress in capturing profitable growth, generating strong cash flow and driving shareholder value.\nThis quarter's 25% total sales growth reflects the benefits of the strengthening global economy and positive sales environment in both our automotive and industrial businesses.\nImportantly, this dual recovery allows us to leverage the full scale of one GPC, which we believe creates significant value.\nOur team also executed well and produced our 15th consecutive quarter of gross margin expansion, while further improving our productivity via ongoing expense initiatives.\nOur global team network and disciplined focus in these areas enabled us to report strong operating results and record quarterly earnings.\nOur exceptional balance sheet provides us with the financial flexibility to pursue strategic growth opportunities via investments in organic and acquisitive growth, while also returning capital to shareholders through the dividend and share repurchases.\nThe GPC team is focused on executing our growth strategy and operational initiatives to further enhance our financial performance in the remainder of 2021 and beyond.\n",
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"content": "compname reports q2 earnings per share of $1.36.\nq2 earnings per share $1.36 from continuing operations.\nq2 sales $4.8 billion versus refinitiv ibes estimate of $4.33 billion.\nq2 adjusted earnings per share $1.74 from continuing operations.\nadjusts 2021 outlook for revenue growth, diluted earnings per share and adjusted diluted eps.\nin compliance with all covenants connected to its notes and other borrowings.\nsees full-year 2021 total sales growth 10% to 12%.\nsees full-year 2021 adjusted diluted earnings per share $6.20 to $6.35.\nsees full-year 2021 free cash flow $900 million to $1.1 billion.\nsees full-year 2021 net cash provided by operating activities $1.2 billion to $1.4 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: We are pleased to report strong financial results again this quarter, which reflects the consistent execution of our strategic priorities as the global markets continue to recover.\nAs we size up the business climate and how we are managing through the recovery, we can report the GPC team is generating positive momentum in both our sales and operating results.\nAnd we are well positioned for both near and long-term growth.\nDespite inflationary pressures, our margins reflect the success of our category management initiatives in cost control efforts which have offset these increases.\nAnd finally, our strategic efforts with our global supplier partners have prevented significant shortfalls and our overall inventory levels allowing us to deliver quality customer service.\nTaken a look at our third quarter financial results, total sales were 4.8 billion up 10% from last year and up 11% from Q3 of 2019.\nWe also produced our 16th consecutive quarter of gross margin expansion.\nAnd we further improved our productivity and customer service capabilities with the ongoing execution of our operational initiatives.\nAs a result, segment profit increased 14% and our segment margin improved 30 basis points to 9.3%.\nThis represents our strongest margin in 2 decades and confirms our key initiatives are driving meaningful improvements.\nNet income was 229 million or a $1.59 for diluted share and adjusted net income was 270 million or a $1.88 per share.\nThis is a 15% increase from 2020 and establishes a new record for GPC's quarterly earnings, so just an outstanding job by the GPC team.\nTotal sales for global automotive also set a new record at 3.2 billion for the quarter.\nThis represents an 8% increase from Q3 2020, and a 15% increase from Q3 of 2019.\nOn a comp basis, sales were up 5% from last year and up 7% on a two-year stack, with our strongest year-over-year automotive comps coming from the U.S. business.\nIn addition, from a cadence perspective, sales held up well through the quarter with the strongest average daily sales volume in each of our geographies coming in September.\nThe broad strength in our global automotive sales reflects a number of factors.\nFirst, we're proud of our team's efforts to shore up our supply chain amid the difficult backdrop of product delays and logistics challenges.\nSupply chain disruptions have been more substantial for U.S. automotive than in our international or industrial operations.\nAnd we continue to work closely with our global suppliers to manage through these issues and ensure we have the right inventory available for our customers.\nWe are confident in the effectiveness of our global sourcing team and believe we are well-positioned in the industry.\nWe also continue to benefit from our key growth initiatives and market tailwinds.\nAmong our growth initiatives, our emphasis on innovative sales programs and sales force effectiveness are positively impacting commercial sales.\nAs examples, we recently finalized an exclusive partnership in the education space for technician recruitment with over 10,000 active tech students in the process of earning their credentials.\nWe're also excited that NAPA and AAA have executed an agreement for NAPA to be the exclusive auto parts supplier for the new AAA branded premium battery.\nThis battery will be available to all consumers with a focus on the over 62 million AAA cardholders and 5,400 approved auto repair centers.\nWe're also equipping our sales team with incremental resources, training and development, which have led to more productive, customer-facing calls.\nIn addition, our omni -channel investments continue to drive strong B2B and B2C digital sales.\nAnd finally, the international rollout of the NAPA brand is driving significant growth in both our European and Asia-Pac operations.\nSo now turning to the market tailwinds, these macro drivers include the following: The ongoing reopening of the economy, and improving miles-driven which generate the need for more repairs and more maintenance.\nA robust used car market, that is keeping more cars on the road longer.\nAnd improving the aftermarket fundamentals, such as the growing and aging vehicle fleet, which will continue to benefit the industry over the long term.\nLooking next at our automotive highlights by region, total U.S. sales were up 9%.\nComp sales increased 8% from last year and are up 5% on a 2 year stack.\nIn Canada, total sales were up 1% with comp sales essentially flat both year-over-year and on a two-year stack as lockdowns in major markets have slowed the recovery.\nit's been encouraging to see these restrictions of easing of late, which should lead to stronger demand through the final 3 months of 2021.\nOur U.S. sales were driven by strong demand for product categories such as exhaust, ride control, brakes, tools, and equipment which all outperformed.\nIn addition, both retail and commercial ticket and traffic counts were positive for the third consecutive quarter.\nBy customer segment, sales to both commercial and retail customers held strong, with DIFM sales outperforming DIY for the second straight quarter.\nWe do remain pleased, however, with the continued strength of our DIY business and believe we can drive additional growth with ongoing initiatives, such as B2C digital investments.\nThese include new search features, improving catalog functionality, and enhanced payment options, such as, buy now and pay later.\nNAPA online, B2C sales continue to grow at a rapid pace, up over 40% from the third quarter, and up 2x from 2019.\nThe strength in commercial sales in the quarter was driven by several of the initiatives mentioned earlier, as well as the ongoing economic recovery in the U.S..\nSales to our major account partners were strongest with mid-teen growth, followed by sales for our NAPA AutoCare customers, which were up low double digits.\nWe would add that our NAPA AutoCare membership has surged with the reopening of markets and includes nearly 400 shop upgrades thus far in 2021.\nSo really terrific momentum for our premier independent garage program.\nRounding out our commercial segments, fleet, and government and other wholesale customers, also posted high single-digit growth for the quarter.\nSo really strong results across all of our commercial accounts.\nThese are encouraging trends and as we look ahead, we remain confident in our growth strategy and our key priorities to deliver customer value and ultimately sell more parts for more cars.\nOur AAD team in Europe continue to perform well with total Q3 sales up 8%, were up a strong 23% on a two-year stack.\nComp sales increased 2.5% from last year and were up 14% on a 2-year stack.\nWhile the UK and Benelux continue to stand out with really strong results, we were pleased with the solid results in each of our 7 European markets.\nA reflection of stable market conditions and execution of our key sales initiatives.\nThese include the continued roll-out of the NAPA brand and ongoing emphasis on key account development, which are driving market share gains.\nNow looking at our Asia-Pac business, total sales were up 2% from 2020 and up 18% on a 2-year stack.\nComp sales were up slightly from last year and up 15% on a 2-year stack.\nWith both commercial and retail sales up double-digit, driven by positive growth with both the Repco and NAPA brand.\nWe're really pleased with these results given the severe lock downs and the major markets of Sydney, Melbourne, and Auckland during much of the quarter.\nWe're energized to see the reopening of these markets is finally getting underway, and we expect a surge in demand in the coming month.\nSo now let's discuss the Global Industrial segment.\nTotal sales for this segment were 1.6 billion, a strong 15% increase from last year, and a 5% increase from 2019.\nComp sales were up 13% and up 4% on a 2-year stack.\nThrough the quarter, average daily sales in July and August were in line with the second quarter, while our strongest results were in the month of September.\nThis quarter's positive momentum and industrial exceeded our expectations, which is a reflection of the great work by our motion team, and the strengthening of the industrial economy.\nBoth the PMI and industrial production were positive for the quarter and these indicators correlate closely to the overall healthy state of the industrial sales climate.\nFor the second consecutive quarter, we had positive sales growth across each of our industries served.\nThe industry's sectors that stood out with double-digit growth include our largest customers segment, equipment and machinery, as well as iron and steel, automotive, aggregate and cement, lumber and wood, fabricated metals, equipment rental, and oil and gas.\nIn addition, our newly added fulfillment and logistics industry experienced tremendous growth.\nSo as you can see, the current growth in our industrial business is quite broad across the markets we serve.\nAs we have conveyed in our prior calls and in our industrial Deep Dive event on September 15, our Motion business is a market leader in the industrial distribution space in North America and Australasia.\nDMI team strive to be the preferred industrial solutions provider in the industries we serve.\nWe partner with the best manufacturers in the industry to provide Tier 1 brand, our customers demand.\nIn addition, we are constantly broadening our product offering, as well as our service capabilities to maximize our sales potential and drive market share gains in a very large and fragmented market.\nWith these fundamentals of our business in mind, our focus on continued profitable growth in this segment remained grounded in 5 key initiatives.\nAn omni -channel build-out to accelerate e-commerce growth and drive sales with new customers.\nAs examples, Motion.com and our inside sales center, which has grown from 15 to now, 35 reps in just 6 months continue to drive incremental sales from new motion customers.\nThe expansion of our industrial services and value-add solutions in areas such as equipment repair, conveyance, and automation.\nStrategic M&A to generate significant growth in new markets and new products, and services as an industry consolidator.\nEnhanced strategy to create a dynamic pricing environment that provides us a competitive advantage in the marketplace.\nAnd lastly, network optimization and automation to further improve our operating efficiencies and productivity.\nWe're pleased with the progress from these initiatives, thus far, and we are excited for the opportunities ahead.\nAnother third quarter highlight, is the publication of our 2021 sustainability report update.\nOur initiatives and activities over the past year have lead to continued progress toward our goal of promoting diversity, equity, and inclusion.\nWe've also taken steps to reduce the environmental footprint of our operations by reducing energy and emissions while increasing recycling opportunities across the globe.\n2020 tested all of us and accentuated the importance of supporting our people and our communities.\nWe're really proud of our GPC teammates around the world for their resilience and contributions to further in our sustainability goals.\nWe invite you to learn more about these initiatives and our full report which you can find on the GPC website.\nSo in summary, we made great progress in several important areas during the third quarter.\nAnd we're very pleased with the strong result in our automotive and industrial businesses, and the continued improvement in our sales and operations.\nWe could not be more proud of the GPC team.\nIt's always a proud moment to have the opportunity to showcase our global teams hard work, relentless customer service, and winning performance.\nIt's a challenging environment and teams have done an exceptional job to adjust and deliver results.\nWe continue to remain focused on our key pillars, including talent, sales effectiveness, digital supply chain, and emerging technology.\nTeams are executing initiatives well and consider s strategic initiatives a central part of our operating cadence.\nThe teams have rigor around measurement and progress visibility.\nWe measure unique global initiatives and are ahead of our 2021 plan established at the beginning of the year.\nAs we execute our GPC strategic planning process for the upcoming year, we reflect on learn from and refine our priority initiative execution.\nIn addition through the year, we share best practices around the globe for common strategies to help us continuously learn and improve as one GPC team.\nWhile our geographies and end markets are diverse, we share similar GPC global initiatives, all designed to deliver profitable growth in excess of market growth, operating leverage, and free cash flow.\nDespite a challenging environment, we're pleased to see more normal team activities and customer activities starting to be possible in most of our geographies.\nWe recently had the opportunity to meet in person with the U.S. Automotive Executive and Field Management team in Atlanta.\nWe listened to field feedback, shared performance trends, enjoyed team camaraderie, introduced new talent, and collaborated on strategic priorities for the upcoming year.\nSimilarly, approximately 70 of our motion Executive and field leaders from around the country, recently had the chance to meet in person for the first time since early 2020, to detail business performance and review strategic initiatives priorities.\nIn Europe, our AAG executive leadership team recently met together in person for the first time in nearly 2 years.\nOur Atlanta-based GPC and U.S. NAPA field support teams also hosted an employee appreciation event for 400 teammates, that included a well-received visit from our celebrity NAPA racing teammates, including Chase Elliott.\nWe're cautiously optimistic our teams in Australasia will soon be able to exit lockdown in November and also return to a more normal in-person routine.\nAt each of these events, it's energizing to see the positive attitudes, strong team alignment, and visible excitement about our GPC momentum and vision.\nIt's also reassuring to see our differentiated GPC culture up close and intact.\nPaul and I have also had the opportunity to spend time in person with customers and vendors this quarter.\nThese discussions are critically important as we share our growth visions, listen to feedback, and explore ways to deepen our strategic partnership.\nThese conversations not only reinforce our GPC core strategic priorities, talent, sales effectiveness, digital and tech, supply chain and emerging tech; b but also always affirm the unique customer value propositions across our GPC businesses.\nGrowth, technology solutions, supply chain excellence, products and technical expertise, and long-standing local relationships are always key themes.\nAs an example, we recently visited with an industrial customer who is enjoying exponential growth.\nOur Motion teammates co-locate associates at the customer facility to provide real-time expertise on the plant floor to ensure the facility is operating to its potential.\nPart of the discussions with this customer explored the use of embedded technology solutions that will make customer ordering from motion easier and faster.\nWe're building plans to triple the size of this customer relationship over the next few years.\nIn our customer discussions or recent common theme is the supply chain challenges that face all Company.\nWe explained, we believe our global scale in-country resources, data and analytics, investments in our supply chain, strategic inventory actions, and proactive daily team approach, position as to navigate the headwinds relative to others.\nWe're in constant discussion with highest levels of our supplier partners, many of which for whom GPC represents a large and important global customer.\nOver the past quarter, we've held numerous top-to-top meetings with our global executive leadership and vendor partners to review progress and jointly problems solved.\nIt's a challenging environment, but our global teams and partners are proactively acting each day to navigate it.\nTurning to our focus on talent, we recently completed an end-to-end strategic review of our global GPC employee value proposition, and talent initiatives.\nThis disciplined work ensures we have the right capabilities aligned to our current and future business strategies.\nThe work also ensures we're constantly striving to be an employer of choice in this dynamic and competitive talent environment.\nAround the globe, we continue to take deliberate actions to lead, recognize and ensure the well-being of our teams.\nFor example, we recently streamlined recruiting processes to move faster to attract talent, introduce new wellness incentives, improved holiday schedules, enhance vacation eligibility and flexibility, invested in healthcare costs to reduce the burden on our associates, improve tuition reimbursement programs, and relaxed dress code policies to name a few.\nAnd talent's our most important advantage, we'll always work to take care of and invest in our people.\nWe also continued to execute well against our broader digital and technology initiatives.\nDuring the quarter, the teams have made exciting progress under leadership of our new Chief Information and Digital Officer, Naveen Krishna.\nWe're focused on building high performing teams that engineered technology to solve customers problems at scale.\nIn addition, we'll optimize human and financial resources to focus on the most critical and impactful activities.\nOur emerging technology initiatives, including electric vehicles and related technologies also continue to advance.\nThe global teams are partnering well to execute a disciplined and coordinated strategy.\nWe're pleased with the team momentum and will continue to dedicate resources to this exciting effort.\nLast, the teams are executing our M&A strategy with discipline.\nFor example, we added several store groups to our North American and Europe an automotive network to increase local market density and we announced the acquisition of J&S Automotive Distributors, a leading automotive parts distributor in Ireland.\nThis new geography represents the 15th country in which GPC operates.\nIn addition, we were pleased to recently sign a definitive agreement to acquire AutoAccessoriesGarage, a leading U.S. based digital platform specializing in automotive accessories.\nThis strategic digital acquisition adds new capabilities and accelerates a strategic product category for the U.S. automotive team.\nThe acquisition pipeline is active and we remain disciplined to prioritize transactions we believe meet all of our GPC strategic and financial criterion.\nOverall, we are really pleased with the record -setting team performance.\nDespite uncontrollable headwind, the teams continue to rally together each day to service customers and deliver performance.\nWe look forward to working hard to close the year strong and build on our solid momentum as we move forward into 2022.\nWe are very pleased with our third quarter financial performance and we look forward to sharing a few additional details with you.\nRecapping revenues, total GPC sales were 4.8 billion in the third quarter, up 10%.\nGross margin improved to 35.5%, an increase of 50 basis points from 35%, last year.\nOur improvement in gross margin was primarily driven by the increase in supplier incentives due to improved volumes and the positive impact of strategic category management initiatives.\nIn the third quarter, we had continued pricing activity with our suppliers as anticipated, resulting in additional product cost inflation.\nOur team was positioned to address these increases with effective pricing and global sourcing strategies and price inflation improve neutral to gross margin.\nOn a total Company basis, we estimate a 3% inflationary impact on Q3 sales, consisting of 3.5% inflation in global automotive, and 1% to 2% in industrial.\nBased on current trends, we expect to see additional price inflation in the fourth quarter, and we will utilize our strategies to protect our gross margin as appropriate.\nOur total adjusted operating and non-operating expenses were 1.35 billion in the third quarter, up 11% from 2020 and at 28% of sales.\nThe increase from last year is due to several factors, including the prior-year benefit of approximately 60 million and temporary savings related to the pandemic.\nAdditionally, our third quarter expenses reflect the increase in variable costs on the 450 million in additional year-over-year sales, as well as cost pressures in areas such as wages, Incentive compensation flight, rent, and health insurance.\nWe continue to execute on our ongoing initiatives to control expenses and improve our operations.\nWhile pleased with our progress, thus far, we see room for further improvement in the quarters ahead.\nOur total segment profit in the third quarter was 447 million up 14%.\nOur segment profit margin was 9.3% compared to 9% last year, a 30 basis point year-over-year improvement, and up a 130 basis points from 2019.\nSo we're really pleased with the continued improvement and the excellent work by our team.\nLooking ahead, we raised our margin expectations for the full year and we currently expect segment profit margin to improve 40 to 50 basis points from 2020 or 80 to 90 basis points from 2019.\nThis would be our strongest full year margin in more than 20 years.\nOur tax rate for the third quarter was 24.9% on an adjusted basis, up from 23.4% last year, with the increase in rate primarily related to income mix shift to higher tax jurisdictions.\nOur third quarter net income from continuing operations was 229 million, with diluted earnings per share of a $1.59.\nOur adjusted net income was 270 million or a $1.88 per diluted share, which compares to 237 million or a $1.63 per adjusted diluted share in the prior year, a 15% increase.\nSo turning to our third quarter results by segment, our total automotive revenue was 3.2 billion up 8% from last year.\nOur segment profit increased 6% to 281 million with profit margin as solid 8.8%.\nWhile down 20 basis points from 2020 due to the prior-year benefit of temporary savings, this represents an 80 basis point margin improvement over 2019 and reflects the underlying progress in our operations.\nFor the 9 months profit margin is 8.6% up 80 basis points from 2020 and up 90 basis points from 2019, driven primarily by margin expansion in our U.S. and European operations.\nOur industrial sales were 1.6 billion up 15% from 2020.\nSegment profit of a 166 million was up a strong 32% from a year ago and profit margin improved to a 10.3%.\nThis is a 140 basis points from 2020 and up 220 basis points from 2019 and the first double-digit margin for industrial since the Fourth Quarter of 2006.\nYear-to-date profit margin for this segment is 9.4% up a 120 basis points from 2020 and up a 150 basis points from 2019.\nSo this group is executing very well and posting excellent operating results through the industrial recovery.\nSo now, let's turn our comments to the balance sheet.\nAt September 30th, total accounts receivable is down 3.5%, primarily due to the timing of the 300 million in accounts receivables sold in October of 2020.\nInventory was up 10% in line with our sales increase and a reflection of our commitment to having the right parts, in the right place, at the right time.\nAccounts payable increased 20% from last year due to the increase in inventory and favorable payment terms with certain suppliers.\nOur AP to inventory ratio improved to 129% from 118% last year.\nOur total debt is 2.4 billion down 474 million or 16% from September of last year, and down 245 million from December 31 of 2020.\nWe closed the third quarter with available liquidity of 2.4 billion and our total debt to adjusted EBITDA improved to 1.5 times from 2.2 times last year.\nSo our teams continue to do an outstanding job of optimizing our working capital and our capital structure.\nWe also continue to generate strong cash flow with another 300 million in cash from operations in the third quarter and 1 billion for the 9 months.\nFor the full year.\nWe expect our earnings growth and working capital to drive 1.2 billion to 1.4 billion in cash from operations.\nAnd free cash flow of 950 million to 1.15 billion.\nOur key priorities for cash remain the reinvestment in our businesses through capital expenditures, M&A, share repurchases and the dividend.\nFor the 9 months we have invested a 138 million in capital expenditures, and we have plans for additional investments to drive organic growth and improve efficiencies and productivity in our operations through the balance of the year.\nIn addition, we have used approximately a 143 million in cash for strategic acquisitions to accelerate growth.\nThese investments includes several automotive store groups across our markets, included in the entry into Ireland discussed earlier.\nWe continue to generate a robust pipeline of additional strategic and bolt-on acquisitions in both automotive and industrial segments.\nThis would include Auto Accessories Garage as mentioned before, which we expect to close in the fourth quarter.\nConsistent with our long-standing dividend policy, we have also paid a total cash dividend of more than 349 million to our shareholders through the 9 months.\nThe Company has paid a dividend every year since going public in 1948 and has increased the dividend for 65 consecutive years.\nAnd as part of our share repurchase program, we have also been active with share buybacks dating back to 1994.\nIn the third quarter, we used a $100 million to purchase 800,000 shares, and year-to-date we have used 284 million to purchase 2.2 million shares.\nThe Company is currently authorized to repurchase up to 12.2 million additional shares, and we expect to remain active in this program in the quarters ahead.\nWe expect total sales for 2021 to be in the range of +12 to +13%, an increase from our previous guidance of +10 to +12%.\nAs usual, this excludes the benefit of any unannounced future acquisitions.\nBy business, we are guiding to +14 to +15 total sales growth for the Automotive segment, an increase from +11 to +13% and a total sales increase of +10 to +11% for the industrial segment.\nAn increase + plus 6% to +8% On the earnings side, we're raising our guidance for adjusted diluted earnings per share to a range of $6.60 to $6.65, which is up 25% to 26% from 2020.\nThis represents an increase from our previous guidance of $6.20 to $6.35.\nSo we're encouraged by the strength in our financial results for the third quarter and the nine months.\nAnd we enter the fourth quarter focused on our initiatives to meet or exceed our outlook for the year.\nWe look forward to reporting on our financial performance for the fourth quarter in full year in February.\nAs we close out another strong quarter, we are pleased with our progress in driving profitable growth, strong cash flow, and shareholder We attribute the positive momentum in our business to our global team work and disciplined focus across all of our operations.\nOur team has confidence in the strategic plans we have put in place to capture long-term growth and margin expansion.\nOur strategic plans combined with an exceptional balance sheet position GPC with the financial strength and flexibility to pursue strategic growth opportunities via investments at organic and acquisitive growth.\nWhile also returning capital to shareholders through the dividend and share repurchases.\nSo as we look ahead, we are encouraged to see the impact of the global pandemic subsiding.\nwhile the fundamentals of our two global businesses remained rock solid.\nOur GPC teams around the world are stepping up under challenging circumstances and taking great care of our customers.\n",
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"content": "q3 earnings per share $1.59 from continuing operations.\nq3 sales rose 10.3 percent to $4.8 billion.\nq3 adjusted earnings per share $1.88 from continuing operations.\nraises 2021 outlook for revenue growth, diluted eps, adjusted diluted earnings per share and free cash flow.\nsees 2021 total sales growth 12% to 13%.\nsees 2021 adjusted diluted earnings per share $6.60 to $6.65.\nsees 2021 free cash flow $950 million to $1.15 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: Those risks include, but are not limited to, risks associated with pricing, volume, inventory supply due to increased customer demand and reduced manufacturing production levels due to component shortages, conditions of markets and adverse developments in the global economy as well as the public health prices related to the COVID-19 virus, and resulting impacts on the demand for new and used vehicles, and related services.\nThose and other risks are described in the company's filings with the Securities and Exchange Commission over the past 12 months.\nCopies of these filings are available from both the SEC and the company.\nAs required by applicable SEC rules, the company provides reconciliations of any such non-GAAP financial measures to the most directly comparable GAAP measures on its website.\nI'll now hand the call over to Earl.\nI'm pleased to report that for the quarter, Group 1 generated adjusted net income of $178 million.\nThis equates to adjusted earnings per share of $9.62 per diluted share, an increase of 38% over the prior year, and an increase of 219% over the pre-pandemic third quarter of 2019.\nOur adjusted results exclude non-core items totaling approximately $5 million of net after-tax losses.\nThis net amount consists primarily of a loss on debt extinguishment, and acquisition costs related to the Prime transaction, partially offset by favorable legal settlements recognized during the quarter.\nThese profit results were largely a result of strong vehicle margins that were able to more than offset unit sales declines, as well as continued growth in after sales and impressive cost control.\nConsumer demand for vehicles remains extremely strong heading into the fourth quarter.\nAnd we continue to sell most units almost immediately after OEM delivery.\nThis dynamic should continue throughout the fourth quarter, and potentially much further out, assuming no material change in consumer demand.\nAs of September 30, we have 2,700 U.S. new vehicle inventory units in stock, representing a 11-day supply.\nOur used inventory situation is much stronger at 10,000 units and a 25-day supply.\nDaryl will speak more about inventory shortly.\nA very encouraging element of our third quarter results is the very strong continued recovery in our after-sales business.\nOur U.S. markets saw 15.5% increase in after-sales revenues versus the prior year.\nAgain, Daryl will provide more detail on our U.S. results in a moment.\nAs with the U.S., consumer demand for vehicles in the UK is extremely strong.\nBut new vehicle availability is severely constrained.\nWe have an order bank with most of our major UK brands extending into the second quarter of next year.\nStrong margins were able to more than offset sales declines due to inventory shortages.\nAnd we're proud to report that we generated an all-time record quarterly profit in the third quarter of 2021.\nWe believe pent-up demand built over the past several years due to both Brexit and the pandemic will help drive strong UK vehicle demand into the foreseeable future.\nOur U.S. adjusted SG&A as a percentage of gross profit was 57.6%.\nThe UK was 64.6%, and Brazil came in at a record 60.9%.\nWhile there is certainly a level of transitory impact due to vehicle margins, we continue to witness very high levels of productivity that will remain after vehicle inventories normalized.\nAs Earl mentioned, U.S. new vehicle inventory levels finished the quarter at 2,700 units and a 11-day supply.\nOur September inventory receipts were the lowest of the year at approximately 6,800 units.\nWe expect to receive roughly the same level in October and November, which we believe will be the trough.\nWe do not have much visibility yet into 2022.\nBut based on OEM communications, we expect production to increase over current levels at some point in the first quarter.\nOur team did a great job increasing vehicle margins throughout the quarter as inventory supply continues to decline.\nAnd we will continue to adjust our operations as required.\nOur Same Store used vehicle retail unit sales improved by 15% versus the third quarter of 2020.\nOur team also did a great job increasing gross profit PRUs, which is a result of increased purchases directly from vehicle owners.\nWe continue to be very aggressive, yet judicious with our used vehicle inventory sourcing strategy, which has allowed us to hold a supply relatively constant while largely avoiding public auctions.\nAs a franchise dealer, we have a distinct advantage over used-only operators due to the numerous channels afforded us a sourcing inventory, including our service drives, lease returns, and OEM closed auctions.\nThe most encouraging profit driver was once again our after sales performance.\nOur customer pay continues to ramp-up following a very strong first half of the year with 19% same-store dealership gross profit growth compared to the third quarter of 2019.\nThis allowed us to grow same-store dealership after sales gross profits by 9%, despite continued headwinds in warranty and collision, both of which we believe will reverse in time.\nWe foresee after sales continuing to ramp up over the near-term.\nThe final major factor driving our outstanding profit performance was continued cost discipline.\nOur third quarter adjusted SG&A as a percentage of gross profit was 67.6%, down from 59% in the third quarter of 2020, and down from 70.5% in the pre-pandemic third quarter of 2019.\nMaterial part of the improvement is due to productivity gains, which we believe will be permanent.\nI would like to provide another quarterly update of AcceleRide, our digital retailing platform.\nAcceleRide is proving again to be a difference maker for our customers.\nIn the third quarter, we sold 5,200 vehicles to AcceleRide, a 68% increase over last year.\nAnd since we have very little inventory pre-selling incoming new vehicles is critical to our business and AcceleRide allows customers to finalize transactions on in-transit units and take deposits digitally.\nIn addition to expanding our reach at in-transit inventory, AcceleRide has proven to be an exceptional way to grow our footprint.\nIn the third quarter, 75% of AcceleRide buyers were new to Group 1.\nCustomers clearly value the superior omni-channel experience that AcceleRide provides which gives Group 1 another avenue to grow incrementally.\nOf the customers who placed orders online last quarter nearly 50% uploaded a driver's license and 25% uploaded proof of insurance.\nAn additional 36% of the orders had a completed credit application as well.\nWe believe that giving customer's control of completing any or all of the car buying process online is critical to their overall satisfaction, and our ability to continue to generate incremental volumes through the platform.\nAcceleRide is also giving us great advantages in sourcing used vehicles.\nDuring the quarter, we purchased nearly 5,000 used vehicles from customers through AcceleRide either through trades or through individual acquisitions.\nThat's up 30% sequentially from the second quarter.\nA differentiator for us is our ability to digitally pay customers through Zelle, nearly 1,000 customers out of our 5,000 total took advantage of the digital payment feature in AcceleRide.\nIn addition to remote selling, we have increased the adoption of AcceleRide for customers in our showroom, about half of U.S. vehicle sold in the third quarter utilized AcceleRide in the everyday traditional sales process.\nIn our view, digitizing the in dealership experience saves everyone time, creates complete transparency and increases professionalism.\nIn September, we activated integrated delivery fees at 38 dealerships, preliminary results are encouraging.\nAbout 13% of customers chose delivery up front, and so far 5% are confirming in the final steps.\nThe average delivery distance is 164 miles, further demonstrating our ability to extend our reach with AcceleRide.\nWe look forward to launching integrated delivery fees and more dealerships soon.\nAcceleRide will launch at our newly acquired dealerships in Texas and California very soon.\nAnd our AcceleRide footprint will expand significantly in the Northeast with the upcoming Prime dealership acquisitions.\nWe expect to start rolling out AcceleRide in those dealerships in January of 2022.\nTurning quickly to Brazil, despite a nearly 30% decline in industry units sold versus the third quarter of 2019.\nOur team once again did a fantastic job growing margins across all lines of business and aggressively thinning the cost structure, resulting in the lowest SG&A quarter in the region's history.\nFor the second quarter in a row, our Brazilian teams at an all-time quarterly profit record.\nWe continue to be well positioned to benefit from a sales rebound coming out of the pandemic.\nAs of September 30, we had $297 million of cash on hand, and another $335 million invested in our floorplan offset accounts, bringing total cash liquidity to $632 million.\nThere was also $282 million of additional borrowing capacity on our U.S. syndicated acquisition line, bringing total immediate liquidity to $914 million.\nSubsequent to quarter-end, we issued $200 million of bonds as an add-on to our existing 4% notes to 2028.\nThis debt was raised to help fund our previously announced acquisition of the Prime Automotive Group, which we expect to close in November.\nWe also plan on raising approximately $180 million in mortgage debt to help fund the deal and provide future liquidity flexibility.\nWe generated $234 million of adjusted operating cash flow in the third quarter and $210 million of free cash flow after backing out $24 million of capital expenditure.\nThis brings our September year-to-date free cash flow to $522 million, which is allowed us to fund the majority of our Prime acquisition with access cash on hand.\nOur rent-adjusted leverage ratio, as defined by our U.S. syndicated credit facility was reduced to 1.5 times at the end of September.\nOn a net debt basis which considers all U.S. cash on hand.\nOur leverage was 0.9 times at September 30.\nAs previously announced when considering the pending Prime acquisition, we do not expect our rent adjusted leverage ratio to exceed two times, leaving plenty of flexibility for further capital deployment.\nFinally, related to interest expense, our quarterly floorplan interest of $4.8 million was a decrease of $3.3 million or 41% from prior year, due to lower vehicle inventory holdings.\nNon-floorplan interest expense decreased $1.5 million or 10% from prior year, primarily due to last year's bond debt refinancing.\nRelated to our corporate development efforts, We previously announced the October acquisitions of two dealerships in the Dallas-Fort Worth metroplex and one dealership in California.\nAnd as Daniel mentioned, we expect our purchase of the Prime Group in New England to close in November.\nOnce closed our 2021 Total acquired revenues will equal $2.5 billion.\nOur balance sheet, cash flow generation, leverage position will continue to allow for further capital deployment.\nAnd we will continue to seek ways to maximize value for our shareholders as we head into 2022.\n",
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"content": "compname announces record third quarter 2021 results.\ncompname announces record third quarter 2021 financial results.\nq3 adjusted non-gaap earnings per share $9.62.\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: Speaking on the call will be Mike Doss, the company's President and CEO; and Steve Scherger, Executive Vice President and CFO.\nInformation regarding these risks and uncertainties is contained in the company's periodic filings with the Securities and Exchange Commission.\nI'm pleased to report a solid start to 2021 in what can be described as a truly unique operating environment.\nWe continue to deliver organic sales growth, capturing new real opportunities in growing markets with our innovative fiber-based packaging solutions.\nGlobal adoption of paperboard multipacks and KeelClip packaging solutions through beverages Paperboard trades, including our new PaperSeal and ProducePack lines for food packaging and Integra fluids, a ship and own container package for omnichannel commerce, all are examples of products that are driving our results.\nWe remain encouraged by the traction we are seeing from our innovative packaging solutions with existing and new customers in growing markets around the world.\nAligned with Vision 2025 and supported by our history of successful acquisitions, we are announcing today our intent to acquire Americraft Carton.\nThe proposed transaction will provide benefits to our customers, employees and stakeholders.\nI will provide additional details on this development shortly.\nTurning to Slide three.\nLet me update you on a high-level financial and operational highlights for the quarter.\nGrowth continued in the first quarter of 2021, with net organic sales increasing 2% year-over-year.\nNotably, this follows a very strong first quarter of 2020, where net organic sales growth was 7%.\nOver the last 12 months, we've exceeded our targets, delivering 3% net organic sales growth.\nStronger than forecasted sales growth is the result of ongoing conversions to more sustainable fiber-based packaging options across our food, beverage, foodservice and consumer goods markets.\nIn addition, our business has benefited from increased at-home consumption.\nImportantly, we continue to have confidence in our 100 to 200 basis points goal for annual net organic sales growth established with Vision 2025.\nAchieving consistent year-over-year organic sales growth is supported by the strengthening global trend to more sustainable packaging alternatives.\nAs we look out specifically at the year to the anticipated volume from our innovation pipeline, coupled with return to growth in foodservice, we expect 2021 net organic sales growth will be at the high end of our 100 to 200 basis point range.\nAdjusted EBITDA in the quarter of $240 million met our expectations before the $29 million of costs we incurred associated with winter storm Uri.\nDuring the quarter, we did see a return of inflation across some of our commodity input cost categories such as logistics, recycled fibers, resins and chemicals.\nWe are executing multiple price initiatives with our customers to fully recover the current inflationary environment.\nOur commitment to price offsetting commodity input costs remains the pillar of our overall value creation model for stakeholders.\nAlso during the quarter, we made further progress on the Vision 2025 goal of achieving 80% to 90% paperboard integration across our consolidated business.\nWe exited the first quarter of 2021 at 71%, improving from 70% in the full year of 2020 and 68% in 2019.\nWe expect to benefit from a meaningful increase in our paperboard integration rate as we start up the new CRB paperboard machine in Kalamazoo later this year while winding down a portion of the existing supply agreements.\nIn addition, we will drive paperboard integration rate higher as we grow our converting volumes both organically and through acquisitions.\nOur partnership with International Paper continue to wind down during the quarter as we acquired another $400 million of minority partnership interest, reducing their interest to 7% from the initial 21% held at the inception of the partnership.\nIn addition, work on our CRB platform consolidation project in Kalamazoo continues ahead of schedule, with the new K2 machine set to begin paperboard production in the fourth quarter.\nPlanning related to our more recently announced investment in Texarkana to convert an existing SBS machine to its full capacity capable of also producing CUK is tracking on time and on budget.\nThis represents a very efficient path to meet increased global demand for CUK and further advances our efforts to closely match supply with areas of strengthening demand.\nContinuing the capital allocation discussion, let's move to Slide four, where I will provide an overview of our intent to acquire Americraft Carton.\nWe have entered into an agreement to acquire Americraft Carton for approximately $280 million.\nThe company is one of the largest remaining independent converters in North America, with over $200 million in annual sales, operating seven well-capitalized and high-quality converting facilities.\nThe company has a great reputation with customers, has been in business for over 100 years and generates approximately $30 million of annual EBITDA.\nWe see 300 basis points of paperboard integration opportunity across all three substrates and expect an additional $10 million of synergies over 24 months following the close.\nThe transaction is expected to close in the next few months.\nTurning now to Slide five and a discussion of innovation and new product development.\nWe have discussed with you in past calls the significant ongoing conversions to paperboard solutions we are seeing in our beverage and foodservice markets.\nAn additional area of expansion for us is into food categories around the printer of the grocery store.\nWe have targeted and are seeing success in new categories as we align our global innovation resources and have established frameworks to execute on the biggest opportunities.\nOn Slide six, I will provide details on our PaperSeal innovation.\nWith the launch of the PaperSeal in 2020, we targeted a $1 billion addressable market opportunity to replace foam trays and shrink wrap alternatives commonly found in the grocery store meat departments around the world.\nOur PaperSeal packaging innovation offers producers and retailers significantly increased food trade recyclability as well as enhanced branding opportunities.\nWe have seen traction in Europe, in Australia with the list of retailers, including Aldi, Esda, ECA, Little, Marks & Spencer and Woolworths adopting our packaging for meats and poultry products.\nWe have tests under way in North America and are on track to be commercial in the region in 2021.\nBuilding on early momentum on PaperSeal, we are executing a product expansion with the launch of PaperSeal Slice and PaperSeal Wedge.\nThe recyclable barrier line paper packaging format now offers the same ease of use and sustainability benefits for sliced deli meats and cheese categories.\nThe packaging insures hygienic and shelf-life characteristics that match existing packaging alternatives.\nThe design allows for enhanced branding and meets the requirements for high-speed food manufacturing lines.\nTurning to Slide seven.\nWe are also targeting and expanding in another category found at the perimeter of the store, produce.\nWith our ProducePack line, we are offering a variety of fully sustainable shelf-ready solutions for protecting and preserving fresh fruit and vegetables.\nProducePack offers significant branding advantages in an eco-friendly container versus existing alternatives.\nThe leading Michigan apple distributor, bell harvest, recently switched to ProducePack for its Fuji, Honeycrisp and Gala Apples in response to consumer preference for fiber-based packaging.\nWith the launch of our new Punnet tray line, we are extending our offerings to new categories like berries and snacking size vegetables.\nOur global marketing, sales and innovation and sustainability team members are working clearly that are focused on winning in today's market.\nSustainability is a key part of every new product development discussion and is central to our go-to-market strategies.\nWe are engaging with external stakeholders to learn more about consumer preferences, product direction and the evolving needs in the market places we move to more environmentally, conscious society.\nProviding packaging enhancements for consumers that include 100% recyclability and reduced carbon footprint will be the key to our new product development road map moving forward.\nLet me conclude on Slide eight, revisiting my comments made at the end of what was an incredible year 2020.\nWe are creating value to leadership with our Vision 2025.\nSimply put, we are running a different race.\nThe investments we have made to advance our capabilities, engage employees and optimize our mills and converting infrastructure differentiate us.\nWe are leaders in sustainability because we've built our business on it.\nOur packaging solutions are made primarily from renewable wood fiber from sustainably managed wood baskets in the United States, and the vast majority of our fiber-based packaging can be recycled today.\nAs a result of prudent capital management and strong cash flow generation, we have invested back into the business and has continued to enhance our service offering to meet global demand and customer preferences, delivering on new product development opportunities with customers and achieving our sustainability-supported growth goals with the proposed acquisition of Americraft, we are positioned to further strengthen our growth outlook, adding customers, adding markets while driving greater paperboard integration.\nWe are confident in the pipeline in front of us to achieve a 100 to 200 basis of annual net organic sales growth and expect to be at the high end of that range in 2021.\nOur ability to help customers reduce their environmental impact and elevate their brands through continued innovation and improvements in packaging is expanding opportunities in drive growth.\nMoving to Slide nine, focused on key financial highlights in the first quarter of 2021.\nNet sales increased 3% from the prior year to $1.65 billion, driven by 2% net organic sales growth and positions.\nAdjusted EBITDA declined from the prior year quarter, primarily related to $29 million in costs associated with winter storm Uri and maintenance downtime.\nAs a result, adjusted earnings per share were $0.23 as compared to $0.31 in the first quarter of 2020.\nTotal liquidity remained significant at $1.44 billion.\nAdditional financial and market detail can be found on Slide 10.\nSolid sales performance was driven by continued strength food, beverage and consumer markets, where sales before acquisitions increased 5%.\nPartially offsetting this performance was our foodservice business, where sales declined 10% versus the prior year period.\nImportantly, foodservice sales improved to flat performance year-over-year in the month of March and are inflecting positive for month-to-date April versus the prior year.\nThis is encouraging and largely as expected, as we see a return to more away-from-home consumption, as vaccinations are rolled out and as we anniversary the beginning of the COVID-19 pandemic.\nOn Slides 11 and 12, you'll see our year-over-year revenue and EBITDA waterfall.\nNet sales increased $50 million in the first quarter of 2021, driven by $33 million of improved volume mix, resulting from a combination of 2% organic sales growth and acquisitions, partially offset by fewer selling days when compared to leap year observed in the prior year quarter as well as $20 million of favorable foreign exchange.\nAdjusted EBITDA decreased $55 million to $240 million in the first quarter of 2021.\nAdjusted EBITDA benefited from $21 million in improved net productivity and $5 million from favorable foreign exchange.\nEBITDA was unfavorably impacted by $3 million of pricing, $2 million of unfavorable volume mix, $34 million of commodity input cost inflation, $13 million of other inflation and $29 million of costs related to winter storm Uri.\nExcluding storm-related costs, adjusted EBITDA was $269 million, consistent with our expectations.\nAs Mike mentioned in his remarks, we experienced higher inflation across certain commodity categories during the first quarter, and we are successfully executing multiple price initiatives to offset inflation.\nBack on Slide nine, you will see that industry operating rates remained strong and backlogs are quite elevated across all of our paperboard substrates.\nIn addition, AF&PA first quarter data reflects declines in industry inventory levels, with balances significantly below historical 5-year average.\nAF&PA industry operating rates at the end of Q1 for SBS and CRB were 92% and 94%, respectively.\nOur CUK operating rate was over 95%, as we remained in an oversubscribed environment.\nBacklog increased from last quarter and were 6-plus weeks in SBS and CRB and 8-plus weeks in CUK at the end of the quarter.\nWe ended the quarter with net leverage at 3.7 times.\nWhile leverage is above our long-term targeted level of 2.5 times to three times and our 2021 target of three times to 3.5 times, we remain confident in our cash flow generation commitments and increase in expected cash flow generation in 2022.\nReferring back to Slide three and highlights in the quarter.\nSince the beginning of 2021, we have strengthened our balance sheet, debt maturity and interest rate profiles through very effective borrowing arrangements.\nWe issued $800 million in two senior secured notes offerings.\nWhat is notable about these transactions are the annual interest rates of the 2024 notes at 0.8% and the 2026 notes at 1.5%.\nWe also retired $425 million of maturing higher interest rate bonds, with an attractive farm credit system loan.\nAnd earlier this month, we completed an amend and extend to our bank credit facility, which notably extended the maturity date from January 2023 to April 2026 and increased the availability under the domestic revolving line of credit by $400 million.\nOur significant liquidity, balance sheet flexibility and strong cash flow generation remains a source of strength of the economy.\nWe have excellent optionality.\nAnd as Mike detailed for you, we are executing a balanced approach to capital allocation.\nTurning now to guidance on Slides 13 and 14.\nUnderlying demand for our fiber-based packaging solutions remains strong.\nAs Mike mentioned, we expect 2021 net organic sales growth to be at the high end of our 100 to 200 basis points target range.\nWe are meeting demand, introducing new products and growing organically.\nWe remain steadfastly focused on achieving the growth goals we established in Vision 2025.\nWe are executing multiple price initiatives to offset commodity input cost inflation.\nWe continue to expect that our volume mix and net performance will be in line with our original expectations for the year, as we earn on organic sales growth at the high end of our expectations and execute performance countermeasures to offset winter storm Uri related costs.\nWhile some components of adjusted EBITDA have changed given the operating environment we are managing, our full year adjusted EBITDA guidance range of $1.09 billion to $1.15 billion provided at the beginning of 2021 remains unchanged due to the numerous pricing, volume and productivity initiatives we are committed to successfully executing throughout the remainder of the year.\nAll of which will result in stronger adjusted EBITDA performance in the second half of 2021.\nAs such, there's also no change to our full year cash flow guidance range.\n",
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"content": "q1 adjusted earnings per share $0.23.\nq1 sales rose 3 percent to $1.649 billion.\nintends to acquire americraft carton, inc. for approximately $280 million.\ngraphic packaging holding - transaction with americraft carton includes seven well-capitalized converting facilities, team of employees.\ngraphic packaging - proposed acquisition of americraft carton is expected to add about $200 million in sales, $30 million in adjusted ebitda upon completion.\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: Speaking on the call will be Mike Doss, the company's President and CEO; and Steve Scherger, Executive Vice President and CFO.\nInformation regarding these risks and uncertainties is contained in the company's periodic filings with the Securities and Exchange Commission.\nI'm excited to discuss quarterly results with you today and the positive developments that we are driving in our pursuing Vision 2025.\nWe are delivering for customers and providing packaging solutions that are resonating with consumers in the marketplace.\nNew innovative packaging introductions continue as our teams expand the new product pipeline and fuel our organic growth strategy.\nWe are executing strategic M&A with transactions that are strengthening our capabilities, expanding our geographic reach and positioning us in growing markets and importantly, we are delivering on our commitments to stockholders.\nNotably these swiftly address the heightened inflationary environment with multiple price initiatives in the quarter that will play out in the second half of 2021 and 2022 in order to limit the impact of the current price cost dislocation and ensure is short-lived.\nTurning to second quarter highlights on Slide 3.\nWe delivered a meaningful 5% net organic sales growth in the quarter across all our markets.\nWe continue to see significant demand for more sustainable packaging solutions.\nOur focus on innovation and our design for the environmental approach, which is an integral part of our new product development process are providing continued opportunities to satisfy this demand.\nWe are ahead of our 100 to 200 basis point organic sales growth goal for the first half of 2021, expect to be at or above the high end of that range for the full-year.\nAdjusted EBITDA in the second quarter was $248 million.\nImportantly, EBITDA was positively impacted by $15 million of improved volume mix related to net organic sales growth and $36 million of favorable net performance.\nOur teams did an excellent job of navigating the challenging operating environment to meet customer demand and deliver sales growth.\nThe solid execution was however offset by $67 million of accelerated inflation across the broad basket of commodities.\nWe address the inflationary environment head on during the quarter successfully implementing multiple pricing initiatives.\nThis included Paperboard price increases across all 3 substrates as well as positive modification of other business terms.\nOne example is our move to shift freight recovery and contracts where we are responsible for product delivery costs to 4 openers per year.\nA second example is the date specific implementation of price increases for paperboard purchases in the open market, replacing the linkage of price increases to industry trade obligations.\nWe committed to stockholders that we would shorten the time period for price to offset commodity input cost inflation and we demonstrated commitment in the second quarter.\nWe have changed the pricing dynamics in our business since the last period of dislocation between 2016 and 2018 and this will be on full display as we progress through the second half of 2021.\nI will talk more about this shortly.\nWhile navigating the challenges supply chain environment, our teams worked tirelessly to meet strong customer demand.\nOur foodservice business increased sales by 22% year-over-year as consumer mobility picked up well food, beverage and consumer sales improved a healthy 4% year-over-year.\nI'm excited to see the growing global interest for fiber-based consumer packaging solutions.\nGrowth in fiber-based packaging is now being realized as we projected at our Investor Day in September of 2019.\nSince that time, we've continue to position the company to meet increased demand through our ongoing investments in our leading paperboard platform, our teams and through strategic acquisitions.\nIn May, we announced the acquisition of payer packaging and more recently, we successfully completed the acquisition Americraft Carton.\nThese transactions are aligned with our growth ambitions and have us on a path to achieving our Vision 2025 goals.\nOn Slide 4, let me recap the compelling strategic rationale there packaging combination and provide an update on timing.\nThe transaction brings together 2 highly innovative workforces serving diverse a complementary customer sets.\nThe acquisition expands our global scale and strengthens our presence in Europe, which is driving the world and a push toward a more circular economy.\nWe see significant opportunities to expand and grow with global customers as the premier fiber based consumer packaging leader, we are encouraged that the regulatory approval processes are proceeding as expected and anticipated close by the end of the year.\nRecognizing the impact to leverage from the announced day, our Packaging transaction.\nIt is important to reiterate that we are fully committed to utilizing our significant cash flow generation to reduce leverage back to our targeted 2.5 to 3 times range.\nWe intend to be back to targeted levels within 24 months following the close of the acquisition.\nTurning to Slide five.\nInnovation and new product development continue across our 3 growth platforms as we rollout packaging solutions designed to address retailer and producer calls for fiber-based packaging alternatives.\nLast quarter, I discussed the rapid acceptance we are seeing for our PaperSeal line the food trade Packaging in Europe and Australia and the excitement over the new Punnet tray line introduced from [Indecipherable] snacking size vegetables.\nLast week, we introduced a new product line OptiCycle to grow in our foodservice markets.\nOur OptiCycle line includes an innovative non-polyethylene coating alternative to traditional PE and PLA coated products.\nOn Slide six, you can see the details of this latest innovation in the foodservice packaging.\nOptiCycle uses a water-based coating instead of polyethylene.\nThe foodservice cup and containers feature should require less coating material versus traditional options and are designed to be more easily recyclable.\nWhen we pull 98% of the fiber, can be recovered and used to make other recycled products.\nWe continue to push forward with our sustainability journey and OptiCycle fits squarely with our ESG commitment to decrease our LDPE usage by 40% by 2025.\nWith this non-PE packaging solution, we are providing a new option for customers to evaluate as they pursue their own sustainability goals and meet the needs of today's consumer.\nWe expect the line to be commercialized in North America in the next few months.\nAs we enter the second half of 2021, I'm pleased with the path we are on.\nEmployees have produced exceptional results and demonstrated commitment to customers as an essential supplier.\nWe have rolled out new product innovations provided outstanding customer service and captured additional demand.\nIn addition, in support of our investments for growth and expansion.\nWe have prudently and effectively raised in deploying capital.\nWe continue to differentiate ourselves by the investments we are making in our paperboard infrastructure.\nOn Slide eight, you will see details of our transformational Kalamazoo recycled paperboard investment.\nThis project is a pivotal case in point.\nWe expect our new world-class coated recycled board machine to be producing paperboard in a few short months.\nWith it, we will serve existing and new customers, delivering the highest quality product in the marketplace at the lowest cost to produce.\nFurthermore, the investment provides environmental and sustainability benefits through the reduction of greenhouse gases, purchased energy and water usage in the paperboard production process.\nWe remain confident in $100 million of incremental EBITDA for this investment once it's fully implemented and expect to capture the first $50 million of additional EBITDA in 2022.\nAnother area where we are redefining leadership in the industry is through our solid track record of execution and integration of strategic acquisitions.\nThe announced acquisitions we have touched on today and our capabilities position us and new growing markets and allow us to further integrate our paperboard platform.\nVertical integration is a strategic priority, and we expect meaningful increases in our integration rate in the quarters ahead.\nAs we grow organically internalize more paperboard from recent acquisitions and unwind existing supply agreement.\nOur vertically integrated model price increase operating efficiencies that benefit both stakeholders and customers.\nThe final point I will make on Slide seven is something I noted earlier, I would like to spend a bit more time discussing with you today.\nOver the past couple of years, we have successfully implemented numerous pricing model revisions that are now flowing through the business during this time of accelerated inflation.\nRealization of our pricing initiatives will be on full display over the next 2 quarters and then into 2022.\nThis is the primary reason we expect to generate significantly stronger EBITDA in the second half of the year.\nMoving to slide 9.\nI will talk through material price cost spread of recovery that we expect will occur in the second half of the year and in the 2022.\nThe on the left hand of the slide reflects the heightened inflationary environment we experienced in the first half of 2021 and our expectations for inflation during the second half.\nThe right hand of the slide shows pricing that has been successfully implemented and recognized and it's flowing through our contracts over the coming 6 months.\nWe expect approximately $120 million of pricing in the second half of 2021, which is intended to address the negative price cost spread experienced in the first half of 2021.\nThe recovery occurring in just 6 months clearly demonstrates more constructive pricing dynamics inherent in our model.\nImplemented and recognized pricing will yield a cumulative $400 million over the 2021 and 2022 time horizon, as we actively address commodity input cost inflation.\nOverall, we are confident in the actions we are taking to address inflationary headwinds and more broadly, we remain confident in the fundamental drivers of our business and our ability to capitalize on the opportunities ahead.\nSimply put, we are running a different race.\nWe are executing for customers driving our growth strategy forward and strategically positioning the company to capture global demand opportunities in the fiber based consumer packaging.\nWe are on track to achieve our Vision 2025 growth goals.\nMoving to Slide 10, focused on key financial highlights in the second quarter of 2021, net sales increased 8% from the prior year to $1.7 million driven by 5% net organic sales growth.\nAdjusted EBITDA declined from the prior year due to the accelerated inflationary environment.\nImportantly, we are known organic volume growth, which positively impacted EBITDA performance by $15 million and we generated, of a favorable $36 million in net performance.\nI'd like just discussed, we have implemented multiple pricing initiatives to offset the current inflationary environment and we expect our adjusted EBITDA dollars and margins will improve in the second half of 2021 and 2022, all consistent with our Vision 2025 financial goals.\nAdditional financial and market detail can be found on slide 11.\nAF&PA industry operating rates increased sequentially with SBS and CRB at 95% and 98% respectively at the end of the second quarter.\nOur CUK operating rate was over 95%, reflective of the continued strong demand environment.\nAF&PA Second quarter data also reflected continued declines and industry inventory levels with balances at multi-year logs, backlogs increased from the previous quarter and all three substrates we're an 8 plus weeks at quarter end.\nOn Slide 12 and 13, you will see our year-over-year revenue and EBITDA waterfalls.\nNet sales increased $126 million very solid 8% in the second quarter of 2021.\nStrong growth was driven by $76 million of higher volume mix resulting from 5% organic sales growth of $14 million in pricing and $36 million of favorable foreign exchange.\nAdjusted EBITDA decreased $12 million to $248 million in the second quarter versus the prior year period.\nAdjusted EBITDA benefited from $14 million in price $15 million in volume mix, $36 million in improved net productivity and $4 million from favorable foreign exchange.\nAdjusted EBITDA was unfavorably impacted by $67 million of commodity input cost inflation and $14 million of labor benefits and other inflation.\nWe ended the quarter with net leverage of 3.7 times.\nAs we previously shared, leverage is currently above our long-term target of 2.5 to 3 times as we execute on critical investments to achieve our Vision 2025 goals.\nWe have clear line of sight to the cash flow generation required to drive leverage down to our targeted levels of 2.5 to 3 times within 24 months following the close of the AR Packaging transaction.\nWe have a substantial total liquidity with $1.9 billion available as of the end of the second quarter.\nIn July, we raised approximately $530 million to support our acquisition activity at very effective interest rates below 2%, $250 million was raised in a 7-year floating rate term loan from the farm credit system in a similar structure to the farm credit loan we raised earlier this year.\nIn addition, we raised Euro based debt when the EUR210 million delayed-draw term loan along with a EUR25 million increase in our European line of credit.\nWe funded the farm credit loan last week.\nWhile we anticipate drawing the euro term loan in connection with the close of the AR Packaging transaction.\nTurning now to guidance on slide 14 and 15.\nWe are updating our full-year EBITDA guidance to incorporate recent price actions expected commodity input cost inflation and the close of the Americraft Carton acquisition.\n2021 adjusted EBITDA is projected to be in a range of 1.0-8 to $1.2 billion.\nComponents of EBITDA have changed modestly as higher contribution from volume mix and net performance are being offset by the transitory negative price cost spread that occurred in the first half of the year.\nNotably on Slide 15, you'll see the significant increase in EBITDA, we are projecting in the second half of 2021.\nImplemented price initiatives are expected to yield a material price cost recovery benefit to EBITDA in the second half of the year in a range of $80 to $120 million compared to the first half.\nThe Americraft acquisition closed on July 1 and is expected to provide an incremental $15 million to the second half adjusted EBITDA.\nTurning back to the cash flow guidance on slide 14, we anticipate a range of $175 to $225 million for the year.\nGuidance for capital expenditures in 2021 has been adjusted, modestly higher, as we are experiencing similar inflationary environment from materials and labor as we complete critical capital projects on time in 2021.\nInterest and working capital components to cash flow have improved related to the attractive refinancing from our debt completed this year at very low interest rates and the positive impact on working capital as we have worked down inventories on stronger demand.\nAs we look through 2022, we remain committed to capital expenditures, returning to a more normalized range of $450 million and look forward to generating significant cash flow as we earn on the investments we've made to materially improve the profitability of the company.\nFor reference, $450 million in capital expenditures, estimated in 2022 includes both the AR Packaging and Americraft acquisitions.\nWrapping up my comments on Slide 16 and the conclusion of our successful partnership with International Paper during the quarter.\nPartnership was foundational to building the highly integrated fiber-based consumer packaging business we are today and it created value for stakeholders.\nConclusion of the partnership with IP, return ownership interest of the partnership back to 100%.\n",
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"content": "compname reports second quarter 2021 results: 5% net organic sales growth driven by strong demand for fiber-based consumer packaging solutions.\nglobal liquidity was $1.9 billion at quarter end.\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 our call today are Mike Doss, the Company's President and CEO, and Steve Scherger, Executive Vice President and CFO.\nThese risks and uncertainties and include, but are not limited to, the factors identified in the beliefs and in our filings with the Securities and Exchange Commission.\nOur performance in the quarter was strong.\nWe successfully navigated a complex supply chain and labor environment, we raised prices where necessary to offset accelerated commodity input cost inflation, we received the required regulatory approvals for our AR Packaging acquisition and made significant strides toward completion of our transformational CRB platform optimization process.\nAll of these accomplishments are aligned with the goals we established with Vision 2025, and have us on track to meet or exceed our long-term aspirations for the business.\nDemand for more sustainable and circular packaging options continues to accelerate globally.\nThe ongoing evolution to practice and promote more environmentally responsible behaviors is evidenced by the increasing number of new pledges made by global corporations to eliminate waste and increase the focus on recyclability, all supportive of commitments to lowering carbon footprints.\nExamples include proactive announcements by retailers around the world moving to minimize the impact that packaging has on our planet.\nConsumers are making their preferences known and companies that are serving them are responding.\nThe fiber-based packaging solutions we are developing and the role we play in providing consumers with packaging choices to promote a more sustainable and circular economy provide our employees with an immense sense of pride.\nThis shows through our continued innovation and new product development initiatives along with service levels we provide our customers in today's very challenging supply and labor environment.\nWe established Vision 2025 in September of 2019 and have demonstrated a very real pivot to organic growth since that time.\nWhile Q3 organic sales declined slightly, we still expect to deliver organic sales growth in 2021 at the high end of our 100 to 200 basis points annual target on top of the 4% organic growth we generated in 2020.\nOn Slide 3, let me cover additional highlights from the third quarter.\nWe have been successful in positioning the company to capture growth opportunities in this very strong demand environment.\nWe are growing with existing customers while ramping up with new ones in new markets.\nMomentum for fiber-based consumer packaging solutions is materializing at a time when we are experiencing unprecedented inflation, supply chain bottlenecks, and labor market challenges.\nWe estimate that the constraints in supply and labor markets resulted in approximately $25 million in delayed sales in the third quarter.\nWe delivered strong adjusted EBITDA growth of $284 million, up 14% year-over-year.\nEBITDA growth was driven by positive price realization of $53 million and favorable net performance of $79 million, which offset unprecedented commodity input cost inflation of $88 million experienced in the quarter.\nThe current environment with all its twist and turns is not deterring us from the focus on meeting or exceeding our Vision 2025 goals, and capturing global demand for sustainable packaging solutions.\nOur dedicated teams are working tirelessly to keep customers in supply while backlogs remain elevated across all our paperboard substrates.\nAs a result of the continued inflation in commodity input costs, we have taken swift pricing actions to recover the price cost dislocation we are experiencing this year.\nWe committed the unit price would offset commodity input costs over time and that any dislocation would be short-lived, we are delivering on that promise.\nAs we have discussed with you over the past several quarters, we have implemented a number of initiatives to reduce pricing and recovery lags with customers and have been negotiating positive modifications of other business terms.\nWhile the inflation we are experiencing this year is one for the history books, we are doing what we said we would do.\nApproximately $650 million in pricing initiatives have been implemented and will be recognized over the 2021 and 2022 time horizon.\nWe recently published our latest comprehensive ESG report.\nIn it, we outlined the many initiatives underway to further drive sustainability across operations and innovation and product development with the end customer in mind.\nWe intend to continue to invest in innovation and promote progress and sustainability to support the migration to a more circular economy.\n10 months earlier we have been pursuing the required regulatory approvals for the AR Packaging acquisition we announced in May of this year.\nI'm pleased to report that we have received the final necessarily regulatory approvals this month and we are working toward a November 1st close.\nIn addition, our CRB platform optimization project remains on track for a start-up of coated recycled paperboard production on our K2 machine in the fourth quarter.\nTurning now to Slide 4, you will see the innovation powerhouse that the combination of AR Packaging will create where the large distributed footprint of AR Packaging, it's 25 converting facilities across Eastern and Western Europe add significant scale and cost-efficiency benefits.\nThe completion of this transformational acquisition extends our global reach, expands our service offerings, and advances our commitment to sustainable packaging solutions for customers around the world.\nWe intend to share our growth plans and milestones for the integration of AR Packaging along with an update on Vision 2025 when we report our fourth quarter and full year 2021 results.\nTurning to Slide 5.\nIn a second extremely impactful and well-time strategic initiative, you can see the picture of our new state-of-the-art K2 CRB machine.\nOur team is executing a significant investment in our paperboard capabilities.\nThe build-out and start-up of the K2 machine in Kalamazoo, Michigan is the largest component of our CRB platform optimization project, and we are on track for paperboard production to begin in the fourth quarter.\nWe are well into the operational readiness space, we have our teams in place, and we are completing the most extensive training effort in our company's history.\nWe look forward to bringing this world-class, lower-cost, higher-quality CRB platform investment to light over the coming quarters, working with our customers to grow their commitment to the recycled fiber-based solutions while generating the returns we are committed to achieving.\nTurning to Slide 6, I will provide a few additional remarks on the current environment for pricing and the positive momentum we have to offset historically high commodity input cost inflation.\nWe have executed $63 million, a positive price that is flowing through the business over the first nine months of 2021, and we expect to realize approximately $77 million of positive pricing during the fourth quarter.\nWe're currently targeting $510 million of pricing in 2022 based on implemented and recognized pricing initiatives.\nThe price actions are intended to fully offset the inflation we are experiencing across a wide array of commodity input costs.\nIn total, at this point, we expect to execute approximately $650 million in price actions over the 2021 and 2022 time horizon.\nAs I have shared today, global demand for fiber-based packaging solutions continues to grow.\nOn Slide 7, let me touch on the steady and consistent nature of the value paperboard substrates have earned over time.\nOver the 15-year period captured here, you can see the steady but increasing pricing for our paperboard substrates.\nThis can be interpreted to a healthy underlying demand for paperboard solutions, supply levels required to meet customer demand, and the introduction of new packaging solutions driving growth in existing and new addressable markets.\nWe surpassed our net organic sales growth goal in 2020 delivering 4% growth, and we expect to deliver at the high end of our targeted 100 to 200 basis points goal this year.\nNotably, this year's expected net organic growth of approximately 200 basis points reflects growth on top of the very strong growth we drove in 2020.\nThe year-to-date picture on the slide tells the same story.\nNet organic sales have experienced growth of 2% compared to the same period in 2020, and the two-year compounded annual growth rate for organic sales since 2019 is 3%.\nThis trajectory is consistent with our organic growth expectations for the business as we continue to see conversions to fiber-based packaging solutions.\nWe have positioned the company to capture growth opportunities in the years ahead, and we've accomplished a great deal so far this year.\nWe look forward to closing the acquisition of AR Packaging in the next week, and we look forward to closing the acquisition of AR Packaging in the last week, and the start-up of our K2 machine in the fourth quarter.\nSimply put, we're running a different race.\nThe strategic priorities we are focused on and executing are redefining our leadership in the industry.\nMoving to Slide 9, focused on key financial highlights.\nNet sales increased 5% or $84 million from the prior year period to $1.8 billion.\nThe year-over-year increase in sales was driven by higher pricing flowing through the business and acquisitions.\nAdjusted EBITDA increased 14% to $284 million resulting in an improved adjusted EBITDA margin of 15.9%.\nAdjusted earnings per share grew 31% to $0.34 a share.\nFinally, our integration rate increased to 73% as we continue to internalize all paperboard into our converting operations.\nOn Slide 10 and 11, you'll see our revenue and EBITDA waterfalls.\nThe drivers of the 5% year-over-year increase in sales were $53 million in pricing, $20 million of higher volume mix and $11 million of favorable foreign exchange.\nAdjusted EBITDA increased $34 million or 14% year-over-year to $284 million in the third quarter versus the prior year period.\nThe increase is low given accelerated commodity input cost inflation that materialized in the quarter.\nAdjusted EBITDA growth was driven by $53 million in price, $3 million in volume mix, and $79 million in improved net productivity.\nAdjusted EBITDA was unfavorably impacted by $88 million of commodity input cost inflation, and $13 million of labor, benefits, and other inflation.\nOn Slide 12, you will find additional financial and market detail.\nOur foodservice business continue to recover from last year, growing 11% year-over-year.\nOur food, beverage, and consumer sales improved 3% including acquisitions.\n9 point to $25 million in delayed sales resulting from supply chain and labor market constraints during the quarter.\nAll the supply chain bottlenecks impacted all areas of our business.\nLabor availability challenges are more specific to our foodservice business as we continue to ramp up production from the declines experienced in 2020.\nWithout these delayed sales, net organic sales growth would have been flat for the quarter, in line with our expectations.\nAF&PA industry operating rates were strong again in the third quarter.\nCRB was 95% while SBS improved sequentially and was 96% at the end of the quarter.\nOur CUK operating rate continue to be well about 95%.\nThese operating rates reflect the strong demand environment for paperboard.\nAF&PA third quarter data also showed continued declines in industry inventory levels with balances at multi-year levels.\nBacklogs were elevated at eight-plus weeks across CUK and CRB and on the six-plus weeks in SBS.\nWe ended the quarter with net leverage of 3.97 times.\nI will discuss our cash generation expectations with you shortly.\nWe have clear line of sight to bring leverage down to 3.5 times or lower at the end of 2022, after leverage peaks in the fourth quarter due to the financing for AR Packaging acquisition.\nGlobal liquidity was $1.8 billion at the end of the third quarter.\nImportantly, after we found and complete the AR Packaging acquisition, our global liquidity will remain substantial with approximately $1 billion available.\nTurning now to full year 2021 guidance on Slide 13.\nWe've updated guidance to reflect additional price actions, higher commodity input cost inflation, higher net performance, and the assumption AR Packaging as part of our business effective November 1.\n2021 adjusted EBITDA is projected to be in a range of $1.04 billion $1.06 billion.\nThe largest important of the EBITDA guidance change is the accelerated commodity input cost inflation occurring in the second half 2021.\nAs Mike mentioned, we are actively taking the price actions necessary to offset this increased level of inflation.\nWe anticipate cash flow will be in the range of $100 million to $150 million for the year.\nCapital spending has increased modestly driven by inflation across raw materials and the labor required to complete critical strategic projects on time.\nWe continue to be very confident.\nIn the guard rails we provided last quarter for adjusted EBITDA in the $1.4 billion-plus range.\nImportantly, on this slide, you can see the components and the walk through the substantial estimated EBITDA growth we will be driving next year.\nAR Packaging and Americraft are expected to contribute $160 million and $30 million before synergies respectively.\nFor the base business, it is reasonable to assume at least $20 million from our traditional EBITDA drivers of volume mix and net performance, more than offsetting labor, benefits, other inflation, and FX.\nThe first $50 million of incremental EBITDA from our Kalamazoo project and a minimum recovery of $170 million of 2021 price cost dislocation provided a clear step-change higher to adjusted EBITDA of $1.4 billion-plus in 2022.\nThe significant expected growth in EBITDA coupled with our commitment to meaningfully lower capital expenditure next year following the large capital project to Kalamazoo, result in significant cash flow generation.\nThe material EBITDA growth and cash flow generation projections give us line of sight to year-end 2022 leverage at 3.5 times or lower.\nWe look forward to providing you with more detailed 2022 guidance when we meet with you in February.\n",
