Datasets:

ZixuanKe

/

soumakchak-earning-call-summary

like 1

[ { "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 discussing results that were released yesterday after the close.\nTo listen online, please go to the stewart.com website to access the link for this conference call.\nBecause such statements are based on an expectation of future financial operating results and are not statements of fact, actual results may differ materially from those projected.\nDave will take you through the details of this quarter's financial results in just a minute, but before then, I want to touch on a couple of broader points.\nWhen I began at Stewart almost two years ago, I discussed both the value of our people and brand, as well as the financial strength of our core business.\nStewart clearly was not a typical turnaround story, yet significant changes were necessary.\nTo compete effectively, we needed to focus on the strategy, founded on a targeted scale, operational improvement, talent upgrades, and acquisitions in core and ancillary business lines.\nWe realized that our journey to become the premier title services company would not happen overnight, but we began to put in place the pieces necessary to build a resilient long-term success.\nAs you know, the rebuild has been happening in the face of the pandemic and historic origination volatility [Phonetic].\n[Technical Issues] our associates who have worked through these challenges, but our team understands our mission and is aligned to moving fast to achieve our long-term goals while taking care of customers.\nI bring this up today as we deliver on record earnings because the improvements in process and investments in talent, scale, services, and technologies, we have made, though not complete, have begun to take hold.\nWhile we are bullish on the real estate over the long term, we are realistic in our assessment that the current market will not last forever.\nThat said, on a daily basis, we are making decisions and taking actions that will define us through the current market and the next full real estate cycle.\nThat is what drives us and that is what you're beginning to see in our results.\nI'm often asked the question, how do you appropriately quantify the changes that Stewart has made so far in our journey.\nWith all that we have been working on, it can, at times be challenging to measure all the ways we've improved our operations by being more efficient adding talent, unlocking existing expertise, eliminating redundancies, rescaling operations, and embracing new and improved technology.\nBut I feel comfortable that the picture that we – that can lie ahead if we execute on our plan is embedded in our performance in the first half of '21.\nOur journey continues and we are a quarter closer to our goals.\nWe continue to see a strong residential real estate market driven by demand, favorable interest rates and an economy getting back to normal.\nThe commercial real estate market is also benefiting from this improving economy.\nAlthough the economy is improving, there are several watch items including fed and government policy in action, virus variants and anti-vac sentiment, and an improving yet historically high mortgage delinquency and forbearance, which need to play out.\nSince these watch items can create operating volatility.\nWe continue to focus on the areas that will have the most meaningful and durable impact on our long-term operating performance, gaining scale in attractive direct markets, improving scale and geographic focus in our agency and commercial operations, scaling and broadening lender services, and throughout our business, improving service and digital capabilities to provide a seamless end-to-end user experience.\nFor the second quarter 2021, Stewart reported, net income of $95 million and diluted earnings per share of $3.50 on total operating revenues of $802 million.\nThe main difference between reported and adjusted net income being the gain on sale of certain buildings.\nCompared to last year, total title revenues for the quarter increased $248 million or 50% due to strong performances from our residential agency and commercial operations.\nThe title segment generated $126 million of pre-tax income, an increase of $71 million from last year's quarter.\nAs a result of revenue growth and continued management focus.\nPre-tax margin for the segment also improved to 17% compared to 11% from Q2 2020.\nWith respect to our direct title business, residential revenues increased $76 million or 47% from increased purchase and refinancing transactions.\nResidential fee per file for the second quarter was approximately $2,100, a 15% improvement over last year's fee per file due to a higher purchase mix this year.\nDomestic commercial revenues improved $30 million or 97% due to increased transaction volume and higher average fee per file, which was $12,600 versus $9,800 for last year's quarter.\nTotal international revenues increased $29 million or 118%, primarily due to improved volumes in our Canadian operations.\nTotal open orders increased 8%, while closed orders improved 27% compared to the last year, primarily due to the strong housing market.\nSimilar to our direct title business, our agency operations generated a solid quarter with revenues of $390 million, which was $113 million or 41% higher than last year.\nThe average agency remittance rate was settled or at 17.5%.\nOn title losses, total title loss expense increased $12 million or 56%, primarily as a result of increased title revenues as a percentage of title revenues, title loss expense was 4.5% compared to 4.3% last year.\nIn regard to operating expenses, which consist of employee and other operating costs, total operating expenses increased primarily due to increased revenue and order activity.\nEmployee cost as a percent of operating revenues improved to 24% from 27% last year while other operating expenses increased to 17% from 15% last year, primarily due to the pass-through appraisal and service costs in our increased appraisal services businesses, excluding these businesses overall other operating expense ratios would have been 12% for the second quarter 2021.\nOn other matters, our financial position remains very solid to support our customers, employees, and the real estate market.\nOur total cash and investments on the balance sheet are approximately $600 million over regulatory requirements and we have approximately $225 million available on our line of credit facility.\nShareholders' equity attributable to Stewart increased to $1.13 billion with book value per share of approximately $42.\nAnd lastly, net cash provided by operations for the second quarter increased to $103 million compared to $61 million from last year's quarter.\nWe are grateful for and inspired by our customers and associates, advocates for everyone's improved safety and prosperity, and confident in our supportive real estate markets.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $3.50.\nq2 revenue rose 58 percent to $802 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On our call today, our CEO, Ron O'Hanley, will speak first.\nAfterwards, we will be happy to take questions.\nDuring the Q&A, please limit yourself to two questions and then requeue.\nActual results may differ materially from those statements due to a variety of important factors, such as those factors referenced in our discussion today and in our SEC filings, including the risk factors in our Form 10-K.\nI'm particularly pleased with our results as quarterly total fee revenue exceeded $2.5 billion for the first time in the Company's history.\nWe delivered a fourth consecutive quarter of servicing fee growth with servicing fees at the highest level in three years, propelled by both strong equity markets and the impact of our actions to strengthen relationship management and sales effectiveness.\nWe continue to differentiate State Street through our unique product and operational capabilities as well as through delivering enhanced client service quality.\nOur pipeline continues to deliver as evidenced by another strong -- another quarter of strong servicing and Alpha client mandates, which I will discuss shortly.\nAdditionally, we continue to invest in our business and innovate across the franchise to drive growth and enduring shareholder value creation.\nFor example, we announced the formation of State Street Digital in the second quarter, a new division focused on addressing the industry's evolving shift to digital finance both as product offerings and as a business model.\nThis is just one example in a long history of innovation that State Street has and is continuing to drive within our industry.\nWe also continue to develop State Street Alpha, our front-to-back offering.\nThis unique capability has created an attractive value proposition that is resonating with both new and existing clients as well as contributing to client retention and growth opportunities, which I will also discuss shortly.\nTurning to Slide 3, I will review our second quarter highlights before handing the call over to Eric, who will take you through the quarter in more detail.\nSecond quarter earnings per share was $2.07 or $1.97 excluding notable items.\nDespite the impact of interest rates on our NII, earnings per share ex-notables reached the highest level since 4Q '19 when quarterly NII was notably higher more than 35% more than it was in 2Q '21.\nRelative to the year-ago period, quarterly total fee revenue exceeded $2.5 billion for the first time, increasing 6% year-over-year, driven by solid servicing and management fee growth, which increased 10% and 14% year-over-year respectively, as well as better securities finance results.\nThis strong performance was partially offset by the year-over-year impact on total revenues from lower software and processing fees, continued moderation of FX market volatility and ongoing interest rate headwinds.\nEven with record quarterly fee revenue, expenses were well controlled.\nWhile second quarter total expenses were up 1% relative to the year-ago period, they were down almost 0.5 percentage point year-over-year, excluding notable items and currency translation as our productivity improvements continued to yield results.\nWe have created a culture of expense discipline over the last two-and-a-half years and we remain confident in our ability to effectively manage core operating costs over the remainder of 2021.\nOur strong fee revenue performance coupled with continued cost discipline, delivered a 200 basis point improvement to our pre-tax margin year-over-year which reached nearly 30% in the second quarter excluding notable items.\nFurther, return on equity was 12.6% or 11.9% excluding notable items in the second quarter.\nAUC/A increased to a record $42.6 trillion at quarter-end, supported by higher period-end equity market levels and new business onboardings.\nNew asset servicing wins increased to $1.2 trillion for the quarter, including the large Alpha mandate with Invesco announced in April.\nWe reported two new Alpha wins in the second quarter, taking the total number of Alpha clients to 15.\nAfter the second-quarter close, we also entered into an Alpha mandate with Legal & General.\nWhile Invesco is an example of how Alpha is helping to expand and deepen existing client relationships, the Legal & General win demonstrates how the Alpha strategy is also helping us forge new client relationships with the world's most sophisticated investors.\nOur experience to date gives us confidence that Alpha relationships will drive stronger retention rates for existing clients, while also allowing us to broaden and deepen those relationships as we add additional products and services to these existing mandates.\nAdditionally, we are signing Alpha clients that are new to State Street demonstrating that Alpha is enabling us to reach new clients and deliver front, middle and back office services in a differentiated manner.\nWe also created new relationships to help drive revenue growth across client segments and regions.\nFor example, earlier this week, we announced a new strategic alliance with First Abu Dhabi Bank.\nThe alliance will create a full service enterprise offering for institutional investors in the Middle East and North Africa region.\nIt will provide investors with extensive reach into more than 100 markets around the world.\nClients will have access to State Street's full suite of front, middle and back office capabilities in addition to our extensive data management and analytic solutions, which seamlessly integrates with First Abu Dhabi Bank's regional suite of security services products, local expertise and regional direct custody network.\nAt CRD, annual recurring revenue increased 11% year-over-year to $230 million and we remain pleased with how the business is performing while also enabling and propelling our Alpha strategy.\nGlobal Advisors continued to demonstrate strong performance.\nAUM increased to $3.9 trillion and management fees increased to $504 million, both records, benefiting from strong second quarter flows of $83 billion across the ETF, institutional and cash businesses as we continue to leverage the strengths of our asset management franchise.\nIn ETFs, our low cost and sector funds as well as our ESG and commodity products, continue to enjoy good market share with low cost ETFs expanding share in the second quarter.\nAnd in institutional, our sales force and relationship management realignment coupled with a strong product set led to good revenue growth.\nTurning to our balance sheet and capital, we returned over $600 million of capital to our shareholders during the second quarter, inclusive of $425 million of common share repurchases, consistent with the limit set by the Federal Reserve.\nI am pleased with yet another strong performance under this year's annual stress test.\nThe new SCB framework provides us with additional flexibility to manage our capital base.\nAs examples, yesterday, we announced that our Board of Directors has approved a 10% increase of our third quarter common dividend to $0.57 per share and authorized a common share repurchase program of up to $3 billion during the third quarter of 2021 through the fourth quarter of 2022.\nTo conclude, we had a very strong quarter.\nBusiness momentum is building and we are demonstrating meaningful progress toward our medium-term financial targets.\nAs I look ahead, to support our strategic vision and help us achieve those targets, we are continuing to prioritize improvement in our fee revenue growth while controlling costs by transforming the way we work and building a higher performing organization for the future.\nI'll begin my review of our second quarter results on Slide 4.\nWe reported earnings per share of $2.07, or $1.97 excluding the $0.10 positive impact of notable items which was driven by a previously announced sale of a majority stake in a legacy business.\nOn the left panel of the slide you can see strong results.\nAs we continue to drive fee revenue growth while controlling expenses, we delivered pre-tax margin expansion and solid earnings growth.\nAs a result of the weaker dollar relative to the year-ago period, we continue to show our year-on-year results excluding the impact of currency translation in the right column.\nWe also show results excluding notable items on the bottom of the slide.\nTurning to Slide 5, you'll see our business volume growth.\nPeriod end AUC/A increased 27% year-on-year and 6% quarter-on-quarter to a record $42.6 trillion.\nBoth the year-on-year and quarter-on-quarter increases were largely driven by higher period end market levels, net new business growth and client flows.\nAt Global Advisors, AUM increased 28% year-on-year and 9% quarter-on-quarter to $3.9 trillion, also a record.\nThe year-on-year and quarter-on-quarter increases were both primarily driven by higher period-end market levels, coupled with net inflows.\nTurning to Slide 6, you can see another quarter of strong business momentum.\nSecond quarter servicing fees increased 10% year-on-year, including currency translation, which was worth approximately 3 percentage points year-on-year.\nThe increase reflects higher average market levels, positive net new business onboarded and client flows, only partially offset by normal pricing headwinds and the absence of elevated prior-year client activity.\nAUC/A wins totaled $1.2 trillion in the second quarter, substantially up from recent quarters, primarily as a result of the large Alpha client mandate announced last April that Ron just mentioned.\nAUC/A won, but yet to be installed also amounted to $1.2 trillion at quarter-end as we smoothly onboarded over $400 billion of client assets this past quarter.\nWe remain focused on reigniting business growth across both client segments and regions.\nThis quarter, we had strong growth in the EMEA region, aided by our intense coverage efforts, which now extend to approximately 350 overall of our top clients.\nWe continue to estimate that we need at least $1.5 trillion in gross AUC/A wins annually in order to offset typical client attrition and normal pricing headwinds and we've clearly exceeded that mark this year.\nI will remind you that inflations typically occur in phases and over time and deals will vary by fee and product mix.\nAt this time, we expect the current won but yet to be installed AUC/A will be converted over the coming 12 to 24-month time period with the associated revenue benefits beginning in 2022 and the majority occurring in 2023.\nAs we said in June, we are pleased with our pipeline and our momentum.\nTurning to Slide 7.\nSecond quarter management fees reached a record $504 million, up 14% year-on-year inclusive of a 2 percentage point impact from currency translation and were up 2% quarter-on-quarter resulting in an investment management pre-tax margin approaching 35%.\nBoth the year-on-year and quarter-on-quarter management fee performance benefited from higher average equity market levels and strong ETF flows.\nThese benefits were only partially offset by the run rate impact from the previously reported idiosyncratic institutional client asset reallocation, as well as about $25 million of money market fee waivers this quarter.\nWhile we previously estimated that money market fee waivers on our management fees could be approximately $35 million per quarter, as a result of the recent improvement in short-end rates following the June FOMC meeting, we now expect that they will be about $20 million to $25 million per quarter for the rest of the year, which is about a third lower than we had previously expected.\nGlobal Advisors recorded solid flows across institutional, ETFs and cash for the quarter with the total amount -- amounting to $83 billion.\nWe have taken a number of actions to deliver growth in our long-term institutional and ETF franchises, which are driving this momentum as you can see on the bottom right of the slide.\nTurning to Slide 8, let me discuss the other important fee revenue lines in more detail.\nWithin FX trading services, we are pleased that we continue to generate strong client volumes which remain above pre-pandemic levels in the second quarter.\nRelative to a strong second quarter in 2020, FX revenue fell 12% year-on-year as declining FX market volatility compared to the COVID environment last year more than offset higher client volumes.\nFX revenue was down 17% quarter-on-quarter, driven by a moderation of client volumes from index rebalances experienced in the first quarter and lower market volatility.\nOur securities finance business recorded strong revenue growth with fees increasing 18% year-on-year and 10% quarter-on-quarter, mainly as a result of higher enhanced custody and agency balances as client leverage rebounded.\nFinally, second quarter software and processing fees were down 12% year-on-year, largely due to the absence of prior-year positive mark-to-market adjustments.\nSoftware and processing fees increased 24% quarter-on-quarter, mainly as a result of higher CRD revenues.\nMoving to Slide 9, I'd like to provide some further updates on our CRD and Alpha performance.\nWe delivered strong stand-alone CRD results in the quarter, primarily reflecting higher client renewals and episodic fee revenues.\nThe more durable SaaS and professional services revenues continued to grow nicely and were up 10% year-on-year resulting in an increase in stand-alone annualized recurring revenue to $230 million.\nThis quarter marks the three-year anniversary since announcing the CRD acquisition and we are very pleased with how the business has performed.\nOn the bottom right of the slide we show some of the second-quarter highlights from State Street Alpha mandates.\nWe reported two new Alpha mandates during the second quarter as the value proposition continues to resonate well with clients.\nNotably, since inception through second quarter, we now have five Alpha client mandates that are live.\nAlthough Alpha deals usually take somewhat longer to implement given the size and scope, the pay-off outweighs the longer implementation period as we are able to further expand share of wallet to generate attractive revenue growth rates and increase the contract lengths which can be up to 10 years in length for Alpha services that span the front and middle office.\nTurning to Slide 10, second quarter NII declined 16% year-on-year, mainly as a result of the effects of lower interest rate environment on our investment portfolio yields and sponsored member repo product.\nThese impacts were partially offset by balance sheet expansion, driven by higher balances.\nRelative to the first quarter however, NII was flat as lower investment portfolio yields and the impact of short-end rates were offset by further expansion of the investment portfolio and lending activity.\nOn the right side of the slide, we show the growth of our average balance sheet during the second quarter.\nTotal average deposits increased by $16 billion in the second quarter or an increase of 7% quarter-on-quarter, reflecting the continued impact of the Federal Reserve's expansionary monetary policy.\nWhile we continue to remain mindful of OCI risk in the current rate environment, we tactically added about $5 billion quarter-on-quarter to our investment portfolio a few months ago, before the recent downdraft in rates.\nWe also increased our average loan balances by approximately 5% quarter-on-quarter to over $29 billion, driven by higher utilization by asset managers and private equity capital call client.\nWe also have a number of initiatives in play to reverse and reduce this recent deposit uptick that we saw during the quarter.\nTurning to Slide 11.\nSecond quarter expenses, excluding notable items, increased 2% year-on-year, mainly driven by the weaker dollar.\nExcluding the impact of notable items and currency translation, total expenses were down nearly 0.5 percentage point year-on-year as productivity savings for the quarter more than offset higher revenue related expenses and targeted investments in client onboarding costs.\nCompared to 2Q '20 on a line-item basis and excluding notable items and the impact of currency translation, compensation employee benefit costs was flat as we reduced high-cost location headcount, which offset higher medical costs as claims began to normalize to pre-pandemic levels.\nInformation systems and communications were up 5% due to continued investment in our technology estate.\nTransaction processing was up 10%, primarily driven by higher revenue related expenses for sub-custody balances and market data costs.\nOccupancy was down 13% reflecting benefits from our footprint optimization efforts and some timing benefits.\nAnd other expenses were down 11% primarily driven by lower-than-usual professional services fees.\nRelative to the first quarter, expenses were primarily impacted by the absence of seasonal and deferred compensation reported in the first quarter.\nSo, overall, we are pleased with our continued ability to demonstrate expense discipline as we have effectively managed total expenses ex-notables and currency down year-on-year in the second quarter while driving strong total fee revenue growth.\nMoving to Slide 12.\nOn the right of the slide, we show our capital highlights.\nWe are pleased with our performance under this year's CCAR with the calculated Stress Capital Buffer well below the 2.5% minimum, resulting in a preliminary SCB at that floor.\nThe new SCB framework provides us with additional flexibility to deploy our capital base in a number of different ways, including investment opportunities, dividends and buybacks.\nFor example, yesterday, we announced a 10% increase to our third quarter common dividend to $0.57 per share and our Board has authorized a common share repurchase program of up to $3 billion from the third quarter of 2021 through year-end 2022.\nIn addition, we are also pleased that the Federal Reserve has provided State Street with one additional year until January 1, 2024, to retain its current G-SIB surcharge of 1%.\nTo the left of the slide, we show the evolution of our CET1 and Tier 1 leverage ratios.\nAs you can see, we continue to navigate the operating environment with strong capital levels in excess of the requirements.\nAs of quarter-end, our standardized CET1 ratio improved by 40 basis points quarter-on-quarter to 11.2% as we had expected and sits above the upper end of our 10% to 11% CET1 target range.\nOur Tier 1 leverage ratio remains well above the regulatory minimum, but declined by 20 basis points quarter-on-quarter to 5.2%, primarily as a result of the further increase in average client balances as the Fed's quantitative easing continues.\nWe continue to think that a Tier 1 leverage ratio in the 5s as appropriate for our business model.\nAnd we can operate the lower end of this range for a number of quarters while we consciously limit and reduce client deposits and offer them a range of liquidity alternatives.\nTurning to Slide 13.\nIn summary, our quarterly performance demonstrates solid business momentum on our top line and the scale we are driving within our operating model.\nTotal fee revenue was up almost 6% year-on-year and exceeded $2.5 billion for the first time with double-digit growth in servicing and management fees, despite the year-on-year headwind from the strong FX trading services results we had in the second quarter of last year during COVID.\nOur expenses remain well-controlled as a result of our productivity program.\nAs a result, we are able to drive pre-tax margin and ROE close to our medium-term targets, notwithstanding the low rate environment.\nNext, I'd like to update you on our economic outlook for the remainder of the year and provide our current thinking regarding the third quarter outlook.\nAt a macro level, our rate view broadly aligns the current forward rate curve and assumes that short-end rates remain low and there is some modest steepening to the yield curve.\nWe are also assuming global equity markets will be relatively flat to quarter-end for the rest of the year as well as continuing normalization of FX market activity.\nIn terms of the third quarter of 2021, we expect overall fee revenue to be up 7% to 8% year-over-year with servicing and management fees each expected to be up 7% to 9% year-over-year.\nThis means full year fee guidance is likely to be better than the upper end of the full-year range we previously provided.\nRegarding NII, despite the recent flattening in the yield curve, we have seen an increase in short-end market rates and we now expect a modestly improved quarterly NII range of $460 million to $470 million per quarter for the rest of the year, assuming rates do not deteriorate and premium amortization continues to attenuate.\nTurning to expenses, we remain confident in our ability to effectively manage core operating costs.\nWe expect that third quarter expenses ex-notable items will be flattish, plus or minus 0.5 percentage point year-over-year in 3Q.\nThese fee and expense guides for 3Q include approximately 1 point of currency translation year-over-year.\nOn taxes, we expect that the 3Q '21 tax rate will be in the middle of our full-year range of 17% to 19%.\nAnd with that, let me hand the call back to Ron.\n", "role": "user" }, { "content": "state street - q2 earnings per share $2.07.\nannounced common share repurchase program of up to $3 billion.\ninvestment servicing auc/a as of quarter-end increased 27% to $42.6 trillion.\ninvestment management aum as of quarter-end increased 28% to $3.9 trillion.\nstate street corp - q3 2021 cash dividend of $0.57 per share of common stock, an increase of 10% from $0.52 per share of common stock in prior quarter.\n", "role": "assistant" } ]