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"content": "q3 adjusted earnings per share $0.34.\nq3 sales rose 5 percent to $1.782 billion.\nnet organic sales declined 1% during quarter as supply chain and labor market constraints delayed sales.\nremain on track to achieve approximately 200 basis points of full year organic sales growth.\nexecuting approximately $650 million in pricing actions to address commodity input cost inflation.\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: Certain risk factors inherent in our business are set forth in filings with the SEC, including our most recent 10-K and subsequent filings.\nWe caution you not to place undue reliance on these statements.\nSome of the comments may refer to non-GAAP financial measures, such as adjusted net revenue, adjusted operating margin and adjusted earnings per share, which we believe are more reflective of our ongoing performance.\nJoining me on the call are Jeff Sloan, CEO; Cameron Bready, president and COO; and Paul Todd, senior executive vice president and CFO.\nWe entered 2020 with our business as healthy as it has ever been during my tenure at Global Payments.\nAnd our performance in the first quarter prior to the impact of COVID-19 reflected that strength, the soundness of our strategy and the consistency of our execution.\nWe believe that these underlying trends will position Global Payments to resume its track record of market-leading growth when the worldwide economy inevitably returns.\nThe company's results in January, February and through the first two weeks of March exceeded our internal expectations, excluding the impact from COVID-19 in our Asia Pacific region.\nHowever, starting in mid-March, the virus began to impact the company's results significantly in North America and Europe as governments took actions to encourage social distancing and implement shelter-in-place directives.\nThe deterioration accelerated toward the end of March as the number of countries and localities adopting restrictive measures meaningfully increased.\nNotwithstanding the impact of the virus, we were successful in winning meaningful new business in the first quarter.\nThese competitive takeaways highlight that the underlying strength of our pure-play payments model is being recognized by some of the most complex and sophisticated customers.\nThey also provide us with continued confidence in further sustained share gains as the partner of choice at scale for cutting-edge companies.\nFirst, we are delighted to announce that Truist Financial Corporation has selected Global Payments to be its provider of issuer processing services for its combined businesses.\nTruist is the sixth largest commercial bank in the United States serving approximately 12 million consumer households and a full range of business clients with leading market share in many of the most attractive high-growth markets in the country.\nImportantly, Truist has a bold vision to meaningfully increase investment in innovative technology and to create distinctive client experiences.\nTruist's strategy to transform its payments businesses via technology aligns perfectly with our TSYS issuer business and provides further validation of our market-leading technologies, product services and the quality and competitiveness of our team members.\nOur issuer business has a strong track record of innovation to the benefit of our customers.\nContactless is a great example, and we have seen near 30% year-on-year growth in recent periods.\nWe also are partnering with the card brands and digital wallet providers to further accelerate contactless growth in light of the virus.\nIn addition, TSYS will be the first issuer technology partner to offer Visa's new installment solution at the point of sale as an enhancement to our existing capabilities.\nSecond, we are very pleased to announce that Synovus Financial Corp.\nhas selected Global Payments to be its new exclusive merchant acquiring partner.\nSynovus is a leading regional commercial bank with 299 branches in the southeast region of the United States.\nOur new partnership with Synovus confirms the wisdom of the Global Payments and TSYS merger.\nWe do not believe that either company individually would have been positioned to win this business.\nWe already launched our partnership with Synovus on April 1.\nThird, we continue to notch significant sales wins in our technology-enabled businesses during the quarter.\nOur partner software business, which we recently rebranded as Global Payments Integrated, launched 30 new partners in the first few months of 2020.\nWe are tracking well ahead of where we were at this time in 2019, which was a year that marked a record for new partner production.\nCameron will provide more detail shortly.\nWe also saw significant new business successes across our own software portfolio.\nFor example, we are delighted to announce new wins with Inspire Brands and Focus Brands, including Auntie Anne's, CKE Restaurants and Arby's.\nIn addition, we continue to make meaningful progress with the rollout of our Xenial QSR cloud-based SaaS point-of-sale solution to new and existing customers, such as Long John Silver's and Dutch Bros.\nWe have also begun testing this solution for a potential placement throughout the restaurant brands international family of more than 26,000 global restaurants.\nThese wins contribute to Xenial achieving record new bookings for its QSR business this quarter.\nIt is worth highlighting that Xenial provides enterprise QSR customers with cutting-edge software, digital wallets, drive-through technologies, mobile-ordering capabilities and integrations with leading delivery partners through our omni product.\nIn fact, for the first quarter, the number of omni mobile and online orders processed for Xenial customers increased over 50% sequentially as QSRs shifted toward online fulfillment.\nFourth and finally, we continue to make progress with our e-commerce and omnichannel businesses, which generated impressive new sales wins, including a large multinational telecommunications carrier for markets outside the United States, one of the largest multinational package delivery companies in Asia and a leading worldwide food services delivery business.\nThese businesses produced the best financial result for us in the quarter, highlighting our leading position in worldwide e-commerce and omnichannel acceptance.\nAnd that trend has continued into April with absolute growth year over year in a number of virtual markets.\nDuring this challenging time, our top priority remains the health and safety of our team members, customers, partners and the communities in which we live and work.\nIt has allowed our business and operations to continue to perform normally.\nWhile these are difficult times, we are well-positioned given the strength of our business model and the dedication and focus of our employees.\nI am especially proud of our Netspend business, which is facilitating the rapid distribution of much needed funds under the CARES Act.\nWe believe that Netspend was one of the first companies to provide stimulus funds to customers ahead of both financial technology peers and financial institutions.\nThose critical funds were made available on average four days before most of the other providers in the market and ahead of its normal two days faster operating model for typical paychecks because Netspend has the end-to-end infrastructure already in place to process government ACH files upon receipt.\nDuring April, we processed over 0.5 million deposits accounting for over $1.2 billion in stimulus payments to American consumers dispersed by the IRS.\nIn the coming weeks, we expect additional governmental programs to fund, and a number of our partners will assist consumers who receive paper checks by enabling deposits into existing or new Netspend accounts to our mobile app or directly onto their phones virtually via our Samsung partnership.\nAs just one example, together with Mastercard, we have helped facilitate 7-Eleven's new Transact prepaid product to enable under and unbanked individuals and families to receive much needed funds faster than a paper check through 7-Eleven stores.\nOur powerful combination with TSYS provides us with multiple levers to mitigate headwinds that we may face from the pandemic.\nWe made significant strides on our integration this quarter, and we continue to anticipate delivering at least $125 million in annual run rate revenue synergies and at least $350 million in annual run rate expense synergies within three years of the merger close.\nIn addition to the merger synergies, we have now implemented additional cost initiatives to help address the anticipated impact of COVID-19 on our business.\nWe expect these actions to deliver at least an incremental $400 million in annualized savings over the next 12 months.\nThese amounts represent a more than doubling of the three-year annualized merger expense synergy benefit in just one year.\nWe have already initiated these expense actions in a series of ways beginning early in the second quarter.\nAs you will hear from Paul, our liquidity, free cash flow and balance sheet are healthy.\nThese efforts are intended to best position Global Payments to weather near-term disruptions and emerge from the crisis in the same strong position with which we entered it.\nAnd we continue to invest in our businesses despite the impact of the virus on the worldwide economy.\nOur long-term plans to grow our technology-enabled businesses, expand our omnichannel efforts and target the most attractive markets have not changed.\nThe uniqueness of our business mix, which is dramatically different today than it was during the last recession, has been a source of strength during the current crisis.\nI would also like to express my sincere appreciation to all of our team members who have provided exemplary support to our customers during this challenging time.\nAs Jeff mentioned, even with the vast majority of our nearly 24,000 team members worldwide working from home since mid-March, our business has continued to operate seamlessly.\nFor the relatively few team members whose job function requires them to be in one of our offices, we have implemented appropriate social distancing practices, made antibacterial hand sanitizers, masks widely available and increased the frequency of cleaning of key areas.\nThroughout this crisis, we have continued to put the health and well-being of our team members first while also supporting our customers and safeguarding our business.\nOver the past several years, we have made significant investments in modernizing the operating environments and technology that support day-to-day execution in our business.\nThe largely cloud-based systems and collaboration tools we use globally facilitated a smooth transition of our operations to business continuity mode with significant utilization of work-from-home arrangements.\nThis has allowed us to sustain outstanding service to our customers while also enabling continued strong execution of our pure-play payment strategy as evidenced by the significant new wins in the quarter.\nIn our merchant solutions business, Global Payments Integrated is off to a record start to the year in terms of new partner wins and is already seeing benefits of our merger with TSYS.\nWe recently signed a new partnership agreement with a large multinational software provider based on our ability to deliver the Genius POS solution together with our best-in-class ecosystem while also enabling its customers to support electronic tips by the Netspend card -- PayCard product.\nGlobal Payments was uniquely positioned to provide this comprehensive solution, which reflects the powerful combination of highly complementary capabilities brought together by our merger with TSYS.\nOur strategy of delivering the full value stack in key vertical markets continues to produce deeper, richer and more value-added relationships with our customers.\nIn addition to the Xenial highlights that Jeff already provided, our higher education business had its strongest ever bookings performance in March, and AdvancedMD saw bookings increased 35% year on year for the first quarter largely due to our ability to deliver cloud-based technology solutions, including telemedicine capabilities to physician practices throughout the U.S. In our Heartland business, we delivered outstanding growth of over 30% in online payments during the first quarter as we continued to see strong customer demand for our omnichannel solutions.\nNotably, this growth accelerated in March as we installed three times as many new e-commerce merchants as anticipated largely due to significant demand for online ordering capabilities.\nWe also began deploying vital POS through our Heartland distribution channel in early March, exactly as we said we would, and we remain confident in our ability to execute on our sales plan for this distinctive solution.\nFurther, we now plan to deliver vital POS to Canada later this quarter, an acceleration from our original target of a third-quarter launch.\nIn Canada, our new partnership with Desjardins is off to a terrific start.\nMerchant migration and lead referrals from all branches commenced at the beginning of March, and we received nearly 1,500 referrals before the current disruption.\nOur early successes reinforce our confidence in this new partnership that combines Global Payments' differentiated technologies and payments capabilities with Desjardins' market-leading position in Québec.\nIn Europe, we successfully launched our social commerce solution in key markets, enabling our customers to accept payments through social networks.\nIn the last few weeks, we launched this product with a new leading national veterinary chain and a high-end restaurant group in the U.K. and also signed Hyundai, which is currently deploying the solution to all of its dealerships in the region.\nby enabling a leading building society with call center payment solutions for work-from-home environments.\nWe successfully executed a new acquiring contract with this customer and distributed software to its call center staff and mortgage brokers from start to finish in less than three days.\nAnd in Asia, we saw strong new sales performance, particularly in our e-commerce business despite COVID-19 gripping that region for the majority of the quarter.\nWe have enabled several of our large retail customers to accelerate their shift to e-commerce and signed new e-commerce partnerships with two large multinational health and wellness companies.\nTurning to our issuer business, in addition to the Truist win, we finalized an agreement with Scotiabank to convert its Canadian consumer credit card and loan accounts.\nAnd we have executed a multiyear renewal agreement for its North American consumer and commercial credit card business.\nAdditionally, we successfully signed a new multiyear processing and managed services agreement with U.K.-based Yaya, encompassing their recently acquired credit card portfolios and extended several other existing client agreements, including with Barclaycard and Bank of Montreal.\nWe also converted over 300,000 accounts during the period and have a robust pipeline with implementation stage throughout the year and into 2021.\nDelivering superior support to our customers is a key pillar of our business model, and we have continued to do so in this unprecedented environment without exception.\nThroughout this pandemic, we remain focused on supporting customers across all of our businesses, including our small to medium-sized merchant customers in the markets most impacted by the virus.\nWe have worked tirelessly to assist these customers by enabling new capabilities to support their business operations, including rapidly equipping merchants who did not previously sell online with a full omni solution, particularly in the restaurant vertical market.\nIn fact, in North America alone, we have added over 1,800 new restaurants to our online ordering platform since mid-March.\nLikewise, we have been facilitating social distancing and no-contact commerce by enabling mobile pay and contactless and mobile wallet acceptance at merchants who had not previously accepted these form factors.\nAs a worldwide leader in NFC deployment, we rapidly enabled contactless acceptance for our merchant customers, which also positions us well for the future as we expect the secular shift from cash to electronic forms of payments to accelerate post the pandemic.\nWe have also provided customers and markets worldwide with virtual terminals to allow them to accept orders over the phone.\nFor healthcare customers at AdvancedMD, we've enabled nearly 1,500 practices with telemedicine capabilities, delivering the technology for more than 80,000 virtual visits in the last two weeks of March alone.\nIn addition to these efforts, we are providing economic relief in a variety of forms to our customers, including waiving certain fees such as SaaS and POS payments, as well as online ordering fees.\nWe have also granted free trial or reduced fees for newly enabled services and established a charitable program targeted at our most vulnerable merchant customers that provides preloaded pay cards that can be used to support their staff at no cost.\nFurther, we are waiving setup fees in the first 90 days of subscription fees for our virtual card add-on solution to brick-and-mortar gift card customers and have extended free trial period of our analytics and customer engagement platform that we are deploying in our Heartland business.\nto facilitate payroll protection program loans for customers across our distribution platforms.\nTo date, our lending partner has placed thousands of PPP loans for our customers.\nOur issuer business has also maintained strong operational stability in its call centers as we work to support our issuer clients during a period of very high call volumes.\nAdditionally, we are working with issuers to enable cardholder and small business relief programs, including supporting the delivery of a range of payment options as consumers and businesses seek predictable ways to manage budgets and expenses during this challenging time.\nWhile we continue to manage through this situation with a difficult relentless focus on execution you have come to expect from Global Payments, we also have an eye on the future and are working to ensure the business is well-positioned for the inevitable recovery.\nWe are revamping sales and marketing strategies to align with our expectations for market reopenings around the globe and to emphasize those solutions most in demand.\nIn the U.S., we are also aggressively recruiting and onboarding new sales professionals into our Heartland channel, which we can do in a cost-effective manner given our model.\nAnd while we are reducing expenses where appropriate, we continue to invest in products and capabilities that will further differentiate Global Payments in the future.\nThere is no question the competitive environment will look different on the other side of this crisis, and we are poised to benefit in the long term due to the distinctiveness of our technology-enabled pure-play payment strategy.\nI want to reiterate how pleased we are with the way in which our team members have responded during this crucial time to ensure business continuity, deliver the highest standard of support and execution for our customers and allow for us to achieve strong financial performance.\nFor the first quarter, total company adjusted net revenue was $1.73 billion, reflecting growth of 108% over 2019 and ahead of our preliminary expectations on April 6.\nOn a combined basis, our revenue increased slightly from the prior year, including a roughly 50-basis-point headwind from the impact of negative foreign currency exchange rates.\nAdjusted operating margins expanded an impressive 300 basis points to 39% for the quarter and well above the 250 basis point annual expansion target we mentioned on our last call.\nAs a result, we were able to deliver strong adjusted earnings-per-share growth of 18% to $1.58, which also includes a roughly 100-basis-point impact from adverse foreign currency exchange rate movements.\nThis first-quarter bottom-line performance was better than anticipated when we previewed our first quarter on April 6.\nNotably, from the start of the quarter through the first two weeks of March, our performance was exceeding our growth expectations compared to last year, excluding the impact of the virus we were already experiencing in the Asia Pacific region.\nOur merchant solutions business drove the outperformance while results for our issuer and business consumer segments were tracking relatively in line with our expectations through that period.\nHowever, in the second half of March, the spread of COVID-19 began to impact our results meaningfully in North America and Europe in addition to Asia Pacific.\nAs Jeff and Cameron both mentioned, it was a dynamic quarter for all of our businesses, and I want to provide some color on each segment.\nFirst, adjusted net revenue in merchant solutions increased 2% on a combined basis to $1.1 billion for the first quarter, which includes nearly a 100-basis-point headwind from currency while adjusted operating margin improved 180 basis points to 45.4%.\nBefore the spread of COVID-19, we were experiencing low double-digit adjusted net revenue growth in this segment, excluding the impact of COVID-19 in Asia Pacific, which negatively impacted results consistent with the $15 million drag we had previously disclosed.\nThis strength was largely attributable to our technology-enabled businesses, including Global Payments Integrated, which was tracking toward mid-teens growth for the lion's share of the quarter.\nThis business continues to benefit from record new wins, strong same-store sales and low attrition rates driven by our ability to provide a truly integrated ecosystem across more vertical markets and more geographies than our peers.\nWe also maintained our consistent track record of strong growth in our vertical market software portfolio ahead of the COVID-19 impact.\nAs Jeff and Cameron indicated, booking trends across the portfolio remained strong with record achievements at several of our businesses during the period.\nOur relationship-led businesses were also seeing good momentum outside of Asia Pacific before the spread of COVID-19.\nNotably, in North America, adjusted net revenue was tracking up low double digits ahead of our expectations, and our European businesses were delivering high single-digit growth.\nFor the full quarter, as in-store volumes came under pressure, our e-commerce and omnichannel businesses served as a partial hedge.\nAs Cameron noted, we delivered strong growth in online sales at Heartland during the quarter while in Europe, we saw high single-digit growth in the U.K. and roughly 20% growth in Spain as more spending moved online.\nE-comm omni revenue was also up double digits in APAC during the first quarter.\nMoving to issuer solutions, we delivered a record $442 million in adjusted net revenue for the first quarter, representing growth of 150 basis points on a constant-currency basis.\nAs I mentioned previously, this business was tracking in line with our expectations through early March for roughly 3% growth with underlying trends to that point remaining consistent with our long-term outlook for mid-single-digit growth.\nAdjusted segment operating margin expanded a very strong 430 basis points to 39.5% as we continue to drive efficiencies and make the pivot toward the cloud in this business.\nWe also added over 13 million accounts on file this quarter, producing yet another record.\nTransaction growth was in the mid-single digits.\nWe experienced strong volumes in managed services as cardholders ramped up the frequency of their interactions with trusted financial institutions in the quarter.\nFinally, our business and consumer solutions segment delivered adjusted net revenue of $204 million, down nearly 7% from the prior year, primarily due to headwinds from the CFPB prepaid rule and seasonal tax impacts.\nAbsent that, adjusted net revenue was roughly flat for the quarter, marking a continuation of the underlying trends from the fourth quarter of 2019.\nAdjusted operating margin for the quarter for this segment was 25.7% and was again better than our expectation.\nWe continue to be pleased by the performance of our DDA products with account growth of over 30% from the prior-year period.\nAs Jeff mentioned, we saw a substantial benefit in early April from the processing of stimulus payments in this segment.\nIn sum, we delivered solid operating performance across all our segments through outstanding execution, and we also benefited from the early and rapid cost actions we took to position our company given the current environment and for the eventual recovery.\nAs it relates to cost actions, as Jeff highlighted, we have already implemented expense initiatives that will translate to roughly $100 million per quarter in incremental cost benefits for the balance of 2020.\nOur focus has been to streamline discretionary spend that includes cuts to G&E and marketing budgets, reductions in executive pay and other salary initiatives and additional targeted actions across the organization.\nWe have also been intentional about these measures to allow our strong growth momentum to continue when a more normalized operating environment resumes.\nFrom a cash flow standpoint for the quarter, we generated adjusted free cash flow of approximately $400 million, which was in line with our expectation.\nWe also exited Q1 with roughly $1.3 billion of available cash, including $640 million in excess of our operating cash needs.\nThis excess cash increased approximately $300 million from year-end.\nWe have adjusted our capital spending outlook for the year from the high $500 million to low $600 million range we talked about on our last call and now expect to be in the $400 million to $500 million range or roughly $100 million less for the year.\nWe invested $105 million of cash in the first quarter that was focused on new products and technologies to ensure we continue to build upon our leading portfolio of pure-play payment solutions, which is consistent with our newly revised estimate.\nEarlier in the quarter, we finished the buyback activity started in the fourth quarter, purchasing 2.1 million of our shares for approximately $400 million.\nWe did, however, suspend repurchases in early March.\nWe ended the quarter with a leverage position of roughly 2.45 times on a net-debt basis or roughly 2.75 times on a gross basis consistent with year-end.\nOur strong investment-grade balance sheet, in combination with our stable free cash flow generation, provides us with ample capital and financial flexibility to navigate through this challenging time.\nWith $2.9 billion of liquidity, including our available cash and undrawn revolver and no significant required debt repayments until our maturity in April 2021, we are truly in a position of financial strength.\nWe will continue to monitor and leverage market opportunities to maintain that strong position over the long term.\nAlthough trends are dynamic, we have seen some stabilization and improvement in late April from the lower levels we have seen several weeks ago.\nSpecifically, volume trends in our merchant business have held fairly steady and begun to recover modestly, led by our technology-enabled businesses.\nIn addition, markets that have recently reopened, such as China and in Central Europe, have seen similar stabilization and improvement trends in domestic volumes.\nOur issuer solutions business remains resilient as bundled pricing and managed services volumes are helping to mitigate the impact of transaction level declines.\nOur international issuing business also remains a bright spot with absolute growth in the low single digits despite the macroeconomic environment.\nThese trends have been offset in part by what we are seeing in our commercial card area due to limited travel spending by corporations and governments.\nSimilar to our experience in merchants, issuing trends have stabilized and recovered somewhat in selected verticals over the last several weeks.\nFinally, business and consumer solutions has benefited from processing substantial stimulus funds, and we do expect to recapture some of the lost revenue from last quarter related to the extended tax deadline over the next several months.\nAdditionally, April is the first month where we do not have CFPB headwinds for comparison.\nAnd while we are not providing guidance at this time, I think it's worth parsing our business in light of the current environment.\nFirst, we have several businesses that have been relatively more resilient through this period.\nThis includes both our issuer and business consumer segments, which combined account for roughly 35% of our adjusted net revenue.\nAdditionally, roughly half of merchant solutions adjusted net revenue has been generally less economically sensitive.\nThis includes our omnichannel business, Global Payments Integrated and certain vertical market solutions like Xenial, AMD and our university business.\nSo two-thirds of our businesses have been somewhat insulated from fluctuating consumer spending trends.\nWith that said, it is difficult to predict when and how the current environment will change.\nHowever, we are confident we will emerge stronger due to the significant cost initiatives being implemented to protect our earnings, cash flows and investment-grade balance sheet.\nAll in all, we are pleased with how we are positioned given the unprecedented times we are operating in as a company.\nOur recent significant wins highlight the wisdom of our partnership with TSYS and the strength of our combined business.\nWe have already taken and will continue to take actions to best position our company for success as the worldwide economy returns to growth.\nIn the interim, we are fortunate to be confronting this crisis from a position of strength.\nThe competitive landscape will no doubt change as a result of this crisis, and we believe that we will capitalize on those changes and continue to gain share organically and through further consolidation.\nWe believe that the virus will continue to accelerate the ongoing shift toward further digitization of payments and the movement toward online commerce globally.\nWe are also grateful for our market-leading position in software across multiple vertical markets, highlighting the diversity of our business banks.\nWe believe that we will continue to be the beneficiary of trends that will be further catalyzed by COVID-19.\nWhile we are not immune to the current economic climate, we are as well-positioned as we have ever been with a balanced portfolio in payments and vertical market software at scale.\nWe expect our strategy of leading with software owned and partner with an emphasis on premier omnichannel solutions in the most attractive markets will serve us well into the future.\n[Operator instructions] Operator, we will now go to questions.\n",
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"content": "compname reports q1 adj. earnings per share of $1.58.\nq1 adjusted earnings per share $1.58.\nimplemented cost initiatives that co expects to deliver at least an incremental $400 million of savings over next 12 months.\ntruist financial has selected global payments to be its provider of issuer processing services for its combined business.\nremain on track to achieve at least $125 million in annual run-rate revenue synergies from tsys merger.\nremain on track to achieve at least $350 million in annual run-rate expense synergies from tsys merger.\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: Certain risk factors inherent in our business are set forth in filings with the SEC including our most recent 10-K and subsequent filings.\nWe caution you not to place undue reliance on these statements.\nSome of the comments made refer to non-GAAP financial measures such as adjusted net revenue, adjusted operating margin, and adjusted earnings per share, which we believe are more reflective of our ongoing performance.\nJoining me on the call are Jeff Sloan, CEO; Cameron Bready, President and COO; Paul Todd, Senior Executive Vice President and CFO.\nWe delivered our best performance since the end of 2019 because of our focus on technology enablement coupled with the excellence in execution.\nOur results demonstrated strong sequential momentum from the fourth quarter of 2020 and improved monthly throughout the first quarter of 2021.\nWe are encouraged by the overall run rates we are seeing in the business.\nWe exited the first quarter in a better position than we entered it.\nWe are delighted to haveto return to growth in the first quarter of 2021.\nWe were able to deliver revenue, margin, and earnings-per-share growth despite facing difficult year-over-year comparisons as the pandemic did not begin to impact our business until mid-March 2000.\nWe are pleased today to announce two strategic acquisitions for approximately $1 billion in total that further are software-driven technology enabled strategy and deepen our presence in the most attractive markets globally we expect to continue to gain market share and extend our lead.\nIn combination with the roughly $1 billion in share repurchases we've affected since returning to our capital allocation strategy at the end of last year, we continue to balance appropriately reinvestment in the future growth of our business with efficient return of capital.\nFirst with our agreement to acquire Zego, we enter one of the largest and most attractive vertical markets worldwide.\nReal estate is the contestants of the type of market that we seek, sizable, global in scope, fragmented and right for further software digital commerce and payments penetration, and COVID-19 has accelerated the underlying changes that make this $6.5 billion target addressable market so attractive.\nZego is a leading software and payments technology company with significant scale delivering a comprehensive real estate technology platform to 7300 customers representing more than 11 million residential units in the United States.\nZego is digital omni-channel solutions support property managers and residents throughout the real estate life cycle, from leasing and on-boarding, to work orders, utility management, resident communications, renewals, off-boarding and of course, payments.\nThrough its integrated payments offering, legal processes approximately $30 billion in payments annually in a market with a volume opportunity that exceeds $1 trillion, the company delivers its full value stock through cloud native SaaS platform to enable seamless digital property management and best-in-class resident engagement and omni-channel experiences.\nIt is a highly scalable and predictable flywheel with compelling recurring revenue, strong retention rates, booking trends and lifetime customer value returns with double-digit organic revenue growth.\nImportantly, we have significant opportunities to accelerate Zego's growth.\nWe intend to leverage Global Payments scale and digital expertise to further payments penetration into Zego's base, generate incremental property and software partner referrals to more than 3500 sales and sales support professionals expanded footprint outside the United States and generate meaningful cross-selling opportunities into its vertical market including innovative products we already deliver into our merchant business like payroll, data and analytics and replication management.\nWe could not be more excited about further capitalizing on the convergence of software and payments and we look forward to welcoming Zego team members to Global Payments.\nSecond, we are excited to have reached an agreement to our Erste joint venture to purchase Worldline's PAYONE business in Austria consisting of roughly 8,000 primarily SMB merchant customers in Erste banks home market.\nWe entered Austria through organic market expansion of our Continental European joint venture roughly 18 months ago.\nThis pending acquisition enables us to bring our distinctive distribution and marketing technology to add scale to get another attractive market.\nIn addition to these strategic accomplishments in early 2021, we also produced a solid first quarter results across our existing businesses.\nFirst, in our merchant segment we delivered significant sequential improvement fueled by our technology-enabled focus and the conversion of last year's share and bookings gains into revenue.\nAnd we generated these results while absorbing ongoing lockdowns in Canada and renew restrictions in selected markets in Europe and Asia Pacific.\nSome highlights in the first quarter of 2021 include record new sales in our Global Payments Integrated business in March and in our US relationship-led business for the quarter, record revenue growth at GPI for the quarter well in excess of pre-pandemic levels, record bookings at Xenial for a cloud-based restaurant POS software and solutions and continued sequential acceleration in our omni-channel businesses.\nIt is worth highlighting that volumes accelerated throughout the quarter, a trend that has continued into April.\nKey customer wins include subway, CKE Restaurants A&W Foods and [Indecipherable].\nIt's also notable that several of these businesses that were most impacted by COVID-19 saw substantial sequential growth in revenue and bookings in the first quarter as our home market end of recovery.\nFor example, active in gaming achieved significant improvement as better macrotrend strong execution and solid bookings over the course of 2020 benefited performance in 2021.\nIn fact, we continue to see positive booking trends across our software portfolio as the ability to deliver a full value stock is increasingly becoming table stakes in the markets we serve.\nWe also made considerable progress on the partnership with Google that we announced in February.\nWe expect for Google as a merchant customer in select Asian markets in the third quarter with North America to follow shortly thereafter.\nWe have initiated our coastal programs and are beginning to see referrals from Google on a number of their enterprise class clients.\nWe anticipate launching our Wanting Grow [Phonetic] My Business product that integrates Google solutions with our innovative capabilities in our digital portal environment in the fourth quarter of this year and we have launched our co-innovation efforts to develop new commerce enablement tools for our merchant customers.\nSecond, our issuer business continues to benefit from strong relationships with market leaders and we are excited to announce today that we have entered into a multi-year renewal with Barclays Consumer Bank in the United States.\nBarclays is one of our largest customers globally and we provide a range of processing and support technologies for both Barclays consumer and commercial credit card portfolios.\nWe look forward to working with Barclays to enable a best-in-class customer experience with unparalleled levels of security and resiliency for its newest partner, the gap and its portfolio of accounts, yet another competitive takeaway.\nPartnering with issuers that are gaining share in the marketplace is a key element of our strategy.\nWe were also pleased to have signed agreements with Mission Lane and UMB Financial with the latter being a competitive takeaway in which with the prior processing relationship had spanned decades.\nIn collaboration with AWS, UMB will adopt our cloud-based data and analytics platform which we also successfully deployed during the quarter for a multi-country customer in Latin America.\nWe continue to capitalize on the broad and deep pipeline we have the good fortune to have in our issuer business.\nToday, we have 12 letters of intent with financial institutions worldwide, six of which are competitive takeaways.\nTurning to AWS, we expect to go live with our first joint takeaway with a multinational financial institution in Asia by the end of the year.\nOur Cloud Prime Instant [Phonetic] is now up and running currently in that market in preparation for the launch.\nWe have another dozen active customers in our pipeline of AWS, up from four at the end of 2020.\nThird, our business and consumer segment delivered record revenue growth.\nI am very proud that Netspend once again facilitated the rapid distribution of stimulus funds to customers most in need.\nSince late December 2020, we have processed more than 2 million deposits accounting for over $3.5 billion in stimulus payments disbursed by the IRS to American consumers, and this was done days in advance of many of our traditional financial institution and financial technology peers.\nIn combination with the 2020 stimulus payments, we have disbursed more than $5 billion in aid to customers through the first quarter of 2020.\nThe pandemic accelerated move toward cashless solutions is also benefiting Netspend.\nFor example, we are seeing rapid adoption of our tips solution and we've reached a new agreement with Flynn Restaurant Group for its Pizza Huts and Wendy's franchise locations, which will drive additional PayCard and potential tips opportunities across our combined footprint in more than 1000 restaurants.\nWe also launched our cashless stadium card linked to a digital wallet with the Phoenix Suns at the Phoenix Suns Arena.\nThese achievements serve as proof points of our differentiated strategy that includes product extensions into the P2P, B2B and B2C segments.\nI cannot be more pleased with all that we accomplished across our businesses this quarter.\nIn March, we returned to year-over-year growth in each of our three segments and the underlying trajectories are tracking for the long-term goals just as we predicted it would, despite the impact of ongoing restrictions and lockdowns in some of our markets outside the United States.\nWe are pleased with our financial performance in the first quarter of 2021 which demonstrated meaningful sequential momentum and reflected our ongoing strong execution across the business.\nSpecifically, we delivered adjusted net revenue of $1.81 billion representing 5% growth compared to the prior year and marking an 800 basis point improvement relative to the performance we reported in the fourth quarter of 2020.\nAdjusted operating margin for the first quarter was 40.6%, a 160 basis point improvement from the prior year that was achieved despite the return of certain cost we temporarily reduced at the onset of the pandemic.\nOn a comparable basis, underlying margin trends would have improved approximately 300 basis points.\nAdjusted earnings per share were $1.82 for the quarter, an increase of 15% compared to the prior year period and was especially impressive in light of the difficult year-on-year comparison due to COVID-19.\nThe pandemic did not begin to impact our business meaningfully until the second half of March of last year and that as a reminder, we delivered 18% adjusted earnings-per-share growth in the first quarter of 2020.\nTaking a closer look at our performance by segment, Merchant Solutions achieved adjusted net revenue of $1.15 billion for the first quarter and 4.4% improvement from the prior year which marked a nearly 900 basis point improvement from the fourth quarter.\nWe delivered an adjusted operating margin of 463% in this segment, an increase of 90 basis points from the same period in 2020 as we continue to benefit from our improving technology enabled business mix.\nGlobal Payments Integrated produced a stellar quarter generating in excess of 20% adjusted net revenue improvement, which is ahead of the levels of growth this business was delivering pre-pandemic.\nAdditionally, our worldwide e-commerce and omni-channel businesses excluding T&E delivered roughly 20% growth as our value proposition that seamlessly spans both the physical and virtual worlds continues to resonate with customers.\nAs for our own software portfolio, we are encouraged to see that several of our businesses most impacted by the pandemic improved meaningfully sequentially as Jeff mentioned, and it is worth highlighting that our gaming business returned to growth this quarter and across our vertical markets portfolio bookings continue to prove resilient in the first quarter, providing us with a positive tailwind for the balance of 2021.\nWe are also pleased that our US relationship-led business generated high single-digit adjusted net revenue growth for the first quarter, which is consistent with our long-term targeted growth rate for this channel despite a difficult comparison to the first quarter of 2020 and notwithstanding a challenging environment in several of our international markets, our portfolio of businesses across Europe and Asia improved significantly and delivered adjusted net revenue that was essentially flat with last year for the quarter.\nImportantly, because our international businesses are largely focused on the best spending in the markets in which we operate, we are seeing improvement in these businesses well in advance of cross-border commerce recovery.\nMoving to Issuer Solutions, we delivered $439 million in adjusted net revenue for the first quarter, which was roughly flat versus the prior year period and exceeded our expectations given traditional fourth quarter to first quarter sequential trends.\nExcluding the commercial card business, our Issuer segment grew in the low single digits for the quarter and in the month of March, Issuer delivered growth in aggregate despite continued commercial card headwinds as we benefited from the ongoing recovery in transaction volumes across many of our markets.\nWe also saw non-volume based revenue increased mid-single digit in the first quarter.\nNotably, our Issuer business achieved record first quarter adjusted operating income and adjusted segment operating margin expanded 370 basis points from the prior year also reaching a new first quarter record of 43.2% as we continue to benefit from our efforts to drive efficiencies in the business.\nAdditionally, our Issuer team signed three long-term contract extensions and three new contracts since the start of the year and our strong pipeline bodes well for future performance consistent with our long-term expectations.\nFinally, our Business and Consumer Solutions segment delivered record adjusted net revenue of $244 million, representing growth of nearly 20% from the prior year.\nGross dollar volume increased 26% or $2.5 billion as we benefited from the stimulus we disbursed to our customers.\nTrends within our DDA products were also very strong helped by the stimulus and we realized an acceleration in active account growth of more than 45% compared to the prior year.\nExcluding the impact of stimulus payments and tax, we believe that this business achieved underlying growth in the roughly mid-single digit range in line with our long-term targets.\nAdjusted operating margin for this segment improved an impressive 750 basis points to a record 33.2% as the benefits of the stimulus and long-term cost initiatives post-merger took effect.\nThe solid performance we delivered across our segments highlights the resiliency of our technology enabled portfolio, consistency of our execution and the strong tailwinds in our business coming out of the pandemic.\nWe are also pleased that our integration continues to progress well and we remain on track to achieve our increased goals from the TSYS merger of annual run rate expense synergy of at least $400 million and annual run rate eevenue synergies of at least $150 million within three years.\nFrom a cash flow standpoint, we generated adjusted first quarter free cash flow of roughly $583 million after reinvesting $86 million in capital expenditures.\nWe expect adjusted free cash flow of more than $2 billion and capital expenditures to be in the $500 million to $600 million range for the full year.\nIn mid-February, we successfully issued $1.1 billion in senior unsecured notes maturing in 2026 at an attractive interest rate of 1.2%.\nThe transaction was credit neutral with the proceeds used to redeem $750 million of notes outstanding with a rate of 3.8% due in April 2021.\nThe balance of the proceeds were used to reduce our outstanding revolver.\nWe have no significant maturities until 2023.\nOur strong cash generation and healthy balance sheet have enabled us to create significant value through our capital allocation strategy to the benefit of our shareholders.\nWe are pleased to have repurchased roughly 4 million of our shares for approximately $783 million during the first quarter, which includes the execution of the $500 million accelerated share repurchase program we announced last quarter.\nWe ended the quarter with roughly $3 billion of liquidity and a leverage position of roughly 2.6 times on a net debt basis, and we are excited to announce that we have reached agreements to make additional investments in our technology enabled strategy and market expansion.\nAs Jeff highlighted, we executed a definitive agreement to acquire Zego and Worldline's PAYONE business in Austria for an aggregate of approximately $1 billion.\nWe expect to finance these transactions using cash on hand and our existing credit facility.\nWe are targeting closing the Zego transaction by the end of the second quarter and the Worldline acquisition in the second half of 2021 both subject to regulatory approvals.\nUpon completion of both transactions, given our current cash balance and strong cash generation, we expect our leverage position will be relatively consistent with current levels leaving us with ample continuing firepower.\nBased on our current expectations for continued recovery from the COVID-19 pandemic worldwide, we have increased our guidance for adjusted net revenue to now be in a range of $7.55 billion to $7.625 billion reflecting growth of 12% to 13% over 2020.\nWe expect adjusted operating margin expansion of up to 250 basis points compared to 2020 levels.\nThis outlook is consistent with an adjusted operating margin expansion of up to 450 basis points on a normalized basis given the operating leverage in our business and expense synergy actions related to the TSYS merger.\nHowever, this is being partially offset by the reinstatement of certain expenses in 2021 that were temporarily reduced at the onset of COVID-19 for most of 2020.\nAt the segment level, we have increased our expectations for adjusted net revenue growth for our Merchant Solutions segment to be in the high teens, which assumes the current pace of recovery continues worldwide.\nWe expect underlying trends in our issuing business to be in the mid to high single-digit range and above our mid-single digit growth target.\nIt is worth noting that our Issuer business generated high single-digit growth on a normalized basis for the month of March as we begin to lap the pandemic impacts.\nAs we discussed last quarter, Issuer is being impacted by two distinct and relatively equal sized headwinds.\nFirst, we are not anticipating a recovery in our commercial card business as we expect corporate travel to remain depressed throughout 2021.\nSecond, we are absorbing a portfolio sale by one of our customers, which will impact us for the remainder of the year.\nTaking these two items into account, we forecast our Issuer business to deliver adjusted net revenue growth in the low single-digit range for the year.\nLastly, incorporating the benefits of the incremental stimulus, we are now forecasting adjusted net revenue growth for our business and consumer segment to be in the mid to high-single digits for the full year consistent with our long-term expectations for this business.\nThis guidance takes into account lapping the benefits of the 2020 CARES Act, which will provide for a more difficult comparison in the second quarter of 2021.\nRegarding segment margins, we expect the up to 250 basis points of adjusted operating margin improvement for the total company to be driven largely by Merchant Solutions while we expect Issuer and Business and Consumer to deliver normalized margin expansion consistent with the underlying profiles of these businesses.\nThis follows the 500 and 400 basis points of adjusted operating margin expansion delivered by Issuer and Business and Consumer respectively in 2020.\nFrom a quarterly phasing perspective, having now lapped muted growth characteristics in the first quarter given the start of the pandemic in mid-March 2020, we will experience the opposite effect in the second quarter before returning to more normalized rates of growth in the back half of the year, a highlight that while we expect to achieve our strongest adjusted revenue growth, adjusted margin expansion and adjusted earnings-per-share growth for the total company in the second quarter, our business and consumer segment will be lapping the impact of the CARES Act stimulus last year.\nWhile we anticipate Netspend to deliver modest adjusted net revenue growth for the second quarter, we expect adjusted operating margins to decline for that segment year-on-year as a result.\nOn an absolute basis, we would expect business and consumer adjusted operating margins for the second quarter to be consistent with the levels achieved in the fourth quarter of 2020 period that also saw more limited benefits from stimulus.\nMoving to non-operating items, we continue to expect net interest expense to be slightly lower in 2021 relative to 2020 while we anticipate our adjusted tax rate will be relatively consistent with last year.\nPutting it all together, we now have increased our expected adjusted earnings per share for the full year to a range of $7.87 to $8.07 reflecting growth of 23% to 26% over 2020.\nOur raised outlook presumed we remain on a path toward recovery worldwide over the balance of the year and it does not include any impact from the Zego and Worldline Austrian business acquisitions we announced today.\nWe will further update our guidance when these transactions close, but it is worth noting now that we do not expect these transactions to have a discernible impact on adjusted earnings per share for 2021.\nOur business is one rating at accelerated levels.\nThe trends of digitization, commerce enablement, software differentiation and omni-channel prevalence driving our performance will serve to catalyze future growth.\nWe said over the course of the last year that we would not stand still or wait for a better day to continue to deepen our competitive mode despite one of the most challenging periods any of us have seen.\nAs a result of our team members terrific efforts, 20 bookings have begun to translate into 2021 outside revenue gains.\nThe announcement today of our return to strategic investments will provide further avenues for future growth.\nAnd all that is playing out against the backdrop of recovery, further differentiation from technology enablement, deeper penetration into attractive markets, sustained share gains and substantial and efficient returns of capital.\nWe now look forward to continuing progress for the remainder of 2021, 2022 and beyond.\nBefore we begin our question-and-answer session, I'd like to ask everyone to limit their questions to one with one follow-up to accommodate everyone in the queue.\nOperator, we will now go to questions.\n",
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"content": "raises fy adjusted earnings per share view to $7.87 to $8.07.\nq1 adjusted earnings per share $1.82.\ncompname says raising expectations for full year 2021 adjusted net revenue to be in range of $7.55 billion to $7.625 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: Certain risk factors inherent in our business are set forth in filings with the SEC, including our most recent 10-K and subsequent filings.\nWe caution you not to place undue reliance on these statements.\nSome of the comments made refer to non-GAAP financial measures, such as adjusted net revenue, adjusted operating margin and adjusted earnings per share, which we believe are more reflective of our ongoing performance.\nJoining me on the call are Jeff Sloan, CEO; Cameron Bready, President and COO; and Paul Todd, Senior Executive Vice President and CFO.\nWe delivered fourth quarter and full year results that exceeded our expectations, because of our focus on technology enablement, coupled with ongoing excellence in execution.\nOur fourth quarter results demonstrated continued sequential improvement, despite the impact of a more challenging macroeconomic environment in a number of our markets for much of the period.\nWe are very pleased to have delivered substantial margin improvement for the fourth quarter, while also setting aside funds to pay partial cash bonuses to our non-executive team members.\nBecause of the actions we took early in the pandemic and our consistency in execution, we were able to deliver double-digit earnings-per-share growth in the fourth quarter, positioning us well heading into 2021.\nWe believe that we exited 2020 in a better position than we entered.\nWe also accomplished a great deal over the last 12 months.\nSpecifically, we signed Truist Financial Corporation, the sixth largest commercial bank in the United States, a competitive win twice over [Phonetic]; entered a new collaboration with AWS, our preferred provider of issuer cloud services to launch a unique go-to-market distribution strategy coupled with transformative cloud-native technologies; expanded and extended our partnership with CaixaBank by increasing ownership of our joint venture and executing a new referral agreement through 2040; renewed agreements with a number of the most complex and sophisticated financial institutions globally, including TD Bank in North America, HSBC in Europe and CIBC in Canada; assisted in a rapid distribution of more than $2.5 billion in stimulus funds for our net spend customers' days faster than other financial technology participants; and announced today a new partnership with Google to deliver innovative and seamless digital services to all manner of merchants worldwide.\nOur collaboration with Google substantially advances our merchant business by driving incremental revenue and lowering operating costs to a worldwide go-to-market distribution relationship and co-innovation agreement focused on transformative cloud-native technologies.\nTogether, we will bring new best-in-class digital products to market on a global basis more quickly, and we will further catalyze our culture of market-leading innovation.\nCameron will provide more detail on Google in a minute, but it's worth noting that in the six last months, we have struck significant and unique distribution relationships with two of the world's largest and most respected technology companies with a combined market capitalization of nearly $3 trillion.\nThis is a first for the payments technology industry and we did this in the midst of a once in a century pandemic, while delivering adjusted earnings-per-share growth and gaining market share.\nThese collaborations also are consistent with our long-held distinctive strategies to drive digital penetration.\nOur business is a combination of two halves: distinctive distribution and cutting-edge technologies.\nAWS and Google enhanced both parts of the equation.\nTogether, we will leapfrog legacy analog means of distribution and redefine how payment solutions and services are sold and consumed in the digital age for our issuing and merchant businesses.\nWe already have reached the threshold of 60% of our business coming from technology enablement, a goal we set in March 2018 for year-end 2020 and achieved early last July.\nAnd roughly 25% of our business is now related to our e-commerce and omni-channel initiatives.\nBut together with AWS and Google, we expect to do more by driving further technology enablement and omni-channel penetration as legs of the stool for future growth.\nI cannot think of two better partners to catalyze further migration of our issuing and merchant businesses to cloud-native technologies and expand our competitive moat.\nThese partnerships provide proof points at the momentum we have entering 2021 and will accelerate the transformation of our businesses for years to come.\nJust a reminder of the composition of the business is driving our growth.\nStarting with our merchant business, which is two-thirds of our Company.\nOur technology enabled portfolio consists of three roughly equally sized channels.\nOur omni-channel partnered software and own software vertical markets businesses collectively represent nearly 60% of merchant adjusted net revenue.\nOur relationship-led businesses make up the remaining portion and continue to differentiate themselves in the markets we serve based on the strength of our technologies.\nOur omni-channel businesses delivered accelerated sequential growth for the fourth quarter of 2020, again excluding travel and entertainment.\nAs we said at the beginning of the pandemic, we continue to see and expect ongoing sustained share shifts toward omni-channel acceptance brought forward three to five years by COVID-19.\nWe launched our Unified Commerce or UCP cloud POS solution this quarter, which connects an e-commerce software to a wireless payment terminal through our API, to help merchants more easily unify their in-person and online payment experiences.\nOur Citi partnership also continues to expand worldwide, and we expect new Citi customers on UCP to include one of the leading global food companies, one of the pre-eminent global beverage brands and one of the largest multi-national auto manufacturing companies across multiple continents.\nAnd of course with today's announcement, we also expect Google to become a UCP partner.\nAdditionally, we signed an agreement with Texas Instruments across Taiwan, the Philippines and India.\nAnd we expect to expand our relationships to additional geographies later this year.\nWe also reached an agreement with Wolverine to consolidate their U.K. and European acquiring across 32 countries.\nAnd we have now successfully launched with both Uber Ride and Uber Eats in our Asia Pacific region.\nMoving to Global Payments Integrated, which drives another nearly 20% of our merchant adjusted net revenue.\nWe generated growth for the fourth quarter and for the full year because of the unrivaled breadth of our partnership portfolio in the most attractive vertical markets.\nThe strength of our combined integrated offerings allowed us to exceed our budgeted new sales forecast for calendar 2020, with new partner production increasing 171% versus 2019.\nOur own software businesses represent the remaining roughly 20% of our merchant-adjusted net revenue.\nAnd our leading SaaS solutions in healthcare, higher education and quick service restaurants or QSRs have been more resilient in the current environment.\nTo that end, our AdvancedMD business delivered a record performance in 2020 achieving double-digit revenue and bookings growth.\nAnd our higher education business produced one of its finest years to date.\nLastly, our enterprise QSR business continued its success with Xenial's Cloud POS [Phonetic] and omni solutions, nearly over 100 million transactions and $1.5 billion in sales for the year.\nIn addition to serving 26 of the Top 50 QSR brands, we are also pleased to announce the signing of Xenial for cloud-based SaaS solutions, extending our addressable market to the fast casual category.\nToday, we lead with technology and innovative solutions across all of our merchant businesses.\nThis includes our relationship-led channels where we continue to see strong new sales performance, fueled by our suite of differentiated products and solutions.\nFor example, our U.S. business is seeing significant uptake of its SaaS point-of-sale solutions with adjusted net revenue and new sales both exceeding 20% growth in 2020.\nOne recent notable win is with the Milwaukee Bucks, where we will be deploying our cloud-based POS solution across merchandise stores and outlets in the arena.\nIssuer is the next largest segment of our business.\nIn August 2020, we announced the transformational go-to-market collaboration with AWS to provide an industry-leading cloud-based issuer processing platform for customers regardless of size, location or processing preference.\nWe currently have one LOI and three other mid to late-stage opportunities together with AWS that we are actively working, and we now believe that the win in Asia and a similar large market from a legacy competitor that we have already secured with AWS will likely expand in several markets across Asia over time.\nWe continue to capitalize on the broad and deep pipeline.\nWe have the good fortune to have in our issuer business.\nWe currently have 11 letters of intent with financial institutions worldwide, six of which are competitive takeaways.\nIn the last 18 months, we have had 36 competitive wins across North America and international markets.\nAnd our customers continue to win in the marketplace, a key element of our issuer strategy to align with market leaders.\nDuring the first quarter of 2021, we will complete the first phase of the conversion of over 4 million accounts from a competitor for one of our largest customers.\nIn Germany, we have successfully expanded our long-standing and successful partnership with Deutsche Bank, our largest client in the DACH region.\nWe are pleased to announce that TSYS has been selected in a competitive process as Deutsche Bank's partner of choice for their scheme branded card portfolios across all brands, including Deutsche Bank and Postbank.\nWe are also proud to have signed a new multi-year agreement with Marlette Funding, owner and operator of the Best Egg lending platform for the processing of a consumer credit card product, which will launch in the second quarter of this year.\nWe are pleased to secure long-term extensions in multiple geographies with President's Choice, a subsidiary of Loblaw's and Canadian Tire Financial Services, both large retailers in Canada; Scotiabank in Central America; Bank of Ireland; and Banco Invex in Mexico.\nFinally, our business and consumer segment delivered another quarter of solid growth, as we continue to pivot our strategic focus to digitization, international expansion and business to business opportunities.\nThat shift is under way without any compromise in execution, as we also achieved adjusted net revenue in excess of $200 million for the first time in the fourth quarter.\nThe move toward cashless solutions is benefiting the portfolio with customers remaining active longer and utilizing our products more online.\nI am proud that Netspend has once again facilitated a rapid distribution stimulus funds to customers and play an important role during this most challenging period.\nSince late December, we have processed more than 1 million deposits, accounting for just over $1 billion in stimulus payments to American consumers dispersed by the IRS.\nAnd this was done days in advance of many of our traditional financial institution and financial technology peers.\nIn combination with the 2020 stimulus payments, we will have disbursed more than $2.5 billion in aid to customers through the first quarter of 2021.\nI think it's fair to ask how our business has been able to deliver results that are orders of magnitude better in our markets.\nOur strategic focus on the diversity of our business mix has enabled us to gain share.\nWe are diverse across channels, geographies, software ownership and partnership, vertical markets and new and durable partnerships.\nWe are diverse by design.\nWe coupled that diversity with a long track record of execution consistency, years of sustained technology investment and the unmatched global experience of our long-tenured team.\nWe are delighted to announce today our new multi-year strategic partnership with Google that we expect will meaningfully enhance our ability to deliver new innovative cloud-based products and capabilities, advance our technology-enabled distribution strategy, and deliver significant operational efficiencies, while improving speed to market and the scalability of our merchant solutions business.\nThis exciting partnership has a number of assets that collectively serve to further distinguish our digital capabilities worldwide.\nFirst, together, we will collaborate on product development and innovation to enhance and differentiate the suite of cloud-based solutions available to our merchant customers.\nThese distinctive solutions will create stickier and longer-term customer relationships, building on our competitive advantages.\nAs just one example of the types of enhanced capabilities we will offer together, Google's business services including Google My Business, Workspace and Ads, will be integrated with Global Payments' leading value-added software and payments ecosystem, creating a single destination and seamless digital experience for the full spectrum of solutions that merchants need to run and grow their businesses globally.\nMerchant customers will be able to digitally access the industry's most robust value stack of SaaS offerings, including point of sale omni-channel ordering and integrated payments, advertising data and analytics, email marketing, online presence and reputation management and loyalty and gift card solutions, as well as capital access in payroll and human capital management solutions.\nThese products will be delivered through Global Payments' cloud-native operating environment, driving better customer engagement and ease of use.\nSecond, our joint go-to-market efforts will drive significant referral and new customer acquisition opportunities for businesses of all sizes across our combined customer bases worldwide on an omni-channel basis.\nSpecifically, Google Workspace serves as the cloud-native operating backbone for small and medium-sized businesses as well as many of the most sophisticated enterprise organizations globally, while Global Payments provides payments technology solutions to roughly 3.5 million merchant locations, in addition to some of the most complex multi-national corporations across 60 countries.\nBy leveraging our complementary customer bases, we will create attractive cross-selling opportunities for our digital solutions and meaningfully expand our addressable market.\nFurther, together, we will be able to connect consumers with merchants by a surge in new and innovative ways driving commerce and growth in a differentiated way for our customers.\nAnd of course, our ability to secure net new customers will be significantly enhanced through the strength of this partnership with Google.\nThird, Global Payments is pleased to be selected as the preferred payment provider for Google.\nToday, Google executes approximately 3 billion transactions annually and Global Payments is well positioned to meet the complex payment needs of one of the world's largest and most sophisticated technology companies by leveraging our Unified Commerce Platform.\nWe are humbled by the confidence our partners at Google have placed in us.\nLastly, in addition to our commercial partnership, Google will become our preferred cloud provider for our merchant payment technologies.\nOver the next several years, we will migrate the vast majority of our merchant technology workloads to Google Cloud, significantly reducing our data center footprint and streamlining our operating environment to enhance performance and drive meaningful cost efficiencies.\nBy moving our acquiring applications and to the Google Cloud, we will maintain the highest level of scalability, reliability, and security, while increasing our speed of innovation and ability to seamlessly deploy products and services on demand anywhere in the world.\nWe are thrilled to have established this partnership with Google.\nTogether, we are on a transformational journey that will further enhance our industry-leading merchant solutions ecosystem with a digital scale, reach and speed-to-market to seamlessly deliver new innovative digital technologies to customers worldwide.\nOur performance in the fourth quarter and for the full-year 2020 exceeded our post COVID-19 expectations and highlights our outstanding execution and the resiliency of our business model.\nFor the full year, we delivered adjusted net revenue of $6.75 billion, down 5% compared to 2019 on a combined basis.\nImportantly, our adjusted operating margin increased 210 basis points on a combined basis to 39.7%, as we benefited from the broad expense actions we implemented to address the impact of the pandemic and the realization of cost synergies related to the merger, which continue to track ahead of plan.\nIt is worth highlighting that our full year adjusted operating margin performance was largely consistent with the guidance we gave at the start of 2020 and prior to the pandemic.\nThe net result with adjusted earnings per share of $6.40, an increase of 3% over 2019.\nWe are extremely pleased that we were able to grow our bottom line in 2020, enabled by continued execution on our differentiated strategy and our unwavering focus on all things within our control despite the impact of COVID-19 on the worldwide economy.\nMoving to the fourth quarter, adjusted net revenue was $1.75 billion, a 3% decline relative to 2019 as underlying trends in our business continued to recover from third quarter levels.\nAdjusted operating margin was 41.5%, a 320 basis point improvement from the fourth quarter of 2019.\nAdjusted earnings per share was $1.80 for the quarter, an increase of 11% compared to the prior year period, an impressive outcome that highlights the durability of our model and momentum we have heading into 2021.\nTaking a closer look at our performance by segment.\nMerchant solutions achieved adjusted net revenue of $1.1 billion for the fourth quarter, a 4% decline from the prior year, which marked a 200 basis point improvement from the third quarter.\nNotably, we delivered an adjusted operating margin of 47.5% in this segment, an increase of 250 basis points from 2019, as our cost initiatives, expense synergies and the underlying strength of our business mix more than offset topline headwinds from the macro environment.\nOur technology-enabled portfolio continues to prove relatively resilient with several of our businesses delivering year-over-year growth again this quarter.\nSpecifically, worldwide omni-channel volume growth, excluding T&E, accelerated to the high teen as our value proposition, including our Unified Commerce Platform or UCP continues to resonate with customers.\nAdditionally, Global Payments Integrated delivered adjusted net revenue growth for a second consecutive quarter.\nThe leading scale and scope of our integrated ecosystem across more vertical markets and more geographies than our peers also enabled another record year for new partner production.\nAs for our own software portfolio, AdvancedMD remained a bright spot, and once again produced strong double-digit adjusted net revenue growth for the quarter and achieved a record bookings year in 2020.\nIndeed booking trends across our vertical markets portfolio remained solid, providing us with a positive tailwind heading into 2021.\nWe are also pleased that our U.S. relationship-led business saw adjusted net revenue return to slight growth for the fourth quarter, enabled by the innovative technology and software solutions we are delivering in this channel.\nAnd despite a more challenging macroeconomic environment in several of our international markets this period, demand for our differentiated capabilities outside of the U.S. remains strong as our solutions are well aligned with shifting customer needs coming out of the pandemic.\nMoving to issuer solutions, we delivered $457 million in adjusted net revenue for the fourth quarter, which was essentially flat to the prior year period.\nTransaction volumes recovered further, while traditional accounts on file continue to grow, setting a new record.\nAdditionally, our bundled pricing model, including value-added products and services, also benefited performance.\nExcluding our commercial card business, which represents approximately 20% of our issuer portfolio and is being impacted by the slow recovery in corporate travel, this segment delivered low single-digit growth for the quarter.\nNotably, this business achieved record adjusted operating income and adjusted segment operating margin expanded 450 basis points from the prior year, also reaching a new record of 44.7% as we continue to benefit from our efforts to drive efficiencies and the business.\nAs Jeff highlighted, our issuer team successfully signed five long-term contract extension and one new contract in the quarter.\nFinally, our business and consumer solutions segment delivered adjusted net revenue of $205 million, a record fourth quarter result, representing growth of 3% from the prior year.\nGross dollar volume increased more than 5% for the quarter, a result including little impact from the late December incremental stimulus, which we expect to primarily benefit us in Q1.\nWe are particularly pleased with trends with our DDA products, which includes an acceleration in active account growth of 29% compared to the prior year.\nAdjusted operating margin for this segment improved 260 basis points to 24.1%, as we benefited from our efforts to drive greater operational efficiencies, as well as favorable revenue mix dynamics toward higher margin channels.\nThe solid performance we delivered across our segments highlights the powerful combination of Global Payments and TSYS, which has provided us with multiple levers to mitigate the headwinds we have faced from the pandemic.\nWe made great progress on our integration during the crisis, which I mentioned continues to track ahead of plan.\nAs a result, we are pleased to again raise our estimate for annual run rate expense synergies from the merger to at least $400 million within three years, up from the previous estimate of $375 million.\nThis marks the fourth time we have increased our cost synergy expectations.\nAdditionally, our early success in leveraging our complementary products and capabilities worldwide also gives us the confidence to increase our expectation for annual run rate synergies again to $150 million, up from our previous forecast of $125 million.\nFrom a cash flow standpoint, we generated adjusted free cash flow of roughly $780 million for the quarter and approximately $2 billion for the year.\nThese are both records for us.\nThis is after reinvesting $107 million of capex for the quarter and $436 million for the year.\nAs you may recall, we indicated we expected to invest between $400 million and $500 million of capex back into the business following the onset of the pandemic.\nConsistent with our announcement on our last call, we are also pleased to have now returned to our traditional capital allocation priorities, and during the quarter, repurchased 1.2 million of our shares for approximately $230 million.\nOur balance sheet is extremely healthy, and we ended 2020 with roughly $3 billion of liquidity and a leverage position of roughly 2.6 times on a net debt basis.\nFurther, our Board of Directors has again approved an increase to our share repurchase authorization to $1.5 billion.\nAs part of this program, we intend to execute an accelerated share repurchase program for $500 million in the coming days.\nTurning to our outlook for 2021.\nBased on our current expectations for continued recovery from the COVID-19 pandemic worldwide, we expect adjusted net revenue to range from $7.5 billion to $7.6 billion, reflecting growth at 11% to 13% over 2020.\nThis outlook is consistent with the high end of our long-term target of high single-digit to low double-digit growth and it also reflects the benefit of the year-on-year comparisons due to the pandemic.\nConsidering this topline forecast, we would expect to deliver normalized adjusted operating margin expansion of up to 450 basis points, given the natural operating leverage in our business and expense synergy actions related to the TSYS merger.\nHowever, this will be partially offset by the reinstatement of certain expenses that were temporarily reduced at the onset of the COVID-19 pandemic for most of 2020.\nTherefore, we are currently forecasting adjusted operating margin expansion of up to 250 basis points compared to 2020 levels on a net basis.\nTo provide some color at the segment level, we expect adjusted net revenue growth for our merchant solutions segment to be in the mid to high teens, which assumes the current pace of recovery continues worldwide.\nWe expect underlying trends in our issuing business to be in the mid to high single-digit growth range and above our mid-single digit growth target.\nBut these trends should be normalized for two distinct and relatively equal size headwinds.\nFirst, we are not anticipating a recovery in our commercial card business as we expect corporate travel to remain depressed throughout 2021.\nSecond, we will be absorbing the impact of a portfolio sale by one of our customers, which will impact us for the remainder of the year.\nTaking these two items into account, we are forecasting our issuing business to deliver adjusted net revenue growth in the low single-digit range for the full year.\nLastly, we expect underlying trends in our business and consumer segment to be consistent with our long-term expectations of mid to high single-digit growth.\nThis outlook reflects the expected benefits of the recent stimulus announced at the end of December, but it does not assume any additional stimulus.\nAdjusting for the impact of the larger 2020 CARES Act stimulus on comparative results for 2021, we are forecasting adjusted net revenue growth to be in the mid-single digits for this segment.\nRegarding segment margins, we expect up to 250 basis points of adjusted operating margin improvement for the total Company to be driven largely by merchant solutions, while we expect issuer and business and consumer to deliver normalized margin expansion consistent with the underlying leverage profile of these businesses.\nThis follows the 500 basis points and 400 basis points of adjusted operating margin expansion, delivered by issuer and business and consumer respectively in 2020.\nLastly, I would highlight that from a quarterly phasing perspective, we will not lap the initial impact of the pandemic until mid-March.\nTherefore, we will have pandemic affected first quarter comparisons resulting in more muted growth characteristics early in 2021, with the opposite effect occurring in the second quarter before returning to more normalized rates of growth in the back half of the year.\nOur outlook is for adjusted net revenue growth, adjusted operating margin expansion and adjusted earnings-per-share growth for each quarter of 2021.\nMoving to a couple of non-operating items.\nWe currently expect net interest expense to be slightly lower in 2021 relative to 2020, while we anticipate our adjusted effective tax rate to be relatively consistent with last year and expect our capital expenditures for 2021 to be in the $500 million to $600 million range.\nPutting it all together, we expect adjusted earnings per share for the full year in a range of $7.75 to $8.05, reflecting growth of 21% to 26% over 2020.\nThis is consistent with the adjusted earnings per share target of roughly $8.00 that we provided on our third quarter call, despite the incremental adverse impact of additional lockdowns and social distancing protocols in a number of our markets since late October.\nIn summary, our 2021 guidance assumes an improving economy for the first half of the year and a stronger second half of the year with continued progress toward normalization.\nWe are pleased with how well we are positioned as we enter 2021.\nI am very proud of all that we accomplished in 2020.\nThis would have been a remarkable year of milestones regardless of the macroeconomic environment, but it's all the more notable in the face of a 100-year pandemic.\nCompetitively, 2020 was a year of firing in all cylinders for our Company.\nAcross our businesses, we took meaningful market share and advanceable further down the fuel despite all the challenges thrown at us.\nWe don't need to wait to see a more benign macro to grow.\nWe didn't spend the past year waiting for a better day.\nOur resilience is self-evident.\nThe technology investments we made over the last seven-plus years, our distinctive strategy and execution consistency has served us well and we significantly expanded our competitive moat as a result during the crisis.\nWhile hurdles undoubtedly remain, we were not trade positions with anyone heading into 2021.\nBefore we begin our question-and-answer session, I'd like to ask everyone to limit your question to one with one follow-up to accommodate everyone in the queue.\nOperator, we will now go to questions.\n",
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"content": "compname posts q4 adjusted earnings per share $1.80.\nq4 adjusted earnings per share $1.80.\ncompname announces plan for $500 million accelerated share repurchase.\ncompname announces plan for $500 million accelerated share repurchase.\nexpect 2021 adjusted earnings per share to be in a range of $7.75 to $8.05.\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: The company's annual report on Form 10-K filed with the Securities Exchange Commission on March 16, 2021, and any subsequent filings with the Securities Exchange Commission, all of which are available on gapinc.com.\nJoining me on the call today are chief executive officer, Sonia Syngal; and chief financial officer, Katrina O'Connell.\nAs I reflect on the last 18 months, I'm inspired by the incredible transformation our teams have made in such a short time despite an ongoing pandemic-related disruption to our business and the broader economy.\nComing off record sales performance in Q2, we had accelerated momentum heading into the back half before facing disruption to our supply chain, driven by the two-and-a-half-month closure of our top manufacturing country, Vietnam, as well as port congestion, both of which affected our ability to fully meet strong customer demand.\nWhile we had planned into the known supply chain constraints as we entered the quarter, including COVID-related closures in Vietnam, the shock to our business persisted longer than anticipated as weeks turned into months.\nWe have been all hands on deck to address these headwinds and the resulting impact on our business, proactively navigating holiday and beyond, ensuring that the customer is at the center of every decision we make.\nTo secure our supply and meet the needs of our customers, we chose airfreight over ocean vessel for a significant portion of our assortment, taking on extreme transitory cost.\nWe're disappointed in the short-term impact on earnings, but we made the choice to invest in our customer promise and build loyalty that will help sustain growth over the long term.\nKatrina will go into greater detail on our mitigation efforts later.\nOverall, we continue to believe the scale of our supply chain is the material advantage.\nWe have deep relationships with our manufacturers across multiple countries of origin optimized for cost, speed, and expertise.\nAnd we have strong transportation partners, offering speed advantage and industry-leading rate.\nThat said, learnings from this crisis will not go to waste.\nWe're using them as an opportunity to accelerate digitization efforts that were already underway across our product-to-market process.\nThere was a sizable increase in the enterprise clock speed on transformative initiative as we combated the current crisis with an eye on a better future faster.\nFor example, we're adding supply chain capabilities that will allow us to better anticipate the unexpected.\nWe've made significant progress digitizing core operating processes with a targeted focus on inventory management, loyalty, and personalization.\nAnd we're transforming product creation by using digital tools to unlock speed and efficiency.\nAll of this work will pay forward in 2022 and beyond.\nThese near-term pressures have not distracted us from our core strategy.\nWe have an acute focus on what really matters, our unique, ownable asset.\nIt's because of the simple, consumable, and executable strategy we shared in October of last year, our Power Plan 2023, the Gap Inc. is in a stronger, more resilient position today than we were entering this fiscal year.\nEven in the face of current headwinds, I'm confident this is true.\nOur brands are healthy, demand for our product is strong, and we have pricing power with average unit retail contributing to the highest gross margins in over a decade.\nWe are becoming digitally led.\nOnline sales grew 48% in the quarter compared to 2019, representing 38% of total sales, and our migration to the cloud has unlocked innovation in our tech portfolio.\nWe will strategically shed an estimated 1 billion in sales by year-end versus 2019 by closing unproductive stores, divesting smaller brands, and partnering our European business to drive focus and profitability.\nNearly three-quarters of active customers are loyalty shoppers, and they are spending twice as much as nonloyalty customers.\nAnd we have fortified our strong balance sheet by restructuring long-term debt, allowing us to invest for growth while continuing to return cash to shareholders.\nI have watched you navigate, persevere, and accelerate through these needs -- near-term challenges while executing a long-term strategy.\nDespite the supply chain disruption, comp sales were up 5% on a two-year basis, with three of our four brands delivering positive two-year comps.\nNet sales were down 1% to 2019, which includes an estimated 8%-point impact due to supply chain headwinds.\nOur strategy is on track and is working.\nLet me walk you through how our Power Plan came to life in Q3.\nStarting with the power of our brand.\nEach of our billion-dollar brands is finding new and relevant ways to expand reach and cut through to the consumer.\nThis is driving an increase in brand power and a decrease in discounting.\nLet me start with Old Navy.\nOld Navy delivered 8% sales growth versus 2019, a deceleration from the first half as the brand was disproportionately affected by inventory lateness during the quarter.\nOld Navy maintained its No.\n1 rank in kids market share according to NPD and sustained its kids and baby growth trend from the first half with strong back-to-school performance.\nBODEQUALITY, Old Navy's inclusive sizing integration launched successfully in August.\nThe brand more than doubled its extended size customer files since launch.\nFifteen percent of customers who shopped extended sizes are new to the brand, and more than a third have shopped Old Navy before but are new to the category.\nWe are seeing strong extended-sized demand across fashion categories, a clear signal that our customer is craving trend choice lacking in the market.\nThe momentum continues at Gap brand, particularly North America, with comparable sales up 13% versus 2019, and net sales nearly flat despite the almost 18 percentage points of revenue we shed through strategic store closures.\nThis marks the third consecutive quarter of positive comparable twp-year sales growth in North America as Gap brand improves the core health of the business from tighter assortments and better quality product to an increase in digital penetration and lighter and brighter stores.\nGap reached a critical milestone in our Power Plan, concluding its strategic review of the European market, driving a more profitable business model by shuttering our U.K. stores and working with local partners to amplify growth.\nWe have identified strong partners in the U.K., Ireland, France, and Italy, and together, are committed to serving and growing our Gap customers in Europe.\nOur newest Yeezy Gap icon, the Perfect Hoodie, delivered the most sales by an item in a single day in gap.com history.\nWith over 70% of the Yeezy Gap customers shopping with us for the first time, this partnership is unlocking the power of a new audience for Gap, Gen Z plus Gen X men from diverse background.\nWe've successfully launched new brand positioning focused on acceptable luxury.\nThrough unique storytelling and experiences, the brand is going back to its roots, igniting the adventure in all of us.\nBanana Republic reported a net sales decline of 18% versus 2019, and a negative 10% two-year comp.\nLike Gap, we walked away from about 10 percentage points of unprofitable revenue due to strategic store closures.\nProduct margins expanded during the quarter as luxury products like merino, leather, cashmere, and silk resulted in increased average transaction, drawing higher-value customers willing to pay for great quality.\nAnd finally, Athleta delivered an outstanding quarter with 48% net sales growth versus 2019, using its unique and ownable mission to empower women and girls through the power of she.\nThe brand is investing in new touchpoints that increased awareness and drove new customer acquisition, which has more than doubled versus Q3 2019.\nAthleta grew brand awareness of 33% versus 27% last year, according to YouGov, by embracing celebrity partnerships, Simone Biles and Allyson Felix, who took to the world stage in Tokyo.\nThe brand expanded into Canada with the launch of its online business and its first company-operated store in Vancouver and Toronto.\nAnd customers are quickly embracing Athleta well, their new immersive digital community rooted in well-being with the active user base growing 50% every month since launch.\nWe believe this platform has tremendous potential over the coming years to revolutionize how we monetize vulnerable brand experiences.\nNext, the power of our platform and portfolio.\nWe leveraged our size and scale to drive advantage for our four purpose-led, billion-dollar brands.\nOur leading omni platform provides customer convenience and engaging experiences, whether in-store, on mobile, or through curbside pickup.\nOur online sales grew 48% in the quarter compared to 2019, and we maintained our rank as No.\nOur sizable active customer file sits at 64 million, and those customers are spending more on average than they were two years ago.\nBut the more important is that the health of our customer file is improving.\nCompared to 2019, newly acquired customers are spending more with us than our existing customers with increased average transactions, average unit retail, and basket size.\nWe're pleased with the launch of our innovative rewards program and our ability to build customer lifetime value.\nNow, with more than 45 million members, our loyalists are two times more likely to shop across brands, and three times more likely to shop across channels.\nWe fuel our brands through our scale technology advantage operations.\nWe are investing capital to drive growth, reduce costs, and increase speed and agility.\nTo diversify and strengthen our business, we are also seeding new capabilities that will unlock additional value.\nFor example, we acquired Drapr, which we expect will power new e-commerce tools with 3D fit technology; and we acquired CB4, our machine learning and AI acquisition with broad potential across sales, inventory, and consumer insights.\nWe have plans to scale these solutions in 2022 to build our core digital capability.\nThis will help our brands lower return, boost in-stock levels, increase margins, and deliver better customer experiences online and in-stores across all four brands.\nThe power of our portfolio comes to life through our leadership in key categories.\nOur strong active and fleece business and our Denim business are expected to generate revenue of 4 billion and 2 billion, respectively, this year; and our kids and baby business owns 9% market share across Old Navy, Gap, and Athleta.\nEven as occasions and wear-to-work categories have strengthened, it's clear comfort and style will sustain.\nWe're extending our customer reach across every age, body, and occasion from value to premium through category expansion and new addressable markets.\nWe can test and pilot in one brand and then leverage learnings to scale across the rest.\nFor example, starting our inclusive sizing rollout in Athleta and scaling at Old Navy with BODEQUALITY, or using Old Navy, Gap, and Banana Republic's strong presence and infrastructure in Canada to enable Athleta's quick and seamless entry into the market.\nIt's the collective power of our brand that gives us scale advantage.\nWe continue to innovate in sustainable sourcing with a focus on empowering women, enabling opportunity, and enriching community.\nEvery industry will be impacted by climate change, and we are doing our part to mitigate this impact, both in our supply chain and on the communities where we operate.\nEarlier this month, the USAID, Gap Inc., Women + Water Alliance announced that we have empowered 1 million people to improve their access to clean water and sanitation, already halfway to our goal of reaching 2 million by 2023.\nLooking ahead, we anticipate robust apparel and accessory retail sales across the industry for the remainder of the year and into the next.\nThat said, we are balancing the favorable consumer climate against current supply constraints.\nAs I mentioned earlier, we are doing everything we can to improve our on-hand inventories versus fall.\nAnd still, we remain cautious given the current environment.\nOne last thought before I hand it over to Katrina.\nWhile the near-term headwinds and resulting impact on our performance are difficult, we remain focused on executing our strategy for long-term sustainable growth.\nWe are focused on what matters, demand-generating investments in our billion-dollar brands fueled by cut-through creative, deploying data and science to drive efficiency in the way we work, and restructuring our business to reduce cost.\nAll of these allow us to emerge from the crisis, growing share, increasing brand health, and delivering profitable growth long term.\nAs Sonia said, we're deeply proud of the progress we're making to transform Gap Inc. through our Power Plan 2023.\nWe have strong demand for our brands and our fleet optimization through store closures, international partnerships, and divestitures is progressing well and adding value.\nOur operating margin remains on track to hit 10% by 2023, in line with our plan, even as we navigate these near-term disruptions.\nOur balance sheet, fortified with our recent debt restructuring, enables us to invest in our business to drive growth while returning cash to shareholders.\nThe core tenets of our Power Plan 2023 strategy are well underway in delivering value.\nWhile we're confident with our strategy, widely reported worsening global supply chain issues meaningfully impacted our third-quarter performance.\nWe lost approximately $300 million of revenue or eight percentage points of sales growth on a two-year basis due to longer transit times and lost weeks of production, which led to on-hand inventory shortages in the quarter.\nThe backlog at U.S. ports deteriorated meaningfully from the first half of the year, resulting in up to three continuous weeks of unanticipated delays to fall product deliveries throughout the quarter.\nIn addition, while our production capacity is largely globally diversified, approximately 30% of our product is produced in Vietnam, where factory closures extended to over two and half months, significantly longer than initially anticipated.\nOur average on-hand inventory in Q3 was 11% below fiscal year 2019.\nSo despite strong sell-through trends, we lost volume as a result of limited supply.\nWhile our brands all experienced delays in styles and sizes that limited their ability to fully meet strong demand, Old Navy was disproportionately impacted.\nWe believe these supply chain disruption impacts to our sales and margins are transitory, although will persist in Q4 and potentially into early next year.\nWith that, we've taken some near-term actions to proactively improve supply for holiday, and we're using the learnings from acute supply crisis to accelerate new capabilities for 2022 that we believe will help to better mitigate logistics challenges and more profitably increase speed to market go forward.\nLet me touch on some efforts.\nFirst, in the near term, we've secured incremental air capacity to support holiday inventory.\nIn addition to an estimated $100 million of air costs incurred in Q3, we've also invested approximately $350 million in Q4 airfreight to further expedite holiday deliveries.\nAnd second, where possible, we have routed a modest portion of our inventory to East Coast ports to bypass the congestion in the L.A. Long Beach port.\nWhile we aspire to improve our on-time deliveries for holiday by adding air capacity and utilizing alternate ports, the supply chain situation continues to be volatile.\nNewly opened Vietnam factories are behind on holiday profits production, ramping up slowly.\nOngoing port delays are worsening and air charters are causing new airport congestion.\nOur mitigation efforts are driving significant transitory costs, but we're focused on the long-term impact that delighting our customers with the products they love during the holiday season have in preserving market share and maintaining customer loyalty.\nWe remain cautious in our outlook for the balance of the year and are updating 2021 earnings per share guidance range to $0.45 to $0.60 per share on a reported basis, and $1.25 to $1.40 per share on an adjusted basis.\nWe are updating our guidance solely based on the acute revenue and margin impact from supply chain disruptions.\nThis range now reflects the estimated lost sales from supply disruptions in the second half of 2021 to be $550 million to $650 million.\nIn addition, our updated guidance range reflects approximately 450 million of transitory airfreight costs we have chosen to incur as we seek to meet as much customer demand as possible.\nAnd we are confident that when adjusting for these substantial disruptive impacts to 2021, our underlying business is ahead of plan, and we will emerge strong in 2022 and beyond.\nAs we look to 2022, we are adding new capabilities that will enable us to navigate these disruptions with more flexibility and significantly less airfreight.\nBeginning with summer 2022, our teams have added the expected longer port delay times into product booking deadlines, which we believe will enable us to ship goods largely by ocean for on-time deliveries.\nIn addition, Old Navy has now accelerated its use of digital product creation for the majority of its fall orders with vendors.\nThis has added speed to the pipeline as the breakthrough and efficiency for the brand.\nAlso, to increase geographic diversification and flexibility, we expect to leverage more multinational vendors.\nAnd we will begin to deploy AI from our recent CB4 acquisition to better drive inventory in-stock in our stores.\nAI, combined with ongoing inventory management transformation efforts and the leverage of our new loyalty program, gives us confidence in the sustainability of strong average unit retails in 2022.\nNow turning to third-quarter financials.\nBefore I get into specific results, I'd like to note that there are select charges we incurred in the quarter that are excluded from our adjusted financials, specifically costs related to restructuring our long-term debt and the transition of our European market to a partnership model.\nI'll provide more details on these as I talk through the results.\nNet sales of 3.9 billion for the quarter were down 1% to 2019 with our Q3 sales deceleration from the first half of the year due to supply chain issues.\nComp sales improved 5% on a two-year basis.\nWe're particularly pleased that three of our four brands delivered strong two-year comp growth with Old Navy up 6%, Gap Global up 3%, and North America up 13%, and Athleta up 41%, all while navigating acute supply issues.\nAnd while Banana Republic's two-year comp was down 10%, the brand made progress in the quarter through its product and customer experience relaunch.\nOur strong e-commerce channel continues to be an advantage as online sales were up 48% compared to 2019, contributing 38% of sales in the quarter, up from 25% of total sales in Q3 2019.\nMoving to gross margin.\nThird-quarter reported gross margin was 42.1%, an increase of 310 basis points versus 2019.\nExcluding impacts related to the transition of our European business to a partnership model, adjusted gross margin of 41.9% for the quarter represent the highest Q3 gross margin rate in over 10 years, expanding 290 basis points versus 2019 gross margin.\nThis is primarily driven by 300 basis points in ROD leverage from higher online sales and lower rent occupancy and depreciation as a result of strategic store closures and renegotiated rents.\nMerchandise margins were down just 10 basis points, despite nearly 200 basis points of higher online shipping costs and about 250 basis points in short-term headwinds related to airfreight.\nProduct acceptance was strong across all brands with our overall Q3 discount rate at the lowest level in five years.\nReported SG&A, which includes 26 million in charges related to the transition of our European operating model was 38.3% of sales, deleveraging 470 basis points compared to Q3 2019.\nOn an adjusted basis, SG&A was 37.6% of sales, 610 basis points above 2019 adjusted SG&A.\nWe continue to execute our strategy of driving down fixed costs while investing a portion of those costs into demand generation in the form of marketing and technology.\nFixed costs have been significantly reduced as we successfully closed stores in North America, divested of two brands earlier this year, and reached partnership agreements for our European markets.\nMarketing, up 360 basis points versus 2019, supported the rollout of our new initiatives, particularly loyalty, inclusive sizing at Old Navy, and the brand relaunch at Banana Republic, and is a major contributor to our low discount rates.\nThe balance of Q3 investments were primarily focused on technology to build out our digital and supply chain capabilities, as well as on higher bonus accruals versus a low 2019 baseline as no meaningful incentive payouts were granted in that year based on performance.\nThe investments we're making today are long-term differentiators, and we're committed to our strategy while remaining prudent even in the face of near-term supply headwinds.\nRegarding operating margin, operating margin for the quarter was 3.9% on a reported basis.\nExcluding $17 million in charges related to our European market transition, adjusted operating margin was 4.3%, which as I noted earlier, includes the impact of an estimated 300 million in lost sales due to constrained inventory in addition to approximately 100 million in nonstructural airfreight costs.\nMoving on to interest and tax.\nDuring the quarter, we restructured our long-term debt by retiring all of our 2.25 billion senior secured notes and issuing 1.5 billion of lower coupon unsecured senior notes.\nThrough this debt restructuring, we were able to reduce our overall debt balance, achieve material interest savings, approximately $140 million on an annual basis beginning in 2022, and unencumber our real estate assets previously pledged as collateral.\nWe incurred a 325 million nonrecurring charge related to debt extinguishment in the quarter.\nQ3 net interest was $43 million.\nFull-year net interest is now expected to be $163 million.\nLooking beyond 2021, we expect annual net interest expense of around $70 million.\nThe effective tax rate was 29% for the third quarter.\nExcluding the impact from fees related to debt extinguishment and the charge changes to our European operating model, the adjusted effective tax rate was 20%.\nWe expect the full-year effective tax rate to be about 23% on a reported basis and about 26% on an adjusted basis.\nRegarding earnings on the quarter, Q3 reported earnings reflect a loss of $0.40 per share.\nExcluding fees associated with our long-term debt restructuring and the transition of our European markets to a partnership model, adjusted earnings per share for the quarter were $0.27.\nInventory delays worsened throughout the quarter, and our Q3 sales down 1% versus 2019 outpaced average on-hand inventory of down 11% to 2019.\nThird-quarter inventory ended flat to 2019 and down 1% versus 2020, with average on-hand inventory down 7% and in-transit up 16% versus last year.\nOn-hand inventory at the end of the quarter remained seasonally relevant with markdowns below Q3 fiscal '19 quarter-end levels.\nWe expect Q4 ending inventory to be up high single digits versus last year, although this point-in-time outlook may change given continued volatility in the supply chain.\nRegarding the balance sheet and cash flow, we ended Q3 with $1.1 billion in cash, cash equivalents, and short-term investments.\nDuring the quarter, we continue to earn -- to return cash to shareholders, paying a Q3 dividend of $0.12 per share and repurchasing $73 million in shares as part of our current plan to offset dilution.\nAnd earlier this month, we announced a Q4 dividend of $0.12 per share.\nLooking at our global store fleet, we are planning to close 350 Gap and Banana Republic.\nNorth America stores is expected to be approximately 75% complete by the end of the year.\nAnd with the recent announcement of our agreement to transition to a partner model in Italy, we've now concluded an important phase of the restructure of our European market.\nAll markets are expected to be transferred to our new partners in early 2022.\nNow, I'd like to provide an update on our full-year financial outlook, which we are downwardly revising solely based on the acute impact of sales and margin of the supply chain disruptions.\nFull-year 2021 reported earnings per share are now expected to be in the range of $0.45 to $0.60, which includes net charges of 445 million, comprised of 325 million in fees related to the restructuring of our long-term debt, and approximately 120 million related to divestitures and the transition of our European business model to a part -- European business to a partnership model.\nExcluding these charges and associated tax impacts, full-year 2021 adjusted earnings per share is expected to be in the range of $1.25 to $1.40.\nThis updated guidance now includes the following assumptions.\nFirst, we expect 2021 full-year revenue growth of about 20% versus 2020.\nThis range now reflects the expected lost sales from supply disruptions in the second half of 2021 of approximately 550 million to 650 million, including an estimated 300 million from Q3 and an estimated 250 million to 350 million in Q4.\nSecond, we expect full-year nonstructural airfreight to be approximately $450 million.\nWe consciously chose to air approximately 35% of our holiday product given the two-and-a-half-month delays from Vietnam closures in Q3 and the over three-week West Coast port delays so that we can give our customers as much holiday product as we can to deliver on their expectations.\nWhile this is material to our profitability, we believe it is necessary to further mitigate sales losses and retain customers for the long term.\nWith the added air cost and the meaningful sales impact from supply constraints, we now expect full-year 2021 reported operating margin to be about 4.5%, with adjusted operating margin at about 5% for fiscal 2021.\nThis is inclusive of short-term air costs in the back half, impacting operating margin by about 270 basis points.\nFull-year capital spend is still expected to be approximately $800 million.\nIn summary, when adjusting for the acute impact of supply chain disruptions, we are still expecting the year to end at or above our original plan for 2021, demonstrating that our underlying business trends are quite strong and providing real momentum.\nThe progress we've made on our Power Plan 2023 strategy in the face of these challenges highlights the strength of our core business and the health of our brands, and we remain confident in our path as we move toward a 10% operating margin in 2023.\nWith that, we'll open it up for Q&A.\n",
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"content": "qtrly loss per share $0.40; qtrly non-gaap earnings per share $0.27.\nqtrly online sales grew 48% versus q3 2019 and represented 38% of the total busines.\nsees fy earnings per share in the range of $0.45 to $0.60.\nsees fy adjusted earnings per share in the range of $1.25 to $1.40.\nnow expects fy revenue growth to be about 20% versus fiscal year 2020.\nqtrly old navy net sales were up 8% versus 2019; qtrly gap net sales declined 10% versus 2019.\nqtrly comparable sales were up 5% versus 2019.\nglobal supply chain disruption, including covid-related factory closures, continued port congestion, caused significant product delays in q3.\nmeaningfully reduced inventory positions throughout quarter negatively impacted sales as brands were unable to fully meet strong consumer demand.\nleveraging increased air freight, port diversification to navigate ongoing delivery challenges for holiday.\nqtrly banana republic net sales declined 18% versus 2019; qtrly athleta net sales were up 48% versus 2019.\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 caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.\nWith Josh and me on the call today are Mark Olear, our Chief Operating Officer; and Brian Dickman, our Chief Financial Officer.\nI will begin today's call by providing an overview of our performance for the second quarter of 2021, and highlight the continued execution of our growth initiatives.\nAnd then, we'll pass the call to Mark and Brian to discuss our portfolio and financial results in more detail.\nThe net result of our stable in-place portfolio and a continued execution of our investment strategies was a 4.5% increase in total revenues, and almost 19% increase in adjusted funds from operations and 11.4% increase in AFFO per share.\nThe Company invested $44.1 million for the quarter, and another $4.6 million just after quarter end, bringing our year-to-date total investment activity to $79 million in aggregate.\nThe quarter was highlighted by the growing and steady pace of our investment activity in convenience and automotive retail assets.\nWe continue to successfully execute on our multiple investment strategies, which include traditional sale leasebacks, accretive acquisitions of net leased properties and construction loans for new-to-industry assets.\nWe also broadened our portfolio further during the quarter by adding both new geographies as we added the State of Michigan, and new tenants as we added both Valvoline and Mavis Tire's to our roster.\nThe Company also continues to benefit from the strong performance of target asset classes, as evidenced by our stable rent coverage of 2.6 times.\nOnce again, Getty realized full normalized collections of our recurring rental income during the quarter, as well as the COVID-related deferments we agreed to in 2020, which were due this quarter.\nMore broadly, industry data published this month by the National Association of Convenience Stores further demonstrates the health of the overall convenience store sector, which had another record year of profits in 2020 despite the COVID pandemic.\nAs we enter the second half of the year, we are pleased that our year-to-date investment activity has positioned the Company to raise our AFFO guidance at quarter end.\nLooking ahead, we are committed to maintaining our healthy portfolio through active asset management.\nIn addition, our team continues to work diligently to source and underwrite new opportunities to invest in our target asset classes, including convenience stores, car washes and automotive-related retail properties, and by unlocking embedded value through selected redevelopments.\nWe remain encouraged by the growing opportunities in our investment pipelines.\nWe are confident with our targeted investment approach, which prioritizes acquiring real estate in strong metropolitan markets across the country.\nWe'll continue to drive additional shareholder value as we move through 2021 and beyond.\nEvelyn has a long track record of advising and investing in real estate companies and REITs and I'm excited about the value she will bring to our Company.\nI look forward to working with her for years to come.\nAs at the end of the quarter, our portfolio includes 994 net lease properties, six active redevelopment sites and five vacant properties.\nOur weighted average lease term was approximately 8.9 years and our overall occupancy, excluding active redevelopments, remain constant at 99.5%.\nOur portfolio remains spread over 35 states plus Washington D.C. and our annualized base rents 65% of which come from the top 15 MSAs in the US, continue to be well covered by our trailing 12-month tenant rent coverage ratio of 2.6 times.\nIn terms of our investment activities, we had another busy quarter in which we invested $44.1 million in 53 properties and subsequent to the quarter and we acquired one additional property for $4.6 million, bringing our year-to-date investment activity to $79 million across 60 properties.\nOur completed acquisitions during the second quarter included the purchase of 46 Valvoline-branded oil change centers for $31 million.\nThe triple net leases which are guaranteed by Valvoline Inc. were acquired with 11.5 years of remaining base term and have multiple renewal options.\nThe properties are located primarily throughout the Detroit, Grand Rapids, Lansing MSAs in Michigan, and the Toledo metropolitan area in Ohio.\nAdditionally, we've closed on the acquisition of three additional car wash properties for $10.4 million during the quarter.\nThese properties were added to our existing unitary lease with WhiteWater Express car wash and have approximately 15 years remaining of the base term with multiple renewal options.\nThese properties are located in Cincinnati, Ohio.\nSubsequent to the quarter end, the Company acquired a Mavis Tire center located in the Chicago, Illinois MSA for $4.6 million.\nIn aggregate, we expect all of our completed acquisitions to generate cash yields that are in line with our historical quoted acquisition cap rate range for our targeted asset classes.\nGetty also funded an additional $2.7 million of construction loans for four new-to-industry convenience stores with Refuel, a c-store operator with more than 100 locations across the Southeast United States and Texas, bringing the total amount funded by Getty to $11.1 million year-to-date.\nAs part of this transaction, we will accrue interest on our investment during the construction phase of the project and we expect to acquire the properties via sale leaseback transaction at the end of the construction period.\nWe ended the quarter with a strong investment pipeline, remain highly committed to continuing to grow our portfolio with convenience and automotive retail real estate.\nAnd we expect that we will continue to pursue direct sale leaseback, acquisitions of net lease properties, and funding for new-to-industry construction.\nMoving to our redevelopment platform.\nDuring the quarter, we invested approximately $200,000 in sites which are in our pipeline.\nAt quarter end, we had 11 signed leases or letters of intent, which includes six active projects, four signed leases on properties which are currently subject to triple net leases, but which have not yet been recaptured from the current tenants and one signed letter of intent on a vacant property.\nAt quarter end, rent commenced on a redevelopment project leased to 7-Eleven in Baltimore and Maryland MSA.\nWe invested approximately $125,000 in the project, expect to generate a return of nearly 40% on that investment.\nThe Company expects to rent -- expect rent to commence at a number of additional redevelopment sites during the second half of 2021.\nIn total, we have invested approximately $2.1 million in the 11 redevelopment projects in our pipeline and estimate that these projects will require total investment by Getty of $7.8 million.\nWe project these redevelopments will generate incremental returns to the Company in excess where we can invest these funds in the acquisition market today.\nTurning to our asset management activities for the quarter, the Company did not sell any properties, but did exit four leased properties which had a de minimis impact on our financial results.\nAs we look ahead, we will continue to selectively dispose the properties that we determined are no longer competitive in their current format and do not have compelling redevelopment potential.\nI'll start with a recap of earnings, AFFO, which we believe best reflects the Company's core operating performance was $0.49 per share for the second quarter, representing a year-over-year increase of 11.1%.\nNAREIT FFO was also $0.49 per share for the quarter.\nOur total revenues were $38.7 million, representing a year-over-year increase of 4.5%.\nRental income, which excludes tenant reimbursements and interest on notes and mortgages receivable, grew more than 8% to $34.4 million.\nStrong acquisition activity over the last 12 months and the current [Indecipherable] our leases were the primary drivers of the increase, additional contribution from rent commencements at nearly [Phonetic] all the projects.\nOn the expense side, G&A cost increased in the quarter, primarily due to employee-related expenses, including stock-based compensation and non-recurring retirement costs, as well as certain professional fees.\nProperty costs and environmental expenses both decreased in the quarter.\nThe reduction in property costs was largely driven by decreases in real estate taxes and certain professional fees related to redevelopment activities, and the decline in environmental expenses was mostly attributable to lower professional fees and related expenses that flow through to AFFO.\nAs we note each quarter, environmental expenses are subject to a number of estimates and non-cash adjustments and will continue to be highly variable.\nTurning to the balance sheet, our capital markets activities, we ended the quarter with $542.5 million of total debt outstanding, including $525 million of long-term fixed-rate unsecured notes and $17.5 million drawn against our $300 million revolving credit facility.\nOur weighted average borrowing cost was 4.2% and the weighted average maturity of our debt was 6.8 years.\nIn addition, our total debt to total market capitalization was 29%, our total debt to total asset value was 38% and our net debt-to-EBITDA was 5 times.\nEach of these leverage metrics are calculated according to the terms of our loan agreements.\nWe have no debt maturities until June of 2023 other than our revolving credit facility which matures in March of 2022, but has a one-year extension option at our election.\nWe were selective with equity issuance under our ATM program during the quarter, raising $9.5 million at an average price of $32.94 per share.\nYear-to-date, we've raised a total of $30.3 million through the ATM program.\nIn general, as we think about our future capital needs, we're committed to maintaining a strong credit profile, including meaningful liquidity and access to capital, low-to-moderate leverage and a well-laddered and flexible capital structure.\nWith respect to our environmental liability, we ended the quarter at $47.9 million, which was a decrease of $150,000 from the end of 2020.\nFor the quarter, net environmental remediation spending was approximately $1.4 million [Phonetic].\nFinally, as a result of our investment and capital markets activities in the first half of the year, we're raising our 2021 AFFO guidance to a range of $1.89 to $1.91, a $0.03 per share increase from our prior guidance.\nThis guidance includes transaction activity completed year-to-date.\nIt does not otherwise assume potential acquisitions or capital markets activities for the remainder of 2024.\nSpecific factors which may impact our guidance include variability with respect to certain operating costs including environmental expenses, variability with respect to the recapturing of properties for redevelopment, which results in foregoing rent, and our expectation that we will remain active in pursuing acquisitions and redevelopments, which could result in additional expenses, including certain property demolition costs and transaction costs for deals that are not ultimately completed.\nOperator, we will take questions at this time.\n",
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"content": "q2 adjusted ffo per share $0.49.\nq2 ffo per share $0.49.\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 caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.\nWith Josh and me on the call today are Mark Olear, our Chief Operating Officer; and Danion Fielding, our Chief Financial Officer.\nSimilar to prior quarters in 2020, we will provide an update on our business in the context of the ongoing COVID-19 pandemic and also provide our quarterly review of our portfolio and financial statements.\nRegarding COVID-19, I am pleased to report that our third quarter results are further evidence of the stability of our triple-net lease rents and growth platform.\nOur portfolio of convenience stores, gas stations and other automotive assets produced another strong quarter of rent collections, operating performance and growth at Getty.\nI am especially proud of our Company as we achieved our results during a difficult time for the overall US economy and related challenges to many aspects of the retail, real estate sector.\nThe entire Getty team is working hard to continue what has been a very strong for our Company.\nWe are proud of our accomplishments year-to-date and expect to continue executing on all of our initiatives for the remainder of 2020.\nTurning to our results, we benefited from the stability of our triple-net lease rents and our active an accretive acquisition program.\nAs a result, our third quarter revenues from rental properties increased by more than 4% to $37.2 million, and our AFFO per share by more than 9% to $0.47 per share.\nThe success of our acquisition strategy year-to-date has been a key contributor to our earnings growth, including transactions that closed just after the third quarter ended.\nGetty has acquired 32 properties for approximately $140 million so far this year.\nThese high quality assets are located in numerous markets across the country and include portfolios of both convenience and gas assets as well as car washes.\nWhile the COVID-19 pandemic cause disruptions in transaction activity across the commercial real estate sector, Getty has been able to maintain momentum and close on several opportunities which we had underwritten earlier in the year.\nIn addition, as Mark will mention, we completed our redevelopment project with 7-Eleven and the Dallas-Fort Worth MSA for a remodeled convenience and gas location, bringing our total number of completed projects to 2018, since the inception of our redevelopment.\nLet me now share some additional details on Getty's performance during the pandemic.\nFor the third quarter, the performance of the convenience and gas and other automotive asset classes in general and our portfolio more specifically was strong.\nOur collections have continued to improve and in the quarter, we collected 98% of our rent and mortgage payments and agreed to a small number of short-term deferrals for rent and mortgage payments.\nPerhaps more importantly, we received substantially all of the deferred rent and mortgage payments, which were due to be repaid during the third quarter.\nLooking ahead to the fourth quarter, as of today, our collections rate currently remains at 98% for the month of October and we are continuing to collect substantially all the COVID-related rent and mortgage deferrals that were due to be repaid this month.\nAlthough uncertainty remains regarding the forward impact of COVID-19 to the broader economy, we are encouraged by the strength exhibited by our tenants and assets since the beginning of the pandemic.\nWe will continue to be vigilant in monitoring the health of our tenants as we believe the severity of the COVID-19 pandemic on the US economy will continue to impact consumer and retail activity generally and therefore could negatively affect Getty's rent collections and financial results.\nThe operating environment for our tenants remains stressed as many tenants continue to adjust their operations to reflect ongoing health and safety challenges.\nDespite these challenges, most of our properties and tenants have performed well during this difficult time.\nNationally, fuel volumes continue to recover and are now down 17% year-over-year compared to the 50% decline we saw at the height of the pandemic impact during the second quarter.\nIn addition, fuel margins remain elevated on a national basis from comparable periods in 2019, meaning that on average operators are making more money on a cents per gallon basis.\nThe net impact of fuel gross profit remains highly regional with certain of our tenants experiencing year-over-year declines and others reporting increases in annual fuel gross profit.\nThe convenience store side of the business has generally performed well across the Board during the pandemic, with the majority of our tenants reporting that results are slightly ahead of the prior year's performance.\nTo touch on our balance sheet and liquidity position, we ended the quarter with $58 million of cash on hand and $190 million of availability on our revolving credit facility, with some of the cash on hand being used to fund acquisitions we have already closed during the fourth quarter.\nWe believe we have sufficient access to capital at this point in time to execute on our business plan.\nTurning to our dividend, given our performance, I am pleased to report that our Board approved an increase of 5.4% to $0.39 per share in our quarterly dividend.\nThis represents the seventh straight year with a dividend increase.\nOur Board believes this annual increase is appropriate as it maintains a stable payout ratio and is tied to the Company's growth over the past year.\nLooking ahead, while the situation remains fluid, we are continuing to effectively navigate this uncertain environment.\nWe believe that our execution of our strategic objectives over the last several years, the essential nature of our tenants businesses, the net lease structure of our leases and our stable balance sheet all position us well.\nFurthermore, we believe there will continue to be opportunities for Getty to grow its business.\nWe are confident that our targeted investment strategy, which focuses on the largely internet resistant service oriented convenience and gas and other automotive sectors across metropolitan markets in this country will continue to create value for our shareholders over the long term.\nWe remain committed to an active approach in managing our portfolio of net leased assets, expanding our portfolio through acquisitions and selective redevelopment projects.\nWe are confident in our ability to continue to successfully execute on our strategic objectives over the long term.\nThis approach and focus on these critical components should result in driving additional shareholder value as we move through the remainder of 2020 and beyond.\nBefore turning the call to Mark, let me just address our recently announced executive transition.\nDanion Fielding, our CFO, is going to be leaving the Getty team for personal reasons.\nDanion led his team and the Company's finances, and was the key part of Getty's success.\nWe expect that Danion will leave Getty before year end, and we wish his family and him well in his future endeavors.\nThe search is under way and we anticipate a smooth transition of the CFO role.\nIn terms of our investment activities, for the third quarter and the first two weeks of October, we are very active in the transaction market.\nDuring the quarter, we invested $36.1 million for the acquisition of nine properties.\nSubsequent to the end of the quarter, we invested an additional $36.6 million for the acquisition of eight properties.\nThe majority of our completed acquisitions during the third quarter come from an acquisition leaseback transaction with a subsidiary of Go Car Wash.\nThe properties acquired are subject to a unitary triple-net lease with the 15 year based term and multiple renewal options.\nThese properties are located within San Antonio MSA.\nProperties we acquired have an average lot size of 2 acres and an average tunnel length of more than 160 feet, both of which we believe, enhance the quality and diversity of our portfolio.\nWe invested $28 million at closing and expect to generate a cash yield that is in line with our historic acquisition cap rate range.\nAdditionally, we closed on the acquisition of two newly constructed car wash locations in North Carolina and Ohio.\nThe sites are subject to a 15 year triple net lease with Zips Car Wash.\nGetty's aggregate initial cash yield on our second quarter acquisitions was 7.2%.\nSubsequent to the quarter end, we completed a sale leaseback with Fikes Wholesale, one of the leading independent convenience store operators in the Southern United States.\nIn the transaction, Getty acquired Fikes [Phonetic] properties for $28.6 million.\nThe properties acquired are subject to a unitary triple-net lease with a 15 year base term and multiple renewal options.\nThe properties are located throughout the state of Texas.\nThe properties we acquired have an average lot size of 2.7 acres and an average store size in excess of 5,300 square feet which reflect that the assets we acquired have all the attributes of today's modern full service convenience stores.\nOur initial cash yield is in line with our historical acquisition cap rate range.\nWe also closed on the acquisition of two car wash locations in the Kansas City and San Antonio MSA.\nThe sites were added to our 15 year triple net lease with Go Car Wash.\nWe remain highly committed to growing our portfolio in the convenience and gas sector as well as our other oil-related categories including car washes and automotive service centers.\nWhile the COVID-19 pandemic continues to impact the overall transaction market, business conditions for our target asset classes have stabilized and we are seeing an increase in the transaction activity in the marketplace.\nAs a result, we expect that we will remain active in the underwriting and acquiring and inquiring assets.\nGetty will remain committed to its core principles of acquiring high quality real estate and partnering with strong tenants and our target asset classes.\nMoving to our redevelopment platform.\nFor the quarter, we invested approximately $0.6 million in both completed projects and sites which are in progress.\nIn the third quarter, we return one redevelopment project back to our net lease portfolio.\nSpecifically in July, a project was returned to the portfolio in the Dallas-Fort Worth MSA where we leased a site to 7-Eleven for the state-of-the-art convenience and gas location.\nOur total investment in this project is $0.8 million and we expect to generate a return on our investment of 18%.\nIn terms of redevelopment leasing, we ended the quarter with 12 signed leases which includes seven active projects and five signed leases and properties, which are currently subject to triple-net leases, but which have not yet been recaptured from the current tenants.\nAll these projects are continuing to advance through the redevelopment process.\nAgain, I note that due to the impact of the COVID-19 pandemic, we continue to experience delays in certain of our projects as contractor suppliers, municipalities deal with restrictions on business and regulatory activities, social distancing requirements and other impediments to normal function.\nIn total, we have invested approximately $1.5 million in the 12 redevelopment projects in our pipeline.\nWe expect to have one additional rent commencement in Q4 2020.\nFrom a capital investment perspective, we expect that these 12 projects will require total investment by Getty of $7.9 million and will generate incremental returns to the Company in excess of where we could have invested these funds in the acquisition market today.\nWe remain committed to optimizing our portfolio and continue to anticipate redevelopment opportunities over the next five years, possibly involving between 5% and 10% of our current portfolio with targeted unlevered -- unlevered redevelopment program yields of greater than 10%.\nTurning to dispositions, we sold one non-core property during the third quarter, realizing proceeds of approximately $0.2 million.\nWe also exited one property, which we previously leased from a third -- of third-party landlord.\nAs we look ahead, we continue to selectively dispose of properties where we have made the determination that the property is no longer competitive as a C&G location and did not have redevelopment potential.\nAs a result of our activity, we ended the quarter with 939 net lease properties, seven active redevelopment sites and eight vacant properties.\nOur weighted average lease term is approximately 10 years and our overall occupancy excluding active redevelopments increased to 99.2%.\nFor the third quarter, our total revenues were $37.9 million, an increase of 4% over the prior year's quarter and our rental income, which excludes tenant reimbursement and interest on notes and mortgages receivable also grew 5.3% to $31.9 million.\nOur growth and rental income continues to be driven by rent escalated in our leases plus additional rent from recently completed acquisitions and redevelopment projects.\nDuring the third quarter of 2020, we benefited from a reduction in both property costs and environmental expenses offset by an increase in general and administrative expenses due to increases in employee-related expenses and legal and other professional fees.\nOur FFO for the quarter was $20.8 million or $0.48 per share as compared to $19.1 million or $0.46 per share for the prior year's quarter.\nOur AFFO for the quarter was $20.2 million as compared to $18.1 million in the prior year's quarter.\nOn a per share basis, our AFFO was $0.47, up 9% from $0.43 in the prior year.\nTurning to the balance sheet and capital markets activities.\nWe ended the third quarter 2020 with $560 million of total borrowings, which includes a $110 million under our credit agreement and $450 million of long-term fixed rate debt.\nOur weighted average borrowing cost is 4.3%.\nThe weighted average maturity of our debt is 4.5 years with 80% of our debt being fixed rate and our earliest debt maturity remains at $100 million Series A which matures in February 2021.\nWe are in the process of refinancing this upcoming debt maturity and will provide an update at the particular time.\nAs of today, we have $190 million of undrawn capacity on our revolving credit facility, which can be used to fund operations or for growth over the near to medium term.\nAt quarter end, our debt to total capitalization stood at 34%.\nOur debt to total asset value is 41% and our net debt to EBITDA ratio was 4.9 times.\nAdditionally, we utilized our ATM program in the quarter and efficiently raised permanent capital.\nFor the quarter, we raised $27 million at an average price of $29.41 per share, which helped to fund our growth and maintain our low leverage profile.\nWe still have $40 million available to us to fund under our existing at-the-market program.\nAs we look ahead and think about our capital needs.\nWe will remain committed to maintaining a well-laddered and flexible capital structure.\nOn environmental liability ended the quarter at $49 million, down $1.7 million for the year.\nFor the quarter, Company's net environmental remediation spending was approximately $1.4 million [Phonetic].\nWhile our tenants in Getty have fared well so far through the COVID-19 pandemic, uncertainties persist with the rest of possible reimplementation of shelter-in-place restrictions and the length and depth of economic impact to the US economy and businesses.\nWe withdrew our 2020 AFFO per share guidance range in conjunction with our first quarter 2020 results, and given the continued uncertainty related to the COVID-19 pandemic, we are not reinstating guidance at this time.\n",
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"content": "getty realty increases quarterly dividend by 5% to $0.39 per common share.\ngetty realty corp - increases quarterly dividend by 5% to $0.39 per common 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 caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.\nWith Josh and me on the call today are Mark Olear, our Chief Operating Officer; and Brian Dickman, our Chief Financial Officer.\nI will lead off today's call by providing an overview of our performance for the third quarter of 2021 and highlight the company's investment and capital markets activities.\nAnd then I'll pass the call to Mark and Brian to discuss our portfolio and financial results in more detail.\nThe net result of our well-positioned in-place portfolio and the continued execution of our active and accretive investment program was a 5.8% increase in total revenues, a 13.2% increase in adjusted funds from operations, and a 6.4% increase in AFFO per share.\nThe company benefited from the stability of its portfolio of convenience and automotive retail assets, which continued to perform well, meaning that we had another quarter of full rent collections, including all amounts owed to us as a result of our 2020 COVID-related rent deferments.\nThe success of our investment strategies year-to-date has been a key contributor to our earnings growth.\nWe invested $61.1 million in 25 properties during the quarter, and another $8.8 million just after quarter-end, bringing our year-to-date total investment activity to more than $144 million.\nThis accelerated pace of investment activity was highlighted by our ability to bring new high-quality tenants into our portfolio, including Flash Market with sites located across the Southeastern U.S. and Splash Carwash, whose footprint spans the Northeast.\nWe also continue to successfully execute on our multiple investment strategies, which include [Indecipherable] leasebacks, accretive acquisitions of net leased properties, and development funding for new industry assets.\nIn addition, rent commenced on three redevelopment projects during the quarter including our second and third projects, with 7-Eleven for remodeled C&G locations in the Baltimore and Dallas-Fort Worth MSAs, bringing our completed projects to 22 since the inception of our redevelopment program.\nWe also announced yesterday that we successfully amended and extended our $300 million credit agreement, which now will mature in October 2021.\nThe improved terms of our facility further validate the company's platform and strong performance over the last several years.\nWhen combined with our active ATM program, which we've used to raise more than $50 million this year, and our strong balance sheet, we continue to have access to capital and the right credit profile to support our growth objectives.\nGiven our performance year-to-date, I am pleased that our Board approved an increase of 5.1% in our recurring quarterly dividend to $0.41 per share.\nThis represents the eighth straight year with a dividend increase.\nOur Board believes this annual increase is appropriate, as it maintains a stable payout ratio and is tied to the company's growth over the past year.\nFurthermore, we are again pleased that our year-to-date accretive investment activity has positioned the company to raise its 2021 AFFO per share guidance.\nI want to reiterate our commitment to effectively executing on both new investment activity and the active asset management of our portfolio.\nOur teams continue to work diligently to source and underwrite new opportunities to invest across our target asset classes including convenience stores, car washes, automotive-related retail properties in strong metropolitan markets across the country as well as to unlock embedded value through selective redevelopments.\nWe believe our success year-to-date demonstrates our ability to source opportunities that align with our investment strategies, and that will continue to drive additional shareholder value.\nAs of the end of the third quarter, our portfolio includes 1,011 net lease properties, five active redevelopment sites, and five vacant properties.\nOur weighted average lease term was approximately 8.8 years, and our overall occupancy, excluding active redevelopments, remains constant at 99.5%.\nOur portfolio spans 36 states across the country plus Washington, D.C., and our annualized base rents, 63% of which come from the top 50 MSAs in the U.S., continue to be well covered by our trailing 12-month tenant rent coverage ratio of 2.6 times.\nIn terms of our investment activities, we had a highly successful quarter in which we invested $61.1 million in 25 properties.\nSubsequent to the quarter-end, we acquired two additional properties for $8.8 million, bringing our year-to-date investment activity to $144.5 million across 82 properties.\nWe completed two transactions in the convenience and gas sector during the quarter.\nThe first was a 15 property sale-leaseback with Flash Market, a subsidiary of Transit Energy Group.\nIn this transaction, we invested $35.1 million to acquire the properties, which are located throughout the Southeast United States with a concentration around the Raleigh-Durham, North Carolina MSA.\nProperties acquired have an average store size of 3,600 square feet and an average property size of 1.7 acres.\nIn addition, 53% of the properties have sub-tenancies with either quick-serve restaurants or auto service operators.\nWe also completed our first development funding project with Refuel in the Charleston, South Carolina MSA.\nOur total investment in the project was $4.5 million, including our final investment of $1.1 million during the third quarter.\nAs per the terms of our development funding transactions, we acquired the property upon completion of development in conjunction with our final funding payment and simultaneously entered into a long-term triple net lease.\nIn the carwash sector, we completed three transactions in the quarter.\nWe acquired two newly constructed properties from WhiteWater Express carwash in Michigan for $7 million.\nThese properties were added to our existing unitary lease with WhiteWater.\nWe also acquired two additional properties for an aggregate purchase price of $8 million, which are leased to Go Car Wash in San Antonio, Texas, and Las Vegas, Nevada MSAs.\nAdditionally, we acquired our first property with Splash car wash, which is located in New Haven, Connecticut MSA.\nOur purchase price was $4 million for the property.\nIn the auto service sector, we acquired our first Mavis Tire property.\nWe invested $4.6 million to acquire the properties in the Chicago, Illinois MSA.\nGetty also advanced $1.2 million of development funding from three new industry convenience stores with Refuel in the Charleston, South Carolina MSA, bringing the total amount funded by Getty for these projects to $8.9 million at quarter-end.\nAs part of this transaction, we will accrue interest on our investment during the construction phase of the project, and we will expect to acquire the properties via sale-leaseback transaction upon completion and final funding.\nThe weighted average initial lease term of our completed transactions for the quarter was 14.6 years, and our aggregate initial cash yield on our third quarter acquisitions was 6.7%.\nSubsequent to quarter-end, we acquired two properties in the Boyington, Vermont MSA from Splash Carwash.\nPurchase price was $8.8 million, and the cap rate was consistent with our year-to-date acquisition activity.\nWe ended the quarter with a strong investment pipeline and remain highly committed to continuing to grow our portfolio of convenience and automotive retail real estate, and we expect to pursue that growth through continued sourcing of direct sale-leaseback, acquisitions of net lease properties, and development funding for new-to-industry assets.\nMoving to our redevelopment platform.\nDuring the quarter, we invested approximately $331,000 in both completed projects and sites, which remain in our pipeline.\nIn addition, rent commenced on three redevelopment projects during the quarter, including two 7-Eleven convenience stores and one property leased to BJ's Wholesale Club, which is adjacent to one of our newly constructed superstores.\nIn aggregate, we invested $0.5 million in these three projects and generate a return on investment capital of 43%.\nAt quarter-end, we had eight signed leases or letters of intent, which includes five active projects and three projects at properties, which are currently subject to triple net leases and have not yet been recaptured from the current tenants.\nThe company expects rent to commence at two additional development sites during the fourth quarter of 2021.\nIn total, we have invested approximately $1.9 million in eight redevelopment projects in our pipeline and estimate that these projects will require a total investment by Getty of $7.4 million.\nWe project these redevelopments will generate incremental returns to the company in excess of where we can invest these funds in the acquisition market today.\nTurning to our asset management activities for the quarter.\nWe sold one property during the quarter, realizing $2.3 million in gross proceeds, and exited five lease properties.\nWe expect the total net impact of these activities will have de minimis impact on our financial results.\nAs we look ahead, we will continue to selectively dispose the properties that we determine are no longer competitive in their current format or do not have compelling redevelopment potential.\nLet me start with a recap of earnings.\nAFFO, which we believe best reflects the company's core operating performance, was $0.50 per share for the third quarter, representing a year-over-year increase of 6.4%.\nFFO was $0.48 per share for the quarter.\nOur total revenues were $40.1 million, representing a year-over-year increase of 5.8%.\nRental income, which excludes tenant reimbursements and interest on notes and mortgages receivables was 7.5% to $34.3 million.\nStrong acquisition activity over the last 12 months and recurring rent escalators in our leases were the primary drivers of the increase, with additional contribution from rent commencements at completed redevelopment projects.\nOn the expense side, G&A costs increased in the quarter, primarily due to employee-related expenses, including noncash and stock-based compensation.\nProperty costs decreased marginally due to reductions in real estate tax expense and environmental expenses, which are highly variable due to a number of estimates and non-cash adjustments, increased in the quarter due to certain legal fees and changes in net remediation costs and estimates.\nWe turn to the balance sheet and our capital markets activities.\nWe ended the quarter with $567.5 million of total debt outstanding, including $525 million of long-term fixed-rate unsecured notes and $42.5 million outstanding on our $300 million revolving credit facility.\nOur weighted average borrowing cost was 4% and the weighted average maturity of our debt was 6.3 years.\nIn addition, our total debt to total market capitalization was 29%.\nOur total debt to total asset value was 37%, and our net debt-to-EBITDA was 5.1 times.\nEach of these leverage metrics are calculated according to the definitions in our loan agreements.\nAs Chris mentioned, yesterday, we announced the amendment and extension of our $300 million revolving credit facility, which is now set to mature in October 2025, with two 6-month extensions, where we have the option to extend to October 2026.\nIn addition to extending the term, we were able to reduce the interest rate by 20 to 50 basis points, depending on where we are in the leverage-based pricing grid, and amend certain covenant provisions to align with those generally applicable to investment-grade rated REITs.\nWe also amended each of our outstanding unsecured notes to conform to the new credit facility covenant provisions.\nAll in all, this is a good transaction for Getty.\nWe reduced our cost of capital, improved some terms, and importantly, demonstrated the continued support of our bank group and unsecured noteholders.\nWith the credit facility extended, our nearest debt maturity is now the $75 million of senior unsecured notes that come due in June of 2023.\nMoving to ATM activity.\nWe continue to be selective with our equity issuance during the quarter, raising $19.8 million at an average price of $31.12 per share.\nYear-to-date, we raised a total of $50.1 million through the ATM.\nWe think about our future capital needs more broadly, we remain committed to maintaining a strong credit profile with meaningful liquidity and access to capital, low-to-moderate leverage, and a well-laddered and flexible balance sheet.\nWith respect to our environmental liability, we ended the quarter at $47.8 million, which was a decrease of approximately $300,000 from the end of 2020.\nFor the quarter, net environmental remediation spending was approximately $1.3 million.\nAnd finally, as a result of our investment in capital markets activities in the first nine months of the year, we are raising our 2021 AFFO per share guidance to a range of $1.93 to $1.94 from our previous range of $1.89 to $1.91.\nOur guidance includes transaction activity completed year-to-date but does not otherwise assume potential acquisitions or capital markets activities for the remainder of 2021.\nFactors which may impact our guidance include variability with respect to certain operating costs and our expectation that we will remain active in pursuing acquisitions and redevelopments, which could result in additional expenses, including certain property demolition costs and transaction costs for deals that are ultimately not completed.\n",
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"content": "q3 adjusted ffo per share $0.50.\nq3 ffo per share $0.48.\nincreasing its 2021 affo guidance to a range of $1.93 to $1.94 per diluted 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 caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially.\nWith Josh and me on the phone today are Mark Olear, our Chief Operating Officer, and Brian Dickman, our new Chief Financial Officer.\nI've known Brian for many years and we are all enjoying working with him and looking forward to his contributions at Getty for years to come.\nI'll begin today's call by providing an overview of our fourth quarter and full-year 2020 performance, update everyone on our business in the context of the ongoing COVID-19 pandemic, touch on our 2021 strategic objectives and then we'll pass the call to Mark and Brian to discuss our portfolio and financial results in more detail.\nWe closed out 2020 with a highly productive quarter, which saw each aspect of our business pose significant accomplishments.\nDuring the year, we maintained high monthly rent collections and stable occupancy in our portfolio, acquired 34 properties and completed six redevelopment projects.\nThe net result was the continued growth of both our revenues from rental properties, which increased by 3.5% for the quarter and 5% for the year.\nAnd our adjusted funds from operations per share, which grew by 12% for the quarter and 7% for the year.\nIn a normal year, we'd be proud to report on this growth.\nWhen you consider the countless challenges brought upon us by COVID-19, I can say with great satisfaction that these results were only possible due to the extraordinary efforts put forth by the entire Getty team this year.\nI believe these results reflect the value of our portfolio and combined with our strong and flexible balance sheet and growing pipeline of investment prospects position the Company well for success as we work toward 2021 and beyond.\nI'm pleased to report that our fourth quarter results continue to demonstrate the stability of our triple-net lease rents and growth platform.\nOur portfolio of convenience stores, gas stations and other automotive assets produced another strong quarter of rent collections, operating performance and growth at Getty.\nWe saw the rent collection rate increase to 98.7% and we collected substantially all of the deferred rent and mortgage payments that were due to us in the fourth quarter.\nWe entered 2021 with a small balance of COVID-related deferrals, which we expect to collect throughout this year.\nIn addition, Getty completed several leasing and disposition transactions in the quarter, which we -- which will serve to stabilize the small number of assets where we were experiencing difficulties with rent collections.\nLooking ahead, although uncertainty remains regarding the forward impact of COVID-19 to the broader economy, we are encouraged by the strength exhibited by our tenants and assets since the beginning of the pandemic.\nWe will continue to be vigilant in monitoring the health of our tenants as we believe the severity of the COVID-19 pandemic on the US economy will continue to impact the consumer and retail activity through at least the first half of 2021, and therefore, could negatively affect Getty's rent collections and financial results.\nThe execution of the Company's acquisition strategy was an important driver of Q4 and full year 2020 performance.\nFor the quarter, Getty acquired 10 properties for $45.1 million and for the year, we acquired 34 properties for $150 million, which represents significant growth over the Company's acquisition activity in the prior year.\nThese high-quality assets are located in numerous markets across the country and include portfolios of both convenience stores which offer consumers food, traditional merchandise and fuel as well as car washes.\nWe also continued the momentum of our redevelopment program as we completed our third project with AutoZone, bringing our total of completed projects for the year to six.\nWe are closing in on completing 20 projects since the inception of our redevelopment strategy further demonstrating the value of the real estate we hold in our portfolio.\nOur balance sheet also ended 2020 in excellent condition as we successfully issued a $175 million, 3.4% debt private placement in December and we issued approximately $65 million of equity under our ATM program during the year.\nOur leverage continues to be less than 5 times and with a revolver that is almost completely undrawn, Getty has significant capacity to fund its growth plans.\nAs we enter 2021, we feel encouraged about our portfolio of nearly 1,000 properties.\nThe convenience store industry and other automotive businesses are essential and largely internet resistant.\nOur rents 65% of which come from the top 50 MSAs in the US continue to be well covered.\nIn fact, despite COVID-related challenges, our rent coverage ratio remained stable throughout the year and ended 2020 at a healthy 2.6 times.\nOur portfolio is built around serving the needs of the car driving individual and it's continuing to do so whether it's stopping for convenience store items, fuel, getting snacks, meals, or getting your car washed or reserviced.\nThese are needs that continue to be in high demand today and which we believe will be stable for the mobile consumer for years to come.\nOur team is more focused than ever on executing our growth initiatives, including maximizing the quality of our input portfolio through continued active asset management, enhancing our portfolio through accretive acquisition in stores and other automotive assets which serve the mobile consumer and unlocking embedded value through our selective redevelopments.\nWe are confident in our targeted investment strategy, which focuses on acquiring high-quality real estate in Metropolitan markets across the country and in our ability to continue to successfully execute on these strategic objectives.\nOur approach and focus on driving growth should result in driving additional shareholder value as we move through the remainder of 2021 and beyond.\nDuring 2020, Getty's underwriting of potential transactions grew as we added resources to focus on convenience store and other automotive opportunities.\nFor the year, we reviewed approximately $2.1 billion of opportunities, which met our initial screen process.\nConvenience store opportunities represented 62% and other automotive represented 38% of the total.\nAs Chris mentioned, we remain highly committed to growing our portfolio in terms of both the convenience store industry, which offers consumers food, traditional merchandise and fuel, and with other automotive-related assets that are tied to mobile consumer spending.\nGoing forward, we anticipate growing both areas of our underwriting platform as we view the businesses as highly complementary and the underwriting characteristics to be very similar.\nTo review a few highlights of our investment activities, for the fourth quarter, we invested $45.1 million in 10 highly -- high quality convenience store and car wash assets.\nIn October, we completed a sale-leaseback with CEFCO Convenience Stores, one of the leading independent convenience store operators in the Southern United States.\nIn this transaction, Getty acquired six properties for $28.7 million, all of located throughout the state of Texas.\nThese properties are subject to unitary triple-net lease with a 15-year base term and multiple renewal options.\nThey have an average lot size of 2.7 acres and an average store size in excess of 5,300 square feet, which reflect that the assets we acquired have all the attributes of today's modern full service convenience store.\nOur initial cash yield is in line with our historical acquisition cap rate range.\nIn addition, we acquired four car wash assets in individual transactions with Go Car Wash and Zips Car Wash for $16.4 million in the aggregate.\nFor the year, we acquired 34 properties for $150 million.\nOur weighted average initial return on acquisitions for the year was 7%.\nFinally, the weighted average initial lease term of the properties acquired for the year was 14.6 years.\nOverall, our acquisition team remains busy sourcing and underwriting potential investments and we continue to feel strongly that the volume of opportunities we are underwriting will produce additional growth as we progress through this year.\nWe expect that our future acquisition activity will remain focused on the convenience store and other automotive sectors and that we will pursue direct sale-leasebacks, acquisitions of net leased properties and funding for new to industry construction.\nFinally, we remain committed to our core underwriting principles of acquiring high quality real estate and partnering with strong tenants in our target asset classes.\nMoving to our redevelopment platform.\nFor the year, we invested approximately $2.9 million in both our completed projects and sites which are in progress.\nIn the fourth quarter, we returned one redevelopment project back to the net lease portfolio bringing our total for completed rent commencement projects to six in 2020 and 19 since the inception of our program.\nSpecifically, in October, rent commenced on project with AutoZone in New Jersey.\nIn this project, we invested $0.2 million and we expect to generate a return on our investment of more than 45%.\nIn terms of redevelopment projects, we ended the quarter with 10 signed leases or letters of intent, which includes six active projects and four signed leases on properties, which are currently subject to triple-net leases, but which have not yet been recaptured from the current tenants.\nWe expect to have rent commencements at several sites during 2021 with remainder completing within three years.\nOn the capital spending side, we have invested approximately $1.8 million in the 10 redevelopment projects in our pipeline and estimate that these projects will require total investment by Getty of $5.8 million.\nWe project these redevelopments will generate incremental returns to the company in excess of where we could invest these funds in the acquisition market today.\nWe remain committed to optimizing our portfolio and continue to anticipate redevelopment opportunities over the next five years, possibly involving between 5% and 10% of our current portfolio with targeted unlevered redevelopment program yields of greater than 10%.\nWe sold 11 properties during 2020 realizing proceeds of approximately $6 million.\nThese properties are sold -- sold were vacant or returned to us by tenants for the terms of their lease agreements.\nWe expect the net financial impact of these dispositions will be minimal.\nIn addition, during the year, we exited 10 properties, which we previously leased from third-party landlords.\nAs we look ahead, we will continue to selectively dispose of properties where we have made the determination that the property is no longer competitive as a convenience store location or does not have redevelopment potential.\nThe net result is our portfolio is now 35 states plus Washington DC and 65% of our annualized base rent comes from the top 50 national MSAs.\nWe ended the year with 946 net lease properties, six active redevelopment sites and seven vacant properties.\nOur weighted average lease term is approximately 9.5 years, and our overall occupancy, excluding active redevelopments, increased to 99.3%.\nI'm excited to be here with Chris, Mark, Josh and the rest of the Getty team and I look forward to interacting with all of you going forward.\nI'll start with a recap of earnings.\nHopefully, everyone's had a chance to see yesterday's release.\nAFFO, which we believe best reflects the Company's core operating performance, was $0.48 per share for the fourth quarter and $1.84 per share for the full year, representing year-over-year increases of 12% and 7% respectively.\nFFO was $0.91 per share for the fourth quarter and $2.32 per share for the full year.\nBoth periods were impacted by non-recurring legal settlement in the company's favor.\nOur total revenues were $37.1 million in the fourth quarter and $147.3 million for the full year, representing year-over-year increases of 3.3% and 4.7% respectively.\nRental income, which excludes tenant reimbursements and interest on notes and mortgages receivables grew 3.9% to $31.8 million in the fourth quarter and 7.1% for the full year to $128.2 million.\nAcquisition activity, rent escalators in our leases, and the completion of redevelopment projects, all contributed to the growth in our rental income.\nOn the expense side, we benefited from a reduction in property costs in both the fourth quarter and full year, primarily due to decreases in third-party rent expense and professional fees related to property redevelopments.\nEnvironmental expenses increased in the fourth quarter versus the prior year, although the amounts were credits in both periods, a decrease for the full year versus 2019.\nEnvironmental expenses are subject to a number of estimates and non-cash adjustments and continue to be highly variable.\nG&A expenses increased in both the fourth quarter and full year primarily due to increases in employee-related expenses, including stock-based compensation and certain legal and other professional fees.\nAs previously mentioned, in the fourth quarter, we had a non-recurring benefit of $20.5 million as a result of the settlement of a litigation matter.\nTurning to the balance sheet and our capital markets activities.\nDuring the fourth quarter, we issued $175 million of new 10-year unsecured notes at 3.43% via direct private placements at three life insurance companies.\nWe used the proceeds to retire the full $100 million outstanding under our 6% Series A notes, which were coming due in early 2021 and to repay borrowings under our credit facility.\nAs a result of this transaction, we incurred a $1.2 million debt extinguishment charge which is included in GAAP net earnings and FFO.\nWe are also active with our at-the-market equity program during the quarter, raising $25.1 million at an average price of $28.45 per share.\nFor the full year, we raised $64.4 million through the ATM at an average price of $29.16 per share, which helped to fund our growth and maintain our low leverage profile.\nAs of December 31, we had total debt outstanding of $550 million, including $25 million outstanding under our credit facility and $525 million of long-term fixed rate unsecured notes.\nOur weighted average borrowing cost was 4.1% and the weighted average maturity of our debt is 7.3 years.\nIn addition, our total debt to total market capitalization was 32%, our total debt to total asset value was 40% and our net debt to EBITDA is 4.9 times.\nWith no debt maturities until June of 2023, other than our credit facility, which matures in March of next year that has a one-year extension option in our election.\nAs we look ahead and think about our capital needs, we remain committed to maintaining a conservative, well-laddered and flexible capital structure.\nWith respect to our environmental liability, we ended the quarter and year at $48.1 million, which was down $2.6 million from the end of 2019.\nFor the fourth quarter and full year, net environmental remediation spending was approximately $1.6 million and $6.4 million respectively.\nAnd finally, we are introducing our 2021 AFFO per share guidance at a range of $1.86 to $1.88 per share.\nOur guidance includes transaction activity today but does not otherwise assume any potential acquisitions or capital markets activities for the remainder of 2021.\nSpecific factors, which impact our guidance this year include the full year impact of our 2020 investment and capital raising activities, our expectations that operating cost will generally continue to increase, our expectation that we will forego rent when we recapture properties for redevelopment and our expectation that we will remain active in pursuing acquisitions and redevelopment, which could result in additional expenses for deals ultimately not completed.\n",