[ { "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: Let's dive right into a discussion about the quarter.\nThere were a number of puts and takes impacting our results in Q2, and Garth and I will spend time walking through them.\nHowever, the fundamentals of our business remain solid, and consumer demand for our brands, particularly our core beer portfolio, remains strong.\nIn addition, we repurchased a significant number of shares in Q2 at prices that are favorable as we believe Constellation stock is undervalued at current levels.\nWe've received some feedback from investors on this topic in recent weeks, and we'll address key themes that emerge from these discussions in our remarks.\nAs we walk through our Q2 performance and outlook for the remainder of the year, there are several key takeaways we'd ask you to keep in mind.\nNumber one, the momentum of our core imported beer brands provides a point of competitive strength versus industry peers as we're the leading share gainer in the high end of the U.S. beer market.\nThe majority of our growth continues to be driven by Modelo Especial, supported by strong consumer demand for Corona Extra and Pacifico, and we expect this to continue for the foreseeable future.\nWe continue to believe that Modelo Especial in particular, has a long runway for growth, given the steadily increasing household penetration for this brand among non-Hispanic consumers and continued strong velocity.\nNow we've admittedly had some supply challenges this fiscal year driven by several external factors, the most relevant being the ongoing robust demand for our beer brands.\nWe expect to return to more normal inventory levels by the end of Q4.\nDespite these challenges, we continue to be on track to deliver a better-than-expected year for our beer business.\nIn fact, our strong performance to date gives us the confidence to increase guidance for our beer business as we now expect to achieve 9 to 11% net sales growth and 4 to 6% operating income growth for fiscal '22.\nOur view is reinforced by recent 12-week IRI trends showing the Constellation's beer business is significantly outpacing the high end and total U.S. beer industry.\nAs it relates to our hard seltzer business and building off our last point, we're unique in our position versus our competitors in this space as our primary growth is coming from our core beer portfolio, and we're not reliant on the growth of hard seltzers and AVAs to achieve the medium-term growth goals for our beer business.\nThe hard seltzer landscape has shifted considerably in recent months.\nTherefore, we've lowered our growth expectations for Corona Hard Seltzer resulting in a sizable obsolescence charge taken for Q2, which includes our view of the total impact for the fiscal year.\nGoing forward, we plan to focus on competing in this space in where we offer meaningful points of differentiation and unique value to consumers.\nI'll have more to say on this topic in a moment.\nNumber three, while our wine and spirits business was challenged in the quarter by underperformance of several mainstream brands due to tough COVID comparisons, our recent route-to-market transition, and supply chain challenges for our imported wine brands, we continue to see the benefits of our premiumization strategy take hold.\nWe're performing well in the high end of the wine segment, which represents the vast majority of expected industry growth over the next several years, and we continue to strengthen our capabilities in emerging growth channels key to long-term success such as e-commerce and DTC.\nNumber four, we continue to enhance our approach to innovation with a more consistent, strategic, disciplined, and consumer-led approach with a focus on high-growth segments aligned with consumer trends.\nOur innovation agenda is designed to complement our organic growth, and we're developing sustainable products that are incremental to our business while further premiumizing our portfolio into margin-accretive price points.\nOver the years, we've been able to extend some of our brands into new spaces, recruiting new drinkers and expanding occasions, and we've achieved a healthy balance between growth from the core and from innovation.\nNumber five, our capital allocation strategy remains unchanged since I assumed the role of CEO almost three years ago.\nSince then, we've made significant progress in reducing debt and achieving our goal of returning 5 billion in value to shareholders by the end of fiscal year '23 through a combination of dividends and share repurchases.\nIn fact, to date, this fiscal year, we have repurchased 1.4 billion of our shares.\nAnd when combined with our dividend, we have achieved nearly 60% of our 5 billion goal.\nTo be clear, our shareholder value equation is based on outsized growth combined with return of dollars to shareholders.\nOne of the most important capital allocation priorities is to continue reinvesting in our beer business to keep up with robust demand for our products.\nDespite initial challenges associated with the build-out of a third brewery in Mexico, we have moved on to other capacity alternatives in the country.\nOur expansions in Nava and Obregon helped ensure we have adequate production capacity for the medium term and will create much needed redundant capacity that better enables us to manage through unexpected events like we've experienced these past two years.\nWe continue to work with the Mexican government to solidify plans for a new brewery in Southeastern Mexico with adequate water supply and an available talented workforce.\nNow let's move on to a more fulsome discussion about our performance within the quarter.\nDuring the quarter, the Modelo brand family posted depletion growth of 17% for the quarter and single-handedly drove total import share gains in IRI channels on a dollar basis.\n2 beer brand in dollar sales in the entire U.S. beer category, Modelo Especial is the only major beer brand growing household penetration and is leading the way as the No.\n1 share gainer among high-end brands.\nModelo Chelada has become the No.\n2 brand family in the Chelada space, posting depletion growth of more than 50% and for the second quarter.\nCorona Extra continues its growth trajectory as the second fastest share gainer and the No.\n1 loved brand in the import category, driven by a return to growth in the on-premise, which currently represents approximately 11% of our beer business volume.\nIn addition to the comments I made earlier about our hard seltzers, I'd like to discuss industry trends and our refreshed approach to this sector of the beer market going forward.\nIn the short to medium term, we believe that there will be consolidation within the hard seltzer/ABA space primarily due to the chaos of SKU and brand proliferation with too many new entrants that don't have the velocity or consumer demand to warrant shelf space.\nWe also believe this subcategory will evolve beyond low-calorie, low-carb offerings, and open up to more distinctive consumer value propositions that include things like more flavor, different alcohol bases, and functional benefits.\nWe've already started to innovate in this way with distinct products like Refresca and Lemonada.\nWe've also discovered that consumers are looking for more robust taste and flavor in their seltzers.\nAs a result, we will be altering the flavor and taste profile of our seltzer portfolio to better align with the changing consumer preferences while also introducing single-serve packages to better serve the growing convenience channel, our largest trade channel.\nAnd we have a solid lineup of innovation that we have yet to introduce.\nWe have several great examples of our innovation strategy at work within our wine and spirits portfolio.\nThis business continues to drive growth from recently launched innovations, including Meiomi cabernet sauvignon, Kim Crawford Illuminate, the Prisoner cabernet, and chardonnay, all of which are among the top 10 innovations across high-end wine in IRI channels during the quarter.\nAnd our wine and spirits innovation pipeline is ready to go with further consumer-led new products as we head into our peak-selling period, including the expansion of our SVEDKA ready-to-drink platform and the introduction of Woodbridge wine seltzers and box wines.\nIn addition to driving growth through innovation, we're making progress with our core wine and spirits portfolio despite the previously mentioned challenges.\nWe continue to take price to further premiumize our mainstream portfolio as these steps are critical to maintain brand equity and to improve profitability, which will serve our brands well over the long term.\nOur high-end super premium plus portfolio grew net sales double digits during the quarter.\nIn on-premise channels, our investments are paying off with enhanced wine offerings at major restaurant chains.\nWe're driving in critical emerging channels like three-tier e-commerce and direct-to-consumer, which continued to drive high-end growth, where we're outpacing category performance at key accounts, such as Instacart, Amazon, and Albertsons with the resurgence of online shopping due to the COVID pandemic.\nFor example, Constellation's fine wine share has expanded significantly in the latest 12 weeks due to the robust growth of the Prisoner on Instacart and Robert Mondavi Winery on wine.com.\nIn fact, e-commerce and DTC sales are up nearly three to four times versus 2019, and they comprise roughly 3 to 5% of our business versus 1% pre pandemic.\nGoing forward, we will continue to focus on becoming a category leader in e-commerce and DTC as we believe these channels will make up a significant portion of our mix over time and will continue to be an opportunity for high-end growth.\nharvest, which is about 70% complete at this point, while our production facilities, wineries, and tasting rooms remain untouched by recent wildfire activity.\nThis quarter, our ventures activities included investments in adaptogen-infused hot water and Aaron Paul and Bryan Cranston's artesanal Dos Hombres mezcal.\nHop water is a nonalcoholic calorie-free sparkling water, infused with adaptedgens and new tropics to provide the perfect balance of function and flavor for health-conscious consumers.\nThe nonalcoholic segment of total beverage alcohol grew almost 40% in 2020 in dollar sales through IRI channels.\nAnd according to IWSR research, 60% of consumers are switching between nonalcoholic or low alcoholic and full-strength drinks within the same occasion.\nDos Hombres is an award-winning handcrafted mezcal brand created by Breaking Bad co-stars who have developed an exceptional liquid that receives frequent praise from both the industry and consumers.\nThe overall U.S. mezcal category grew 14% in 2020 according to IWSR, and super premium mezcal priced above $30 per barrel is projected to be the largest and fastest-growing segment within the category.\nMoving on to Canopy Growth.\nWe're encouraged by the recent introduction of the cannabis opportunity in Administration Act draft bill, which was introduced by Senators Booker, Wyden, and Schumer in July.\nMore than 90% of Americans are in favor of cannabis legislation for medical purposes and two-thirds of those are in favor of legalizing for recreational use as well.\nIn fact, nearly two out of three Americans already have legal cannabis access as 37 states have legalized for medical use and 18 states for adult use.\nWhile we're optimistic about federal legislation within this congress, Canopy is not waiting for this reality to materialize.\nCanopy's U.S. business grew 91% year over year in their most recent quarter, driven by robust consumer demand for their CBD and CPG products, including Martha Stewart-branded products, quatro beverages, stores and vape products, and BioSteel's new RTDs.\nbusiness is expected to grow significantly as it benefits from increasing distribution and new product introductions.\nOnce THC permissibility becomes a reality in the U.S., Canopy expects their U.S. business to make a substantially greater contribution to their results.\nnon-THC business with more opportunities in a world post federal permissibility.\nOverall, we're comfortable with Canopy's progress, and we're looking forward to the growth and legalization prospects for the business.\nIn closing, I'd like to reiterate our main takeaways for this quarter.\nFirst, continued strong demand for our core imported beer brands provides a point of competitive strength versus industry peers led by the No.\n1 share gainer in the beer category, Modelo Especial, which we feel has ample runway for growth well into the future, given the steadily increasing household penetration rates among non-Hispanic consumers and continued strong velocity.\nThe short-term supply disruption to our imported beer business does nothing to dampen our long-term prospects as we expect to return to more normal inventory levels by the end of Q4, and we're on track to deliver a better-than-expected year for our beer business.\nSecond, we continue to see the hard seltzer and broader ABA space as a meaningful sector within the beer market.\nGoing forward, we plan to focus on competing in this space in ways where we can offer meaningful points of differentiation and unique value to consumers, and we have some upcoming innovation in this space that we're optimistic about.\nNumber three, we continue to see benefits of our wine and spirits premiumization strategy take hold.\nWe're performing well in the higher end of the wine segment, and we continue to strengthen our capabilities in emerging growth channels key to long-term success, such as e-commerce and DTC.\nFourth, we continue to enhance our approach to innovation with a more consistent, disciplined, and consumer-led approach focused on high-growth segments aligned with consumer trends to complement our organic growth while developing sustainable products that are incremental to our business at margin-accretive price points.\nAnd fifth, and certainly not least, our shareholder value equation continues to be based on outsized growth combined with the return of dollars to shareholders.\nAnd let me reiterate, our capital allocation strategy remains unchanged.\nWe remain committed to our goal of returning 5 billion in value to shareholders by the end of fiscal year '23 through a combination of dividends and share repurchases.\nOur strong operational performance and cash flow generation allowed us to make significant share repurchases in Q2 aligned with our commitment, which contributed to the increase in our earnings per share guidance for the year.\nAt the same time, we remain committed to continuing to reinvest in our business with an emphasis on our beer business to keep up with the robust demand for our products.\nQ2 certainly reflected yet another strong quarter of marketplace performance for our beer business.\nDue to continued robust consumer demand for our core beer portfolio, we now expect to exceed our initial, top line, and operating income targets for our beer business.\nAdditionally, our strong cash flow generation enabled us to continue to repurchase shares during the quarter.\nAnd through September, we've repurchased 6.2 million shares of common stock for $1.4 billion.\nAs a result, we've increased our full-year fiscal 2022 comparable basis diluted earnings per share target, and we now expect to be in the range of $10.15 to $10.45.\nThis range excludes Canopy equity and earnings impact and reflects the increase in beer operating income guidance and decrease in the average -- in the weighted average diluted shares outstanding based on shares repurchased through September partially offset by an increase in the tax rate for fiscal year 2022.\nNow let's review Q2 performance and our full-year outlook in more detail, where I'll generally focus on comparable basis financial results.\nNet sales increased 14%, driven by shipment volume growth of nearly 12% and favorable price partially offset by unfavorable mix.\nDepletion volume growth for the quarter came in above 7%, driven by the continued strength of Modelo Especial and Corona Extra, as well as the continued return to growth in the on-premise channel.\nDepletion trends tempered in Q2 versus Q1, driven by out-of-stocks due to ongoing robust consumer demand, as well as lost shipping days for some of our distributors due to severe weather events, including hurricanes and wildfires.\nWe estimate that these factors hampered Q2 growth by approximately two to three points.\nAs Bill mentioned, on-premise volume accounted for approximately 11% of the total beer depletions during the quarter and grew strong double digits versus last year.\nAs a reminder, the on-premise accounted for approximately 15% of our beer depletion volume pre COVID and accounted for only 6% of our depletion volume in Q2 fiscal 2021 as a result of the on-premise shutdowns and restrictions due to COVID-19.\nSelling days in the quarter were flat year over year and will also be flat in Q3.\nWholesaler depletions continued to outpace cases shipped during Q2, resulting in a lower-than-normal distributor inventory on hand at the end of the quarter.\nTo rectify this gap, shipment case volume is expected to exceed depletion case volume throughout the second half of the fiscal year, resulting in a gradual improvement of distributor inventories during Q3 and Q4 as inventories are expected to return to normal levels by the end of the fiscal year.\nMoving on to beer margins.\nBeer operating margin decreased 530 basis points versus prior year to 37.2%.\nBenefits from favorable pricing, mix, and foreign currency were more than offset by unfavorable COGS, increased marketing investments, and higher SG&A.\nThe increase in COGS was driven by several headwinds that include the following: First, a Q2 obsolescence charge of $66 million.\nAs a result of our production constraints earlier in the year, we prebuilt hard seltzer inventory in advance of the key summer selling season based on our best estimates for fiscal year 2022.\nDue to the overall slowdown in the hard seltzer category in the U.S., some of that growth is not going to materialize in the fiscal year, resulting in excess inventory.\nSecond, increased brewery costs, driven by labor inflation in Mexico, increased headcount, and incremental spend related to capacity expansion.\nThird, a step-up in depreciation expense, largely due to the incremental 5 million hectoliters at Obregon.\nAnd finally, as expected, increased material costs predominantly driven by increased commodity prices and inflationary headwinds on pallets, cartons, and aluminum.\nThese COGS headwinds were partially offset by favorable fixed cost absorption.\nMarketing as a percent of net sales increased 150 basis points to 9.9 versus prior year as we returned to our typical spending cadence, which is weighted more heavily toward the first half of the fiscal year.\nAs a reminder, marketing spend in the first half of the prior year was significantly muted resulting from COVID-19-related sporting and sponsorship event cancellations and or postponements.\nLastly, the increase in SG&A was primarily driven by an increase of approximately $12 million in legal expenses, as well as higher compensation and benefits.\nAs mentioned earlier, we are increasing full-year fiscal 2022 net sales and operating income guidance for our beer business.\nWe are now targeting net sales growth of 9 to 11%, reflecting the strength of our core beer portfolio and pricing actions that are higher than initially planned.\nFurthermore, we are now targeting operating income growth of 4 to 6%, which implies operating margin in the low to midpoint of our stated 39 to 40% range.\nPlease note that the updated guidance includes all obsolescence charges and legal expenses incurred in the first half of the fiscal year.\nWe continue to expect our gross margin to be negatively impacted for the fiscal year as benefits from price and our cost savings agenda are expected to be more than offset by several cost headwinds.\nHowever, the mix and magnitude of these headwinds have changed from our original assumptions presented at the beginning of our fiscal year.\nFirst, we're still estimating a significant step-up in depreciation expense, which began to accelerate in Q2.\nHowever, some of this depreciation started later in the year versus planned.\nAs such, we are now estimating total beer depreciation expense to approximately $250 million, an increase of approximately $55 million versus last year, or a $10 million decrease versus our original planned estimate.\nSecond, we still expect expect substantial inflationary headwinds across numerous cost components to continue during the second half of our fiscal year as commodity prices continue to rise, specifically across aluminum, diesel, and pallets resulting from a rather volatile inflationary market.\nAnd third, due to the growth moderation within the hard seltzer market, as well as lower ACV levels across the category on new items, we do not expect our hard seltzer SKUs to meet originally planned volume expectations, which results in a positive mix benefit versus our original estimate.\nConversely, due to the slowdown in the hard seltzer sector, excess inventory resulted in a fiscal year-to-date obsolescence charge of approximately $80 million.\nPlease note that these losses cover our hard seltzer obsolescence exposure and as such, we do not expect to take any additional obsolete charges in the back half of the fiscal year for hard seltzers.\nFrom a marketing perspective, we continue to expect full-year spend as a percentage of net sales to land in the 9 to 10% range, which is in line with fiscal 2021 spend of 9.7% of net sales.\nLooking ahead to Q3.\nI'd like to remind everyone of the difficult buying overlaps we will encounter as we're facing a 28% and 12% growth comparison for shipment volume and depletion volume, respectively.\nAdditionally, we expect to perform our normal annual brewery maintenance during Q3, which will result in less throughput versus Q2 as we have to shut down production for a few days.\nAs such, we are estimating low single-digit shipment volume growth for Q3.\nMoving to wine and spirits.\nQ2 fiscal 2022 net sales declined 18% on shipment volume down 36%.\nExcluding the impact of the wine and spirits divestitures, organic net sales increased 15%, driven by organic shipment volume growth of nearly 6%, favorable mix and price and smoke-tainted bulk wine sales.\nRobust mix driven by the Prisoner brand family, Meiomi, and Kim Crawford accounted for approximately nine points of the year-over-year organic net sales growth.\nShipments were negatively impacted by port delays for our international brands and route-to-market changes, which also impacted depletions.\nDepletion volume declined 2% during the quarter and was additionally impacted by the challenging overlap the consumer pantry loading behavior especially for our mainstream brands that experienced robust growth during the beginning of the COVID-19 pandemic.\nHowever, as we head into the second half of the fiscal year, we feel as though most of these challenges are behind us and expect shipment volume and depletion volume to generally align in the second half of fiscal 2022.\nMoving on to wine and spirits margins.\nOperating margin decreased 620 basis points to 19.7% as mix benefits from the existing portfolio and divestitures combined with favorable price were more than offset by increased marketing and SG&A spend, higher COGS, and margin-dilutive smoke-tainted bulk wine sales.\nHigher COGS were driven by unfavorable fixed cost absorption and increased transportation costs.\nThese headwinds were partially offset by lower great raw materials and other cost savings initiatives.\nKeep in mind that we're lapping lower SG&A spend in Q2 fiscal 2021 due to COVID and having smaller business post divestitures, resulting in significant marketing and SG&A deleveraging, impacting operating margins.\nFor full-year fiscal 2022, the wine and spirits business continues to expect net sales and operating income to decline 22 to 24% and 23 to 25%, respectively.\nThis implies operating margin to approximately 24%, which is flattish to prior year on a reported basis, which shows significant margin expansion on an organic basis.\nExcluding the impact of the wine experience divestitures, organic net sales is expected to grow in the 2 to 4% range.\nFrom a Q3 perspective, keep in mind that we are lapping unfavorable fixed cost absorption of $20 million in the prior year resulting from decreased production levels as a result of the 2020 U.S. wildfires.\nWe expect this favorable overlap to be partially offset by a continued increase in transportation costs and incremental unfavorable fixed cost absorption due to the New Zealand frost.\nAlso, we continue to expect marketing and SG&A deleveraging as a result of the wine and spirits divestitures.\nAs such, we expect marketing and SG&A to continue to be a significant drag to operating margins in Q3 fiscal 2022.\nNow let's proceed with the rest of the P&L.\nFiscal year-to-date corporate expenses came in at approximately $117 million, up 7% versus last fiscal year.\nThe increase was primarily driven by higher consulting services and compensation and benefits partially offset by a favorable foreign currency impact.\nWe now expect full-year corporate expenses to approximate $245 million, driven by increase in compensation and benefits.\nComparable basis interest expense for the quarter decreased 4% to approximately 96 million versus prior year primarily due to lower average borrowings.\nWe now expect fiscal 2022 interest expense to be in the range of 355 to $365 million.\nThe slight decrease versus our previous guidance reflects early redemption of higher interest rate debt, as well as $1 billion of senior notes issued in July at attractive rates.\nOur Q2 comparable basis effective tax rate, excluding Canopy equity earnings, came in at 21.8% versus 16.9% in Q2 of last year, primarily driven by the timing of stock-based compensation benefits and a higher effective tax rate on our foreign businesses.\nWe now expect our full-year fiscal 2022 comparable tax rate, excluding Canopy equity and earnings, to approximate 20% versus our previous guidance of 19%.\nThis increase is primarily due to a higher effective tax rate on our foreign earnings than originally estimated.\nI would also note that we expect stock-based compensation tax benefits to be weighted toward Q4.\nAs a result, we expect our Q3 tax rate to be higher than our full-year estimate at approximately 21%.\nWe also now expect our 2022 weighted average diluted shares outstanding to approximate 192 million, reflecting the impact of our September year-to-date share repurchases previously discussed.\nMoving to free cash flow, which we define as net cash provided by operating activities less capex.\nWe generated free cash flow of $1.2 billion for the first half of fiscal 2022, which is flat to prior year, reflecting strong operating cash flows offset by an increase in capex.\nCapex totaled $353 million, which included approximately $295 million of beer capex, primarily driven by expansion initiatives at our Mexico facilities.\nOur full-year capex guidance of 1 to 1.1 billion, which includes approximately 900 million targeted for Mexican beer operation expansions, remains unchanged.\nFurthermore, we continue to expect fiscal 2022 free cash flow to be in the range of 1.4 to $1.5 billion.\nThis reflects operating cash flow in the range of 2.4 to $2.6 billion and the capex spend previously outlined.\nIn closing, I want to iterate that while we had our fair share of challenges during the first half of our fiscal year resulting in several puts and takes impacting our results, the fundamentals of our business remain strong, and consumer demand for our products, particularly our imported beer portfolio, remains robust, providing us with strong momentum as we head into the second half of our fiscal year.\n", "role": "user" }, { "content": "constellation brands - updates fiscal 2022 reported basis earnings per share outlook to $0.30 - $0.60; increases comparable basis earnings per share outlook to $10.15 - $10.45.\nqtrly reported net sales $2,371 million, up 5%.\nconstellation brands - affirms fiscal 2022 operating cash flow target of $2.4 - $2.6 billion and free cash flow projection of $1.4 - $1.5 billion.\nbeer business now expects 9 - 11% net sales growth and 4 - 6% operating income growth for fiscal 2022.\nsees 2022 wine and spirits ; organic net sales growth 2% - 4%.\nconstellation - wine & spirits business continues to expect fiscal 2022 reported net sales & operating income decline of 22 - 24% & 23 - 25%, respectively.\n", "role": "assistant" } ]

[ { "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 turning the call over to Bill, similar to prior quarters, I would like to ask that we limit everyone to one question per person, which will help us to end our call on schedule.\nI hope you enjoyed the holidays and had an opportunity to enjoy some of our fine products in whatever form your celebrations took.\nI join other leaders across the country in condemning the violence that occurred, instead calling for a peaceful transfer of power that upholds our democracy and calling for peace, unity and stability as we move forward as a nation.\nNow, let's move on to a discussion of our business performance.\n2020 was certainly a challenging year, and like many of you, we are happy to turn the page.\nAs we do so, are mindful of the words of American novelist, James Lane Allen who said, adversity does not build character, it reveals it.\nThis is certainly the case for us.\nOur team rose to meet many challenges that surfaced in 2020.\nThis included overcoming many negative impacts from COVID, most notably a significant volume reduction in the on-premise, a slowdown in production of our Mexican beer portfolio heading into our busiest selling season, and threats to the safety, health and wellbeing of our team members.\nDespite all that, we continued to build momentum for our high-performing beer brands and launched Corona Hard Seltzer just as the pandemic started to gain steam in the U.S. Impressively, this remains one of the most successful new product launches in our company's history.\nWe continue to transform our wine and spirits business, leveraging innovation to drive higher growth and margin performance, while investing in capabilities needed to win long-term, such as DTC and three Tier e-commerce and successfully working through the complexities of our transaction with Gallo, which now that it is complete positions our wine and spirits business to become a more meaningful contributor to our overall growth profile.\nAnd we have also supported our communities by providing much needed assistance to those impacted by COVID and West Coast fires, by taking steps to achieve greater racial equity within our company, our industry and our surrounding communities, by once again earning recognition from the Corporate Equality Index as a great place to work for members of the LGBTQ community and by improving our Carbon Disclosure Project ratings for climate and water stewardship.\nWhile 2020 will be remembered for many things, what I will remember most is the character that was revealed by our leaders and team.\nPreventative measures implemented across our business helped mitigate impacts related to COVID, while maintaining full employment resource levels.\nI continue to be impressed by the – inspired by their resilience, focus and determination for driving the success of our business, and this bodes extremely well for our future.\nAs Garth and I run through the highlights of the quarter, there are three things that I ask you to keep in mind.\nNumber one, our beer business, the biggest catalyst of our growth remains extremely strong with accelerating trends in IRI.\nConsumer demand for our core beer brands continues to be robust.\nThe introduction of Corona Hard Seltzer has exceeded our expectations and we are back to gaining share in IRI as we continue to recover from the slowdown in production earlier this year due to COVID.\nNumber two, the completion of our transaction with Gallo to divest a number of our lower-end wine brands priced at $11 and below in retail has set the stage for accelerated growth and profitability, driving focus more fully on a tighter set of powerful brands that already have traction with consumers.\nAnd number three, despite the challenges faced in 2020, we are on track to deliver another strong year of growth, consistent with our long-term goals.\nI'm proud to say that our business remains healthy, allowing us to provide fiscal 2021 guidance that I am sure you will agree reinforces our strategic growth priorities and strong cash generation capabilities.\nThis is truly a testament to the strength of our team and our brands.\nSo let's dig a little deeper with a more fulsome discussion of our beer business performance in the quarter.\nDespite the challenges posed by COVID-19, including the continued partial closure of the on-premise, which was down about 35% year over year, Constellation's beer business continues to be one of the largest contributors to U.S. beer industry growth, delivering depletion trends of plus 12% in the quarter.\nAnd while some depletion growth we saw this quarter included benefits from inventory restocking, the portfolio delivered accelerating underlying trends that align with our sales growth projection of 7% to 9% for the foreseeable future, as consumer demand remains exceptionally strong for our products across the majority of the portfolio.\nIn fact, Constellation's beer portfolio posted IRI consumer takeaway dollar growth of more than 15% for the third quarter.\nAs you know, the COVID-related slowdown of our beer production in Mexico earlier this year has impacted this year's shipment and volume net sales trends.\nThe good news is that we've returned to a position of gaining share in IRI-tracked channels, as we continue to replenish inventories to more normal levels, which we expect to accomplish by fiscal year-end, a process that's actually taken a little longer than originally planned due to continued strong consumer demand for our brands.\nSo let's take a deeper dive into the key brands that drove these excellent trends for our beer business.\nThe Corona Brand family grew nearly 12% in IRI channels, led by particularly strong contributions from Corona Premier, Corona Hard Seltzer and Corona Extra.\nWith the launch of only one SKU to date, Corona Hard Seltzer continues to exceed our expectations and remains in a strong number-four position in the Hard Seltzer category.\nIt also has the distinction of being the second fastest moving Hard Seltzer among major seltzer brands, while continuing to maintain strong incrementality levels at nearly 90%.\nEarly next fiscal year, we plan to launch Corona Hard Seltzer Variety Pack No.\n2, which will offer consumers the same great Corona taste and refreshment attributes while expanding to new flavors, including pineapple, strawberry, raspberry and passion fruit.\n2 will be followed shortly thereafter by the introduction of another exciting new hard seltzer initiative.\nThese initiatives will be supported with impactful marketing campaigns to strengthen and build upon our hard seltzer portfolio.\n2020 marked the 30th consecutive year of Corona's iconic O' Tannenpalm commercial that was airing on TV during the holiday season.\nAs the longest-running beer commercial of all time, O' Tannenpalm demonstrates the strength and resilience of the Corona brand, including Corona Hard Seltzer, which continues to resonate with consumers and remains one of the most beloved consumer brands in the world.\nModelo Especial was the most significant growth contributor within our portfolio for the quarter.\nThis exceptional brand has excellent marketplace momentum and achieved the number one spot as the top share gaining imported beer in the U.S. beer category, with depletion growth of almost 20%.\nModelo continues to gain traction with general market consumers, while sustaining momentum with its core Hispanic consumer, driven by the authenticity of the brand and our marketing efforts.\nThe success of Modelo has been driven in part by impactful marketing initiatives that include high profile sports programming with the NFL, NBA, NCAA Football, Spanish language soccer, as well as an ongoing presence on Facebook and Instagram.\nFinally, Pacifico was also a top share gainer within the import segment during the quarter, continuing its strong momentum with depletion growth of nearly 20%.\nWe remain excited about the future growth prospects for this brand, as we continue to increase awareness and expand distribution beyond its core market of Southern California.\nAs we said before, Pacifico has all the makings of the next big brand in our beer portfolio.\nFrom an operational perspective, we plan to complete the 5 million hectoliter expansion of our Obregon facility in early fiscal 2022, which is a slight delay versus our original plans due to pandemic-related construction slowdowns for this project last year.\nAfter the completion of the Obregon capacity expansion, we believe we will have ample capacity at the Nava and Obregon breweries to meet consumer demand over the medium term, which includes more than doubling our seltzer production capacity heading into the next fiscal year.\nOverall, our excellent year-to-date results provide confidence in our ability to achieve 7% to 9% net sales growth for fiscal 2021.\nIn addition, we have increased our operating income growth target to 8% to 10% for the year.\nNow, let's move on to the quarterly results for our wine and spirits business.\nAs I mentioned earlier, the closure of the Gallo deal and other pending transactions will include a series of actions which positions our wine and spirits business for accelerated revenue growth and operating margin performance going forward.\nWe are grateful for the dedication of our Constellation team and the support and collaboration from Gallo and our business partners as we ensure a smooth transition.\nWith the completion of the divestitures, we believe the wine and spirits business is positioned to grow net sales low-to-mid single digits, while producing operating income growth ahead of net sales growth as the business works to take out stranded costs and execute against other cost, price mix and efficiency improvements to achieve a 30% operating margin over the medium-term.\nIn the near-term, we expect the remaining portfolio post the Gallo deal to generate fiscal 2021 net sales growth in the 2% to 4% range.\nWith these transactions now behind us, our team can more fully concentrate resources and focus behind a smaller set of more premium brands that better align with consumer-led premiumization trends.\nDuring the quarter, we continued to see the staying power of these trends as premiumization continues to drive elevated growth across the total beverage alcohol segment, further reinforcing the transformation strategy for our business.\nhigh-end wine category IRI channels, driven by Meiomi, Kim Crawford, The Prisoner Wine Company portfolio, all of which posted double-digit growth in IRI channels for the quarter.\nOverall, we expect these brands to be key growth drivers of the business long term and we are extremely bullish on the future runway for these higher growth higher-margin brands.\nDuring the quarter, successful new innovation initiatives also contributed to topline growth with Power Brand introductions like The Prisoner Cabernet Sauvignon and Chardonnay varietals, along with Meiomi Cabernet Sauvignon, which has become this year's biggest ultra-premium wine introduction in IRI channels based on dollar sales.\nIn addition, several other innovation initiatives launched earlier this year continued to gain traction and drive growth, including brands like Unshackled from The Prisoner Wine portfolio, Kim Crawford Illuminate and Woodbridge Spirits Barrel Aged varietals just to name a few.\nAnd let's not forget, Woodbridge wine go-packs, which became the number two innovation this year in IRI channels based on dollar sales.\nWe are also successfully driving our digital commerce initiatives which are gaining momentum.\nSince our acquisition of Empathy Wines, we have continued to make significant progress in leveraging their unique platform and capabilities across our portfolio within the DTC and three Tier e-commerce space.\nWe have launched several new DTC sites, leveraging the Empathy platform, including The Prisoner Wine Company, Double Diamond and Simi.\nWe believe this category will be a meaningful pillar of growth for Constellation in the future.\nIn fact, our wine Power Brands competing in the e-commerce space are outpacing the overall wine category as our early investment in the category is providing us with a meaningful first-mover advantage.\nDuring the quarter, we became the first CPG company to partner with Instacart to feature our products on Facebook ads, propelling Constellation to the next level of three Tier e-commerce media by enabling us to refine and optimize our ad creative and targeting based on real-time data.\nFurthermore, it is important to our growth and margin profile that we continue to invest in this space, since DTC is heavily weighted toward the higher end of the wine category as wines priced $20 up, make up nearly 90% of total DTC sales.\nNow, moving on to a discussion of our investment in Canopy Growth.\nWe are pleased with the progress the Canopy Growth team has made in defining and strategically positioning themselves in the U.S. CBD and legal THC cannabis markets, which will be beneficial upon U.S. federal permissibility, which was probably enhanced with the change in the Senate that's occurred in the last 48 hours.\nCanopy's core BioSteel beverages are now the official sports drink of the Dallas Mavericks, The Philadelphia 76ers and the Toronto Raptors and has several standout athlete and influencer partners, including the reigning NFL and Super Bowl MVP, Patrick Mahomes.\nIn fact, Canopy predicts that CBD beverages can grow at a 35% CAGR through 2025 as consumer realize the compelling benefits from CBD beverages.\nIn addition, BioSteel now has two exclusive partnerships with Manhattan Beer and the Reyes Beer Division, two key Constellation distributors, which will give Canopy the ability to gain traction in the U.S. market well ahead of its competitors in the emerging CBD space.\nIn September, Canopy launched Martha Stewart branded CBD product line, which is available on shopcanopy.com and several other outlets, including its new national distribution agreement with The Vitamin Shoppe retail locations, just in time for the holidays.\nCanopy will continue to seek strategic partnerships like the one with Martha Stewart to drive consumer awareness of these products.\nOverall, we believe that Canopy will be a significant long-term growth opportunity for Constellation, and we believe they remain best positioned to win long-term in the emerging cannabis space.\nIn closing, I want to take you back to the key takeaways mentioned earlier.\nI am extremely proud of the results of our team and what they have driven in the face of continued adversity.\nOur beer business, the biggest catalyst of our growth remains extremely strong with accelerating trends in IRI.\nThe completion of our transaction with Gallo to divest a number of lower end brands priced at $11 and below at retail has set the stage for accelerated growth and profitability.\nDespite the challenges faced in 2020, we are on track to deliver another strong year of growth consistent with our long-term goals.\nOur excellent third-quarter performance drove strong cash generation, which coupled with the finalization of the Gallo deal, enhances the financial profile of our business, enables further debt reduction and allows us to continue to execute our commitment to return $5 billion in value to our shareholders through fiscal 2023.\nOur business remains extremely healthy and these strong results are truly a testament to the strength of our team and our brands.\nConstellation Brands continues to demonstrate its resiliency by generating robust financial results and continuing to focus on debt paydown despite a volatile environment and various headwinds driven by COVID-19.\nSpecifically, during our third quarter, we generated comparable basis EPS, excluding Canopy Growth of $3.16, an increase of 32% versus prior year, delivered strong operating margin and accelerating double-digit depletion growth for our beer business and increased operating cash flow and free cash flow by 14% and 23% respectively, resulting in ongoing debt repayment and achievement of target net leverage, excluding Canopy equity earnings as we ended the quarter at 3.3 times.\nAs Bill mentioned, we are very pleased to have closed the transaction to sell a portion of our wine and spirits business to Gallo, including the Nobilo wine brand, as well as closing the transaction to sell our concentrate business to Vie-Del.\nAs an update, we expect to close the Paul Masson Grande Amber Brandy transaction within the next several weeks.\nPost transaction closing, we are left with a more focused and premium portfolio which nicely positions our wine and spirits business to produce low-to-mid single-digit topline growth, while migrating to an operating margin of 30% in the medium-term.\nIn total, at transaction close, Constellation received cash of approximately $560 million and the opportunity to receive up to $250 million in earnouts if brand performance targets are met over a three-year period after closing.\nWe also received approximately $130 million related to the closing of the Nobilo deal and expect to receive approximately $265 million from Sazerac upon closing the Paul Masson Grande Amber Brandy deal.\nIn total, from all transactions, we expect to receive approximately $955 million before tax and we expect the overall tax payments related to the transactions to be approximately $50 million, which are expected to be paid in fiscal 2022.\nThe cash proceeds from these transactions will facilitate further debt reduction, so we can continue to execute on our commitment to lower our leverage ratio and to return $5 billion in value to shareholders through dividends and share repurchases through fiscal 2023.\nThe cash proceeds received from Gallo reflect a significant inventory adjustment.\nDue to the prolonged timing of the Gallo deal, we were able to sell through a significant amount of finished goods inventory that was originally slated to go to Gallo.\nAlso, as indicated last quarter, we have flexibility in how we source grapes to mitigate any shortages due to wildfires.\nAs a result, we decided to retain a portion of bulk wine inventory as we had a higher and better use for it is a replacement for smoke-tainted bulk resulting from the wildfires.\nThose two factors resulted in substantial cash flow for Constellation throughout the fiscal year.\nBefore we jump into the quarterly financial results, I'd like to provide an update on guidance.\nDue to the continued resiliency of our business and further clarity of the operating environment, we have issued fiscal 2021 earnings per share guidance and are projecting our comparable basis diluted earnings per share to range between $9.80 and $10.05.\nThis range excludes future Canopy equity in earnings impact and accounts for the respective timing of the previous mentioned deal closures.\nNow, let's review Q3 performance and our full-year outlook in more detail, where I'll generally focus on comparable basis financial results.\nNet sales increased 28% and shipment volume growth of 27%.\nExcluding the impact of the Ballast Point divestiture, organic net sales increased 30% driven by organic shipment volume growth of 28% in favorable price and mix.\nDepletion volume for the quarter accelerated and achieved 12% growth as inventory levels improved and strong performance continued in the off-premise channel, which more than offset the impact of approximately 35% year-over-year reduction in the on-premise channel due to COVID-19.\nDepletions in the quarter benefited by approximately three to four points driven by inventory restocking.\nWhile underlying consumer demand for our products remained strong, the robust shipment and depletion volume growth experienced during the quarter was enhanced by inventory replenishment at both the distributor and retailer level.\nAs product inventories begin to rebuild from a COVID-related slowdown of Mexican beer production earlier in the fiscal year, this resulted in Q3 year-to-date organic shipment and depletion volume growth of approximately 6% to 7%, which is in line with our medium-term goals and accounts for volume timing between quarters.\nDue to continued robust consumer demand, product inventories are now expected to return to historically normal levels during the fourth quarter of fiscal 2021 as shipment volume is expected to continue to outpace depletion volume for the remainder of the fiscal year.\nMoving on to beer margins.\nBeer operating margin increased 330 basis points versus prior year to 42.6%.\nBenefits from marketing and SG&A as a percent of net sales, foreign exchange and the Ballast Point divestiture more than offset unfavorable operational and logistics costs.\nThe increase in operational cost was driven primarily by higher material costs, brewery compensation and benefits and depreciation, while the increased logistics costs resulted from strategic actions taken to expedite beer shipments from our breweries in order to accelerate inventory replenishment across the network.\nThese headwinds were partially offset by favorable fixed cost absorption.\nOn an absolute dollar basis, marketing dollars spent during the quarter increased versus prior year.\nHowever, due to favorable leverage driven by increased throughput at our breweries, marketing as a percent of net sales decreased 170 basis points to 9.3%.\nWe now expect full-year fiscal 2021 marketing as a percent of net sales to be in the nine to nine and a half percent range.\nNow, let's discuss balance of your expectations and full-year fiscal 2021 beer guidance.\nWe expect net sales growth of 7% to 9%, which includes one to two points of pricing within our Mexican product portfolio.\nExcluding the impact to Ballast Point, we expect organic net sales to land in the higher end of the 7% to 9% range.\nWe now expect fiscal 2021 operating income growth of 8% to 10%, which is an increase versus our prior guidance provided during the quarter.\nFurthermore, we expect full-year operating margin to range between 40% and 41%, achieving margin expansion versus prior-year operating margin of 40%.\nLooking at Q4, a couple of items to touch on from a margin perspective, as the beer segment will experience some headwinds during the quarter.\nFirst, as a reminder, we took selective price increases this fall as we decided to stagger our annual price increases, and in some instances, these increases will shift in the beginning of our fiscal 2022.\nAs a result, we saw pricing favorability muted in Q3, which will continue in Q4.\nSecond, from a COGS perspective, we will continue to incur incremental shipping costs due to actions we are taking to accelerate the replenishment of inventory across the network.\nWe also expect margin headwinds related to incremental headcount driven by the 5 million hectoliter expansion at Obregon, which is now expected to be completed in early fiscal 2022.\nLastly, we expect increased marketing spend to be the largest headwind to margins in the fourth quarter, driven by the shift in spend from the first half to the second half of the fiscal year.\nOur Q4 investment will focus on incremental media in both the NFL and NBA, incremental digital media, and continue to support behind Corona Hard Seltzer, which includes a holiday spot, leveraging the equity of the iconic Corona Extra O' Tannenpalm ad.\nThese incremental investments made during the holiday season and into the beginning of the calendar year will provide continued momentum as we head into fiscal 2022 and the spring selling season.\nMoving to wine and spirits.\nQ3 Power Brand depletion volume accelerated and achieved nearly 4% growth as these brands continue to win in the higher-end and across the majority of price segments in the U.S. wine category.\nOverall depletion volume declined 1%, which reflected the brands recently divested.\nWine and spirits net sales increased 10%, and shipment volume up 3% driven by our Power Brands, as well as strong innovation contributions.\nExcluding the impact of the Black Velvet divestiture, organic net sales increased 13%, reflecting shipment volume growth of approximately 7%.\nQ3 net sales results outperformed our previously communicated expectations, primarily due to incremental shipments from the brands recently divested, driven by the timing of the Gallo deal.\nOperating margin decreased 200 basis points to 24% as benefits from price and mix were more than offset by higher COGS and increased marketing, driven by the shift in spend from the first half.\nHigher COGS was mostly driven by unfavorable fixed cost absorption of $20 million resulting from decreased production levels as a result of the wildfires.\nThis came in slightly favorable versus what we originally anticipated and guided for the quarter.\nHowever, we still expect to incur approximately $10 million of costs in Q4 associated with unfavorable fixed cost absorption due to the wildfires.\nDuring the quarter, we also recognized a $26.5 million loss in connection with the writedown of certain grapes as a result of smoke damage sustained during the wildfires.\nHowever, these costs were excluded from Q3 comparable basis results.\nWe have insurance coverage that partially covers losses from grapes from our own vineyards and we are actively pursuing reimbursement from our insurance carriers.\nAs we continue to work through our processes, additional writedowns of certain bulk wine inventory maybe needed for the fourth quarter of fiscal 2021, which would be excluded from comparable basis results as well.\nAs a reminder, we do not expect a material impact to our ability to meet consumer demand for our excellent portfolio of products.\nEven though margins for the segment took a step back during Q3, the underlying fundamentals of our consumer-led premiumization strategy continue to shine through as significant mix and price were generated during the quarter.\nStrong shipment volume mix was driven by some of our fastest moving Power Brand such as Kim Crawford, Meiomi, The Prisoner Brand family and we are continuing to see benefits from the pricing actions we took on both Woodbridge and SVEDKA at the beginning of the fiscal year.\nMoving along to balance of the year expectations and full-year fiscal 2021 wine and spirits guidance.\nWe now expect fiscal 2021 wine and spirits net sales and operating income to decline 9% to 11% and 16% to 18% respectively, which reflects the closing of the Gallo transaction, including Nobilo and the concentrate transaction, as well as the Paul Masson divestiture.\nIn addition, we expect the retained portfolio post divestitures to grow net sales in the 2% to 4% range this year.\nLooking ahead to Q4, a couple of items to touch on from a wine and spirits segment perspective.\nFor Q4, we expect Power Brand depletion volumes to be muted due to the following.\nFirst, we are lapping strong Q4 fiscal 2020 Woodbridge volume buy-in ahead of the price increases that went into effect on March 1.\nSecond, we are also lapping solid Q4 fiscal 2020 innovation driven by the rollout of Unshackled.\nAnd finally, we are continuing our efforts to right-size inventory on hand at several chain retailers in key states to allow for better inventory management going forward.\nAlso let me provide an update on marketing cadence for the remainder of the fiscal year.\nIn the first half of the fiscal year, reduced marketing spend provided margin benefits due to timing as we shifted spend from the first half into the second half of the fiscal year.\nOriginally, we expected a majority of the shift to impact Q3.\nHowever, we now expect a shift in spend to be more equally distributed between Q3 and Q4.\nWe are also expecting incremental investment in Q4, creating strong support for our Power Brands as we propel our momentum into fiscal 2022.\nThis will result in an increase in year-over-year spend for Q4.\nNow, let's proceed with the rest of the P&L.\nFiscal year-to-date corporate expenses came in at approximately $171 million, up 15% versus Q3 year to date last year.\nThe increase was primarily driven by increased compensation and benefits, unfavorable foreign currency losses and an increase in charitable contributions primarily driven by COVID-19 support efforts, partially offset by reduced T&E spend.\nWe now expect full-year corporate expense to approximate $240 million.\nThis is a good spot to provide an update on our SAP S/4HANA implementation.\nI am excited to announce that the final phase of our SAP implementation is scheduled to go live on March 1, 2021.\nWe have various business continuity processes and resources in place to ensure this transition goes as smoothly as possible and look forward to updating everybody on our efforts during our Q4 call.\nAs a reminder, we expect corporate expenses as a percent of net sales to decrease by the end of fiscal 2022, once our digital enablement activities are fully implemented and we begin to eliminate redundant IT cost, allowing us to realize benefits of the new platform.\nComparable basis interest expense for the quarter decreased 7% to approximately $96 million primarily due to lower average borrowings as we continued to decrease our leverage ratio.\nFiscal 2021 interest expense is now expected to approximate $390 million.\nOur Q3 comparable basis effective tax rate, excluding Canopy equity earnings came in at 17.7% versus 17.5% in Q3 last year, primarily driven by higher effective tax rate on our foreign businesses, partially offset by an increased benefit from stock-based compensation.\nAs indicated last quarter, we expect our full-year fiscal 2021 comparable effective tax rate, excluding Canopy equity and earnings impact to approximate 19%, which would imply an increase in the Q4 tax rate driven by the timing of stock-based compensation benefits.\nMoving to free cash flow, which we define as net cash provided by operating activities less capex.\nWe generated free cash flow of $1.9 billion for the first nine months of fiscal 2021.\nThis represents an impressive 23% increase and reflects strong operating cash flow and lower capex.\nWe are projecting full-year fiscal 2021 capex spend to be in the range of $800 million to $900 million, which includes $650 million to $750 million of beer capex as we expect an acceleration of spend during Q4, driven by the 5 million hectoliter expansion at Obregon.\nFurthermore, we expect fiscal 2021 free cash flow to be in the range of $1.7 billion to $1.8 billion and operating cash flow to be in the range of $2.5 billion to $2.7 billion.\nIn Q3, we recognized a $770 million increase in fair value of our Canopy investments.\nThese were excluded from comparable basis results.\nThe total pre-tax net gain recognized since our initial Canopy investment in November of 2017 is $834 million, which increased significantly from Q2 driven by Canopy's robust share price movement during the quarter.\nIn closing, I'd like to reiterate our capital allocation priorities.\nAs we've navigated through a challenging and volatile economic environment throughout the first nine months of our fiscal year, we believe it was financially prudent to focus on paying down debt and further reducing our leverage ratio.\nAs a result of our strong cash generation profile, we've reduced our net debt by $1.2 billion since the end of fiscal 2020, which has led to further reduction of our leverage ratio to our target range.\nThese financial strides coupled with the fact that our business has continued to remain resilient through this economic environment, now provides us with the flexibility to be opportunistic and resume share repurchase activity in the near-term as we remain fully committed to our goal of returning $5 billion to shareholders through dividends and share repurchases through fiscal 2023.\nWe are also pleased that the board of directors recently authorized an additional $2 billion for share repurchases.\n", "role": "user" }, { "content": "constellation brands inc - excluding canopy growth equity losses, achieved qtrly comparable basis earnings per share of $3.16.\nconstellation brands inc - board of directors authorizes new $2 billion share repurchase program.\nconstellation brands inc - fy comparable basis earnings per share outlook of $9.80 - $10.05.\nconstellation brands inc - provides fiscal 2021 reported basis earnings per share outlook of $10.30- $10.55 and comparable basis earnings per share outlook of $9.80-$10.05.\nconstellation brands inc sees fiscal 2021 beer net sales growth of 7% to 9%.\nconstellation brands - sees 2021 capital expenditures of $800 million to $900 million, sees 2021 free cash flow of $1.7 billion to $1.8 billion.\nconstellation brands inc sees fiscal 2021 wine and spirits reported net sales and operating income decline of 9 -11% and 16-18%, respectively.\nconstellation brands - business performance accelerated during quarter despite ongoing headwinds from pandemic.\n", "role": "assistant" } ]