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"content": "q4 adjusted ffo per share $0.48.\nq4 ffo per share $0.91.\nestablished 2021 affo guidance at a range of $1.86 to $1.88 per diluted share.\nqtrly total revenues $37.1 million versus $35.9 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: I'm pleased to be here today with Granite President, Kyle Larkin; and Executive Vice President and Chief Financial Officer, Lisa Curtis.\nWe begin today with an overview of the company's Safe Harbor language.\nActual results could differ materially from statements made today.\nCertain non-GAAP measures may be discussed during today's call, and from time to time, by the company's executives.\nThese include but are not limited to adjusted EBITDA, adjusted EBITDA margin, adjusted net income or loss and adjusted earnings or loss per share.\nAlthough it was a difficult decision, we concluded that it was in the best interest of the company, as well as our shareholders to move forward.\nFollowing court approval, we will be able to put this litigation behind us and focus on our business and people.\nGranite portion of the settlement is insurance is $66 million and we expect it to be paid from existing cash on hand.\nAs Lisa will explain in further detail later in the call, despite this event, our liquidity and cash position remains strong.\nAs I've discussed in previous calls, our core values guide us in our day-to-day operations and are serving as the foundation of our cultural reinvigoration.\nOn the last call, I provided an overview of our sustainability core value and the efforts that are under way to drive sustainability forward at Granite.\nToday, I will touch on two more of our core values; safety and inclusion, and how we are integrating them into our day-to-day operations to drive desired behaviors.\nGranite's choice to continue to include safety as a core value is embedded in our culture and reflects our belief that the safety and well-being of our people, our partners and the public is our greatest responsibility.\nEvery level of our organization supports our safety culture with training, planning and engagement.\nWe approach every task with safety built into the process, and we do not sacrifice anyone safety to get the job done.\nWhile safety is front of mind every day at Granite, it is particularly timely to talk about our safety commitment on the heels of safety week, which is just concluding today.\nSafety week is an industry wide national event, and Granite was one of the founding members almost a decade ago.\nAcross the country on Granite projects and in our offices, we conduct daily activities to reinforce and strengthen our commitment to safety.\nThis week, I had the opportunity to visit Granite project teams and take part in safety meetings across the country.\nThe planning and attention to detail that our teams presented in these safety meetings are impressive and demonstrate our focus on safety.\nInclusion is a core value that was added this year, but it's been an important focus since 2019.\nSince it's a new core value, we want to provide additional details as to why we chose to recognize the importance of inclusion.\nInclusion is how we build value in our company by welcoming contributions from all of our employees.\nOur differences enhance creativity and innovation to create a high performance culture and have a positive impact on how we achieve our business goals and objectives.\nAt Granite, when we know the value of inclusion, we value and respect the workforce diverse and perspective, experience, knowledge and culture, and we are committed to an inclusive environment in which everyone feels a sense of belonging and can grow.\nTo live this value, we must understand a couple of things.\nFirst, we know that diversity is the mix of our employees, our clients and our community and inclusion is how we make that makes work.\nWe have made significant progress in our inclusive diversity journey, starting with our employee resource groups, Granite Resources and Opportunities for Women or GROW, and supporting and recognizing the veteran community for service.\nGROW advocates for and supports women who're mentoring, networking in career development, service supports and recognize employees that have served, and friends and family members employees that have served, and all branches of the military.\nWe have also established executive inclusive diversity and multicultural councils, conducting leadership training and establishing relationships with historically black colleges and universities.\nIn 2020, we had over 200 interns, and more than half were diverse.\nIn addition, 1/3 of our executive team and nearly half of our Board of Directors are diverse.\nLooking forward, we will continue to create clarity around inclusive diversity by having dialogue concerning how we can be more inclusive.\nWe will continue to develop talent and strengthen our talent pipeline at all levels, with a focus on women and people of color.\nAnd we will continue to build capability to training leaders and employees to challenge ourselves to be more inclusive.\nWe know that having an inclusive environment doesn't happen overnight, it happens over time.\nI'm proud of our inclusion efforts and I'm excited about the culture we are creating here at Granite.\nLet's switch gears and talk about our business segments starting with transportation.\nThe first quarter is typically our slowest quarter with cold and wet weather regularly hampering work in many of our markets.\nEven with the challenges of weather, I am pleased with the performance of the segment, not only on the top line, but also at the gross profit level due to good execution across our operating groups.\nSome good news to share.\nWe continue to burn through the backlog of Heavy Civil Operating Group Old Risk portfolio with a minimal impact to gross profit during the quarter.\nThis was a marked improvement over the last two years.\nThe remainder of the segment, which is primarily comprised of vertically integrated projects also completed a solid first quarter, setting the stage for a busy remainder of the year.\nThe bidding environment is strong with robust opportunities in our markets, resulting in an increase in our bid volume year-over-year.\nWhile we routinely share information about our larger project wins, we also continue to have success in winning the smaller to medium sized projects that are the foundation of our portfolio.\nThe first quarter of the year is historically a very competitive bid environment with contractors more aggressively bidding to build backlog early in the year.\nWe have seen this dynamic in the first quarter of 2021.\nWe've increased bid volume and strong competition.\nAs anticipated, transportation committed and awarded projects or CAP, decreased year-over-year with the shift in the portfolio as Heavy Civil Operating Group cap is burned and replaced with cap from our vertically integrated businesses, including best value procurement work.\nThe extension of the FAST Act, the $13.6 billion infusion to the Highway Trust Fund for 2021 and the enactment of Coronavirus relief bills have combined to provide direct and indirect support for transportation funding.\nFunding is positive across our markets and we are hopeful that a federal infrastructure bill will be signed into law this year.\nTurning to the water segment.\nIn the first quarter, we continue to see a recovery from the pandemic, but the deep freeze in Texas during the quarter interrupted the supply chain, resulting in a spike in resin costs.\nResin is a product used in our torrentuous, secured [Phonetic] in place pipe rehabilitation business Granite Inliner.\nAlthough this segment was hardest hit by the pandemic, we are seeing an increase in bid opportunities, positive indication for the remainder of the year.\nAs a result, water segment cap remains strong as of the end of the first quarter at $339 million.\nThis figure does not include the recently awarded Leon Hurse Dam project in Texas for approximately $160 million, which will be included in our second quarter cap.\nThis award is a component of the overall Lake Ralph Hall project, which will be one to Texas newest lakes and one of the state's biggest water projects in the last 30 years.\nGranite has a long history of working on complex dam projects and we are proud to continue this work on the Leon Hurse Dam.\nAll levels of the government recognize the critical need to repair and support water infrastructure across the country, as seen in the ongoing discussion with the federal infrastructure bill and the Senate recently passed $35 billion water infrastructure bill.\nWe have been successful in winning water infrastructure projects and there are multiple opportunities in the water market that Granite is currently pursuing.\nWe believe we are well positioned to continue to procure work in this area.\nMoving on to the specialty segment.\nOur team has turned in a solid quarter and ended with a record cap of over $1 billion.\nIn the first quarter, we added to cap a significant new $267 million tunnel project in Columbus, Ohio.\nWe are excited to continue our relationship with the City of Columbus, where we successfully completed a large tunnel project just a couple of years ago.\nAdditionally, operating groups continue to foster new relationships, as well as build upon existing relationships to expand our footprint with both public and private clients.\nRecent project wins include several projects with a variety of mining clients in different geographies across our business; a project to establish a new rail yard in the Port of Stockton, California; and a federal project to expand a military facility in Guam.\nBoth the private and public markets within the diverse specialty segment continue to be strong, with investment driven by the overall positive economic outlook.\nThe segment is a growing area of our business and we look for that to continue in 2021 and beyond.\nMoving on to the material segment.\nThe first quarter results were terrific in our seasonally slowest quarter.\nWe ended the quarter with significantly higher material orders compared to the prior year, which resulted in higher sales volumes in 2021 led by the California operating group.\nAs of the end of the quarter, materials orders continue to outpace the prior year with strong demand in both California and Northwest operating groups.\nThis demand is a positive indicator for the remainder of 2021; not only in the material segment, but also for our vertically integrated construction businesses.\nAs of the end of the first quarter, our consolidated cap is $4.5 billion, an increase during the quarter of over $170 million compared to year-end levels.\nCap in our Specialty and Water segments continues to grow as we pursue end market diversification.\nThe old risk portfolio, design build cap, continues to decline as our risk profile has transformed following our new project selection criteria.\nAnd finally, our cap portfolio is more evenly distributed across operating group geographies.\nAs I mentioned on previous calls, we have been transforming our cap portfolio focused on reducing risk.\nOur teams have made significant progress and continue to execute on our plan.\nStarting with revenue and gross profit.\nThe first quarter delivered strong results on both measures.\nFirst quarter consolidated revenue grew 5% year-over-year to $670 million with gross profit increasing 166% year-over-year to $63 million with a gross profit margin of just under 10%.\nWithin our transportation segment, revenue was up slightly year-over-year to $351 million, led by an increase from the California Operating Group, which offset a revenue decrease from the Heavy Civil Operating Group.\nTransportation gross profit for the quarter increased 41% to $36 million, resulting in a gross profit margin of 10%.\nThe increase in gross profit was primarily due to a decrease in project losses from the Heavy Civil Operating Group Old Risk portfolio.\nLosses from the Old Risk portfolio in the first quarter of 2021 under $1 million, compared to losses of $13 million in the first quarter of 2020.\nThe Old Risk portfolio, backlog decreased by nearly $100 million during the quarter, which is on pace to meet our estimated project burn of $425 million to $475 million during 2021 that I mentioned in our last call.\nOur team's execution in the first quarter, serve to mitigate exposure in the old risk portfolio, and we are optimistic this will continue in the future.\nIn our water segment, first quarter revenue was down 2% year-over-year as the segment continued its recovery from the COVID-19 pandemic.\nWater gross profit for the first quarter decreased to 8% to $9 million, resulting in a gross profit margin of 9%.\nThis decrease in gross profit was primarily due to temporarily higher resin costs and Granite Inliner associated with supply chain disruptions due to winter weather events in Texas.\nMoving on to the Specialty segment.\nFirst quarter revenue increased 17% year-over-year to $156 million.\nSpecialty gross profit increased 262% to $17 million with a gross profit margin of 11%.\nAs a reminder, there was a significant write down during the first quarter of 2020 related to a dispute on a tunneling project, which reduced gross profit in the prior year.\nFinally, the Materials segment completed an exceptional first quarter with a revenue increase of 26% year-over-year to $63 million in 2021.\nThis increase was largely due to strong sales volumes in the West.\nMaterials gross profit increased to $2 million, resulting in a gross profit margin of just under 3% as compared to breakeven in the prior year.\nThis increase in the gross profit was also primarily related to higher volumes across the business.\nTurning now to our non-GAAP financial metrics.\nAdjusted EBITDA for the first quarter increased $35 million year-over-year to $17 million, resulting in an adjusted EBITDA margin of over 2% for the quarter.\nThe increase in adjusted EBITDA was driven in part by improvement in project execution, as we continue to burn through the Heavy Civil Operating Group Old Risk gross portfolio during the first quarter of 2021.\nIn addition, we also benefited from improvements in gross profit in the Specialty and Materials segments year-over-year.\nOur first quarter resulted in an adjusted net loss of $5 million, which was a $27 million improvement from an adjusted net loss of $32 million in the prior year.\nAs a reminder, these non-GAAP financial metrics are adjusted to exclude other costs, which includes the impact of the legal settlement and legal and accounting fees, non-cash impairments of goodwill, transaction costs and amortization of debt discount.\nNow turning to cash and liquidity.\nWe had another strong cash quarter with cash from operations of $38 million and a net increase in cash during the quarter of $17 million compared to year-end.\nThis was an outstanding result for the first quarter of the year.\nWe ended the first quarter with cash and marketable securities of over $464 million and our teams remain focused on working capital management.\nUpon court approval and finalization of the securities litigation settlement, we expect to pay our portion from existing cash on hand.\nWhile we anticipate seasonal cash trends to be consistent with prior year patterns, our 2021 cash projections for the remainder of the year remains solid.\nWith the completion of the first quarter, we are reiterating our guidance for the full fiscal year 2021.\nThere are opportunities within each of our markets and very active bid schedules across the company.\nWe believe we can capitalize on these opportunities to achieve low to mid-single digit revenue growth.\nSG&A increased $2.5 million year-over-year to $76 million, which was 11.3% of revenue for the first quarter.\nThis increase was primarily attributable to a change in the fair market value of our non-qualified deferred compensation plan liability of $5 million year-over-year.\nThis increase is offset by corresponding investment gains and other income and expense, net.\nFor the full year, our guidance is unchanged with an expected SG&A expense of 8.5% to 9% of revenue.\nDuring the first quarter, we had solid execution across all groups and segments.\nWe expect this execution will allow us to achieve an adjusted EBITDA margin range of 5.5% to 7.5%.\nLet me close with the following points.\nIn what is typically a seasonally tough quarter, we are pleased with our first quarter performance across the company.\nOur teams have done a great job maintaining focus on execution, particularly in the oil risk portfolio.\nWe believe the Securities litigation settlement is in the best interest of the company-hander shareholders.\nThis will allow us to focus on execution in 2021 as we work to refresh our longer-term strategic plan.\nAcross our markets, we are seeing a healthy bidding environment, but we have opportunities to continue the transformation of our portfolio and build quality cap.\nFinally, we are optimistic about the funding environment.\nThe economy appears to be strong with continued investment from the private market and public funding environment.\nThe public funding environment has been supported by direct and indirect infrastructure legislation from several different measures and we remain hopeful the enactment of a federal infrastructure bill will occur this year and will serve to further strengthen the environment in 2021 to 2022 and beyond.\n",
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"content": "company reaffirms our guidance 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: Actual results may differ materially as a result of various risks and uncertainties, including those detailed in our SEC filings.\nToday, I'll provide an overview of our second quarter results and progress toward our goals as the economy recovers.\nBefore we get into details on the quarter, I'd like to spend a moment highlighting our Grainger Edge framework.\nTwo years ago, we launched this framework that defines who we are, why we exist and where we're going.\nIt covers our purpose, aspiration strategy and the principles that drive our actions.\nIt all starts with our purpose.\nWe keep the world working.\nWe shared this with all team members across the company in 2019.\nWhile the concepts weren't new and many were already part of our operational DNA, the framework provided clarity at who we are and what we do as well as the common language for our team members.\nThe Grainger Edge has guided us through the pandemic, and I'm proud of how the Grainger team has continued to embrace it.\nIt's also been a strong foundation for how we serve our customers and helped us through the challenges of the last 18 months.\nSpeaking of challenges, 2021 has provided plenty.\nThe year has been characterized by strong demand but a very challenging supply chain environment.\nRaw material shortages, labor shortages and transportation challenges have been the norm, particularly in the second quarter.\nThese challenges are industrywide.\nAnd while we're not immune to them, we are uniquely positioned to leverage our scale and navigate through these ongoing difficulties.\nImportantly, this year, the supply chain has become a competitive sport.\nAnd while we've had obstacles and things are messier than normal, our customer research suggests we are navigating the obstacles well and providing very strong relative service during this time.\nWe are actively leveraging our network.\nFor example, for a customer located in New York, we would typically fulfill their entire order from our Northeast DC.\nDue to supply constraints or product delays, now part of the order may only be available in Louisville.\nIn this case, the order may be fulfilled from Louisville, adding an extra day and incremental cost to the order.\nBut we are able to leverage our network to provide and protect our great service.\nWe are also leveraging our branches for more shipping in this environment.\nIn addition, we have accelerated the ramp of our Louisville DC, which has helped alleviate capacity constraints.\nThis building is a great asset for Grainger and will continue to ramp capacity through the next 18 months.\nThe good news is that we still have very high availability in our network even if the product comes from an alternate location.\nI've had the opportunity to be in the field quite a bit this past quarter and have been excited to spend time with the customers and hear their feedback.\nI'm hearing consistently that while we may be delivering a bit differently than the past, we are serving our customers better than the competition.\nWe have validated this through feedback on our recent customer surveys, and the vast majority said we were doing better than other distributors right now.\nWe are also investing in non-pandemic inventory and partnering closely with our suppliers to work through any supply constraints, inbound lead time challenges and any potential cost increases.\nAdditionally, shortage in the labor market have had a significant impact for all companies this year.\nIn response, we have increased our wages to attract and retain talent, especially in our distribution centers.\nWe've implemented robust training programs to onboard new team members and train existing team members to work throughout our buildings.\nWe have made great progress in closing staffing gaps and will continue to do so over the third quarter.\nFinally, transportation has been very challenging.\nThat is clearly linked to the product and labor shortages.\nWhile we have always prioritized optimal routes and cost efficiencies, over the last few months, we have partnered with our carriers in new ways to ensure we are meeting customer expectations.\nWe have also added new partners to our carrier mix to handle our volume and provide us flexibility.\nIt's important to note that the overall freight market is volatile and uncertain.\nWhile we are confident in our current plans to manage these challenges, there are a lot of moving pieces and constraints across all modes, parcel, LTL and ocean freight.\nFor example, the ocean freight market has been uncertain as the pandemic surges again in Asia and container costs fluctuate.\nWe are ready to respond to any of these dynamics.\nWe expect the supply chain challenges to last through the end of the year and likely well into next year.\nI have no doubt, as we continue to live the Grainger Edge and follow our principles, we'll not only get through these challenges, but we'll deliver strong results and take market share.\nTurning to our financial highlights.\nThe bottom line is that our performance has been in line with our expectations and what we communicated on our last earnings call.\nThe only exception to this has been gross profit impacted primarily by the changes in May to the CDC mask guidelines halfway through the quarter.\nHeading into the second quarter, all external factors were pointing to a reopening in the U.S. around or sometime after the 4th of July, giving us a full quarter to sell through as much of our remaining pandemic inventory as possible.\nBased on our internal scenario planning, we thought that potential adjustments in Q2 would fall somewhere between $45 million and $50 million, while we couldn't predict precisely how far the demand curve would fall or when.\nThen, when the CDC mask guidance changed in mid-May, we saw our demand for pandemic products, especially masks, declined rapidly.\nAs a result of the sudden weakening of demand, we had more pandemic inventory remaining than expected, and we took a $63 million adjustment, about $15 million more than our internal scenario planning.\nWe believe this completes any material pandemic-related inventory adjustments.\nWithout this incremental change, GP would have been roughly flat sequentially.\nWe understand that CDC has just changed guidance again this week.\nWhile the situation is fluid, we do not expect any material change in our outlook as a result of this change.\nShifting to the other financial results.\nWe achieved strong organic daily sales growth of 15% for the company on a constant currency basis within our guided range.\nWhen compared to 2019, Q2 was up about 14% on a daily organic basis, a positive indicator of our strong performance and recovery beyond the pandemic.\nOur High-Touch Solutions North America segment grew 12.7% on a daily constant currency basis.\nIn the U.S., we lapped the most extreme volatility of 2020.\nLooking at the two-year average in the second quarter of 2021, we drove approximately 275 basis points of average market outgrowth.\nWe remain very confident in our ability to grow 300 to 400 basis points faster than the market on an ongoing basis.\nWe expect the volatility of 2020 and 2021 to average out and get back to normal heading into 2022.\nOur Canadian business drove positive operating earnings growth for the quarter and managed expenses well.\nWe are seeing continued momentum in targeted end markets, especially heavy manufacturing and higher education as schools prepare to reopen in the fall.\nAnd we continue to diversify the business beyond natural resources.\nThe Endless Assortment model had another impressive quarter with 23.9% daily sales growth on a constant currency basis, fueled by strong customer acquisition.\nLastly, we generated $269 million in operating cash flow and achieved strong ROIC of 29.2%.\nTurning to our quarterly results for the company.\nI've discussed most of what's on this slide, but I wanted to point out two additional items.\nFirst, our SG&A was $790 million, in line with the guided range provided on our first quarter call.\nAs expected, we increased SG&A for the quarter as we continued to invest in marketing and in our people through increased variable compensation and wage rates in the DCs.\nThis resulted in total company operating margin of 10.4%, down 70 basis points compared to the prior year.\nExcluding the impact of the $15 million incremental inventory adjustment, GP would have been roughly flat sequentially and operating margin would have been 10.9%.\nThe resulting earnings per share would have been around $4.50.\nWe continue to see a robust recovery with daily sales up 13.7% compared to the second quarter of 2020 and up 9.5% compared to the second quarter of 2019.\nIn the U.S., we saw strong growth in our non-pandemic product category with product mix returning to more normal levels.\nFor the segment, GP finished the quarter at 36.9%, down 125 basis points versus the prior year.\nI think it's important to note that without the $63 million of inventory adjustment, GP would have been up 125 basis points year-over-year.\nThis 250 basis point swing demonstrates that our underlying GP rate would have otherwise been a healthy 39.4%.\nCoupled with our focus on achieving price/cost neutrality, we are confident that our run rate GP remains strong.\nSG&A in the segment ramped as expected to $640 million, lapping the lowest point of SG&A spend in the second quarter of 2020.\nCanada continued to make solid progress and expanded operating margin approximately 315 basis points year-over-year.\nConsistent with last quarter, we have included a chart with details on the U.S. and the Canadian businesses on the first page of the appendix.\nOn slide 10, looking at pandemic product trends, I want to highlight two things before we dive into the Q2 numbers.\nFirst, we lapped the extreme growth experienced last year and saw decreased demand for PPE products.\nAccordingly, pandemic sales declined approximately 28% versus 2020.\nHowever, that's an impressive 27% increase versus 2019.\nWe estimate July 2021 will be down about 28% over July 2020, in line with what we saw in the second quarter of this year.\nMore importantly, we see the trend in our non-dynamic sales as a positive sign of economic recovery.\nDuring the quarter, we grew 31% versus 2020 and up 7% versus 2019.\nWe're seeing end markets like commercial, which include our severely disrupted customers in hospitality, along with heavy manufacturing, make a significant comeback.\nWe estimate that for the month of July 2021, non-pandemic sales growth of about 22%.\nAs it relates to pandemic product mix, while we expected it to taper off to near pre-pandemic levels to about 20% by year-end, we're seeing this happen more quickly now at about 22% of sales.\nIn total, our U.S. High-Touch Solutions business is up about 12% for the second quarter of 2021 and up 10% over 2019.\nLooking at market outgrowth on slide 11, we are lapping the highest concentration of large pandemic purchases of the prior year.\nAt this time, the market declined between 14% and 15% and we saw outsized share gains of roughly 1,200 basis points.\nFor Q2 2021, we're seeing the opposite effect.\nWe estimate the U.S.\nMRO market grew between 18.5% and 19.5%.\nThe U.S. High-Touch business grew 12.4%, about 650 basis points lower than the market.\nTo normalize for the volatility, we calculated the two-year average share gain to be 275 basis points over the market.\nThere's some noise in the market number because -- across industrials, given the dynamics and fluctuations over the last two years.\nTherefore, the two-year average is a better estimate of what's really going on.\nAs I previously noted, our U.S. High-Touch business is up 10% over 2019.\nAs the impact of the pandemic subsides, coupled with our strong progress on key initiatives and our return on investments like marketing, we remain confident in our ability to achieve our share gain goals.\nNow let's cover our U.S. GP rate.\nAs previously discussed, our second quarter GP decline resulted from the $63 million inventory adjustment.\nThis adjustment lowered U.S. GP by 270 basis points.\nWithout this, our underlying U.S. GP rate is 39.8% in the second quarter.\nAs we look to the remainder of 2021, it is important to note we are operating in a very challenging and fluid environment.\nWe're doing everything within our control to exit the year with a Q4 GP rate at or above the Q1 2020 levels or 40.1%.\nWe remain confident in our ability to achieve this target for a few reasons.\nFirst, as noted earlier, we anticipate no further material pandemic-related inventory adjustments.\nExcluding the inventory impacts, our GP rate is nearing this level already.\nAs we discussed on slide 10, our pandemic product mix is close to pre-pandemic levels, and we expect this to fully normalize in the second half.\nAnd we've seen evidence that we can continue to maintain price/cost neutrality.\nOn the cost side, we have a robust process to partner with our suppliers and understand the specific raw material impacts as well as other conditions that may result in increased costs.\nAs it relates to price, our goal is to continue to maintain competitiveness in the market and pass what is applicable.\nIn the first half, we were slightly above neutrality and as we expect to take additional price increases in the second half to offset what we're expecting in costs.\nEven in this inflationary environment, we are confident we will be able to execute and achieve neutrality through the remainder of the year.\nMoving to our Endless Assortment segment.\nDaily sales increased 23% or 23.9% on a constant currency basis, driven by continued strength in new customer acquisitions at both Zoro and MonotaRO as well as growth of larger enterprise customers in MonotaRO.\nGP expanded 75 basis points year-over-year driven by positive trends at both businesses, and operating margin finished up 95 basis points over the prior year.\nI'll go into more detail on the next slide as we provide further transparency on the results of both of these businesses.\nMoving to slide 14.\nPlease remember that MonotaRO is a public company and follows Japanese GAAP, which differs from U.S. GAAP and is reported in our results one month in arrears.\nAs a result, the numbers we disclose will differ somewhat from MonotaRO's public statements.\nIn local currency and using Japan's local selling days, which occasionally differ from U.S. selling days, MonotaRO's daily sales grew 16.7% with GP finishing the quarter at 26.4%, 25 basis points above the prior year.\nOperating margin decreased 15 basis points to 12% as they continue to ramp up operations at the Ibaraki DC.\nAgain, another strong quarter for MonotaRO.\nSwitching to Zoro U.S., daily sales grew 32.6% as it laps its softest quarter of 2020.\nZoro GP grew 95 basis points to 31.5% and achieved 320 basis points of operating margin expansion through substantial SG&A leverage in the quarter.\nAll in all, very impressive results.\nMoving to slide 15.\nIn addition to the strong financial performance, we're seeing positive results with our key operating metrics.\nAs you saw in the first quarter, we've listed total registered users for both businesses, an important driver of top line performance.\nBoth MonotaRO and Zoro have shown progress and are up over 20% over the second quarter last year.\nOn the right, Zoro continues to actively add SKUs to the portfolio.\nAt the end of the second quarter of 2021, we had a total of 7.5 million SKUs available online, close to our goal of eight million for the year.\nWe remain encouraged by our progress with SKU additions beyond traditional MRO.\nNow I'll provide commentary as it relates to the upcoming quarter and our expectations for the full year.\nFor the third quarter, on a total company level, we expect our revenue growth to be between 10% and 11% on a daily organic basis.\nWe believe any material pandemic-related inventory adjustments are complete, and we expect GP to be up between 100 and 120 basis points year-over-year and to improve sequentially.\nSG&A is anticipated to fall between $805 million and $815 million as we continue to invest in marketing and wages in the DCs to remain competitive.\nTransitioning to our total company guidance, I'd like to provide some brief commentary on how we're trending so far.\nWe expect strong sales to continue while GP, operating margin and earnings per share will face pressure as a result of the incremental inventory adjustments and freight costs, along with investments and increased DC wages and marketing.\nWhile we are maintaining our guidance, we expect results will trend toward the low end of our range with the exception of revenue.\nWe expect revenue to be near the midpoint.\nAs it relates to our segment operating margins, we think that some of the supply chain challenges as well as the first half inventory adjustment will weigh more heavily on the High-Touch Solutions segment and therefore, High-Touch operating margin may trend at the low end of the range.\nAt the same time, we believe Endless Assortment, driven by strong performance and improving margins, may end the year at the high end, both helping to support delivery of total company results.\nWe are not adjusting guidance as we are confident in our ability to deliver results within our guidance ranges.\nAs we learn more, we'll continue to keep you apprised of any changes.\nFirst, I'm proud to announce that earlier this month, Grainger was certified as a Great Place to Work, a true testament to the exceptional team member experience we've built and an important milestone in advancing the Grainger Edge.\nSecond, it's our 10th year of publicly reporting our ESG efforts.\nI wanted to share highlights from our new corporate responsibility report.\nAt Grainger, we embrace our obligation to operate sustainably and with a long-term fact-based view of critical issues regarding the environment, society at large and corporate governance.\nFor example, in 2012, we became the first industrial distributor to publicly disclose our carbon footprint.\nIn 2013, we became the first in our industry to set a public greenhouse gas emissions reduction target, which we achieved two years early.\nWe just set a new goal last year to reduce the absolute Scope one and two greenhouse gas emissions by 30% by 2030.\nWe're also committed to helping our customers achieve their ESG goals through our products and services.\nWe now offer more than 100,000 environmentally friendly products.\nThrough this portfolio, we're able to help customers maintain sustainable facilities via efficient energy management, water conservation, waste reduction and improved indoor air quality.\nAnd this year, we formed the ESG Leadership Council, which I chair.\nThe council is comprised of Grainger leaders who provide strategic direction and oversight on our ESG efforts.\nYou can find the new report at graingeresg.com.\n",
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"content": "sees 2021 net sales $12.7 billion - $13.0 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: Actual results may differ materially due to various risks and uncertainties, including those detailed in our SEC filings.\nWe will also share results related to MonotaRO.\nPlease remember that MonotaRO is a public company and follows Japanese GAAP, which just differs from U.S. GAAP and is reported in our results one month in arrears.\nAs a result, the numbers disclosed today will differ somewhat from MonotaRO's public statements.\nThe Grainger Edge is our framework that defines who we are, why we exist and where we're going while establishing a set of operating principles.\nI'm proud of the ways that we use the principles to guide decisions and deliver results.\nThings are very challenging on many fronts.\nGiven the ongoing pandemic and labor and material shortages, nothing in the world seems to be working exactly the way it should.\nOur manufacturing partners, transportation partners, Grainger team members, and certainly our customers, are all finding harder than ever to keep the world working.\nGrainger is proud to support the hospital staff, government agencies, teachers and many others who continue to do great work in a very challenging environment.\nI might say that in spite of these challenges, we performed very well, but in reality, it's partly because of how we are wired that Grainger is doing so well.\nWe've seen strong demand this quarter, especially in the U.S.\nWe have product available in our network and have been able to ship it to customers quickly.\nOur service to customers has been exceptional given the circumstances.\nWe are leveraging our scale, demonstrating our agility and gaining share.\nOur goal is to always be in an advantaged position to help our customers solve their problems.\nAs I've been out with customers this past quarter time and again, I hear that Grainger is executing well.\nCustomers tell me that they are pleased with our performance, and you can see this in our revenue growth.\nWhile the current supply chain environment is volatile and uncertain, we are confident in our current plans and our readiness to respond to any evolving dynamics.\nIn the face of labor and material shortages throughout the supply chain, we are providing strong relative service and helping our customers avoid disruptions.\nWe continue to actively leverage our network even if sometimes we have to the orders from less optimal locations at a higher cost.\nWe are investing in inventory while actively monitoring the freight market and the West Coast ports.\nAnd as it relates to labor, we have made great progress in closing staffing gaps and training team members, which has resulted in improvements, especially in our DC operations.\nOur customer research shows that this is driving customer satisfaction.\nTurning to our financial highlights.\nDemand in the quarter was robust, resulting in strong revenue and gross margin performance and well-managed SG&A.\nWe achieved organic daily sales growth of 11.9% for the total company on a constant currency basis.\nWhen compared to Q3 2019, the quarter was up 17.3% on a daily organic basis, driven primarily by core non-pandemic product sales, which is a positive indicator of our underlying run rate performance.\nOur High-Touch Solutions in North America segment grew 11.6% on a daily constant currency basis.\nIn the U.S., we drove approximately 100 basis points of share outgrowth versus the prior year and 475 basis points on a two year average.\nWe remain confident in our ability to grow 300 to 400 basis points faster than the market on an ongoing basis.\nOur service to customers, especially the last two years, has contributed to meaningful share gain.\nOur Endless Assortment segment finished the quarter with 14.9% daily sales growth on a constant currency basis.\nI'd like to note two things that temporarily moderated growth in this segment.\nFirst, Zoro lapped a very strong third quarter in 2020.\nFor context, we opened up pandemic product supply to Zoro customers in Q3 2020 that was previously reserved mostly for government and healthcare customers.\nIn the third quarter 2021, Zoro managed to drive 11.9% revenue growth.\nAnd when we compare that to Q3 2019, we are up 30.6%, which is really strong.\nAlso MonotaRO was impacted by several external factors, including a slow start to vaccinations and a generally slower Japanese economy.\nIn local days and local currency, sales were up about 17.5% compared to Q3 2020.\nAnd MonotaRO continues to take share, especially as COVID restrictions lift and we grow with our targeted enterprise customers.\nAnd as we look at results versus Q3 2019, MonotaRO sales are up over 37%.\nWe feel that the comparison to 2019 for both businesses is more indicative of our underlying business strength.\nWe still expect the segment to close the year with growth at about 20% above prior year.\nWe saw strong gross margin expansion across all segments, even above our expectations that we discussed last quarter.\nHigh-Touch Solutions North America was up 140 basis points over Q3 of the prior year, and Endless Assortment was up 115 basis points.\nDee will cover the drivers for both segments.\nLastly, we returned $327 million to shareholders through dividends and share repurchases in the third quarter, and we maintained strong return on invested capital of 31.4%.\nTurning to our quarterly results for the company.\nI've discussed most of what's on this slide but wanted to point out a few additional items.\nFirst, our SG&A was $812 million, right where we thought it would be.\nWe continue to invest in marketing and labor, primarily through increased variable compensation and gripped wage rates in the DCs.\nAnd like many companies, we're also starting to see increased healthcare costs as team members return to routine medical visits and undergo deferred elective procedures.\nAnd while overall spending is up versus the prior year, we are still gaining significant leverage when compared to 2019.\nOur operating earnings were $438 million, up 17.4%.\nAnd our resulting earnings per share is $5.65 for the quarter, which is growth of 25%.\nOverall, it was a really strong quarter.\nWe continue to see a robust recovery with daily sales up 12% compared to the third quarter of 2020 and up 14.5% compared to the third quarter of 2019.\nIn the U.S., we saw strong growth, especially in our core non-pandemic product categories.\nBoth large and midsized customers saw significant growth at 10% and 19%, respectively.\nCanada continues to be slow as recurring shutdowns in many of the larger provinces kept businesses closed or operating at minimal capacity.\nAs vaccination rates improve and businesses reopen, we expect more typical purchasing behavior to resume and sales to follow.\nCanadian daily sales were up 11.7% or 5.7% in local days and local currency compared to the third quarter of 2020.\nFor the High-Touch Solutions segment, GP margin finished the quarter at 39.4%, up 140 basis points versus the prior year third quarter.\nOur focus and diligence on managing price/cost spread contributed to our GP improvement.\nIn the quarter, we saw strong price realization to customers both on contract and web pricing.\nOur realization was better than anticipated, and as a result, price/cost spread was above neutral.\nIn addition, consistent with the second quarter, our U.S. pandemic product mix was about 22%, an improvement versus 28% in the third quarter of 2020.\nWe are confident that our run rate GP remains strong and will finish in line with the expectations we set forth for the fourth quarter.\nOn slide 20, you'll find a chart with details on the U.S. and Canadian businesses.\nThis information has been provided to help bridge our prior reportable segments to our new High-Touch Solutions North American segment.\nI'd like to give you some advanced notice that we will continue to show daily sales and gross margin by business.\nHowever, as our operating expenses across the segment have become more intertwined, our operating margin by geography will no longer be provided in our 2022 reporting.\nOn slide 9, taking a deeper dive into High-Touch Solutions for the U.S. The Delta variant and the renewed mask mandates in July reversed the declining trend we were seeing in the second quarter for pandemic products.\nAs the virus surged, we saw pandemic product demand pick back up, especially for masks.\nHowever, of particular note, our core non-pandemic sales growth was at or above 20% every month in the third quarter.\nWe are encouraged to see this growth as a sign of more regular business and economic activity.\nWhen comparing core non-pandemic sales to Q3 2019, sales were up 12%, which is quite strong.\nIn total, our U.S. High-Touch Solutions business is up 12% for the third quarter 2021 and up 16% as compared to 2019.\nLooking at market outgrowth on slide 10.\nIn the third quarter, as expected, we saw our share gain grow as we lap more reasonable yet still inflated Q3 2020 comparisons.\nIn the quarter, we estimate that the U.S. market grew between 10.5% and 11.5%, resulting in our estimated outgrowth of approximately 100 basis points versus Q3 2020.\nTo normalize for volatility, we are continuing to show the two year average share gain, which was about 475 basis points over the market for the third quarter of 2021, a really exceptional result.\nGiven the noise and fluctuations in the market number across industrials, the two year average is a better estimate of our true market outgrowth.\nWe remain focused on our key initiatives, which give us confidence in our ability to achieve our U.S. share gain goal of growing 300 to 400 basis points faster than the market.\nNow let's cover our U.S. GP rate.\nWe saw a significant lift in the High-Touch U.S. GP performance in the quarter.\nSequentially, we wanted to comment on two of the biggest factors that make up the difference between the second quarter and the third quarter.\nFirst, the biggest contributor, the inventory adjustments are behind us as anticipated.\nIn addition, we are seeing greater price realization than expected.\nI'll note that while we sold some of the pandemic inventory that was previously written down, the impact to GP was immaterial.\nWe're encouraged by these results and are confident in our ability to achieve our expected 40.1% GP rate in Q4 based on continued pandemic mix improvements, our expected price realization in the fourth quarter and our ability to navigate supply chain challenges.\nMoving to our Endless Assortment segment.\nDaily sales increased 12.7% or 14.9% on a constant currency basis, driven by continued strength in our new customer acquisition at both Zoro and MonotaRO as well as growth of larger enterprise customers at MonotaRO.\nGP expanded 115 basis points year-over-year driven primarily by Zoro U.S.\nWe took a number of pricing actions based on evolving market conditions, and we deemphasized lower-margin channels.\nIn addition, we experienced improved freight efficiencies at Zoro, primarily as a result of fewer B2C customers who typically place smaller orders that are more expensive to ship.\nOperating margin for the segment finished up 80 basis points over the prior year third quarter due primarily to improved gross profit margin.\nI'll go into more detail on the next slide as we provide further transparency on the results for both businesses.\nMoving to slide 13.\nIn local currency and using Japan's local selling days, which occasionally differ from U.S. selling days, MonotaRO daily sales grew 17.5% compared to the third quarter of 2020.\nGP margin finished the quarter at 25.8%, 30 basis points below the prior year third quarter, as we continue to grow with enterprise customers.\nAs a result, operating margin decreased 65 basis points to 12%.\nSwitching to Zoro U.S. Daily sales grew 11.9% as compared to the strongest sales quarter of 2020.\nZoro GP grew 375 basis points to 33.9% and achieved 325 basis points of operating margin expansion.\nIn addition to the strong financial performance in the segment, we also continue to execute well on our key initiatives.\nFirst, when it comes to our registered users, we saw continued growth across both businesses, which is an important driver of top line performance.\nAnd on the right, Zoro continues to actively add SKUs to the portfolio.\nAt the end of the third quarter of 2021, we had a total of eight million SKUs available online, achieving our goal for the year a quarter early, adding nearly two million SKUs in the last nine months.\nWe remain encouraged by our progress with SKU additions.\nOnce again, I would like to provide some color commentary as it relates to the fourth quarter and the full year.\nFor the fourth quarter for revenues, we expect total company daily sales to be between 11.5% and 12.5%.\nWe anticipate company gross margin will fall between 37.2% and 37.4%.\nAs discussed before, we expect the U.S. GP rate to exit the year at or above pre-pandemic levels.\nAnd for SG&A, we expect a similar level of spending in the fourth quarter as we saw in the third quarter, between $810 million and $815 million with increased variable compensation, wages and healthcare expenses.\nAnd while it's unclear at this point, we may have some additional risk as it relates to vaccine mandate costs.\nGiven the strong performance in the quarter, we remain confident in our guidance range.\nFor the full year, we expect revenue to be at or above the midpoint and all other metrics to be stronger than the low end of the range we discussed at the end of the second quarter, but likely still below the midpoint given the pandemic inventory adjustments taken in the first half.\nFirst, I'm immensely proud of the Grainger team and their commitment.\nIt's been very challenging, but we continue to demonstrate the strength and resilience of our team and our supply chain.\nSecond, it was a very good quarter across the board.\nThe results were above our expectations.\nAnd finally, despite the current market and supply chain uncertainties, we are confident in our ability to deliver solid performance in the fourth quarter and into 2022.\n",
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"content": "q3 adjusted earnings per share $5.65.\nq3 sales rose 11.7 percent to $3.4 billion.\nreaffirming guidance ranges previously provided 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: We expect the call to last roughly an hour.\nIn addition, during our call today, we will refer to certain non-GAAP financial measures that we believe provide additional information to enhance the understanding of the way management views the operating performance of our business.\nOur third quarter performance reflects continued momentum across our business.\nGlobal Client top line performance, which grew at 11% on a constant currency basis was once again driven by strong demand for Transformation Services, made up of analytics, digital and consulting.\nOur strategic investments over the years in capabilities and talent, including the continuous training and development of our global workforce positions us well to address the pressing challenges and opportunities our clients are facing.\nThis quarter, we achieved the milestone of crossing the threshold of $1 billion in quarterly total revenue for the first time.\nFor the third quarter 2021, we delivered: total revenue of $1.02 billion, up 8% on a constant currency basis; Global Client revenue of $921 million, up 11% on a constant currency basis; adjusted operating income margin of 16.6% compared to 17.1% during the third quarter of 2020; and adjusted diluted earnings per share of $0.66 per share, up 18% year-over-year.\nGlobal Client revenue growth in the quarter cut across almost all of our industry verticals with double-digit growth in consumer goods and retail, life sciences and healthcare, high-tech and manufacturing and services.\nAs expected, banking and capital markets growth continued to be muted due to the restructured relationship with one client that resized its asset management business in late 2020.\nOur pipeline remains healthy with a mix of both large and regular-sized deals.\nWe continue to scale our revenue and bookings from existing relationships and add new logos, which sets the stage for future growth.\nDuring the third quarter, we signed four large deals across life sciences, CPG, banking and capital markets and high-tech services.\nAs we deepen our role as a trusted advisor to our clients, we have seen sole-sourced deals, which was, for many quarters, above 50% of our bookings, now rising above 60%.\nWe are also seeing great traction build up in fintech, digital banking and other fast growth tech companies where our domain strength and agile development and deployment is helping them scale rapidly.\nGlobal Client Transformation Services continues to grow at a 30%-plus rate and now accounts for more than 35% of total Global Client revenue, including the contribution from the Enquero acquisition.\nYear-to-date, approximately 70% of Global Client bookings include a component of analytics, digital or consulting in them.\nAs a reminder, approximately half of Transformation Services bookings are annuity-based and often lead to large long-term intelligent operations engagements.\nAnalytics is not only the largest component of Transformation Services, contributing more than half of its revenue over the last several quarters, but is also its fastest-growing component, consistently growing well above 30%.\nMany of our analytics solutions are deeply connected to high-growth areas where we are strategically focused, such as sales and commercial, supply chain, financial crimes and risk and SG&A.\nOur sharp differentiation is our ability to orchestrate data and analytics in the cloud with deep industry and process knowledge.\nThe availability of high-quality data and the ability to derive actionable insights with analytics to drive decision-making is now more critical than ever.\nIt is at this insight to action level where we differentiate ourselves the most.\nOur intelligence platform, Genpact enterprise 360 enables clients to do just that.\nGenpact enterprise 360 harnesses the power of data and insights from our operations built on proprietary metrics and benchmarks we have deployed and developed over the past 20 years in our digital Smart Enterprise frameworks.\nThis enables clients to have radical transparency in their businesses.\nThe platform then uses AI to generate connective insights.\nThis further empowers clients to take actions, either themselves all through our work with them to deliver better outcomes today and to point transformation opportunities to unlock future growth.\nAnother differentiator for us is our ability to drive outcome-oriented value for clients beyond just cost and productivity, such as increased growth, lower receivables and inventory, lower losses in fraud and better pricing.\nThis is one of the key reasons why our Transformation Services solutions resonate so well with our clients.\nSome examples include, for a large global CPG client, leveraging our experience and design thinking methodologies, we are using analytics to help them with better sales targeting and automating processes such as contract management and payment reconciliations.\nThis enables its sales teams to focus on much higher proportion of their time on business development.\nFor a large fintech client, we have designed, implemented and are now running a best-in-class anti-money laundering and transaction monitoring process to improve their regulatory risk compliance as they experience hyper growth.\nFor a large high-tech client using our Cora sales assist solution, we are leveraging data and analytics to proactively generate and prioritize advertising leads for small and medium business segment to grow the client's top line.\nFor a large client in the semiconductor ecosystem, we are using digital and analytics solutions to improve supply and demand forecasting, diversify their supplier base for greater resilience, conduct global inventory analysis and run spot price forecasting to optimize the timing of purchases.\nThese examples reflect the five trends we continue to see in every CxO conversation.\nThe five trends are: one, a significant shift from off-line to online across every industry; two, the virtualization of all technology services and solution delivery; three, an accelerated consumption of cloud-based services and solutions; four, an exponential growth in real-time predictive analytics; and five, the move to human-centered design that creates superior experiences for customers, users and employees.\nClients continue to tell us that our approach of bringing together our expertise in digital and cloud-based analytics solutions with our deep industry and process depth to drive actions that deliver outcomes is different.\nWe continue to see momentum in driving commercial models linked to these outcomes versus traditional input-based models that focus on the cost of FTEs.\nThese commercial models ensure goal alignment between us and our clients.\nFor example, being paid for the outperformance of predefined metrics, consumption of transaction-based models or fixed fee models.\nAs the world continues to adapt to the changes that I've seen over the last 18 months, companies across every industry are intensely competing for talent across the globe.\nWhile this hot talent market presents challenges for our kind of a business, it certainly creates an interesting set of opportunities for us.\nWe see many engagements where we can help our clients access and nurture global talent, given our ability to scale across a range of skill sets and geographies as well as our focus on reskilling.\nWe are using our investments in our online on-demand learning platform, Genome, to build the critical skills businesses are looking for across digital, data and analytics.\nSpecific industry and process knowledge, use of Lean and Six Sigma as well as soft skill and personal development.\nAs an example, our data and analytics certification program equips our employees with the skills necessary to generate impact immediately after course completion by deriving insights from complex data sets.\nTo date, Almost 70% of our employees are enrolled with more than 43,000 fully trained and tested.\nThis is analytics at scale for our clients.\nAt the height of the pandemic in 2020, we saw historically low attrition rates.\nIn the third quarter, as expected, our attrition rate increased above our historical average.\nThis is a global trend that is impacting our peers and clients alike.\nHowever, given our talent management practices to date, we have had no impact on our client engagements or our ability to convert new bookings.\nThis reflects the strength of our culture of curiosity, innovation and learning as well as the countless learning, development and career opportunities we provide for our employees, enabled by investments like Genome and our redeployment platform, Talent Match.\nWe are delighted to have had a state of recent recognitions for being a great destination for talent in the market, such as: Forbes 2021 World's Best Employers List; the Refinitiv's 2021 diversity and inclusion top 100; a total of 28 excellent awards from Brandon Hall Human Capital Management; International SOS' Duty of Care award for diversity and inclusion; Aptar's top 10 best companies for women in India.\nAnd earlier today, Forbes 2021 America's Best Employers for Veterans.\nWe are also being recognized for the work we are doing to improve our communities.\nFor example, being named to Fortune's Change the World List as one of 100 companies celebrated for having a positive societal impact.\nWe are deeply committed to our environmental, social and governance initiatives and are proud to have been recently awarded a gold medal from EcoVadis, recognizing our efforts across environment, labor and human rights, ethics and sustainable procurement.\nWe also recently concluded our annual green-a-thon event with more than 25,000 participants to sponsor the planting of more than 14,500 tree saplings, underscoring our commitment to environmental sustainability.\nESG is not only an important focus for us internally as a company, but also for what we do with our clients.\nGiven our industry knowledge, strength in data and analytics, and deep familiarity with our clients' processes, we are in a meaningful position to help our clients achieve progress on their own ESG agenda through areas like responsible sourcing, supply chain optimization, financial crimes, climate footprint of equipment usage and many others were able to help our clients generate positive social and environmental impact.\nWe are very excited about the work we are doing on our pursuit of a world that works better for people.\nLastly, as our teams are beginning to return to the office globally and travel more frequently to collaborate in person or meet with clients.\nWe are taking every precaution to continue to ensure the health and safety of our own employees and their families.\nWe are happy to report that a large and increasing number of our employees are getting vaccinated globally.\nFor example, in our largest delivery ecosystem, India, approximately 80% of our workforce has received at least one dose of a COVID vaccine, and we continue to encourage participation for the rest of our population.\nToday, I'll review our third quarter results and provide our latest thinking regarding our full year 2021 financial outlook.\nTotal revenue was $1.02 billion, up 9% year-over-year or 8% on a constant currency basis.\nGlobal Client revenue that expanded to 91% of total revenue increased 12% year-over-year or 11% on a constant currency basis primarily driven by ongoing movement in Transformation Services led by analytics that grew more than 30% in the quarter as we continued underlying strength in our Intelligent Operations business.\nTotal Global Client growth included approximately one point contribution from revenue related to certain divested GE businesses that we began including in our Global Client portfolio as of January one.\nDuring the quarter, we continued to expand the size of our Global Client relationships.\nFor example, during the 12-month period ended September 30, we grew the number of Global Client relationships with annual revenue over $5 million from 129 to 142 or a 10% year-over-year increase.\nThis included clients with more than $25 million in annual revenue, increasing from 23 to 26 or 13% year-over-year.\nGE revenue declined 15% year-over-year driven by our delivery of committed productivity and the overall macroeconomic impact on GE.\nExcluding the effect of revenue related to divested GE businesses I mentioned earlier, GE revenue would have declined 6% during the quarter, which is in line with our expectations.\nAdjusted operating income margin at 16.6% declined from the first half of the year largely due to the increase in investment activity that we discussed with you last quarter as well as higher travel expenses.\nAs we move into the latter part of the year, we expect travel-related activity to increase as the macro environment continues to stabilize.\nGross margin in the quarter was 35.6% compared to 35.2% during the same period last year largely due to increased productivity from higher revenue and a more favorable mix.\nWe continue to expect our full year gross margin to expand 70 to 75 basis points year-over-year.\nSG&A as a percentage of revenue was 21.3%, up 10% year-over-year and 60 basis points sequentially as we dialed up investment activity to be able to take advantage of long-term growth opportunities.\nAdjusted earnings per share was $0.66, up 18% year-over-year compared to $0.56 in 2020.\nThis 10% -- $0.10 increase was primarily driven by higher adjusted operating income of $0.04, lower taxes of $0.03, a $0.02 impact related to FX remeasurement and a $0.01 impact related to lower year-over-year share count.\nOur effective tax rate was 17.3% compared to 22.6% last year largely due to discrete benefits in the quarter as well as a nonrecurring prior period tax refund-related items.\nExcluding this onetime tax benefit that equates to $0.03 per share, our effective tax rate for the quarter would have been 21.4%.\nTurning to cash flow and balance sheet.\nDuring the third quarter, we generated $210 million of cash from operation that corresponds to free cash flow being almost two times higher than net income.\nAs a reminder, during 2020, we experienced a lower-than-normal working capital impact to our cash flow given improved days outstanding as lower revenue growth related to the pandemic.\nThis helped drive cash flow from operations of $252 million during the third quarter last year.\nOur days outstanding have remained in a consistent range with third quarter 2021 at 84 days.\nCash and cash equivalents totaled $922 million compared to $753 million at the end of the second quarter of 2021, and includes $350 million related to the 1.75% bond that we issued in the first quarter.\nWe continue to closely monitor market conditions for the optimum timing of the pay down of our 3.7% bond that is scheduled to mature in April 2022.\nOur net debt-to-EBITDA ratio for the last four rolling quarters was 1.1 times.\nWith undrawn debt capacity of approximately $500 million and existing cash balances, we continue to have ample liquidity to pursue growth opportunities and execute on our capital allocation strategy.\nWhile we continue to invest to drive organic top line growth, we have a solid M&A pipeline, and we remain vigilant in searching for companies that can strengthen our capabilities in our chosen service lines.\nAs our track record demonstrates, to the extent capital is available, we expect to repurchase shares, particularly when the valuation is attractive in comparison to our view of the intrinsic value of the firm.\nAs expected, capital expenditures as a percentage of revenue increased from levels we saw during the first half of the year due to investments related to deal ramp-ups and the measured pace of our global workforce return to office.\nGiven our year-to-date spending, we now anticipate capital expenditures as a percentage of total revenue for the full year to be in the range of 1.5% to 2%.\nLet me now turn to an update of our full year outlook.\nWe continue to expect total revenue between $3.96 billion and $4 billion, representing year-over-year constant currency growth of 5.5% to 6.5%.\nFor Global Clients, the expected growth remains in the range of 10.5% to 11.5% or 9% to 10% on a constant currency basis.\nThere is also no change to our full year GE outlook of approximately 20% year-over-year decline.\nExcluding the effect of approximately $40 million in revenue related to the GE divested businesses, we continue to expect GE full year revenue to decline 10% to 12%.\nWe continue to expect our adjusted operating income margin to expand to 16.5% for the full year.\nFactored into this outlook is the impact of continued ramp-ups in investment activity in both sales and marketing, research and development, higher fourth quarter travel, and a higher level of transaction costs related to recent large deal signings.\nTo be clear, our approximate 16.5% adjusted operating income full year margin remains the baseline for which we think about our trajectory for 2022.\nAs a result of the nonrecurring tax benefit in the third quarter I referred to earlier, we now expect our full year 2021 effective tax to be approximately 22.5% to 23.5%, which compares to the prior year range of 23.5% to 24.5%.\nGiven the outlook I just provided, we now expect full year adjusted earnings per share to be in the range of $2.40 to $2.43, up from the prior $2.36 to $2.39 range due to the favorable impact of the nonrecurring tax benefit as well as the balance sheet remeasurement gains during the quarter.\nAdditionally, given our year-to-date performance, we can now expect our full year operating cash flow to be at least $550 million, up from our earlier outlook of $500 million, and we continue to anticipate free cash flow from operations of approximately 1.2 times to 1.3 times net income, above our historical 1:1 ratio.\nOur results for the third quarter are a reflection of the focused long-term strategic choices we have made, the capabilities we have built organically and added inorganically over the years are resonating well in the market.\nWe are pleased with our performance that we believe reinforces our medium- to long-term trajectory of double-digit to low teens Global Client revenue growth driven by continued momentum in Transformation Services, particularly analytics with an expanding adjusted operating income margin and adjusted diluted earnings per share growing ahead of total revenue, all supported by strong cash flow generations.\nClients across all industries are increasingly looking to leverage data and analytics for predictive insights to drive actions and position themselves to compete in this new world.\nThis secular trend plays to our strengths in Transformation Services that continues to power our revenue growth led by its largest segment analytics that have been consistently growing more than 30%.\nThe majority of our Transformation Services engagements are longer-term annuity-based work that often leads to larger intelligent operations engagements that are, of course, annuity based by definition.\nOur outcome-oriented solutions are resonating well with clients as we focus on generating value beyond just cost and productivity, which is helping us win many sole-source opportunities, both with existing client relationships that are growing as well as with new logos.\nWe are at the forefront of developing new ways of working.\nWe are conducting many experiments across the globe with and for our clients in a variety of hybrid flexible models that allows our talent to get the benefits of being able to work from home while coming together as a team in a set rhythm to collaborate, innovate and build on a strong team culture that we are known for.\nOur clients value us for our talent practices and our ability to reskill globally and at scale.\nThese strengths differentiate us even more in the talent market we are today.\nThis is opening doors to many opportunities to help clients transform their business models with new cloud-based digital solutions that leverage newer commercial constructs given the changing nature of work away from traditional FTE modes.\nI'm very proud of the work we are doing and the impact our global teams have for our clients, our colleagues, our shareholders and the communities we live in, and I'm very excited about the opportunities ahead of us.\nNika, can you please provide the instructions?\n",
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"content": "compname reports adjusted earnings per share of $0.66.\nq3 adjusted earnings per share $0.66.\nq3 revenue rose 9 percent to $1.02 billion.\nsees fy revenue $3.96 billion to $4.0 billion.\nsees 2021 adjusted diluted earnings per share of $2.40 to $2.43.\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 New York today are Tiger Tyagarajan, our president and chief executive officer; and Ed Fitzpatrick, our chief financial officer.\nOur agenda for today will be as follows.\nTiger will provide a high-level overview of our results and update you on our strategic initiatives.\nEd will then discuss our financial performance in greater detail and provide our outlook for 2020.\nAnd as Gigi just mentioned, we expect our call to last roughly an hour.\nIn addition, during our call today, we will refer to certain non-GAAP financial measures.\nWe believe these non-GAAP measures provide additional information to enhance the understanding of the way management views the operating performance of our business.\nOutstanding execution and continued transformation services wins capped off one of our best revenue growth years ever.\nThis translated into a healthy adjusted earnings per share and operating cash flow growth for 2019.\nThese metrics were all above the high end of our expectations.\nClients' desire for transformational change is accelerating, expanding our addressable market and providing greater opportunities for us to drive profitable long-term growth.\nWe continue to improve the rigor and agility of our portfolio evaluation process, allowing us to quickly reallocate investment and talent resources to best penetrate high-growth areas.\nHere are our full-year 2019 results on a constant-currency basis.\nTotal revenue increased 18%, Global client revenue increased 12% and Global client BPO revenue increased 14%.\nWe also delivered adjusted operating income margin of 15.9%, up 10 basis points; and adjusted earnings per share of $2.05, up 14%.\nDuring 2019, we were increasingly recognized by our clients and industry analysts as a preferred partner to drive transformational change.\nBy leveraging disruptive digital technologies and real-time predictive insights, we are reimagining the way work gets done to solve critical business problems for our clients.\nWith the relentless pace of technological innovation, as well as competitive, macroeconomic, and geopolitical pressures, corporate leaders must accelerate their decision-making process and make bold decisions based on insights derived from analytics.\nWe believe our culture of driving change to meet these heightened expectations from the C suite and boards is a huge differentiator in the market and is one of the reasons we win.\nDuring 2019, we drove Global client growth across our chosen verticals led by growth of more than 30% in transformation services.\nOur consulting, digital, and analytics transformation services, rooted in domain and process expertise, acts as a tip of the spear for many large, long-term transformational engagements.\nOur consistent growth performance over many years supports my long-held view that digital and analytics comes to life when implemented with a deep understanding of domain and process.\nHighlighting the impact of transformation services on our business, our fastest-growing relationships are greater than 20% of revenues coming from transformation services.\nThese accounts are growing at more than double the company average.\nDuring 2019, for the second consecutive year, we signed total new bookings close to $4 billion, fed by our high-quality pipeline that remains near historic highs with steady win rates.\nAs a comparison, during 2016 and 2017, new bookings averaged approximately $2.7 billion.\nGlobal client bookings had a solid growth in 2019 with proactive sole sourced deals accounting for roughly half of our new wins.\nLarge deals continued to be a meaningful contributor to total bookings, and almost three quarters of our bookings had transformation services embedded in them, up from 60% range in 2018.\nAs expected, the bookings declined in 2019, given the large deal we signed late in 2018.\nLet me call out some key highlights for 2019.\nWe continued to add iconic brands to our client list in our focused industry verticals.\nWe closed two acquisitions to enhance our capabilities in critical areas: financial crimes and risk management and digital experience.\nSupply chain services, a strategic focus area, showed dramatic growth in inflows, pipeline, bookings and revenue during the year.\nWe successfully launched Genome, a reskilling and training platform for our global workforce that has been a huge hit.\nWe continued to leverage new commercial models, reflecting the changing nature of work we do for our clients.\nAnd finally, through the last phase of the large GE deal, we significantly enhanced our strategic sourcing capability.\nExpanding on some of these, during the year, we elevated our brand recognition and solidified our reputation as a thought leader, providing innovative transformative solutions for a growing roster of iconic clients.\nFor instance, as discussed last quarter, we entered into a strategic relationship with Cardinal Health, where our deep expertise in finance and accounting and ability to leverage data analytics to provide insights will help transform their FP&A analytics function to drive timely, as well as insightful decision-making.\nFP&A represents another ripe area for disruption and provides opportunities for growth.\nThese relationships are creating a heightened level of new inbound C-suite calls as companies want to explore engaging with us to transform their businesses.\nWe expect to fully leverage such new skill sets from a number of these relationships that has added significant new capabilities over the last two years.\nThese include highly leverageable teams in financial planning and analysis; order management and supply chain, particularly in consumer goods retail; commercial and pricing analytics; and sourcing and category management.\nA lot of this depth is in market and onshore.\nWe acquired riskCanvas early in 2019, which bolstered our already strong market offerings in financial crimes and risk management services for banks, a large opportunity for growth.\nOur expanded capabilities in this space are already showing results.\nWe were selected by a global bank to transform their KYC process for their wholesale banking business to better define customer risk profiles and improve regulatory compliance.\nOur risk domain team, along with our digital and analytics experts, are deploying a first of its kind-as-a-service solution with a transaction-based commercial model.\nThis unique offering leverages the riskCanvas proprietary cloud platform to collect and organize customer data, populate customer profile templates and provide risk scores.\nReplacing the bank's current manual processes with a streamlined digital as-a-service model, this solution is expected to cut processing time in half and provide an industrialized KYC process with much higher accuracy and timely regulatory reporting.\nDuring the fourth quarter, we closed the acquisition of Rightpoint to deepen our capabilities in experience, which is becoming increasingly important to our clients.\nWhile still early days, we're already seeing the value of bringing together our process innovation and Rightpoint's experience innovation.\nSupply chain management, now led by the team that joined us from Barkawi in late 2018, is allowing us to build traction in a vastly underpenetrated market.\nOur pipeline has expanded more than three times since the beginning of 2019, and we recently won a new engagement with a large global consumer goods company to help transform and run their end-to-end supply chain operations.\nThe redesigned operating model is aimed at helping the client drive better customer relationships, improve fulfillment rates, accelerate new product introductions and optimize trade promotions, thereby driving higher revenue and better working capital levels for them.\nI am excited to report that we now have three global relationships that crossed $100 million in annual revenue, up from just one at the end of 2018.\nWe expect many more of our relationships to hit this milestone over time.\nAs our solutions increasingly leverage AI, machine learning, robotic process automation and cloud-based solutions, our commercial models are becoming more outcome based.\nAt the end of last year, more than 40% of our total revenue is from newer constructs, not just based on FTE pricing, up from the mid-30% range only a couple of years back.\nOur talent has always been the most important pillar of our success.\nLike many of our clients, we are going through a transformation in the way we excite our workforce to reskill and help them continuously learn.\nThe launch of our Genome platform early last year provides the right tools and methods to up-skill our 95,000-plus global team members with relevant digital transformation and other professional skills at scale.\nWe are well on our way to achieving our first-year goal of reaching 70% penetration with the amount of learning hours continuing to expand.\nAs we move into 2020, we continue to expect our overall demand to be robust and continue to be led by transformation services.\nCoupled with the power of our domain and process expertise, we believe we are uniquely positioned to leverage innovative new digital technologies, as well as data and analytics in a focused way to solve for specific business outcomes.\nThis allows us to drive end-to-end digital transformation for clients in unprecedented ways, delivering significant outcome improvements and superior experiences.\nWe have been building these solutions through a combination of internal development, partnerships, acquisitions and large targeted carve-outs from our clients.\nWe now have an active portfolio of solutions that we manage, allowing us to leverage them for scale.\nOver time, we will continue to take decisions to proactively pull the plan on some of these.\nRecent examples of this include our mortgage origination platform, the KYC JV and the wealth management platform.\nThis proactive culling allows us to double down on areas such as dynamic workflows in the cloud, customer experience solutions, supply chain optimization, financial crimes and risk solutions and many others that are demonstrating market traction.\nToday, I will review our full-year results in detail then briefly touch upon some highlights of our fourth-quarter performance, as well as provide our financial outlook for 2020.\nLet me begin with a review of our full-year 2019 results.\nTotal revenue was $3.52 billion, up 17% year over year or 18% on a constant-currency basis.\nTotal growth was greater than expected, with transformation services leading the way.\nTotal BPO revenue, which represents approximately 84% of total revenue, increased 19% year over year, and total IT services revenue was up 10% year over year.\nGlobal client revenue, which represented approximately 86% of total revenue, increased 11% year over year or 12% on a constant-currency basis, at the high end of our expected range.\nWithin Global clients, BPO revenue increased 13% year over year or 14% on a constant-currency basis, led by growth in transformation services, up more than 30%, while IT services revenue increased 3%.\nDuring the year, as we become a bigger transformation partner for an increasing number of Global clients, we have meaningfully expanded the size of a number of our client relationships.\nDuring 2019, we increased the number of our Global clients with annual revenues over $15 million to 49 from 45.\nThis included clients with more than $25 million in annual revenue, growing to 25 from 21.\nGE revenue increased 78% year over year, above our expectations largely due to incremental scope added during the year related to the large deal we signed late in 2018.\nAdjusted income from operations grew 18% year over year to $559 million.\nRecall that we had assumed approximately $22 million at the beginning of the year related to the India export subsidy in our adjusted operating income outlook.\nAs it became clearer throughout the year that we would only receive approximately $4 million of that expected benefit, we put plans in motion to cover the $18 million shortfall with other items.\nDuring the fourth quarter, we were able to finalize the plans to monetize a property we owned in India which generated a gain of approximately $31 million included in other operating income.\nThis gain was partially offset during the quarter by certain other costs, including an $11 million nonrecurring impairment charge in cost of revenues related to a European wealth management platform that we no longer plan to leverage beyond the current scope.\nAdjusted operating margin of 15.9% was 10 basis points or $4 million, lower than our 16% target primarily due to a $4 million impairment charge recorded in the fourth quarter related to certain retirement plan assets in India.\nGross margin was lower year over year primarily due to higher stock-based compensation of 20 basis points and approximately 50 basis points due to the nonrecurring charges I just mentioned.\nBetter-than-expected revenue growth with higher onshore scope and the additional GE revenue also impacted margin.\nSG&A expenses totaled $795 million, compared to $694 million last year.\nAs a percentage of revenue, SG&A expenses were down 50 basis points year over year, driven by operating leverage, despite a 50-basis point dilution related to higher year-over-year stock-based compensation, as well as a 10-basis point impact from Rightpoint acquisition-related expenses.\nAdjusted earnings per share of $2.05 was up 14% year over year, compared to $1.80 in 2018.\nThis $0.25 increase was primarily driven by higher operating income of $0.34, partially offset by lower foreign exchange remeasurement gains, higher tax expense, and higher net interest expense of $0.03 each.\n2019 represents the fifth consecutive year of double-digit adjusted earnings per share growth that produced a 15% compound annual growth rate over that period.\nThis growth was driven by solid revenue growth and disciplined cost management that has consistently driven increased operating income and related operating margins in each of those periods, in line with our stated key strategic objectives.\nOur effective tax rate was 23.7%, compared to 22.3% last year, driven by the expiration of Special Economic Zones benefits in India, changes to the jurisdictional mix of income and the impact of India tax law changes.\nLet me now provide some additional color around our fourth-quarter performance.\nGlobal client revenue increased 7% year over year or 8% on a constant-currency basis, largely driven by continued growth in our consumer goods retail, banking capital markets and high-tech verticals.\nRecall that our growth rates during the fourth quarter last year made for a tougher comparison this year.\nGE revenues were up 61% year over year, driven by the large deals signed late last year and incremental scope of work added during the quarter.\nAdjusted operating margin during the quarter was 16.9%, largely in line with the level reported during the same period last year but slightly lower than we expected primarily due to the nonrecurring impairment of the India retirement plan assets in the quarter that I mentioned earlier.\nGross margin for the quarter was approximately 33%, compared to 35.5% level we generated during the first three quarters of 2019.\nThe decline was primarily driven by the two nonrecurring charges I referred to earlier that total approximately $14 million.\nIn addition, lower margin on the incremental GE scope and lower margin on the ramp-up of a new account in our banking vertical negatively impacted gross margin levels during the quarter.\nThe new banking account margins are expected to return to more normalized levels in the first quarter of 2020.\nWe also expect overall GE full-year 2020 gross margins to be largely aligned with GE's 2019 levels.\nSince 2019 was impacted by nonrecurring charges of approximately 50 basis points, we are expecting full-year gross margins to be up by 50 basis points in 2020.\nTotal SG&A expenses were $213 million, compared to $179 million in the same quarter of last year and included approximately $7.4 million of nonrecurring Rightpoint-related acquisition expenses and approximately $16 million related to stock-based compensation.\nAdjusted earnings per share for the fourth quarter was $0.57 compared to $0.52 last year.\nThe $0.05 increase was driven by higher operating income of $0.07, as well as $0.01 related to the impact of higher foreign exchange balance sheet remeasurement gains, partially offset by higher effective tax rate of $0.02 and increased share count of $0.01.\nOur effective tax rate was 28.1% compared to 25.8% last year due to the expiration of Special Economic Zones benefits, changes in the jurisdictional mix of our income and the impact of India tax law changes.\nTurning to our balance sheet and cash flows.\nDuring the year, we returned $95 million of capital to shareholders.\nThis included approximately $65 million in the form of our regular quarterly dividend of $0.085 per share which increased by 13% in comparison to the prior year.\nWe also repurchased approximately 766,000 shares totaling $30 million at a weighted average price of $39.16 per share during the year.\nSince we initiated our share buyback program in 2015, we've reduced our net outstanding shares by 17%.\nOver this period, we repurchased 37.4 million shares at an average price of approximately $26 per share for a total of $976 million.\nThe weighted average annual return on these share repurchases has been approximately 18% from 2015 through the end of January this year.\nWe currently have approximately $274 million of authorized capacity under our share repurchase program.\nCash and cash equivalents totaled $467 million, compared to $368 million at the end of the fourth quarter of 2018.\nOur net debt-to-EBITDA ratio for the last four rolling quarters was 1.7.\nWith undrawn debt capacity of $428 million and existing cash balances, we continue to have sufficient liquidity to pursue growth opportunities and execute on our capital allocation strategy.\nDays sales outstanding were 86 days, which were down from 87 days sequentially and increased three days from the last year, driven by delayed collections on certain accounts where cash was received in early January.\nDespite the higher DSOs, we were able to generate $428 million of cash from operations in 2019, up 26% year over year, exceeding the high end of the range we expected for the year.\nThe majority of this outperformance was driven by higher adjusted operating income.\nCapital expenditures as a percentage of revenue was 3.3% in 2019, in line with our expectations.\nFinally, let me update you on our outlook for 2020.\nWe expect total revenues to be between $3.89 billion and $3.95 billion, representing year-over-year growth of 10.5% to 12.5% on a constant-currency basis.\nWe expect the Rightpoint acquisition to contribute approximately 250 basis points to total company growth in 2020.\nThis impact is approximately 100 points higher than the contribution from acquisitions to our top line in 2019.\nFor Global clients, we expect revenue growth to be in the range of 12% to 14% on a constant-currency basis.\nWe expect GE revenues to normalize and be approximately flat year over year.\nWe will continue our strategic objectives to expand our adjusted operating margin and expect to drive 10 basis points of improvement to 16%.\nAs I mentioned earlier, we are expecting our full-year gross margins to improve by approximately 50 basis points in 2020 due to the impact of nonrecurring charges incurred in 2019.\nWe believe our gross margins have stabilized.\nThe impact of large deals has driven even higher revenue growth than we expected and thus has had a greater impact on gross margins than we initially expected.\nGiven the tremendous amount of capabilities we have been adding to our team from these iconic companies, we made the strategic decision to accept initially lower gross margins on these deals.\nWe plan to fully leverage these skill sets well into the future.\nDue to the historic seasonality we see in our business, we currently expect our adjusted operating margin for the first quarter of 2020 to be in the 14% to 15% range we have seen in the last two years.\nWe also expect the ramp of operating margins to be more in line with the trajectory we have seen over the past two years.\nOur 2020 effective tax rate is expected to be approximately 23.5% to 24.5%, up from 23.7% in 2019, driven primarily by the expiration of Special Economic Zones in India.\nWe continue to expect our effective tax rate to stabilize in a mid-20% range as the Special Economic Zone expirations reduce over time.\nGiven the outlook I just provided, we are estimating adjusted earnings per share for the full-year 2020 to be between $2.24 and $2.28.\nThis increase in earnings per share of 9% to 11% includes the negative impact of higher tax rate of approximately $0.01 per share in 2020 and includes no FX remeasurement-related impact.\nRecall that we recorded a gain of $0.03 for FX remeasurement gains in 2019.\nWe have assumed our ending share count as of December 31, 2019, in this estimate.\nWe are forecasting cash flow from operations to grow by approximately 10%, largely in line with total company revenue growth.\nCapital expenditures as a percentage of revenues are expected to remain at approximately 3% to 3.5%.\nWe continue to expect the free cash flow to net income ratio to be approximately one to one, on average, over time.\nAnd finally, we just announced an increase to our quarterly dividend from $0.085 to $0.0975 per share, which equates to annualized dividend of $0.39 per share, up 15% year over year.\nWe saw terrific momentum in our business in 2019, driven by disciplined strategic choices and strong execution.\nOur investments in our service lines, along with the successful integration of our acquisitions, particularly in digital and analytics, has positioned us well for a multiyear growth trajectory.\nOur large deals with iconic brands have solidified our reputation as a transformation partner of choice, leading to higher levels of inbound activity beyond our traditional buying centers.\nAs we enter 2020, we are seeing the experience economy rewrite the rules of digital transformation.\nWe are extremely excited about how we have bolstered our capabilities in this area through the acquisition of Rightpoint on the heels of the addition of the TandemSeven a few years back.\nWe have also been able to leverage our automation to AI platform Genpact Cora in many of our engagements and solutions, and we see it being a huge differentiator.\nCora allows us to bring more standardized, repeatable offerings to the market.\nClients increasingly need predictive insights to make more informed decisions.\nWith the acceleration of the digitization of data and the maturation of data management, our opportunity in analytics has expanded dramatically.\nWe saw terrific growth in analytics in 2019, and we expect this trajectory to continue to be a key driver of transformation services growth going forward.\nAs noted earlier, we will continue to be maniacally focused on reallocating investment and talent resources to high-growth areas, and we'll continue to be thoughtful in our choices.\nIn summary, we have a growing top line primarily made up of sticky long-term global relationships with inherent operating leverage driving long-term margin expansion and the ability to tap our cash flows and balance sheet to take advantage of opportunities in our underpenetrated market.\nWe have the right leadership team and talent base to go after this.\nI'm pleased with our 2020 outlook, which is very much aligned with our long-term growth and profitability goals.\nGigi, can you please provide the instructions?\n",
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"content": "compname reports q4 adjusted earnings per share $0.57.\nq4 adjusted earnings per share $0.57.\nsees fy revenue $3.89 billion to $3.95 billion.\nqtrly total revenue was $941 million, up 13%.\nsees 2020 adjusted diluted earnings per share of $2.24 to $2.28.\nsees 2020 global client revenue growth in range of 12% to 14% on as reported and constant currency basis.\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 Chris Simon, our CEO and Bill Burke, our CFO.\nAdditionally, we provided a complete P&L, balance sheet, summary statement of cash flows as well as reconciliations of our GAAP to non-GAAP financial results and guidance.\nPlease note that these measures exclude certain charges and income items.\nToday, we reported organic revenue growth of 6% and adjusted earnings per share of $0.50, up $0.04 or 9% compared with the first quarter of the prior year.\nWe are encouraged by our overall performance despite the impact of the COVID pandemic.\nWe are trending favorably and anticipate continued improvements in plasma collection volumes, strong procedure recovery is fueling outsized growth in our hospital segments, and the blood center market is resilient.\nI want to share some updates about how we are evolving our approach to managing the businesses to meet our growth commitments.\nChad Nikel has been named President, Global Plasma and Blood Center businesses.\nChad is a business builder who has been an integral part of Haemonetics for 12 years.\nHis vast knowledge of our products and our markets across the globe make him uniquely qualified to lead this business.\nUnder Chad's leadership, we can leverage our expertise in collection and donor management to achieve a broader global footprint.\nTwo years ago, we unveiled our operational excellence program to improve quality and service by transforming the way we source, make, and deliver products.\nOur goal was to achieve $80 million to $90 million in gross savings by the end of fiscal '23.\nI am proud to share that despite the headwinds in the past two years, we are planning to meet our savings target and save an additional $35 million by extending this program through the end of fiscal '25.\nThis will further strengthen our financial health and help offset losses from the anticipated transition of CSL in fiscal '23, rising inflationary pressures, and the effects of the pandemic.\nExpanding the program allows us to take a fresh look at our operations, identify new opportunities, and make new investments in sustainable solutions that will have a positive impact on our daily operations, customer support, and longer-term financial performance.\nWe look forward to sharing more insight into our long-term plans at our Virtual Investor Day later this year.\nFinally, we announced earlier this week, Lloyd Johnson has joined our Board of Directors.\nLloyd brings significant financial management, international operations, and business development insight.\nAdditionally, Ellen Zane has been elected Chair of our Board.\nThese updates reflect Haemonetics' ongoing commitment to refreshment, diversity, and augmenting our experienced base.\nNow on to the business units.\nPlasma revenue increased 6% in the quarter as the pandemic and the associated government subsidies continued to have a pronounced effect on the U.S. source plasma donor pool.\nNorth America disposables revenue increased 3% in the quarter driven by improvement in collections volume partially offset by price adjustments including the expiration of fixed term pricing on a historical PCS2 technology enhancement.\nSequentially, U.S. source plasma collection volumes declined 6% compared with about 6% seasonal improvement historically as additional economic stimulus hindered recovery.\nPlasma collections in Europe showed continued recovery in the first quarter specifically in the Czech Republic and Hungary driven by fewer COVID-related restrictions and plasma center growth.\nWe had double-digit growth in our plasma software revenue in the quarter supported by additional recovery in plasma collection volumes and our Donor 360 app, which enables plasma donors to register at home and streamline the pre-collection process with enhanced safety, efficiency, and convenience.\nSoftware is a strategic lever for our customers and we continue to invest in value-adding innovation to support their recovery and growth.\nNexLynk is a key enabler and differentiator for NexSys and we believe our combined technologies offer the most benefit to our plasma customers through improved collection yield, faster and more efficient center operations, improved compliance and donor satisfaction.\nAs we emerge from the pandemic, the sustained increases in available donors, the operational benefits of NexSys PCS integrated with NexLynk DMS will be a valuable tool to help collection centers accommodate greater donor traffic.\nCollection center conversions are on track as we plan to upgrade our customers to the latest version of NexLynk DMS software later this year and complete the transition of our major customers to NexSys PCS devices by mid-fiscal '23.\nWe've made significant progress with our Persona technology and early adopters are benefiting from an additional 9% to 12% plasma yield per donation.\nTheir positive feedback and real-world data validate the value proposition of our technology and confirm that there is no impact on repeat donations and donor deferral rates.\nWe anticipate additional Persona conversions in the second half of our fiscal '22.\nThe demand for plasma-derived medicines remains strong and our customers continue to take steps to recruit and retain donors.\nAs the industry recovers from the pandemic, we expect to return to the long-term 8% to 10% growth of U.S. sourced plasma collections and we see potential to grow in excess of that as customers strive to replenish depleted plasma inventories.\nAs we approach the midpoint of our second quarter, collections have improved 21% compared with the 14% improvement in the first quarter.\nThis increased growth is consistent with the high-end of our fiscal '22 plasma guidance.\nWe remain vigilant about potential disruptions caused by new COVID variants and recent reinforcement of the U.S. border policy, but we anticipate strong plasma collection recoveries in the second half of the year and a firm fiscal '22 organic revenue growth of 15% to 25%.\nMoving to hospital, revenue grew 26% in the quarter primarily due to continued improvements in hospital procedures driving increased utilization of disposables, strong capital sales in North America, and new business opportunities in Europe.\nWe saw continued recovery across all of our key markets although recovery trends outside of the U.S. were uneven due to concerns about new COVID variants and slower vaccine distribution.\nHemostasis Management revenue grew 31% in the quarter.\nU.S. led the charge with growth in the adoption and utilization of TEG disposables and strong instrument placements.\nWe also increased market share in Europe including the award of a new tender for the use of our ClotPro technology acquired in fiscal '21.\nCell Salvage revenue was up 27% in the quarter with double-digit growth across all of our key markets.\nGrowth was supported by continuous recovery in procedure volumes and capital sales as we continue to upgrade our customers to our latest technology.\nTransfusion Management grew 11% in the quarter primarily driven by strong growth in SafeTrace Tx as we completed new account installations in the U.S. BloodTrack also showed significant growth in the U.S. with a slight decline in international markets as new COVID concerns delayed implementation.\nWe affirm our expectation for 15% to 20% organic revenue growth in hospital including Hemostasis Management organic revenue growth in the mid-20s.\nThis growth rate assumes hospital procedures continue to improve throughout the year and will be fully recovered across all geographies by the end of fiscal 2022.\nOur newly acquired VASCADE vascular closure business delivered $22 million in revenue in the first quarter, exceeding our expectations.\nBoth VASCADE products delivered meaningful results through accelerated penetration into new accounts and increased utilization within existing accounts.\nWe are enthusiastic about the continued growth of this business supported by greater procedure volumes, higher diagnosis rates, increased hospital efficiency and an overall move to standard of care.\nWe are also expanding internationally by securing regulatory approvals and developing go-to-market strategies for faster and broader penetration.\nWe are increasing our fiscal '22 revenue guidance from $65 million to $75 million to $75 million to $85 million as we look to accelerate additional growth through further investments.\nBlood center revenue declined 6% in the first quarter.\nApheresis revenue declined 3% in the quarter and was impacted by unfavorable order timing and lost revenue from the previously announced customer loss included in our first quarter fiscal '21 results.\nWe are encouraged by the resilience of this business and the altruistic nature of blood donors.\nPlatelet collections in Japan fully recovered although that growth was partially offset by a reduction in plasma collections due to prolonged COVID-related state of emergency.\nWe also experienced strong market demand for platelets in China driven by our expansion in Tier 2 markets.\nWhole blood revenue declined 14% driven by lower collection volumes and discontinued customer contracts in North America.\nOur expectations for the blood center business are unchanged and our fiscal '22 revenue guidance is a decline of 6% to 8%.\nChris has already discussed revenue.\nSo I will start with adjusted gross margin, which was 54.7% in the first quarter, an increase of 750 basis points compared with the first quarter of the prior year.\nOur adjusted gross margin benefited from the addition of Vascular Closure devices from the Cardiva Medical acquisition as well as favorable mix from our remaining product portfolio as our businesses continue to recover from the effects of the pandemic.\nIn manufacturing and supply chain, we had improved operating efficiency due to higher volume and lower expenses related to the pandemic.\nWe also continued to drive savings from the operational excellence program.\nThese benefits were partially offset by previous divestitures and price adjustments.\nAdjusted operating expenses in the first quarter were $87.1 million, an increase of $23.4 million or 37% when compared with the prior year.\nAs a percentage of revenue, adjusted operating expenses increased by 550 basis points and were at 38%.\nThe acquisition of Cardiva had the largest impact on the increase in adjusted operating expenses.\nAlso affecting the increase were higher variable compensation, spending beginning to return to normal levels, an increase in freight costs, and higher research and development expenses to strengthen our technology.\nOur first quarter adjusted operating income was $37.9 million, an increase of $9.4 million or 33% compared with the prior year.\nThis improvement in adjusted operating income was driven by higher adjusted gross margin partially offset by the increase in adjusted operating expenses.\nOur adjusted operating margin was 16.6% in the first quarter, an increase of 200 basis points compared with the same period in fiscal '21.\nAs our business continues to recover from the pandemic, we continue to generate additional savings through the operational excellence program.\nWe anticipate increased leverage in adjusted operating margin.\nWe affirm adjusted operating margin guidance of fiscal '22 to be in the range of 19% to 20%.\nOur adjusted income tax rate was 24% in the first quarter compared with 4% in the same period of fiscal '21.\nThe adjusted income tax rate in the first quarter of fiscal '21 was abnormally low due to the benefit of higher performance share vestings.\nWe now expect our fiscal '22 adjusted tax rate to be 22%.\nFirst quarter adjusted net income was $25.4 million, up $1.7 million or 7% and adjusted earnings per diluted share was up was $0.50, up 9% when compared to the first quarter of fiscal '21.\nThe adjusted income tax rate in the first quarter of fiscal '22 had a $0.13 downward impact on adjusted earnings per diluted share when compared with the prior year.\nOur Vascular Closure business is exceeding original expectations and we expect this business to be net neutral to adjusted earnings per diluted share in fiscal '22 compared with our original expectation of $0.15 to $0.20 dilution in the first year following the acquisition.\nWe expect this overperformance will be driven by stronger commercial execution and difference in capital structure when compared with the original deal model and will allow us to generate additional resources to fund growth investments across the company.\nToday we announced a revised operational excellence program with total gross savings of $115 million to $125 million that will deliver $80 million to $90 million in gross savings by the end of fiscal '23, which is in line with our original expectations with an additional $35 million in savings by the end of fiscal '25 with the return of volume back to pre-pandemic levels.\nWe expect the majority of the savings realized to benefit adjusted operating income by the end of fiscal '23 and about half of the total savings passing through by the completion of this program in fiscal '25.\nThe exact pace of the operational excellence program savings and net impact on adjusted results will be communicated with our guidance for each fiscal year.\nAdditionally, we expect to incur $95 million to $105 million in restructuring and restructuring related costs over the course of this program.\nIn addition to updating the total estimated gross savings for this program, we accelerated the pace of these savings in fiscal '22 and now expect this program to deliver gross savings of approximately $33 million, an increase of $11 million or 50% when compared with our previous guidance.\nDue to increasing inflationary pressures and investments in manufacturing, we anticipate about 25% of these savings will benefit adjusted operating income in fiscal '22.\nWe expect fiscal '22 adjusted earnings per diluted share to be in the range of $2.60 to $3.00.\nCash on hand at the end of the first quarter was $173 million, a decrease of $19 million since the beginning of the fiscal year.\nFree cash flow before restructuring and turnaround costs was $2 million compared with $11 million in the same quarter of the prior year.\nThe lower free cash flow before restructuring and turnaround costs in fiscal '22 was due to higher accounts receivable as our revenue continued to recover from the pandemic and higher capital expenses primarily related to the operational excellence program partially offset by lower inventory growth.\nWe affirm our previous guidance and continue to expect free cash flow before restructuring and turnaround expenses in fiscal '22 to be $135 million to $155 million.\nOur capital allocation priorities remain unchanged and we continue to prioritize organic growth followed by inorganic opportunities and share buybacks.\nIn the short-term, we will focus on investments into core capabilities and technologies that make our products distinctive.\nBefore we open the call up to Q&A, I want to reiterate the key points that we hope you take away from today's call.\nFirst quarter results show encouraging performance across our business supported by strong procedure recovery in our hospital business, resilience of blood donors in blood centers, and initial rollouts of our Persona technology and plasma.\nWe believe there are no structural changes in the underlying demand for our products and we continue to anticipate full recovery across all of our businesses by the end of fiscal '22 but the exact pace of the recovery, particularly in plasma remains the biggest variable included within our affirmed guidance.\nThe recently acquired VASCADE vascular closure technology is exceeding our expectations with strong revenue growth and increased leverage delivering no dilution to adjusted earnings per diluted share one year ahead of the original deal model.\nThis business strengthens our market position, expands the market opportunity, and further enables our portfolio to capitalize on the market recovery ahead.\nWe remain committed to delivering value for our customers and our shareholders as we pursue growth strategies to maintain market leadership, to develop innovative products and partnership with our customers, and to drive productivity and efficiency of scale with an expanded operational excellence program.\nAnd lastly, our team has been working diligently on updating our long range plan and we are looking forward to sharing it at our Virtual Investor Day expected at the end of this calendar year.\n",
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"content": "qtrly adjusted earnings per diluted share $0.50.\nhaemonetics - affirmed fiscal 2022 adjusted operating margin, adjusted earnings per share & free cash flow before restructuring & restructuring related costs 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: I'm joined today by Chris Simon, our CEO; Stewart Strong, President of the Hospital Business Unit; and Bill Burke, our CFO.\nAdditionally, we provided a complete P&L, balance sheet, summary statement of cash flows, as well as reconciliations of our GAAP to non-GAAP adjusted results.\nBefore we get started, unless noted otherwise, all revenue growth rates discussed today are on an organic basis and exclude the impacts of currency fluctuation, strategic exits of product lines, acquisitions and divestitures.\nPlease note that these measures exclude certain charges and income items.\nPlease note that these measures exclude certain charges and income items.\nOur improved third quarter results are evidence in the strength of our strategy and our progress transitioning to transformational growth.\nWe have a lot to discuss today.\nLet me start by highlighting five key themes.\nRevenue improved sequentially in all three business units as our markets are recovering from the pandemic.\nProductivity from the Operational Excellence Program and cost management helped improve our profitability.\nWe are making meaningful progress with NexSys adoption.\nOur innovation agenda continues to propel organic growth, and the Cardiva acquisition will help us diversify, grow, and create shareholder value.\nMoving to our results.\nOrganic revenue was down 6% in the quarter and 12% [Technical Issues] as the impacts from the pandemic continue to affect our business.\nThird quarter adjusted earnings per diluted share was $0.81, down 14% from the prior year quarter and down 28% year-to-date.\nWhile our results were below our pre-pandemic fiscal 23rd [Phonetic] quarter, we did see a 14% sequential improvement in revenue driven by all three business units, and our adjusted earnings per diluted share was up 31% from second quarter.\nPlasma revenue declined 13% in the third quarter and 26% year-to-date as the pandemic continued to have a pronounced effect on the U.S. source plasma donor pool.\nRevenue declines were partially offset by a $6 million one-time safety stock order of plasma disposables.\nSequentially, North America collection volume improved 29% excluding the effect of the safety stock order.\nTo put this in perspective, we typically have a 3% to 5% seasonal increase in the third quarter.\nOur customers have taken extensive donor safety measures and launched a myriad of promotional campaigns to encourage donations.\nHeightened safety protocols and compelling financial incentives along with waning government stimulus contributed to 10 consecutive weeks of volume recovery.\nNexSys platform adoption is progressing, and we are confident that it will supplant PCS2 as a standard for source plasma collection worldwide.\nWe are on track to upgrade all U.S. customers to our NexLynk DMS software by the end of the calendar year.\nAll major customers have agreed to adopt NexSys PCS devices somewhere in their network.\nThis bodes well for eventual broad-based implementation, because history shows that first-hand user experience leads to adoption.\nRollout will not be immediate as there is important planning and support work to be done and near-term, Haemonetics and our customers primary focus is on driving a robust recovery in collections.\nOur innovation agenda continues to propel organic growth.\nPersona's individualized donor-specific approach is expected to yield an incremental 9% to 12% of plasma per collection.\nNexSys early adopters are validating the new nomograms impact on immunoglobulin levels and implementing logistics changes needed to support the new procedure, including accommodating our collection bottle, that is a third largest.\nThe real world data being collected will strengthen the NexSys offering and inform ongoing innovation in our proprietary collection technology, including safely advancing additional personalization and further yield enhancements.\nMeanwhile, we continue to do everything we can to support our customers and we remain cautiously optimistic about the timing and pace of recovery.\nThe third quarter highlights the critical role that donor economics play in plasma collections.\nCollection volumes weakened over the last few weeks, which we believe was driven by a donor response to the new government stimulus.\nNonetheless, our customers are ramping up to support end-market growth, and although forecasting remains difficult in this environment, once the pandemic subsides, we expect to see 8% to 10% collections growth over the long-term and the potential to grow in excess of that, as customers replenish their inventories.\nBlood center revenue declined 1.4% in the third quarter and 2.6% year-to-date.\nThe business continues to outperform as our continuity and responsiveness enables us to supply blood bankers around the world seeking expanded safety stocks.\nWe also continue to support customers globally in collecting convalescent plasma.\nWe had strong capital sales both in the third quarter and year-to-date, as our apheresis devices continue to play an important role in helping to provide essential blood products to our customers.\nWe believe the increased installed base should provide longer-term benefits to our disposable sales.\nApheresis revenue was up 6% in the third quarter and 1.8% year-to-date.\nContinued plasma growth and favorable order timing among distributors in both periods was partially offset by the impact of a previously disclosed customer loss of about $4 million in the quarter and $12 million year-to-date.\nWe did not see distributor stocking order reversals in the third quarter.\nWhole blood revenue declined 19% in the quarter and 11% year-to-date, driven by lower-than-usual procedure volumes due to COVID-19, previously discontinued customer contracts, and overall declines in blood utilization rates.\nAdditionally, whole blood revenue in the third quarter was impacted by unfavorable order timing among distributors.\nOur recent efforts to optimize this portfolio has allowed our team to focus on apheresis devices and disposable, which is driving performance.\nCardiva is a leader in vascular closure, an under-developed segment with significant potential.\nVASCADE is a leading product with strong tailwinds and the Cardiva team is talented and highly motivated to deliver.\nWith focus and support, we can accelerate growth, especially in electrophysiology, where VASCADE MVP is uniquely positioned for use with cardiac ablation procedures.\nThis is a revenue deal.\nBut with added scale, there will also be increased operating leverage.\nWe avoid the G&A cost Cardiva would have incurred to operate as a public company.\nWe can use our infrastructure to support U.S. expansion and our international commercial organization can help to launch VASCADE outside the U.S. Together, we can improve our global reach and relevance.\nInvestments in sales and clinical reps, as well as clinical medical and health economics capabilities will benefit both portfolios in IC and EP.\nOur TEG long-range plan is anchored in interventional cardiology with further opportunity in electrophysiology.\nHaemonetics [Indecipherable] can learn from Cardiva.\nAnd over time, there may be commercial and-or clinical calpoint [Phonetic] synergies.\nWe value diversification and growth.\nCardiva diversifies our product offerings in [Indecipherable] and vascular closure.\nAttractive near adjacencies that can fuel accelerated growth.\nOur focus has shifted to integration and execution is now our top priority.\nOver to you, Steve.\nI would like to reiterate my excitement about Cardiva.\nThe acquisition is on track to close this quarter.\nDetailed integration planning is under way, and we are squarely focused on driving revenue growth.\nWe are supporting the Cardiva team's strategy in their commercial, product innovation and manufacturing plans, while working on G&A integration.\nNow moving to our results.\nHospital revenue increased 5% in the third quarter and 1% year-to-date.\nOur hospital business has seen continued sequential improvement over the course of the fiscal year and our third quarter growth was driven by our direct markets across the globe, and in particular, our top two markets, North America and China.\nHemostasis Management revenue was up 11% [11.3%] in the third quarter and 6% year-to-date, compared with the prior year, driven by strong sales of TEG disposables in the U.S. and capital sales in Europe.\nThe pandemic continued to partially offset the strength of this business, both in the quarter and year-to-date.\nWe are excited to share that the FDA has issued guidance on the use of viscoelastic testing in patients suspected of COVID-19 coagulopathy, and we are working to update our indication in line with the guidance.\nThe use of TEG analyzers for hypercoagulable patients has already been discussed in a number of scientific publications, and updated indications will give us the opportunity to be proactive in deploying this technology to help advance COVID-19 patient management.\nIn parallel, we're driving our go-to-market strategies.\nWe recently signed an agreement in China to manufacture locally designed and made viscoelastic testing analyzers, and locally manufactured reagents to expand our product offering to meet the unique needs of the Chinese market.\nThe product line will focus on automation, high-throughput, and easy customer interface as we build on market specific platform with further innovation in the pipeline.\nTransfusion management was up 7% in the third quarter and 9% year-to-date, primarily driven by strong growth in BloodTrack through new accounts in several key geographies.\nOur teams have implemented alternative methods to advance installations and utilization in customer environments where access continues to be restricted.\nCell salvage revenue declined 6% in the third quarter and 11% year-to-date, primarily driven by declines in disposable usage.\nSequentially, cell salvage revenue was up 1% in the third quarter as additional recovery in procedure volumes plateaued toward the end of the quarter.\nThe pandemic continues to validate the essential role our technologies play in assessing bleeding and thrombosis risks, autologous blood transfusions and effectively managing blood supply.\nRecovery has been very encouraging, but we're cautious about the near-term forecast as procedure volumes have leveled-off over the past four weeks, driven by a global resurgence of COVID cases that may prolong the recovery.\nWe are confident in the hospital business unit's long-term value to our customers and their patients, and our significant opportunity for growth and expansion.\nChris has already discussed revenue.\nSo, I will start with adjusted gross margin, which was 51.4% in the third quarter, a decline of 70 basis points compared with the third quarter of the prior year.\nAdjusted gross margin year-to-date was 50.4%, a decline of 160 basis points compared with the first nine months of the prior year.\nThe primary drivers of the declines in both the third quarter and year-to-date we're impacts from higher costs, including an inventory charge in the third quarter, cost per COVID-19 protective measures, and lower volume.\nThere was also some un-favorability due to product mix.\nThese downward effects on gross margin were partially offset by productivity savings realized from the ongoing strength in our operational excellence program, and lower depreciation expense as our PCS2 devices were mostly depreciated by the end of the prior fiscal year.\nAdditionally, the combination of our recent divestitures and our strategic exit of the liquid solution business resulted in a net negative impact on our third quarter, and about neutral impact on our year-to-date adjusted gross margin.\nWe continue to successfully execute an appropriate balance of cost control measures and investments without disrupting our growth objectives.\nAdjusted operating expenses in the third quarter were $71 million, a decrease of $2.4 million or 3% [3.3%] compared with the third quarter of the prior year.\nAdjusted operating expenses year-to-date were $201.1 million, a decrease of $19.1 million or 9% compared with the first nine months of the prior year.\nLower adjusted operating expenses, both in the third quarter and year-to-date were due to a combination of ongoing productivity savings related to our operational excellence program and cost containment measures implemented to help offset the negative effects of COVID-19.\nPartially offsetting these savings were ongoing investments in key growth areas of the business.\nAs a result of the performance and adjusted gross margin and adjusted operating expenses, the third quarter adjusted operating income was $52.6 million, a decrease of $9 million or 15% [14.6%], and adjusted operating income year-to-date was $124.1 million, a decrease of $46.7 million or 27% compared with the same period in fiscal ' 20.\nAs our business continue to recover from the pandemic, we have seen significant progress in the sequential quarterly improvement of our adjusted operating margins throughout the fiscal year.\nWe continue to expect adjusted operating margins to improve to levels above fiscal '20 once the pandemic fully subsides.\nAdjusted operating margin was 21.9% in the third quarter and 19.2% year-to-date, down 190 basis points and 350 basis points respectively compared with the same periods in fiscal ' 20.\nFor both periods, the lost leverage from revenue declines outpaced the impacts of cost mitigation efforts.\nThe adjusted income tax rate was 16% in the third quarter and 15% in the first nine months of the fiscal year, compared with 17% in the third quarter and 14% in the first nine months of the prior year.\nThird quarter adjusted net income was $41.4 million, down $7.1 million or 15% [14.5%] and adjusted earnings per diluted share was $0.81, down 14% [13.8% ] when compared with the third quarter of fiscal ' 20.\nAdjusted net income year-to-date with $96.8 million, down $39.1 million or 29%, and adjusted earnings per diluted share was $1.89, down 28% when compared with the prior year.\nOur third quarter results are encouraging and show a significant recovery from the effects of the pandemic.\nIn the short-term, however, we continue to view the current environment as uncertain and we will not be providing guidance for the fourth quarter.\nOur operational excellence program is delivering positive results and continues to drive improvements in adjusted gross margin and adjusted operating margin.\nWe remain committed to delivering $80 million to $90 million of savings by the end of fiscal '23 as part of this program, which is essential for our future growth.\nThe progress we have made has helped us to reduce the impacts from the pandemic.\nWe expect the majority of savings realized will drop through to adjusted operating income by the conclusion of the program with the return of the business back to historical levels.\nFree cash flow before restructuring and turnaround costs was $99 million in the first nine months of fiscal '21, compared with $95 [$95.2 ] million in the prior year.\nWe have been able to offset the decline in earnings due to the impact of the pandemic on sales volumes, particularly in the plasma business through a combination of lower increases in inventory, lower capital expenditures, an improvement in accounts receivable, when compared with the prior year.\nAlthough our free cash flow for inventory is lower than the same period of the prior year, the impact from lower sales volumes and plasma has resulted in a higher disposables inventory balance.\nWe continue to monitor our inventory levels and have seen a decrease in our disposable inventory sequentially.\nAdditional fluctuations in inventory may occur as we adjust our production to support customer demand and our operational excellence program initiatives.\nCash on hand at the end of the third quarter was $189 million, an increase of $52 [$51.7] million since the beginning of the fiscal year.\nIn addition to free cash flow, the third quarter ending cash balance increased $28 million from recent portfolio moves and decreased $73 million due to debt repayments, including a $60 million repayment of the revolving credit line that was outstanding at the end of fiscal ' 20.\nThe borrowing of $150 million under the revolving credit facility in the first quarter of this fiscal year was repaid during the third quarter, and has no effect on the cash increase in this fiscal year.\nOur current debt structure includes a $700 million credit facility that does not mature until the first quarter of fiscal '24, with the majority of the principal payments weighted toward the end of the term.\nAt the end of the third quarter, total debt outstanding under the facility included $311 million term loan.\nThere were no borrowings outstanding under the existing $350 million revolving credit line at the end of the third quarter.\nFollowing our announcement to acquire Cardiva Medical, we will execute additional term loan of $150 million and we'll finance the remaining $325 million balance using a combination of our cash on hand and our existing revolving credit line.\nAt the completion of this transaction, which is expected to occur during the fourth quarter, our EBITDA leverage ratio as calculated in accordance with the terms set forth in the company's existing credit agreement will increase from 1.3 at the end of our third quarter of fiscal '21 up to about 3.2.\nOur capital allocation priorities are clear and remain unchanged as we continue to prioritize organic growth followed by inorganic opportunities and share repurchases.\nOver the last fours years, we put a lot of emphasis on strengthening our portfolio in funding key organic growth initiatives.\nThese investments have enabled us to improve our growth trajectory and will continue to fuel growth.\nWe have also bought back a total of $435 million or $4.5 million of the company's shares outstanding.\nAnd while we do not plan to make additional purchases under the current share repurchase authorization, we view share repurchases as an important driver of shareholder return.\nM&A is also a critical pillar of our capital allocation and by acquiring Cardiva Medical, we are adding a high growth asset, which will help us sustain future revenue growth and provide attractive financial returns.\nAnd now, I'd like to open the call for Q&A.\n",
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"content": "compname reports quarterly adj earnings per diluted share of $0.81.\nqtrly adjusted earnings per diluted share $0.81.\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 Chris Simon, our CEO; and Bill Burke, our CFO.\nAdditionally, we provided a complete P&L, balance sheet, summary statement of cash flows, as well as reconciliations of our GAAP to non-GAAP financial results and guidance.\nPlease note that these measures exclude certain charges and income items.\nBefore I get into our results, I want to review the news we announced a few weeks ago.\nIn April, CSL Plasma notified us that they do not intend to renew their US supply agreement for the use of our PCS2 plasma collection system equipment and the purchase of plasma disposables that expires in June of 2022.\nWe were informed that CSL's decision was not based on the level of service or quality of our products, but rather reflects the change in internal strategy that was made some time ago, presumably before they had experience with NexSys and Persona.\nWe are disappointed by CSL's decision, but it does not change our commitment to the plasma market and our technology to improve collections.\nThe NexSys and Persona value propositions are strong, supported by real-world data and real-time customer feedback.\nAnd we are excited about what this platform means for our customers.\nWe are taking a comprehensive approach to address the impact the CSL transition will have in fiscal '23.\nWe are acting with urgency, but we are being thoughtful and balanced in our planning.\nOur ability to respond is enhanced by the steps we have taken these past few years to strengthen our financial health, improve productivity, drive innovation, reshape our portfolio and build a collaborative performance-driven culture.\nWe are well positioned to navigate this change.\nWe are focused on driving value for customers and shareholders, and our decision making is guided by a through-cycle mindset.\nWe will continue to pursue growth strategies to maintain our market leadership, including developing innovation in partnership with our customers.\nWe also remain committed to productivity and being good stewards of the Company's resources.\nWe will provide more details on the path forward as our plans take shape.\nWith that, let me turn to our results for the quarter and the fiscal year.\nToday, we reported organic revenue decline of 14% in the fourth quarter and 13% for fiscal '21; and adjusted earnings per share of $0.46, down 33% in the quarter, and down 29% to $2.35 for the year.\nFiscal 2021 was a difficult year for Haemonetics as the pandemic had varying effects across our businesses and their respective customers.\nDespite the challenges, we made progress to build a stronger Haemonetics.\nWe divested non-performing assets like the Fajardo blood filter manufacturing operations, Blood Center donor management software in the US and Inlog SAS blood bank and hospital software in Europe.\nWe made organic and inorganic investments in attractive and growing markets, including the launch of Persona and the Donor360 app, and the acquisitions of ClotPro and Cardiva Medical.\nWe modified our capital structure for financial flexibility and remain diligent with cost containment, while continuing to fund growth.\nWe made significant changes to the way we source and make our products as part of our Operational Excellence Program.\nWhile we cannot control the pandemic's impact on our customers' businesses, we met every challenge, keeping our employees safe and our plants operational with high levels of service and customer support.\nEarly fiscal '22 will continue to be challenging, but we expect the pace of recovery to accelerate over the year.\nThe end market demand for our products remain strong, and we do not see structural or other changes from the pandemic that would impact the need for lifesaving plasma-based medicines or hospital devices for critical areas of medicine like trauma, interventional cardiology and electrophysiology.\nWe have healthy and viable businesses, delivering exceptional value adding technology.\nWe have proven our resilience and our ability to drive growth and productivity, and we will do so again as our markets recover from the pandemic.\nTurning now to our business units.\nPlasma revenues declined 28% in the fourth quarter and 26% in fiscal '21, as the pandemic continued to have a pronounced effect on the US-sourced plasma donor pool.\nWe saw lingering effects beyond fourth quarter into April.\nNorth America disposables declined by 31% in the fourth quarter, primarily driven by declines in volume and a negative impact from the expiration of pricing on a historical technology enhancement with one of our customers.\nSequentially, plasma collection volumes declined by 13% compared with historical average seasonal declines of about 7%, as additional economic stimulus hindered recovery.\nFiscal '21 was an especially difficult year for plasma collections, given the interplay of different factors affecting donor behavior.\nOur customers have taken extensive measures to ensure the health and safety of donors and to launch a myriad of promotional campaigns to encourage plasma donations.\nOur teams have remained focused on ensuring no disruptions to our supply, service and support.\nDespite the environment, we advanced our innovation agenda with the FDA clearance of Persona, which safely yields an additional 9% to 12% of plasma on average per collection.\nWe extended the reach of our customers to donors via a Donor360 app, which allows donors to engage with centers before in-person visits, decreasing door-to-door time and improving the overall donor experience.\nGiven the pandemic's negative effect on collections, increased yield is more important than ever and feedback from NexSys customers operating with YES technology or Persona continues to be positive.\nWe believe they were able to offset some of the headwinds from the pandemic because they benefited from safe, higher plasma yield per donor, bidirectional paperless connectivity and increased donor satisfaction.\nNexLynk DMS rollouts continue on pace, and the software continues to be a key enabler and differentiator for NexSys.\nAll of our major customers have agreed to adopt NexSys somewhere in their collection network, and we anticipate that by mid-fiscal '23, the majority of our customers, excluding CSL, will be on NexSys in the US or globally.\nAs we emerge from the pandemic and see future sustained increases in available donors, the operational efficiency benefits of NexSys, integrated with NexLynk DMS, will be an increasingly valuable tool to support greater donor traffic.\nWe anticipate initial Persona rollouts this fiscal year, as we strive to move in sync with our customers and pace our technology implementations to meet their individual needs.\nWe are committed to advancing our innovation agenda across devices, disposables and software to develop products that create long-term sustainable value for our customers.\nWe continue to do everything we can to support our customers, and we remain cautiously optimistic about the timing and pace of recovery.\nThe demand for plasma-derived medicines remains strong, and our customers are doing what they can to recruit and retain donors.\nUnfortunately, donor economics play a critical role in plasma collections, and we expect collections will be muted until government stimulus wanes.\nBeyond stimulus, we expect a return to the long-term 8% to 10% growth of the US-sourced plasma collections market, and we see potential to grow in excess of that as customers strive to replenish depleted plasma inventories.\nHospital revenue increased 12% in the fourth quarter and 4% in fiscal '21.\nOur Hospital business experienced continued sequential improvement over the first nine months of the fiscal year.\nFourth quarter recovery was uneven, as we saw another spike in COVID cases early in the quarter, followed by a material improvement in February and March, coupled with the anniversary of the previous year impact of COVID-19 in China and other geographies that were affected earliest by the pandemic.\nHemostasis Management revenue was up 19% in the fourth quarter and 9% in fiscal '21.\nNorth America, our largest market, showed sequential growth throughout the first nine months of the year.\nAnd despite a spike in COVID cases early in the fourth quarter, the business exited in a strong position, including additional penetration into new accounts.\nChina, our second largest market, benefited from a lower comparator in the prior year fourth quarter due to the early onset of COVID-19.\nStrong capital sales in North America and EMEA have also contributed favorably to our fourth quarter and fiscal '21 results.\nWe continue to drive our go-to-market strategies for viscoelastic testing to meet the unique needs of our regional markets.\nWe are executing on the Chinese market introduction of our locally designed and manufactured viscoelastic testing technology that expands our product offering to meet the needs of that geography.\nTransfusion Management was up 9% in the fourth quarter and fiscal '21, primarily driven by strong growth in BloodTrack through new accounts and geographic expansion of SafeTrace Tx.\nOur teams have used remote tools to advance installations and utilization in customer environments where access continues to be restricted.\nCell Salvage revenue grew 2% in the fourth quarter and declined 8% in fiscal '21.\nOur Cell Salvage results in the quarter benefited from the easy comparison with the prior year quarter in China and 80% growth in capital sales as we continue to upgrade our customers to the latest technology.\nPartially offsetting these benefits in the fourth quarter was overall lower procedure volume due to COVID-19.\nThe integration of Cardiva Medical is going well, and the performance of the business is exceeding expectations.\nThe VASCADE proprietary vascular closure technology strengthens our hospital portfolio in the attractive interventional cardiology and electrophysiology markets, and the team is focused on driving the strategy underlying this acquisition.\nAlthough excluded from our organic revenue results, Cardiva added close to $8 million of revenue in March, as our teams continue to drive penetration in the top hospital accounts for interventional procedures in the US.\nAdditionally, as US procedure volume continues to improve, we've seen increasing benefit from product utilization among existing accounts.\nOur long-term outlook for this business is strong, as our combined product development and regulatory teams work closely together on OUS registrations and driving additional product innovation.\nOverall, the pandemic has validated the essential role of our technologies in hospital.\nWe have demonstrated our ability to safely and effectively sell, including to new and existing accounts, install and service our equipment despite limited access to hospitals.\nBlood Center revenue declined 10% in the fourth quarter and 4% in fiscal '21.\nApheresis revenue declined 3% in the fourth quarter and grew nearly 1% in fiscal '21.\nFourth quarter apheresis results were impacted by unfavorable distributor order timing in EMEA and a competitive loss, partially offset by strong capital sales.\nOrder timing was overall a benefit to our full year fiscal '21 results, as distributors made large stocking orders in response to the pandemic, particularly in Europe and the Middle East.\nWe also benefited from strong capital sales as we continue to support our customers in the collection of convalescent plasma.\nThese benefits were partially offset by the previously disclosed competitive loss that had a $17 million impact on our full year results.\nExcluding this loss, overall Blood Center revenue actually grew in fiscal '21.\nWhole blood revenue declined 24% in the fourth quarter and 14% in fiscal '21, driven by lower collection volumes due to COVID-19 and discontinued customer contracts in North America.\nWe remain committed to supporting enhanced product quality and services for our blood center customers, while preserving cash generation and exploring portfolio rationalization as appropriate.\nI will begin by discussing our fiscal '21 actual results, followed by our fiscal '22 guidance.\nChris has already discussed revenue, so I will start with adjusted gross margin, which was 50% in the fourth quarter, a decline of 30 basis points compared with the fourth quarter of the prior year.\nAdjusted gross margin year-to-date was 50.3%, a decline of 130 basis points compared with the prior year.\nOn the positive side, we continue to benefit from productivity savings realized from our Operational Excellence Program and lower depreciation expense related to our PCS2 devices, which were mostly depreciated by the end of the prior fiscal year.\nWe also saw benefits from the recent acquisition of Cardiva Medical.\nThe primary drivers of the adjusted gross margin decline were unfavorable pricing and product mix, mainly due to the impact of COVID-19, higher inventory-related charges and the impact of recent divestitures.\nThese inventory-related charges, which relate to CSL's intent not to renew the US plasma disposables supply agreement, had about 220 basis points impact on our fourth quarter and about 60 basis points impact on our fiscal '21 results.\nThe combination of our recent divestitures and our strategic decision to exit the liquid solution business resulted in a net negative impact of 70 basis points on our fourth quarter and about neutral impact on our fiscal '21 adjusted gross margin.\nAdjusted operating expenses in the fourth quarter were $81.9 million, an increase of $9.2 million or 13% compared with the fourth quarter of the prior year.\nAdjusted operating expenses for fiscal '21 were $283 million, a decrease of $9.8 million or 3% compared with the prior year.\nAdjusted operating expenses, both in the fourth quarter and fiscal '21, were impacted by higher variable compensation, the acquisition of Cardiva Medical and the impact from the 53rd week.\nContributions from our productivity savings and cost containment efforts that we put in place earlier in the pandemic helped to offset some of the impacts and allowed us to make additional growth investments into our business.\nAs a result of the performance in adjusted gross margin and adjusted operating expenses, fourth quarter adjusted operating income was $30.5 million, a decrease of $16.8 million or 35%, and adjusted operating income for fiscal '21 was $154.6 million, a decrease of $63.4 million or 29% compared with the prior year.\nAdjusted operating margin was 13.5% in the fourth quarter and 17.8% in fiscal '21, down 630 basis points and 420 basis points respectively compared with the same periods in fiscal '20.\nFor both periods, the lost leverage from revenue, coupled with the inventory-related charges, higher variable compensation and impacts from portfolio changes, outpaced the impact of cost mitigation efforts and productivity savings.\nThese inventory-related charges and higher variable compensation put downward pressure on operating margins by approximately 500 basis points in the fourth quarter and approximately 100 basis points in fiscal '21.\nThe variable compensation incentives we established during the pandemic and the one-time inventory-related charge due to the recent customer announcement are not expected to affect future operating margins.\nThe adjusted income tax rate was 12% in the fourth quarter and 14% in fiscal '21 compared with 18% and 15% respectively for the same periods of the prior year.\nFourth quarter adjusted net income was $23.9 million, down $11.5 million or 33%, and adjusted earnings per diluted share was $0.46, down 33% when compared with the fourth quarter of fiscal '20.\nAdjusted net income for fiscal '21 was $120.7 million, down $50.6 million or 30%, and adjusted earnings per diluted share was $2.35, down 29% when compared with the prior year.\nThe inventory-related charges and higher variable compensation had a downward impact on adjusted earnings per diluted share of $0.18 in the fourth quarter and $0.12 in fiscal '21.\nOur Operational Excellence Program continued to deliver positive results and drive improvements in adjusted gross and adjusted operating margins.\nThis program has also enabled us to offset some of the challenges resulting from the pandemic.\nDuring fiscal years '20 and '21, the program-to-date gross savings are approximately $34 million, with the majority of those savings dropping through to adjusted operating income.\nCash on hand at the end of the fourth quarter was $192 million, an increase of $55 million since the beginning of the fiscal year.\nFree cash flow before restructuring and turnaround costs was $99 million in fiscal '21 compared with $139 million in the prior year.\nFiscal '21 included a $54.3 million payment for a compensation-related liability as part of the Cardiva Medical acquisition.\nThe total purchase price paid for Cardiva Medical was reduced by the amount of this liability.\nLower increases in inventory, lower capital expenditures and improvement in accounts receivable compared -- when compared with the prior year have benefited fiscal '21.\nAlthough the free cash outflow for inventory is lower than in the prior year, the impact from lower sales volume in Plasma has resulted in a higher disposables inventory balance.\nWe will continue to monitor our inventory levels and expect inventory fluctuations to continue as we adjust our production to support customer demand and our Operational Excellence Program initiatives.\nIn addition to free cash flow, the fourth quarter ending cash balance benefited from the completion of a $500 million convertible debt offering, which resulted in a net cash inflow of $439 million.\nOffsetting the cash inflow during fiscal '21 was $390 million of net cash spent on recent portfolio moves and $82 million of debt repayments, including a $60 million repayment of the revolving credit line that was outstanding at the end of fiscal '20.\nOur current debt structure includes a $700 million credit facility that does not mature until the first quarter of fiscal '24 with the majority of the principal payments weighted toward the end of the term.\nAt the end of the fourth quarter, total debt outstanding under the facility was $302 million.\nThere were no borrowings outstanding under the $350 million revolving credit line at the end of fiscal '21.\nDuring the fourth quarter, we completed a $500 million convertible debt offering.\nOur EBITDA leverage ratio, as calculated in accordance with the terms set forth in the Company's existing credit agreement, is 3.4 at the end of fiscal '21.\nThe existing $500 million share repurchase authorization will expire at the end of May 2021 with $325 million remaining on the authorization.\nWe will update our capital allocation priorities in the next few quarters as we continue to develop our long-range plan.\nNow, I will turn to our fiscal '22 guidance.\nOur business continues to be impacted by the pandemic.\nTherefore, our fiscal '22 guidance includes wider than usual ranges that reflect the uncertainty of the pace of the continuing recovery.\nWe will narrow or update our guidance as necessary throughout the year.\nOur fiscal '22 organic revenue growth is expected to be in the range of 8% to 12%.\nWe remain confident in the continued market growth underlying the commercial plasma business and anticipate Plasma revenue growth of 15% to 25% in fiscal '22.\nAt the low end of our guidance range, we assume that the second and third rounds of economic stimulus will continue to impact plasma collections through the first half of fiscal '22 with stronger collection volumes in the second half of fiscal '22.\nAt the higher end of our guidance range, we assume that recovery will begin mid-second quarter with additional acceleration toward the end of the fiscal year as customers begin to replenish safety stock levels.\nIn both cases, we expect the run rate for plasma collections to be at or above fiscal '20 levels at the end of the fiscal year.\nDisposable revenue related to CSL collection volume is included in the guidance for 12 months.\nIn fiscal '21, we recognized disposable revenue in the US from CSL of approximately $89 million.\nThis Plasma revenue guidance also includes the net impact of initial rollouts of Persona and NexSys adoption for customers with whom we have agreements, with the majority of the benefit toward the end of the fiscal year.\nThese benefits are partially offset by price adjustments, including the expiration of fixed term pricing on a historical PCS2 technology enhancement and a one-time safety stock order in fiscal '21.\nWe expect 15% to 20% organic revenue growth in our Hospital business in fiscal '22.\nThis growth rate assumes the recovery of hospital procedures will continue to improve throughout the year and will be close to fully recovered across all geographies by the end of our fiscal '22.\nOur Hospital revenue guidance includes Hemostasis Management revenue growth in the mid-20s.\nThe Cardiva Medical acquisition is anticipated to deliver $65 million to $75 million of revenue and is excluded from organic revenue growth until the anniversary of the acquisition date.\nOur fiscal '22 guidance for Blood Center revenue is a year-over-year decline of 6% to 8%.\nThe anticipated revenue decline in Blood Center reflects the annualization of business exits, primarily within North America whole blood, the non-repeating revenue related to convalescent plasma in fiscal '21 and the effects of order timing, which favorably impacted fiscal '21.\nWe expect fiscal '22 adjusted operating margins in the range of 19% to 20% and adjusted earnings per diluted share in the range of $2.60 to $3.00.\nOur adjusted earnings per diluted share guidance includes an adjusted income tax rate of approximately 21%.\nIn fiscal '22, we expect our Operational Excellence Program to deliver gross savings of approximately $22 million with less than half benefiting adjusted operating income due to inflationary pressures and investments in manufacturing.\nThe program began in fiscal '20.\nAnd by the end of fiscal '22, we anticipate achieving approximately $56 million of gross savings, with about 60% of those savings benefiting adjusted operating income.\nThe remaining year of the Operational Excellence Program is being updated as part of our comprehensive effort to address the impacts from the anticipated customer loss in early fiscal '23.\nWe intend to communicate the updated Operational Excellence Program as part of our longer range plan.\nWe also expect our free cash flow before restructuring and turnaround expenses in fiscal '22 to be $135 million to $155 million.\nBefore we open the call up for Q&A, I want to reiterate the key points that we hope you take away from today's call.\nFirst, while the pandemic continued to impact our business, we don't believe it has caused any structural changes to the end market demand for our products.\nBy the end of our fiscal '22, we expect full recovery across all of our businesses, but the exact pace of the recovery is the biggest variable included within our guidance.\nSecond, we believe our product portfolio strongly positions us to capitalize on the market recovery ahead.\nDespite the challenges put in front of us, our teams remain focused on rationalizing our product portfolio to emphasize the products and markets that meet our strategic goals, prioritizing investment and allocating capital to strengthen the core capabilities and technology that make us distinctive.\nThird, our Operational Excellence Program continues to drive transformation, primarily in our manufacturing and supply chain, as we become more agile and flexible.\nWe made significant progress to date, which has allowed us to offset some of the headwinds due to the pandemic, and we expect to have close to 60% to 70% of the program completed by the end of our fiscal '22 with the majority of those savings benefiting our adjusted operating income.\nAnd finally, we have a proven dedicated team, committed to driving value for our customers and our shareholders.\nWe are proud of the way our teams have risen to meet the challenges over the past year.\nWe recognize more challenges are ahead, including difficult donor economics and the eventual loss of CSL in Plasma.\nWe are committed to taking action, managing costs and mitigating the impact without compromising future growth of our business.\nAnd while we have a lot of work to do in the coming quarters, we're confident that our teams' experience, resilience and agility will ensure that Haemonetics has a bright future.\n",
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"content": "qtrly adjusted earnings per diluted share $0.46.\nsees fy 2022 gaap total revenue growth of 13 – 18%.\nsees fy 2022 adjusted earnings per share $2.60 - $3.00.\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 risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2020, Form 10-Q for the quarter ended September 30th, 2021, recent current reports on Form 8-K, and other Securities and Exchange Commission filings.\nOur comments today also include non-GAAP financial measures.\n2021 finished strong for Halliburton, and I'm excited about the accelerating upcycle as we enter 2022.\nWe have an effective value proposition and benefit from increasing activity both in North America and international markets.\nAt the same time, we see improving service pricing in both markets.\nThroughout this upcycle, I expect Halliburton to grow profitably, accelerate free cash flow generation, strengthen our balance sheet, and increase cash returns to shareholders.\nBut first, I want to take a minute and recognize the men and women of Halliburton for their execution on every dimension of our business: safety, service, quality, and financial results.\nIn spite of global complexity in 2021, you outperformed.\nI believe 2022 will be a strong year for our industry and especially for Halliburton.\nWhile global energy demand and economic growth demonstrated resilience, global energy supply has shown its fragility.\nThe impact of several years of underinvestment in new production is now apparent.\nAnd the structural requirement to invest around the wellbore is crystal clear.\nWe see increasing customer urgency and a pivot back to what creates value for Halliburton.\nOur customers demand reliable execution, dependable supply chains, effective technology, and a collaborative service provider to maximize asset value.\nAnd this is at the core of Halliburton's unique value proposition.\nBut first, I'll highlight some of our 2021 accomplishments.\nWe finished the year with total company revenue of $15.3 billion and operating income of $1.8 billion.\nBoth of Halliburton's divisions grew revenue and margins this year.\nOur completion and production division finished the year with 15% operating margin, driven by activity improvement despite inflationary pressures.\nWe expect to build on this margin growth in 2022 as global activity and pricing improve.\nOur drilling and evaluation division margins remained firmly in double digits throughout 2021 and achieved full-year margins of 12% for the first time since 2014.\nThis is a good demonstration of our steady march forward, and we are not done.\nI am pleased with the trajectory of our international business.\nInternational revenue and operating income increased every quarter in 2021.\nIn North America, Halliburton achieved 36% incrementals year on year as U.S. land activity rebounded and we maximized the value of our business.\nWe announced our science-based emission reduction targets, added 11 new participating companies to Halliburton Labs, and were named to the Dow Jones Sustainability Index, which highlights the top 10% most sustainable companies in each industry.\nFinally, we generated strong free cash flow of $1.4 billion and ended the year with $3 billion of cash on hand, even after the retirement of $685 million of long-term debt in 2021.\nNext, let me share a few highlights from our fourth quarter performance.\nTotal company revenue increased 11%, and operating income grew 20% sequentially.\nOur completion and production division revenue increased 10% sequentially, and operating income increased 8%, with completion tool sales showing the highest third to fourth quarter improvement in the last 15 years.\nEqually important, our current completion tool order book has more than doubled from a year ago, signaling strong growth and profitability again in 2022.\nOur drilling and evaluation division grew revenue 11%, which outperformed the global rig count growth for the quarter and delivered over 300 basis points of sequential margin improvement.\nInternational and North America revenue grew 11% and 10%, respectively, due to strong year in sales and activity increases across all regions.\nBuilding on this strong foundation of disciplined execution, today, we announced two important strategic steps we are taking to further create value for our shareholders.\nFirst, our board of directors increased our quarterly dividend to $0.12 per share in the first quarter of 2022.\nThis action reflects our confidence in Halliburton's strong cash generation capacity.\nSecond, in order to accelerate debt retirement and strengthen our balance sheet, we are redeeming $600 million of our $1 billion in debt maturing in 2025.\nWhen these notes are redeemed in February, we will have retired $1.8 billion of debt since the beginning of 2020.\nThese steps demonstrate my confidence in our business customers, employees, and value proposition.\nAs I discussed with you on recent earnings calls, I expect the macro industry environment to remain supportive.\nAnd as we saw in 2021, the international and North America markets will continue their simultaneous growth.\nThis is momentum that I have not seen in a long time.\nWith this momentum, we plan to execute our unique strategic priorities, deliver profitable growth internationally, maximize value in North America, accelerate digital and automation deployment, improve capital efficiency, and advance a sustainable energy future.\nLet's discuss how we plan to do this.\nFirst, internationally, our strategy is to deliver profitable growth.\nWe allocate capital to the highest-returns opportunities, which means we are selective on what we bid for and when.\nOur D&E margin performance in 2021 as a demonstration of this discipline.\nWe continue to invest in technology, both digital and hardware, that maximizes asset value.\nIn 2021, we brought to market over 50 new technologies, including our iStar Intelligent Formation and Evaluation Platform and the next generation of our iCruise system for harsh drilling environments.\nOur multiyear investment in drilling technologies is paying off.\nAnd we expect to outgrow the market as international drilling activity ramps up.\nWe have unique international growth opportunities in specialty chemicals and artificial lift.\nAs Halliburton expands the international footprint of these businesses, we have a pipeline of opportunities that are longer cycle and should be margin accretive.\nHalliburton's size, scale, and sophisticated supply chain and HR teams reliably execute for our customers in the face of supply shortages and labor tightness.\nSecond, in the structurally smaller North American market, our strategy is to maximize cash flow, and it dictates how we approach our North America business.\nStrong cash flow starts with strong margins, and Halliburton's margins are the best in class.\nWe completed the most aggressive set of structural cost reductions in our history.\nWe also made significant changes to our processes that drive higher contribution margin, for example, how we perform equipment maintenance and provide engineering support.\nThese changes give us meaningful operating leverage as North American activity accelerates.\nWe consistently replace equipment as it wears out and avoid outsized recapitalization requirements.\nAnd we have the right type of equipment.\nWe are the leaders in the low-emissions equipment segment.\nWe believe this gives us a structural pricing advantage as operators are willing to pay a premium for differentiated, more environmentally friendly solutions.\nOur second-generation ZEUS electric fracturing technology is working in the field today and delivers results for a growing list of customers.\nImportantly, in addition to emissions reduction, electric fracturing technology provides unprecedented operational control and precision.\nFor example, this makes pumping rate adjustments at least four times faster than a diesel pump, allowing us to respond to surface and subsurface changes more quickly than with a conventional frac spread and precisely execute the job design.\nWe expect fully electric locations to become a larger share of the market.\nHalliburton has the right kit, including our ZEUS electric pumping unit, the ExpressBlend blending system, the eWinch electric wireline unit, and the electric tech command center to meet the market demand for lower-emitting fracturing operations.\nWe developed differentiated technologies that focus around the wellbore.\nAs the oil price and customer urgency increase, these technologies become more valuable to operators.\nFor example, our SmartFleet intelligent fracturing solution helps customers optimize fracturing performance and maximize production.\nSeveral large operators will have SmartFleet working on multi-pad completion programs this year.\nAdditionally, SmartFleet delivers fully automated frac operations, which ensures more consistent fracture placement on every stage, improves cluster uniformity, and manages offset frac hits.\nFinally, I want to highlight the importance of our well construction and production service lines.\nThey each have unique competitive advantage and technology to maximize value in North America.\nThird, our strategy is to advance digitalization and automation in all aspects of our business.\nOur digital investments drive higher margins through customer purchases of software, smarter tools and answer products, and cost savings for Halliburton.\nLet me give you an example.\nCurrently, 100% of Halliburton's drilling jobs run on a cloud-based real-time system to deliver data and visualization to our customers around the world.\nClose to 60% of iCruise operations are fully automated, allowing for up to a 70% reduction in headcount per rig.\nAutomation alleviates health and safety concerns by removing personnel from rigs, accelerates service delivery improvements, and reduces the environmental footprint of oil and gas operations.\nOur fourth strategic priority is to drive capital efficiency across the balance sheet.\nThis positions Halliburton to generate industry-leading returns and strong free cash flow as markets grow.\nWe will optimize the working capital required to grow our business and maintain our capex in the range of 5% to 6% of revenue.\nOur business thrives in this range because of our research and development efforts and process changes.\nThese allow us to build tools cheaper, lengthen their run life, and move assets quicker to where they make the most money.\nOur final strategic priority is to advance a sustainable energy future.\nOur clean energy accelerator, Halliburton Labs, continues to add new participants.\nWe help these early stage companies achieve important scaling milestones and significantly increase their enterprise value.\nThrough Halliburton Labs, we are actively participating in the clean energy space without committing shareholder capital.\nHalliburton will evolve as energy evolves.\nAnd we will add to our already expanding opportunities to participate as clean energy value chains mature.\nHowever, we will do so consistent with our capital allocation strategy and mindful of our commitment to deliver industry-leading returns and free cash flow generation.\nWe will proceed with patience, discipline, and resolve.\nNow, let's review our fourth quarter 2021 performance and expectations for 2022.\nAs OPEC Plus spare capacity returns to normalized levels this year, we believe sufficient pent-up oil demand will support a call on both international and U.S. production, and lead to increased activity.\nInternational activity accelerated in most markets in the second half of the year and finished strong in the fourth quarter with a 23% rig count increase year on year.\nAll Halliburton regions grew revenue, led by Asia-Pacific, the Middle East, and Africa, with both of our divisions contributing to the revenue and margin expansion.\nI'm excited about our future international growth.\nDespite typical first quarter seasonality, we're starting 2022 a lot higher than where we entered 2021.\nI expect our customers international spend to increase by mid-teens this year.\nWe anticipate projects in the Middle East, Russia, and Latin America to attract the most investment, with activity increases in Africa and Europe limited to a few markets.\nAsset owners are eager to reverse base production declines caused by multiple years of underinvestment.\nWe expect that operators will focus on shorter-cycle production opportunities to meet increasing oil demand.\nThis disproportionately benefits Halliburton as these short-cycle barrels require higher service intensity and spending directly focused on the wellbore as opposed to long-cycle infrastructure investments.\nIn 2022, we expect to deliver steady, profitable growth across the international markets.\nOur tender pipeline is strong.\nWe anticipate higher utilization for existing equipment in busy markets like the Middle East, Russia, and Latin America.\nWe plan to allocate our capital dollars to the opportunities that generate the highest return.\nGiven the tool tightness that exists today in some product lines and geographies, we intend to strategically reallocate assets to drive improved utilization and returns.\nA tightening market focuses our ongoing pricing discussions with customers.\nWe see pricing traction on new work and contract renewals, including integrated contracts.\nAdditionally, we have introduced pay-for-performance models, negotiated favorable terms and conditions, and applied price escalation clauses.\nWhile large tenders remain competitive, we are consistent with our strategy to pursue profitable growth.\nTurning to North America.\nIn 2021, the recovery in North America was faster and more pronounced than in the international markets.\nIn the fourth quarter, U.S. land rig count increased 84% year on year, and drilling activity outpaced completions as operators prepared well inventory for 2022 programs.\nCompleted stage count growth moderated slightly due to the holidays, sand supply tightness, and lower-efficiency levels typically experienced in the winter months.\nIn the fourth quarter, we finished the planned upgrade of all fracturing fleets to the next-generation fluid end technology that extends the life of our equipment and helps reduce maintenance cost.\nWe expect a busy 2022 in North America.\nGiven a strong commodity price environment, we anticipate North America customer spending to grow more than 25% year on year.\nWe believe the highest increase will come from private operators.\nPublic E&Ps will continue to prioritize returns while delivering production into a supportive market.\nIn North America, Halliburton uniquely benefits as the largest oilfield services provider in the largest oilfield services market in the world.\nWe anticipate solid net pricing gains in North America throughout 2022.\nThe North America completions market is approaching 90% utilization, and Halliburton is sold out.\nPricing for our fracturing fleets is moving higher across the board, both for our market-leading low-emissions equipment and our Tier 4 diesel fleets.\nAs a result, we expect to see over 30% incremental than our hydraulic fracturing business in the first quarter.\nAnticipated demand growth for equipment provides a runway for us to increase pricing throughout the year.\nWe expect some marketwide operational efficiencies afforded by completing a backlog of DUCs in 2021 to reverse as frac fleets return to the usual mode of following drilling rigs.\nThis will further increase the call on equipment as operators add rigs throughout the year.\nFinally, during the tendering season, we secured net pricing increases across several different non frac product service lines: drilling, cementing, fluids, drill bits, and artificial lift.\nAs activity accelerates, the market is seeing tightness related to trucking, labor, sand, and other inputs.\nWhile we pass these increased costs on to operators, Halliburton has effective solutions that minimize the operational impact of this tightness and provide reliable execution for our customers.\nAs an example, in 2021, we expanded our collaboration with Vorto and now benefit from 5F, the largest integrated transportation platform in the oil and gas industry.\nThis platform has several thousand drivers, hundreds of carriers, and a chain of asset-managed yards.\nIt allows us to effectively manage trucking inflation and availability constraints and significantly reduce logistics-related, nonproductive time.\nOur human resources team and systems effectively mitigate local labor tightness.\nWe recruit nationally and hire, train, and manage a commuter workforce that makes up to 80% of our personnel in some areas.\nThere is no doubt, the much-anticipated multiyear upcycle is now underway.\nNorth America production growth remains capped by operators' capital discipline, while meaningful international production growth is challenged by years of underinvestment.\nEnergy demand has proven its resilience, fueled by pent-up economic growth and a global desire to return to normalcy.\nThis is a fantastic set of conditions for Halliburton.\nIn a strong commodity price environment with limited production growth options, operators turn to short-cycle barrels and increase spend around the wellbore.\nOur value proposition works.\nWe have the right strategies for both international and North America markets.\nWe are leaders in digital and automation, and we drive capital efficiency while advancing a sustainable energy future.\nI fully expect that Halliburton will accelerate cash flow generation, strengthen our balance sheet, and increase cash returns to shareholders in this upcycle.\nLet me begin with a summary of our fourth quarter results compared to the third quarter of 2021.\nTotal company revenue for the quarter was $4.3 billion, an increase of 11%.\nOperating income was $550 million, a 20% increase compared to the adjusted operating income of $458 million in the third quarter.\nThese results were primarily driven by increased global drilling activity and end-of-year product and software sales.\nNow, let me discuss our division results in a little more detail.\nStarting with our completion and production division, revenue was $2.4 billion, an increase of 10%, while operating income was $347 million, or an 8% increase.\nThese results were primarily driven by higher completion tool sales globally, as well as increased pressure pumping services in North America land and the Middle East Asia region.\nThese improvements were partially offset by reduced stimulation activity in Latin America, Canada, and the Gulf of Mexico; lower pipeline services in Europe, Africa, CIS, and Asia; reduced well intervention services in Brazil; and decreased artificial lift activity in North America land.\nIn our drilling and evaluation division, revenue was $1.9 billion, an increase of 11%, while operating income was $269 million, or a 45% increase.\nThese results were due to increased drilling-related services globally, wireline sales in Guyana, improved project management activity in Ecuador and India, increased wireline activity in the Middle East Asia region, and higher software sales in Latin America and Middle East Asia.\nPartially offsetting these increases were decreased project management activity and testing services in Mexico, as well as lower drilling-related activity in Russia.\nMoving on to our geographic results.\nIn North America, revenue increased 10%.\nThis increase was primarily driven by higher pressure pumping activity and drilling-related services in North America land, in addition to higher completion tool sales and fluid services in the Gulf of Mexico.\nThese increases were partially offset by a reduced stimulation activity in Canada and the Gulf of Mexico, coupled with reduced artificial lift activity in North America land.\nTurning to Latin America.\nRevenue increased 7% sequentially.\nThis improvement was driven by higher project management activity in Ecuador, increased drilling-related services in Mexico, increased activity across multiple product service lines in Brazil, wireline sales in Guyana, and higher activity across multiple product service lines in Colombia.\nThese increases were partially offset by reduced project management and simulation activity and testing services in Mexico.\nIn Europe, Africa, CIS, revenue increased 8% sequentially.\nThese results were partially driven by higher software and completion tools sales across the region, improved activity across multiple product service lines in Norway and Egypt, and increased well control activity in Nigeria.\nThese improvements were partially offset by a reduced activity in multiple product service lines in Russia, reduced pipeline services and well construction activity in the United Kingdom, and decreased stimulation activity in the Congo.\nIn the Middle East Asia region, revenue increased 16%, resulting from higher completion tool sales and wireline activity across the region, improved well construction services in Saudi Arabia and Oman, higher software sales in Kuwait and China, improved project management activity in India, and increased stimulation activity throughout Asia.\nThese increases were partially offset by reduced pipeline services in Asia, along with lower activity across multiple product service lines in Vietnam.\nNow, I'd like to address some additional financial items.\nIn the fourth quarter, our corporate and other expense totaled $66 million, which was slightly higher than expected due to an increase in legal reserves.\nFor the first quarter, we expect our corporate expense to be about $60 million.\nNet interest expense for the quarter was $108 million, slightly lower than anticipated due to higher interest income from our cash balance.\nToday, we announced our decision to redeem $600 million of the 2025 senior notes using cash on hand.\nThis action will reduce future cash interest expense and reflects our desire to continue reducing debt balances.\nAs a result of the debt retirement in late February, our net interest expense should remain roughly flat in the first quarter.\nDuring the quarter, we recognized a noncash gain of approximately $500 million due to the partial release of a valuation allowance on our deferred tax assets.\nThis reversal is based on the improved market conditions and reflects our increased expectation to utilize these deferred tax assets going forward.\nOur normalized effective tax rate for the fourth quarter came in at approximately 23%.\nBased on our anticipated geographic earnings mix, we expect our 2022 first quarter effective tax rate to be approximately the same.\nCapital expenditures for the quarter were $316 million, with our 2021 full year capex totaling approximately $800 million.\nIn 2022, we intend to increase our capital expenditures to approximately $1 billion while remaining within our target of 5% to 6% of revenue.\nWe believe that this level of spend will equip us well to execute on our strategic priorities and take advantage of the accelerating market recovery.\nTurning to cash flow, we generated nearly $700 million of cash from operations during the fourth quarter and delivered approximately $1.4 billion of free cash flow for the full year.\nAs a result, we ended the year with approximately $3 billion in cash.\nI've spoken before about our ability to concurrently reduce debt and increase the return of cash to shareholders.\nAnd today, we put that into action.\nThis is a great start to a longer-term goal of returning more cash to shareholders.\nNow, let me provide you with some comments on how we see the first quarter playing out.\nAs is typical, our results will be subject to weather-related seasonality and the roll-off of year-end product sales, which will mostly impact our international and Gulf of Mexico businesses.\nHowever, we expect pricing recovery in North America to help offset these dynamics.\nAs a result, in our completion and production division, we anticipate sequential revenue and margins to be essentially flat to the fourth quarter.\nIn our drilling and evaluation division, we expect revenue to decrease in the mid-single digits sequentially, while margins are expected to be flat to down 50 basis points.\nTo summarize our discussion today, we see customer urgency and demand for our services increasing internationally and in North America.\nWe expect our strong international business to continue its profitable growth as activity ramps up throughout the year.\nIn the critical North America market, we expect our business to grow and improve margins.\nWe prioritize our investments to the highest returns opportunities and remain committed to capital efficiency.\nWe continue to play a role in advancing cleaner and more affordable energy solutions.\nIn 2022, I expect Halliburton to deliver margin expansion, industry-leading returns, and solid free cash flow.\n",