[ { "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: [Operator instructions] And now here's Bill.\nI sincerely hope you were able to enjoy a safe and happy holiday season with family and friends.\nCalendar year 2021 was another challenging year given the continued effects of the pandemic, a host of global supply chain issues impacting nearly every industry, inflationary pressures, and severe weather events.\nThat said, I'm incredibly proud of the determination shown by our team at Constellation throughout the year.\nThey worked relentlessly, navigating a myriad of evolving dynamics to deliver a very solid performance year to date and in Q3, putting us on pace for another strong year of financial performance and shareholder value creation in fiscal '22.\nThat said, I'd like to highlight a few key takeaways from the quarter.\nFirst, our beer business delivered a very strong performance in Q3, while lapping tough comps in fiscal '21.\nWe continue to see robust consumer demand, yielding high single-digit depletion growth.\nWe extended our leadership position as the top share gainer in the high end of the US beer market behind the strength of our Modelo and Corona brand families, while improving our inventory position.\nOur strong performance to date gives us confidence to increase top and bottom-line guidance for our beer business in fiscal '22.\nSecond, we continue to see significant runway for growth for our core imported beer portfolio in the years ahead, and we're investing in the next increment of capacity additions required to sustain our momentum as this represents one of the most compelling value-creating opportunities for our company and our shareholders.\nThird, our wine and spirits business has made solid progress in transforming both its brand portfolio and financial profile.\nQ3 marked another step along our journey as we continue to shift to a higher-end wine and spirits business focused on delivering increased revenue growth and margin expansion.\nWhile our wine and spirits business continues to navigate through a series of headwinds impacting its year-to-date performance, our increased focus and investments behind our fine wine and craft spirits portfolio, margin accretion innovation and e-commerce initiatives continue to gain traction and are enabling an increase in our net sales guidance for the business in fiscal '22.\nAnd finally, our strong overall total company performance in Q3 gives us confidence to increase our comparable basis earnings per share guidance for the fiscal year.\nGarth will provide additional details relative to our financial performance and fiscal year guidance in just a few minutes.\nToday, we are also excited about our announcement of a new agreement with The Coca-Cola Company in the United States to bring FRESCA brand into beverage alcohol through manufacturing and distributing a new line of FRESCA mixed cocktails.\nFRESCA is currently the fastest-growing diet soft drink in Coca-Cola's portfolio, and over half of FRESCA consumers already use it as a mixer with spirits.\nBuilding on this great foundation and in alignment with emerging consumer preferences around convenience, flavor, and a preference for high-quality products, we plan to launch FRESCA Mixed later this year, starting with cocktails using real spirits and inspired by recipes created by FRESCA fans from around the globe.\nWith that, let's talk in more detail about our performance in the most recent quarter.\nOur beer business posted depletion growth of more than 80% in the third quarter, outpacing the high end of the US beer category.\nModelo Especial continues to be our most significant growth driver, with depletions increasing over 13%.\nThat is more than 5 million cases relative to the same quarter last year.\nIt remains the brightest star in our portfolio as the top share gainer across the entire US beer category in IRI channels, while maintaining its position as the No.\n1 high-end beer brand.\nOur Modelo Chelada brand family has become an important growth contributor to our portfolio as the No.\n1 chelada in the US beer market and maintained its explosive growth, posting 35% depletion growth in the third quarter.\nWe continue to build on this extremely successful innovation platform with a new entrant, Modelo Chelada Pina Picante, which was launched in August and is already a top share gainer among important brands.\nCorona Extra sustained its reinvigorated growth trajectory and position as the second-fastest import share gainer and the No.\n3 high-end brand in IRI channels with 11% depletion growth versus prior year.\nSimilarly, Corona Premier continued its strong performance with 8% depletion growth, which accelerated through distribution gains as supply conditions improved.\nFrom an innovation perspective within the Corona brand family, Refresca and Refresca Mas are back in production and contributing nicely to growth in our ABA portfolio.\nMeanwhile, Corona Hard Seltzer remains a top seltzer brand in IRI, following the dramatic slowdown in the seltzer category.\nWe're making good progress to enhance our flavor profiles, and we're on track to roll out the restaging of our variety packs, tropical mixed pack, and berry mixed pack in the first quarter of fiscal '23.\nAnd we are diligently working to address the brown glass shortage that is acting a big headwind this year, especially for our Pacifico brand, which continues to see strong demand and has a long runway for growth ahead.\nOverall, our outstanding performance gives us confidence to increase guidance for our beer business as we now expect to achieve 10% to 11% net sales growth and 6% to 7% operating income growth in fiscal '22.\nTo fuel the continued growth of our imported beer portfolio, we plan to deploy an increased level of investment over the next four fiscal years to support construction of a new brewery in Southeast Mexico in the state of Veracruz as well as to expand and optimize capacity at our existing Nava and Obregon operations.\nGarth will give you additional details on that momentarily.\nNow moving on to our Wine and spirits business.\nWe remain committed to our vision to become a bold and innovative, high-end wine and spirits business with distinctive brands and products, delivering exceptional consumer experiences.\nIn an effort to make this vision a reality, we recently reorganized into two distinct commercial teams within the business, one focused on our fine wine and craft spirits brands and the other focus on our mainstream and premium brands.\nWhile each team has their own distinct strategy, both remain aligned to our goal of accelerating performance by increasing revenue growth and expanding margins.\nOur fine wine and craft spirits business is delivering solid growth this year, driven by brands like The Prisoner Unshackled, Roberto Mondavi Winery, and High West as well as strong gains in our direct to consumer, e-commerce, hospitality, and international businesses.\nOur mainstream and premium business is focused on maintaining share in the mainstream wine segment, while delivering and continuing to deliver growth through premium segment brands such as Meiomi and Kim Crawford, in line with our consumer-driven premiumization strategy.\nWhile we've experienced recent headwinds on mainstream brands like Woodbridge, Robert Mondavi Private Selection and SVEDKA, IRI trends for these brands have improved since overlapping the peak of the pandemic, supported by an increased focus on more relevant branding, strategic pricing, and innovation.\nThroughout our buying experience portfolio, we've launched several innovations that are creating momentum and driving growth, including Kim Crawford Illuminate and The Prisoner Unshackled, both of which were among the top five share gainers in their respective price points and IRI channels this quarter.\nDuring the quarter, we also launched multiple initiatives.\nSecond, SVEDKA ready-to-drink, soda mixed pack; and third, our new Woodbridge three-liter box.\nWe've also experienced successful market expansion for our Woodbridge and Robert Mondavi private selection spirit barrel-aged wines.\nWithin our DTC portfolio, we launched exclusive SKUs from the Robert Mondavi Winery and The Prisoner Saldo Red Blends as well as High West Midwinter Night Dram and the ready-to-serve Manhattan and old-fashioned cocktails.\nWithin the three-tier e-commerce landscape, Constellation continues to outpace total US wine market growth by double digits.\nIn fact, Meiomi sales in the three-tier e-commerce channels increased 27% versus the prior year.\nCurrently, about 10% of Meiomi's sales come from three-tier e-commerce, which is the highest level among leading US line brands in IRI e-commerce channels.\nWhile we advance our strategic agenda in Wine and spirits, we continue to address a number of headwinds that have impacted our year-to-date performance.\nWe continued to lap last year's COVID pantry-driven loading, where we experienced outsized growth.\nHowever, upcoming comparable growth rates are less challenging.\nThroughout the year, we've experienced out of stocks and other operational challenges related to our SAP implementation, a difficult domestic and international logistics environment and our route-to-market transition of 70% of our distribution to Southern Glazer's Wine and spirits.\nThe encouraging news: These issues are all stabilizing.\nWe are rebalancing our inventories and expect more standard service levels for the balance of the year.\nBased on our year-to-date performance, we are raising organic net sales guidance from 2% to 4% to 4% to 6% for fiscal '22.\nAnd before I close, just a couple of quick notes on Canopy growth.\nClearly, recent results have been disappointing and there are meaningful near-term challenges facing Canopy and the overall cannabis market in Canada.\nThe store openings have been slower than previously anticipated due to the pandemic.\nHowever, we continue to believe that the cannabis market represents a significant growth opportunity in the CPG space over the next decade given the predicted US market size of roughly 100 billion post-legalization, which is double the size of the spirits market and approaching the size of the beer category.\nWe're encouraged by Canopy's innovation agenda with more than 40 new SKUs launched globally during their recently reported second quarter.\nIn addition, Canopy purchased the right to acquire Wana Brands upon a US triggering event, which includes US federal legalization of cannabis.\nWana Brands has the No.\n1 share of the gummy market in Canada, with more than 40% market share and the largest multi-market presence in the US gummy market.\nThe gummies category is one of the fastest-growing segments in both the US and Canadian cannabis markets, accounting for over 70% of all edibles purchased.\nWana's asset-light licensing model approach will allow them to scale quickly in the US and provide Canopy a highly distributed brand upon US legalization.\nIn closing, I would like to reiterate our main takeaways from this quarter.\nOur beer business continues to deliver impressive performance.\nIts growth remains ahead of the high end of the US beer market in IRI channels, and we now expect to achieve 10% to 11% net sales growth and 6% to 7% operating income growth for fiscal '22.\nWe remain confident in the robust longer-term growth prospects of our beer business, and we're securing our ability to capture the significant value creation opportunity by expanding and optimizing our production capacity over the next four years.\nOur wine and spirits business continues to move toward its long-term revenue growth and margin expansion vision, which is further enabled by the clearer strategic focus of its newly configured fine wine and craft spirits and mainstream and premium teams.\nAnd in spite of an ongoing challenging environment, our strong overall total company performance gives us the confidence to increase our comparable basis earnings per share guidance for the year.\nWe look forward to continuing to build a portfolio of products that consumers love and delivering another strong year of financial performance and shareholder value creation in fiscal '22.\nQ3 was another quarter of strong execution by our beer business.\nThis continued strength, coupled with tax favorability, enabled us to deliver 8% comparable basis diluted earnings per share growth for the quarter, excluding Canopy.\nAs a result, we have increased and narrowed our full year fiscal 2022 comparable basis diluted earnings per share target to a range of $10.50 to $10.65 versus our previous guidance of $10.15 to $10.45.\nThis range excludes Canopy equity earnings, includes an increase in beer operating income guidance and reflects a decrease in the tax rate for fiscal 2022.\nNow let's review our Q3 performance and full year outlook in more detail, where I'll generally focus on comparable basis financial results.\nNet sales increased 4% driven by shipment growth of 3% and favorable price, partially offset by unfavorable mix.\nAs a reminder, we are lapping a significant inventory rebuild in Q3 of the prior year, which generated 28% shipment growth.\nDepletion growth for the quarter came in above 8% driven by the continued strength of Modelo Especial and explosive growth of Corona Extra as well as the continued return to growth in the on-premise channel.\nAgain, keep in mind the difficult volume overlap we encountered during the quarter as we faced a 12% depletion growth comparison driven by robust inventory replenishment at the retailer in the prior year.\nOn-premise volumes account for approximately 12% of the total beer depletions during the quarter and grew strong double digits versus last year.\nAs a reminder, the on-premise accounted for approximately 15% of our beer depletion volume pre-COVID and was only 8% of our depletion volume in Q3 fiscal 2021 as a result of on-premise shutdowns and restrictions due to COVID-19.\nSelling days in the quarter were flat year over year, and please note that in Q4, there is one additional selling day.\nCases shipped exceeded cases depleted as distributor inventory levels began to rebuild during the quarter.\nInventories are expected to return to normal levels by the end of the fiscal year as shipment volume is expected to continue to exceed cases depleted for the remainder of the fiscal year.\nMoving on to beer margins.\nBeer operating margin decreased 130 basis points versus prior year to 41.3%.\nBenefits from favorable pricing and marketing timing were more than offset by unfavorable costs.\nThe expected increase in COGS was driven by several headwinds that included the following: First, increased material costs due to rising commodity prices and inflationary headwinds that on average are in the mid to high single-digit range, predominantly driven by wood pallets, aluminum, steel, and carpets.\nPlease note that this range includes the impact of hedging more positive.\nSecond, increased brewery costs driven by labor inflation in Mexico, increased head count, incremental spend related to capacity expansion and annual brewery maintenance that was performed during the quarter.\nAs a reminder, the annual brewery maintenance took place during the fourth quarter last fiscal year.\nAnd third, a step-up in depreciation expense, largely due to the incremental 5 million hectoliters at Obregon completed earlier this fiscal year.\nThese COGS headwinds were partially offset by favorable fixed cost absorption driven by increased production levels.\nMarketing as a percent of net sales decreased 130 basis points to 8% versus prior year as we have returned to our typical spending cadence, which is weighted more heavily toward the first half of the fiscal year.\nIn the prior year, a significant amount of marketing spend was shifted from the first half to the second half of the fiscal year due to COVID-19-related sporting and sponsorship event cancellations and/or postponements.\nAdditionally, we continue to expect full-year spend as a percent of net sales to land in the 9% to 10% range, which is in line with fiscal 2021 spend of 9.7% of net sales.\nFor full year fiscal 2022, we now expect net sales growth to land in the 10% to 11% range and operating income growth to land in the 6% to 7% range, reflecting the continued strength of our core beer portfolio.\nAs previously communicated, we expect price increases within our beer portfolio to land slightly above our typical 1% to 2% range.\nHowever, we anticipate this incremental pricing favorability to be partially offset by unfavorable net sales mix, primarily driven by a shift in package types and return of on-premise draft SKUs.\nWe continue to expect our gross margin to be negatively impacted for the fiscal year as benefits from price and cost savings agenda are expected to be more than offset by cost headwinds, predominantly driven by a significant step-up in depreciation and increased inflation across numerous cost components as the inflationary environment resulting from economic supply chain and other byproducts of the pandemic continues to be dynamic and variable.\nWe now anticipate these elevated inflationary pressures to persist well into fiscal year 2023 and expect inflation on the commodity spend component of direct materials to land on average in the high single-digit to low double-digit range next fiscal year.\nWe will continue to maintain our disciplined approach to address these evolving conditions through our commodity hedging program, cost-saving initiatives, and balanced price adjustments.\nHowever, due to a persistent and tough inflationary environment and incremental depreciation driven by our capital expansion plans, operating margins could land below our stated 39% to 40% range in fiscal 2023.\nLet me reiterate that these are still best-in-class operating margins within our industry, which reflects the strength of our core beer portfolio and efficiencies of our operations.\nWe will continue to refine our outlook for fiscal year 2023 and will provide more details and official guidance during our Q4 earnings call in April.\nMoving to wine and spirits.\nQ3 fiscal 2022 net sales declined 25% as shipments declined approximately 39%.\nExcluding the impact of the Wine and spirits divestitures, organic net sales increased 3%, driven by shipment growth of approximately 3%, favorable price, incremental sales to Opus One and smoke-tainted bulk wine sales, all partially offset by unfavorable mix.\nDepletions declined approximately 7% during the quarter and continue to be challenged by port delays for our international brands and distributor route-to-market changes in transition markets.\nAdditionally, depletions faced a difficult overlap, especially for our premium and luxury brands, which experienced robust growth during Q3 of the prior year.\nHowever, we expect depletion growth to accelerate during the fourth quarter driven by the continued strength of our higher-end brands, led by the Prisoner brand family, Meiomi and Kim Crawford, a robust innovation agenda, and an easier buying overlap versus a year ago.\nFrom a shipment perspective, we expect shipment growth for the fourth quarter to decelerate versus Q3 as we continue to rightsize distributor inventory levels for our mainstream brands.\nMoving on to wine and spirits margins.\nOperating margin increased 140 basis points to 25.4% as decreased COGS, mix benefits from divestitures and favorable price were partially offset by increased marketing and SG&A as a percent of net sales and unfavorable mix from the existing portfolio.\nAs expected, lower COGS were driven by net favorable fixed cost absorption, lower grade raw materials, and cost savings initiatives, partially offset by increased transportation costs.\nThe net favorable fixed cost absorption resulted from lapping the unfavorable impact of $20 million in the prior year, which was a result of decreased production levels due to the 2020 US wildfires.\nThis benefit for the quarter was partially offset by unfavorable fixed cost absorption, resulting from decreased production levels in New Zealand due to a late frost during their harvest season earlier this year.\nMarketing and SG&A as a percent of net sales increased versus the prior year due to a loss of top-line leverage resulting from the divestitures.\nIn the prior year, a significant amount of marketing spend was shifted from the first half to the second half of the fiscal year due to COVID-19-related cancellations and/or postponements.\nAs a result, marketing as a percent of net sales for Q4 is expected to be lower than the prior year.\nFor the full year, we expect marketing as a percent of net sales to be in the 10% range.\nFor full year fiscal 2022, we now expect net sales and operating income to decline 21% to 22% and 23% to 25%, respectively.\nExcluding the impact of the Wine and spirits divestitures, organic net sales is now expected to grow in the 4% to 6% range versus our previous guidance of 2% to 4%.\nIt is important to note that the increase in our top line guidance is mainly due to incremental shipments to support our route-to-market transition earlier this fiscal year and revenues associated with sales of smoke-tainted bulk wine.\nBoth are onetime in nature, and thus, we do not expect them to be repeated in future years.\nAs such, going forward, we remain confident in our medium-term top-line growth algorithm for the Wine and spirits business 2% to 4%.\nLooking ahead to fiscal year 2023, we expect significant cost increases for the business, including supply chain disruptions and inflationary cost pressures on product, freight, and warehousing costs.\nHowever, in order to mitigate some of these cost headwinds, we intend to take incremental price that will be staggered throughout the first half of calendar year 2022.\nWe will continue to work through the puts and takes of our fiscal -- of our full year fiscal 2023 outlook, and we'll provide more details and official guidance during our Q4 earnings call in April.\nNow let's proceed with the rest of the P&L.\nFiscal year-to-date corporate expenses came in at approximately $162 million, down 6% versus Q3 year to date last fiscal year.\nThe decrease was predominantly driven by compensation and benefits, due to the reversal of an accrual for performance share units, which will not be earned due to not achieving the threshold level of earnings performance from our Canopy investment and a favorable foreign currency impact.\nThese tailwinds were partially offset by increase in consulting services and T&E spend.\nWe now expect full-year corporate expenses to approximate $230 million, reflecting the year-to-date compensation and benefits favorability.\nComparable basis interest expense for the quarter decreased 8% to $88 million versus prior year primarily due to lower average borrowings.\nWe expect fiscal 2022 interest expenses to land toward the midpoint of our previous guidance range of $355 million to $365 million.\nOur Q3 comparable basis effective tax rate, excluding Canopy equity earnings, came in at 14% versus 17.7% in Q3 last year, primarily driven by the timing and magnitude of stock-based compensation benefits, partially offset by higher effective tax rates on our foreign businesses.\nWe now expect our full year fiscal 2022 comparable tax rate, excluding Canopy equity earnings, to approximate 19.5% versus our previous guidance of 20%.\nThis half-point decrease primarily reflects the impact of increased stock-based compensation tax benefits received during the quarter.\nAdditionally, stock-based compensation tax benefits were weighted toward Q3 versus our previous expectation of Q4, resulting in a sequential rate increase to our implied Q4 tax rate, which is now expected to approximate 23%.\nMoving to free cash flow, which we define as net cash provided by operating activities less capex.\nWe generated free cash flow of $1.8 billion for the first nine months of fiscal 2022, reflecting a 3% increase in operating cash flow, offset by an increase in capex spend.\nCapex spend totaled approximately $600 million, which included approximately $500 million of beer capex primarily driven by expansion initiatives at our Mexico facilities.\nOur full year capex guidance of $1 billion to $1.1 billion, which includes approximately $900 million targeted for Mexico beer operations expansions, remains unchanged.\nFurthermore, we continue to expect fiscal 2022 free cash flow to be in the range of $1.4 billion to $1.5 billion.\nThis reflects operating cash flow in the range of $2.4 billion to $2.6 billion and the capex spend previously on, as Bill mentioned, our beer business continues to significantly outperform the US beer industry driven by robust consumer demand, and it is essential that we invest appropriately to support the expected ongoing growth momentum for our exceptional beer brands.\nAs such, we have updated and increased our brewery expansion investment plans in Mexico.\nTotal capital expenditures for the beer business are now expected to be $5 billion to $5.5 billion over the fiscal 2023 to fiscal 2026 time frame with the majority of spend expected to occur in the first three years.\nIn total, this investment will support an incremental 25 million to 30 million hectoliters of additional capacity and includes construction of a new brewery in Southeast Mexico in the state of Veracruz as well as continued expansion and optimization of our existing sites in Nava and Obregon.\nPlease note that this investment includes the previously disclosed beer capex guidance of $700 million to $900 million annually during the fiscal 2023 to fiscal 2025 time line to support a 15 million hectoliter build-out between our Nava and Obregon facilities.\nAs a reminder, our existing brewery footprint currently supports 39 million hectoliters between Nava and Obregon.\nIn closing, I'd like to reiterate our medium-term growth expectations for our beer business.\nAs Bill and I outlined, we expect continued momentum, and thus, continue to target top-line growth in the 7% to 9% range over the next three to five years, which includes one to two points of price and implied volume growth in the mid to high single-digit range.\nThis expectation provides us with the conviction to support incremental capital investments in Mexico.\n", "role": "user" }, { "content": "plans incremental capacity investments\tin mexico to support continued strong growth of core beer\tportfolio.\naffirms fiscal 2022 operating cash flow target of $2.4\t- $2.6 billion and free cash flow projection of $1.4 - $1.5 billion.\nnow sees 2022 comparable basis eps\tof $10.50 - $10.65.\nsees fy 2022 beer business net sales growth 10 -11%.\ntotal capital expenditures\tfor beer business expected to be $5.0 billion to $5.5 billion over fiscal 2023 to fiscal 2026.\nsees fy 2022 wine and spirits business net sales decline 21-22%.\n", "role": "assistant" } ]