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"content": "q4 revenue $4.3 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: We are pleased to be here today to provide an update on our progress after the second quarter of 2020.\nHopefully, everyone has had a chance to review the news release we issued earlier today.\nThese risks include those related to the impact of the COVID-19 pandemic and measures by governmental or regulatory authorities to combat the pandemic on our business and operations as well as the business and operations of the consumer, our customers, suppliers, business partners and labor force.\nThese risks also include those detailed in our various filings with the SEC, which may be found on our website as well as in our news releases.\nThe use of the term PPE relates to our personal protection garment business, including face masks, face coverings and gowns.\nAlso, please note that unless otherwise stated, all prior year comparisons are to 2019 results that have been rebased to reflect the exited C9 Champion program at Target and the DKNY intimates license.\nWith me on the call today are Gerald Evans, our Chief Executive Officer; and Scott Lewis, our Chief Accounting Officer and Interim Chief Financial Officer.\nThis quarter, I have never been more proud of this organization and our employees' ability to rise to the occasion and meet challenges to deliver exceptional performance, even in the midst of a devastating pandemic.\nDespite the economic disruption of COVID-19 around the globe, Hanesbrands delivered strong second quarter results, driven by better-than-expected performance in both our apparel and our new PPE businesses.\nFor the quarter, revenue increased 6%, operating profit increased 41%, earnings per share increased 58%, and we generated $65 million of operating cash flow.\nOur strong second quarter performance in one of the most challenging retail and consumer environments in decades underscores the strength of our brand portfolio, the agility of our organization, the scale of our company-owned supply chain and the cash-generating power of our business model.\nIn my view, there are four key highlights in the quarter that speak to the strength of our underlying model.\nAnd our ability to grow this business going forward.\nFirst, our apparel business outperformed; second, the organization quickly pivoted to create a new PPE business; third, we generated positive cash flow; and fourth, we ended the quarter with $1.8 billion of liquidity.\nTouching on our apparel business performance, which excludes PPE, our strong second quarter results were meaningfully ahead of our base case scenario in each of our three main segments: U.S. Innerwear, U.S. Activewear and international.\nPoint-of-sale trends improved sequentially through the second quarter in all of our key geographies, with the positive momentum carrying into July, as consumers settled into new routines, stimulus initiatives were rolled out, and retail doors reopened around the world.\nIn fact, point-of-sale in our U.S. Basics and Champion businesses in May and June exceeded pre-COVID levels.\nIn U.S. Innerwear, point-of-sale trends accelerated through the quarter.\nMoving from down 29% in April to up 8% in May and up 11% in June.\nWe experienced strong momentum in our Basics business with mid-teens point-of-sale growth, yielding more than 300 basis points of market share gains in the quarter.\nWithin our Intimates business, point-of-sale returned to essentially flat in June and improved to up 3% in July, regaining its pre-COVID momentum as the mid-tier and department store channels reopened.\nWe experienced a similar trend in our Champion business within the U.S. Activewear segment.\nIn the quarter, Champion point-of-sale accelerated from down 14% in April to up nearly 40% in May and up more than 70% in June as consumers continued to actively seek out the brand, particularly within the online channel.\nWith store reopenings under way in our International business, we saw monthly progression within our Innerwear businesses in Europe and Australia as well as within our Champion businesses in Europe and Asia.\nStrength in our Online business continued globally in the second quarter, with sales up more than 70% over prior year.\nWe experienced strong growth across our key regions in the quarter, with triple-digit online growth at some of our largest customers and nearly 200% growth on our newly enhanced champion.com website.\nWithin our Apparel business, which excludes PPE, online represented over 30% of total sales in the quarter.\nWe are encouraged by the strong POS trends, which we believe points to the improving shipment and revenue trend in our Apparel business as we move through the second half and into next year.\nTurning to the second highlight of the quarter.\nOur newly created PPE business generated over $750 million of revenue.\nThis was well ahead of our initial expectation as we benefited from additional government contracts for both mask and reusable gowns, and we were able to fulfill demand for a number of businesses.\nWe recently launched our consumer PPE facemask business at retail.\nWe expect to generate more than $150 million of additional PPE revenue in the second half of the year.\nLooking forward, we continue to believe this consumer product line represents a meaningful ongoing business opportunity.\nThe third highlight of the quarter was cash flow, as we generated $65 million of cash flow from operations.\nYear-to-date, operating cash flow was $40 million better than last year.\nWith the majority of retail doors closed for half the quarter, this performance speaks to the cash-generating power of our model and the discipline of the organization to aggressively manage operating cost and working capital.\nWe continue to expect to generate positive operating cash flow for the second half of the year.\nAnd finally, in terms of liquidity, we said on our last call that our focus in this environment was on managing cash while positioning the company to be able to take advantage of opportunities.\nThis focus allowed us to capture stronger-than-expected demand for our products in the quarter as well as maintain our dividend.\nWe ended the quarter with $1.8 billion of liquidity, which we believe provides us ample capital to maximize our operating flexibility and positions us to grow the business going forward.\nLooking ahead, there remains uncertainty about the extent and pace of reopening economies in the midst of COVID-19, and we are planning accordingly.\nAbsent any rollbacks of store reopenings, we expect year-over-year revenue trends in our Apparel business to improve sequentially in the second half.\nOur core brands are healthy.\nWe are gaining market share.\nPoint-of-sale trends remain strong.\nOur back-to-school and holiday plans are set and initial spring 2021 bookings of Global Champion are up meaningfully over prior year in each region.\nWe believe the positive underlying trends in our business, both prior to and during the pandemic, positions us for growth in a post pandemic environment.\nSo in closing, we delivered a strong quarter in a very challenging global environment.\nMomentum is building in our Apparel business, and we believe we have ample liquidity.\nWe believe our diversified global business model continues to position us to drive growth and take advantage of opportunities over the next several years.\nI've enjoyed getting to know you and exchanging points of view over the years.\nTo the Hanesbrands team, it's been an honor to be part of the HBI family for so many years.\nTogether, we built a company and successfully expanded it to be a global leader in our categories.\nThese are things that could only be achieved by the determined efforts of 60,000 team members around the world pulling together.\nI look forward to watching Hanesbrands continue to prosper under the leadership of Steve Bratspies in the years ahead.\nOur strong second quarter results, including double-digit growth and adjusted and GAAP EPS, underscore the earnings and cash flow leverage, our vertically integrated business model can generate.\nSales for the quarter were $1.74 billion, which includes $752 million of PPE revenue.\nAs compared to last year, sales increased 6% on a reported basis and 7% on a constant currency basis.\nExcluding PPE, Apparel revenue declined approximately 40% over prior year.\nThis is well ahead of our expectation and accounted for more than half of the upside in the quarter relative to our base case scenario.\nAdjusted gross margin of 37.9% decreased approximately 180 basis points over the last year.\nApproximately 50 basis points of the decline was the result of deleverage from minimum royalty payments in our sports license business.\nThe remainder of the decline was driven by COVID related door closings, which had a greater sales impact on our core international and our Champion and U.S. Activewear businesses.\nAs a reminder, these businesses carry higher gross margins, but they also carry higher SG&A expense.\nAdjusted operating margin for the quarter increased approximately 430 basis points over prior year to 17.5%.\nHigher sales drove meaningful SG&A leverage, which was further benefited by our temporary cost savings initiatives.\nInterest and other expense declined $8 million over prior year to approximately $47 million due primarily to lower average rates in the quarter.\nRestructuring and other related charges were approximately $63 million in the quarter.\nOur planned supply chain restructuring actions and program exit costs, which remain unchanged, accounted for $11 million of these costs.\nThe remaining approximately $52 million are nonrecurring COVID related costs in the quarter, which are noncash.\nThese include a $20 million intangible asset write down, $11 million of bad debt expense and approximately $21 million of inventory adjustments primarily related to canceled orders from retailers for seasonal product we already made.\nThe tax rate of 17.8% was higher than our expectation as better-than-expected performance in U.S. Innerwear and PPE resulted in a higher mix of U.S. profit in the quarter.\nAnd adjusted and GAAP earnings per share increased 58% and 12% over prior year to $0.60 and $0.46, respectively.\nNow let me take you through our segment performance.\nFrom a high level, all of our segments experienced a similar progression through the quarter.\nWe saw significant year-over-year pressure in April, as regions sheltered in place.\nThis was followed by sequential improvement in May and June as consumers shifted to open channels, including online and closed stores began to reopen.\nFor the quarter, U.S. Innerwear sales increased approximately 67% over the prior year, while the operating margin expanded nearly 550 basis points to 27.8%.\nBoth revenue and operating profit exceeded our base case scenario, driven by better-than-expected sales in both our core Innerwear and new PPE businesses, our significant fixed cost leverage from higher sales and by lower SG&A expense due to our temporary cost reduction initiatives.\nAdjusting for sales from our PPE business, core U.S. Innerwear performed significantly better than our base case scenario.\nCore revenue declined approximately 27% over prior year, with Basics down 18% and Intimates down 52%.\nThese better than base case results were driven by the strong performance of our Basics and Intimates businesses, within the channels that remain open as well as the reopening of mid-tier and department store channels late in the quarter.\nOn the back of improved point-of-sale during the quarter, we have seen booking trends in both Basics and Intimates strengthen through July.\nTurning to U.S. Activewear.\nRevenue declined 52% over prior year, which was better than our base case scenario.\nThe year-over-year decline was due to COVID related door closures as well as school closings and fewer group events that significantly impacted our Sports Apparel and Printwear businesses.\nAs expected, Activewear's operating margin declined over prior year.\nDeleveraged from lower sales, deleveraged from minimum royalty payments in our Sports License business.\nAnd our decision to hold Champion marketing investment flat over prior year more than offset our temporary cost savings initiatives.\nWhile Champion experienced headwinds due to COVID related channel closures, we were encouraged by the accelerating point-of-sale trends through the quarter and a continued POS strength in July.\nWe believe this underscores the consumers' ongoing desire for the brand and points to improving revenue trends going forward.\nSwitching to our International segment.\nRevenue is well ahead of our base case scenario.\nAs compared to last year, revenue declined approximately 20% on a reported basis and 17% on a constant currency basis.\nAdjusting for PPE sales, core International revenue declined 44% as compared to the prior year.\nThe better than base case performance in our core International business was driven by online as well as the performance of our company-owned stores as they reopened.\nThe International segment's operating margin of 17.3% increased 310 basis points over prior year, driven by lower SG&A costs as we benefited from various temporary cost savings initiatives.\nTouching briefly on our Global Champion business.\nExcluding C9, revenue declined 46% over prior year with declines in both our domestic and international businesses.\nLike other parts of our business, Global Champion was hindered by closures of our company-owned stores and channel partner doors early in the quarter.\nAs doors reopened, Global Champion trends improved through the quarter with momentum continuing through July, reinforcing our expectation for sequential improvement in Champion sales through the balance of the year.\nTurning to cash flow and the balance sheet.\nWe delivered a strong cash flow performance in the quarter, generating $65 million of cash flow from operations.\nYear-to-date, operating cash flow was approximately $40 million above last year.\nThe strong performance was driven by previously planned inventory reduction efforts, temporary cost savings initiatives, continued working capital discipline and timely actions taken within our manufacturing network.\nWith respect to our balance sheet, inventory declined approximately $265 million or 12% compared to last year.\nLeverage was 3.4 times on a net debt to adjusted EBITDA basis, down from 3.5 times last year.\nAnd we ended the quarter with approximately $1.8 billion of liquidity, which we believe provides us with significant cash capital cushion in this uncertain environment.\nDue to the uncertainty and unpredictability of the COVID-19 pandemic as well as the current lack of visibility in our business environment, we are not providing third quarter or full year 2020 guidance at this time.\nHowever, I will like to share a few thoughts to help frame some of the key levers within our business model.\nLooking at our Apparel business, which excludes PPE, revenue declined approximately 40% over prior year in the second quarter.\nAbsent any rollbacks of store reopenings, we currently foresee an environment for the year-over-year decline in our Apparel business to improve sequentially in both this third and fourth quarter.\nWith respect to our PPE business, we currently expect more than a $150 million of PPE revenue in the second half, the vast majority of which is expected in the third quarter.\nWhile we continue to tightly manage SG&A expenses, the amount of temporary cost savings from the second quarter are currently not expected to repeat in the second half.\nCombined with a lower overall unit and sales volume, we believe it is reasonable to assume year-over-year pressure on margins in both this third and fourth quarters.\nNow with respect to our tax rate, we currently expect a rate of approximately 17.5% for the second half.\nAnd in terms of cash flow, we continue to expect to generate positive cash flow in the second half of the year.\nSo in closing, we delivered strong second quarter results.\nOur balance sheet is healthy, and we believe we have ample liquidity.\nWhile there remains a significant amount of uncertainty, we are encouraged by the positive underlying momentum in our Apparel business, which we believe points to a return to pre-COVID levels in our business once the pandemic has passed.\n",
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"content": "compname reports q2 adjusted earnings per share $0.60.\nq2 adjusted earnings per share $0.60.\nq2 gaap earnings per share $0.46.\nq2 sales $1.74 billion versus $1.76 billion.\nquarter-end liquidity of approximately $1.8 billion.\nincurred about $63 million in both planned restructuring actions and additional covid-related costs in q2.\nwill not provide quarterly and fy performance guidance until visibility of pandemic's effect on global economies improves.\ndecline in apparel sales in q2 was better than co's base-case scenario.\nanticipates sequential improvement of sales declines q3 and q4 for apparel sales.\nestimates it could sell more than $150 million of protective garments in h2 2020, primarily in q3.\nexpects to generate positive cash flow in second half.\nexpects foreign currency exchange rates to reduce net sales and operating profit in 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: I'm excited to be speaking with you on my first earnings call as CEO of Hanes Brands.\nI'm honored and excited to be leading such a passionate team as we embark on a growth-oriented journey.\nThe global pandemic has clearly created significant challenges and uncertainty.\nIt's impacted everything from our business visibility to our manufacturing, to consumer traffic in our stores and on our website.\nAnd it continues with this week's European announcements regarding new lockdowns and curfews.\nIn this unpredictable environment, I'm encouraged by the progress we're making on a number of fronts.\nI've been impressed with the team, the way they've been able to adapt and respond to the challenges of 2020.\nWe're seeing revenue momentum in our business, and I feel good about our strategic assessment and the progress we've already made toward defining the ambition and strategic goals for the organization.\nFor today's call, I'll begin by sharing some insights about myself and why I was attracted to this opportunity.\nI'll then speak to the strategic assessment that we began on my first day.\nI'll offer some thoughts on the process, what we are looking at as well as share some initial observations.\nAnd I'll end with a few comments on our current business performance before handing off to Scott for a more detailed review of the results and our fourth quarter guidance.\nHanesbrands is a great company.\nWe have iconic brands.\nWe have global breadth and supply chain scale.\nWe have a solid balance sheet.\nThere's a long-standing commitment to sustainability, and we have a dedicated, passionate team with a genuine appetite and readiness for change.\nWith this strong foundation, I see significant opportunities and potential to drive growth and shareholder value.\nWith respect to my background, at heart, I'm a brand and product person.\nI believe in providing great products borne directly from consumer insights.\nI believe in the power of brands to differentiate, tell stories and build lasting loyalty.\nI like to change and transform things.\nAnd I like to think big.\nTo that end, I want Hanesbrands to be one of the most admired global apparel companies, one that is growth oriented and consistently delivers strong shareholder value.\nI'm also a big believer in communication, being unvarnished, honest and transparent, both internally and with all of you.\nWith that backdrop, I'd like to give you a sense of how I spent my first three months as CEO.\nThe global pandemic has certainly altered my approach.\nMy preference would be to spend the first several weeks traveling, meeting with customers, visiting our stores, touring our manufacturing facilities in Asia, Central America and the Caribbean and sitting with our teams around the globe.\nWhile it's frustrating not to be able to get out and meet face-to-face, I've had plenty of interactions with our global team and our customers via video meetings and virtual plant tours.\nI've done a lot of listening, I've been asking a ton of questions and I've immersed myself in learning about our various businesses.\nAs I mentioned on my first day, we began a detailed, objective assessment of the business.\nThis is what I call the unvarnished truth.\nIt will define our opportunities as well as the challenges we must address to be successful and reach our full potential.\nThe strategic assessment is the foundation on which we will set our ambition for Hanesbrands.\nFrom there, we will build our short- and long-term operating plans to achieve our goals.\nWith respect to the scope of the strategic assessment, we are evaluating our entire global portfolio.\nWe're looking at historical performance, category trends, channel dynamics and competitive landscape across geographies and business segments.\nWe're analyzing our cost structure across spend categories.\nWe're analyzing the current level and mix of our inventory, and we're looking at how we're organized.\nWe're also studying our supply chain, our technology infrastructure and our concept to consumer processes.\nWe're evaluating our online and direct-to-consumer capabilities.\nWe're analyzing our consumer mix, our brand equity measures and our product quality.\nWe're even looking at how we are perceived by retailers.\nSo let me share some initial observations from our work today.\nThis is a great company with a strong foundation that we can leverage.\nHowever, in an environment where the pace of change is accelerating, for us to be successful and reach our full potential, we must become a more agile, consumer-centric, growth-oriented company.\nSo what does this mean?\nIt means that we're going to align Hanesbrands to become a company that embraces change, acts decisively, moves quickly and shares a common ambition.\nWe'll have a consumer-centric mindset.\nThe consumer is going to be at the center of everything that we do.\nWe'll become faster and more flexible by simplifying our organizational structure as well as streamlining processes and decision-making, particularly around concept to consumer.\nWe'll commit to growth.\nFor example, we'll support the momentum in the Champion brand globally as well as the growth in Bonds and Bras N Things in Australia, particularly online.\nAnd not surprisingly, we need to return U.S. Innerwear to consistent year-over-year growth by applying a more consumer-centric approach to our brands, evolving our supply chain capabilities and capturing new opportunities.\nLastly, it means we're going to build certain capabilities that improve efficiency and speed, enable growth and position the company for long-term success.\nWe are looking for opportunities to modernize our technology.\nWe're looking at segmenting our supply chain to accelerate our time to market and meet the unique needs of our diverse brands and businesses.\nWe must expand our digital focus and capabilities to be able to capture our share of online growth.\nAnd we'll invest in talent, filling current gaps while also developing the next generation of leaders.\nOur investments will be deliberate and targeted.\nWe've already started a comprehensive review of our current cost structure to identify near-term savings opportunities that can be used to fuel some of our investments.\nI feel very good about the progress we've made.\nThe global team is highly engaged, and there's a lot of energy, excitement and a genuine desire for change.\nWe're working with purpose, and we're moving fast.\nThis will be a multiyear journey that I believe will be rewarding for both our people and our shareholders.\nYou'll begin to see parts of our strategy unfold this quarter, and we look forward to updating you on our progress over the coming months.\nTurning to our results.\nOverall, Hanes brand had a solid third quarter, with revenue, operating profit, earnings per share and operating cash flow coming in above our expectations.\nScott will provide a more detailed review of our results, so I'll focus my comments on four key takeaways from the quarter.\nFirst, we saw good momentum across the business as apparel revenue trends improved sequentially in each of our business segments.\nWe're encouraged by the trends in U.S. Innerwear.\nSales, excluding PPE, increased 11.5% over prior year driven by continued point-of-sale strength and broad-based inventory restocking by retailers.\nDespite shipments exceeding point-of-sale in the quarter, inventory at retail remains below last year's levels.\nTherefore, we expect some level of retailer restocking to continue in the fourth quarter.\nWe're pleased with the global improvement in Champion as sales increased nearly 130% from the second quarter.\nCompared to last year, sales declined 9% due primarily to our sports apparel business where COVID-related headwinds have essentially shut down sporting events and college bookstores.\nExcluding this, sales would have been down 2%.\nWe were also impacted by COVID-driven supply challenges in the quarter.\nAbsent these two items, Champion sales increased over prior year.\nWe expect the supply challenges to improve in the fourth quarter.\nAnd with global spring/summer 2021 bookings up over 2019 levels, we expect Champion's momentum to carry into next year.\nLooking forward, I'm excited and confident in the global potential of Champion.\nThere's a lot of opportunity for growth over the next several years.\nThe second takeaway is that we're facing second half profitability headwinds, which were mentioned on last quarter's call.\nThe timing of negative manufacturing variances and higher SG&A expense are expected to pressure both gross and operating margins in the fourth quarter.\nWe're also facing additional uncertainty from the latest COVID trends.\nThird, we delivered another strong cash flow quarter, generating nearly $250 million of operating cash flow.\nWhile we now expect to end the year with higher-than-anticipated PPE inventory, we continue to expect to generate positive operating cash flow in the second half and for the full year.\nAnd the fourth takeaway for the quarter, we further strengthened our liquidity, ending the quarter with $2 billion of liquidity, which we believe provides us with plenty of operating flexibility in this uncertain environment.\nSo in closing, we're making progress in an increasingly unpredictable environment.\nWe're seeing good revenue momentum in our business.\nWe're moving quickly with our strategic and cost assessment.\nWe're defining our ambition, identifying our opportunities and building our plans to become a more agile, consumer-centric, growth-oriented company.\nI'm excited to begin this multiyear journey, one that I believe will be rewarding to both our people and our shareholders.\nOverall, Hanesbrands had a strong quarter, with the results across all of our key metrics coming in above our expectations.\nRevenue momentum continued across the business driven by continued strength in point-of-sale trends and broad-based inventory restocking.\nAs expected, margins declined over prior year but less than we were anticipating, and we generated $249 million of operating cash flow, further strengthening our liquidity position.\nTurning to the details of the results.\nThird quarter sales increased 3% over prior year to $1.81 billion, with foreign exchange rates accounting for 80 basis points of the quarter's growth.\nApparel revenue performed better than our expectation for the quarter.\nExcluding $179 million of PPE sales, apparel revenue declined 7% compared to prior year.\nThis represents a significant improvement from last quarter's 40% decline as each segment experienced a sequential improvement in year-over-year revenue trends.\nAdjusted gross margin of 36.7% decreased approximately 275 basis points over last year due to increased inventory reserves as well as negative manufacturing variances, which were incurred earlier in the year, rolling off the balance sheet and onto the P&L.\nAdjusted operating margin declined approximately 170 basis points over prior year to 12.6% as the gross margin pressure and higher operating costs from COVID were partially offset by ongoing SG&A controls as well as benefits from our temporary cost savings initiatives.\nRestructuring and other related charges were $53 million in the quarter.\nApproximately $49 million are nonrecurring costs from restarting portions of our manufacturing network that closed for approximately 10 weeks beginning in March due to the COVID pandemic.\nWe experienced a stronger-than-expected recovery in point-of-sale.\nIn an effort to meet demand and best serve our customers, we chose to expedite shipments via airfreight as well as temporarily leverage third-party manufacturing capacity.\nThis resulted in short-term incremental cost in the form of freight and sourcing premiums relative to our normal manufacturing cost.\nWe believe this was the right long-term business decision.\nAnd in fact, we are already seeing the benefits in the form of newly captured retail shelf space.\nThe remaining $4 million of these costs relates to our previously disclosed supply chain restructuring actions and program exit costs.\nThese actions and their associated costs are on track and remain unchanged from previous disclosures.\nOur tax rate for the quarter was 17.3%, which was in line with our expectations.\nAnd adjusted and GAAP earnings per share decreased 11% and 43% over prior year to $0.42 and $0.29, respectively.\nNow let me take you through our segment performance.\nFor the quarter, U.S. Innerwear sales increased 41% over prior year driven by a 15% increase in basics, a 7% increase in intimates and the inclusion of $166 million of PPE revenue.\nExcluding PPE, U.S. Innerwear sales increased 11.5% over prior year due to the continued positive point-of-sale trends and inventory restocking by retailers.\nIn our basics business, we experienced growth in each product category, which drove approximately 170 basis points of market share gains in the quarter.\nWithin intimates, bra sales increased at a double-digit rate.\nThis more than offset the decline in shapewear sales, which is a category that continues to be negatively impacted by the coronavirus pandemic.\nLooking forward, we have seen positive point-of-sale and order trends continue through October.\nWith these trends, as well as retail inventory that remains below last year, we expect some level of restocking to continue in the fourth quarter.\nFor the quarter, Innerwear's operating margin expanded approximately 80 basis points over prior year to 21.7% driven by fixed cost leverage from higher unit volumes as well as favorable product mix.\nTurning to U.S. Activewear.\nRevenue declined 27% compared to last year, which is an improvement from the second quarter's 52% decline.\nThe vast majority of the year-over-year decline was from our sports apparel business, which continues to be significantly impacted by COVID-related headwinds.\nActivewear's operating margin was 9.1% for the third quarter.\nAs expected, Activewear's margin declined compared to prior year due to the timing of negative manufacturing variances, inventory reserves for some of our non-Champion brands as well as SG&A deleverage from lower sales volumes.\nHowever, I will note that the segment margin improved significantly from last quarter's operating loss.\nTouching briefly on Champion, sales of the Champion brand within our Activewear segment increased approximately 85% from the second quarter.\nCompared to last year, sales declined 27%, with the vast majority of the decline due to the COVID-challenged sports apparel business.\nDespite the challenges in sports apparel, we continue to expect sequential improvement in Champion's revenue trends in the fourth quarter driven by continued point-of-sale growth in key channels and online as well as improved product availability.\nSwitching to our International segment.\nRevenue declined 5% compared to last year on a reported basis and 7% on a constant currency basis.\nAdjusting for PPE sales, core International revenue declined 7% as compared to prior year, which is a significant improvement from a 44% decline in the second quarter.\nFor the quarter, International Champion sales increased 5% over prior year.\nExcluding the impact from foreign exchange rates, we experienced growth in our Americas and Champion Europe businesses.\nThis was more than offset by declines in our European Innerwear, Asia and Australia businesses where COVID-related challenges have slowed the retail recovery.\nInternational segment's operating margin declined approximately 100 basis points over prior year to 15.2% driven by deleverage from lower sales volumes, which was partially offset by continued tight SG&A cost management.\nTurning to cash flow.\nWe generated $249 million of operating cash flows in the quarter.\nLooking at our balance sheet, inventory increased 4% over prior year which was in line with sales growth and includes approximately $400 million of PPE inventory.\nExcluding PPE, inventory declined 15% compared to prior year.\nLeverage at the end of the quarter was 3.3 times on a net debt to adjusted EBITDA basis, which was comparable to last year.\nWhile liquidity remains our short-term focus in a post-COVID environment, our focus would be to return our leverage ratio to below three times.\nWe further strengthened our liquidity position in the quarter even while reducing debt by approximately $130 million and paying our regular quarterly dividend.\nWe ended the quarter with $2 billion of liquidity above the $1.8 billion at the end of the second quarter.\nWe continue to believe we have significant capital cushion in this uncertain environment.\nAnd now turning to guidance.\nOutlook reflects the continued uncertainty due to the COVID-19 pandemic.\nOur outlook is based on the current business environment, which, among other items, reflects the lockdowns and curfews put in place over the past week in Europe.\nOutlook does not reflect any potential impact to the consumer or operating environments should governments or businesses institute additional lockdowns and store closings.\nI want to remind everyone that all year-over-year comparisons reference our rebased 2019 results.\nFor the fourth quarter, we expect total sales of $1.60 billion to $1.66 billion, which, at the midpoint, implies a 2% decline over prior year.\nPrior to this week's European lockdowns, our revenue outlook assumed a low single-digit growth.\nIncluded in our sales outlook is approximately $50 million of PPE sales, approximately $10 million of foreign exchange benefit and contributions from a 53rd week.\nWe expect adjusted operating profit of $160 million to $180 million, which, at the midpoint, implies an operating margin of 10.4%.\nExpected year-over-year margin pressure is due to the timing of negative manufacturing variances and higher SG&A expense.\nWe expect interest and other expense of approximately $50 million and a tax rate of approximately 17.5%.\nOur guidance for adjusted and GAAP earnings per share range from $0.25 to $0.30 and $0.24 to $0.29, respectively.\nAnd our guidance for full year 2020 operating cash flow is $300 million to $400 million, which includes the impact from the higher-than-anticipated PPE inventory.\nBased on our year-to-date cash flow, this implies fourth quarter operating cash flow of approximately $70 million to $170 million.\nSo in closing, I'm encouraged by how we're managing through the increasingly unpredictable environment.\nWe're seeing good revenue momentum in our business.\nI'm excited about our strategic assessment we're doing to define our strategy, and I look forward to the journey ahead.\n",
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"content": "compname reports q3 gaap earnings per share $0.29.\nsees q4 2020 adjusted earnings per share $0.25 to $0.30.\nsees q4 2020 gaap earnings per share $0.24 to $0.29.\nq3 sales $1.81 billion versus refinitiv ibes estimate of $1.67 billion.\nq3 gaap earnings per share $0.29.\nsees q4 2020 sales about $1.6 billion to $1.66 billion.\nfull-year 2020 net cash from operations is expected to be $300 million to $400 million.\ncontinues to expect to generate positive operating cash flow in second half and for full year.\nqtrly adjusted earnings per share $0.42.\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: We are pleased to be here today to provide an update on our progress after the fourth quarter of 2020.\nHopefully, everyone has had a chance to review the news release we issued earlier today.\nThese risks include those related to the impact of the COVID-19 pandemic and measures taken by governmental or regulatory authorities to combat the pandemic on our business and operations, as well as the business and operations of the consumer, our customers, suppliers, business partners and labor force.\nThese risks also include those detailed in our various filings with the SEC, which may be found on our website as well as in our news releases.\nThe use of the term PPE relates to our personal protection garment business including face masks, face coverings and gowns.\nAlso, please note that unless otherwise stated all prior-year comparisons are to 2019 results that have been rebased to reflect the exited C9 program at Target and the DKNY intimates license.\nWith me on the call today are Steve Bratspies, our Chief Executive Officer; and Scott Lewis, our Chief Accounting Officer and Interim Chief Financial Officer.\nIt's hard to believe that it has been a year since the pandemic began.\nI hope you and your families are staying safe and healthy.\nI'm extremely proud of how much the team has accomplished over the past year especially under such challenging circumstances.\nI'm excited to speak with you today to provide an update on the progress we've made since our last call.\nWe're going to center the conversation on two main topics.\nFirst, our execution and the financial results in the fourth quarter that drove a strong finish to the year.\nSecond, is the launch of our multi-year growth strategy, which we're calling our full potential plan that's being developed as a strategic assessment I outlined last quarter.\nFirst, in terms of the fourth quarter, we delivered solid results as revenue, operating profit, earnings per share and operating cash flow all came in above our expectations despite the increasingly unpredictable environment.\nWe experienced strong consumer demand for our brands and products around the world, which drove market share gains in a number of categories including US basics and US intimates.\nWe also saw revenue momentum continues to build across our three largest businesses.\nUS Innerwear, we delivered another quarter of above category growth.\nThe sales excluding PPE increasing 16% over prior year.\nWe're also pleased with the global performance of our Champion brand during the quarter.\nOn a constant currency basis, global Champion sales increased 11% over prior year.\nAnd outside of the COVID challenge, sports and college licensing business, global sales were up 18% in the quarter.\nIn international along with Champion strong performance, constant currency sales in our Australian Innerwear business increased 8% over prior year.\nNow turning to the second topic, we've made significant progress on our growth strategy.\nSince our last call, we've defined our growth drivers, we've identified the strategic initiatives needed to unlock growth and improve productivity and we began the early implementation of our full potential plan.\nIt was clear from our analysis of the business that simplification is critical to our future growth.\nIt will make us faster, it will lower costs and it will focus resources.\nSpecific actions that we've initiated over the past few months as we began to implement our full potential plan include portfolio streamlining and SKU rationalization.\nI'd like to briefly touch on both of these.\nFirst, we're streamlining our portfolio to increase our business focus and improve future returns.\nSpecifically, we are exploring strategic alternatives for our European Innerwear business.\nWhile we are in the very early stages, we're committed to be transparent and we'll provide updates as we move through the process.\nWe're also moving on from PPE.\nIt's encouraging to see that COVID vaccines are rolling out around the world.\nAs a result, this rollout along with slowing retail orders and a flood of competitive offerings have dramatically reduced our future sales opportunities.\nTherefore, we do not view PPE as a future growth opportunity for the company.\nThe second action we've taken to simplify our business is rationalizing our SKUs.\nBased on the inventory review that we discussed on our last call, we are removing 20% of our SKUs.\nWe're also implementing a formal product life cycle management process.\nThis will heighten our product design and consumer focus as well as streamline our product offerings, which in turn should lower costs, improve in stocks and drive sales at higher volume, higher margin SKUs.\nAs a result of these actions, we've made the difficult but important decision to writedown our entire PPE inventory-related balance, as well as the inventory tied to our SKU rationalization.\nScott will provide more detail on this during his review of our financial results.\nAs I mentioned last quarter, our goal is to become a consumer-centric growth company, one that generates higher and more consistent revenue growth while also delivering higher levels of profitability over time.\nOur full potential plan is the footprint [Phonetic] to accomplish this goal.\nAs you can see, we are moving forward with purpose and with urgency.\nWe've already taken action and we're focused on executing our full potential plan.\nOverall, HanesBrands delivered solid fourth quarter results.\nOn an adjusted basis, we exceeded the high end of our expectations across all of our key metrics driven by continued top line momentum.\nLooking at the details of our fourth quarter results, sales increased 8% over prior year to $1.8 billion.\nExcluding PPE, sales increased nearly 7% as we experienced continued sequential improvement in our Innerwear, Activewear and international segments.\nFor the quarter, FX in the 53rd week contributed 190 and 290 basis points of growth respectively.\nAdjusted gross margin of 41% was above our expectations for the quarter due to higher sales and product mix.\nAs compared to last year, gross margin declined 80 basis points due to the expected negative manufacturing variances, which were partially offset by higher sales and favorable product mix.\nAdjusted operating margin declined 250 basis points over prior year to 12% as a gross margin declined along with the expected higher cost caused by COVID and our full potential plan more than offset the benefits from higher sales and mix.\nPre-tax restructuring and other related charges were $661 million in the quarter, of which 96% were non-cash.\nThe vast majority of these costs, approximately $611 million were inventory related charges tied with the business simplification action Steve mentioned as we began implementing our full potential plan.\nBreaking this down, $400 million is related to the entire PPE inventory-related balance that we referred to on last quarter's call.\nThe other $211 million is related to our SKU reduction initiative and representative approximately 12% of our non-PPE inventory balance at the end of the year.\nThe remaining $50 million of charges in the fourth quarter reflect $25 million for a COVID-related goodwill impairment of our US hosiery business, $17 million from a write-off of a discrete tax asset tied to our Bras N Things acquisition and $8 million for business accelerated [Phonetic] actions as well as the previously disclosed supply chain restructuring.\nOur adjusted tax rate which excludes $67 million of one-time tax benefits was 19%.\nThis was above our expectations due to the higher than expected profit in the quarter.\nAnd adjusted earnings per share were $0.38, while on a GAAP basis, we had a loss of $0.95 per share.\nNow, let me take you through our segment performance.\nFor the quarter, US Innerwear sales increased 20% over prior year driven by an 18% increase in Basics, an 8% increase intimates and the inclusion of $22 million of PPE revenue.\nExcluding PPE, US Innerwear sales increased 16% over prior year.\nSome of our strong consumer demand at point of sale, space gains in kids underwear, continued inventory restocking by retailers and the contribution from a 53rd week.\nIn our Basics business, we experienced growth in each product category.\nAnd within our intimates business, gross sales increased at a double-digit rate, which more than offset the COVID-driven decline in shapewear sales.\nFor the quarter, Innerwear's operating margin declined 60 basis points over prior year to 24.1% driven primarily by higher distribution costs, which were partially offset by the benefits from higher sales in mix.\nTurning to US Activewear, revenue increased 7% compared to last year, driven by growth in the online, wholesale and distributor channels.\nWhile our sports and college licensing business declined over prior year due to continued campus closures and limited attendance to sporting events, we saw sequential improvement in this year-over-year revenue trend in the fourth quarter.\nLooking at the Champion brand across all the channels in our Activewear reporting segment, Champion sales increased 11% over last year.\nActivewear's operating margin was 8.9% in the fourth quarter.\nAs expected Activewear's margin declined compared to prior year due to the expected negative manufacturing variances, which were partially offset by the benefits from higher sales in mix.\nPutting to our international segment, revenue increased 2% compared to last year.\nExcluding the $6 million of PPE sales, international revenue increased 1% and with respect to the Champion brand within our international reporting segment, sales increased 6%.\nOn a constant currency basis, international sales declined 3% over prior year.\nWe experienced growth in Australia driven by our Bonds and Bras N Things brands across the retail, wholesale and online channels.\nWe also saw growth in Canada and Latin America.\nHowever, this growth was more than offset by COVID-driven declines in Asia and Europe.\nFor the quarter, the international segment's operating margin declined 160 basis points over prior year to 14.3% [Phonetic] due to the expected negative manufacturing variances, COVID expenses in mix.\nTurning to cash flow, we generated $217 million of operating cash flow in the quarter, which exceeded our guidance and $448 million for the full year.\nLooking at the balance sheet, excluding the actions and writedowns previously discussed, inventory declined approximately 4% sequentially and leverage at the end of the quarter was 3.3 times on a net debt to adjusted EBITDA basis which compares to 2.9 times at the end of last year.\nAnd now turning to guidance.\nAt this time, we are providing guidance for the first quarter.\nWe plan to provide a full-year 2021 outlook as well as three-year financial targets as part of the detailed review or full potential plan at our upcoming Investor Day in May.\nWith respect to the first quarter, we expect the uncertainty created by the COVID-19 pandemic to continue to impact the global consumer environment and we have reflected this on our outlook.\nAt the midpoint, we expect total sales growth of 14% over the prior year.\nAdjusting for $50 million of foreign currency benefit, the midpoint of our sales guidance implies 10% growth on a constant currency basis.\nWe expect adjusted operating profit of $150 million to $160 million, which at the midpoint implies an operating margin of 10.3%.\nExpected year-over-year margin expansion is due to higher sales, positive manufacturing variances and the anniversary of last year's COVID-driven volume deleverage.\nWe expect interest and other expense of approximately $48 million and a tax rate of 16% and our guidance for both adjusted and GAAP earnings per share is $0.24 to $0.27.\nSo in closing, we delivered strong fourth quarter results and with the momentum we are seeing across our business, we believe we are well positioned to deliver continued growth in the first quarter of 2021.\nWe're excited about our future and we're confident in our ability to build on our business momentum in 2021 while also positioning the company for long-term success.\nAnd now I'd like to spend a few minutes providing some additional details on our full potential plan.\nThrough the plan, we have defined our four pillars of growth and identify the initiatives to unlock this growth and create a more efficient and productive business model.\nMy confidence in the strengths of HanesBrands that I outlined on last quarter's call have only been reinforced as we've developed our growth strategy.\nWe have iconic brands, we have global breadth and supply chain scale, we have a solid balance sheet, we have a long-standing commitment to sustainability and we have a dedicated passionate team with a genuine appetite and readiness for change.\nThis is a strong foundation to leverage and capturing opportunities for growth and driving shareholder value.\nWith respect to our four growth pillars of our full potential plan, they are grow Champion globally, drive Innerwear growth with products and brands that appeal to younger consumers, build e-com excellence across channels and streamline our global portfolio.\nTouching briefly on each of these.\nFirst, with Champion, we're making rapid progress developing our global brand strategy that defines our consumer segments, geographies, product offerings and channels of distribution.\nWe have solid momentum in this business and we're being thoughtful in how we position the brand going forward.\nWe see significant opportunity to grow Champion over the next three to four years.\nWe're engaging directly with the consumer through digital platforms, we're leveraging our global design centers to deliver innovative products, we're driving category expansion including a greater focus on women's and kids as well as layered outerwear and casual athletic footwear and we're expanding in China with our partners to an integrated front-end strategy stand-alone stores and online.\nOur second growth pillar is to get younger in Innerwear.\nIn Australia, we'll build our momentum by fueling the growth of our Bonds and Bras N Things brands, particularly through our D2C channels.\nIn the US, our plan is to build on our recent Innerwear growth by shifting our portfolio younger while defending our core, we must maintain our strength with our current consumers while adding the growing base of younger US consumers.\nWe are well positioned to capture this growth opportunity by targeting our incredible brand portfolio of Hanes, Maidenform, Bali and more to reach unique consumer groups.\nWe plan to invest to meet changing lifestyles targeted in innovative products.\nThird, we're building e-com excellence across all online channels.\nConsumers are rapidly adapting digital tools as a way to connect with our brands and buy our great products.\nTo be successful over time, we must build our e-comm capabilities to serve consumers however they shop.\nWe're leveraging data analytics to get to know our consumers better and build long-term loyalty, we're improving performance marketing so consumers can find our products online and we're developing a frictionless shopping experience to help consumers easily buy and receive our products, whether it's on our own sites or our retail partner sites.\nFinally, we're streamlining our portfolio and positioning for global growth.\nThis will allow us to focus our resources and efforts on higher growth, higher margin businesses.\nAs I mentioned earlier, we're moving on from PPE and we are exploring strategic alternatives for European Innerwear.\nWith that overview of our growth opportunities, let me turn to the other key components of our plan, setting the strategic initiatives and making investments to unlock growth and create a more efficient and productive business model.\nWe've already begun executing on a number of these including a multi-year cost savings program intended to substantially self-fund our investments.\nWe've identified 20 strategic initiatives, each with its own leader, tactical team, KPIs and deliverable schedule.\nWhile I'm not going to run through all these initiatives today, let me provide some high level thoughts.\nWe'll be coming more consumer and product focus.\nWe will lead with product design and innovation.\nWe'll elevate the discipline of brand and channel management and we'll extend our sustainability heritage beyond our supply chain and into our brands and consumer marketing.\nWe're optimizing data and modernizing our technology.\nData and technology are key enablers for a number of our initiatives in our full potential plan.\nWe're making data a tool through standardization and accessibility across the global organization and we're investing in technology to make us more efficient, both in terms of revenue optimization and cost management.\nWe're segmenting our supply chain so we can better serve our customers.\nOur supply chain is a competitive advantage, and it's been a long-standing strength of the company.\nGiven our broad diversified portfolio of products, we're enhancing our capabilities to adapt to the changing environment and needs of the digital consumer.\nSegmenting our supply chain allows us to efficiently meet growth opportunities, deliver innovation and be quicker to market for our respective Innerwear and Activewear businesses and over time, this should provide greater revenue opportunities while also lowering cost.\nAnd we're transforming our organization to speed up decision making, align ourselves to deliver future growth and to build a winning culture.\nWe're designing a flatter and more responsive organization around the global Innerwear and global Activewear structure.\nThis will help us to leverage innovation, improve supply chain service and efficiency and build powerhouse brands that meet the changing demands of our consumers and customers around the world.\nWe're bringing in new capabilities and leadership.\nWe've added outstanding new leaders including our CHRO, our Chief Consumer Officer and most recently, our President of Global Innerwear.\nWe've also restructured and reorganized a number of existing goals to drive alignment and to focus expertise on critical components of our full potential plan particularly within supply chain and IT functions, all of which designed to leverage and unleash the knowledge and expertise of our long-tenured talent base.\nSo to sum up, we're excited about the progress we made in the quarter.\nRevenue momentum continues to build across our business, which was evident in our strong fourth quarter performance and we've begun implementing our full potential plan to drive growth and higher long-term profitability.\nThis gives us confidence that we can build on our business momentum in 2021 while also positioning the company for long-term success.\nWe're looking forward to a more in-depth discussion about our growth strategy at our May Investor Day.\n",
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"content": "q4 adjusted earnings per share $0.38.\nq4 gaap loss per share $0.95.\nsees q1 adjusted earnings per share $0.24 to $0.27.\nq4 sales $1.8 billion versus refinitiv ibes estimate of $1.64 billion.\nexploring strategic alternatives for european innerwear business.\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: The table providing supplemental information on adjusted EBITDA and reconciling to net income attributable -- attributable to HCA Healthcare Inc. is included in today's release.\nAs the COVID-19 pandemic continues to surge, we started the year with strong financial results in the first quarter.\nThe results were driven by better-than-expected revenue growth and improved operating margins.\nRevenues grew over $1.1 billion, or 8.7% as compared to the prior year.\nThis growth was generated by highly acute inpatient volumes, better payer mix, and a rebound in surgical and outpatient volumes in March.\nGenerally speaking, March trends are continuing into April.\nInpatient revenues increased by 12%.\nThe acuity within our inpatient business was higher as reflected in both the case mix index, which increased 7% and length of stay which grew by 6%.\nAdditionally, commercial admits inside of our domestic operations represented 29% of total admits, compared to 26.5% last year.\nThe commercial payer mix has been consistently around this level for the past four quarters.\nThese two factors combined explain the 17% increase in inpatient revenue per admissions.\nThe total -- the total admits were down 4.2% year over year.\nIn comparison to 2019, admits were down approximately 3%, which was -- which was in line with our expectations.\nIn the quarter, we treated almost 50,000 COVID-19 inpatients, which represented 10% of total admissions.\nThroughout the quarter, the percentage of COVID-19 admits to total admits declined.\nJanuary with 17%, February was 8%, and March was down to almost 5%.\nOutpatient revenues increased 4.7% as compared to the prior year.\nThis result is better performance than the previous two quarters in which outpatient revenue was down approximately 5%.\nOutpatient revenues declined in January and February, consistent with that trend.\nBut March, which had one additional weekday this year, increased by 30% as outpatient surgery and other procedures recovered strongly.\nSame facility outpatient surgery volumes grew 2.3% as compared to last year.\nAs compared to 2019, they declined 3%.\nE.R. visits declined 18%.\nThis decrease is generally consistent with the trends we experienced in the previous two quarters.\nvisits were down 19% compared to 2019.\nOur teams continue to focus and deliver on our operating agenda.\nThe adjusted EBITDA margin for the company grew on a year-over-year basis and was consistent on a sequential basis with the prior quarter.\nDiluted earnings per share, excluding losses and gains on sales as well as losses on debt retirement, increase 78% to $4.14.\nDuring the quarter, we announced the definitive agreement to acquire a majority stake in the home health and hospitals business of Brookdale Senior Living.\nThis business provides us with a large platform that complements our local provider systems.\nIt will expand the services we offer across our networks and provide us with more enterprise capabilities to coordinate care for our patients and improve their experiences.\nAdditionally, we believe the home will become a more important setting for healthcare in the future with continuing growth and demand.\nWe anticipate this transaction will close in the third quarter and we look forward to our new partnership with Brookdale.\nAlso during the quarter, we opened two new hospitals.\nOne in Denver and one in Orlando.\nEach of these hospitals will strengthen our system offerings in these communities.\nIn the second quarter, we expect to close on the acquisitions of two small hospitals both of which complement our networks in Nashville and Savannah.\nAnd lastly, we continue to invest broadly across our networks to improve convenience, access, and value for patients by developing more outpatient facilities.\nThe pipeline for development and acquisition in this category remains strong.\nAs we look to the rest of the year, we have increased our annual guidance to reflect the first quarter's performance and better perspective on important macro factors.\nMainly, governmental reimbursement and economic outlooks for our markets including uninsured assumptions.\nBill will provide more details on our guidance in his comments.\nThe first corps is yet another period where the disciplined operating culture and strong execution by our teams were on display.\nWe could not have performed at this level without their unwavering commitment to our patients and the communities we serve.\nAs we continue to resource and execute on our strategic agenda, we will remain true to our mission of improving lives and delivering on the responsibilities we have to all our stakeholders.\nSam spoke to many of our operating metrics and results so I will discuss our cash flow and capital allocation activity during the quarter and then review our updated 2021 guidance.\nAs a result of the strong operating performance in the quarter, our cash flow from operations was $1.99 billion, as compared to $1.375 billion in the first quarter of 2020.\nCapital spending for the quarter was $654 million and we completed just over $1.5 billion of share repurchases during the quarter.\nWe have approximately $7.3 billion remaining on our authorization and consistent with our year-end discussion.\nWe are planning on completing the majority of this in 2021 subject to market conditions.\nOur debt to adjusted EBITDA leverage was 2.85 times and we had approximately $5.6 billion of available liquidity at the end of the quarter.\nWe expect revenue to range between $54 billion and $55.5 billion.\nWe expect full-year EBITDA to range between $10.85 billion and $11.35 billion.\nWe expect full-year diluted earnings per share to range between $13.30 and $14.30.\nAnd our capital spending target remains at approximately $3.7 billion.\nOur revised guidance considers the strong results in the first quarter, and also considers the extension of the public health emergency and the deferral of sequestration reductions through the end of the year.\nIn summary, we recognize some uncertainties remain as we go through the balance of the year, but we are confident in the company's ability to manage through various business cycles and we are well-positioned to continue to invest capital to capture growth opportunities and execute on acquisition opportunities if they become available.\nPlease remind everyone to limit their questions to one so that we may keep trying and get in the queue as possible.\n",
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"content": "q1 earnings per share $4.14.\nsees fy earnings per share $13.30 to $14.30.\nqtrly same facility admissions declined 4.2 percent and same facility equivalent admissions declined 6.5 percent.\nsees 2021 revenues $54.0 to $55.5 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: A table providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA Healthcare is included in today's release.\nWith the effects of the pandemic moderating in the second quarter, we experienced a strong rebound in demand for our services.\nCOVID admissions in the quarter were down to 3% of total, as compared to 10% in the first quarter.\nVolumes across all categories grew significantly compared to last year.\nAnd notably, we grew inpatient admissions and outpatient surgeries over 2019.\nThe growth was supported by an improved payer mix, which resulted from an increase in commercial volumes.\nOn a year-over-year basis, revenues grew 30% to $14.4 billion.\nInpatient revenues increased 20%, driven by a 17.5% admission growth.\nOutpatient revenues grew an impressive 59%, reflecting the resurgence in outpatient demand across most categories.\nTo highlight a few areas, outpatient surgeries were up 53%, emergency room visits grew 40%, cardiology procedures increased 41%, and urgent care visits were up 82%.\nCompared to 2019, overall inpatient admissions grew almost 3% with commercial admissions growing 8%.\nOutpatient surgeries grew approximately 3.5%.\nEmergency room visits were only down 5.5% with the month of June basically flat.\nAcuity, however, in our emergency rooms was up, with moderate growth in the most acute categories.\nWe were able to leverage the increased revenue into higher margins.\nAdjusted EBITDA margin improved compared to last year, excluding the government stimulus income and sequentially in comparison to the first quarter.\nDiluted earnings per share, excluding losses and gains on sales of facilities and losses on retirement of debt, increased 35% to $4.37.\nAs noted in our release, earnings per share in the second quarter of 2020 included a $1.73 per diluted share benefit from government stimulus income.\nThis benefit was reversed in the third quarter of 2020 as a result of the decision we made to return our entire share of provider relief funds from the CARES Act.\nOnce again, our teams delivered on our operating agenda.\nAs we look to the rest of the year, we have raised our annual guidance to reflect the performance of the company over the first half of the year and the belief that the current levels of demand should prolong over the remainder of the year.\nWe continue to invest aggressively in our strategic plan, which revolves around building greater clinical capabilities to serve our communities while also developing more comprehensive enterprise resources to support caregivers and differentiate our local networks.\nWe believe this operating model will continue to create value for our patients, deliver market share growth, and produce solid returns for our shareholders.\nI will discuss our cash flow and capital allocation activity during the quarter, then review our updated 2021 guidance.\nAs a result of the strong operating performance in the quarter, our cash flow from operations was 2.25 billion, as compared to 8.7 billion in the second quarter of 2020.\nIn the prior-year period, cash flow from operations was positively impacted by approximately 5.8 billion due to CARES Act receipts.\nAnd this year, we had approximately 850 million more income tax payments in the quarter than the prior year due to the deferral of our second-quarter 2020 estimated tax payments.\nCapital spending for the quarter was 842 million, and we have approximately 3.8 billion of approved capital in the pipeline that is scheduled to come online between now and the end of 2023.\nWe completed just under 2.3 billion of share repurchases during the quarter.\nWe have approximately 5 billion remaining on our authorization.\nAnd consistent with our year-end discussion, we are planning on completing the majority of this in 2021, subject to market conditions.\nOur debt to adjusted EBITDA leverage was 2.65 times, and we had approximately 5.6 billion of available liquidity at the end of the quarter.\nDuring the quarter, we closed on the acquisition of Meadows Regional Hospital in Vidalia, Georgia.\nWe also closed on the Brookdale Home Health and Hospice transaction as of July 1st, 2021.\nWe have a number of other development transactions in our pipeline to expand our regional delivery networks, including over 15 surgery center additions through both de novo development and acquisitions, as well as a number of urgent care and physician practice acquisitions.\nWe also anticipate the closing of our previously announced facility divestitures in Georgia later this quarter, and we plan to use the proceeds from this transaction for other capital allocation purposes.\nWe expect full-year adjusted EBITDA to range between 12.1 billion and 12.5 billion.\nWe expect full-year diluted earnings per share to range between $16.30 and $17.10 per share.\nAnd our capital spending target remains at approximately 3.7 billion.\nAs Sam mentioned, our revised guidance considers the strong results in the first half of the year and our belief in the company's ability to continue this performance for the remainder of the year.\nIf you could give instructions to the callers on the queue.\n",
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"content": "sees fy earnings per share $16.30 to $17.10.\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: After my remarks, Dale will review our results in additional detail, and then you have the opportunity to ask questions.\nDuring the third quarter, we were pleased to deliver our most profitable results since the onset of the COVID-19 pandemic driven by the resiliency and efficiency of our operational base.\nAs we have discussed over the past several quarters, our priority during the COVID-19 pandemic has been to focus on the things that we can control, our operations and cost base, to set us up for success when market conditions outside of our control improved.\nThis work has already been fruitful with the company maximizing its potential despite generally tough conditions during that period.\nBut now, with macro factors having become tailwinds instead of headwinds, we can see just how meaningful our work over the last 20 months has been for our company in delivering strong results and creating value for our stakeholders.\nThis quarter, we saw record high pricing, enabling us to leverage the strong global economic recovery to increase our average net selling prices.\nSteel and met coal demand has continued to increase, which, when combined with the Chinese ban on Australian coal imports, has created an ideal environment for our operationally strong enterprise to demonstrate our resiliency.\nEven with the current upswing in the macro environment, however, we continue to focus on managing expenses, enhancing liquidity and increasing cash flows with the objective of remaining well positioned to meet our customers' long-term commitments in the face of any potential future market volatility.\nThroughout the third quarter, our customers continued to experience strong demand for the steel products, which translated into strong demand for our premium quality coal.\nThe combination of solid market fundamentals across the world, and ongoing geopolitical tensions between the world's largest met coal consumer and the world's largest met coal producer, have elevated pricing for our products to levels we have never seen before.\nChina remains locked in a self-imposed supply constraint due to the continued ban on the import of Australian coals, it’s rigid COVID-19 protocols at the Mongolian border crossing and due to policy measures, and limited output of domestic met coal production.\nIn addition, the Chinese government's mandate to keep steel production growth at 0% compared to 2020 has led to drastic cuts in steel production.\nAs such, Chinese producers have been able to absorb higher met coal prices as their margins have remained quite healthy due to higher steel prices and lower iron ore costs, both direct consequences of the aggressive steel production cuts mandated by the government.\nIn the short term, we see these trends continuing.\nAs recently reported by the World Steel Association, global pig iron production increased by 3.4% for the first nine months of the year, with China decreasing 1.3%.\nExcluding China, the rest of the world's production grew at an impressive rate of 13.9%.\nWe were expecting our markets to remain strong as they did during the third quarter.\nHowever, we were surprised by pricing levels achieved by our main indices.\nDuring the third quarter, the Platts PLV, FOB Australia index price experienced a meteoric rise of $191 per metric ton, rising from $198 on July 1 to a high of $389 per metric ton at the end of September.\nLikewise, the PLV CFR China indices increased by $295 per metric ton from $309 to a high of $604 per metric ton.\nHowever, the majority of the rapid rise in pricing occurred in the final six weeks of the quarter, during which the PLV FOB Australian indices rose by $162 per metric ton, equivalent to 85% of the total increase for the third quarter.\nThis also occurred with the PLV CFR China indices rising by $232 per metric ton in the final six weeks, equivalent to 79% of the total increase for the third quarter.\nSales volume in the third quarter was 1.1 million short tons compared to 1.9 million short tons in the same quarter last year.\nOur sales by geography in the third quarter were 47% into Europe, 4% into South America and 49% into Asia.\nThe higher, the normal sales to Asia were primarily driven by Chinese demand that we capitalized upon during the third quarter while capturing 100% of the CFR China index price on the day of the sale.\nProduction volume in the third quarter of 2021 was 1.1 million short tons compared to 1.9 million short tons in the same quarter of last year.\nThe tons produced in the third quarter resulted from running both longwalls at Mine 7 plus four continuous mining years.\nBy running the four continuous miner units, our lead days, or float times, have not materially changed since the strike commenced in April and are still several months out into the future.\nMine 4 remained idle during the third quarter.\nOur gross price realization for the third quarter of 2021 was 81% of the Platts Premium Low Vol FOB Australian index price, and was lower than the 90% achieved in the prior year period.\nThe lower gross price realization was primarily due to the previously mentioned rapid rise late in the quarter of both the Australian and Chinese price indices.\nOur spot volume in the third quarter was approximately 30% of total volumes and 38% year-to-date.\nOur normal expectation of spot volume is approximately 20%.\nThe highest spot volume is primarily attributed to the sales to China.\nI will now ask Dale to address our third quarter results in greater detail.\nIn the third quarter last year, we saw the ongoing impact of COVID-19 and its downward impact on the steel and met coal industries including our company, even as we continue to run both mines at near capacity.\nIn contrast, this year, our third quarter results were negatively impacted by the UMWA strike in which we idled Mine 4 and significantly reduced operations at Mine 7.\nAs we execute our business continuity plans to meet our contractual commitments to our customers.\nWe took advantage of strong market conditions to generate strong results of adjusted EBITDA and free cash flow.\nIn the third quarter of 2021, the company recorded its largest net income in over two years on a GAAP basis of approximately $38 million or $0.74 per diluted share compared to a net loss of $14 million or $0.28 per diluted share in the same quarter last year.\nNon-GAAP adjusted net income for the third quarter, excluding the nonrecurring business interruption expenses, idle mine expenses and other nonrecurring income was $0.97 per diluted share compared to a loss of $0.28 per diluted share in the same quarter last year.\nAdjusted EBITDA was $105 million in the third quarter of 2021, the largest in over two years as compared to $17 million in the same quarter last year.\nThe quarterly increase was primarily driven by a 108% increase in average net selling prices, partially offset by a 45% decrease in sales volume.\nOur adjusted EBITDA margin was 52% in the third quarter this year compared to 9% in the same quarter last year.\nTotal revenues were approximately $202 million in the third quarter compared to $180 million in the same quarter last year.\nThis increase was primarily due to the 108% increase in average net selling prices, offset partially by 45% lower sales volume in the third quarter versus the same period last year.\nIn addition, other revenues were negatively impacted in the third quarter this year by a noncash mark-to-market loss on our gas hedges of approximately $6 million which were entered into earlier this year before hurricane season and gas supply deficits.\nThe Platts Premium Low Vol FOB Australian Index price averaged $129 per metric ton higher, were up 130% in the third quarter compared to the same quarter last year.\nThe index price averaged $264 per metric ton for the quarter.\nDemurrage and other charges reduced our gross price realization to an average net selling price of $189 per short ton in the third quarter this year compared to $91 per short ton in the same quarter last year.\nCash cost of sales was $91 million or 46% of mining revenues in the third quarter compared to $151 million or 86% of mining revenues in the same quarter last year.\nThe decrease in total dollars was primarily due to a $68 million impact of lower sales volume, partially offset by $8 million of higher variable costs associated with price-sensitive transportation and royalty costs.\nCash cost of sales per short ton, FOB port, was approximately $86 in the third quarter compared to $78 in the same quarter last year.\nCash costs and price-sensitive items such as wages, transportation and royalties that vary where met coal pricing were higher in the third quarter this year compared to the same quarter last year.\nDepreciation and depletion expenses for the third quarter of this year were $29 million compared to $28 million in last year's third quarter.\nThe net increase of $1 million was primarily due to two things.\nFirst, the immediate recognition of $8 million of expense related to Mine 4 depreciation that would have normally been capitalized as inventory as it was produced.\nHowever, since Mine 4 is currently idled, it was instead directly expensed.\nSecond, these expenses were lower by $7 million due to the 45% decrease in sales volume.\nSG&A expenses were about $7 million or 3.7% of total revenues in the third quarter of 2021 and were lower than the same quarter last year, primarily due to lower employee related expenses and lower professional fees.\nDuring the third quarter, we incurred incremental nonrecurring business interruption expenses of $7 million directly related to the ongoing UMWA strike.\nThese nonrecurring expenses were primarily for incremental safety and security, legal and labor negotiations and other expenses.\nAs a result of the ongoing UMWA strike that began April 1, we idled Mine 4 in the second quarter.\nWe incurred $9 million of expenses in the third quarter associated with the idiling of Mine 4 and reduced operations at Mine 7.\nThese expenses for electricity, insurance, maintenance, labor, taxes, and are primarily fixed in nature.\nNet interest expense was about $9 million in the third quarter includes interest on our outstanding debt, interest on equipment financing leases, plus amortization of our debt issuance costs associated with our credit facilities, partially offset by interest income.\nThe slight increase quarter-over-quarter was primarily related to new equipment financing leases.\nOther income represents proceeds received as a result of the settlement of a lawsuit.\nWe recorded income tax expense of $5 million during the third quarter of this year compared to a benefit of $8 million in the same quarter last year.\nThe third quarter tax expense was primarily due to pre-tax income, offset partially by benefits for depletion and additional marginal gas well credits.\nTurning to cash flow.\nDuring the third quarter of 2021, we generated $52 million of free cash flow, which resulted from cash flows provided by operating activities was $63 million less cash used for capital expenditures and mine development cost of $11 million.\nFree cash flow in the third quarter of this year was negatively impacted by an $18 million increase in net working capital.\nIncrease in net working capital was primarily due to an increase in coal inventory due to the lower sales volume.\nCash used in investing activities for capital expenditures and mine development costs were $11 million during the third quarter of this year compared to $28 million in the same quarter last year.\nHowever, we do expect to spend more in the fourth quarter than we did in the third quarter to keep the mines well capitalized.\nCash flows used by financing activities were $51 million in the third quarter of 2021 and consisted primarily of payments on our ABL facility at $40 million, payments for capital leases of $8 million, and the payment of the quarterly dividend of $3 million.\nOur total available liquidity at the end of the third quarter was $356 million, representing a 24% increase over the second quarter and consisted of cash and cash equivalents of $268 million and $87 million available under our ABL facility.\nThis is net of outstanding letters of credit of approximately $9 million.\nOur balance sheet has a leverage ratio of 0.6 times adjusted EBITDA.\nAnd notably, we have no near-term debt maturities.\nWe believe our liquidity position and strong balance sheet, combined with our low and variable cost structure, has enabled us to weather this period of uncertainty.\nIt gives us the flexibility to continue to manage through a continued volatile global marketplace.\nNow turning to our outlook.\nDue to the ongoing uncertainty related to our negotiations with the union, the COVID-19 pandemic, the Chinese ban on Australian coal and other potentially disruptive factors, we will not be providing full year 2021 guidance at this time.\nWe expect to returning to providing guidance once there is further clarity on these issues.\nWe continue to appropriately adjust our operational needs, including managing our expenses, capital expenditures, working capital, liquidity and cash flows.\nIn addition, we have delayed the development of the Blue Creek project.\nAnd our stock repurchase program also remains temporarily suspended.\nBefore we move on to Q&A, I'd like to make some final comments on our outlook for the fourth quarter and next year as well as the ongoing UMWA strike.\nWe continue to execute successfully on our business continuity plans in response to the UMWA strike, which began on April 1, allowing us to continue to meet the needs of our valued customers.\nWhile we continue to negotiate in good faith to reach a new contract, UMWA unfortunately, remains on strike.\nDespite incurring incremental costs associated with the strike, we've been able to manage our working capital and spending to deliver strong results in this market.\nLooking ahead, we understand there are questions about the status of the UMWA negotiations, estimates of potential outcomes and possible time lines.\nUnfortunately, we cannot speculate at this time on any of those topics for various reasons.\nLet me just say, we value and appreciate the hard work of our hourly employees.\nOur priorities have always been keeping people employed and working safely with long-lasting careers and ensuring the company remains financially stable in a particularly volatile coal market.\nWhile we are disappointed that the union continues with the strike, we continue to negotiate in good faith to reach a resolution.\nWe expect the current strength in the steel markets to continue in the fourth quarter and into early next year, supported by our forecasted sales orders and ongoing discussions with our valued customers.\nLikewise, we anticipate supply to remain tight in supportive of favorable market conditions.\nWe expect pricing for our products to remain strong due to the positive demand and supply dynamics but recognize that the likelihood of a pricing reset is high.\nHowever, when a reset does occur, we expect pricing to remain above historical averages due to the strong market fundamentals.\nWe believe we are well positioned to fulfill our customer volume commitments for 2021 of approximately 4.9 million to 5.5 million short tons through a combination of existing coal inventory and expected production during the fourth quarter.\nWhile we have business continuity plans in place, the strike may still cause further disruption to production and shipment activities, and results may vary significantly.\nWe're in the early stages of planning our budget for 2022, including updating our business continuity plans.\nThere are various scenarios that may play out depending upon our negotiations with the union.\nIf we're able to reach an agreement soon with the union, we believe that we could ramp to a run rate of production of approximately 7.5 million short tons in about three to four months.\nWe would like to capitalize on the current market strength of met coal pricing in support of steel and met coal environment that exhibit strong demand and tight supply.\nCurrently, we believe our customers will purchase every ton that we can produce for the remainder of this year and next year.\nIf we are unable to reach a contract with the union in the near term, we believe our production and sales volume to be between 5.5 million and 6.5 million short tons.\nThis could possibly include restarting the Mine 4 longwall as early as January with a small number of crews working on limited shift schedule.\nWe have recently started in the fourth quarter one continuous mining we did at Mine 4.\nAs we finish up the fourth quarter results, we expect to have further clarity into 2022 volumes and expectations, which could change from those that I've just outlined.\n",
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"content": "q3 adjusted earnings per share $0.97.\nq3 earnings per share $0.74.\nwarrior met coal - believes it is well positioned to fulfill anticipated customer volume commitments for 2021 of about 4.9 to 5.5 million short tons.\neven though mine 4 remains idled, expects production to continue at mine 7, although at lower than usual rates.\nwarrior met coal - co's collective bargaining agreement contract with united mine workers of america expired on april 1, 2021, & umwa initiated a strike.\nwarrior met coal - believe production, sales volume over 12-month period could be between 5.5 million & 6.5 million short tons, possibly including restarting mine 4.\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: Questions will be limited to analysts and investors.\n[Operator instructions] If we are unable to get to your question during the call, please call our investor relations department.\nJoining us on our call today are Craig Menear, chairman and CEO; Ted Decker, president and chief operating officer; and Richard McPhail, executive vice president and chief financial officer.\nThese risks and uncertainties include but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission.\nReconciliation of these measures is provided on our website.\nAs you know, this is my last earnings call, and it has been a blessing and an honor to serve our customers, associates, shareholders, and communities for the last seven and a half years as CEO.\nI'm extremely proud of the progress this team has made together, but perhaps our greatest accomplishment has been nurturing the culture of our company, which I believe is a competitive advantage.\nI am confident that this leadership team will effectively guide The Home Depot through its next phase of growth.\nBut before we talk about that, let's first discuss our results for the year.\nFiscal 2021 was another record year for The Home Depot as we achieved the milestone of over $150 billion in sales.\nWe have continued to navigate a challenging and fluid environment with agility.\nThis resulted in double-digit comp growth for fiscal 2021 on top of nearly 20% comp growth that we delivered in fiscal 2020.\nWe've grown the business by over $40 billion over the last two years.\nFor context, prior to the pandemic, it took us nine years from 2009 to 2018 to grow the business by over $40 billion.\nSo to achieve that level of growth in two years' time is truly a testament to our investments, our teams, and their exceptional execution.\nNone of what has been accomplished over the past two years would have been possible without our orange-blooded associates.\nOur associates have maintained their relentless focus on the customer while simultaneously navigating the ongoing pandemic, industrywide supply chain disruptions, inflation, and a tight labor market.\nThe tenure and strength of our relationships with our supplier and transportation partners has also been key to our success.\nOur respective teams have worked tirelessly to build depth in key product categories and flow product to stores and distribution centers as quickly and efficiently as possible.\nTheir extraordinary efforts in fiscal 2021 resulted in record Success Sharing, our bonus program for our hourly associates.\nWe finished the year with another exceptional quarter as home improvement demand remained strong.\nSales for the fourth quarter grew approximately $3.5 billion to $35.7 billion, up 10.7% from last year.\ncomps of positive 7.6%.\nDuring the fourth quarter, all our regions and merchandise departments posted positive comps.\nDepartments of comps above the company average were plumbing, electrical, building materials, millwork, decor, and storage and paint.\nOur kitchen bath department was in line with the company average.\nAnd hardware tools, lumber, flooring, appliances, and our garden departments were positive but below the company average.\nDuring the fourth quarter, our comp average ticket increased 12.3%.\nComp transactions decreased 3.8%.\nThe growth in our comp average ticket was driven primarily by inflation across several product categories.\nCore commodity categories positively impacted our average ticket growth by approximately 185 basis points in the fourth quarter driven by inflation in lumber, building materials, and copper.\nLumber prices remain volatile.\nFor example, in the fourth quarter alone, the pricing for framing lumber ranged from approximately $585 to over $1,200 per 1,000 board feet, an increase of more than 100%.\nOn a two-year basis, both comp average ticket and comp transactions were healthy and positive in the fourth quarter.\nBig-ticket comp transactions or those over $1,000 were up approximately 18% compared to the fourth quarter of last year.\nWe saw continued strength in both our Pro and DIY customers.\nDuring the fourth quarter, Pro sales growth outpaced DIY growth.\nSales growth for both our Pro and DIY customers accelerated in the fourth quarter relative to the third quarter and showed strong double-digit growth on a two-year basis for both customer groups.\nSales leveraging our digital platforms grew approximately 6% for the fourth quarter and approximately 9% for the year.\nOver the past two years, sales from our digital platforms have grown over 100%.\nOur focus on delivering a frictionless, interconnected shopping experience is resonating with our customers as approximately 50% of our online orders were fulfilled through our stores in fiscal 2021.\nWe feel great about our position as the No.\n1 retailer for home improvement, and we look forward to serving our customers in the busy spring selling season.\nOver the last year, we faced a number of challenges, including rising cost pressures, disruptions throughout the supply chain, and the ongoing pandemic.\nWe're extremely grateful for the way our cross-functional teams work with our partners to mitigate these challenges while staying focused on serving our customers and communities.\nIn the fourth quarter, total sales were $35.7 billion, an increase of approximately $3.5 billion or 10% -- 10.7% from last year.\nOur total company comps were positive 8.1% for the quarter with positive comps of 7.3% in November, 10.2% in December, and 7% in January.\nwere positive 7.6% for the quarter with positive comps of 7.2% in November, 10.9% in December, and 5.4% in January.\nOur results in the fourth quarter were once again driven by broad-based strength across the business and our geographies.\nAll 19 U.S. regions posted positive comps, and Canada and Mexico, both posted double-digit positive comps in the fourth quarter.\nFor the year, our sales totaled a record $151.2 billion, with sales growth of $19 billion or 14.4% versus fiscal 2020.\nFor the year, total company comp sales increased 11.4%, and U.S. comp sales increased 10.7%.\nIn the fourth quarter, our gross margin was 33.2%, a decrease of approximately 35 basis points from last year.\nAnd for the year, our gross margin was 33.6%, a decrease of approximately 30 basis points from last year, primarily driven by product mix and investments in our supply chain network.\nDuring the fourth quarter, operating expenses were approximately 19.7% of sales, representing a decrease of approximately 120 basis points from last year.\nOur operating leverage during the fourth quarter reflects comparisons against significant COVID-related expenses that we incurred in the fourth quarter of 2020 to support our associates, the anniversarying of $110 million of non-recurring expenses related to the completion of the HD Supply acquisition in the fourth quarter of 2020, and solid expense management for the quarter.\nDuring the fourth quarter of fiscal 2021, we also incurred approximately $125 million of COVID-related expenses.\nFor the year, operating expenses were approximately 18.4% of sales, representing a decrease of approximately 170 basis points from fiscal 2020.\nOur operating expense leverage in fiscal 2021 reflects a decrease in our COVID-related costs compared to last year, partially offset by wage actions taken at the end of 2020 as well as throughout 2021.\nOur operating expenses for the year included a consistent level of investment in our business, which we intend to continue.\nFor the year, we are very pleased with the operating expense leverage we were able to deliver.\nOur operating margin for the fourth quarter was approximately 13.5% and for the year was approximately 15.2%.\nInterest and other expense for the fourth quarter was essentially flat with last year.\nIn the fourth quarter, our effective tax rate was 25.5% and for fiscal 2021 was 24.4%.\nOur diluted earnings per share for the fourth quarter were $3.21, an increase of 21.1% compared to the fourth quarter of 2020.\nDiluted earnings per share for fiscal 2021 were $15.53, an increase of 30.1% compared to fiscal 2020.\nDuring the year, we opened seven new stores and added 14 new stores through a small acquisition, bringing our store count to 2,317 at the end of fiscal 2021.\nRetail selling square footage was approximately 241 million square feet at the end of fiscal 2021.\nTotal sales per retail square foot were approximately $605 in fiscal 2021, the highest in our company's history.\nAt the end of the quarter, merchandise inventories were $22.1 billion, an increase of $5.4 billion versus last year.\nAnd inventory turns were 5.2 times, down from 5.8 times from the same period last year.\nMoving on to capital allocation.\nDuring the fourth quarter, we invested approximately $830 million back into our business in the form of capital expenditures.\nThis brings total capital expenditures for fiscal 2021 to $2.6 billion.\nDuring the year, we paid approximately $7 billion of dividends to our shareholders.\nWe look to grow our dividend every year as we grow earnings.\nAnd today, we announced our board of directors increased our quarterly dividend by 15% to $1.90 per share, which equates to an annual dividend of $7.60.\nAnd finally, during fiscal 2021, we returned approximately $15 billion to our shareholders in the form of share repurchases, including $4.5 billion in the fourth quarter.\nComputed on the average of beginning and ending long-term debt and equity for the trailing 12 months, return on invested capital was 44.7%, up from 40.8% in the fourth quarter of fiscal 2020.\nNow I'll comment on our outlook for 2022.\nThe broader housing environment continues to be supportive of home improvement.\nDemand for homes continues to be strong, and existing home inventory available for sale remains near record lows, resulting in support for continued home price appreciation.\nOn average, homeowners' balance sheets continue to strengthen as the aggregate value of U.S. home equity grew approximately 35% or $6.5 trillion since the first quarter of 2019.\nThe housing stock continues to age, and customers tell us the demand for home improvement projects of all sizes is healthy.\nWhile we are encouraged by the consistent and resilient demand we've seen for home improvement, broader uncertainty remains with respect to the impact of inflation, supply chain dynamics, and how consumer spending will evolve through the year.\nGiven these factors establishing full year 2022 guidance based on macroeconomic fundamentals remains challenging.\nWe adjust this dollar run rate for our historical seasonality to calculate our sales outlook for 2022.\nBased on this approach and assuming there are no material shifts in demand, we calculate that sales growth and comp sales growth will be slightly positive for fiscal 2022.\nWe expect our 2022 operating margin to be flat to 2021.\nAnd we would expect low single-digit percentage growth in diluted earnings per share compared to fiscal 2021.\nOver the course of fiscal 2022, we plan to invest approximately $3 billion back into our business in the form of capital expenditures, in line with our annual expectation of approximately 2% of sales going forward.\nWe believe that we have positioned ourselves to meet the needs of our customers in any environment as evidenced by our results.\nThe investments we've made in our business have enabled agility in our operating model.\nAs we look forward, we will continue to invest to strengthen our position with our customers, leverage our scale and low-cost position to drive growth faster than the market, and deliver shareholder value.\nWith that, I'll hand it back to Craig.\nAnd again, let me congratulate the team on an exceptional year.\nIn a few moments, Ted and Richard will share their thoughts on the next phase of growth for our company.\nThe leadership team has spent a lot of time over the past year talking about what's next for The Home Depot, and I have never been more excited about the opportunities that are ahead of us.\nWhile change is constant in our business, our strategic priorities remain consistent: deliver the best customer experience in home improvement and extend our low-cost provider position.\nOur objectives to grow market share and deliver exceptional shareholder value are also unchanged.\nAnd as Ted will detail, the investments we have made and will continue to make in differentiated capabilities throughout the business will unlock the opportunity to deliver a value proposition that we believe is unique in our industry.\nWe are well-positioned to leverage our distinct competitive advantages to capitalize on a compelling growth opportunity in our space.\nWe have a world-class leadership team who have the vision and experience to guide our company to new heights.\nWe have a team of approximately 500,000 associates who are committed to the culture that our founders instilled in our business over 40 years ago.\nThese associates have demonstrated exceptional execution and an unwavering commitment to our customers regardless of the operating environment.\nI believe that the greatest days for The Home Depot are ahead of us.\nLet me take a moment to express my sincere appreciation for all that you have done for this company throughout your 25-year career.\nYou're a tremendous steward of our culture, ensuring our values guide every decision we make as a leadership team.\nYou led us through a transformational period and positioned us well for the future.\nI believe that Home Depot is an organization unlike any other.\nOur success is driven by our orange-blooded associates, unique culture, customer focus, and operational excellence.\nThis is the power of The Home Depot and why we are the No.\n1 retailer for home improvement.\nI'd like to spend some time talking about the future, what's next for this great company.\nWe've seen several inflection points in our company's history, all spurred by a desire to maintain the growth mentality and entrepreneurial spirit created by Bernie and Arthur when they revolutionized the home improvement industry over 40 years ago.\nOver the years, we have used these inflection points to adapt to changing market conditions and customer expectations.\nApproximately 15 years ago, we pivoted from new stores as a driver of growth to growth driven by productivity.\nYears later, we began building capabilities to better enable a multichannel shopping experience through an end-to-end approach.\nIn recent years, we focused on a customer-back approach to deliver the best interconnected shopping experience in home improvement.\nCustomer expectations continue to evolve, and there is little tolerance for any friction in the shopping journey.\nSo we will continue to adapt to stay ahead of the customer.\nWe have seen a tremendous amount of growth in the past decade.\nWe could have never predicted the more than $40 billion in growth since the end of 2019.\nWith this growth, we are reimagining new milestones for the business.\nOur objectives to grow market share and deliver exceptional shareholder value are unchanged.\nAligned with these objectives, our goals are: first, to grow the business to $200 billion in sales, which represents incremental growth of approximately $50 billion from where we are today; and second, and just as importantly, deliver best-in-class operating profit dollar growth and return on invested capital.\nWe believe that we will achieve these goals through what we are confident is the winning formula for our customers, our associates, and our shareholders.\nWe intend to provide the best experience in home improvement, extend our position as the low-cost provider and be the most efficient investor of capital in home improvement.\nOver the last two years, as we've grown by over $40 billion in sales, our addressable market has also grown.\nWe now estimate that our total addressable market in North America is greater than $900 billion.\nWe have invested in capabilities that improve our competitive positioning and allow us to pursue opportunities we could not meaningfully address in the past, which provides significant growth opportunities with both consumers and Pros.\nWe estimate that each of these respective customer groups represent about 50% of the total addressable market.\nWe also estimate that each of these important customer groups represent approximately 50% of our total sales.\nFor Pro, we believe this addressable end market is over $450 billion.\nWithin this end market, we believe our addressable maintenance, repair, and operations, or MRO space, has expanded to over $100 billion.\nSo while we are the No.\n1 home improvement retailer across all of our geographies, we represent a relatively small part of a large and fragmented total addressable market that has expanded significantly over the past two years.\nTo support our growth objectives, we have a straightforward approach to capital allocation that will also remain unchanged.\nInvesting in the business is our primary capital allocation priority, and we have learned that it is critical to invest in a more consistent and agile way.\nOur investment cadence has become more real time, allowing us to pivot more quickly, giving us the ability to move faster when we see positive results.\nAfter investing in the business, it is our intent to return excess cash to shareholders through a balanced approach of paying a healthy dividend and making share repurchases.\nWhile there is more to do as we fine-tune new go-to-market strategies and refine our processes to better serve our customers, we believe what we are creating will extend our leadership position.\nWe intend to leverage our unmatched scale as we continue to optimize assets and capabilities to compete in a more disruptive way.\nThe macroeconomic environment is supportive, the opportunity in front of us is compelling, and our capital allocation principles will continue to create value for our stakeholders.\nWe have a powerful foundation and distinct competitive advantages.\nFirst, as I mentioned earlier, our unique culture and values as well as our knowledgeable associates will remain a competitive differentiator.\nSecond, our stores are the hub of our business and will always be important in the future of home improvement retail.\nWe have a premier real estate footprint that provides convenience for the customer.\nThird, we believe we have the most relevant brands and products and are continuously driving innovation in the marketplace.\nFourth, we have a best-in-class supply chain and have demonstrated our ability to operate with agility and navigate any environment.\nAnd finally, we have consistently improved the interconnected shopping experience as our customers increasingly blend physical and digital worlds for their projects.\nWe continue to invest and strengthen these advantages to ensure the best experience for our customers.\nWhile there is more work to do, we've made important strides in removing friction from the customer experience.\nLet me give you real examples of how the investments we've made across the business are earning us more share of wallet with our customers.\nLet's take the example of one of our Pro customers in the Dallas market.\nYears ago, this large-scale repair/remodeler primarily shop with us in our stores for their unplanned immediate need purchases, largely out of convenience.\nOver time, their in-store spend increased and they were signed a dedicated Pro Account Representative, or PAR, to deepen our relationship with them.\nAs we invested across the interconnected experience, this customer engaged with us more often and occasionally used us for job site delivery.\nAt this point, we saw their spend with The Home Depot grow to more than $100,000 annually but still for mostly unplanned immediate need purchases in store.\nFast forward to today, this customer now utilize the number of new and/or improved capabilities.\nLast year, this customer downloaded our mobile app.\nTheir mobile orders increased.\nThey joined our Pro loyalty program and authenticated with us via our B2B website.\nWe began offering personalized pricing on certain products.\nAnd they took their first deliveries from several of our new fulfillment centers, including one of our new flatbed distribution centers.\nAs a result, we've seen spend with this customer more than triple to over $300,000 annually.\nWhile this is one example, we see that customers increase spend with us as they build confidence in our capabilities.\nWhile we continue serving this customer for their unplanned immediate-need purchases, we now believe our capabilities are beginning to satisfy important planned purchase occasions.\nWe believe the ability to serve our Pros' planned and unplanned purchase occasions will be an important driver of growth as we work toward a $200 billion sales milestone.\nAnd while Pro is an important driver of growth going forward, removing friction from the DIY customer is equally important.\nLet's take the example of a customer we'll call Geena, a DIY customer tackling a bathroom remodel four years ago and compare that with the same shopping experience today.\nFour years ago, she would have relied heavily on our stores and website for helping completing her project.\nGeena's engagement on our digital applications is a little more difficult.\nThe mobile experience wasn't as intuitive, search results weren't as relevant, and associated recommendations were limited.\nAs a result, she likely made multiple trips to the store for items didn't know she needed.\nAnd when she did go to the store, buy online pick up in store, or BOPUS, was essentially the only option outside of the traditional cash-and-carry model for collecting whatever tools and materials her project required.\nToday, Geena's experience would be meaningfully different as her shopping journey is met with a lot less friction.\nAs Geena begins her project online, improvements in search provide her with more relevant results.\nWe also have a better understanding of the intent of her shopping journey and can make recommendations supporting her whole project.\nAnd we know these product-relevant recommendations matter.\nOver the last four years, we've seen a significant increase in sales driven by product recommendations.\nWhen Geena comes to our stores, our recently updated mobile app and improved signage help her more easily navigate our aisles.\nWe've made investments in the front end to improve her checkout experience.\nAnd as always, our knowledgeable associates are there to help Geena throughout her project.\nIf Geena chooses to place an order online for pickup in the store, she has multiple fulfillment options.\nShe can pick up her items at the service desk, grab those items from a locker or have them brought to her car with curbside pickup.\nGeena can also receive same- or next-day delivery on thousands of items.\nWe have seen customers like Geena increase their spend with The Home Depot as a result of our improved in-store experience, more robust and personalized online shopping journey and greater delivery and fulfillment options.\nWe are also shifting our mindset to deliver a truly seamless interconnected experience.\nThe flywheel we are building goes beyond retail's traditional channel mindset to an ecosystem of capabilities and operational efficiencies working together to remove friction at every step of the customer shopping journey.\nFor example, while we believe the supply chain network we are building is transformational, it's just not about the buildings themselves.\nThe value lies in their connection to the overall fulfillment and store ecosystem in the improved customer experience.\nThe new fulfillment centers enable us to expand our assortment and inventory depth as well as offer faster and more reliable delivery options.\nIn addition, these new facilities removed some fulfillment pressures historically placed on stores, creating a better in-store shopping experience and freeing up associates to help drive additional sales.\nOur intention is to build an unrivaled delivery network for home improvement goods.\nWhile early days, we continue to develop our capabilities, and we are encouraged as we see a measurable lift in sales with a more interconnected shopping experience.\nAs we move forward toward this next phase of growth, we will remain focused on driving productivity, a long-standing hallmark of The Home Depot.\nEnabled by technology, we are focused on eliminating unnecessary tasks and making our processes more efficient while also making our shopping experience the best in home improvement.\nWhen I think about our stores, I think about the tremendous amount of productivity over the years, all of which helped us achieve over $600 in sales per retail square foot in 2021.\nAs we set our sights on our goal of $200 billion in sales, we have many opportunities to improve freight flow throughout the store and drive further space optimization in SKU productivity.\nThe productivity initiatives don't reside solely in our stores, we see many opportunities across the business.\nWhen our founders started The Home Depot over 40 years ago, they transformed an industry.\nWe are continuing that legacy but doing so in an interconnected way.\nWe believe that the interconnected ecosystem we are building will increase our ability to capture share.\nWe intend to disrupt traditional business models with new go-to-market strategies.\nThe opportunity in front of us is exciting today as it was when we first opened our doors, and I am honored to help lead this company into the next phase of growth.\n",
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"content": "compname announces fourth quarter and fiscal 2021 results increases quarterly dividend by 15 percent provides fiscal 2022 guidance.\ncompname announces fourth quarter and fiscal 2021 results; increases quarterly dividend by 15 percent; provides fiscal 2022 guidance.\nq4 earnings per share $3.21.\nq4 sales rose 10.7 percent to $35.7 billion.\nfiscal 2022 guidance assumes run-rate of dollar demand it has observed over last two quarters continues through fiscal 2022.\nsees 2022 sales growth and comparable sales growth to be slightly positive.\nsees 2022 operating margin approximately flat with fiscal 2021.\nqtrly comparable sales in u.s. increased 7.6 percent.\nqtrly comparable sales for q4 of fiscal 2021 increased 8.1 percent.\nsees 2022 diluted earnings-per-share-growth to be low single digits.\nannounced that its board of directors approved a 15 percent increase in its quarterly dividend to $1.90 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 Larry Mendelson, Chairman and CEO of HEICO Corporation.\nAs management looks at the company, we really believe that our success and the ability to keep our head well above water, not to get into any financial binds, not to struggle to sell debt at 8% or 10% and so forth and to be fiscally sound is all attributed to the unbelievable talent and brilliance of the team members.\nAnd I can tell you, senior management hold -- and the Board holds these people in the highest regard.\nBefore reviewing our operating results in detail, I'd like to take a few minutes to discuss the impact on HEICO's operating results from the COVID pandemic.\nResults of operations in the first quarter of fiscal '21 continue to reflect adverse impact from COVID-19.\nMost notably, demand for commercial aviation products and services continues to be moderated and impacted negatively by ongoing depressed commercial aerospace markets.\nWe continue to focus on health and safety measures at our facilities in accordance with the CDC guidelines in order to protect the global team members and mitigate the spread of COVID-19 while serving our customers' needs.\nKeep in mind that almost all of our facilities were open continually since the start of the COVID pandemic.\nAnd very, very few members of our teams came down with this miserable disease.\nThat was because of the safety measures and health measures that we employ throughout the company.\nConsolidated net sales for businesses that operate within the commercial aerospace industry decreased by about 43% in the first quarter of fiscal '21 as compared to the first quarter of fiscal '20.\nAs we mentioned in prior calls, we anticipate that as the pandemic vaccine becomes more widely available, consumer interest in commercial air travel should begin to reemerge.\nAs such, we cautiously anticipate improved demand for our commercial aerospace products to slowly recover toward the second half of fiscal '21.\nSummarizing the highlights of our first quarter of fiscal '21 results.\nI would tell you that despite continuing difficult operating environment created by the pandemic, HEICO continues to generate excellent cash flow.\nAnd the cash flow provided by operating activities was very strong, increasing 32% to $107.2 million in the first quarter of fiscal '21, and that was up from $81.1 million in the first quarter of fiscal '20.\nWe are encouraged by the second consecutive quarter of sequential improvement in net sales and operating income at our Flight Support Group.\nOperating income and net sales at flight support increased 20% and 3%, respectively, in the first quarter of fiscal '21 as compared to the fourth quarter of fiscal '20, clearly an improvement that's obvious.\nNet sales for ETG, space and electronics products grew organically by a very strong 19% and 14%, respectively, in the first quarter of fiscal '21, while the ongoing pandemic's impact resulted in softer demand for its commercial aerospace products.\nIn January 21, we paid our regular semiannual cash dividend of $0.08 per share, and this represented our 85th consecutive semiannual cash dividend since 1979.\nHEICO's strength in the face of ongoing challenging conditions, coupled with our optimism for HEICO's future, gave our Board the confidence to continue paying a cash dividend through the current health pandemic.\nTotal debt to shareholders' equity improved to 32.2% as of January 31, '21, and that compares to 36.8% as of October 31, '20.\nOur net debt, which is total debt less cash and cash equivalents of $270.3 million as of January 31, '21, to shareholders' equity ratio improved to 13% as of January 31, '21.\nAnd that was down from 16.6% as of October 31, '20.\nOur net debt-to-EBITDA ratio improved to 0.62 times as of January 31, '21.\nAnd that was down from 0.71 times on October 31, '20.\nWe have no significant debt maturities until fiscal '24, and we plan to utilize our financial strength and flexibility to aggressively pursue high-quality acquisitions of various sizes to accelerate the growth and maximize shareholder return.\nLast week, we publicly have proudly extended our congratulations to both NASA and Jet Propulsion Laboratories, or known as JPL, on their successful Mars Perseverance Rover Landing.\nOur Apex Microtechnology, Sierra Microwave, 3D PLUS and VPT subsidiaries supplied mission-critical hardware for the mission.\nOnce again, NASA and JPL demonstrated remarkable talent and capabilities despite a year of great challenges for the world's population, and they remain a beacon of optimism for all people.\nAnd we are extremely proud of HEICO companies and team members who contributed to this effort.\nI think we want to focus on the extreme technical ability and unbelievable quality that these -- our subsidiaries built into the electronics that they supply for that Mars Perseverance Rover Landing.\nThe Flight Support Group's net sales were $199.3 million in the first quarter of fiscal '21 as compared to $301.1 million in the first quarter of fiscal '20.\nThe net sales decrease is principally organic and reflects lower demand for the majority of our commercial aerospace products and services resulting from the significant decline in global commercial air travel attributable to the pandemic.\nThe Flight Support Group's operating income was $25.8 million in the first quarter of fiscal '21 as compared to $62 million in the first quarter of fiscal '20.\nThe operating income decrease principally reflects the previously mentioned decrease in net sales as well as a lower gross profit margin and the impact from lost fixed cost efficiencies stemming from the pandemic.\nThe lower gross profit margin principally reflects the impact from lower net sales of commercial aerospace products and services across all of its product lines.\nThe Flight Support Group's operating margin was 13% in the first quarter of fiscal '21 as compared to 20.6% in the first quarter of fiscal '20.\nThe operating margin decrease principally reflects the previously mentioned lower gross profit margin and an increase in SG&A expenses as a percentage of net sales mainly from the previously mentioned lost fixed cost efficiencies and the effect of higher intangible asset amortization expense.\nI would like to point out that the full impact of the pandemic began to affect the FSG operating segment at the beginning of our third quarter of fiscal '20.\nThrough practical and disciplined cost management, we have delivered sequential quarterly improvements in our FSG operating margin.\nThe FSG operating margin was just 6.7% in the third quarter of fiscal '20 and has since steadily increased to 11.1% in the fourth quarter of fiscal 2020 and to 13% in the first quarter of fiscal '21.\nOur team members and assembled workforce is our most valuable asset.\nOur team members engaged primarily in commercial aviation sacrificed greatly during the pandemic through limited layoffs, moderate furloughs and wage reductions for nearly all others not impacted by layoffs or furloughs.\nThese team members sacrificed a tremendous amount, and we owe our loyalty to them as we held on to a much higher percentage of our workforce than most others.\nThus, we decided to operate with higher overhead, which reduced our gross margins and increased our SG&A.\nA lot of companies speak about how their team members are important.\nBut HEICO demonstrates it through actions, including by maintaining our 401(k) matching contributions and granting our team members their maximum potential 401(k) profit sharing contributions, even though we missed our budgets due to the pandemic.\nWe could have sacrificed the future in order to have better current period results, but that is not what HEICO is about.\nThat's the luxury of being part of the HEICO family as we don't feel pressured to make short-term decisions that hurt future performance.\nWe also treated our customers, suppliers, principles, partners and acquisitions extremely well and truly believe this helps us grow faster than the industry as people prefer dealing with us due to our culture.\nWe are confident that our motivated and assembled workforce will propel us to new heights as the pandemic passes.\nAnd I would also like to echo my gratitude to all of HEICO's team members, including those at the Electronic Technologies Group, for their remarkable efforts during this difficult time.\nAbout 90% of our people cannot work from home and have to come in.\nAnd our businesses have been operating as essential businesses throughout this pandemic very carefully and very safely and taking care of each other.\nAnd I'm very proud of the job that our people have done throughout this entire difficult period as well as the many years before, and I know that they'll continue to do the excellent work that they've carried out.\nAs for the Electronic Technologies Group's performance, our net sales increased 7% to $223.6 million in the first quarter of fiscal '21, up from $208.4 million in the first quarter of fiscal '20.\nThe increase is principally attributable to the favorable impact from our fiscal '20 acquisitions.\nThe Electronic Technologies Group's operating income increased 5% to $60.1 million in the first quarter of fiscal '21, up from $57.5 million in the first quarter of fiscal '20.\nThis increase principally reflects the previously mentioned net sales growth.\nThe Electronic Technologies Group's operating margin was 26.9% in the first quarter of fiscal '21 as compared to 27.6% in the first quarter of fiscal '20.\nThe lower operating income as a percent of net sales principally reflects a lower gross profit margin, partially offset by a decrease in SG&A expenses as a percentage of net sales, mainly from certain efficiencies gained from the previously mentioned net sales growth.\nThe lower gross profit margin mainly reflects a decrease in net sales with commercial aerospace products and lower net sales and a less favorable product mix of certain defense products, partially offset by an increase in net sales of certain electronics products.\nMoving on to earnings per share.\nConsolidated net income per diluted share was $0.51 in the first quarter of fiscal '21 and that compared to $0.89 in the first quarter of fiscal '20.\nThe decrease principally reflects the previously mentioned lower operating income of the Flight Support Group and higher income tax expense, partially offset by less net income attributable to noncontrolling interest as well as lower interest expense.\nDepreciation and amortization expense totaled $23 million in the first quarter of '21.\nThat was up from $21.6 million in the first quarter of fiscal '20.\nThe increase in the first quarter of fiscal '21 principally reflects the incremental impact of higher intangible asset amortization expense from our fiscal '20 acquisitions.\nSignificant new product development efforts are continuing at both ETG and flight support.\nR&D expense was $16.2 million in the first quarter of fiscal '21 or about 3.9% of sales, and that compared to $17.1 million in the first quarter of fiscal '20 or 3.4% of sales.\nConsolidated SG&A expense decreased by 10% to $78.1 million in the first quarter of fiscal '21 as compared to $87.1 million in the first quarter of fiscal '20.\nThe decrease in consolidated SG&A expense reflects: a decrease in performance-based compensation expense; a reduction in other selling expenses, including outside sales commission, marketing and travel; and the reduction in other G&A expenses.\nConsolidated SG&A expense as a percentage of net sales was 18.7% in the first quarter of fiscal '21, and that compared to 17.2% in the first quarter of fiscal '20.\nThe increase in the consolidated SG&A expense as a percentage of net sales principally reflects higher other G&A expenses as a percentage of net sales and the impact from higher intangible asset amortization expense.\nInterest expense decreased to $2.4 million in the first quarter of fiscal '21, and that was down from $4.3 million in the first quarter of fiscal '20.\nThe decrease was principally due to lower weighted average interest rates, partially offset by a higher weighted average balance of borrowings under our revolving credit facilities.\nOther income in the first quarters of fiscal '21 and '20 was really not significant.\nHEICO's income tax expense was $2.3 million in the first quarter of fiscal '21, and that compared to an income tax benefit of $22.9 million in the first quarter of fiscal '20.\nHEICO recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal '21 and '20 of $13.5 million and $47.6 million, respectively.\nThe tax benefit from stock option exercises in both periods was the result of the strong appreciation in HEICO's stock price during the option lease holding period, and the $34.1 million larger benefit recognized in the first quarter of fiscal '20 was the result of more stock options which were exercised.\nNet income attributable to noncontrolling interest was $5.7 million in the first quarter of fiscal '21, and that compared to $7.9 million in the first quarter of fiscal '20.\nThe decrease principally reflects a decrease in the operating results of certain subsidiaries of flight support, in which noncontrolling interests are held.\nFor the full FY '21, we now estimate a combined effective tax rate and noncontrolling interest rate of approximately 24% to 26% of pre-tax income.\nMoving over to balance sheet and cash flow.\nThe financial position of HEICO and forecasted cash flow remains very strong.\nAs we mentioned earlier, cash flow provided by operating activities was very strong and increased 32% to $107.2 million in the first quarter of fiscal '21, up from $81.1 million in the first quarter of fiscal '20.\nOur working capital ratio was strong and consistent at 4.9 times as of January 31, '21, and that compared to 4.8 as of October 31, '20.\nDays sales outstanding of receivables, DSOs, improved to 45 days as of January 31, '21, and that compared to 46 days as of January 31, '20.\nOf course, we continue to closely monitor all receivable collection efforts in order to limit our credit exposure.\nNo one customer accounted for more than 10% of net sales.\nOur top five customers represented about 24% and 22% of consolidated net sales in the first quarter of fiscal '21 and '20, respectively.\nOur inventory turnover rate increased to 164 days for the period ending January 31, '21.\nThat compared to a pre pandemic 132 days for the period ended January 31, '20.\nThe increase in the turnover rate principally reflects lower net sales volume, mainly resulting from the pandemic impact on certain -- on demand for certain of our products and services.\nAnd despite the increased turnover rate, our subsidiaries really have done an excellent job controlling inventory levels in the first quarter of fiscal '21, which we believe are appropriate to support expected future net sales.\nAnd in consideration of HEICO's consolidated backlog, which has increased by $62 million since October 31, '20, the backlog was $906 million as of January 31, '21.\nAs we look ahead to the remainder of fiscal '21, the pandemic will likely continue to negatively impact commercial aerospace and HEICO.\nGiven this uncertainty, we cannot provide fiscal '21 net sales and earnings guidance at this time.\nHowever, we believe that our ongoing fiscal conservative policies, healthy balance sheet and increased liquidity will permit us to invest in new research and development and gain market share as the industry recovers.\nIn addition, our time-tested strategy of maintaining low debt and acquiring and operating high cash-generating businesses across a diverse base of industries beyond commercial aviation, such as defense, space and other high-end markets, including electronics and medical, puts us in a good financial position to weather this uncertain economic period.\nFurthermore, we are cautiously optimistic that the vaccine progress may generate increased commercial air travel and will result in gradual recovery in demand for our commercial aerospace parts and services businesses.\nAnd we expect that to commence primarily in the second half of fiscal '21, although we do expect it to increase gradually until we get there.\nThat strength will manifest from our culture of ownership, our mutual respect for each other and the unwavering pursuit of exceeding customers' expectations.\nI also would like to point out that in spite of the pandemic and in spite of decreased sales, HEICO wanted to look and reward our team members.\nAnd again, this year, we continue to make the 5% match to team members' 401(k) investments.\nAs you know, most team members invest 6%, HEICO matches it with 5% of their salary in HEICO shares.\nWe would never cut that back because we respect and we want to reward our outstanding team.\n",
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"content": "compname reports strong operating cash flows in the first quarter of fiscal 2021; up 32%.\nq1 earnings per share $0.51.\ncannot provide fiscal 2021 net sales and earnings guidance at this time.\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 Larry Mendelson, Chairman and CEO of HEICO Corporation.\nThe dedication to HEICO's customers and to the safety of their fellow team members has been commendable.\nI'd now like to take a few moments to address the impact of COVID-19 on HEICO's recent operating results.\nResults of operations in the first six months and the second quarter of fiscal '21 continue to reflect the adverse impact from COVID-19.\nMost notably, demand for our commercial aviation products and services continues to be moderated by the ongoing depressed commercial aerospace market which, we know, is beginning to rebound and return to normal.\nLooking ahead to the remainder of fiscal '21, we are cautiously optimistic that the ongoing worldwide rollout of COVID-19 vaccines will have and, in fact, is having a positive influence on commercial air travel and will generate more favorable economic environments in the markets that we serve.\nSummarizing the highlights of the first six months and second quarter of fiscal '21, we are pleased to report record quarterly net sales within the ETG Group, and our third consecutive sequential increase in quarterly net sales and operating income of the Flight Support Group.\nThe ETG Group set a quarterly net sales and operating income record in the second quarter of fiscal '21, improving 11% and 9%, respectively.\nThese increases, principally reflect the impact from our profitable fiscal '20 and '21 acquisitions, as well as very strong organic growth of 19% for our other electronic products.\nThe Flight Support Group reported sequential growth in operating income and net sales in the second quarter of fiscal '21, and they improved 37% and 16% respectively, as compared to the first for fiscal '21.\nOur total debt to shareholders' equity reduced and improved to 27.1% as of April 30, '21 and that compared to 36.8% as of October 31, '20.\nOur net debt, which is total debt less cash and cash equivalents, of $199 million as of April 30, '21 compared to shareholders' equity ratio improved to 9.2% as of April 30, '21 and that was down from 16.6% as of October 31, '20.\nAnd this provides HEICO with substantial acquisition capital in the balance of our $1.5 billion unsecured revolving credit facility as well as other available capital.\nWe are not a capital constrained company.\nOur net debt to EBITDA ratio improved to 0.47 times as of April 30, '21, down from 0.71 times as of October 31, '20.\nDuring fiscal '21, we successfully completed one acquisition, and we completed -- we have completed five acquisitions over the past year.\nWe have no significant debt maturities until fiscal '24, and we plan to utilize our financial strength and flexibility to aggressively pursue high-quality acquisitions of various sizes, which will accelerate growth and maximize shareholder returns.\nCash flow provided by operating activities remained strong, increasing 2% to $210.1 million in the first six months of fiscal '21 and that was up from $205.9 million in the first six months of fiscal '20.\nIn March '21, we acquired all of the business assets and certain liabilities of Pyramid Semiconductor.\nPyramid is a specialty semiconductor designer and manufacturer, which offers a well-developed line of processors, static random-access memory, electronically erasable programmable read-only memory and logic products on a diverse array of military, space and medical platforms.\nWe do expect this acquisition to be accretive to earnings within the first 12 months following the closing.\nThe Flight Support Group's net sales were $429.6 million in the first six months of fiscal '21, as compared to $553 million in the first six months of fiscal '20.\nThe Flight Support Group's net sales were $230.3 million in the second quarter of fiscal '21, as compared to $252 million in the second quarter of fiscal '20.\nThe net sales decrease in the first six months and second quarter of fiscal '21 is principally organic, and reflects lower demand for the majority of our commercial aerospace products and services resulting from the significant decline in global commercial air travel attributable to the pandemic.\nThe Flight Support Group's operating income was $61.3 million in the first six months of fiscal '21, as compared to $109.6 million in the first six months of fiscal '20.\nThe operating income decrease in the first six months of fiscal '21 principally reflects the previously mentioned lower net sales, as well as a lower gross profit margin, higher performance-based compensation expense and the impact from lost fixed cost efficiencies stemming from the pandemic.\nThe Flight Support Group's operating income was $35.5 million in the second quarter of fiscal '21, as compared to $47.5 million in the second quarter of fiscal '20.\nThe operating income decrease in the second quarter of fiscal '21 principally reflects higher performance-based compensation expense, directly resulting from the strong improvement in operations during the past three consecutive quarters.\nThe Flight Support Group's operating margin was 14.3% in the first six months of fiscal '21, as compared to 19.8% in the first six months of fiscal '20.\nThe operating margin decrease in the first six months of fiscal '21 principally reflects an increase in SG&A expenses as a percentage of net sales, mainly from the previously mentioned higher performance-based compensation expense and lost fixed cost efficiencies, and the lower gross profit margin.\nThe Flight Support Group's operating margin was 15.4% in the second quarter of fiscal '21, as compared to 18.9% in the second quarter of fiscal '20.\nThe operating margin decrease in the second quarter of fiscal '21 principally reflects the previously mentioned higher performance-based compensation expense.\nThe Electronic Technologies Group's net sales increased 9% to a record $466.6 million in the first six months of fiscal '21, up from $427.4 million in the first six months of fiscal '20.\nThe net sales increase in the first six months of fiscal '21 principally reflects our fiscal '20 and '21 acquisitions as well as organic growth of 1%.\nThe organic growth principally reflects increased demand for other electronic and space products, partially offset by demand for commercial aerospace products.\nThe Electronic Technologies Group's net sales increased 11% to a record $243.1 million in the fiscal second quarter of '21, up from $219 million in the second quarter of fiscal '20.\nThe net sales increase in the second quarter of fiscal '21 principally resulted from our fiscal '20 and '21 acquisitions, as well as organic growth of 3%.\nThe organic growth principally reflects increased demand for our other electronic and defense products, partially offset by decreased demand for commercial aerospace products.\nThe Electronic Technologies Group's operating income increased 7% to a record $131.4 million in the first six months of fiscal '21, up from $123 million in the first six months of fiscal '20.\nThe operating income increase in the first six months of fiscal '21 principally reflects the previously mentioned net sales growth, partially offset by a lower gross profit margin mainly from lower net sales of defense and commercial aerospace products that were partially offset by an increase in net sales of certain other electronic products.\nThe Electronic Technologies Group's operating income increased 9% to $71.3 million in the second quarter of fiscal '21, as compared to $65.5 million in the second quarter of fiscal 2020.\nThe operating income increase in the second quarter of fiscal '21 principally reflects the previously mentioned net sales growth, partially offset by a lower gross profit margin mainly from a less favorable product mix for our defense products, as well as a decrease in net sales of commercial aerospace products that were partially offset by a net increase in sales of certain other electronic products.\nThe Electronic Technologies Group's operating margin was 28.2% in the first six months of fiscal '21, as compared to 28.8% in the first six months of fiscal '20.\nThe Electronic Technologies Group's operating margin was 29.3% in the second quarter of fiscal '21, as compared to 29.9% in the second quarter of fiscal '20.\nThe operating margin decrease in the first six months and second quarter of fiscal '21 principally reflects the previously mentioned gross profit margin, partially offset by a decrease in SG&A expenses as a percentage of net sales mainly from efficiencies gained from the previously mentioned net sales growth.\nMoving on to details, the diluted earnings per share, consolidated net income per diluted share was a $1.03 in the first six months of fiscal '21, and that compared to $1.44 in the first six months of fiscal '20.\nThe decrease in the first six months of fiscal '21 principally reflects the previously mentioned lower operating income of Flight Support and higher income tax expense, and that was partially offset by the previously mentioned higher operating income of the ETG Group and lower interest expense.\nConsolidated net income per diluted share was $0.51 in the second quarter of fiscal '21, as compared to $0.55 in the second quarter of fiscal '20.\nThe decrease in second quarter fiscal '21 principally reflects the previously mentioned lower operating income of Flight Support, partially offset by lower income tax expense as well as higher operating income of the ETG Group and lower interest expense.\nDepreciation and amortization expense totaled $22.9 million in the second quarter of fiscal '21, that was up from $21.7 million in the second quarter of fiscal '20, and totaled $45.9 million in the first six months of fiscal '21, up from $43.3 million in the first six months of fiscal '20.\nThe decrease in the second quarter and first six months of fiscal '21 principally reflects incremental impact from the fiscal '20 and '21 acquisitions.\nR&D expense increased to $34.2 million or 3.9% of net sales in the first six months of fiscal '21, and that was up from $33.1 million [Phonetic] or 3.5% of net sales for the first six months of fiscal '20.\nR&D expense increased to $18 million or 3.9% of net sales in the second quarter of fiscal '21, and that was up from $16.8 million or 3.6% of net sales, second quarter fiscal '20.\nWe note that significant ongoing new product development efforts are continuing at both ETG and Flight Support.\nOur consolidated SG&A expense were $161.2 million in the first six months of fiscal '21, as compared to $157.8 million in the first six months of fiscal '20.\nConsolidated SG&A expenses were $83 million in the second quarter of fiscal '21, and that compared to $70.7 million in the second quarter of fiscal '20.\nThe increase in consolidated SG&A expense in the first six months and second quarter of fiscal '21 principally reflects higher performance-based compensation expense and the impact from our fiscal '20 and '21 acquisitions, partially offset by reductions in other G&A expenses and selling expenses.\nConsolidated SG&A expenses as a percentage of net sales increased to 18.2% in the first six months of '21, up from 16.2% in the first six months of fiscal '20.\nConsolidated SG&A expense as a percentage of net sales increased to $17.8 million [Phonetic] in the second quarter of fiscal '21, and that was up from 15.1% in the second quarter of '20.\nThe increase in consolidated SG&A expense as a percentage of net sales in the first six months and the second quarter of fiscal '21 principally reflects higher performance-based compensation expense.\nInterest expense decreased to $4.5 million in the first six months of fiscal '21, down from $8 million in the first six months of fiscal '20.\nInterest expense decreased to $2.1 million in the second quarter of fiscal '21, and that was down from $3.8 million in the second quarter of fiscal '20.\nThe decrease in the first six months and second quarter of fiscal '21 was principally due to a lower weighted average interest rate on borrowings outstanding under our revolving credit facility.\nOther income in the first six months and second quarter was not significant.\nTalking about income taxes.\nOur effective rate in the first six months of fiscal '21 was 12%, as compared to 0.3% in the first six months of fiscal '20.\nAs previously mentioned, HEICO recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal '21 and '20, and that accounted for the majority of the decrease in the year-to-date effective tax rate.\nThe tax benefit from stock option exercises in both periods was the result of strong appreciation in HEICO's stock price during the optionees' holding period, and the larger benefit recognized in the first quarter of fiscal '20 was the result of more stock options exercised in that period.\nOur effective tax rate decreased to 19.5% in the second quarter of '21 -- fiscal '21, and that was down from 22.6% in the second quarter of fiscal '20.\nThe decrease principally reflects the favorable impact of higher tax exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan.\nNet income attributable to non-controlling interest was $11.5 million in the first six months of fiscal '21, and that compared to $13.4 million in the first six months of fiscal '20.\nThe decrease in net income attributable to non-controlling interest in the first six months of fiscal '21 principally reflects a decrease in the operating results of certain subsidiaries of the Flight Support Group, in which non-controlling interest are held, and that was partially offset by higher allocations of net income to non-controlling interest as a result of certain fiscal '20 acquisitions, as well as an increase in the operating results of certain subsidiaries of the ETG Group in which non-controlling interest are held.\nNet income to non-controlling interest was $5.8 million in the second quarter of fiscal '21, as compared to $5.5 million in the second quarter of fiscal '20.\nFor the full fiscal '21 year, we continue to estimate a combined effective tax rate and non-controlling interest rate of between 24% and 26% of pre-tax income.\nNow let's talk about the balance sheet and cash flow.\nOne thing I want to mention that in the second quarter of fiscal '21, cash flow from operations was a 146% of reported net income.\nSo the net income was $70.7 million and the cash flow was almost $103 million.\nOur financial position and forecasted cash flow remain very strong.\nAs we discussed earlier, cash flow provided by operating activities increased 2% to $210.1 million in the first six months of fiscal '21, and that was up slightly from $205.9 million in the first six months of fiscal '20.\nOur working capital ratio was 4.5 times, '21 as of April 30, compared to 4.8 times as of October 31, '21 [Phonetic].\nOur days sales outstanding of receivables improved to 41 days as of April 30, '21, that was down slightly from 44 days as of April 30, '20.\nWe continue to closely monitor receivable collection in order to limit our credit exposure.\nNo one customer accounted for more than 10% of net sales.\nOur five -- top five customers represented approximately 23% and 24% of consolidated net sales in the second quarter of fiscal '21 and '20, respectively.\nInventory turnover rate was 153 days for the period ending April 30, '21 compared to 139 days for the period ended April 30, '20.\nThe increased turnover rate principally reflects lower sales volume from the pandemic's impact on demand for certain of our commercial aerospace products and services.\nDespite the increased turnover rate, our subsidiaries has done an excellent job controlling inventory levels in the first six months of fiscal '21, and we believe that's appropriate to support expected future net sales as well as our increased backlog as of April 30, '21, which increased by $51 million to $895 million.\nLooking ahead, as we look ahead to the remainder of fiscal '21, we are cautiously optimistic that the ongoing worldwide rollout of COVID-19 vaccines will have a positive influence and, in fact, is having a positive influence on commercial air travel, and it will generate favorable economic environments in the markets that we serve.\nThe pace of recovery in the global travel remains difficult to predict, and can be negatively influenced by new COVID variance and varying vaccine adoption rates.\nGiven those uncertainties, we cannot provide fiscal '21 net sales and earnings guidance at this time.\nWe continue to estimate capital expenditures of approximately $40 million for fiscal '21.\nThat strength will manifest from the culture of ownership, mutual respect for each other and the unwavering pursuit of exceeding our customers' expectations.\nI want to remind the listeners that a very high percentage of HEICO members are HEICO shareowners through their 401(k) plans.\nWe have many millionaires, multi-millionaires and wealthy team members who all support the operation of HEICO.\n",
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"content": "compname reports q2 earnings per share of 51 cents.\nq2 earnings per share $0.51.\ncannot provide fiscal 2021 net sales and earnings guidance at this time.\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 Larry Mendelson, Chairman and CEO of HEICO Corporation.\nNow before reviewing our fourth quarter and full fiscal year results, I'd like to take a few moments to discuss the impact on HEICO's operating results from the COVID-19 global pandemic.\nThe results of operations in fiscal '20 were significantly affected by COVID-19 global pandemic.\nThe effects of the pandemic and related actions by governments around the world to mitigate its spread have impacted our employees, customers, suppliers and manufacturers.\nSince the beginning of the pandemic in March 2020, we have implemented health and safety measures at our facilities in accordance with the CDC guidelines to protect team members and mitigate the spread of in COVID-19.\nMost of our facilities are considered essential businesses and have remained operational during the pandemic.\nThe Board of Directors and management of HEICO are truly humbled by the dedication of our team members to their company during these unprecedented times.\nCurrently, we believe the recent vaccine progress will most notably result in a gradual recovery in demand for our commercial aerospace parts and services commencing in fiscal '21 as demand for air travel slowly recovers, we remained very confident in our ability to offer cost saving solutions and robust product development programs that we expect to increase our market share and allow us to have even a stronger presence within the commercial aviation market.\nI'd like to take a few moments to summarize the highlights of our full fiscal '20 and fourth quarter results.\nDespite, the many challenges faced in fiscal '20, HEICO has continued to generate excellent cash flow.\nOur cash flow provided by operating activities was very strong at $409 million and $437.4 million in fiscal '20 and '19, respectively.\nCash flow provided by operating activities totaled $110.2 million, or 177% of reported net income in the fourth quarter of fiscal '20, as compared to $124 million in the fourth quarter of fiscal '19.\nAs all of you know, HEICO's most important metric is cash flow, and I think that the results of 2020 operations, particularly the fourth quarter are clearly indicative of this success.\nWe are encouraged by the sequential improvements in our fiscal '20 consolidated fourth quarter operating results over the third quarter of fiscal '20.\nAnd during the fourth quarter, we experienced increases in consolidated operating income, net income, and net sales of 30%, 15% and 10%, respectively.\nIn fact, despite the continued impact from the pandemic on demand for our commercial aerospace parts and services, the Flight Support Group's operating income and net sales in the fourth quarter of fiscal '20 improved sequentially by 78% and 9%, respectively, as compared to the third quarter of fiscal '20, a significant improvement.\nThe Electronic Technologies Group and from now on I will call it ETG, set all-time quarterly net sales and operating income records in the fourth quarter of fiscal '20 improving 8% and 14%, respectively, over the fourth quarter of fiscal '19.\nThese increases principally reflect the excellent operating performance of our fiscal '20 acquisitions, as well as continued disciplined cost management on the part of our operating teams.\nWe recently entered into an amendment to extend the maturity date of our revolving credit agreement by one year to November 23 and to increase the committed capital to $1.5 billion.\nIn addition, our credit facility continues to include a feature that will allow the company to increase the capacity by $350 million to become a $1.85 billion facility through increased commitments from existing vendors or the addition of new lenders and can be extended for an additional one-year period.\nTheir loyalty to HEICO is demonstrated by this credit facility amendment, further offers us the financial flexibility to pursue our disciplined strategy of acquiring high-quality businesses at fair prices.\nOur net debt, which we define as total debt less cash and cash equivalents of $333 million, compared to shareholders equity ratio improved to 16.6% as of October 31 '20, and this was down from 29.8% as of October 31 '19.\nOur net debt to EBITDA ratio improved to 0.71 times as of October 31 '20, down from 0.93 times as of October 31 '19.\nKeep in mind this is after making six acquisitions during the year.\nDuring fiscal '20, we successfully completed six acquisitions, four of which were completed since the pandemic start.\nWe have no significant debt maturities until fiscal '24, and we plan to utilize our financial strength and flexibility to aggressively pursue high-quality acquisitions of various sizes and accelerate growth to maximize shareholder returns.\nAs we reported yesterday, we declared an $0.08 per share regular semi-annual cash dividend on both classes of common stock, payable January 21, 2021 to shareholders of record as of January 7, 2021.\nThis cash dividend will be our 85th consecutive semi-annual cash dividend since 1979.\nHEICO's strength in the face of challenging business conditions, coupled with our optimism of the future, gave our Board of Directors the confidence to continue paying our normal cash dividend.\nWhile this is very important to all of our shareholders, it is especially important to our team members, the vast majority of whom are fellow HEICO shareholders through the personal holdings in their 401(k) plan.\nLet's talk about some of the new fourth quarter acquisitions.\nAs I discussed during the third quarter teleconference, we completed three acquisitions in August through our ETG Group.\nFirst, we acquired a 75% of the equity interest in Transformational Security and Intelligent Devices.\nThese two companies design and develop and manufacture state-of-the-art technical surveillance countermeasures equipment.\nNext, we acquired approximately 90% of the equity interest of Connect Tech.\nConnect Tech designs and manufactures rugged small form factor embedded computing solutions used in rugged commercial and industrial, aerospace and defense, transportation and smart energy applications.\nThese acquisitions are expected to be accretive to earnings within the first 12 months following closing.\nThe Flight Support Group's net sales were $924.8 million in fiscal year '20, as compared to $1,240.2 million in fiscal year '19.\nThe Flight Support Group's net sales were $193.6 million in the fourth quarter of fiscal '20, as compared to $324.7 million in the fourth quarter of fiscal '19.\nThe net sales decreases are principally organic and reflect lower demand across all of our product lines, resulting from the significant decline in global commercial air travel beginning in March 2020, due to the pandemic.\nNet sales in fiscal '20 follows the 13% and 12% organic growth reported in the year and fourth quarter of fiscal '19, respectively.\nThe Flight Support Group's operating income was $143.1 million in fiscal '20, as compared to $242 million in the fiscal year '19.\nThe Flight Support Group's operating income was $21.5 million in the fourth quarter of fiscal '20, as compared to $62.2 million in the fourth quarter of fiscal '19.\nThe operating income decreases principally reflects the previously mentioned decrease in net sales, a lower gross profit margin, and an increase in bad debt expense, due to potential collection difficulties from certain commercial aviation customers that filed for bankruptcy protection during fiscal '20 as a result of the pandemic's financial impact, partially offset by a decrease in performance-based compensation expense.\nThe lower gross profit margin principally reflects an increase in inventory obsolescence expense, mainly resulting from the announced retirement of certain aircraft types and engine platforms by our commercial aerospace customers, due to the pandemic's financial impact.\nAdditionally, the lower gross profit margin reflects the impact from lower net sales within our repair and overhaul; parts and services and aftermarket replacement parts product lines.\nThe Flight Support Group's operating margin was 15.5% in fiscal '20, as compared to 19.5% in fiscal '19.\nThe Flight Support Group's operating margin was 11.1% in the fourth quarter of fiscal '20, as compared to 19.2% in the fourth quarter of fiscal '19.\nThe decrease -- the operating margin decreases principally reflect the previously mentioned lower gross profit margin and an increase in SG&A expenses as a percentage of net sales, mainly from the previously mentioned higher bad debt expense and fixed cost efficiencies loss resulting from the pandemic's impact, partially offset by lower performance-based compensation expense.\nThe Electronic Technologies Group's net sales increased 5% to a record $875 million in fiscal '20, up from $834.5 million in fiscal '19.\nThe increase in fiscal '20 is attributable to the favorable impact from our fiscal '20 and '19 acquisitions, partially offset by an organic net sales decrease of 1%.\nThe organic net sales decrease is principally due to lower sales of commercial aerospace and medical products, largely attributable to the pandemic, partially offset by increased sales of defense and space products.\nThe ETG's net sales increased 8% to a record $236.7 million in the fourth quarter of fiscal '20, up from $219.5 million in the fourth quarter of fiscal '19.\nThe increase in the fourth quarter of fiscal '20 is attributable to the favorable impact from our fiscal '20 acquisitions and the anticipated increase in commercial space revenues.\nThe Electronic Technologies Group's operating income increased 5% to a record $258.8 million in fiscal '20 up from $245.7 million in fiscal '19.\nThe increase in fiscal '20 partially -- principally reflects the previously mentioned net sales growth, lower performance-based compensation expense and a decrease in acquisition-related expenses, partially offset by a lower gross profit margin.\nThe lower gross profit margin is mainly due to a decrease in net sales and less favorable product mix of certain commercial aerospace and medical products, partially offset by increased net sales of certain defense products.\nThe ETG's operating income increased 14% to a record $73.9 million in the fourth quarter of fiscal '20, up from $64.6 million in the fourth quarter of fiscal '19.\nThe increase in the fourth quarter of fiscal '20 principally reflects the previously mentioned net sales growth and improved gross profit margin.\nThe improved gross profit margin principally reflects a more favorable product mix and increased net sales of certain space and defense products, partially offset by a decrease in net sales of certain commercial and aerospace products.\nThe Electronic Technologies Group's operating margin improved to 29.6% in fiscal '20, up from 29.4% in fiscal '19.\nThe ETG's operating margin improved to 31.2% in the fourth quarter of fiscal '20, up from 29.4% in the fourth quarter of fiscal '19.\nThe increase in the fourth quarter of fiscal '20 mainly reflects efficiencies gained from the previously mentioned net sales growth, and the improved gross profit margin.\nMoving on to diluted earnings per share, consolidated net income per diluted share decreased 4% to $2.29 in fiscal '20, as compared to $2.39 in fiscal '19.\nConsolidated net income per diluted share decreased 27% to $0.45 in the fourth quarter of fiscal '20, as compared to $0.62 in the fourth quarter of fiscal '19.\nThose decreases principally reflect the previously mentioned lower operating income of Flight Support, partially offset by lower income tax expense, less net income attributable to non-controlling interest, as well as lower interest expense.\nDepreciation and amortization expense totaled $88.6 million in the fiscal '20, up from $83.5 million in fiscal '19 and totaled $23.3 million in the fourth quarter of fiscal '20, up from $21.8 million in the fourth quarter of fiscal '19.\nThe increase in the fiscal year and fourth quarter of fiscal '20, principally reflects the incremental impact from our fiscal '20 and '19 acquisitions.\nResearch and development -- significant ongoing new product development efforts are continuing at both ETG and Flight Support.\nR&D expense was $65.6 million in fiscal '20 or about 3.7% of net sales and that compared to $66.6 million in fiscal '19%, or 3.2% of net sales.\nR&D expense was $16.6 million in the fourth quarter of fiscal '20, or 3.9% of net sales, and that compared to $17.9 million in the fourth quarter of fiscal '19 and that was 3.3% of net sales.\nSG&A expenses consolidated decreased by 14% to $305.5 million in fiscal '20, and that was down from $356.7 in fiscal '19.\nThe decrease in consolidated SG&A expense in fiscal '20 reflects a decrease in performance-based compensation expense, a reduction in other G&A expenses, and a reduction in other selling expenses, including outside sales commissions, marketing and travel.\nThese decreases were partially offset by the impact of our fiscal '19 and '20 acquisitions, as well as the previously mentioned increase in bad debt expense, and that was due to collection difficulties from certain commercial aviation customers that filed for bankruptcy protection during fiscal '20 as a result of the financial impact of the pandemic.\nConsolidated SG&A expense decreased by 18% to $72.6 million in the fourth quarter of fiscal '20, down from $88.8 million in the fourth quarter of fiscal '19.\nThe decrease in consolidated SG&A expense in the fourth quarter of fiscal '20 reflects a reduction in other general and administrative expense, decrease in performance-based compensation expense, and a reduction in other selling expenses including outside sales commissions, marketing and travel.\nThe decreases were partially offset by the impact of our fiscal '20 and '19 acquisitions, as well as the increase in bad debt expense.\nConsolidated SG&A expense as a percentage of net sales dropped to 17.1% in fiscal '20, and that was down slightly from 17.4% in fiscal '19.\nThe decrease in consolidated SG&A expense as a percentage of net sales in fiscal '20, again is due to lower performance-based compensation expense and a decrease in other selling expenses, partially offset by the impacts of higher other G&A expense as a percentage of net sales and an increase in bad debt expense.\nConsolidated SG&A expense as a percentage of net sales increased to 14% -- I'm sorry, 17% in the fourth quarter of fiscal '20, and that was up slightly from 16.4% in the fourth quarter of fiscal '19.\nThe increase in consolidated SG&A expense as a percentage of net sales in the fourth quarter of fiscal '20, reflects higher other general and administrative expense as a percentage of net sales, due to the decreased sales volume and the aforementioned increase in bad debt expense, partially offset by a decrease in lower performance-based compensation expense, and a decrease in other selling expenses.\nInterest expense decreased to $13.2 million of fiscal '20 and that was down significantly from $21.7 million of fiscal '19 and it decreased to $2.5 million in the fourth quarter of fiscal '20, down from $5.2 million in the fourth quarter of fiscal '19.\nThe decreases are principally due to a lower weighted average interest rate on borrowings outstanding under our credit facility.\nOur effective tax rate in fiscal '20 was 7.9%, as compared to 17.8% in fiscal '19.\nThe decrease in fiscal '20 is mainly attributable to a larger tax benefit recognized in fiscal '20 from stock option exercises, compared to fiscal '19, and that resulted from more stock options being exercised, as well as the strong appreciation in HEICO's stock price during the optionees' holding period.\nOur effective tax rate in the fourth quarter of fiscal '20 was 22.3% and that compared to 19.8% in the fourth quarter of fiscal '19.\nNet income attributable to non-controlling interest was $21.9 million in fiscal '20, and that compared to $31.8 million in fiscal '19.\nThe decrease in fiscal '20, principally reflects a decrease in operating results of certain subsidiaries of Flight Support, in which non-controlling interests are held, as well as the impact of a dividend paid by HEICO Aerospace in June '19 -- 2019, that is -- that effectively resulted in the transfer of 20% non-controlling interest held by Lufthansa Technik in eight of our existing subsidiaries and that was transferred back to our Flight Support Group.\nNet income attributable to non-controlling interest was $5.3 million in the fourth quarter of fiscal '20, and that compared to $6.9 million in the fourth quarter of fiscal '19.\nThe decrease in the fourth quarter of fiscal '20, principally reflects a decrease in the operating results of certain subsidiaries of the Flight Support Group in which non-controlling interests are held.\nFor the full fiscal year '21 at the present time, we anticipate a combined tax and non-controlling interest rate of approximately 23% to 24%.\nMoving onto the balance sheet and cash flow, as you all know, our financial position and forecasted cash flow remain very strong.\nPreviously, I mentioned cash flow provided by operating activities was consistently strong at $409.1 million and $437.4 million in fiscal '20 and '19, respectively.\nCash flow provided by operating activities totaled $110.2 million, or 177% of net income in the fourth quarter of fiscal '20 and that compared to $124 million in the fourth quarter of fiscal '19.\nWe currently anticipate capital expenditures of approximately $40 million in fiscal '21, and that would be up from the $22.9 million spent in fiscal '20.\nOur working capital ratio, which is, of course, current assets divided by current liabilities, improved to 4.8 as of October 31, '20, as compared to 2.8 as of October 31, '19.\nDays sales outstanding, DSOs of accounts receivable approved -- improved to 45 days as of October 31, '20 and that compared favorably to the 47 days as of October 31, '19.\nWe continue to closely monitor all receivable collection efforts in order to limit our credit exposure.\nNo one customer accounted for more than 10% of sales, and our top five customers represented approximately 24% and 20% of consolidated net sales in fiscal '20 and '19, respectively.\nOur inventory turnover rate increased to 153 days for the year ended October 31, '20, as compared to 124 days for the year ended October 31, '19.\nThat increase in turnover rate principally reflects certain long-term and non-cancelable inventory purchase commitments, which were based on pre-pandemic net sales expectations and also to support the backlog of certain of our business.\nAs we look ahead to fiscal '21, the pandemic will likely continue to negatively impact commercial, aerospace industry, as well as HEICO.\nGiven this uncertainty, HEICO cannot provide fiscal '21 net sales and earnings guidance at this time.\nHowever, we do believe our ongoing fiscal conservative policies, healthy balance sheet, increased liquidity will permit us to invest in new research and development and gain market share as the industry recovers.\nIn addition, our time-tested strategy of maintaining low debt and acquiring -- operating high cash-generating businesses across a diverse base of industries, besides commercial aerospace and these industries are defense-based and other high-end markets; including electronics and medical, puts us in good financial position to weather this uncertain economic period.\nWe are cautiously optimistic that the recent vaccine progress should generate increased commercial air travel and will result in a gradual recovery in demand for our commercial aerospace parts and services commencing in fiscal '21.\nTheir dedication to HEICO's customers and to the safety of their fellow team members has been exemplary.\nI am confident that our future is bright and we will exit this COVID-19 period as a stronger and more competitive company.\n",