[ { "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 very pleased with the performance of all of our business lines as 2021 is off to a very strong start.\nIn the first quarter, we delivered core FFO per share of $1.26, which exceeded the high end of our guidance of $1.17.\nDue to this outperformance and strong visibility into our second and third quarter transient RV bookings, we are raising our 2021 core FFO per share annual guidance range by $0.13 to $5.92 to $6.08 and our expected same community NOI growth for the full year by 190 basis points to a range of 7.5% to 8.5%.\nThe momentum we experienced in our RV resorts in 2020 has only accelerated this year as the country continues to reopen.\nFor the quarter, same community NOI growth was 2.7% over last year, despite the continued Canadian border closure and the California stay-at-home order which dictated the closure of our California resorts through early February.\nWe achieved total portfolio occupancy of 97.3%, a 60 basis point improvement over the first quarter of 2020 by selling 514 revenue-producing sites.\nWe also delivered approximately 350 ground-up and expansion sites in the first quarter, which include the grand opening of our premier 250 site Sun Outdoors San Diego Bay Resort.\nSince the beginning of the year, we have deployed $183 million into acquisitions, comprised of two manufactured housing communities, six RV resorts, and four marinas.\nOur team continues to find ways to add irreplaceable assets to our portfolio that serve to reinforce the high quality of our brand, enhance our offerings to our guests and foster continued growth of our revenues and earnings over time.\nIn our manufactured housing business, our operations are benefiting from sustained strength and fundamentals and demand for affordable housing, evidenced by new, pre-owned, and brokered home sales.\nFurthermore, applications to live in a Sun community remain at record high levels, up 21% over this time last year.\nOur RV business, while impacted by the closures and the travel restrictions associated with the pandemic during the quarter, is showing resilience with forward bookings well ahead of both 2020 and 2019.\nAs we emerge from the pandemic and as the percentage of the vaccinated population rises, we anticipate our best-in-class resorts to remain a preferred vacationing option.\nOur assertion is supported by the RV Industry Association stating record-year unit sale expectations for 2021 as well as our strong advance bookings for the second and third quarters.\nA broader segment of the population rediscovered the outdoors during 2020 and we are seeing that interest carry forward.\nIn an environment impacted by COVID, RV provides travelers with an incremental level of safety and control.\nMoreover, we believe that increased demand is being driven by the continued desire of consumers to get back to a degree of normalcy, resuming vacation and leisure travel after last year's travel restrictions.\nIn our marina business, results continue to track ahead of our underwriting and the team is preparing for an active boating season.\nAccording to multiple industry sources, boat sales have increased in demand year-over-year.\nWith our expanded presence in this sought-after and scarce asset class, we are well-positioned to benefit from the increased demand for slips and moorings.\nWe are relying on our four core investment strategies to support long-term resilience and the growth of our platform, further solidifying our position of delivering industry-leading results.\nAn important part of these core strategies includes expansion and ground-up development.\nWe wanted to highlight the recent opening of Sun Outdoors San Diego Bay first announced nearly four years ago.\nIt is now open for guests and we are pleased to continue to realize meaningful accretion from our capital deployment activities.\nIn early March, we executed a $1.1 billion equity raise to secure capital to fund our growing acquisition pipeline and other opportunities.\nWe will match fund these growth initiatives with this equity.\nKey contributors to the success of our franchise are our ongoing efforts with regard to our environment and its sustainability, our social ecosystem and careful attention to governance.\nWith that said, we wanted to provide some important updates with regard to our ESG initiatives.\nThis month, we launched a new partnership with the National Park Foundation in support of the foundation's outdoor exploration program.\nSun RV resorts has committed to contribute toward the National Park Foundation's mission to connect this and future generations with the social, mental and physical health benefits of national parks and outdoor discovery.\nWith respect to our commitment to diversity, equity, and inclusion, Sun has engaged with a consultancy team with 30 years of experience in the field of equality and justice.\nThis group has deep expertise in the importance of breaking through unconscious bias and social injustices in the workplace.\nTogether, we are assessing the current state of inclusion, diversity, equity, and accessibility at Sun, and developing an organizationwide strategy to create positive change.\nBefore handing the call over to John and Karen, I wanted to point out that we have enhanced our financial disclosures.\nWith the addition of Safe Harbor, we took the opportunity to provide better insight into the primary drivers of our business.\nKaren will walk you through the changes we have implemented after John shares details about our operational performance.\nSun delivered a strong first quarter across the board, setting the stage for a solid year.\nOur results reflect the combination of the stability of our manufactured housing business line and our same community portfolio, as well as the incremental benefits of our growth initiatives across MH, RV, and marina business lines.\nFor the first quarter, combined same community NOI increased 2.7%.\nThe growth in NOI was driven by a 3.5% revenue gain, supported by a 1.9% increase in occupancy to 98.8% and a 3.5 weighted average rent increase.\nThis was offset by a 5.5% expense increase.\nAs part of our revised disclosures, we are now providing same community NOI for our manufactured housing and RV businesses.\nSame community manufactured housing NOI increased by 4.9% from 2020 and same community RV NOI declined by 4%.\nRV revenues were impacted by the Canadian border closure during the first quarter which affected our snowbird season and the California shelter-in-place order that ran through early February.\nCombined, these two events had a $6 million impact on our transient RV same community revenue as compared to our previously communicated estimate of $8 million to $10 million.\nWith respect to RV revenue, we anticipate a significant rebound in the second and third quarters.\nRV resorts are beneficiaries of the reopening trade and we are fully participating.\nOur second quarter transient forecast is already ahead of our original budget by over 20% and trending 57% higher than 2019, which we believe to be a better comparable given COVID-related disruptions in 2020.\nLikewise, our third quarter transient RV forecast is currently ahead of the original budget by approximately 5% and this is trending ahead of 2019 by almost 40%.\nIn addition, we have a great deal of visibility into our reservation for rest of the year through Campspot, our proprietary RV reservation of revenue management software.\nToday, digital reservations comprise over 60% of our total reservations for our same community portfolio as compared to 60% [Phonetic] just two years ago.\nMoving onto total MH and RV portfolio, in the first quarter, we gained 514 revenue-producing sites as compared to 300 in the first quarter of 2020, bringing our total portfolio occupancy to 97.3% from 96.7% a year ago.\nOf our revenue-producing site gains, over 380 transient RV sites were converted to annual leases with the balance being added in our manufactured housing expansion communities.\nA key component of our four core growth initiatives is the development of ground-up and expansion sites.\nIn the first quarter, we delivered approximately 350 sites, 250 of which in the ground-up development in San Diego and 100 were in MH expansion sites at Sunset Ridge in Texas.\nThese completed expansion and ground-up development sites will contribute to RPS gains in 2021 and beyond as they fill up and stabilize.\nAs of the end of the quarter, we have approximately 9,700 zoned and entitled sites in our portfolio that once built will contribute to growth in the coming years.\nHome sales in the quarter were particularly strong.\nWe sold 835 homes, an increase of 9.4% versus the first quarter of 2020.\nOf these, 149 were new home sales, up over 25% and 686 were pre-owned home sales, up 6.5% as compared to the same period last year, respectively.\nAverage home prices for both new and pre-owned homes rose 17.6% and 9.8%, respectively, underscoring the overall geographic market mix as well as sustained demand for our product and the strong desire to live in a Sun community.\nBrokered home sales throughout Sun's portfolio saw 36% increase year-over-year, as the resale market continues to show strength.\nAverage brokered home prices in our communities increased by over 20%, as compared to the first quarter of 2020.\nWe believe that a vibrant resell market for homes in our communities demonstrates the benefits of the consistent reinvestment in our properties, creating equity value for our homeowners and increasing the overall value of our portfolio.\nMoving on to Safe Harbor.\nDuring the quarter, the marina portfolio contributed over $31.4 million to total NOI.\nThe marinas are performing ahead of our underwriting, and the team continues to source acquisitions in irreplaceable locations, which for the first quarter, include two marinas on Islamorada in the Florida Keys and two marinas on Martha's Vineyard.\nWe are optimistic about the underlying trends we are observing across all of our business lines.\nWith the vaccination rate increasing across the country, we are anticipating accelerated growth in our RV and marina businesses.\nWe are well positioned to see follow-through of this quarter's outperformance and look forward to sharing our progress with you in the coming quarters.\nKaren will now discuss our financial results in more detail.\nFor the first quarter, Sun reported core FFO per share of $1.26, 3.3% above the prior year and $0.09 ahead of the top-end of our first quarter guidance range.\nDuring and subsequent to quarter-end, we acquired $183 million of operating properties comprised of two manufactured home communities, six RV resorts and four marinas.\nTo support our growth activities, we completed a $1.1 billion equity raise, representing approximately 8 million shares of our common stock.\nTo date, we have settled 4 million shares, receiving $538 million in net proceeds, which was used to pay down borrowings on our credit facility.\nWe expect to settle the remaining 4 million shares no later than March 2022.\nWe ended the first quarter with $4.4 billion of debt outstanding at a 3.4% weighted average rate and a weighted average maturity of 9.5 years.\nAs of March 31, we had $105 million of unrestricted cash on hand and a net debt to trailing 12-month recurring EBITDA ratio of 6.1 times.\nOn a pro forma basis, including the estimated full year EBITDA contribution from Safe Harbor and other acquisitions, our net debt to trailing 12-month recurring EBITDA ratio is in the low-5 times.\nAs a result of our outperformance during the quarter, we are raising our core FFO expectations for full-year 2021 to a range of $5.92 per share to $6.08 per share.\nWe expect core FFO for the second quarter to be in the range of $1.57 per share to $1.63 per share.\nWe are also revising full year same community NOI growth guidance to a range of 7.5% to 8.5%.\nAs Gary mentioned earlier, we enhanced our financial disclosures this quarter.\nThe addition of the marina portfolio gave us the opportunity to reenvision how we report key aspects of our business.\nTo provide more insight into each of our business lines, we now have a same community schedule which details performance by our MH and RV portfolio separately.\nAdditionally, our same community revenues now include rental home program revenue and vacation rental home revenues.\nSo the entire payment for these rentals is now included in real property revenue.\nSame community property operating expense now includes the related costs for these rental home programs.\nWe are also netting all utility income against utility expense, which provides a better view on what Sun's direct utility costs are since the majority of these costs are passed through to our customers.\nWe have retained our legacy disclosures for our rental program and have added a new page on the marina portfolio.\nPlease see the 2021 summary of reporting changes document, which is contained in the Investor Relations section of our website for additional information and an illustration of these changes.\n", "role": "user" }, { "content": "qtrly core ffo per share $1.26.\nsees fy 2021e core ffo per share $5.92 - $6.08.\nsees q2 2021e core ffo per share $1.57 - $1.63.\n", "role": "assistant" } ]

[ { "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 strong third quarter is a continuation of the momentum we have historically demonstrated, which reflects both the stability and the growth potential of the platform we have established.\nThis includes organic growth, expansions and developments, and acquisitions.\nThe unique combination of these elements allowed us to deliver 31.9% growth in core FFO per share during the third quarter, and exceeded the high end of our guidance.\nThe speed [Phonetic], along with a positive outlook for the remainder of the year, once again led us to raise our core 2021 FFO guidance by $0.16 at the midpoint, for range of $6.44, at $6.50 per share.\nAnd we're expecting the same community NOI growth for the full year at 70 basis points, a range of 10.9% to 11.1%.\nFor the quarter, same community NOI grew 12.4% over last year, driven by our favorable strategic positioning to capture the sustained demand in RVs.\nIn the RV segment, same community NOI increased by 30.6% for the quarter, as transient RV continued to deliver exceptionally strong results.\nThe RV Resort business is benefiting from people seeking outdoor experiences at Sun RV resorts, coming from both existing and new customers.\nRV is establishing itself as the vacation choice for many travelers, and we have positioned the Sun to capture this demand at scale.\nWe are continuing to see momentum in forward bookings for transient, as well as annual site conversions.\nThe stability of our manufactured housing portfolio continues to show the need for attainable housing as evidenced by our home sales volume and applications to live in a Sun community.\nManufactured home sales were another bright spot in the quarter, with total home sales volume up nearly 64% from the prior year, and brokered home sales up over 15% for the quarter compared to the third quarter of 2020.\nOur core pillars are delivering superior customer service, maintaining high quality communities and offering an attainable housing option continue to create strong demand to live in a Sun community.\nIn our marina segment, we are pleased that results continue to track ahead of our underwriting.\nOur NOI increases this quarter have been primarily from the continued demand for wet slips and dry storage needs for our members.\nForward demand for dry storage and wet slip rental is ahead of where they were at this time last year, in large part through our best-in-class marina network, locations, and services.\nWe have also remained active and growing and improving our portfolio.\nIn the third quarter, through the date of this earning's call, we had 22 properties across our three segments, deploying over $500 million of capital and adding over 7,400 sites.\nOur recently acquired four lease portfolio of nine manufactured housing communities in the Midwest, comprises of over 2,500 high-quality sites with expansion growth opportunities and ample room for existing vacancies.\nOn the marina side, our acquisitions of Puerto Del Rey, Puerto Rico, our largest marina in the Caribbean, continues to strengthen our irreplaceable network of marina assets.\nPuerto Del Rey now allows for a Safe Harbor member to remain within the network, while traveling from the Northeast, all the way down to the Caribbean.\nOur acquisition teams remain extremely active and we are enthusiastic about the opportunities we are seeing across each of Sun's business segments.\nFurthermore, we have a proven track record of maximizing value from our acquisitions as we integrate them onto the Sun platform.\nThis includes adding value for our operational platform, proprietary technologies, the scale of our marketing and booking platforms, including Campspot and potential repositioning of acquired properties.\nAs the leading industry consolidator, we believe our cycle tested ability to create value through acquisitions, will continue to result in attractive accretive growth.\nThis activity is supported by the ongoing proactive focus and maintaining financial flexibility.\nAdditionally, we are continually evaluating our portfolio for assets which no longer fit with our long-term strategic and growth objectives.\nTo that end, in the third quarter, we completed the disposition of six assets or total sales price of 162 million, representing a blended cap rate, the low fours, that further demonstrates the value of Sun's portfolio.\nWe have a deep bench of incredibly talented team members, a well positioned balance sheet, and a healthy pipeline and internal and external growth opportunities, and we remain optimistic in our ability to deliver on each of our performance objectives.\nSun delivered a strong third quarter across the board, outperforming our previous expectations.\nOur results reflect the combination of the stability of our best-in-class portfolio, as well as the contributions from our growth initiatives across all three of our business segments.\nFor the third quarter, combined same community manufactured housing and RV NOI increased 12.4% from the third quarter 2020.\nThe growth in NOI was driven by a 12.8% revenue gain, supported by a 150 basis point increase in occupancy, to 98.9% and the 3.7% weighted average rental rate increase.\nOur expenses were up 13.7% from the prior year.\nSame community manufactured housing NOI increased by 2.6% from 2020, and same community RV NOI increased by 30.6%.\nAnd our RV growth was 15.2% for the quarter as a result of a 5% rental rate increase and the effect of over 100 conversions to annual leases over the trailing 12 months.\nOur retransient revenues were up 29% compared to last year.\nThis is on top of the 5% transient growth we experienced in the third quarter of 2020 over 2019 when we began to see the benefits of travelers who are seeking drive-through vacation options and took advantage of our resorts in desirable destinations.\nWhen we issued second quarter results in late July, we shared the transient RV revenue for the second half of the year was 15.2% ahead of the original budget.\nToday, an accounting for the third quarters actual contribution, it has accelerated to 18.3% ahead of original budget.\nAs of this earnings call, our fourth quarter transient RV revenue is 19.6% ahead of the original budget.\nThe increased levels of consumer engagement discussed last quarter have continued.\nYear-to-date, RV website traffic is up 10% compared to last year and 120% compared to 2019.\nAnd we have seen our social media following and interaction continue to grow with more than 1.4 million followers on the three major platforms; Instagram, Facebook and TikTok.\nOur best salespeople have always been our residents and guests and their reach to spread the word has been meaningfully amplified through our social media engagement.\nWe have also continued to sign up members to our pilots Sun RV resorts loyalty program.\nAnd while it's still in its early days, initial interest and feedback has been very positive.\nIn short, we believe we are seeing strong evidence of two important trends.\nFirst, that many travelers are learning now and trying out an RV vacation; and second, once travelers have discovered their sunnier side through an RV vacation, it becomes part of their future vacation considerations.\nAdditionally, Sun has simplified the reservation process with our Campspot platform, which in turn enhances the demand for RV vacations at Sun RV resorts.\nWith respect to our total MH and RV portfolio, we continue to pursue our strategy of filling existing vacancy and creating additional revenue producing opportunities through expansion and conversions.\nIn the third quarter, we gained 576 revenue producing sites.\nOf our revenue producing site gains, over 430 were transient RV sites converted to annual leases, with the balance being added to our manufactured housing expansion communities.\nWe have now converted almost 1,200 transient RV sites to annual leases year-to-date, which exceeds any prior full year figure and demonstrates the successful execution of this internal growth lever.\nThe RV site conversions result in an average 50% increase in site revenues during the first year of conversion, with an additional benefit of transient site scarcity pushy [Phonetic] rates.\nMoving on to new construction.\nIn the third quarter, we delivered over 320 new sites, approximately 70% of which were Greenfield ground up developments, and the remainder were expansions to existing communities.\nOne of the ground-up developments delivered this quarter was the next phase of Smith Creek Crossing, a manufactured housing community in Granby, Colorado.\nThe first phase of 82 sites has been filling up rapidly since opening a year ago, and we anticipate this next phase to continue to see the high demand for attainable housing in the area.\nAnd home sales in the third quarter were also strong.\nHome sales volume was up 64% year-over-year as we sold more than 1,100 homes in the quarter.\nThese results are a clear reflection of the value proposition that the Sun manufactured housing community offers; the healthy demand for these homes and the home value is maintained in our communities.\nApplications to live in a Sun community are up 13.2% year-to-date and we anticipate we will continue to see strength in our manufactured housing business, given the tight housing market and the demand for quality attainable housing.\nTurning to the marina business, we ended the quarter with 120 properties comprising nearly 45,000 wet slips and dry storage spaces, which includes the acquisition of six properties for approximately $250 million completed in the third quarter.\nSame marina rental revenue growth for the portfolio of 75 properties owned and operated by Safe Harbor since the start of 2019, with 17.8% for the nine months of 2021 over 2019.\nThis is a CAGAR increase in rental revenue of 9.9% for the quarter and 8.5% year-to-date through the end of September 2021.\nBetter than expected performance in the Marina portfolio continues to come from demand for Wet slips and dry storage spaces.\nWe have also witnessed higher margins on the service business with Water Del Marina Center and drive being the leading contributors to this outperformance.\nGreat service creates stronger slip rental demand and higher member retention.\nIn summary, Sun's growth engines continue to deliver strong results.\nOur internal levers are driven by the fundamentals of Sun's operating platform and by expansion site deliveries.\nOur total image portfolio stands at approximately 97% occupancy, providing us with more than 200 basis points of occupancy upside, as well as additional growth potential by adding further expansion sites over time.\nIn the RV business, robust transient demand continues.\nWe also anticipate continued momentum and conversions of transient annual leases each year.\nWe expect to build on our successful track record of delivering and filling expansion sites.\nWe have an inventory of 7,500 expansion sites, a portion of which we intend to strategically deliver each year targeting 10% to 14% unlevered IRRs.\nIn addition, our external growth pipeline is robust across all three businesses with opportunities to continue to consolidate each industry, as well as pursuing selective ground up developments.\nWe are pleased for our performance year-to-date and we expect to continue delivering on our objectives.\nKaren will now discuss our financial results in more detail.\nFor the third quarter, Sun reported core FFO per share of $2.11, 31.9% above the prior year and $0.05, ahead of the top end of our third quarter guidance range.\nOutperformance was achieved across annual and transient RV and marinas.\nDuring its subsequent to quarter end, we acquired approximately $500 million of operating properties, bringing our year-to-date total to $1.1 billion, adding 38 properties, totaling nearly 12,000 sites.\nTo support our operations and growth expectations, we have been active in enhancing our balance sheet and in capital markets activity, which provides the capacity and flexibility to pursue our ongoing growth pipeline.\nLast quarter, we received investment-grade ratings, which provides us with an additional attractive source of financing.\nSubsequent to the end of the third quarter, we issued 600 million of senior unsecured notes in our second bond offering of the year across seven and 10-year maturities.\nAdditionally, we utilized our ATM program and completed the sale of 21.4 million of forward shares of common stock.\nWe ended the second quarter with $4.7 billion of debt outstanding at a 3.3% weighted average rate, and a weighted average maturity of 9.6 years.\nAs of September 30, we had $72 million of unrestricted cash on hand and a net debt to trailing 12 months recurring EBITDA ratio of 4.9 times.\nWe are raising our full-year 2021 core FFO guidance to a range of $6.44 to $6.50 per share, a $0.16 increase at the midpoint from our prior range.\nThis increase includes our outperformance in the third quarter with the remainder due to contributions from recent acquisitions and increased expectations across each of our businesses.\nWe expect core FFO for the fourth quarter to be in the range of $1.24 to $1.30 per share.\nWe are also increasing full year same community NOI growth guidance to a range of 10.9% to 11.1%, up 70 basis points from the previous midpoint of guidance of 10.3%.\nThe fourth quarter same community NOI growth guidance is 7.2% to 8%.\n", "role": "user" }, { "content": "compname reports q3 core ffo per share $2.11.\nq3 core ffo per share $2.11.\n", "role": "assistant" } ]

[ { "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 include expectations and assumptions regarding the partnerships future operations and financial performance, including expectations and assumptions related to the impact of the COVID-19 pandemic.\nActual results could differ materially, and the partnership undertakes no obligation to update these statements based on subsequent events.\nDuring todays call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted.\nIn the second quarter, Sunoco continued to showcase the strength of its business model with strong financial results in a period of increasing commodity prices.\nFor the second quarter of 2021, the partnership recorded net income of $166 million.\nAdjusted EBITDA was $201 million compared to $182 million in the second quarter of 2020.\nVolumes were 1.93 billion gallons, a sequential increase of approximately 10% from the first quarter as the reopening trend in the U.S. took off Q2.\nYear-over-year volumes increased approximately 28%.\nFuel margin was $0.113 per gallon versus $0.135 per gallon in the second quarter of 2020, which Karl will hit on further in his remarks.\nTotal operating expenses in the second quarter were up slightly compared to the first quarter at $102 million versus $100 million and were up from $97 million in the second quarter of 2020.\nSecond quarter distributable cash flow as adjusted was $145 million, yielding a current quarter coverage ratio of 1.67 times and a trailing 12-month coverage ratio of 1.41 times consistent with our long-term target of 1.4 times.\nOn July 22, we declared an $0.8255 per unit distribution, the same as last quarter.\nWe continue to maintain a stable and secure distribution for our unitholders, which remains the #1 pillar behind our capital allocation strategy.\nLeverage at the end of the quarter was 4.27 times, which we expect to continue to decline toward our 4.0 target as the year progresses.\nOur 2021 full year EBITDA guidance remains unchanged from the original guidance, which we provided in December 2020.\nFor the full year 21, we expect adjusted EBITDA between $725 million and $765 million.\nOperating expense guidance is unchanged at $440 million to $450 million.\nAnd while we expect higher second half operating expenses, we are trending toward the low end of the full year range.\nWe continue to expect maintenance capital of approximately $45 million and target growth capital expenditures of $150 million in 2021.\nNext, Id like to spend a few minutes on the meaningful expansion to our midstream business that we announced yesterday.\nTo recap, we announced two terminal transactions that will not only help diversify and strengthen our core fuel distribution business, but will also provide a platform for growth in the markets served by these assets.\nThe new store assets consist of eight largely refined product terminals, seven of which are on the East Coast and one is just south of Chicago.\nThese assets have approximately 14.8 million barrels of storage and are accessed via pipeline, truck, rail and marine vessels.\nWe expect the $250 million purchase price to result in a sub seven times multiple on expected EBITDA, including synergies in the second year of ownership.\nThe Cato terminal is a gasoline and distillate terminal with 140,000 barrels of storage located in Salisbury, Maryland, and is accessed via truck and marine vessels.\nWe expect the $5.5 million purchase price to result in a sub-6 times multiple on expected EBITDA, including synergies in the second year of ownership.\nBoth of these transactions are expected to be immediately accretive to unitholder value.\nThe second quarters strong results and the announced acquisitions demonstrate our commitment to maintaining Sunocos solid financial footing and increasing value to our stakeholders through our strategy of disciplined capital investment.\nI want to start today by giving you some more insight into our important expansion of the midstream business that we announced yesterday.\nAs we shared in the past, our midstream growth strategy is to focus on opportunities that both diversify our operations and integrate effectively with our overall business.\nDuring the past nine months, weve added a marine terminal in the Albany, New York area.\nWe are making great progress on our greenfield/brownfield terminal and are now adding nine more terminals to our portfolio.\nThe Salisbury, Maryland terminal that we are purchasing from Cato oil is in a niche market that fits well with our fuel distribution business.\nThe NuStar terminals will be fantastic additions.\nLinden is the core asset.\nWere very excited to have a highly profitable operation in the New York Harbor market with great flexibility and connectivity.\nThe Baltimore and Jacksonville terminals will strengthen our business and facilitate additional growth in our fuel distribution business in these important markets.\nAndrews Air Force Base and Virginia Beach are key assets that support our military.\nThe Blue Island facility just south of Chicago will be our first terminal in the midwest.\nWere looking forward to welcoming the employees from these acquisitions to our team.\nIf you step back and look at the evolution of our business over the past few years, we have demonstrated that we are able to add terminal assets to our portfolio, operate them well, capture synergies and grow our fuel distribution business in the relevant markets.\nBottom line is with our combined fuel distribution and midstream strategy, we have proven that we can add value.\nNext, I will share some thoughts on our second quarter results.\nAt a high level, our strong results were underlined by better volume performance, margin returning to our guidance range even with a generally unfavorable and rising market and continued discipline on expenses.\nStarting with volumes, we were up about 28% from last year, but the more relevant comparison continues to be performance relative to 2019.\nLooking at it through that lens, we were down about 6% from 2019 volumes, meaningfully better than last quarter.\nWeve seen similar volume performance at the beginning of the third quarter.\nAs we look at volumes through the back half of the year, it feels as though the pace of closing the gap to 2019 has slowed a bit, but we remain optimistic as overall economic strength in the U.S. continues.\nThe second quarter showed improvement versus the challenging first quarter.\nEven though prices rose another $0.25 per gallon or so in the second quarter, the increased volatility, coupled with our continual margin optimization strategies, resulted in our margins rebounding and returning to our full year 2021 guidance range.\nAs we look forward, I still feel confident that $0.11 to $0.12 per gallon fuel margin is appropriate for the full year 2021 as we expect similar volatility to persist in the commodity markets through the back half of the year.\nThe final piece of our strong financial performance was continued expense control and discipline.\nAs Dylan mentioned earlier, we expect second half expenses to be higher than the first half with full year expenses trending toward the lower end of our guidance range.\nSome of the higher spending in the second half of the year is due to timing, and some of it is related to our decisions to defer bringing costs back into the business with a challenging start to the year.\nAs the margin environment has improved, we are more comfortable returning some of our expenses to a more sustainable level going forward.\nWe delivered a very strong second quarter.\nFuel volume grew roughly 10% versus the first quarter of this year, while our fuel margins remain very healthy.\nThe combination of higher industry breakevens with our ability to control costs and optimize gross profit allows us to minimize the downside while still capturing the upside when the commodity market supports it.\nQuarter after quarter, we have proven the durability of our business.\nLooking forward, the third quarter is off to a good start.\nFor the month of July, RBOB prices have been volatile.\nWithin these volatile commodity environments, we have a proven history of delivering attractive margins.\nAs for volume, the start of the third quarter has seen a moderation of volume growth as compared to the growth we experienced from the first to second quarter.\nWe still believe that there is upside.\nBut as of today, we foresee similar volume in the third quarter to what we realized in the second quarter.\nWith the first half of the year in the books and early readings for the third quarter, we expect to deliver on our full year 2021 adjusted EBITDA guidance.\nMoving on to growth.\nWere very excited about the expansion of our midstream business through the two announced acquisitions.\nStrategically, these acquisitions help diversify and vertically integrate our business while providing a more enhanced platform for fuel distribution growth.\nFinancially, we executed these transactions at very attractive valuations, especially after adding synergies.\nIn addition, the Brownsville terminal project is on budget and on time.\nWe expect the terminal to be up and running in early 2022.\nOn the field distribution side, we continue to grow organically.\nHowever, well also look for acquisitions.\nFor both organic growth and acquisitions, well continue to build on our history of maintaining financial discipline, which means protecting the security of our distributions while also protecting our balance sheet.\n", "role": "user" }, { "content": "for full-year 2021, continues to expect maintenance capital expenditures of about $45 million and growth capital expenditures of $150 million.\n", "role": "assistant" } ]

[ { "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 include expectations and assumptions regarding the partnership's future operations and financial performance, including expectations and assumptions related to the impact of the COVID-19 pandemic.\nActual results could differ materially, and the partnership undertakes no obligation to update these statements based on subsequent events.\nDuring today's call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted.\nIn the third quarter, Sunoco continued to demonstrate the strength of its business model with strong financial results in a period of continuing economic recovery.\nFor the third quarter of 2021, the partnership recorded net income of $104 million.\nAdjusted EBITDA was $198 million compared to $189 million in the third quarter of 2020.\nVolumes were approximately two billion gallons, a sequential increase of 2% from the second quarter.\nYear-over-year volumes increased 6.4%.\nFuel margin was $0.113 per gallon versus $0.121 per gallon in the third quarter of 2020.\nTotal operating expenses in the third quarter were up as expected compared to the second quarter at $113 million versus $102 million and were flat to the third quarter of 2020.\nThird quarter distributable cash flow as adjusted was $146 million, yielding a current quarter coverage ratio of 1.68 times and a trailing 12-month coverage ratio of 1.43 times, consistent with our long-term target of a minimum of 1.40 times.\nOn October 25, we declared an $0.8255 per unit distribution, consistent with last quarter.\nWe continue to maintain a stable and secure distribution for our unitholders, which remains the number one pillar behind our capital allocation strategy.\nLeverage at the end of the quarter was 4.05 times, which we expect to increase minimally with the closing of the NuStar acquisition.\nLeverage is expected to trend lower toward our 4.0 times target as we move into next year.\nOur 2021 full year EBITDA guidance remains $725 million to $765 million, excluding the NuStar and Cato acquisitions.\nAs anticipated, second half expenses are trending higher than the first half.\nHowever, we expect the full year to come in below our previously guided range due to the extension of many of our 2020 cost-cutting initiatives throughout the first half of 2021.\nWe are reducing full year 2021 operating expense guidance to $425 million to $435 million compared to our previous guidance of $440 million to $450 million.\nFinally, we continue to expect maintenance capital of $45 million and growth capital expenditures of approximately $150 million.\nNext, with respect to the recently closed expansions to our midstream business, given the size and timing of the closing of these acquisitions, they will have only a modest impact to 2021 adjusted EBITDA and have been excluded from that guidance.\nIn the fourth quarter, we took advantage of bond market conditions to derisk our balance sheet and reduce our financing costs.\nIn October, we issued $800 million of 4.5% senior notes due 2030, using the proceeds to redeem $800 million of our existing 5.5% senior notes due 2026.\nThe transactions lower our interest rate on this debt by 100 basis points while extending the maturity date by approximately four years.\nWe will continue to take prudent and proactive measures to strengthen our financial position when opportunities like this arise.\nThe third quarter's strong results, the recently closed acquisitions, and our opportunistic refinancing demonstrate our commitment to maintaining Sunoco's solid financial foundation and to increasing value to our stakeholders through a strategy of disciplined capital investment and balance sheet management.\nOur strong third quarter results were driven by better volume performance, continued strength in margins and continued discipline on expenses.\nVolume for the quarter was up over 6% from last year, but the more relevant comparison continues to be performance relative to 2019.\nOn that basis, we were off about 7% from the third quarter of 2019.\nSo far, in the fourth quarter, our volumes continue to be in the same range relative to 2019 once you factor in the JC Nolan ramp-up in the fourth quarter of that year.\nThe third quarter showed improvement versus the first half of the year.\nRBOB prices were generally flat from the beginning of the quarter to the end of the quarter, but the increased volatility coupled with our continual gross profit optimization strategies and elevated breakeven margins helped our margins remain solidly within our full year 2021 guidance range.\nThe final piece of our strong financial performance was continued expense control and discipline.\nAs Dylan mentioned earlier, we expect second half expenses to be higher than the first half.\nSome of the higher spending in the second half of the year is due to timing, and some of it is related to our decisions to defer bringing costs back into the business with a challenging start to the year.\nAs the margin environment improved through this year, we are more comfortable returning some of our expenses to a more sustainable level going forward.\nBefore turning it over to Joe, I want to briefly touch on a few more topics.\nIt seems that over the last few months, the topics of inflation, supply chain challenges and labor shortages have been increasingly visible and discussed.\nWe have not been immune to any of these challenges.\nWe have felt the impacts of inflation and incorporated the impact into our forward views on expenses.\nOver the last few years, we have demonstrated our ability to control expenses and increase efficiency.\nGoing forward, we remain committed to delivering an efficient and lean expense structure.\nWe've also put into place strategies to adequately deal with longer supply chains.\nWe continue to be proactive in addressing our labor challenges and have been successful at maintaining a team to deliver for our customers.\nAn important thing to remember is that every one of these issues continues to support higher-than-historic breakeven margins.\nFinally, a brief update on our growth efforts.\nOur Brownsville terminal remains on track for completion and commissioning by the end of the first quarter.\nThe project team has done a great job keeping schedule and costs in line even in the face of some of the industry headwinds, I just discussed.\nAnd our integration efforts for the NuStar and Cato acquisitions are well underway.\nIf anything, we have been excited by some of the additional commercial opportunities we have uncovered in the first month of ownership.\nI will wrap up by stating that we will continue to focus on what we can control and what drove this quarter's results, gross profit optimization, growth of our core business and solid and efficient operations.\nWe delivered a strong third quarter.\nFuel volumes grew roughly 2% versus the second quarter of this year, while our fuel margins remained very healthy.\nAnd just as importantly, we continue to control costs and manage our balance sheet.\nQuarter after quarter, we have demonstrated the durability of our business.\nLooking toward the fourth quarter, RBOB prices increased rapidly through most of October with a moderate pullback during the last week of the month.\nEven if the challenging headwind environment continues, we expect to have a solid fourth quarter.\nFuel margins should remain healthy given higher industry breakevens and fuel volume should remain steady with normal seasonality.\nAs for full year 2021, we expect to deliver on our adjusted EBITDA guidance.\nAs we look out further to 2022, you should expect us to have another good year.\nWe will provide detailed guidance in December.\nMoving on to growth.\nWe continue to strengthen our business by growing our midstream assets.\nThe NuStar and Cato acquisitions as well as the Brownsville project helped diversify and vertically integrate our business.\nIt also provides us a more enhanced platform for fuel distribution growth.\nFinancially, we executed these transactions at very attractive valuations, especially after adding synergies.\nOn the fuel distribution side, we will continue to grow organically as well as capitalize on acquisition opportunities.\nAs we continue to grow, we will build on our history of maintaining financial discipline, which means protecting the security of our distributions while also protecting our balance sheet.\n", "role": "user" }, { "content": "excluding any impact in 2021 from recently closed acquisitions, co continues to expect fy 2021 adjusted ebitda of $725 million to $765 million.\n", "role": "assistant" } ]

[ { "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 include expectations and assumptions regarding the Partnership's future operations and financial performance, including expectations and assumptions related to the impact of the COVID-19 pandemic.\nActual results could differ materially and the Partnership undertakes no obligation to update these statements based on subsequent events.\nDuring today's call, we will also discuss certain non-GAAP financial measures, including adjusted EBITDA and distributable cash flow as adjusted.\nFor the fourth quarter of 2020, the Partnership recorded net income of $83 million, adjusted EBITDA was $159 million compared to $168 million in the fourth quarter of 2019.\nVolumes of 1.8 billion gallons were relatively unchanged from the third quarter, but remain down about 12% from levels seen a year ago.\nFuel margin was $0.092 per gallon and included approximately $8 million of one-time write-offs associated with prior period fuel tax and inventory-related items.\nFourth quarter margin also included approximately $9 million of unfavorability related to inventory valuation and associated hedges.\nFor the full-year 2020, the impact of this inventory valuation and hedging activity resulted in approximately $2 million of margin favorability.\nKarl will elaborate further on our fuel margin in his remarks.\nFourth quarter distributable cash flow, as adjusted, was $97 million, yielding a coverage ratio of 1.1 times.\nWe ended the full-year 2020 with the coverage ratio of 1.5 times.\nOn January 28, we declared an $0.8255 per unit distribution, the same as last quarter.\nThe proven resiliency of our business and history of delivering results has allowed us to maintain a stable and secure distribution for our unitholders.\nWe continued to deliver strong results in 2020, despite the challenges of the COVID pandemic and fully expect to continue building on the strong performance in 2021 and beyond.\nFirst off, I'd like to highlight some of our accomplishments for 2020 before walking through the 2021 guidance that we unveiled in December.\nOur full-year 2020 accomplishments include the following: adjusted EBITDA of $739 million, a record for SUN and up 11% from 2019 levels; distributable cash flow, as adjusted, was $517 million, also a record for SUN and up 14% from 2019.\nWe improved our already strong coverage ratio to 1.5 times, up from 1.3 times in both 2018 and 2019.\nOur cost reduction initiatives resulted in total operating expenses of $448 million, which was a reduction of 11% from 2019 levels.\nOur fuel margin increased $0.018 per gallon from 2019 to $0.119 per gallon.\nWe successfully refinanced our 4.875% Senior Notes due 2023, with new 4.5% Senior Notes due 2029, thereby lowering interest expense, while significantly expanding the weighted average maturity of our debt.\nFor reference, our nearest Senior Note debt maturity is now the 2026 Senior Notes.\nAnd finally, we improved our leverage to 4.18 times, or 4.1 times when adjusted for total cash on hand from 4.6 times at the end of 2019.\nOur liquidity remains strong, with an undrawn $1.5 billion revolving credit facility and $97 million in cash at year-end.\nWith all these accomplishments as a backdrop, we enter 2021 poised to continue to deliver strong results.\nIn December, we provided guidance for 2021 for adjusted EBITDA of between $725 million and $765 million.\nUnderpinning this guidance are the following: fuel volumes in a range of 7.25 billion to 7.75 billion gallons; annual fuel margin between $0.11 per gallon and $0.12 per gallon; total operating expenses of between $440 million and $450 million; maintenance capital of $45 million; and growth capital of at least $120 million.\nFree cash flow generating capability of this business allows us to focus on the pillars of our capital allocation strategy.\nFirst, to maintain a stable and secure distribution for our unitholders.\nSecond, to protect our balance sheet through debt paydown when prudent.\nAnd third, to pursue disciplined investment in our growth opportunities.\nWe will be financially disciplined with the target coverage ratio of 1.4 times, which is up from our prior target of 1.2 times and a target leverage ratio of 4 times, which is down from our prior target of 4.5 times to 4.75 times.\nI'd like to conclude my remarks by stating that Sunoco established a strong financial footing early on in 2020 and this continues to carry through as we enter 2021.\nScott and Dylan walk you through the numbers for the quarter and the full year.\nI want to take a few minutes and give you a sense of how we view these results and what kind of insight they give us into 2021.\nLet's start by talking about volume.\nOn the surface, our fourth quarter results were very similar to the third quarter.\nThere are a few additional factors though that we view as promising.\nFirst, during our last conference call, I shared the volumes were off around 12% for October.\nWhen we moved into November and December, we all experienced some additional restrictions on travel and business activity, with the increase in COVID cases across the country.\nEven with those additional restrictions, our volumes held and we finished the quarter at about the same level relative to the prior year.\nThe second factor is around J.C. Nolan volumes.\nLast quarter, I explained that our J.C. Nolan diesel volumes were off much more than the rest of our business.\nWe were also lapping the start-up of the pipeline in the third quarter of 2019.\nIn the fourth quarter, this was an even bigger impact, since we were comparing against a full period of pipeline operation.\nYear-over-year, J.C. Nolan volume reductions accounted for 3% of total volume for the fourth quarter.\nSo that would put our volumes down only 9%, if you remove the impact of J.C. Nolan.\nMy final thought on volumes provides some insight into one of the reasons for the solid performance, which is our ability to add new customers.\nStarting last summer, we started ramping backup our growth focus on signing up new customers, and we're starting to see that in our Q4 numbers, and that will carry forward into 2021.\nThe bottom line is that we see our volumes continue to grow through the rest of this year, both from overall economic recovery and our own growth efforts.\nMoving over to margins, the market continues to support stronger margins.\nLet me give you some perspective on our reported margins for the fourth quarter.\nFirst, we saw a challenging market environment with a fairly steady and relentless claim in RBOB prices for most of the quarter.\nIf you look back at our history, that would have likely resulted in margins close to $0.09 a gallon, maybe even dipping a little lower.\nFast forward to the post-COVID environment and the floor is higher, which is what our fourth quarter results look like after you account for the one-time adjustments and inventory timing impacts as Scott mentioned.\nAs we have stated before, the higher breakeven environment for many industry participants, both in the wholesale and retail channels, helps support the higher margin floor.\nAs we look to the first quarter, we've continued to see a steady rise in RBOB prices, putting pressure on margins.\nAnd we still feel like a floor in the $0.095 to $0.10 range is reasonable for these tough market environments, excluding one-time issues in the quarter.\nWe already discussed some one-time items for the fourth quarter, and we expect the 7-Eleven catch-up payment in the first quarter that will provide a boost to our base margins.\nFinally, I want to provide some more color around our expense performance.\nFor the last few years, we've been extremely focused on looking hard at what it takes to efficiently run our business.\nWhen COVID hit, we took an even deeper look and made some tough choices.\nOur expense performance in the third and fourth quarters show that we are able to operate at these levels.\nThere will always be some fluctuations in timing, and there were a few favorable one-time impacts in the fourth quarter that brought the expenses down even a little further than our run rate.\nBut the takeaway is that we have continued to deliver on our expense commitments, and are very comfortable with our guidance for this year.\nWe continue to add volume to our network.\nMargins are solid, and our expense focus falls directly to the bottom line.\nWe delivered very strong results in 2020.\nWe came into 2020 financially healthy, and we finished the year stronger than where we started.\nWhile countless companies had significant financial difficulties, our 2020 results demonstrate the resiliency of our business model.\nLast year, we delivered record EBITDA and DCF.\nOver the last three years, we have steadily improved our coverage, while at the same time, decreasing our leverage ratio.\nLooking forward, we expect to have another good year.\nWe're about a month and a half into the New Year and both fuel volume and RBOB costs continue to rise.\nSince early November, both gasoline and diesel prices has steadily increased.\nOver that time period, New York Harbor RBOB has gone up around $0.75 per gallon.\nAs you know, this is not the most conducive margin environment.\nWith that said, there are other important factors to consider.\nIndustry break-evens are higher.\nWe're seeing this play out, as the market continues to pass on price increases to the rack and to the street.\nHowever, the steady constant rise in costs does create a time lag, resulting in short-term margin pressure.\nTaking a step back, there will always be some quarters where the commodity environment provides noticeable headwind.\nBut there will also be quarters where the commodity environment will be highly supportive of wide margins.\nHistory has shown that run-ups in prices are followed by periods of more volatile or falling prices that provide margin tailwinds.\nWhen you look at our business beyond a quarter-by-quarter basis, we expect to have quality long-term results.\nOn the volume side, we're seeing positive increases in volume, excluding material regional weather events.\nWe expect this to continue over the course of this year.\nFinally, you can expect us to deliver on expenses.\nMoving on to growth, we'll continue to grow our field distribution business.\nThe opportunity set remains strong, and we expect these organic and M&A opportunities to remain for the foreseeable future.\nOn the midstream side, we remain patient looking for the right opportunity at the right price.\nWe'll continue to look for highly synergistic opportunities, while remaining financially disciplined.\n", "role": "user" }, { "content": "partnership sold 1.8 billion gallons in q4 of 2020, down 12% from q4 of 2019.\npartnership expects full year 2021 adjusted ebitda to be between $725 and $765 million.\nexpects 2021 growth capital expenditures of at least $120 million.\nexpects 2021 fuel volumes to be between 7.25 and 7.75 billion gallons.\n", "role": "assistant" } ]

[ { "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 currently available information and assumptions, and we undertake no duty to update this information, except as required by law.\nThese statements are also subject to a number of risks and uncertainties, including the numerous risks related to the cyber incident and the potential spinoff of our N-able business.\nCopies are available from the SEC or on our Investor Relations website.\nWhen we refer to financial measures, we will be referring to the non-GAAP financial measures.\nI hope you're doing well and staying safe.\nI've completed my first full quarter at SolarWinds, and I'm energized and inspired as I witnessed firsthand the tremendous dedication that our employees have to customer success, the competence, commitment and attitude displayed to execute on our Secure by Design initiative and to deliver demonstrable results, the commitment and trust our customers and partners place in us, something we deeply cherish and do not take for granted as we accelerate our journey to help them transform faster in an increasingly hybrid IT world.\nI continue to spend a lot of my time with our employees, customers and partners, whereas the conversations earlier in the quarter were largely about the cyber incident itself and what happened.\nIncreasingly, the conversations are much more focused on what have we learned and how can we apply what we have learned to ensure the safety of our environment and those of our customers.\nIn this regard, our Secure by Design initiatives are enabling us to have broader conversations with customers, thereby, bolstering our relevance to them even further.\nI'll expand on this in a minute.\nWith respect to the cyber incident, we are also coming to the end of our investigation and will continue to provide updates as we conclude them.\nI will now touch on a few financial and operational highlights in Q1.\nOur teams did an excellent job of maintaining focus on delivering customer success.\nOur partners played a pivotal role as we executed the Orion Assistance Program in support of our customers.\nFor the first quarter, we delivered revenues well above the high end of the range of our outlook with a total non-GAAP revenue ending the quarter at $257 million, representing year-over-year growth of 33%.\nFirst-quarter adjusted EBITDA was $106.5 million, representing an adjusted EBITDA margin of 41%, exceeding the high end of our outlook for the first quarter.\nOur Q1 core IT management maintenance renewal rate of 87% is higher than the low- to mid-80% renewal rates we noted we expected in 2021 when we discussed our full-year results in February.\nWe continue to focus on customer retention as a key priority and hope to grow back to our historical and best-in-class renewal rates of over 90%.\nOur largest customer renewed with us while also increasing their license count.\nWe have also seen other customers, including those in the federal sector, expand their investments with SolarWinds in the first quarter.\nWe see these wins as validation of our team's proactive and sustained efforts to deliver industry-leading solutions that are not only powerful and affordable but also secure.\nOur N-able business, again, delivered double digit, 13% revenue growth in Q1, and we continue to expand our portfolio in support of our MSP partners and SME customers.\nWe are accelerating our momentum in the database monitoring segment with the formation of a dedicated core team to help us capture what we believe is a large and growing market opportunity of over $6 billion.\nWe were recognized by Gartner in the Magic Quadrant for application performance monitoring, another pillar of future growth potential for us alongside our database monitoring business.\nWe expanded our offerings in Q1 as we continue to evolve to a full stack observability company that helps accelerate the digital transformation needs of our customers via an integrated platform with automation, monitoring, alerting and remediation capabilities, leveraging AI/ML techniques on a unified cloud platform to support hybrid IT deployments.\nWe expanded our management team with the appointment of Andrea Webb as our chief customer officer; Tim Brown as our chief information and security officer; and Rohini Kasturi as our chief product officer.\nAdditionally, Jason Bliss assumed the role of chief administrative officer, integrating the corporate functions of HR, corporate development, legal and IT.\nIn addition, we added key management members to the N-able business, including a chief technology and product officer, a general counsel, chief customer officer and chief people officer, as N-able prepares to operate on a stand-alone basis.\nNow let me turn to an update on our Secure by Design initiatives.\nThe recent cyber incident against SolarWinds, our widely used technology providers and our and their customers is a concerning new reality for the software industry.\nThis represents the increasingly novel and sophisticated actions used by [Inaudible] space on the supply chain and infrastructure on which we all rely and illustrate the need for the industry and public sector to work together to share real-time information.\nSolarWinds is committed to sharing our learnings about this attack broadly given the common development practices in the industry and our belief that transparency and cooperation are our industry's best tools to help prevent and protect against future attacks.\nAnd we see an opportunity to help the industry -- to help lead an industrywide effort that we believe will position SolarWinds as a model for secure software environment, development processes and products.\nIn fact, this is increasingly the topic of discussion as I engage more closely with our customers and partners.\nOver the past three months, our IT, product and development teams have been committed to implementing a series of actions that are designed to further enhance the security of our environment and system against attacks, including adopting least privilege access mechanisms and addressing further potential risks associated with third-party application access.\nWe also recognize that our security posture and procedures are dependent on the people at SolarWinds.\nSo we are investing in additional rigorous security training for our employees.\nOur initiatives continue to resonate well with customers and partners, and it is my goal to proliferate them as [Inaudible] as possible.\nWe see these initiatives and investments as being consistent with our goal of being a best-in-class provider of powerful, affordable and secure solution.\nI'll spend the next five minutes giving an update on the N-able business and first-quarter performance.\nI'm excited to announce that in Q1, we completed the rebrand of N-able across our platform solutions, new website and partner community sites.\nAlso, on April 14, we hosted an Analyst Day for equity analysts.\nFirst, the market opportunity for N-able starts with a small and medium enterprise IT spending, which is over $1 trillion globally and growing.\nSMEs [Inaudible] as much IT complexity as larger enterprises, but IT management and security are not the core competencies of most SMEs.\nAs a result, SMEs have increasingly turned to MSPs to be their trusted partner through their digital evolution.\nAnd in turn, MSP is the technology that can be effectively -- can effectively address SME customer needs.\nUsing our purpose-built software platform, MSPs are able to not just build successful service offerings but also play an increasingly important role in shaping SME IT spending decisions.\nWe believe the market opportunity for our software solutions is approximately $23 billion and expected to nearly double by 2025.\nSecond, why do we win?\nWe win because we're architected for the MSP to enable them to effectively scale their businesses and are purpose-built across three pillars.\nThe first is our monitoring breadth and depth, which has always been a strength of both N-able and SolarWinds.\nOur MSP partners that live in our platform day in and day out rely on the centralized view and alerts we provide on hundreds of thousands of different end customer environments and devices.\nIn Q1, we expanded our monitoring depth.\nWe went GA with our Microsoft Intune integration, allowing MSP partners to perform Intune device management functions directly with the N-able platform.\nWe also extended our iOS device coverage to map workstations, adding remote access capabilities into additional types of network devices.\nOur second area of strength is our data protection and security solutions, which are fully cloud-based and seamlessly delivered via our RMM platform and give our MSP partners a truly layered approach to protecting their customers.\nIn addition, because our platform gives our partners access into end customer environments, the security of our platform is extremely important.\nIn light of the Secure by Design initiatives that Sudhakar has discussed in detail, we have and continue to implement end product security enhancements to our enabled products, such as multifactor authentication, single sign-on and SSH for network devices.\nThird, we offer what we believe our best-in-class partner success resources that train our partners on how to improve technician efficiency, build stronger books of business and become better business operators.\nThis helps drive retention and expansion on our platform.\nWe look forward to hosting our global Empower event later this quarter, and the discussions we'll have with our partners on industry trends and how to solve the challenges they face.\nAs we strive to become a stand-alone Rule of 50 company with a heavier lean toward growth from the potential spin-off transaction, I want to highlight the unique aspect of our growth model called partner enabled expansion.\nWe grow when we add new MSP partners and help our MSP partners grow.\nThat's the fuel that propelled the model.\n[Inaudible] partner, we grow when the partner adds new technicians that use our sell-through solutions.\nMore significantly, we grow when the partners add new SME customers and when those SMEs add employees and devices under management.\nWe grow again when our MSPs deliver additional solutions powered by our platform.\nThis is the power of our sell-through model and also the biggest driver of our net retention rate.\nThrough this partner-enabled activity, our partners essentially act as an extension of our sales force.\nTurning to N-able's Q1 performance.\nWe delivered a solid 13% total revenue growth and 15% subscription revenue growth, especially considering a couple of headwinds worth noting.\nFirst, after the cyber incident at the end of December, we slowed our demand generation and sales activity, which impacted new partner additions and expansions in January and February before returning to more normalized levels in March.\nSecond, the continuing impact of COVID, which we began to experience during Q2 of last year, remains a modest year-over-year headwind, although the impact on our subscription revenue growth rates has continued to improve since the initial deceleration in Q2 of last year.\nLooking ahead, we're cautiously optimistic about improving conditions for the balance of 2021.\nWe are making investments for growth in R&D, international go-to-market and partner success that we believe will position us for growth acceleration as we exit 2021.\nWe remain excited about the planned spin of N-able, which we're still targeting to complete over the coming months.\nOur first-quarter financial results reflect solid execution while demonstrating the resiliency and sustainability of our model.\nWe had a much better quarter than anticipated and finished well above the high end of the range of our outlook for the first quarter with total non-GAAP revenue ending the quarter at $257 million, representing year-over-year growth of over 3%.\nTotal N-able revenue was $83 million, representing growth of 13%.\nJohn just talked about what is driving that piece of our business.\nAnd total -- or core IT management revenue was $174 million.\nTotal license and maintenance revenue was $147.9 million in the first quarter, down 3.5% versus the prior year.\nMaintenance revenue was $123 million in the first quarter, up 6% versus the prior year.\nWe typically disclose the maintenance renewal rate for our perpetual license products on a trailing 12-month basis.\nOur Q1 trailing 12-month rate was 91%.\nHowever, given the heightened focus on smaller windows of performance since the cyber incident, we want to provide the in-quarter renewal rate for Q1, which was approximately 87%.\nThis exceeded our expectations for renewal rates in the low- to mid-80% range throughout 2021, which we provided on our last earnings call.\nIn addition, we expect this renewal rate of 87% to increase by a few percentage points based on historical trends after factoring in renewals that expire bookings that occur post quarter end.\nFor the first quarter, license revenue was $24.9 million, which represents a decline of approximately 33% as compared to the first quarter of 2020.\nThe decline in license revenue is a result of the combination of the impact of the cyber incident, the continuing impact of the COVID-19 pandemic and our continued evolution to subscription sales for our on-premises products.\nOur on-premises subscription sales resulted in approximately 2-percentage-point headwind to our license revenue for the quarter.\nThat said, we believe that the first quarter should be the most negatively impacted as it relates to the year-over-year growth.\nWe substantially halted our demand gen activities from December through the early parts of the first quarter as we focused our efforts on assisting customers.\nWe believe this negatively impacted our new license bookings in the first quarter and in the early portion of the quarter in particular.\nWe saw acceleration in our business as we move throughout the -- through the first quarter, and we are working to continue that trend as we move through the rest of the year.\nLooking ahead, we expect to continue to have near-term headwinds on our business.\nTotal ARR reached approximately $961 million as of March 31, reflecting year-over-year growth of 12%.\nSubscription ARR grew 13%, reaching $438 million at the end of the quarter.\nMoving to our subscription revenue.\nFirst-quarter non-GAAP subscription revenue was $109.1 million, up 15% year over year, which was driven by N-able's 15% year-over-year subscription revenue growth, as well as solid performance in core IT management subscription revenue.\nOur land, expand and retain model has successfully driven sustained growth in our customer relationships.\nWe finished the quarter -- we finished the first quarter of 2021 with 1,074 customers that have spent more than $100,000 with us in the last 12 months, which is a 16% improvement over the previous year and 17% more since year-end.\nWe are continuing our efforts to build larger relationships with our enterprise customers.\nWe also had a solid quarter of non-GAAP profitability in the first quarter.\nFirst-quarter adjusted EBITDA was $106.5 million, representing an adjusted EBITDA margin of 41%, exceeding the high end of the outlook for the first quarter.\nUnlevered free cash flow for the first quarter totaled $51 million.\nExcluded from EBITDA and unlevered cash flow -- unlevered free cash flow are one-time costs of approximately $20 million, including $10 million of spin-off-related costs and $10 million of cyber-related remediation, containment, investigation and professional fees, net of insurance proceeds.\nI do want to clarify that these cyber-related costs, not included in adjusted EBITDA, are one-time and nonrecurring.\nThey are separate and distinct from the $20 million to $25 million of Secure by Design initiatives, which are aimed at enhancing our IT security and supply chain process.\nThese costs will be part of our recurring cost structure on a go-forward basis.\nWe expect one-time cyber-related costs to fluctuate in future quarters but to be less in future periods than the amount incurred in the first quarter.\nThese one-time cyber costs are, however, difficult to predict.\nThey not only include the significant costs of the forensic investigation efforts that we are expecting to conclude in the near future, but also costs associated with our ongoing litigation, government investigations and potential judgments or fines and related professional fees.\nWe expect our insurance coverage to offset a portion of these expenses.\nWe expect our one-time spend-related costs to subside following the completion of the spin-off, which we are targeting to complete in the coming months.\nNet leverage at March 31 was 3.2 times our trailing 12-month adjusted EBITDA.\nWith $374.4 million in cash at March 31, we believe we are well-positioned from a financial standpoint to continue to invest in the future growth of our business.\nI will now walk you through our outlook before turning it over to Sudhakar for some final thoughts.\nWhile ongoing customer renewals and pipeline growth are indicators of the health of our business, there is still enough uncertainty around the impact of the cyber incident on top of the continuing impact from the global pandemic that we feel is still too early predict a range of outcomes with the level of precision that we have provided in the past.\nAs such, we believe it is prudent to only provide second quarter of 2021 outlook for total revenue, adjusted EBITDA and earnings per share.\nFor the second quarter of 2021, we expect total non-GAAP revenue to be in the range of $254 million to $258 million, representing year-over-year growth of 3% to 5%.\nAdjusted EBITDA for the second quarter is expected to be $102 million to $104 million, which implies an approximately 40% adjusted EBITDA margin.\nAs a reminder, our adjusted EBITDA margin is being impacted by the incremental spending associated with the Secure by Design initiative that we began implementing in the first quarter, as well as the growth initiatives that John and the N-able team were executing in anticipation of the potential spin-off.\nNon-GAAP fully diluted earnings per share is projected to be $0.21 per share, assuming an estimated 319.6 million fully diluted shares outstanding.\nAnd last, our outlook for the second quarter assumes a non-GAAP tax rate of 22%, and we expect to pay approximately $22 million in cash taxes during the second quarter of 2021.\nWhile we are not providing consolidated full-year outlook, I will say that we continue to expect license performance to improve versus Q1 as we move through the year in all regions.\nBased on what we've seen so far in the first quarter, we expect that maintenance renewal rates will be in the mid-80s for the rest of 2021, and we are targeting to return to historical performance in 2022 as we work with our customers to ensure their security and success and as we continue to further enhance our product portfolio.\nIncreasing the percentage of our recurring revenue has been a focus over the past five years, and recurring revenue is down 90% of our total revenue.\nWe intend to continue to expand these subscription offerings of our on-premises products in 2021 and make that new subscription sales a priority with our sales team.\nAnd finally, with respect to our conversion of adjusted EBITDA to free cash flow.\nOur rate for the first quarter was well below our historical trends.\nThe conversion rate was negatively impacted by lower license and maintenance renewal bookings.\nThe ongoing revenue mix shift to more subscription, as well as annual bonus payments, which are seasonally higher in the first quarter.\nWe expect our conversion rate for the full year to be above 70% and grow to the low 80% range in 2022.\nOur team's competence, commitment and attitude was evident as we delivered a strong Q1 performance and delivered results exceeding our outlook in both revenue and EBITDA.\nI'm confident that our continued focus on customer success will make us even more relevant as we evolve our platforms and serve the evolving hybrid IT needs of our customers.\nWe expect to enable ITOps, DevOps and SecOps professionals to have integrated experiences across automation and configuration, monitoring, visibility, alerting and remediation.\nThese moves will further accelerate our progress toward a greater mix of subscription and recurring revenues.\nFor the remainder of 2021, our focus will continue to be on executing on the initiatives that I outlined during our Q4 earnings call, focusing on customer retention and demonstrating ongoing progress in subscription, license and maintenance growth across all geographies and sectors.\nWe hope to continue to demonstrate progress in customer retention, license and maintenance growth and accelerating our progress along with strategic and portfolio dimensions to support the growing needs of our customers.\n", "role": "user" }, { "content": "sees q2 non-gaap diluted earnings per share of $0.21.\n", "role": "assistant" } ]