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"content": "compname reports q4 earnings per share of $0.45.\nq4 earnings per share $0.45.\nwill not provide fiscal 2021 guidance at this time.\nbelieve ongoing fiscal conservative policies, balance sheet, increased liquidity will permit us to invest in new research, development.\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 risks include those set forth in the Risk Factors section of Hess' annual and quarterly reports filed with the SEC.\nAlso on today's conference call, we may discuss certain non-GAAP financial measures.\nA reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website.\nToday, I will review our continued progress in executing our strategy and our long-standing commitment to sustainability.\nGreg Hill will then discuss our operations and John Rielly will cover our financial results.\nOur strategy is to grow our resource base, have a low cost of supply and sustained cash flow growth.\nExecuting this strategy has positioned our company to deliver industry-leading cash flow growth over the next decade and has made our portfolio increasingly resilient in a low oil price environment.\nOur strategy aligns with the world's growing need for affordable reliable and cleaner energy that is necessary for human prosperity and global economic development.\nWe recognize a climate change is the greatest scientific challenge of the 21st century and support the aim of the Paris Agreement and a global ambition to achieve net zero emissions by 2050.\nThe world faces the dual challenge of needing 20% more energy by 2040 and reaching net zero carbon emissions by 2050.\nIn the International Energy Agency's rigorous sustainable development scenario, which assumes that all pledges of the Paris agreement are met, oil and gas will be 46% of the energy mix in 2040 compared with approximately 53% today.\nIn the IEA's newest net zero scenario, oil and gas will still be 29% of the energy mix in 2040.\nIn either scenario, oil and gas will be needed for decades to come and will require significantly more global investment over the next 10 years on an annual basis than the $300 billion spent last year.\nThe key for our company is to have a low cost supply by investing only in high-return low cost opportunities.\nThe best rocks for the best returns.\nWe have built a differentiated and focused portfolio that is balanced between short cycle and long cycle assets Guyana is our growth engine and The Bakken, Gulf of Mexico and Southeast Asia are our cash engines.\nGuyana is positioned to become a significant cash engine in the coming years, as multiple phases of low-cost oil developments come online, which we expect will drive our portfolio breakeven Brent oil price below $40 per barrel by the middle of the decade.\nBased on the most recent third-party estimates, our cash flow is estimated to grow at a compound annual growth rate of 42% between 2020 and 2023, which is 75% above our peers and puts us in the top 5% of the S&P 500.\nWith a line of sight for up to 10 FPSOs to develop the discovered resources in Guyana, this industry leading cash flow growth rate is expected to continue through the end of the decade.\nInvestors want durability and growth in cash flow.\nWe are pleased to announce today that in July, we paid down $500 million of our $1 billion term loan maturing in March 2023.\nDepending upon market conditions, we plan to repay the remaining $500 million in 2022.\nThis debt reduction, combined with the start-up of Liza Phase 2 early next year is expected to drive our debt-to-EBITDAX ratio under 2 times next year.\nOnce this debt is paid off and our portfolio generates increasing free cash flow, we plan to return the majority to our shareholders.\nFirst, through dividend increases and then opportunistic share repurchases.\nWe expect to receive approximately $375 million in proceeds and our ownership in Hess Midstream on a consolidated basis, will be approximately 45% compared with 46% prior to the transaction.\nOn April 30, we completed the sale of our Little Knife and Murphy Creek nonstrategic acreage interest in The Bakken for a total consideration of $312 million effective March 1, 2021.\nThis acreage, most of which we were not planning to drill before 2026 was located in the Southern most portion of our Bakken position and was not connected to Hess Midstream Infrastructure.\nThe Midstream transaction and the sale of the Little Knife and Murphy Creek acreage bring material value forward and further strengthen our cash and liquidity position.\nThe Bakken remains a core part of our portfolio and our largest operated asset.\nWe have a large inventory of future drilling locations that generate attractive financial returns at $50 per barrel WTI.\nIn February, when WTI oil prices moved above $50 per barrel, we added a second rig, given the continued strength in oil prices, we are now planning to add a third rig in the Bakken in September, which is expected to strengthen free cash flow generation in the years ahead.\nKey to our long-term strategy is Guyana with its low cost of supply and industry-leading financial returns.\nWe have an active exploration and appraisal program this year on the Stabroek Block, where Hess has a 30% interest and ExxonMobil is the operator.\nWe see the potential for at least six FPSOs on the block by 2027 and up to 10 FPSOs to develop the discovered resources on the block, and we continue to see multibillion barrels of future exploration potential remaining.\nEarlier today, we announced a significant new oil discovery at Whiptail.\nThe Whiptail number 1 well encountered 246 feet of net pay and the Whiptail number 2 well, which is located three miles northeast of Whiptail-1 encountered 167 feet of net pay in high quality oil bearing sandstone reservoirs.\nDrilling continues at both wells to test deeper targets.\nThe Whiptail discovery could form the basis for our future oil development in the Southeast area of the Stabroek Block and will add to the previous recoverable resource estimate of approximately 9 billion barrels of oil equivalent.\nIn June, we also announced the discovery at the Longtail-3 well which encountered approximately 230 feet of net pay including newly identified high quality hydrocarbon bearing reservoirs, below the original Longtail-1 discovery intervals.\nIn addition, the successful Mako-2 well, together with Uaru-2 well which encountered approximately 120 feet of high quality oil bearing sandstone reservoir will potentially underpin a fifth oil development in the area east of the Liza complex.\nIn terms of Guyana developments, the Liza Unity FPSO with a gross capacity of 220,000 barrels of oil per day is expected to sail from Singapore to Guyana in late August and the Liza-2 development is on track to achieve first oil in early 2022.\nOur third oil development on the Stabroek Block at the Payara field is expected to achieve first oil in 2024, also with a gross capacity of 220,000 barrels of oil per day.\nEngineering work for our fourth development on the Stabroek Block at Yellowtail is underway with preliminary plans for a gross capacity in the range of 220,000 to 250,000 barrels of oil per day and anticipated start-up in 2025 pending government approvals and project sanctioning.\nOur three sanctioned oil developments have a breakeven Brent oil price of between $25 and $35 per barrel.\nAnd according to a recent data from Wood McKenzie, our Guyana developments are the highest margin, lowest carbon intensity oil and gas assets globally.\nLast week we announced publication of our 24th Annual Sustainability Report, which details our Environmental, Social and Governance or ESG strategy and performance.\nIn 2020 we significantly surpassed our five-year emission reduction targets reducing Scope 1 and 2 operated greenhouse gas emissions intensity by 46% and flaring intensity by 59% compared to 2014 levels.\nOur five year operated emission reduction targets for 2025 which are detailed in the sustainability report exceed the 22% reduction in carbon intensity by 2030 in the International Energy Agency sustainable development scenario, which is consistent with the Paris Agreements ambition to hold the rise in global average temperature to well below 2 degrees centigrade.\nWe are also contributing to groundbreaking research being done by the Salk Institute to develop plants with larger root systems that are capable of absorbing and storing potentially billions of tons of carbon per year from the atmosphere.\nWe continue to be recognized as an industry leader for the quality of our ESG performance and disclosure.\nIn May, Hess was named to the 100 Best Corporate Citizens list for the 14th consecutive year, based upon an independent assessment by ISS ESG.\nAnd we were the only oil and gas company to earn a place on the 2021 list.\nIn summary, oil and gas are going to be needed for decades to come.\nBy continuing to successfully execute our strategy and achieve strong operational performance, our company is uniquely positioned to deliver industry-leading cash flow growth over the next decade.\nAs our term loan is paid off and our portfolio generates increasing free cash flow, the majority will be returned to our shareholders, first through dividend increases and then opportunistic share repurchases.\nIn the second quarter, we continued to deliver strong operational performance.\nCompanywide net production averaged 307,000 barrels of oil equivalent per day excluding Libya, above our guidance of 290,000 to 295,000 barrels of oil equivalent per day, driven by good performance across the portfolio.\nIn the third quarter, we expect companywide net production to average approximately 265,000 barrels of oil equivalent per day excluding Libya, which reflects the Tioga Gas Plant turnaround in the Bakken and planned maintenance in the Gulf of Mexico and Southeast Asia.\nFor full year 2021, we now forecast net production to average approximately 295,000 barrels of oil equivalent per day excluding Libya, compared to our previous forecast of between 290,000 and 295,000 barrels of oil equivalent per day, so we're now forecasting to be at the top of the range.\nTurning to the Bakken.\nSecond quarter net production averaged 159,000 barrels of oil equivalent per day.\nThis was above our guidance of approximately 155,000 barrels of oil equivalent per day, primarily reflecting increased gas capture which has allowed us to drive flaring to under 5%, well below the state's 9% limit.\nFor the third quarter we expect Bakken net production to average approximately 145,000 barrels of oil equivalent per day, which reflects the planned 45 day maintenance turnaround and expansion tie-in at the Tioga Gas Plant.\nFor the full year 2021, we maintain our Bakken net production forecast of 155,000 to 160,000 barrels of oil equivalent per day.\nIn the second quarter, we drilled 17 wells and brought nine new wells online.\nIn the third quarter, we expect to drill approximately 15 wells and to bring approximately 20 new wells online.\nAnd for the full year 2021, we now expect to drill approximately 65 wells and to bring approximately 50 new wells online.\nIn terms of drilling and completion costs, although we have experienced some cost inflation, we are confident that we can offset the increases through technology and lean manufacturing efficiency gains and are therefore maintaining our full year average forecast of $5.8 million per well in 2021.\nWe've been operating two rigs since February, but given the improvement in oil prices and our robust inventory of high return drilling locations, we plan to add a third rig in September.\nMoving to a three rig program will allow us to grow cash flow and production, better optimize our in basin infrastructure and drive further reductions in our unit cash costs.\nNow moving to the Offshore.\nIn the deepwater Gulf of Mexico, second quarter net production averaged 52,000 barrels of oil equivalent per day compared to our guidance of approximately 50,000 barrels of oil equivalent per day.\nIn the third quarter, we forecast Gulf of Mexico net production to average between 35,000 and 40,000 barrels of oil equivalent per day, reflecting planned maintenance downtime as well as some hurricane contingency.\nFor the full year 2021, our forecast for Gulf of Mexico net production remains approximately 45,000 barrels of oil equivalent per day.\nIn Southeast Asia, net production in the second quarter was 66,000 barrels of oil equivalent per day, above our guidance of approximately 60,000 barrels of oil equivalent per day.\nThird quarter net production is forecast to average between 50,000 and 55,000 barrels of oil equivalent per day, reflecting planned maintenance at North Malay Basin and the JDA as well as Phase-3 installation work at North Malay Basin.\nFull year 2021 net production is forecast to average approximately 60,000 barrels of oil equivalent per day.\nNow turning to Guyana, in the second quarter gross production from Liza phase one averaged 101,000 barrels of oil per day or 26,000 barrels of oil per day net to Hess.\nThe repaired flash gas compression system has been installed on the Liza Destiny FPSO and is under test.\nThe operator is evaluating the test data to optimize performance and is safely managing production in the range of 120,000 to 125,000 barrels of oil per day.\nReplacement of the flash gas compression system with a modified design and production optimization work are planned for the fourth quarter, which will result in higher production capacity and reliability.\nNet production from Liza Phase-1 is forecast to average approximately 30,000 barrels of oil per day in the third quarter and for the full year 2021.\nThe Liza Phase-2 development will utilize the 220,000 barrels of oil per day Unity FPSO which is scheduled to sail away from Singapore at the end of August and first order remains on track for early 2022.\nTurning to our third development Payara.\nThe Prosperity FPSO oil is complete and will enter the Keppel yard in Singapore following sale away of the Liza Unity.\nTopsides fabrication has commenced the dynamic and development drilling began in June.\nThe overall project is approximately 45% completed.\nThe Prosperity will have a gross production capacity of 220,000 barrels of oil per day and is on track to achieve first oil in 2024.\nAs for our fourth development at Yellowtail.\nThe joint venture anticipate submitting the plan of development to the Government of Guyana in the fourth quarter, with first oil targeted for 2025, pending government approvals and projects sanctioning.\nDuring the second quarter the Mako-2 Appraisal well on the Stabroek Block confirmed the quality, thickness and areal extent of the reservoir.\nWhen integrated with the previously announced discovery at Uaru-2, the data supports a potential fifth development in the area east of the Liza complex.\nDrilling continues at both wells to test deeper targets.\nIn terms of other drilling activity in the second half of 2021 after Whiptail-2, the Noble Don Taylor will drill the Pinktail exploration well, which is located five miles southeast of Yellowtail one, followed by the Tripletail-2 appraisal well, located five miles south of Tripletail-1.\nThe Noble Tom Madden will spud the Kaieteur Block-1 exploration well located 4.5 miles southeast of the Turbot-1 discovery in early August.\nThen in the fourth quarter, we will drill our first dedicated test of the deep potential at the [Indecipherable] prospect located 9 miles northwest of Liza-1.\nIn the third quarter, The Noble Sam Croft will drill the Turbot-2 appraisal well then transition to development drilling operations for the remainder of the year.\nThe Stena Carron will conduct a series of appraisal drill stem tests at Uaru-1, Mako-2 and then Longtail-2.\nIn closing, we continue to deliver strong operational performance across our portfolio.\nOur Offshore assets are generating strong free cash flow.\nThe Bakken is on a capital-efficient growth trajectory and Guyana keeps getting bigger and better, all of which positions us to deliver industry-leading returns, material cash flow generation and significant shareholder value.\nIn my remarks today, I will compare results from the second quarter of 2021 to the first quarter of 2021.\nAdjusted net income was $74 million in the second quarter of 2021, compared to net income of $252 million in the first quarter of 2021.\nE&P adjusted net income was $122 million in the second quarter of 2021 compared to net income of $308 million in the previous quarter.\nThe changes in the after-tax components of adjusted E&P results between the second quarter and first quarter of 2021 were as follows: Lower sales volumes reduced earnings by $126 million; higher cash costs reduced earnings by $48 million; higher exploration expenses reduced earnings by $10 million; all other items reduced earnings by $2 million, for an overall decrease in second quarter earnings of $186 million.\nSecond quarter sales volumes were lower, primarily due to Guyana having two, 1 million barrel liftings of oil, compared with three, 1 million barrel liftings in the first quarter and first quarter sales volumes included non-recurring sales of two VLCC cargos totaling 4.2 million barrels of Bakken crude oil, which contributed approximately $70 million of net income.\nIn the second quarter, our E&P sales volumes were under lifted compared with production by approximately 785,000 barrels, which reduced our after-tax results by approximately $18 million.\nCash costs for the second quarter came in at the lower end of guidance and reflect higher planned maintenance and workover activity in the first quarter.\nIn June, the US Bankruptcy Court approved the bankruptcy plan for Fieldwood Energy, which includes transferring abandonment obligations of Fieldwood to predecessors in title of certain of its assets, who are jointly and severally liable for the obligations.\nAs a result of the bankruptcy, Hess as one of the predecessors in title in 7 Shallow Water, West Delta 79-86 leases held by Fieldwood is responsible for the abandonment of the facilities on the leases.\nSecond quarter E&P results include an after tax charge of $147 million representing the estimated gross abandonment obligation for West Delta 79-86 without taking into account potential recoveries from other previous owners.\nWithin the next nine months, we expect to receive an order from the regulator requiring us along with other predecessors in title to decommission the facilities.\nThe timing of these decommissioning activities will be discussed and agreed upon with the regulator and we anticipate the cost will be incurred over the next several years.\nThe Midstream segment had net income of $76 million in the second quarter of 2021 compared to $75 million in the prior quarter.\nMidstream EBITDA before noncontrolling interest amounted to $229 million in the second quarter of 2021 compared to $225 million in the previous quarter.\nNow turning to our financial position.\nAt quarter end, excluding Midstream, cash and cash equivalents were $2.42 billion, which includes receipt of net proceeds of $297 million from the sale of our Little Knife and Murphy Creek acreage in the Bakken.\nTotal liquidity was $6.1 billion, including available committed credit facilities, while debt and finance lease obligations totaled $6.6 billion.\nOur fully undrawn $3.5 billion revolving credit facility is committed through May 2024 and we have no material near-term debt maturities aside from the $1 billion term loan which matures in March 2023.\nIn July, we repaid $500 million of the term loan.\nEarlier today Hess Midstream announced an agreement to repurchase approximately 31 million Class B units of Hess Midstream held by GIP and us for approximately $750 million.\nWe expect to receive net proceeds of approximately $375 million from the sale in the third quarter.\nIn addition, we expect to receive proceeds in the third quarter from the sale of our interest in Denmark for total consideration of $150 million with an effective date of January 1, 2021.\nIn the second quarter of 2021, net cash provided by operating activities before changes in working capital was $659 million compared with $815 million in the first quarter, primarily due to lower sales volumes.\nIn the second quarter, net cash provided by operating activities after changes in working capital was $785 million compared with $591 million in the first quarter.\nChanges in operating assets and liabilities during the second quarter of 2021 increased cash flow from operating activities by $126 million, primarily driven by an increase in payables that we expect to reverse in the third quarter.\nNow turning to guidance.\nOur E&P cash costs were $11.63 per barrel of oil equivalent including Libya and $12.16 per barrel of oil equivalent, excluding Libya in the second quarter of 2021.\nWe project E&P cash costs, excluding Libya to be in the range of $13 to $14 per barrel of oil equivalent for the third quarter, which reflects the impact of lower production volumes resulting from the Tioga Gas Plant turnaround.\nFull year cash cost guidance of $11 to $12 per barrel of oil equivalent remains unchanged.\nDD&A expense was $11.55 per barrel of oil equivalent including Libya and $12.13 per barrel of oil equivalent excluding Libya in the second quarter.\nDD&A expense excluding Libya is forecast to be in the range of $12 to $13 per barrel of oil equivalent for the third quarter and full-year guidance of $12 to $13 per barrel of oil equivalent remains unchanged.\nThis results in projected total E&P unit operating costs, excluding Libya to be in the range of $25 to $27 per barrel of oil equivalent for the third quarter and $23 to $25 per barrel of oil equivalent for the full year of 2021.\nExploration expenses excluding dry hole costs are expected to be in the range of $40 million to $45 million in the third quarter and full-year guidance is expected to be in the range of $160 million to $170 million, which is down from previous guidance of $170 million to $180 million.\nAnd Midstream tariff is projected to be in the range of $265 million to $275 million for the third quarter and full-year guidance is projected to be in the range of $1,080 million to $1,100 million, which is down from the previous guidance of $1,090 million to $1,115 million.\nE&P income tax expense, excluding Libya is expected to be in the range of $35 million to $40 million for the third quarter and full-year guidance is expected to be in the range of $125 million to $135 million, which is updated from the previous guidance of $105 million to $15 million reflecting higher commodity prices.\nWe expect non-cash option premium amortization will be approximately $65 million for the third quarter and full-year guidance of approximately $245 million remains unchanged.\nDuring the third quarter, we expect to sell three 1 million barrel cargoes of oil from Guyana.\nOur E&P capital and exploratory expenditures are expected to be approximately $575 million in the third quarter.\nFull-year guidance, which now includes increasing drilling rigs in the Bakken to three from two in September, remains unchanged from prior guidance at approximately $1.9 billion.\nWe anticipate net income attributable to Hess from the Midstream segment to be in the range of $50 million to $60 million for the third quarter and full-year guidance is projected to be in the range of $275 million to $285 million, which is down from the previous guidance of $280 million to $290 million.\nCorporate expenses are estimated to be in the range of $30 million to $35 million for the third quarter and full-year guidance of $130 million to $140 million remains unchanged.\nInterest expense is estimated to be in the range of $95 million to $100 million for the third quarter and approximately $380 million for the full year, which is at the lower end of our previous guidance of $380 million to $390 million reflecting the $500 million reduction in the term loan.\nThis concludes my remarks, we will be happy to answer any questions.\n",
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"content": "qtrly net production from the gulf of mexico was 52,000 boepd.\nqtrly net production from bakken was 159,000 boepd compared with 194,000 boepd in prior-year quarter.\nnet production, excluding libya, was 307,000 boepd in q2 of 2021, compared with 334,000 boepd in q2 of 2020.\n2021 net production, excluding libya, is expected to be approximately 295,000 boepd.\nexcluding midstream segment, hess corporation had cash and cash equivalents of $2.42 billion at quarter-end.\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 risks include those set forth in the Risk Factors section of Hess' annual and quarterly reports filed with the SEC.\nAlso on today's conference call, we may discuss certain non-GAAP financial measures.\nA reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website.\nToday, I will review our continued progress in executing our strategy.\nGreg Hill then will discuss our operations and John Riley will cover our financial results.\nWith COP26 beginning this Sunday, it is appropriate to address the energy transition.\nClimate change is the greatest scientific undertaking of the 21st century.\nThe world has two challenges to grow our global energy supply by about 20% in the next 20 years and to reach net zero emissions by 2050.\nThe International Energy Agency published its latest World Energy Outlook earlier this month, which provides four scenarios to shed light on these challenges.\nIt is important to remember that these are scenarios not forecast to help guide policymakers and business leaders in their decision making.\nIn all four scenarios, oil and gas will still be needed in the decades to come.\nSignificantly more investment will be required to meet the world's growing energy needs, much more in renewables and much more in oil and gas.\nOur reasonable estimate for global oil and gas investment from these IEA scenarios is at least $400 billion each year over the next 10 years.\nLast year, that number was $300 billion.\nThis year's estimate is $340 billion.\nTo ensure a successful an orderly energy transition, we need to have climate literacy, energy literacy and economic literacy.\nOur strategy is to grow our resource base, have a low cost of supply and sustain cash flow growth.\nWhile delivering industry-leading environmental social and governance, performance and disclosure by investing only in high-return, low cost opportunities, we have built a differentiated and focused portfolio that is balanced between short cycle and long cycle assets.\nOur cash engines are the Bakken, the Gulf of Mexico and Southeast Asia, where we have competitively advantaged assets and operating capabilities.\nGuyana is our growth engine and is on track to become a significant cash engine in the coming years, as multiple phases of low-cost oil developments come online.\nAlso, by adding a third rig in the Bakken in September and completing the turnaround and expansion of the Tioga Gas Plant, the Bakken is expected to generate significant free cash flow in the years ahead.\nBy successfully executing our strategy, our company is positioned to deliver strong and durable cash flow growth through the end of the decade.\nBased upon the most recent sell side consensus estimates, our cash flow is estimated to grow at a compound annual growth rate of 42% between 2020 and 2023, which is 50% above our peers and puts us in the top 5% of the S&P 500.\nAs our portfolio generates increasing free cash flow, we will first prioritize debt reduction and then cash returns to shareholders through dividend increases and opportunistic share repurchases.\nWe have continued to maintain financial strength as well as managing for risk.\nAs of September the 30th, we had $2.4 billion of cash on the balance sheet.\nIn July, we prepaid half of our $1 billion term loan maturing in March 2023 and we plan to repay the remaining $500 million in 2022.\nThis debt reduction combined with the start up of lease of Phase 2 early next year, is expected to drive our debt to EBITDAX ratio under 2% and also enable us to consider increasing cash returns to shareholders.\nIn August, we completed the sale of our interest in Denmark for total consideration of $150 million effective January 1, 2021, and received $375 million in proceeds from Hess Midstream's buyback of Class B units from its sponsors Hess Corporation and Global Infrastructure Partners.\nEarlier this month, our company also received net proceeds of $108 million from the public offering of Hess-owned Class A shares of Hess Midstream.\nThe Denmark sale and these Midstream monetizations brought material value forward and further strengthened our cash and liquidity position.\nKey to our long-term strategy is Guyana, one of the industry's best investments.\nOn the Stabroek Block, where Hess has a 30% interest and ExxonMobil is the operator, we announced the 19th and 20th of significant discoveries during the third quarter at Whiptail and Pinktail.\nAnd on October 7th, we announced the 21st significant discovery on the block at Cataback.\nThese discoveries will underpin our Q, our future low cost oil development.\nWe see the potential for at least six FPSOs on the Stabroek Block producing more than $1 million gross barrels of oil per day in 2027, and up to 10 FPSOs to develop the discovered resources on the block.\nOn October 7th, we increased the gross discovered recoverable resource estimate for the block to approximately 10 billion barrels of oil equivalent, up from the previous estimate of more than 9 billion barrels of oil equivalent.\nAnd we continue to see multibillion barrels of future exploration potential remaining.\nIn terms of our current Guyana developments, gross production from the lease of Phase 1 complex average 124,000 barrels of oil per day in the third quarter.\nThe lease of Phase 2 development is on track for start-up in early 2022 with a gross production capacity of 220,000 barrels of oil per day and the leasing Unity FPSO arrived in Guyana on Monday.\nOur third development on the Stabroek Block at the Payara field is on track to achieve first oil in 2024 also with a gross capacity of 220,000 barrels of oil per day.\nOur three-sanctioned oil developments have a breakeven Brent oil price of between $25 and $35 per barrel.\nThe plan of development for our fourth development on the block at Yellowtail was recently submitted to the Government of Guyana for approval.\nPending government approvals, the project is envisioned to have a gross capacity of approximately 250,000 barrels of oil per day with first oil in 2025.\nWe are proud to be recognized as an industry leader in our environmental, social and governance performance and disclosure.\nEarlier this month, our company received a AAA rating in the MSCI ESG ratings for 2021 after earning A ratings for the previous 10 consecutive years.\nThe AAA rating digit makes Hess as a leader in managing industry specific ESG risks relative to peers and reflects our strong management practices to reduce carbon emissions as well as our top quartile performance in areas such as biodiversity and land use, reduction of air and water emissions and waste, and making a positive impact on the communities where we operate.\nIn summary, we remain focused on executing our strategy and achieving strong operational and ESG performance.\nOur company is uniquely positioned to deliver cash flow growth over the next decade.\nThat is not only industry leading, but which we believe will rank among the best in the S&P 500.\nAfter our term loan is paid off and our portfolio generates increasing free cash flow, we will prioritize return of capital to our shareholders through dividend increases and opportunistic share repurchases.\nIn the third quarter, we continued to deliver strong operational performance, meeting our production targets despite extended hurricane-related downtime in the Gulf of Mexico and safely executing a major turnaround at our Tioga Gas Plant in North Dakota.\nCompanywide net production averaged 265,000 barrels of oil equivalent per day excluding Libya in line with our guidance.\nIn the fourth quarter and for the full year 2021, we expect companywide net production to average approximately 295,000 barrels of oil equivalent per day excluding Libya.\nTurning to the Bakken, third quarter net production averaged 148,000 barrels of oil equivalent per day.\nThis was above our guidance of approximately 145,000 barrels of oil equivalent per day and primarily reflected strong execution of the Tioga Gas Plant turnaround and expansion, no small task in a COVID environment that required strict adherence to extensive safety protocols to keep more than 650 workers safe.\nFor the fourth quarter, we expect Bakken net production to average between 155,000 and 160,000 barrels of oil equivalent per day.\nFor the full year 2021, we forecast our Bakken net production to average approximately 155,000 barrels of oil equivalent per day, compared to our previous guidance range of 155,000 to 160,000 barrels of oil equivalent per day.\nThis guidance reflects an increase in NGL prices, which reduces volumes under our percentage of proceeds contracts, but significantly increases this year's earnings and cash flow.\nIn the third quarter, we drilled 18 wells and brought 19 new wells online.\nIn the fourth quarter, we expect to drill approximately 19 wells and to bring approximately 18 new wells online.\nAnd for the full year 2021, we continue to expect to drill approximately 65 wells and to bring approximately 50 new wells online.\nIn terms of drilling and completion costs, although we have experienced some cost inflation, we are maintaining our full year average forecast of $5.8 million per well in 2021.\nSince February, we've been operating two rigs.\nBut given the improvement in oil prices and our robust inventory of high return drilling locations, we added a third rig in September.\nMoving to a three-year three rig program will allow us to grow cash flow and production better optimize our in basin infrastructure and drive further reductions in our unit cash costs.\nNow moving to the offshore.\nIn the deepwater Gulf of Mexico, third quarter net production averaged 32,000 barrels of oil equivalent per day, compared to our guidance range of 35,000 to 40,000 barrels of oil equivalent per day.\nOur results reflected an extended period of recovery following Hurricane Ida, which caused power outages at transportation and processing facilities downstream of our platforms.\nProduction was restored at all of our facilities by the end of September.\nIn the fourth quarter, we forecast Gulf of Mexico net production to average between 40,000 and 45,000 barrels of oil equivalent per day.\nFor the full year 2021, our forecast for Gulf of Mexico net production remains approximately 45,000 barrels of oil equivalent per day.\nIn Southeast Asia, net production in the third quarter was 50,000 barrels of oil equivalent per day in line with our guidance of 50, 000 to 55,000 barrels of oil equivalent per day, reflecting the impact of planned maintenance shutdowns and lower nominations due to COVID.\nFourth quarter net production is forecast to average approximately 65,000 barrels of oil equivalent per day and our full year 2021 net production forecast remains at approximately 60,000 barrels of oil equivalent per day.\nNow turning to Guyana.\nIn the third quarter, gross production from Liza Phase 1 averaged 124,000 barrels of oil per day or 32,000 barrels of oil per day net to Hess.\nReplacement of the flash gas compression system on the Liza Destiny with a modified design is planned for the fourth quarter and production optimization work is now planned to take place in the first quarter of 2022.\nThese two projects are expected to result in higher production capacity and reliability.\nNet production from Liza Phase 1 is forecast to average approximately 30,000 barrels of oil per day in the fourth quarter and for the full year 2021.\nLiza Phase 2 development will utilize the 220,000 barrels of oil per day Unity FPSO, which arrived in Guyana Monday evening.\nNext steps will be more in line installation and umbilical and riser hook up.\nFirst oil remains on track for first quarter 2022.\nTurning to our third development at Payara, the Prosperity FPSO hull entered the Keppel yard in Singapore on August 1st.\nTopside fabrication of dynamic and development drilling are underway.\nThe overall project is approximately 60% complete.\nThe Prosperity will have a gross production capacity of 220,000 barrels of oil per day, and is on track to achieve first oil in 2024.\nAs for our fourth development at Yellowtail earlier this month, the joint venture submitted a plan of development to the Government of Guyana, pending government approvals and project sanctioning.\nThe Yellowtail project will utilize an FPSO with a gross capacity of approximately 250,000 barrels of oil per day.\nFirst oil is targeted for 2025.\nAs John mentioned, we announced three discoveries since July.\nIn July, we announced that the Whiptail 1 and 2 wells encountered 246 feet and 167 feet of high quality oil bearing sandstone reservoirs respectively.\nThis discovery is located approximately four miles southeast of well 1 and 3 miles west of the Yellowtail.\nIn September, we announced that the Pinktail 1 well located approximately 22 miles southeast of Liza 1 encountered 220 feet of high quality oil bearing sandstone reservoirs.\nAnd finally earlier this month, we announced a discovery of Cataback located approximately 4 miles east of Turbot 1.\nThe well encountered 203 feet of high quality hydrocarbon bearing reservoirs, of which approximately 102 feet was oil bearing.\nThese discoveries further underpin future developments and contributed to the increase of estimated gross discovered recoverable resources on the Stabroek Block to approximately 10 billion barrels of oil equivalent.\nExploration and appraisal activities in the fourth quarter will include drilling [Indecipherable] exploration well located approximately 11 miles northwest of Liza 1.\nThis well as a significant step out tests that will target deeper Campanian and Santonian aged reservoirs.\nAppraisal activities in the fourth quarter will include drill-stem tests at Longtail 2 and Whiptail 2 as well as drilling the Tripletail 2 well.\nIn closing, we have once again demonstrated strong execution and delivery and are well positioned to deliver significant value to our shareholders.\nIn my remarks today, I will compare results from the third quarter of 2021 to the second quarter of 2021.\nWe had net income of $115 million in the third quarter of 2021, compared with a net loss of $73 million in the second quarter of 2021.\nOn an adjusted basis, which excludes items affecting comparability of earnings between periods, we had net income of $86 million in the third quarter of 2021, compared to net income of $74 million in the second quarter of 2021.\nThird quarter earnings include an after-tax gain of $29 million from the sale of our interest in Denmark.\nOn an adjusted basis, E&P had net income of $149 million in the third quarter of 2021, compared to net income of $122 million in the previous quarter.\nThe changes in the after-tax components of adjusted E&P results between the third quarter and second quarter of 2021 were as follows.\nHigher realized crude oil NGL and natural gas selling prices increased earnings by $110 million.\nLower sales volumes reduced earnings by $147 million.\nLower DD&A expense increased earnings by $37 million.\nLower cash costs increased earnings by $14 million.\nLower exploration expenses increased earnings by $10 million.\nAll other items increased earnings by $3 million.\nFor an overall increase in third quarter earnings of $27 million.\nSales volumes in the third quarter were lower than the second quarter, primarily due to hurricane-related downtime in the Gulf of Mexico, planned maintenance downtime and lower nominations in Malaysia and lower sales in the Bakken, resulting from the planned Tioga gas plant maintenance turnaround.\nIn Guyana, we sold three 1 million barrel cargoes of oil in the third quarter, up from two 1 million barrel cargoes of oil sold in the second quarter.\nFor the third quarter, our E&P sales volumes were under lifted compared with production by approximately 175,000 barrels, which had an insignificant impact on our after-tax results for the quarter.\nThe Midstream segment had net income of $61 million in the third quarter of 2021, compared with $76 million in the prior quarter.\nThird quarter results included costs related to the Tioga Gas Plant maintenance turnaround that was safely and successfully completed.\nMidstream EBITDA before noncontrolling interest amounted to $203 million in the third quarter of 2021, compared with $229 million in the previous quarter.\nTurning to our financial position at quarter-end excluding Midstream, cash and cash equivalents were $2.41 billion and total liquidity was $6 billion, including available committed credit facilities, while debt and finance lease obligations totaled $6.1 billion.\nDuring the third quarter, we received net proceeds of $375 million from the sale of $15.6 million Hess-owned Class B units of Hess Midstream and proceeds of approximately $130 million from the sale of our interest in Denmark.\nIn July, we prepaid $500 million of our $1 billion term loan and we plan to repay the remaining $500 million in 2022.\nIn October, we received net proceeds of approximately $108 million from the public offering of 4.3 million Hess-owned Class A shares of Hess Midstream.\nOur ownership in Hess Midstream on a consolidated basis is approximately 44% compared with 46% prior to these two recent transactions.\nIn the third quarter, net cash provided by operating activities before changes in working capital was $631 million, compared with $659 million in the second quarter.\nIn the third quarter, net cash provided by operating activities after changes in operating assets and liabilities was $615 million, compared with $785 million in the second quarter.\nChanges in operating assets and liabilities during the third quarter decreased.\nNet cash provided by operating activities by $16 million compared with an increase of $126 million in the second quarter.\nNow turning to guidance.\nFirst for E&P, our E&P cash costs were $12.76 per barrel of oil equivalent including Libya and $13.45 per barrel of oil equivalent excluding Libya in the third quarter of 2021.\nWe project E&P cash cost excluding Libya to be in the range of $12 to $12.50 per barrel of oil equivalent for the fourth quarter and $11.75 to $12 per barrel of oil equivalent for the full year, compared to previous full year guidance of $11 to $12 per barrel of oil equivalent.\nThe updated guidance reflects the impact of higher realized selling prices in 2021, which significantly improved cash flow, but reduced volumes received under percentage of proceeds contracts and increased production taxes in the Bakken.\nDD&A expense was $11.77 per barrel of oil equivalent including Libya and $12.38 per barrel of oil equivalent excluding Libya in the third quarter.\nDD&A expense excluding Libya is forecast to be in the range of $13 to $13.50 per barrel of oil equivalent for the fourth quarter and the full year is expected to be in the range of $12.50 to $13 per barrel of oil equivalent.\nThis results in projected total E&P unit operating costs excluding Libya to be in the range of $25 to $26 per barrel of oil equivalent for the fourth quarter and $24.25 to $25 per barrel of oil equivalent for the full year of 2021.\nExploration expenses excluding dry hole costs are expected to be in the range of $50 million to $55 million in the fourth quarter and approximately $160 million for the full year, which is at the lower end of our previous full year guidance of $160 million to $170 million.\nThe Midstream tariff is projected to be approximately $295 million for the fourth quarter and approximately $1.95 billion for the full year.\nE&P income tax expense excluding Libya is expected to be in the range of $35 million to $40 million for the fourth quarter and the full year is expected to be in the range of $135 to $140 million, which is up from previous guidance of $125 million to $135 million, reflecting higher commodity prices.\nWe expect non-cash option premium amortization will be approximately $65 million for the fourth quarter.\nFor the year 2022, we have purchased WTI collars for 90,000 barrels of oil per day with the floor price of $60 per barrel and a ceiling price of $90 per barrel.\nWe have also entered into Brent collars for 60,000 barrels of oil per day with a floor price of $65 per barrel and a ceiling price of $95 per barrel.\nThe cost of this 2022 hedge program is $161 million, which will be amortized ratably over 2022.\nDuring the fourth quarter, we expect to sell two 1 million barrel cargoes of oil from Guyana.\nOur E&P capital and exploratory expenditures are expected to be approximately $650 million in the fourth quarter.\nFull year guidance remains unchanged at approximately $1.9 billion.\nFor Midstream, we anticipate net income attributable to Hess from the Midstream segment to be approximately $70 million for the fourth quarter and the full year is projected to be approximately $280 million, which is at the midpoint of our previous guidance of $275 million to $285 million.\nTurning to corporate, corporate expenses are estimated to be in the range of $30 million to $35 million for the fourth quarter and the full year is expected to be in the range of $125 million to $130 million, which is down from our previous guidance of $130 million to $140 million.\nInterest expense is estimated to be in the range of $90 millon to $95 million for the fourth quarter and the full year is expected to be in the range of $375 million to $380 million, compared to our previous guidance of approximately $380 million.\nThis concludes my remarks.\nWe will be happy to answer any questions.\n",
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"content": "q3 net profit 115 million usd versus -243 million usd loss year ago.\nnet production, excluding libya, was 265,000 boepd in q3 of 2021, compared with 321,000 boepd in q3 of 2020.\nqtrly net production from bakken was 148,000 boepd compared with 198,000 boepd in prior-year quarter.\nqtrly net production from gulf of mexico was 32,000 boepd, compared with 49,000 boepd in prior-year quarter.\nq3 2021 e&p results include a pre-tax gain of $29 million associated with sale of corporation's interests in denmark.\non an adjusted basis, corporation reported net income of $86 million, or $0.28 per common share, in 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: We had a very strong start to the year with first quarter consolidated net income of $64.4 million and earnings per share of $0.59.\nThese results were 93% and 90%, respectively, above the same quarter last year and were driven by stronger earnings at both the utility and the bank.\nIn the first quarter, Hawaiian Electric benefited from continued savings from the robust cost management program we started last year.\nThe savings will be delivered to customers in rates beginning in June, and, along with other timing elements, we expect the utility to remain within the full year guidance range we announced in February.\nAmerican's first quarter results reflect good execution in an environment that remains challenging for bank profitability.\nOur results benefited from a release of provision as we continue to conservatively manage credit in the improving Hawaii economy.\nAs Greg will cover in more detail, we're increasing our bank guidance and consolidated HEI guidance for the year to reflect this improvement.\nWe're seeing strengthening in the local economy as Hawaii continues to manage the virus well and the vaccine rollout continues.\nUnemployment declined to 9% in March.\nWhile still above the national average, it's headed in the right direction, having declined from a peak of nearly 24% a year ago.\nWe've seen significant growth in tourism arrivals this year.\nAnd lately, we've experienced multiple days where arrivals have approached prepandemic averages.\nAt this point, almost all our arrivals are from the U.S. mainland as the COVID situation and vaccinations abroad have been more challenging than domestically.\nHawaii real estate fundamentals are strong and continue to support the conservative portfolio mix at the bank.\nYear-to-date March, Oahu's sales volumes are up 19% for single-family homes and 53% for condos.\nMedian prices are also up 17% to $950,000 for single-family homes and 4% to $450,000 for condos.\nIn its March outlook, the University of Hawaii Economic Research Organization accelerated its forecast for the state's economic recovery by 18 months with the GDP now expected to rise 3.7% in 2021 and 3.1% in 2020.\nCOVID-19 cases in Hawaii have remained far below the mainland.\nThe seven-day rolling average was 94 for the state and is the fifth lowest per capita among U.S. states as of May six.\n40% of our residents are now fully vaccinated and more than half have had at least one dose.\nWhile this is encouraging, we're mindful that we're still in the early stages of Hawaii's economic recovery, and there is still some uncertainty about the pandemic's course.\nAt the utility, cost efficiency, our transition to the new PBR framework and our clean energy future have been and continue to be our major focus.\nWe and our stakeholders are all learning the new PBR framework, which is designed to align our interests as we work together to increase renewable energy and decarbonize our economy in a way that is affordable, reliable, resilient and equitable.\nOur commitment to cost efficiency positions us well as we transition into PBR.\nThe utility has been successful in implementing efficiencies and achieving savings to deliver on our management audit savings commitment and the customer dividend.\nWe'll start returning these savings to customers through the Annual Revenue Adjustment, or ARA, when PBR goes into effect June one.\nCost management will continue to be a focus as we operate under PBR.\nWe've been working with stakeholders to finalize the new PBR performance incentive mechanisms, or PIMs, as well as the scorecards and metrics we'll report on going forward.\nWe are expecting the PUC to issue an order setting forth the parameters of the new PIMs in the near future.\nAs we've said before, reaching our collective clean energy and decarbonization goals must be done in a way that is kakou, a Hawaiian word that means it takes everyone working together.\nWe're working to bring projects from Hawaii's largest ever renewable energy and storage procurement online as soon as possible.\nWe are fully committed to this effort, which is no easy task given the number of projects, the scale of this procurement relative to our small system, community considerations, land constraints and the need to ensure reliability on isolated island grids.\nWe're actively working with independent power producers, government agencies and other stakeholders to overcome obstacles to bring projects online faster.\nLast week, the PUC directed us to establish regulatory liabilities to track costs to customers resulting from delays in commercial operations of approved Stage one, Stage two and CBRE Phase one projects.\nWhile we do not believe we are liable for any amount, we believe the PUC's intention may be to track rather than record costs before determination is made.\nSo we will be seeking reconsideration or clarification.\nLast week, the PUC also approved, with conditions, our agreement for the Kapolei Energy Storage project, a stand-alone battery project that will help ensure reliability when the Oahu coal plant retires and enable integration of more renewable energy.\nWhile technically an approval, the order imposes conditions that may prevent us and the developer from moving forward with this project.\nThe regulatory process allows us to raise our concerns to the PUC, and we will be filing a motion for reconsideration on Monday.\nAnother key focus is accelerating the addition of more distributed energy resources, or DERs, and demand response.\nOn May 3, we filed our recommendations to achieve this acceleration while underscoring the importance of equity and fairness in how the programs are designed.\nWe're advancing programs to benefit all customers, including expanding our community solar program, proposing a rooftop rental program and procuring aggregated grid services from DERs.\nGrid modernization is key to facilitating faster deployment and effective use of demand response and DERs.\nIn March, the PUC approved our proposal to shift from an opt-in to an opt-out approach for advanced meters in targeted areas, allowing us to deploy advanced meters more quickly and thus enabling operational efficiencies and more advanced rate programs.\nTurning to the bank.\nAmerican continues to perform well in a challenging environment.\nIn the first quarter, we continued to have strong mortgage production and deployed an additional $150 million of ASB CARES or Paycheck Protection Program loans to support small businesses in round two of that program.\nYear-to-date, that amount has increased to over $170 million.\nRecord deposit growth, in large part driven by federal stimulus, continues to outpace lending opportunities in this early stage of Hawaii's economic recovery.\nWe're taking a balanced approach to managing our portfolio, optimizing fee income and loan portfolio growth in a low interest rate environment.\nWhile net interest margin is still pressured, record-low funding costs and balance sheet growth are helping grow net interest income consistent with our expectations.\nOur first quarter release of reserves for credit losses reflects the resilience of our customers as well as the moderating credit risk environment as Hawaii's economy begins to recover.\nWe continue to manage our reserves for credit losses conservatively.\nAmerican has also continued its cost control efforts, leading to lower noninterest expense in the first quarter even as we invest in our anytime, anywhere banking transition.\nImproved profitability is also allowing the bank's dividend to HEI to increase.\nWe're accelerating our digital transformation to enable customers to bank with us anytime and anywhere.\nToday, 44% of deposits are made through self-service channels such as ATMs and mobile, more than double prepandemic levels.\nAnd we've seen increased customer satisfaction across all channels over that time.\nWe're enhancing our digital offerings to make banking even easier for our customers.\nThis includes providing new online financial wellness tools, upgrading our ATM fleet, strengthening our mobile app, expanding online capabilities and opening new digital centers where our teammates will help customers with digital banking solutions.\nNow Greg will discuss our financial results and our outlook.\nOver to you, Greg.\nTurning to our first quarter results.\nConsolidated earnings per share were $0.59 versus $0.31 in the same quarter last year.\nBoth the utility and the bank reported strong performance, reflecting the resilience of our company's and the Hawaii economy that has showed signs of a strengthening recovery.\nAt the utility, earnings reflect lower O&M expenses from cost reduction efforts and delays on timing of generation overhauls, coupled with higher revenues from our annual rate adjustment mechanism, including timing-related charges for target revenue recognition to eliminate seasonality impacts.\nThe bank benefited from the release of provision for credit losses as certain credits earned upgrades, and we saw stable credit trends in an improving economic outlook.\nWhile the holding company loss is well in line with plan, we increased charitable giving during the quarter, including a $2 million contribution to support our community through challenging times.\nCompared to the same time last year, consolidated trailing 12-month ROE improved 80 basis points to 10%.\nUtility ROE increased 160 basis points to 9%; and bank ROE, which we look at on an annualized basis, was 16%.\nThe utility outlook remains unchanged, however, and the ROE expectations will be impacted by the management audit savings and customer dividend as O&M cost reductions that have improved earnings for the quarter are used to fund customer bill reductions under PBR.\nRegarding the utility's results, net income for the quarter was $43.4 million compared to $23.9 million in the first quarter of 2020.\nThe most significant variance drivers were $10 million lower O&M expenses compared to the first quarter last year.\nThere were three main factors that drove O&M lower: lower staffing and efficiency improvements from the ongoing cost management program; timing-related items, including higher bad debt expense in the first quarter of 2020 related to COVID-19, which has since been deferred; and fewer generating facility overhauls, some of which will be performed later in the year.\nThere were also higher costs in 2020 related to an increased environmental reserve and higher outside service costs to support the PBR docket and other customer service projects.\nIn addition to lower O&M, we benefited from a $5 million revenue increase from higher rate adjustment mechanism revenues; a $4 million revenue increase related to timing of the recognition of target revenues during the year, which we -- will have no net impact on 2021 and which is due to a change in methodology that eliminates seasonality for recognizing target revenues within the year; a $1 million lower enterprise resource planning system implementation benefits to be passed on to customers; and $1 million lower nonservice pension costs due to a reset of pension costs included in rates as part of a final rate case decision.\nThese items were partially offset by $1 million higher depreciation.\nRegarding the drivers of utility performance for the rest of the year, we expect no meaningful contribution from the performance incentive mechanisms during 2021.\nWe currently have approximately $22 million of COVID-related cost, primarily bad debt expense accrued in a deferred regulatory asset account.\nWe will continue deferring COVID-related costs through June 30.\nThe moratorium on customer disconnections is in place through May 31 2021, and we will -- and we continue to work with customers on extended payment plans and assisting with other bill assistance alternatives.\nWe plan to file a separate application to seek recovery of costs once actual costs are known.\nWe will also be filing a request for approval to continue deferring COVID-related costs beyond June 30.\nAs mentioned, our O&M expense was positively impacted by the timing of overhauls.\nWe do expect some of these overhauls to occur later in the year, in line with our annual guidance.\nThe utility's ability to achieve accelerated management audit savings commitment is an important driver of O&M expenses.\nThe utility is on track to achieve the savings necessary to meet the annual $6.6 million commitment, which will be returned to customers starting June one.\nUtility capital investments for the quarter of approximately $60 million were lower than planned due to unexpected delays.\nSome of the delays were due to extended repairs being made at one of our substations, limiting work that can be done on other parts of the electric system.\nWe also experienced additional design work required for T&D projects, COVID travel limitations and meter deployment delays that impacted our grid modernization work.\nDespite the delays, we still expect to achieve our utility capital investment plan for 2021.\nAnd we are maintaining the capex and rate base growth guidance we issued during our previous earnings call and still expect 2021 capex of approximately $335 million to $355 million, reflecting rate base growth of 4% to 5%.\nTurning to the bank.\nASB's net income for the quarter was $29.6 million compared to $15.7 million last quarter and $15.8 million in the first quarter of 2020.\nThe increase primarily reflected moderation of the elevated credit risk environment as Hawaii's economy begins to recover, and the results benefited from a release of reserves for credit losses, which I'll discuss further.\nNet interest income reflects the impact of strong deposit growth, lower loan demand and increased growth of our investment portfolio.\nNoninterest income benefited from strong mortgage origination and sales in line with plan despite being below the prior year's quarter.\nNoninterest expense remained in line with the plan as ASB continues to focus on strategic investments to drive efficiency and productivity.\nASB's net interest margin compressed 17 basis points during the quarter.\nNIM was 2.95% compared to 3.12% in the fourth quarter of 2020.\nThe low interest rate environment and record deposit growth each contributed to NIM compression.\n$3.1 million in fees from PPP lending and a record low cost of funds helped soften the pressure on asset yields.\nThe average cost of funds was 0.08%, down one basis point from the linked quarter and 16 basis points from the prior year.\nWe expect continued pressure from low interest rates and from excess liquidity due to strong deposit growth and lower reinvestment yields.\nConsequently, we're updating our NIM guidance range to 2.80% to 3%.\nWe anticipate that balance sheet growth should still lead to net interest income in line with expectations for the year.\nIn the first quarter, the bank released $8.4 million in provision for credit losses compared to provisions of $11.3 million in the fourth quarter and $10.4 million in the first quarter last year.\nThis reflects credit upgrades in the commercial loan portfolio, reduced exposure to riskier but profitable consumer unsecured loans and lower net charge-offs as Hawaii's economy begins to recover and credit -- the credit risk environment moderates.\nASB's net charge-off ratio for the quarter was 0.18% compared to 0.36% in the fourth quarter and 0.44% in the first quarter 2020.\nNonaccrual loans were up slightly to 1% compared to 0.89% in the fourth quarter and 0.90% in the prior year.\nWe remain conservative as we take a wait-and-see approach to Hawaii's economic recovery.\nAnd at 1.73% as of quarter end, our allowance for credit losses was the highest among Hawaii peers.\nWe're seeing positive loan deferral trends across ASB's portfolio.\nNearly all deferred loans have returned to scheduled payments.\nActive deferrals are just 0.2% of the total loan portfolio.\nWe're -- we've experienced declining delinquencies in the higher-risk commercial and consumer portfolios.\nWhile realizing a slight uptick in delinquencies in the residential portfolio, that portfolio is a low-risk -- is low risk and secured by rising value in the Hawaii real estate market.\nThese two factors have contributed to a decreasing profile of our overall -- risk profile of our overall loan portfolio.\nASP continues to manage liquidity and capital conservatively, maintaining ample liquidity and healthy core capital ratios.\nThe bank has approximately $4 billion in available liquidity from a combination of reliable resources.\nASB's Tier one leverage ratio of 8.33% was comfortably above well-capitalized levels.\nProspectively, given the lower risk profile of our portfolio, we're anticipating managing closer to an 8%-or-above Tier one leverage ratio and drive competitive profitability metrics, growth of the ASB dividend while maintaining a strong capital position.\nWe expect higher bank dividends to HEI this year than reflected in our February guidance given ASB's strong performance and outlook and efficient capital structure.\nWe now expect dividends of approximately $50 million to $60 million versus the previously estimated $40 million.\nFor the quarter, the ASB Board has declared a $23 million dividend to HEI.\nWe still do not anticipate the need to issue any external equity in 2021 at HEI unless we identify significant additional accretive investment opportunities.\nWe are committed to maintaining an investment-grade profile.\nAt the utility, we're pleased to have had recent utility credit rating upgrades by S&P to BBB flat and Moody's to Baaone, both with stable outlooks.\nTurning to our guidance.\nWe're reaffirming our previously issued utility guidance.\nWhile the utility had a strong first quarter, we'll be returning cost savings to customers beginning June one and expect additional overhauls later in the year.\nIn addition, while the first quarter benefited from higher revenues due to a methodology change to remove seasonality in recognizing target revenues, a portion of that will reverse later in the year.\nHowever, we are revising our banking consolidated guidance.\nOur revised guidance is $0.67 to $0.74 per share, up from our prior guidance of $0.52 to $0.62.\nWe're revising our NIM expectations at the bank to 2.8% to 3%, down from 2.90% to 3.15%.\nThe impact on net interest income should be muted by balance sheet growth.\nGiven strengthening credit dynamics and outlook for the Hawaii economy, we now expect provision to range from $0 to $10 million, which we believe remains appropriately conservative given continued uncertainty for the economy until we see increased vaccination levels and the eventual return of international travel.\nWe expect that, that stronger bank profitability will translate into consolidated earnings growth as well as increase bank dividends to the holding company.\nAnd we're increasing HEI guidance -- earnings per share guidance to $1.90 to $2.05 per share.\nI'm proud of the dedication of our employees and the resilience of our companies as we continue to provide essential electricity and banking services and deliver solid financial results while helping Hawaii reach its aggressive climate goals and build back better.\nLast month, we issued our second consolidated ESG report, which includes our ESG priorities and our first Task Force on Climate-related Financial Disclosures-aligned reporting.\nWe're considering the implications for our companies of the Biden administration's goal to cut carbon emissions 50% from a 2005 baseline by 2030.\nWe believe our goals and plans here in Hawaii and the work we've been doing for some time place us on a strong path to achieve a net-zero future.\nWe're updating our planning and analysis, and we'll report further on that in the future.\nAnd finally, we say aloha to Rich today as he is leaving American to pursue other interests.\nRich accomplished a great deal during his more than 10 years at the helm of American.\nRich leaves American in great shape, as evidenced by ASB's strong first quarter earnings and Greg's comments earlier.\nUnder Rich's leadership, ASB has grown its assets, expanded its customer base, products and services and improved operational efficiency.\nHe and his team have provided great customer service and made banking easy for customers.\nAnn Teranishi, currently the bank's Executive Vice President of Operations, will succeed Rich as President and CEO later today.\nAnn is a strong, collaborative leader with deep banking industry knowledge and a 14-year track record of success at American.\nWe look forward to Ann's leadership.\n",
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"content": "q1 earnings per share $0.59.\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 begin, I'd like to direct you to our website, www.\nBefore we dive into the results of the quarter, I want to make a couple of quick announcements.\nIf you have not done so already, I would encourage you to read our letter to shareholders that was released a couple of weeks ago.\nThe letter, which is included in our 2020 annual report can be found on the Investor Relations section of our website.\nIt provides a good overview of our business and highlights the many accomplishments we've been able to achieve over the past year.\nCorrene joined us as Chief Financial Officer in April and brings a wealth of knowledge of financial expertise to the company.\nShe comes to us from Whiting Petroleum, having served as Chief Financial Officer.\nThere's no doubt Correne will play a vital role in driving the company forward as we look to continue the acceleration of the development across our portfolio.\nI'm going to open the call today with remarks on the performance of our various business segments before handing it over to Jay Cross, who will provide updates on the Seaport in our strategic development pipeline.\nCorrene will then speak to our financial results, before concluding and opening up the call for Q&A.\nAs we've highlighted over the last several quarters, our MPCs are positioned in low cost, low tax states and offer best-in-class amenities that are attractive to both residents and tenants.\nThese amenity-rich communities are fully integrated with expansive open spaces and provide exceptional quality of life where individuals can live, work and play, all in one highly desirable setting.\nAnd these characteristics are becoming more and more sought after in today's environment, which has allowed us to produce outsized results despite unforeseen circumstances brought on by COVID-19.\nConsider for a moment The Woodlands.\nIn March, Niche.com ranked The Woodlands as the number one best city to live in America.\nAnd today, all homes that are even close to move and ready are selling in off the market within three to five days.\nThis incredible achievement is a culmination of all the hard work and dedication that has been put into this community by The Woodlands team over the last few decades.\nIn Summerlin, Bridgeland and The Woodlands Hills, the pace of new home sales and appreciation of our residential land have been incredible, and have only accelerated further since the start of 2021.\nThis resiliency is a reflection of the demand that continues to strengthen within our communities and is a testament to the quality of the MPCs we are creating.\nEven in Ward Village, where we sell premium condominiums to residents, the pace of sales has remained strong despite selling most of these units site unseen due to the travel restrictions brought on by the pandemic.\nThese are just some recent examples of the great momentum and the positive growth Howard Hughes is experiencing throughout its communities.\nNow on to the results of the quarter.\nWe kick-started the year with a strong first quarter across all aspects of the business.\nThe acceleration of new home sales and condo sales displayed in the second half of 2020 carried into the New Year.\nWe also saw improvements within our operating assets that were impacted by COVID, which is very encouraging as we continue to see signs of recovery across our retail and hospitality portfolio.\nDuring the quarter, we took steps to fortify our balance sheet and proactively issued $1.3 billion of senior notes in an effort to further diversify our funding sources, term out our debt maturities, and lower our overall cost of debt.\nThe combination of these events has allowed us to accelerate 2 million square feet of development in our core MPCs, and we continue to look for additional opportunities ahead.\nWithin our MPC segment, new home sales, a leading indicator for future land sales, increased a staggering 35%, selling 929 new homes, 241 homes above the same period last year.\nMPC earnings before tax, or EBT, increased 44% to $63 million in Q1 of 2021 compared to Q1 of 2020, largely driven by higher custom lot sales in Summerlin and an increase in the number of units closed at The Summit, our joint venture with Discovery Land Company.\nIt is also important to highlight these results were achieved without closing a single super-pad sale in Summerlin during the quarter.\nThese figures showcase the volume of residents flocking to our communities, despite economic headwinds, that have negatively impacted the US economy for over a year.\nWe believe the robust demand in our MPCs will continue for at least the remainder of the year, which gives us the confidence to raise our full year MPC EBT guidance.\nOn our fourth quarter earnings call, we provided MPC EBT guidance for 2021 in a range of $180 million to $200 million.\nFollowing the results of the first quarter, we are now targeting a range of $210 million to $230 million.\nCorrene will provide additional details on our MPC segment a bit later, as the increases in acres sold and price per acre provided the support to adjust our guidance.\nOur operating assets performed well during the quarter with a 10% sequential increase in NOI across the portfolio.\nOne of the leading drivers of this increase was retail, which improved by 20% compared to the fourth quarter of 2020.\nThe largest factors contributing to this increase were driven by our two largest retail footprints, Ward Village and Downtown Summerlin with NOI rising 55% and 44%, respectively.\nWe've seen foot traffic steadily return to our retail locations, which has resulted in a corresponding increase in collections.\nDuring the first quarter, collections improved to 78%, the highest retail collection rate since the onset of the pandemic.\nThese results are encouraging and demonstrate that we are well on our way to recovery as we move closer to pre-COVID levels.\nPerhaps the hardest hit area of our operating asset portfolio over the past year was our hospitality assets in The Woodlands.\nDuring the quarter, we nearly broke-even as we recorded a net operating loss of $147,000 compared to a net operating loss of $236,000 last quarter.\nWhile our three hotels continue to make steady improvements, business and leisure travel still remain at significantly lower levels relative to what they were a year ago.\nWe've seen a slight increase in occupancy in our hotels over the last quarter, and we are hopeful this will continue throughout the year.\nLast week, on May 6, our Minor League team, the Las Vegas Aviators, was fortunate enough to host its first game back in the Las Vegas Ballpark stadium.\nThis is a great step in the right direction.\nAnd while circumstances are always subject to change, we are hopeful we will be able to host the remaining games on our schedule, which would have a meaningful impact on the overall contribution to our NOI.\nIf you recall in our last earnings call, the NOI guidance we provided for 2021 assumed the Ballpark would break-even, given the uncertainty surrounding COVID-19.\nHosting all of our scheduled games this season would certainly have a positive impact on our NOI, which would be concentrated in the second and third quarter of this year.\nIn addition to these positive improvements, we received the annual distribution from our 5% ownership stake in the Summerlin Hospital totaling $3.8 million, which further fueled the sequential rise.\nThese strong results were partially offset by sequential declines largely concentrated in our office and multi-family assets.\nOffice NOI declined 8% compared to the fourth quarter of 2020 largely attributed to space reductions by select tenants in The Woodlands in Columbia.\nIn total, our stabilized office occupancy dropped 3% since the fourth quarter.\nOur leasing teams are proactively pursuing tenants across the country to fill these spaces with a strong focus on corporate relocations.\nThe NOI generated by our multi-family assets declined 12% sequentially, largely due to favorable property tax true-ups realized during the fourth quarter of 2020 that were not repeated this quarter.\nWe view this as a one-off event and do not expect this will be a common occurrence moving forward.\nDespite the sequential decline, our latest multi-family developments in The Woodlands, Bridgeland, Summerlin and Downtown Columbia continue to lease-up ahead of projections.\nThe progression in NOI we are seeing across the portfolio plays a crucial part in our recovery from the pandemic.\nAs this NOI draws closer to pre-COVID levels, it will drive the net asset value of the company higher, unlocking meaningful value for our shareholders.\nOur stabilized operating asset NOI target increased to $379 million in the first quarter, an increase of $17 million compared to the first quarter of 2020.\nThis increase exhibits the progress we've made over the last year with the construction commencement of several new assets ranging from multi-family to office and retail.\nAs we develop more projects and bring additional assets online, we look forward to increasing this target year in and year out as we strive to unlock the great value inherent in our commercial land.\nShifting over to Ward Village.\nThe pace of condo sales continues to show no sign of abating.\nWe contracted 46 units during the quarter, marking a sequential increase of 64%.\nWithin our completed towers, we closed on a total of five homes at Waiea and Anaha.\nWaiea now has only three remaining units to be sold.\nAnaha only had one unit remaining at the end of the quarter, which subsequently closed in April.\nAnaha is now completely sold out.\nWe commenced construction during the quarter on our seventh tower, Victoria Place.\nWe closed on our $368 million construction loan for the development.\nThe pace of presales for this project is the fastest Ward Village has ever seen, with 85% of the tower already presold.\nSaid differently, we have only 15% of the tower left to sell between now and the time of completion, which is expected to be in 2024.\nThis dramatically decreases the overall risk of the project and gives us the ability to command premium prices for the remaining units that are in high demand.\nTurning to the Seaport.\nWe concluded the winter season of The Greens in March.\nThis concept, which we only launched during this past summer, demonstrated strong results that have greatly benefited our sponsors.\nDuring the first quarter, we served over 38,000 guests and had an average daily wait list of 3,000 people, while generating over $2 million in revenue.\nDuring the first quarter, we made great progress preparing our latest concepts for the debut at the Seaport.\nAt Pier 17, we rebranded Bar Wayo, a JV owned restaurant with David Chang, which opened as Ssam Bar last month, and we're close to opening our two new concepts by Andrew Carmellini, Mister Dips and Carne Mare.\nAt the Fulton Market Building, we're preparing the former 10 Corso Como space for two new concepts announced last quarter, The Lawn Club and a restaurant for acclaimed chefs, Wylie Dufresne and Josh Eden.\nAll of these efforts will be fully maximized with the launch of the Tin Building, which remains on track to be completed by the end of the year, and we anticipate a grand opening in early 2022.\nFinally, last week, we passed a significant hurdle in the land use approval process for 250 Water Street that Jay will describe in more detail, in addition to providing updates on our Strategic Developments segment.\nJay, over to you.\nAs David mentioned, we are seeing strong signs of demand within our communities, evidenced by the pace of new home sales, condo sales and lease-up of our latest multi-family developments.\nFrom a development perspective, our strategy is only to build to meet underlying demand to never oversaturate our markets.\nThe quarter's results demonstrate the strong desire to live in our MPCs and the projects we have under way will allow us to capture this inflow of demand.\nAs of the end of April, we have commenced construction on the 2 million square feet of development that was announced in February, and so far, secured $494 million in construction loans to finance these projects.\nIn Ward Village, we broke ground at Victoria Place and expect to deliver this tower in 2024.\nThis premium 349-home development is on Ward Village's front row with unobstructed ocean views.\nWith 85% of the tower already presold, we could not be more pleased with the results of our local Hawaiian team.\nWe are now in the predevelopment phase for our next two towers and hope to announce the launch of our next presales campaign shortly.\nConstruction from Marlow is now under way in Downtown Columbia.\nThis mixed-use product will comprise 472 apartment units and 32,000 square feet of ground floor retail.\nIts location is directly adjacent to our latest multi-family asset in the area of Juniper.\nJuniper was delivered back in the first quarter of 2020 and is already 80% leased, which has exceeded our projections.\nHoward County has restricted multi-family supply due to school capacity that we are exempt from, which gives us the confidence that the leasing amount in Juniper will yield similar results at Marlow, another example of how our development inventory allows us to respond nimbly to market demand in our regions.\nMoving over to Bridgeland.\nWe began construction last quarter on our 358-unit project Starling and secured financing for the project in April.\nThis is only our second multi-family project in Bridgeland and like Marlow in Columbia follows on the success of Lakeside Row, which opened during the fourth quarter of 2019, and is already 94% leased only after one year in operations.\nStarling is the first project launched in what will be our new town center, Bridgeland Central, where we plan to accelerate development over the next few years.\nFinally, in Summerlin, we have already announced two new projects, which commenced construction in April.\nOur multi-family product, Tanager Echo and our next office building, 1700 Pavilion.\nWe look forward to bringing these assets online quickly as their predecessor projects, Tanager and two Summerlin office buildings are both 100% leased.\nAt the Seaport, as David mentioned, we received approval last week from the New York City Landmarks Preservation Commission on our proposed design for a building on the site of the surface parking lot at 250 Water Street.\nThis favorable ruling confirms that the proposed architecture is appropriate for the Seaport historic district and allows us to proceed with the formal New York City Uniform Land Use Review Procedure, known as ULURP.\nThrough this process, approval from the New York City Planning Commission will be required to allow us to complete the necessary transfer of development rights to the parking lot site.\nThis project presents a unique opportunity at the Seaport to transform this last available development site into a vibrant mixed-use asset.\nThe plan, as proposed, will provide long-term viability to the South Street Seaport Museum and deliver much needed affordable housing and economic stimulus to the area.\nWe will continue working with the city to advance this process over the coming calendar year, with the goal of bringing these additional benefits to this one-of-a-kind neighborhood.\nDuring the quarter, the Seaport reported an operating loss of $4.4 million, which was largely unchanged from the same quarter last year.\nWhile NOI was largely the same year-over-year, the revenues and corresponding expenses during the first quarter of 2021 were comparatively lower.\nThis was due, of course, to the impact of COVID-19 that still exists in New York City.\nCapacity restrictions have limited the amount of seating in our restaurants.\nFoot traffic has declined within our retail locations and social distancing requirements limited our ability to maximize the entire space of the Pier 17 Rooftop.\nDespite these challenges, we still had a good quarter with continued success at The Greens and making further progress in the construction of the Tin Building.\nAs New York City begins to slowly reopen, we are in a strong position to capitalize on the city's post-COVID return to normalcy.\nWe have several new concepts gearing up to launch soon at Pier 17 and the Fulton Market Building.\nAnd in 2022, we plan to have a grand opening for the Tin Building, which will bring increased foot traffic to the area.\nWe believe the combination of project completions and the reopening of the Manhattan economy will make the Seaport, one of the premier entertainment and food and beverage destinations in all of Manhattan.\nWith 2 million square feet of new development under way, we are actively seeking out future opportunities where we can put our capital to work.\nOne of the ways to do this is by introducing new product types, which will further diversify our portfolio.\nOver the next few quarters, we hope to announce new projects throughout our master-planned communities in categories such as single-family for rent, medical office, new timber office buildings, senior housing, residential condos and cultural amenities.\nThis type of development will enhance our communities, increase our stream of recurring income and ensure that we're putting forth maximum effort to deliver outsized returns for our shareholders.\nI'm happy to be joining all of you today on my first HHC earnings call.\nI look forward to meeting most of you over the next several months through upcoming conferences, roadshows and meetings.\nI'm going to start with a review of our MPC and Strategic Development performance, then we'll turn to our financial results and balance sheet.\nWith the start of the year, our MPCs across the country continued to experience tremendous growth.\nWe achieved year-over-year growth in new home sales, price per acre of residential landfills and MPC EBT compared to the first quarter of 2020.\nNew home sales accelerated quickly during the first quarter with 929 new homes sold in our community, 35% more compared to the first quarter of 2020 and 34% higher than the fourth quarter of 2020.\nThis is an incredible pace that persists since the latter half of 2020, and we see this trend continuing.\nLand sales, however, were down 5% in the first quarter with 54 acres sold versus 57 acres sold in the first quarter of last year.\nThis is attributed to fewer lots sold in Bridgeland and no super-pads sold in Summerlin, which, as we've always said, are very lumpy quarter-to-quarter and should be evaluated on an annual basis.\nThe fact that land sales were only down 5% without closing on a single super-pad highlights the strength of the quarter for our MPC.\nMPC EBT, which is a metric of profitability we look at for the segment, increased 44% compared to the same period last year.\nThis uptick in earnings was mostly the result of higher custom lot sales and increased units closing at The Summit, our 555-acre, members-only community in Summerlin.\nDuring the quarter, The Summit closed on 19 units versus six units closed during first quarter of 2020, a substantial increase that helped drive quarterly MPC EBT to $63 million.\nSummerlin had a breakout quarter with new home sales higher by 41% in the first quarter of 2021 versus the same period in 2020.\nIn addition, price per acre in Summerlin residential land grew 13% or $199,000 to $1.7 million per acre for the first quarter of 2021, as compared to the first quarter of 2020.\nThis also compares very favorably with the $762,000 per acre achieved last quarter.\nThis increase was attributed to selling only custom lots as opposed to a typical quarter where the majority of our sales are generated through the sale of super-pads.\nSummerlin has been a huge beneficiary of the recent migratory patterns of homebuyers leaving high-cost, high-tech states like California.\nWe see no indication of this trend slowing anytime soon.\nFurther, we believe the growth demonstrated within Summerlin is sustainable as the broader Las Vegas economy improves.\nBridgeland continues to demonstrate excellent results in the first quarter.\nNew home sales grew 33% when compared to the same quarter last year, and price per acreage of residential land increased from $439,000 in the first quarter of 2020 to $459,000, a 5% increase.\nThe influx of homebuyers to Bridgeland have been impressive, and we have reason to believe this momentum will continue.\nSimilar to what we have seen in Summerlin, the surrounding Houston economy has improved since the lows of last year in oil prices and the overall energy markets have improved.\nWe view this as a strong catalyst for continued growth in home sales.\nWhile land sales were below the first quarter of 2020, the momentum in new home sales confirms demand is still robust, and we expect strong results through the balance of the year.\nIn Woodlands Hills, new home sales more than doubled from 41 homes in the first quarter of 2020 to 84 homes this quarter.\nSimilarly, The Woodlands Hills sold 16 acres of land during the quarter, representing a 92% increase when compared to the same period last year.\nIn addition, we continue to see steady increase in the price per acre of our residential land sold to homebuilders.\nPrice per acre of residential land increased from $303,000 in the first quarter of 2020 to $307,000 this quarter.\nAlthough these numbers are from a lower starting basis, given this is our least mature community, the results are an encouraging sign of future expansion ahead as we have only just scratched the surface in terms of residential land sales.\nIn our Strategic Developments segment, the demand for our homes in Ward Village remains robust.\nWe contracted 46 units during the quarter, of which 30 units were from Victoria Place.\nThe sales pace at this tower has been incredible with 85% of the units presold, and we are only just starting construction.\nDuring the quarter, we closed on a $368 million construction loan for this project at LIBOR plus 500 basis points with an initial maturity date of September 2024, and two one-year extension options.\nThis 85% presold tower has hard deposits from buyers that can be used to fund construction.\nOur other two towers under construction, 'A'ali'i and Ko'ula, are making strong progress and are 86% and 79% presold with estimated completions expected at the end of 2021 and 2022, respectively.\nDuring the quarter, we closed on five units between Waiea and Anaha generating $35 million in sales.\nSubsequent to the quarter end, we closed on the last remaining unit at Anaha, which is now completely sold making this Ward Village's third sold-out tower, only three units remain at Waiea.\nIt is important to note that $20 million was charged during the quarter related to additional anticipated costs to repair construction defects previously identified at Waiea.\nThis is comparison to the $98 million charge in the first quarter of 2020 for the estimated repair costs related to this matter.\nAs we previously stated on last year's earnings call, we believe the general contractor is ultimately responsible for the defects, and we expect to recover all the repair costs from the responsible parties.\nTaking a look at GAAP earnings.\nFor the first three months ended March 31, 2021, we reported a net loss of $67 million or $1.20 per diluted share, compared to a net loss of $125 million or $2.88 per diluted share during the first quarter of 2020.\nThe year-over-year improvement was accredited to a stronger result in our MPC and Strategic Developments segments, in addition to no impairment charges during the quarter compared to a $49 million impairment charge against the outlet collection at Riverwalk during the same period last year.\nThis was partially offset by a loss on the early extinguishment of debt due to the repurchase of the company's $1 billion senior notes due 2025 and the repayment of the loans for 1201 Lake Robbins and The Woodlands Warehouse in February following our $1.3 billion bond offering.\nWe also reported lower NOI from our operating assets, largely related to the expiration of a short-term lease at The Woodlands tower that ended in June of 2020, as well as lower operating performance from our COVID-impacted assets within retail and hospitality.\nExcluding our loss on the early extinguishment of debt and non-recurring items, HHC would have reported a net loss of $31 million or $0.56 per diluted share during the first quarter of 2021.\nThe bond offering, I mentioned, is just an example of Howard Hughes's opportunistically approaching the high-yield market at the right time.\nThis successful issuance allowed the company to reduce its annual interest expense by $11 million with the refinancing of its 2025 notes and extended out its maturities by an additional two years.\nFurther, the issuance was offered across two separate tranches, which allows us to manage our future refinancing needs.\nThe offering includes a $650 million eight-year issuance due 2029 at a rate of 4.125% and a $650 million 10-year issuance due 2031 at a rate of 4.375%.\nThis bond offering increased our unencumbered book value of assets by over $300 million, further reduced our cost of debt and extended our maturity profile.\nOur nearest debt maturity is not due until October of 2021, which is our $28 million loan on the outlet collection at Riverwalk.\nFollowing the end of the quarter, we closed on several construction loans in order to ensure that we are well positioned for the strategic development activity Jay discussed earlier.\nThis included construction loans on our multi-family project in Bridgeland and Downtown Columbia.\nIn April, we secured a $43 million construction loan for Starling at Bridgeland, which bears an interest at LIBOR plus 275 basis points and matures in May of 2026 with an option of a one-year extension.\nWe also closed on an $83 million construction loan for Marlow, which bears an interest of LIBOR plus 295 basis points and matures in April of 2025 with an option of a one-year extension.\nIn Summerlin, we also closed on a $59 million loan, which replaces the existing construction loan for Tanager.\nThis loan was closed in April and bears interest at 3.13% and matures in May of 2031.\nFinally, we closed out the quarter with over $1 billion of liquidity, which includes $976 million of cash on hand and $185 million of availability under our lines of credit.\nOur net equity requirement for projects under construction totaled $504 million at the end of the first quarter.\nWhen you account for the construction loans we closed in April, this equity commitment drops further to $379 million.\nGiven the strength of our liquidity position, we have more than enough capital to meet all of our current funding requirements and are well positioned to capitalize on additional opportunities that lie ahead.\nThe results delivered during the quarter speak to the demand we are seeing with our communities across the country.\nSignificant increases in new home sales and condo sales point to the desire residents have to live in our highly amenitized, award-winning master plan communities.\nThe performance of our retail and hospitality assets in the form of higher collections and increased occupancy proves the road to recovery is rapidly improving.\nWe have opportunities in place to capture the growing demand we are seeing across the portfolio, and our strong liquidity position will allow us to further accelerate this momentum as we continue to unlock value for our shareholders.\nWe look forward to updating you on our progress throughout the remainder of the year as we continue to deliver unmatched results and successfully grow our communities.\nWe will now turn to the Q&A section of the call.\nWe will answer the first few questions that have been generated by state technology and will be read by Dave Striph.\nDave can you read the first question?\n",
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"content": "howard hughes q1 loss per share $1.20.\nq1 loss per share $1.20.\n",
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