[ { "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 currently available information and assumptions, and we undertake no duty to update this information, except as required by law.\nThese statements are also subject to a number of risks and uncertainties, including the numerous risks related to the cyber incident and the recently completed spinoff of the N-able business.\nCopies are available from the SEC or on our Investor Relations website.\nWe completed the spin-off of the N-able business on July 19, 2021, and accordingly have included the results of the N-able business as discontinued operations for the current and historical periods.\nUnless otherwise specified, when we refer to the financial measures, we will be referring to the non-GAAP financial measure.\nWe note also that because there was no impact of purchase accounting on revenue in the third quarter, our non-GAAP total revenue is equivalent to our GAAP total revenue in this period.\nGoing forward, we will begin to present certain financial measures on a GAAP basis only.\nI hope you're doing well and staying safe.\nAs many of you know, we will hold our annual Analyst Day meeting on November 10, 2021.\nDuring this virtual event, we look forward to then share our vision for SolarWinds and how we plan to retain, evolve, and grow to build an even more successful business.\nAs we move our discussion of financial and operational highlights for Q3, I've described our performance and continued progress.\nI attribute the progress to the dedication of our Celerion, the relevance of our solutions to address our customer needs, and the commitment of our partners and customers to SolarWinds.\nFor the third quarter, we delivered revenue above the high end of the range of the outlook we provided with total revenue ending the quarter at $181.3 million.\nThird quarter adjusted EBITDA was $75.3 million, representing an adjusted EBITDA margin of 42%, exceeding just the high end of our outlook.\nAs I outlined in the Q4 2020 earnings call, customer retention is a top priority in 2021, and we continue to make great progress toward this goal in Q3.\nOur Q3 maintenance and annual rate of 88% was above the low to mid-80% renewal rate we noted we expected in 2021.\nCustomer retention remains a key priority.\nAnd with our growing portfolio of offerings, we believe we have a great opportunity to continue to grow our LTV and net retention rates with our large customer base.\nWhile we continue to be able to offer flexible pricing, purchasing options to our customers, we are increasing our focus on subscription bookings and we expect to continue to increase the mix of subscription in these upcoming quarters and years.\nIn Q3, our subscription revenue grew at a 20% year-over-year rate with subscription ARR growing 23% year over year.\nBart will provide more color on how this part of our business will trend in Q4 and beyond, given the skew that the SentryOne acquisition timing creates.\nWe have completed now the successful spin-off of the N-able business in July, and that has enabled us to plan and execute our stand-alone strategy, the details of which we look forward to sharing with you at Analyst Day.\nOur global system integrator and enterprise motions are resulting in larger subscription deals.\nNoteworthy here is that customers are investing in our entire solutions offering and taking advantage of our simplified packaging and the pricing.\nWe will also highlight our views on our [Inaudible] solutions potential to be a growth driver in the coming years through a comprehensive and differentiated approach to observability compared to the alternate.\nOur product teams made significant progress in Q3, delivering these new elements within our solutions that are designed to drive additional value to our customers based on their evolving needs, including updates to our database and ITSM solutions as well as Secure by Design initiatives that impact our entire product portfolio.\nWe have also extended the breadth of our database monitoring portfolio's platform support, which now includes Google cloud extensions and added enhanced integration, including with Microsoft teams to our ITSM solutions.\nIncreasingly, our application, database, and ITSM offerings will become integral elements of SolarWinds' observability that -- as we create -- as we support customers of all sizes with their IT, Dev, and SecOps requirements.\nWe believe that this will help differentiate our offerings from all -- from those of the other vendors.\nWe are expanding our global partner engagement with events in various geographies.\nThe global partners, including GSIs, cloud service providers, and MSPs, are critical to expanding our GTM reach and to jointly deliver customer success.\nDifferentiated offerings with rich enablement, incentives, and a spirit of mutual accountability are the underpinnings of our partner strategy.\nIn September, we celebrated the Seventh Annual IT Professionals Day holiday, which was originally established by SolarWinds here in 2015.\nIT Pro Day recognizes and celebrates all IT professionals and the contributions they make to their business every day.\nAs part of the celebration, we released findings from our IT Pro Day 2021 Survey, Bring It On, which then revealed IT [Inaudible] confidence and [Inaudible] in their roles.\nWe were also able to recognize four IT professionals nominated by their peers in our second annual IT Pro Day awards.\nWe also believe that IT professionals showed their true grit under challenging conditions this past year and deserve recognition and appreciation for their efforts, commitment, and resiliency.\nWe continue to attract excellent talent across all functions of our organization, and we are selectively adding our footprint in international regions, including most recently in South Korea and parts of our EMEA region.\nI'll discuss our SolarWinds results on a stand-alone basis.\nAs most of you know, our spin of the N-able business happened earlier this quarter and was effective on July 19th.\nTherefore, these results are reflected as discontinued operations in our third quarter financial results.\nAlso, a quick reminder that the guidance for the third quarter that I provided in August did not include any impact from N-able as the spin had been completed at that time.\nOnce again, our public filings will present N-able as discontinued operations in the third quarter as well as in prior periods for a much better comparability.\nOur third quarter financial results reflect another quarter of improving execution while demonstrating the resiliency of our model.\nThat execution led to another quarter of better-than-expected financial results for the third quarter with total revenue ending at $181.3 million, above the high end of our total revenue outlook of about $176 million to $180 million.\nFor the third quarter of 2021, there was no impact of purchase accounting on revenue, so our non-GAAP total revenue is equivalent to our GAAP total revenue.\nTotal license and maintenance revenue was $149 million in the third quarter, which is a decrease of 6% from the prior year period.\nThe maintenance revenue was $120 million in the third quarter, which is up slightly from the prior year.\nOur maintenance revenue has been impacted by a combination of year-over-year declines in license sales for the past eight quarters and a reduction in our renewal rate in 2021.\nThe trend of this lower license sales intensified with the COVID-19 pandemic in the first quarter of 2020 and because of the introduction of subscriptions of our licensed products in Q2 of 2020 as well as the SUNBURST incident in December of 2020 as we focus more for our efforts on longer-term customer success and retention rather than maximizing near-term sales.\nAlthough maintenance renewal rates have remained lower than historical levels since SUNBURST, we are encouraged by the fact that they have improved throughout the year.\nOur expectation at the start of the year was that maintenance renewal rates this would be in the low to mid-80s.\nOn a trailing 12-month basis, our maintenance renewal rate is 89%.\nWorking with our customers had been a top priority this year.\nAlso consistent with recent quarters, we want to provide the in-quarter renewal rate for the third quarter, which currently stands at approximately 88%, which again is above our expectations at the start of the year.\nFor the third quarter, license revenue was $29.2 million, which represents a decline of approximately 26% as compared to the third quarter of 2020.\nOn-premises subscription sales resulted in an approximately 11-percentage-point headwind to license revenue for the quarter.\nThe remainder of the decline in license revenue reflects the combination of an impact of that cyber incident and the continuing impact of the COVID-19 pandemic.\nThat said, our new license sales performance with commercial customers has improved sequentially each quarter during the year.\nAnd while we have continued to sell to customers in the federal government and have had some key wins post-SUNBURST, new sales to customers in the federal space overall has been a challenge this year.\nWe have an incredibly committed federal team, who's now the primary focus has been on working with customers and maintaining the security and stability of their environment.\nMoving to our subscription revenue.\nThird quarter subscription revenue was $32.3 million, up the 20% year over year.\nThis increase is due to the additional subscription revenue from SentryOne products as well as increased sales of our on-premise subscriptions as part of our early efforts to shift more of our business to subscription.\nTotal ARR have reached approximately $624 million as of September 30, 2021, reflecting year-over-year growth of 9% and is up slightly from our ending Q2 2021 ARR balance of $621 million, which is the corrected amount included in our 8-K filing from earlier this month.\nThe growth in ARR is that primarily due to the incremental revenue of SentryOne, which we acquired late last year, and our efforts on sales of our products at on-premises subscription.\nOur subscription ARR of $130.2 million increased 23% year over year and 9% sequentially from the second quarter.\nSo we finished the third quarter of 2021 with 786 customers that have spent more than $100,000 with us in the last 12 months, which is a 4% improvement over the previous year.\nWe are continuing our efforts will build larger relationships with our enterprise customers, which we will talk more about at our upcoming Analyst Day next month.\nWe delivered a solid quarter of our non-GAAP profitability.\nThird quarter adjusted EBITDA was $75.3 million, representing an adjusted EBITDA margin of 42%, exceeding the high end of the outlook for the third quarter despite continuing to invest in our business.\nExcluded from the adjusted EBITDA are onetime costs of approximately of the $2.9 million of cyber-related remediation, containment, investigation, and professional fees, net of insurance proceeds.\nI do want to clarify that these cyber-related costs not included in adjusted EBITDA are onetime and nonrecurring.\nThey are separate and distinct from our Secure by Design initiatives, which are aimed at enhancing our IT security and supply chain process.\nCosts related to our Secure by Design initiatives are and will remain part of the recurring cost structure as we go forward.\nWe expect onetime cyber-related cost to fluctuate in future quarters but to be less in future periods.\nThese onetime cyber costs are, however, difficult to predict.\nThey not only include the significant cost of the forensic investigation efforts we substantially in May but also costs associated with our ongoing litigation, government investigations, and any potential judgments or fines related and -- as well as related professional fees.\nWe expect our insurance coverage and offset a portion of these expenses and will be presented net of insurance proceeds.\nNet leverage at September 30 was approximately 3.8 times our pro forma trailing 12-month adjusted EBITDA.\nWe retained the full amount of the $1.9 billion in term debt that the company had at present.\nDuring the third quarter, we completed a two for one reverse stock split and declared a dividend of $1.50 per share on this post-split basis, which was paid in August.\nIn addition, N-able repaid $325 million of inter-company debt.\nAs a result of this repayment, our cash balance is $709 million at the end of the third quarter, bringing our net debt to approximately $1.2 billion.\nOur plan is to keep that cash of our balance sheet for the foreseeable future.\nWe believe we have favorable terms on our debt, so we intend to maintain flexibility as it relates to our cash on balance sheet.\nOur debt matures in February of 2024 and we expect to revisit our level of gross debt as we get closer to that date.\nI will then now walk you through our outlook before turning it back over to Sudhakar for some final thoughts.\nWe are providing guidance for the fourth quarter of 2021 for total revenue, adjusted EBITDA, and earnings per share, and we will tell you what that means for a full year.\nFor the fourth quarter of 2021, we expect total revenue to be in the range of $180 million to $184 million, representing a year-over-year decline of negative 3% to negative 1%.\nAdjusted EBITDA for the fourth quarter is expected to be approximately $72 million to $74 million, which also implies an approximately 40% adjusted EBITDA margin.\nNon-GAAP fully diluted earnings per share is projected to be $0.25 to $0.26 per share, assuming an estimated 160.7 million fully diluted shares outstanding, which reflects the reverse stock split completed on July 30.\nAnd finally, our outlook for the fourth quarter assumes a non-GAAP tax rate of 22%, and that we expect to pay approximately $8 million in cash taxes during the fourth quarter of 2021.\nFor the full year, we expect total revenue to be in the range of $712 million to $716 million, representing a year-over-year decline of negative 1% to flat with prior year.\nSo our adjusted EBITDA for the full year is expected to be approximately $297 million to $299 million, which implies an approximately 42% adjusted EBITDA margin for the year.\nNon-GAAP fully diluted earnings per share is projected to be $1.14 to $1.15 per share, assuming an estimated 160.5 million fully diluted shares outstanding.\nAs you think about the components of revenue in the fourth quarter, it is important to remember that we acquired SentryOne last year in late October.\nWe expect our subscription revenue growth in the fourth quarter to be in the high single digits.\nHowever, looking ahead to 2022 and beyond, we intend to continue to expand our subscription offerings while turning new subscription sales a much higher priority with our sales team.\nBased on what we've seen year-to-date, we expect that maintenance renewal rates will be in the high 80s for the fourth quarter and anticipate continued progress throughout 2022.\nAnd in the near term, we expect the maintenance revenue will continue to be relatively flat to slightly down compared to prior year periods.\nSo as we think about EBITDA margins for the rest of the year and into 2022, the costs associated with our Secure by Design initiatives, investments in transitioning our product portfolio to a greater subscription mix and our continued investments in our sales and marketing initiatives are factored into the margins in the short term.\nWe anticipate that accelerating margins again in the future, but believe that these investments are now necessary.\nWe will talk more about these initiatives at the Analyst Day on November 10.\nOur team's competence, commitment, and attitude continues to be on display as we delivered a strong Q3 performance, exceeding outlook in both total revenue and adjusted EBITDA.\nWe are executing our mission to help customers accelerate their business transformation via simple, powerful, and secure solutions for multi-cloud environments.\nIn Q3, we introduced an early adopter program of SolarWinds' observability to select customers.\nThese customers currently under maintenance has the great opportunity to make an early move to subscribe to our offerings and begin a journey to multi-cloud with SolarWinds as a strategic partner.\nBy eliminating customer complexity and meeting them where they currently are, we believe we are uniquely positioned to protect investments while increasing our relevance to them over time.\nWe expect this motion to become a mainstream activity in our upcoming quarters and a significant contributor to our subscription and ARR.\nIn Q4, we have continued to execute on the initiatives that I outlined during our Q4 2020 earnings call, focusing on customer retention and demonstrating ongoing progress in subscription, license, and maintenance growth across geographies and sectors.\nWe hope to see you all on November 10.\n", "role": "user" }, { "content": "sees fy non-gaap earnings per share $1.14 to $1.15.\nsees q4 non-gaap earnings per share $0.25 to $0.26.\nsees q4 revenue $180 million to $184 million.\nsees fy revenue $712 million to $716 million.\nq3 revenue fell 1.9 percent to $181.3 million.\n", "role": "assistant" } ]

[ { "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 currently available information and assumptions, and we undertake no duty to update this information, except as required by law.\nThese statements are also subject to a number of risks and uncertainties, including the numerous risks related to the impact of the cyberattack on our business and a potential spin-off of our MSP business.\nCopies are available from the SEC or on our Investor Relations website.\nWhen we refer to financial measures, we will be referring to the non-GAAP financial measures.\nI hope you're doing well and staying safe.\nAs you know, I joined the company earlier this year on January 4 and this is my first earnings call with the company.\nI have long been a student of SolarWinds' high velocity go-to-market model.\nOur broad portfolio of solutions, low customer concentration, strong revenue recurring base, strong balance sheet and the opportunity to apply my background to address an expanding market opportunity to support the needs of ITOps, DevOps and SecOps professionals made it easy for me to say, yes, when I got the opportunity to lead the company as president and CEO.\nIn the seven weeks that I have been with the company, I've had the opportunity to spend a lot of my time with customers and partners.\nThe vast majority of the customers that I have spoken to understand that the cyber incident that affected us and others could have happened to any vendor, and especially a broadly deployed vendor like SolarWinds.\nEqually, they're eager to see us address the issue and share our learnings, which we are doing.\nThe other opportunity that keeps coming up in these discussions is our ability to provide guidance and input to protect the entire environment of our customers as opposed to just focusing on our products, making us a more strategic partner.\nThe majority of our customers that downloaded a version of the affected code have upgraded to our latest version and continue to renew their contracts with us.\nWhile the first priority continues to be ensure the safety and security of our customers, our conversations with customers and partners have also given us the opportunity to discuss the strength of our entire portfolio and of our future plans.\nI have also spent a significant amount of time on the cyberattack on SolarWinds, both in managing the investigation, as well as working closely with our employees, customers and partners.\nI'll elaborate on our investigation, learnings and future plans, but first, I'll touch on a few financial and operational highlights in Q4 and 2020.\nOur teams did a solid job of executing throughout the year in the face of a global pandemic.\nWe hit a significant milestone that many companies aspire to, achieving non-GAAP revenues of over $1 billion in 2020.\nWe grew non-GAAP revenues by 9% year over year for the full-year 2020 and 6% year over year in Q4.\nWe delivered an adjusted EBITDA margin of 48% for each of the full year and in Q4.\nOur non-GAAP subscription revenue grew by 22% for the full-year 2020, and our net retention rate was approximately 105% on a trailing 12-month basis.\nWe sustained strong maintenance renewal rates north of 90% in 2020, and the fourth-quarter renewal rates held up well despite the cyberattacks on SolarWinds, which we announced on December 14.\nWe completed the SentryOne acquisition in the fourth quarter.\nBetween our database performance analyzer, database performance monitor via the acquisition of VividCortex and SentryOne, we now have a comprehensive analysis and monitoring portfolio, supporting a broad range of database platforms across on-premises, native cloud and hybrid IT environments.\nRevenue for our database management products continued to grow in the fourth quarter, consistent with recent trends.\nWe expect SentryOne to help sustain that growth.\nThe database solutions complement our already strong network, systems and application monitoring solutions, as well as our efforts to become a leader in hybrid IT monitoring.\nOur core IT management subscription growth continues to be fueled by service desk, which is our ITSM product and our cloud infrastructure and application management solutions.\nAdditionally, our MSP business again delivered double-digit 15% growth in both the fourth quarter and the full year, surpassing $300 million in revenue in 2020.\nWe ended the year with more than 25,000 MSP partners that service over 500,000 small, medium enterprise customers, reflecting our status as a leading provider of remote monitoring and management, security, data protection and business management solutions for MSPs around the world.\nIn December, we announced the confidential submission of a Form 10 registration statement with the SEC for the potential spin-off of our MSP business.\nWhile the process is difficult to predict, we continue to target completing the transaction in the second quarter.\nAs part of the preparation for the spin-off, the MSP business, formerly known as SolarWinds MSP also announced a new brand in December.\nMoving forward, the business will be known by a familiar name, Enable, extending the roots of the company.\nTo reflect the performance, protection and partnership, our MSP partners need to power their clients and businesses forward.\nNow let me turn to the cyberattack.\nSince we learned of it in December, our top priority has been to ensure that our customers are safe and protected.\nAnd the entire company has been working tirelessly to provide remediation, support our customers, cooperate with government authorities and share our learnings publicly.\nAs I came on board and learned more, it became clear that any company would be hard-pressed on its own to withstand this type of dedicated and sophisticated attack by a determined nation state.\nIt also became clear that the scope of the attack was much broader than SolarWinds as news and public disclosures emerged about breaches and compromises of other companies unrelated to us.\nWe believe our Orion platform was targeted in this campaign to create a backdoor into IT environments of select customers.\nThe threat actor did this by adding malicious code known as SUNBURST to versions that we released between March and June of 2020.\nSUNBURST has since been removed and is not an ongoing threat in current versions of Orion.\nAdditionally, after extensive investigation, we have not found SUNBURST in any of our more than 70 non-Orion products.\nOne update that I believe is critical to share is that we previously disclosed that the number of customers that may have installed an affected version of the Orion software platform was fewer than 18,000.\nBased on our discussions with customers and our investigations into the nature of SUNBURST malicious code and the advanced trade craft of the threat actor, we believe the number of organizations actually exploited through SUNBURST is substantially fewer than the number of customers that may have installed an affected version of the Orion platform.\nThis is consistent with statements by National Security Advisor for Cyber and Emerging Technology, Anne Neuberger, that as of February 17, nine federal agencies and about 100 private sector companies were compromised.\nWhile our attitude will always be that of one impacted customer is one too many, we currently believe the total number of customers potentially impacted is significantly lower than what was originally feared.\nWe are applying our learnings from this event and sharing our work more broadly.\nInternally, we are referring to our work as secure by design.\nAnd it's premised on zero trust principles and developing a best-in-class secure software development model to ensure our customers can have the utmost confidence in our solutions.\nWe see these investments as consistent with our goal of being a best-in-class provider of powerful, affordable and secure solutions.\nWe have published details regarding our efforts, but in summary, they are focused on three primary areas: first, further securing our internal environment; second, enhancing our product development environment; and third, ensuring the security and integrity of the products we deliver.\nWe've added a level of security and review through tools, processes, automation and where necessary, manual checks around our product development processes that we believe goes well beyond industry norms to ensure the integrity and security of all of our products.\nWe firmly believe that the Orion software platform and related products, as well as all of our other products can be used by our customers without risk of the SUNBURST malicious code.\nWe also formed a new technology and cybersecurity committee of our board.\nTwo current sitting members of our board, who are CIOs with significant cybersecurity experience, and I form the three member committee.\nThis committee has the responsibility to assist our board in overseeing our response to the cyber incident and provide advice to management and oversight of our improvement initiatives.\nGiven our unique experience, we are committed not only to leading the way with respect to secure software development, but also to sharing our learnings with the industry.\nOur fourth-quarter financial results reflect solid execution while demonstrating the resiliency of our model in the face of the cyberattack.\nWe finished near the high end of the range of our outlook for the fourth quarter for non-GAAP total revenue, ending the quarter with $265.5 million in revenue, representing year-over-year growth of approximately 6%.\nNon-GAAP maintenance revenue was $124.3 million in the fourth quarter, up 8% versus the prior year, driven by consistent maintenance renewal bookings and reflecting sequential acceleration in maintenance revenue growth since the second quarter, which was impacted the most by the pandemic.\nThis growth was driven by solid customer retention as evidenced by maintenance renewal rates of over 90% in the fourth quarter.\nFor the fourth quarter, non-GAAP license revenue was $34.5 million, which represents a decline of approximately 23% as compared to the fourth quarter of 2019.\nThe decline in license revenue resulted from the continuing impact of the global COVID pandemic, the impact of the cyberattack and our continued evolution to subscription sales for our on-premises products.\nWe continue to see quarter-over-quarter sequential growth in sales of subscriptions for our on-premises products in the fourth quarter.\nOn-premises subscription sales resulted in an approximately 3-percentage-point headwind to our license revenue for the quarter.\nTotal non-GAAP license and maintenance revenue was $158.8 million in the fourth quarter, down 1% versus the prior year.\nLooking ahead, we expect near-term headwinds on our business due to the cyberattack and the pandemic.\nThat said, we continue to see demand from both new and existing customers for our products and continue to renew existing customers, although at lower rates.\nTotal ARR reached approximately $960 million as of December 31, 2020, reflecting year-over-year growth of 14%, which includes approximately 2 percentage points of contribution from our SentryOne acquisition in the fourth quarter.\nSubscription ARR grew 17%, reaching $435 million at the end of the quarter.\nSubscription ARR growth was not materially impacted by our SentryOne acquisition.\nMoving to our subscription revenue.\nFourth-quarter non-GAAP subscription revenue was $106.6 million, up 20% year over year, which was driven by 16% year-over-year growth in our MSP business, as well as solid performance in our core IT management subscription business.\nOur land, expand and retain model has successfully driven sustained growth in our customer relationships.\nOur subscription net retention rate for the year was 105%.\nOver the last year, we believe that pandemic has validated the importance of digital transformation to the small, medium-sized enterprises that depend on our MSP partners for IT management and security and has given us confidence in the strength of our business model.\nWhile we've seen some reduction in spending among some SMEs, we've also seen promising trends and uptake of our solutions, as well as consistency among our larger MSP partners, resulting in stable net retention rates in 2020.\nTotal non-GAAP revenue for the year ended December 31, 2020, was $1.02 billion, which represents a major milestone as we broke the $1 billion mark in annual revenues threshold while delivering 9% growth over 2019 total revenue of $938.5 million.\nFor the year ended December 31, 2020, non-GAAP subscription revenue was $399 million, which represents growth of 22% year over year.\nThe growth was led in dollars by our MSP business and from a full-year revenue from our ITSM and VividCortex products that were acquired in April and December 2019, respectively.\nNon-GAAP license and maintenance revenue for the full year in 2020 increased 2% year over year to $622.7 million.\nNon-GAAP maintenance revenue grew at a rate of 7%, reaching over $478 million.\nThis growth was driven by solid customer retention as evidenced by a maintenance renewal rate of 91.5% in 2020.\nLicense revenue for the full year was negatively impacted by a combination of the slowdown in on-premises purchasing as a result of the COVID pandemic, the cyberattack in the fourth quarter and the impact of offering previous perpetual license products on a subscription basis, which we expect to yield more revenue over the full duration of the typical customer lifetime.\nWe finished 2020 with 1,057 customers that have spent more than $100,000 with us in the last 12 months, which is an 18% improvement over year-end 2019.\nWe are continuing our efforts to build larger relationships with our enterprise customers.\nWe also had a solid quarter of non-GAAP profitability in the fourth quarter.\nFourth-quarter adjusted EBITDA was $127.1 million, representing an adjusted EBITDA margin of 48%, exceeding the high end of the outlook for the fourth quarter.\nAnd for the year ended December 31, 2020, adjusted EBITDA was $489.7 million representing an adjusted EBITDA margin of 48% for the full year as well.\nUnlevered free cash flow for the full year totaled $431 million, which reflects an adjusted EBITDA conversion rate of 88%.\nThe conversion rate was positively impacted by lower interest payments on our debt and improved net working capital.\nNet leverage at December 31 was 3.2 times our trailing 12 months adjusted EBITDA, despite the use of $142 million of cash on the acquisition of SentryOne in the fourth quarter.\nFor the full year in 2020, we reduced our net leverage ratio from 3.9 times to 3.2 times, reflecting the power of our model to complete an acquisition the size of SentryOne and still delever significantly over the course of the year.\nWith $370.5 million in cash at December 31, we are well-positioned from a financial standpoint to continue to invest in the future growth of our business.\nI will now walk you through our first-quarter outlook before turning it over to Sudhakar for some final thoughts.\nAs it relates to the full year, there is uncertainty around the impact of the cyberattack on top of the continuing impact from the global pandemic.\nWe are encouraged by recent engagements with both prospective and existing customers, and we are cautiously optimistic about growth of our business in 2021.\nWhile ongoing customer renewals and pipeline growth are indicators of the health of our business, we feel it is still too early to predict the range of outcomes with the level of precision we have provided in the past.\nAs such, we believe it is prudent to only provide first quarter of 2021 outlook for total revenue, adjusted EBITDA and earnings per share at this point.\nFor the first quarter of 2021, we expect non -- total non-GAAP revenue to be in the range of $247 million to $252 million, representing year-over-year growth of negative 1% to positive 1%.\nAdjusted EBITDA for the first quarter is expected to be $98 million to $101 million, which implies an approximately 40% EBITDA margin.\nAs a reminder, our adjusted EBITDA margin is typically at its lowest level in the first quarter of every year due to lower license revenue and an increase in expenses, particularly around social security and payroll taxes.\nThat said, the year-over-year decline in adjusted EBITDA also reflects incremental spending related to the SentryOne acquisition.\nInvestments in our MSP business in advance of the spin and the incremental expenses we are making in our security-related initiatives.\nAs it relates to 2020 and 2021 adjusted EBITDA, we expect our investments in security-related initiatives to be approximately $20 million to $25 million.\nNon-GAAP fully diluted earnings per share is projected to be $0.19 to $0.20 per share, assuming an estimated 318 million fully diluted shares outstanding.\nOur outlook for the first quarter assumes a non-GAAP tax rate of 22%, and we expect to pay approximately $17.2 million in cash taxes during the first quarter of 2021.\ndollar exchange rate of 1.34.\nWhile we are not providing full-year outlook, I will say that we expect license revenue growth to improve as we move through the year in all regions and particularly in our EMEA and APJ regions.\nBased on what we've seen so far in the first quarter, maintenance renewal rates are expected to be in the low to mid-80s in 2021.\nAnd we are targeting to return to historical performance in 2022 as we work with our customers to ensure their success and as we continue to further enhance our product portfolio.\nIncreasing the percentage of our recurring revenue has been a focus of ours over the past five years, and recurring revenue is now 86% of our total revenue.\nWe will continue to expand the subscription offerings of our on-premises products in 2021 and make new subscription sales a priority with our sales teams.\nAs we said previously, we continue to explore the previously announced potential spin-off of our MSP business, now known as Enable and continue to target having that transaction occur in the second quarter of this year.\nIn my various executive assignments, I have sought to let humility, ownership, transparency, focused action and a bias toward customer success be my guiding principles.\nWe are committed to practicing these principles actively at SolarWinds, and as we do, we will emerge stronger as a business.\nOver time, we see significant opportunities to increase our relevance to customers and to expand our market by leveraging our network, systems, application and database analysis and monitoring tools, along with our excellent IT service desk and tools portfolio.\nWe intend to integrate our platforms and serve the evolving hybrid IT needs of our customers.\nWe will enable it ops, DevOps and SecOps professionals to have integrated experiences across automation and configuration, monitoring, visibility, alerting and remediation.\nThese moves will further accelerate our progress toward a greater mix of subscription and recurring revenues.\nAs we look to the next several quarters and years, we believe that we have a growing market opportunity, and we intend to organize our activities and plans to achieve and, in some segments, exceed market growth rates over the long-term even as we deliver strong EBITDA margins, as a result of the operating leverage that we have created in our business.\nTo achieve a balance between sustained growth and strong profitability, we expect to take the following key actions: expand our international go-to-market investments to capture additional growth and market opportunities; accelerate our evolution to our customer success model and further enhance our sales team's ability to land new customers and expand.\nWe believe this critical evolution will lead to a better customer satisfaction and, over time, increase the lifetime value of our customers, continue to nourish our high velocity go-to-market models, while also expanding with the enterprise and global system integrated motions, we started in 2020.\nWe are embarking on additional portfolio integration and packaging efforts to support enterprise customers.\nAccelerate our offering strategy to comprehensively address the needs of hybrid IT deployments with flexible deployments that is cloud, SaaS and on-premises with an associated evolution to a greater subscription mix.\nSelectively expand via inorganic investments that both round out our portfolio, as well as enhance our ability to capture market opportunity faster.\nOver 20-plus years, we have earned the trust of our customers by delivering powerful and affordable solutions, and I'm confident that going forward, we will be known for delivering powerful, affordable and secure solutions.\n", "role": "user" }, { "content": "sees q1 non-gaap earnings per share $0.19 to $0.20.\nsees q1 2021 revenue $247 million to $252 million.\nq4 revenue $265.5 million versus refinitiv ibes estimate of $261.5 million.\nat december 31, total cash and cash equivalents were $370.5 million and total debt was $1.9 billion.\nsees q1 non-gaap total revenue in range of $247 to $252 million.\nsees q1non-gaap diluted earnings per share of $0.19 to $0.20.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call, in addition to myself, is Jim Loree, CEO; Don Allen, President and CFO; and Lee McChesney, Vice President of Corporate Finance and CFO of Tools & Storage.\nConsistent with prior calls, we're going to be just 1 question per caller.\nSuch statements are based on assumptions of future events that may not prove to be accurate and as such, they involve risk and uncertainty.\nCustomer demand remained at robust levels across commercial and retail end markets.\nand strong trends continued in homebuilding and remodeling, commercial construction, professional activity and global economic growth.\nInnovation was also a positive, which is driving demand around electrification and other themes.\nWe're continuing to prioritize meeting this heightened customer demand while operating in an unusually complex supply chain environment.\nTools generated 13% organic growth in what we believe to be the strongest demand environment in our history, resulting from positive secular trends, robust professional activity and strong global markets.\nOur brands such as DEWALT, CRAFTSMAN, Stanley and Black & Decker, among others, were fueled by a steady stream of innovation and a strong and resilient supply chain, which is putting great products in the hands of our loyal end users across the globe.\nIndustrial grew 1% organically, driven by continued double-digit growth and share gains in our general industrial and attachment tool businesses.\nas these end markets remained solid.\nIndustrial growth was tempered, however, by lower auto production activity as OEMs continue to be impacted by electronic and other component shortages.\nAerospace also experienced trough conditions as the industry recovery while promising to be likely in the foreseeable future, has yet to occur.\nSecurity delivered another strong quarter with 8% organic growth.\nThe security transformation to a data-enabled cloud-based technology provider is building significant momentum, and our team successfully converted this robust backlog into revenue growth.\nOrder rates were strong and we posted a third straight record quarter and backlog.\nWe're excited about the full potential of these opportunities to support elevated revenue growth in the fourth quarter and beyond.\nThe overall company adjusted operating margin rate was 12.2%, down from the prior year as growth investments and higher supply chain costs that accelerated in the quarter more than offset volume leverage, price mix benefits and margin resiliency.\nAdjusted earnings per share for the quarter was $2.77, down 4% year-over-year.\nAnd similar to most companies engaged in global trade, our supply chain costs were higher this quarter.\nWe have worked tirelessly to get components and finished products to where they need to be to serve this extraordinary customer demand.\nThrough data analytics, we now have visibility into every container on and off the water, and we utilize this visibility to prioritize and expedite the most critical items, often with premium freight.\nTo offset the additional expenses, we have deployed price increases, surcharges and productivity measures.\nTo be clear, we have made a conscious decision to incur temporarily higher expediting costs to serve our customers and meet demand as effectively as possible.\nWe have sized the pricing and productivity actions to ensure that we are well positioned to address the inflation and achieve margin accretion in 2022.\nThis implies that our actions will be sufficient to restore our margins to normalized levels as the actions catch up to the higher costs in 2022.\nAnd further, we remain highly confident in our multiyear growth and margin expansion plans.\nThere are several positive secular demand trends that are benefiting our businesses, and we remain bullish on the resi and nonresi construction markets as well as the industrial recovery.\nWe have developed an array of growth drivers to position our businesses to capture this opportunity, and we are continuing to invest in innovation, manufacturing, automation, inventory and our supply chain to meet the strong demand in the near term and fuel sustainable growth over the medium and long terms.\nAnd now I'll take a moment to review our recently announced MTD and Excel acquisitions.\nThe combination of these two high-quality complementary companies with our existing outdoor business creates a powerful growth engine with approximately $4 billion of revenue across all categories the $4 billion, we expect approximately $3 million of that in -- of the $4 billion to be a direct result of closing the two transactions in the coming weeks.\nEven before that, we are starting from a position of strength with strong outdoor brands in DEWALT, CRAFTSMAN and Black & Decker as well as the fastest-growing franchise in cordless electric outdoor products.\nOur legacy outdoor business is benefiting from the long-term trend of electrification, primarily now in handheld products and walk-behind mowers.\nMTD is one of the leading players in U.S. retail with great brands such as Cub Cadet and Troy-Bilt and brings a relentless dedication to innovation.\nExcel focuses on zero-turn mowers and offers a range of premier commercial grade and prosumer equipment, with Tier 1 niche pro brands such as Hustler and Big Dog.\nExcel also brings us access to a strong and extensive professional dealer network.\nThese acquisitions are complementary to each other and fill gaps in our current presence in the outdoor space, which brings me to another major growth driver.\nWith these acquisitions, we have an ESG opportunity.\nto lead large-format electrification and outdoor.\nThe customer adoption of electrified riders and zero-turn mowers is still in the early stages but the future potential is compelling.\nIn collaboration with MTD, we have been making great progress since 2019 in developing innovative electrified solutions that offer a compelling value proposition in terms of run time, price point, and environmental impact.\nAdditionally, MTD has semiautonomous and autonomous mowing technology, which we will commercialize in the coming years.\nOutdoor will undoubtedly unleash an array of impressive innovation over the next few years.\nGlobal channel development and professional branding are significant additional revenue synergies that we think as we think about ways to grow sales through our future outdoor activities, applying MTD's strong innovation with a leading professional brand like DEWALT presents an excellent opportunity to win the prouser with a full line of gas and electric options.\nTo fully realize this potential, we plan to build on our existing position in retail as well as expand our sales in the pro dealer network.\nMTD has a strong presence in the retail channel with approximately 1,500 dealer locations.\nExcel exclusively distributes through its 1,400 outlet dealer channel, which is largely geographically complementary to MTD's dealers.\nThe opportunities for brand, product and channel revenue synergies to expand sales and carry accretive margins are both meaningful and exciting.\nAnd finally, on one more outdoor growth front, we have an opportunity in the $4 billion high-margin parts service segment as we build our presence and serve our customers.\nThe benefits from this growth will also come with margin expansion as we apply our SBD operating model and our global scale to execute on cost synergies, launch margin-accretive innovation and develop a vibrant professional franchise.\nWe expect these opportunities to provide a pathway to mid-teens or higher margins over the long term.\nBoth acquisitions are currently progressing through their respective regulatory processes.\nAnd for MTD, we are happy to say that the United States HSR review is complete.\nAdditional reviews are underway in several other smaller countries.\nWe currently anticipate to close in late 2021 or early '22 for both transactions pending successful completion of the regulatory processes.\nAnd as must be obvious, we're excited about the future of outdoor products at SBD.\nThe significant ESG growth and margin opportunities have the potential for excellent value creation in 2022 and beyond.\nExtreme innovation is at the heart of SBD's culture.\nIt is 1 of our 3 strategic pillars: performance, innovation and social responsibility.\nInnovation differentiates all our franchises and defines our brands.\nOver the last couple of years, we have brought incredible innovation to the market from FLEXVOLT to Atomic and Extreme and now DEWALT power stack and Black & Decker Reviva, which I will cover in a few moments.\nIt is clear that our tools innovation machine has never been stronger.\nNonetheless, we are doubling down on our investments in innovation and new product commercialization.\nThese investments will support the largest pipeline we have ever had with new products across all our major categories and end users.\nOver the last 12 months, we have added approximately 1,300 new employees with deep domain expertise and technical knowledge in critical areas, including sales, engineering, product management, brand, industrial design, e-commerce and end-user insights.\nOur supply chain investments are also key innovation enablers moving closer to the customer, adding capacity, improves agility, customer responsiveness and speed to market as we develop and commercialize new products.\nWe have approximately $200 million of new innovation and growth investment projects in process which are included in our second half 2021 run rate.\nThese projects will allow us to effectively better serve the strong global product demand for tools and position us for sustained long-term growth.\nEarlier this month, we announced our latest breakthrough innovation, the DEWALT POWERSTACK battery, a remarkable design and engineering achievement.\nPOWERSTACK is the world's first power tool battery to leverage lithium-ion pouch cell technology and introduces a new era of performance for DEWALT power tools.\nPOWERSTACK batteries will begin shipping in the fourth quarter of this year with annual growth potential measured in hundreds of millions.\nThis is another example of our leading-edge differentiated innovation, driving the revenue growth potential of our core business.\nThe POWERSTACK battery is 25% smaller, 15% lighter than our comparable DEWALT 20-volt 2 amp-hour battery and it delivers 5 0% more power with 2x the charge cycles, making this revolutionary design the lightest and most powerful and longest-lasting compact battery from DEWALT. And it is compatible with our DEWALT 20-volt system.\nThe combination of POWERSTACK and our proven capabilities to design and manufacture the best and most compact brushless motors in the industry, we have just unlocked a new dimension for smaller, lighter and more powerful tools with enormous runway ahead.\nThe importance of this innovation cannot be overstated.\nMore power, more compact, lighter, lasts longer, guaranteed tough.\nWe love it and so are the market.\nDEWALT is again asserting itself as the industry leader in professional power tools.\nAnd now for something also very exciting, but quite different.\nIt's never been more important for companies to turn their attention to building a sustainable future for our global community.\nThe Black & Decker Reviva line is our latest customer offering and creating more sustainable products and driving innovation with purpose.\nThis line of consumer DIY tools features 5 0% post-consumer recycled content in the enclosures, which reduces virgin plastic use and supports closing the loop in a circular economy.\nPartnering with Eastman to apply their Triton Renew material to our products has created the opportunity to reduce environmental impact, while continuing to develop the performance, durability and quality that our customers require.\nWe are delighted to have found a long-term partner in Eastman, a company that will support and accelerate our wider, broader commitment to becoming a force for good in society.\nThis product is a great example of how corporations can embrace ESG in a way that provides meaningful innovation to the consumer, reduces our impact on the environment and drives business performance.\nThe Black & Decker revitalization is a major growth opportunity for the company, and Reviva is just one great example of how we're making that happen.\nIn support of that, I want to spend a moment to share a few of the many actions we have taken to position our company for significant growth in 2022 and beyond.\nThree areas I would like to highlight include our latest investments in expanded manufacturing capacity, strategic sourcing partnerships and the further acceleration of our factory automation initiatives.\nBeginning with our manufacturing footprint.\nWe are aligning our new investments with our Make Where We Sell strategy as we expand capacity globally.\nFor example, in 2021, we are opening two new power tool plants and 1 new hand tool facility in North America.\nThese three new facilities will enable shorter lead times.\nAnd once in place, our North American capacity will have tripled since 2016.\nThese new manufacturing plants will be accompanied by a parallel regional development of our local supply chain base over time, enhancing local market sourcing and speed to market.\nAs it relates to strategic sourcing, we have acted and continued to focus on securing sufficient supply of battery cells and electronic components using our power tools to support our long-term growth plans, which include the growing tailwind from electrification.\nWe have co-invested with key battery suppliers to secure dedicated capacity for the next several years.\nIn addition, we are adding new qualified suppliers to diversify our sourcing and working to increase our inventories for battery cells.\nWe made great progress in 2021 and are well positioned for significant supply increases related to battery cells.\nAs it relates to electronic components, we are following a very similar plan.\nWe have made progress in 2021 and are on our way to securing the chips and the throughput to support at least 25% growth in our electronic component supply for 2022.\nThis area is currently an intense pain point.\nHowever, we see a road map for significant improvement by early spring of 2022.\nFinally, we are leveraging our Industry 4.0 capabilities to drive manufacturing automation throughout many of our factories.\nWe are deploying multiple projects in our Charlotte manufacturing facility that have a payback of less than one year.\nThese flexible automation projects enable the labor efficiency and increased throughput required to deliver outsized productivity and enable our Make Where We Sell strategy.\nIn summary, we have positioned our business to have the capacity, supply and throughput to deliver significant growth in 2022 and beyond.\nI will now take a deeper dive into our business segment results for the third quarter.\nTools & Storage delivered record revenues as we maintained our focus on ensuring we keep up with the existing market demands.\nThis resulted in 14% revenue growth with volume up 11%, price up 2% and currency contributing an additional point.\nThe operating margin rate for the segment was 15.7%, down from 21.5% in the third quarter of last year as volume, price, productivity and benefits from innovation were more than offset by accelerating transit costs incurred to meet the strong market demand.\nAdditionally, rising commodity inflation and new growth investments related to digital marketing and feet on the street offset those positive items I mentioned.\nAll regions delivered organic growth, with North America up 9%, Europe up 20% and emerging markets up 28%.\nThis performance was supported across all markets as the secular The strong professional-driven demand was also demonstrated in the commercial and industrial channels posting 15% growth versus the prior year.\nOur thesis on demand is playing out as underlying construction activity remains strong and the Pro is driving growth, overcoming a robust growth performance in the comparable period last year and a little bit of moderation in the DIY category.\nFurther demonstrating the durability of these trends, our latest POS results showed mid-single-digit growth over the last four weeks, covering late September through mid-October, with the last measured week up double digits, a very good signal of the healthy backdrop in U. S. retail.\nThe European Tools business experienced growth across all major geographies.\nalong with the commercial, retail brick-and-mortar and e-commerce channels.\nThe region grew 17% organically with a standout e-commerce outperformance, up 43% versus the prior year.\nIn addition to a notable DEWALT brand strength performance, which achieved 27% growth.\nFinally, in emerging markets, growth was pervasive across all regions and was led by trade solutions, cordless power tools and continued e-commerce momentum.\nAll markets are consistently contributing to share gains, including 36% organic growth in Latin America and 22% organic growth in Asia.\nFinally, our enterprisewide e-commerce strategic growth initiative continues to deliver strong results with third quarter global e-commerce revenue up nearly 20% versus 2020.\nNow let's turn to the Tools & Storage SBUs.\nPower Tools delivered 11% organic growth, which was supported by the new and innovative product launches across CRAFTSMAN, DEWALT and Stanley FatMax.\nTwo great examples of these innovations are, one, Stanley 20-volt product line launch with improved battery technology; and two, several new offerings across both the Extreme and Atomic platforms.\nMoving on to the Outdoor business.\nAll regions contributed to an 11% organic growth performance.\nThis was driven by new listings and cordless innovations under the Black & Decker, CRAFTSMAN and DEWALT brands.\nNotably, global sales were up over 50% year-to-date as compared to 2020.\nWe delivered industry-leading growth, rolling out new offerings in mowers and handheld products in 2021.\nLooking ahead, we are encouraged by the results of our 2022 line reviews where we gained significant listings with all our major retailers, supporting our belief that outdoor electrification has the potential to be a major growth catalyst for the company.\nFinally, hand tools, accessories and storage grew 16% organically, fueled by a robust market demand and new product introductions across our key construction, auto and industrial markets.\nA few highlights include the 20-volt spot laser and the Elite circular saw blade within the construction space.\nWithin the automotive aftermarket, CRAFTSMAN unveiled a new set of V-Series mechanics tools that are designed to professional specifications.\nWe also launched a Lennox Gentech carbide band saw for our industrial customers.\nA lot of wonderful innovation in the third quarter.\nAlso during the quarter, the Tools & Storage team was awarded 46 Pro Tool Innovation Awards, representing best-in-class products in the construction industry.\nWell done, Tools team.\nDemand in tools remains robust, lapping strong 2020 growth comps and Q3 saw strong mid-20s percentile growth as compared to 2019.\nNow shifting to Industrial.\nSegment revenue expanded by 1%, as two points of price and 1 point of currency was partially offset by one point of volume and one point from an oil and gas product line divestiture.\nOperating margin was 7.9%, down versus 12.3% in the third quarter of last year as the benefits from price and productivity were more than offset by commodity inflation, growth investments and volume declines in higher-margin automotive and aerospace fasteners.\nLooking further within this segment, Engineered Fastening organic revenues were down 1% as strong general industrial growth of 23% was offset by market-driven aerospace declines and lower automotive OEM production, resulting from the global semiconductor shortage.\nOur auto fastener growth outperformed light vehicle production by approximately 15 points for the quarter and year-to-date periods.\nThis shows our value-add business model is generating share gains despite the OEM production schedule fluctuations.\nInfrastructure organic revenues were up 7%, as 16% growth in attachment tools was partially offset by lower pipeline project activity in oil and gas.\nMomentum continues to build in the attachment tools markets with strong backlogs and order rates at our OEM and independent dealer customers.\nAs we look forward into 2022 and beyond, we are prepared to serve the cyclical growth recovery across many of our industrial end markets.\nNow shifting to Security.\nTotal revenue was up 5%, with 7% volume and 1 point contributions from price, currency and acquisitions, which was partially offset by a five point decline related to the international divestitures completed in the third quarter of last year.\nNorth America was up 12% organically, driven by strong backlog conversion in commercial electronic security and solid growth within automatic doors and healthcare.\nEurope was positive organically led by data-driven product solutions in France, which is one of our most mature businesses and activating the new health and safety growth opportunities that we have outlined in the past.\nOur security business transformation is consistently driving top line momentum.\nOrder rates globally grew 14% in the third quarter, resulting in the third consecutive record quarter end backlog.\nOverall Security segment profit rate, excluding charges, was 9.2%, down versus the prior year rate of 11% as price and volume gains were more than offset by costs, pandemic-related inefficiencies and growth investments such as SaaS solutions, touchless door technology and other health and safety options.\nWe now have broad customer access, but new safety protocols are extending installation time lines.\nWe are implementing price actions for these new realities while we continue to invest to fuel top line momentum.\nMoving to slide 11, let's review free cash flow performance.\nThird quarter free cash flow was a use of cash of $125 million, which brings our year-to-date results to a use of cash of $31 million.\nAs you heard from Jim, we are focused on serving our customers and have invested in inventory to serve the robust demand environment here in 2021 and in '22 and beyond, which is a major item that explains the year-over-year performance.\nThere's also a normal seasonality pattern to our working capital that typically results in a significant amount of our cash flow generation occurring in the fourth quarter.\nWe expect 2021 will follow that pattern and are planning for strong fourth quarter cash performance, while ensuring that we make the all of our exciting growth initiatives.\nLet's now move to page 12 and dive into the supply chain.\nThe environment certainly remains dynamic as we serve the robust demand across the markets.\nDuring the third quarter, we experienced accelerated input cost inflation and higher cost to serve demand.\nWe've initiated a comprehensive set of pricing and productivity actions in response.\nI'll now outline our latest expectations for inflation and our game plan for price recovery.\nCompared to our July guidance, key commodity inputs such as steel, resins and purchase components accelerated throughout the third quarter, contributing an incremental $100 million in costs.\nIn addition, container and transportation costs, which largely drive our cost to serve, experienced a dramatic increase during the quarter.\nAverage container spot prices are now nearly seven x what we were paying earlier this year.\nAverage transit time from Asian suppliers to the North American manufacturing facilities and distribution centers have increased more than twofold from approximately 40 days to 85.\nCombined, these container and transit cost impacts added an additional $130 million of cost pressure.\nThese underlying assumptions raise our full year commodity and supply chain headwinds to an estimate of approximately $690 million.\nAssuming the known impacts continue, we also are forecasting approximately $600 million to $650 million of carryover cost headwinds for 2022.\nNow if you shift to the right side of the page, teams across the globe are actively engaged to fully address these headwinds with robust productivity actions to further boost their operational efficiency.\nWe've also completed the price increases that we discussed with you in July and have recently taken further actions, which include communicating a new 5% surcharge in our North America Tools and Outdoor business, and further price increases across all of our businesses and regions during the fourth quarter.\nThe combination of our market-leading brands, when coupled with a robust pipeline for innovation, provide a setup for volume and price-driven growth in 2022.\nAnd then finally, we continue to advance our margin resiliency initiatives and anticipate $100 million to $150 million of opportunity in 2022, which we can leverage to offset incremental headwinds, further invest in the business or contribute to margin outperformance.\nWithin a complex environment, we believe that we've sized the productivity and pricing actions to exceed the anticipated 2022 headwinds, and we are taking the appropriate actions to position the business for margin improvement in the coming quarters.\nI will now outline the full year organic growth and margin rate assumptions overall and by segment.\nOur updated full year 2021 guidance calls for organic revenue growth of 16% to 17%.\nAnd at the midpoint, adjusted earnings per share expansion of 22% versus the prior year and 31% versus 2019.\nTools & Storage and Security organic growth expectations are consistent with our prior guidance, in the low 20s and the high single digits, respectively.\nThe teams will continue to leverage price and cost actions in addition to operational productivity to counteract the extremely dynamic supply chain cost pressures.\nWe are anticipating a relatively consistent level of revenue for Tools & Storage across Q3 and Q4, which both represent total growth in the mid- to high 20s versus the comparable periods in 2019.\nAcross all the segments, margin rates will be down year-over-year, largely due to the accelerated inflation impacts, which are partially mitigated by the incremental pricing actions that were or will be implemented during the third and fourth quarter.\nOn a GAAP basis, we expect the earnings per share range to be $10.20 up to $10.45, inclusive of various onetime charges related to facility moves, deal and integration costs and functional transformation initiatives.\nOn an adjusted basis, we are moderating the earnings per share outlook to $10.90 up to $11.10 from the previous range of $11.35 to $11.65.\nThe key assumption changes to the company's prior earnings per share outlook includes the following 4 items: one, an incremental $230 million in commodity, transit and labor inflation, which is approximately $1.25 reduction to EPS; two, recent currency movements have resulted in a $0.\n15 negative earnings per share for 2021; three, these pressures will be partially mitigated by our incremental pricing actions and other actions, which add an incremental $0.30 to EPS; and then four, the benefit of a lower full year tax rate and other below-the-line assumption will contribute approximately $0.6 0 of improvement to EPS.\nWe have also disclosed several key full year assumptions and our expectation for pre-tax M&A and other charges to assist you with your modeling.\nLastly, the company expects free cash flow to be approximately $1.1 billion to $1.3 billion, which contemplates capex investment levels to be between 3% to 3.5% of revenue.\nThis updated guidance reflects our desire to maintain temporarily higher levels of inventory to serve the strong demand and improve customer fill rates.\nThat, combined with our supply chain investments, will set us up strong or very strong performance in 2022.\nSo in summary, our revised guidance calls for consistent revenue expectations, generating organic growth of 16% to 17% and approximately 22% adjusted earnings per share expansion for the company in 2021.\nConsidering the volatility in the operating environment that we all continue to navigate, this is an excellent top line performance with significant year-over-year earnings per share expansion.\nMoving to the right side of the page, I'll now outline some initial thoughts on 2022.\nWhile the environment remains dynamic, we have strong conviction that we can grow our core earnings base in addition to the MTD and Excel accretion.\nWe have been investing in our supply chain and in a powerful set of organic growth initiatives that could fuel mid-single-digit organic volume growth in 2022.\nIn addition, we have cost productivity to help us fund investments and enable healthy operating leverage.\nWe are also actively addressing the inflationary environment with pricing actions that should result in 3.5 to 4 points of price next year and will allow us to move -- to more than fully recover the carryover impacts from inflation experienced in the second half of 2021.\nWe believe this price and inflation dynamic can be a positive carryover benefit of approximately $0.20 of earnings per share in 2022.\nThese factors added together should generate approximately $0.90 to $1.\n10 of earnings per share accretion.\nAdditionally, MTD and Excel is expected to generate $0.50 of earnings per share and combined with the prior factors can result in significant double-digit earnings per share growth from operations.\nBelow the line, we are assuming a $0.50 headwind, primarily from the tax benefit in 2021 which will not repeat next year.\nSo to summarize, with the current inflation and demand environment, we are programming the business to deliver $1 of earnings per share growth versus our 2021 guidance.\nTools & Security global markets continue to demonstrate strong demand and our customers have an optimistic view for 2022.\nIndustrial will begin to see a cyclical recovery in 2022, most likely at a moderate pace.\nWe have a clear plan for 2022 growth assuming that conditions we are experiencing today continue.\nThese initial thoughts on what is possible in 2022 will be refined with our guidance to be issued in January once we have a clearer picture of various external inputs.\nThat being said, the market demand environment remains very strong and supportive.\nWe have a phenomenal set of growth catalysts across the businesses, and we are actively addressing the supply and inflation environment, which has not worsened from what we have experienced in Q3.\nWe remain well positioned to deliver above-market organic growth with operating leverage, resulting in strong free cash flow generation that will drive top quartile shareholder returns over the long term.\nIt may not be obvious without stepping back from all this condensed information is this.\nWhen we deliver the organic growth in 2022 that Don discussed and when we closed the outdoor transactions, in combination, we will have added $6 billion of growth in the 2021, 2022 time period against a 2020 base of $14 billion.\nThat is over 40% growth.\nSo in summary, we continue to execute on the strong demand trends and deliver exceptional organic growth despite the temporarily challenging supply chain environment.\nWe are enjoying positive secular trends, vibrant markets and a strong array of growth catalysts, and we expect this to continue.\nI am more than pleased with our team's efforts, and I'm excited about the enormous potential as we close out this year and look forward to continuing top and bottom line growth to drive shareholder value creation in the coming months and years.\nAnd finally, I am excited about all the cultural advancements we have made in recent times to attract, inspire and engage talent in the 2020s requires an acute awareness and commitment to deliver what that talent is looking for in their company's employee value proposition.\nWe are a purpose-driven company with an authentic commitment to diversity and inclusion.\nWe are a company that cares about its stakeholders and is doing its share to be a force for good in society.\nThis is an exciting place for people to thrive and live their purpose.\nSo far, it is working.\nOur ability to attract world-class diverse talent has never been stronger, and our passion for and conviction in differentiated performance, becoming known as one of the world's most innovative companies and elevating our commitment to corporate social responsibility inspires us and motivates us every day.\nWe are for those who make the world.\nAnd with that, we are now ready for Q&A.\nShannon, we can now open the call to Q&A, please.\n", "role": "user" }, { "content": "stanley black & decker q3 revenue up 11% to $4.3 bln.\nq3 revenue rose 11 percent to $4.3 billion.\nrevising 2021 diluted gaap earnings per share guidance range to $10.20 - $10.45.\nrevising 2021 adjusted earnings per share to $10.90 - $11.10.\nqtrly adjusted earnings per share $ 2.77.\n", "role": "assistant" } ]

[ { "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 Mark Chekanow, Director of Investor Relations at SWM.\nActual results may differ materially from the results suggested by these comments for a number of reasons, which are discussed in more detail in our Securities and Exchange Commission filings, including our annual report on Form 10-K and our quarterly reports on Form 10-Q.\nIn particular, the extent to which the COVID-19 pandemic continues to impact our business is uncertain and depends on numerous evolving factors which are difficult to predict, including the duration and scope of the pandemic and actions taken in response to it.\nUnless stated otherwise, financial and operational metric comparisons are to the prior-year period and relate to continuing operations.\nThese continue to be interesting times around the world.\nI've seen in news reports, COVID is moderating somewhat, but also not retreating as fully as everyone had hoped.\nAt the same time, dramatic demand increases have caused widespread supply disruptions with rapid and sometimes unprecedented price increases on many input costs, coupled with shortages of key raw materials.\nIn mid-2020, while many companies dealt with weak sales results and lengthy production outages from COVID-related stay-at-home orders, SWM's performance was quite strong, with several AMS markets proving resilient to COVID pressures and our Paper business exceeding expectations.\nSWM's global teams were agile and our portfolio robust with good demand across many end markets, resulting in outstanding 2020 third quarter earnings.\nWe were expecting a similar story this year by building on an already strong portfolio, combined with the additional capabilities offered by our acquisition of Scapa in April.\nWe have high conviction that the fundamental story remains positive as demonstrated by the strong top line growth continuing in AMS. However, 2021 has seen global supply chains in disarray and rapid inflation and challenges accelerated throughout the third quarter, with higher input costs compounded by limited availability of some key raw materials and global shipping bottlenecks; these headwinds are clearly impacting our bottom line results.\nWhile we continue to successfully implement price increases with the latest round becoming effective October 1, we have still been lagging in many cases, pressuring margins and resulting in us delivering adjusted earnings per share of $0.82 for the third quarter.\nBut we do see some early signs of moderation.\nWe expect these conditions to continue at least through the fourth quarter before our actions deliver better margin recovery.\nGiven our results to date and near-term view, we expect that our full year 2021 adjusted earnings per share will be below our original guidance for the full year, but do expect sequential improvements throughout 2022.\nAs you will see in the following commentary, our overall portfolio remains very good -- remains strong with very good demand, and we are confident that the actions we have and will continue to take will return us to the levels of profitability expected from our company.\nAs demonstrated by our agile teams last year, we are well positioned to continue to execute against our long-term strategic plans despite these shorter-term disruptions.\nIn AMS, overall sales nearly doubled, including the benefit of Scapa acquisition, with underlying organic sales increasing a strong 10% in the quarter.\nDemand remains positive in several of our most strategic product lines, particularly in transportation and filtration end markets.\nTransportation was up approximately 25%.\nFundamentals remain very strong and consumers are driving rapid growth for our high-value paint protection films.\nAs we noted in last quarter's call, that despite being the world's largest supplier of these base films, our sales could have been even higher if not for raw material scarcity.\nYear-to-date, we have missed tens of millions of dollars in sales due to this midterm constraint.\nTo address this, we have expanded our supplier network and qualified additional suppliers' resins with our customers and secured additional supply for 2022.\nThough still constrained, access to more raw materials should support our ability to deliver even greater than 10% growth next year on top of what will be already rapid growth in 2021.\nWe further expect our recent acquisitions to allow us to continue to innovate by expanding our offerings in this key product area, thereby executing against our stated strategy of offering our customers greater solutions to their needs.\nWe also continue to invest in capacity worldwide to capitalize on increasing consumer awareness and adoption of paint protection films and continued middle-class growth in many countries.\nFiltration also grew approximately 25% in the quarter as the need for cleaner and purer continues to drive positive trends.\nWater and process materials led the way.\nAgain, echoing comments from the second quarter call, our water customers continued to relay bullish outlooks to our commercial teams as they restock from depleted inventory levels, see increased activity at processing sites and convey positive outlooks for additional capacity coming online in emerging markets.\nProcess filtration also remained strong, albeit somewhat constrained by the semiconductor shortage, but we see continued momentum as chip makers work to fulfill unmet demand.\nOn the air filtration side, sales nearly matched third quarter of last year when our sales grew more than 60% on widespread COVID-driven HVAC system upgrades.\nAnd we are encouraged that this business is maintaining such a high level of activity.\nNotably though, our overall filtration sales have been impacted by labor challenges that constrained our growth.\nWe estimate the total impact to be in the range of $4 million to $5 million per quarter in lost sales, implying our total filtration business could have been up nearly 40% in the third quarter compared to last year.\nThough there is limited visibility on when labor markets will reach equilibrium, we are taking multiple actions at various plants to address the issues in the meantime and are seeing increased interest in open positions.\nThese actions are a combination of increasing rate wages where needed to assure we are competitive; increasing our focus on supporting those currently in roles; and investing in automation to reduce our reliance on labor and improve efficiencies.\nAMS' legacy healthcare business faced a tough year-on-year comparison as last year we benefited from the unprecedented demand in face mask materials.\nOutside of that, we saw good gains in both consumer and higher-margin specialty wound care categories.\nRegarding Scapa's performance, we are pleased that it is in line with our sales expectations.\nExcluding currency fluctuations and GAAP accounting conversions, the overall business rebounded strongly versus 2020 and is nearing pre-COVID levels on the top line.\nOn the healthcare side, we are seeing good growth in consumer wellness products, whereas products more reliant on hospital foot traffic remain below pre-COVID levels.\nIn Industrial, we again saw a strong growth versus 2020.\nThose sales are performing well.\nScapa is experiencing similar inflationary and supply chain pressures as the rest of our businesses.\nAlthough we are disappointed that inflationary pressures, material sourcing challenges and labor availability negatively impacted the bottom line, top line performance for AMS has been strong.\nThough we have successfully increased prices multiple times, these actions quite simply were not sufficient to keep pace with rapidly increasing raw material prices.\nCustomers are generally accepting these increases, and we will continue these actions as needed.\nOn a positive note, we do see early signs of resin pricing easing during the fourth quarter, and if that trend continues, should put us in an improved price cost position in 2022.\nIt is also important to note that while we have been addressing the above challenges, we have continued to drive our innovation process and invest in capacity and efficiency improvements across many of our segments.\nThese efforts will allow us to continue to position ourselves for continued growth.\nSwitching to Engineered Papers.\nQuarterly top and bottom line results were softer than last year, though this was to be expected as last year's third quarter was the highest quarterly segment of operating profits we have achieved over the past 5 years.\nWhile we were very happy with this performance last year as many businesses were suffering from weak demand, we knew that the inventory builds our customers took to handle the pandemic would reverse in time.\nAs you may recall, when we outlined our 2021 annual guidance, our expectation was to return to a more historical EP segment profit level given the large '22 benefit -- 2020 benefit of several large customers building LIP inventory to derisk their supply chains.\nUnfortunately, while the decline in sales of 12% on a 10% volume decrease was generally anticipated, EP was not an exception to the inflationary pressures seen across global manufacturing.\nHigher input costs for wood pulp, freight, and most recently, escalating energy and natural gas prices have far exceeded our expectations to date.\nBut just as with AMS, we have been actively raising prices to recoup higher wood pulp costs.\nDue to the more standard contractual obligations, these increases lagged the pace of inflation, although we expect to catch up in the coming quarters.\nWe have also been able to negotiate additional volumes as a further offset to pricing constraints.\nJust as with resin, we do believe we have seen peak pulp prices and expect modest near-term relief.\nImportantly, we are not slowing our investments in innovation and finding ways to improve our cost structure.\nHeat-not-Burn sales demonstrated continued momentum as our customers invest heavily in reduced-risk products.\nOur hemp products are also going commercial, and we are in the process of finalizing our first meaningful commercial contract for hemp filler products to be used in non-tobacco, non-nicotine-based alternative smoking products.\nThis customer alone could become a multimillion-dollar customers within 2 years.\nOur investments in hemp processing technologies and botanicals are beginning to bear fruit.\nAnd like all new innovations, these product lines deliver an attractive margin profile.\nI reiterate that despite grappling with the current supply chain headwinds and inflation, it is critical for our long-term outlook to continue to drive innovation and partner with current and potential new customers to drive growth in new product categories.\nRegarding our cost structure, we have announced that we will be closing our Winkler site in Manitoba, Canada, at the end of the year.\nThis site primarily processed materials for our recently closed Spotswood, New Jersey site.\nThough always a difficult decision to close facilities, we believe it was the prudent decision given the Spotswood shutdown.\nStarting with AMS, third quarter sales increased 87% with organic growth at 10%.\nAs mentioned, sales could have been even higher if not for supply chain disruptions with some of our specialty resins, coupled with understaffing at some of our sites due to a tight labor market.\nDirectionally, it is possible AMS organic sales could have been up 20% without some of the constraints that we are dealing with.\nWe had excellent sales performance, particularly in transportation and filtration, each growing about 25% despite those limitations.\nAdjusted operating profit increased 9%, reflecting the high organic sales growth and the incremental profits from Scapa.\nHowever, significant inflationary costs, particularly with raw materials, along with supply chain issues pressured margins.\nSegment adjusted operating margin contracted 750 basis points to 10.5%, in large part due to higher input costs.\nHigher resin costs, mostly for polypropylene, had a negative effect on operating profits of approximately $5 million, net of the price increases that were effective in the period.\nWe recouped about half of the resin cost inflation, similar to the second quarter recovery ratio.\nWe've continued to raise prices and are actively engaged with our customers as we continue to catch up to a market that has seen rapidly escalating prices that reached record levels during the third quarter.\nFor context on the recent price escalation, during the second quarter, polypropylene prices increased to about $1.20 per pound, up 150% year-over-year.\nDue to the 1 quarter lag from when we purchase, produce and sell, we felt that impact during our third quarter.\nIn the third quarter, prices continued to rise sharply to an average price of approximately $1.40 per pound, which will flow through the P&L during the fourth quarter.\nWe are, however, very encouraged to see some pullback in the polypropylene market in October.\nAnd industry projections show continued softness of these record high levels during the fourth quarter and throughout next year.\nCurrent projections call for pricing to reach under $1 by the second half of 2022.\nWhile polypropylene is the single biggest variance driver, other factors such as higher costs for other materials and freight also contributed to margin contraction of the base business.\nRegarding Scapa's profit contribution, the acquisition boosted AMS segment adjusted operating profits by over $9 million, similar to the second quarter.\nHowever, as noted in our release, approximately $2.5 million of Scapa's SG&A costs were booked in our unallocated costs, not within AMS. So please be cognizant of that when assessing our segment financial results.\nThe transaction was slightly dilutive to adjusted earnings per share in the quarter, with elevated costs and supply chain disruptions causing the variance to our original expectations.\nOutside of these external factors, we are pleased with how the business is performing and are confident in Scapa's progress with rebounding to pre-COVID sales and profit levels and our ability to deliver cost synergies in the near term and commercial synergies in the longer term.\nSimply put, we expect to drive significantly improved results in 2022 and beyond as supply chain conditions normalize and our pricing catches up to the elevated raw materials environment.\nFor Engineered Papers, second quarter sales were down 12% on a 10% volume decline.\nAs Jeff detailed, we knew this would be a very challenging comparison to prior year, in large part due to a normalization of LIP volumes.\nThis carries an inherent negative mix impact on our profits as well, which was compounded by higher costs for wood pulp and other inputs.\nPulp costs alone were approximately a $3 million negative impact compared to last year, net of the price increases effective during the quarter.\nWhile we've executed price increases to some customers, this business is more contract based, so our recovery rate has been less than half.\nFor context, the NBSK wood pulp index was up 40% to nearly $1,200 per ton in the second quarter compared to last year, which flowed through the P&L in the third quarter, and the third quarter index was up 60% to nearly $1,340 per ton, which will impact fourth quarter results.\nThe index appears to have peaked at this elevated level in recent months and industry projections are for some more modest relief in the coming quarters.\nRegarding adjusted unallocated expenses, we saw an increase of $4 million during the quarter.\nHowever, as noted, $2.5 million of the increase was Scapa's unallocated costs booked in our unallocated costs.\nThe remainder of the increase related to higher third-party consulting fees as well as higher IT expenses to support the growth of the business.\nOn a consolidated basis, sales for the quarter increased 37% to $384 million but decreased 1% on an organic basis.\nAdjusted operating profit decreased 24% to $40 million.\nThird quarter 2021 GAAP earnings per share was $0.38 versus $0.78.\nThe most material GAAP earnings per share items that are excluded from adjusted earnings per share were higher purchase accounting expenses of $0.29 per share compared to $0.15 last year due to the Scapa acquisition.\nIn addition, integration expenses were $0.08 per share.\nNormalizing for those and other items, adjusted earnings per share was $0.82, down from last year's $1.16 per share.\nTo put some of the supply chain and cost headwinds into perspective, we estimate that cost inflation on resins and pulp alone that we did not recoup through price increases had an impact of over $0.20 per share on earnings per share in the quarter.\nAnd the lost sales on transportation films alone was more than a $0.10 impact.\nWhen combined with the other inflationary items like freight and energy and other constraints on growth, we could have very well seen adjusted earnings per share growth this quarter despite the difficult LIP comparisons we had anticipated.\nTo reiterate our comments from last quarter, these are our best directional estimates and indications, but they are clearly -- they clearly convey the magnitude of the financial impacts.\nThough the costs and challenges are real, we see signs of relief on several of them, which should put us up for improving results as we move past the fourth quarter with comparisons getting easier throughout next year.\nTo recap, we have secured additional specialty resins for our transportation films business.\nOur price increases will continue to catch up to input costs.\nWe see fourth quarter costs of resin and pulp easing, that are expected to be realized in 2022.\nAnd we have visibility on cost and commercial synergies in Scapa for next year.\nWe are disappointed that this year's earnings will finish below our original expectations.\nHowever, we firmly believe many of the challenges are temporary and are currently turning the corner.\nWith respect to the fourth quarter, we expect adjusted earnings per share to be down approximately 20% from $0.77 in the prior-year quarter, implying full year adjusted earnings per share could finish about 10% below the low end of our original guided range.\nThis reflects the high-cost raw materials purchased during the third quarter flowing through the P&L, continued lost sales due to material scarcity and some understaffing in our sites, with other key variables being joint venture results and final year tax rate.\nWe're still assessing next year's outlook, and we'll issue guidance in February.\nBut at this stage, we see strong operating profit growth in 2022.\nThis could mean potentially exiting 2022 on a run rate approaching $4 of adjusted EPS, assuming the current tax rate, which is generally consistent with our original 2021 guidance we issued before many of these challenges escalated.\nRegarding cash flows, year-to-date operating cash flow was approximately $28 million, down from $108 million in the prior year.\nYear-to-date adjusted operating profits were lower by $6 million.\nWe incurred $14 million of cash costs related fees and expenses in connection with the Scapa acquisition.\nAnd we saw a $50 million increase in working capital outflows.\nIn addition to robust sales growth, which would naturally drive working capital outflows related to higher receivables, the inflationary environment is pushing our cash cost of inventories still on the balance sheet significantly higher.\nThis inventory factor alone accounts for approximately $30 million of higher cash outflows compared to last year.\nAlthough sales growth and higher costs have impacted our typically strong second half cash flows, we would expect to resume more historically strong cash flow generation as working capital levels normalize during the fourth quarter and into 2022.\nNet debt finished the second quarter just over $1.2 billion.\nNet debt to adjusted EBITDA for the terms of our credit agreement was 4.8x at the end of the third quarter.\nDespite leverage increasing, we remain comfortably below our 5.5 covenant level and have approximately $160 million in liquidity, consisting of our current cash balance of $73 million and $86 million of availability on our revolving credit facility.\nIn addition, we are in the process of closing the sale of assets related to discontinued operations, which is expected to be completed during the fourth quarter.\nNow, back to Jeff.\nAs we close out 2021, we want to keep the ups and downs of the past 18 months in perspective.\nOur global teams overcame many challenges and uncertainties last year to deliver strong operational and financial performance in 2020.\nAnd while we are grappling with supply chain headwinds this year, though very different issues, these 2 will ultimately normalize.\nWe remain laser-focused on addressing those issues within our control, with price increases to offset higher costs, sourcing projects to combat raw material scarcity, and initiatives to improve staffing levels at our production sites to meet demand.\nWe are confident we can return to a run rate of $4 in earnings per share later in 2022 with the stage set for sustained growth in the years to follow.\nDespite the all-hands-on-deck approach required to address current challenges, we have not lost sight of the strategic imperatives to position us for long-term growth.\nThese imperatives include innovation of new products, offering expanded solutions, realizing the synergies of our recent acquisitions and leveraging manufacturing 4.0 technology to improve operations.\nAnd underscoring all those initiatives is a cultural foundation based on unwavering commitments to each other and our customers as we navigate these unprecedented times.\nWe are excited about our portfolio and the future growth it portends.\nThat concludes our remarks.\n", "role": "user" }, { "content": "schweitzer-mauduit international inc - qtrly total sales were $383.6 million, up 37.3%, but down 1% on organic basis.\nschweitzer-mauduit international inc - qtrly gaap earnings per share was $0.38.\nschweitzer-mauduit international inc - qtrly adjusted earnings per share was $0.82.\n", "role": "assistant" } ]

[ { "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: Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance and actual results on developments may differ materially and we are under no obligation to update them.\nWe may also refer to some non-GAAP financial measures which help facilitate comparison across periods and with peers.\nWe really appreciate you joining us on the call today for our discussion.\nWe delivered another strong quarter, both financially and operationally.\nIn addition, we financed, closed and integrated the Indigo acquisition, a transformative opportunity that positions us well in the two premier US natural gas basins.\nBy way of one example we just surpassed 4 trillion cubic feet of responsible natural gas production in our Pennsylvania asset in Northeast Appalachia which continues to deliver great value to the Company.\nOur strategy is comprised of four interdependent pillars including creating sustainable value, protecting financial strength and progressing our leading operational execution.\nResults delivered by our teams in these first three pillars allow us to execute the fourth pillar, capturing the tangible benefits of scale.\nOur strategic intent is to be the preferred investment vehicle for institutional investors to gain exposure to responsible natural gas development.\nThe acquisition of GEP announced earlier today directly supports that intent.\nIt also meets all the criteria of our disciplined acquisition framework as any deal must.\nGEP brings large scale core Haynesville assets with stacked pay Haynesville and Middle Bossier inventory.\nThe 226,000 net effective acres are adjacent to SWN's newest operations in the Haynesville.\nThe addition of GEP increases SWN's total production to 4.7 billion cubic foot a day [Phonetic] equivalent per day, including 1.7 Bcf per day from Haynesville making us the largest operator in the Haynesville.\nIt will also increase SWN's expected year end 2021 SEC proved reserves to approximately 21 trillion cubic feet equivalent.\nThe transaction had 700 economic locations to our high quality inventory with the scale adding acquisitions, well cost reductions, performance enhancements and commodity price improvement.\nThe Company now has approximately 6800 economic locations across the enterprise.\nGiven the strength and complementary nature of our portfolio, we expect to have investment activity across all of our operating areas in 2022 as part of our maintenance capital program.\nWith the expanded exposure to LNG -- the LNG corridor and the growing demand centers along the Gulf Coast, this acquisition will further improve the Company's overall basis differentials and increase our margins.\nThe access to high value global markets will supplement our premium Appalachia outlets [Phonetic].\nAs part of our leading ESG practices, we plan to implement a responsibly sourced gas program in the Haynesville.\nBeyond the clear ESG sustainability benefits, we believe that responsibly sourced gas will ultimately lead to enhanced margins and improved economics from greater access to global markets.\nTurning to the terms of the deal, the $1.85 billion total consideration is comprised of $1.325 billion in cash and approximately $525 million of SWN stock.\nThe cash portion will be debt financed and the equity portion will consist of 99 million shares of SWN stock calculated per the agreed 30 day VWAP of $5.28 per share as of November 3.\nThe purchase price implies an enterprise value to projected '22 EBITDA of 2.9 times, a meaningful discount to where SWN currently trades and at a discount compared to other recent natural gas consolidation transactions.\nGiven this attractive valuation, we expect that the transaction to be immediately accretive to SWN's margins, returns and key per share metrics.\nCash flow per share, free cash flow per share and earnings per share all increased by approximately 15%.\nIncluded in these accretion estimates are the already identified $25 million of synergies in 2022.\nWe expect our synergy capture to increase to $50 million per year starting in '23.\nThe integration of GDP will be enhanced by our recent experience integrating Indigo as well as with a six-month transition services agreement negotiated with the seller.\nWe expect to close the deal by year end subject to customary closing conditions, including regulatory approvals.\nBefore I get to some operational details related to the acquisition, I want to touch on the third quarter results for our team hit the ground running in Haynesville and continue to deliver in Appalachia.\nIn 3Q, which included 30 days of Haynesville, we reported total production of 310 Bcfe at the top end of our guidance range.\nWe exited the quarter producing 4 Bcfe per day including 1 Bcf per day in Haynesville.\nTotal production included 106,000 barrels per day of NGLs and oil which is flat with the previous two quarters.\nDuring 3Q, we averaged four drilling rigs in Appalachia and there were six rigs running in the Haynesville with two completion crews in each area.\nWe have now been operating the Haynesville for two months.\nOur new employees in Houston and Louisiana have been integrated into the business and operations have been running smoothly.\nOur initial focus in Haynesville has been to leverage the operational expertise that our combined teams bring to the table.\nIn September, we brought our first five wells online, all of which were in the Middle Bossier with an average initial production rate of 24 million cubic feet per day and an average c lat of approximately 6300 feet.\nThese results are indicative of the quality of our existing Haynesville position and with today's GEP acquisition announcement, we increased the scale of that high quality position.\nAs Bill mentioned earlier, the proximity of the GEP acreage to our existing Haynesville position will allow for operating economies, marketing synergies and contract optimization realizing the benefit of our enhanced scale.\nGEP is currently running four rigs and one completion crew and expect to exit the year running three rigs.\nWe will issue formal 2022 guidance early next year and maintain our commitment to maintenance capital program with investment of approximately 1.9 billion holding production flat.\nI'll close by acknowledging the continued high-end performance of our technical and operating teams who are driving improved performance through efficiency gains, innovation and knowledge transfer.\nWe have established a track record of leading operational execution in Appalachia and we expect to do the same in Haynesville as we move forward with our 2022 development plan.\nDuring the quarter, we generated $105 million of free cash flow.\nWe expect our free cash flow to materially increase in the fourth quarter.\nWe ended the third quarter with $4.2 billion in total debt, reducing our leverage by 0.4 times to 2.2 times.\nTurning to today's announcement, we plan to finance the acquisition in the manner that A, protects our financial strength; while B, minimizing equity dilution.\nFrom a debt perspective, the deal is essentially leverage neutral with our expected year end leverage near 2.0 times.\nAnd as Bill referenced and I'll discuss further, we have a clear and appropriately de-risked path to materially lower total debt and leverage ratios.\nFrom an equity perspective, the transaction should drive immediate double-digit accretion across key [Indecipherable] maintenance.\nGiven our increased scale, with the current commodity price outlook, we would expect approximately $2.3 billion in free cash flow over the next two years.\nWe intend to apply our disciplined hedging approach to the acquired production.\nWe should go a long way to safeguarding this expected cash flow.\nUsing this cash for debt repayment, we'll reduce our total debt to approximately $3 billion, our leverage ratio to near 1.0 times, our debt would then be at the low end of our announced $3.0 billion to $3.5 billion target range and our leverage ratio at the lower end of our newly announced 1.0 times to 1.5 times target range.\nWe added the absolute debt range to the updated leverage target range to provide better clarity to the market about how we're thinking about the right hand side of our balance sheet.\nImportantly, as we approach our total debt and leverage targets, we would look to initiate a return of capital program.\nThe Company's hedging strategy remains a core part of our enterprise risk management process.\nWe would like to clarify the execution of some aspects of our hedging approach.\nGiven the Company's improved financial strength, going forward, we will target hedging at a level sufficient to cover the Company's expected costs and capital program assuming conservative pricing on unhedged production.\nIn general, with this dynamic construct, where hedging levels will shift to lower or higher inversely with commodity prices, and directly changes to our cost structure and capital investment.\nWe believe our hedging approach protects the Company's financial strength while retaining appropriate exposure to potential commodity price upset.\n", "role": "user" }, { "content": "qtrly reported total production of 310 bcfe, or 3.4 bcfe per day, including one month of haynesville production.\n", "role": "assistant" } ]

[ { "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 Alexander stated, my name is Greg Peterson, I'm the Senior Vice President and CFO of the company.\nKen Kenny, our Vice President of Finance and Treasurer is ill today and unable to join us.\nOur conference call is being broadcast live over the Internet.\nswgasholdings.com and click on the conference call link.\nWe have slides on the Internet, which can be accessed to accompany our discussion.\nAlso the Company will address certain factors that may impact this coming year's earnings and provide longer term guidance for 2022.\nTurning to Slide number 4, we have an outline for today's call, I will start reviewing some highlights and recapping the investment thesis for our shareholders at Southwest Gas Holdings'.\nGreg will follow with a review of our financial results for the quarter, including breakdown detail for each business segment.\nJustin will review our numerous regulatory initiatives and activities.\nKaren, will cover recent customer growth, liquidity and capital expenditures, dividend of rate base growth and expectations for 2021 and beyond.\nMoving to Slide number 5, we present a variety of highlights for our combined businesses.\nFirst from a Holdings perspective, last month we announced the planned acquisition of Questar Pipeline.\nWe're very excited about this planned acquisition which is forecasted to be accretive to earnings in 2022.\nQuestar Pipeline is a compelling high return suite of assets with unique strength and stability that is both commercially and geographically adjacent to our existing portfolio.\nThe acquisition will significantly increase and diversify our regulated business mix and allow us new opportunities in the energy transition with a business that has a robust stream of steady contracted earnings and cash flows.\nWe're also very excited to have separately announced today the addition of two new Board members effective January 1.\nThe addition of these two new expertly qualified Directors is the culmination of a methodical thoughtful planned Board refreshment effort that began last year and as is now seen was anticipated to bolster our Board for the New Year in advance of expected Director retirements at the May Annual Meeting.\nAlso separately today we filed a 14D-9 response to a tender offer for Southwest Gas Holdings shares presented last month by Carl Icahn.\nThe tender offer seek to secure shares of Southwest Gas Holdings at a price of $75 a share which and consultation with our outside investment bankers and attorneys, our Board has concluded is an adequate.\nWe're also focused on the promising role our company can play in the energy transition as our businesses are poised to support the delivery of reliable and affordable energy services both now and for decades to come.\nNext at our natural gas distribution company, we continue to see strong growth across our service territory having added 37,000 net new customers over the past year.\nOn the regulatory front, we saw a very promising decision from the Arizona Corporation Commission just this past week authorizing the recovery of $74 million in margin related to our customer owned yard line and vintage steel pipe replacement programs.\nAlso, third quarter operating margin increased by $18 million or 10% and we continued executing on our sustainability goals as seen with our partnership with Pima County in Arizona supporting the harvesting of renewable natural gas at the now operational Tres Rios RNG processing facility and walking the talk on the energy transition with our announced investment as a founding partner in the Energy Capital Ventures Fund.\nMeanwhile at our Centuri infrastructure services business, we continue our high quality acquisition track record with the completed acquisition during the quarter of Riggs Distler expanding Centuri's geographic footprint and service offering suite to include the provision of the unionized electrical contracting services 5G, offshore wind and more.\nRelatedly, we are excited to see Riggs Distler being selected as general contractor for the 880 megawatt Sunrise Wind offshore wind farm.\nOverall, we saw Centuri's third quarter revenues increased by $52 million or 9% and we're also eager to explore the opportunities that Centuri may have to capitalize on as part of the federal government's infrastructure spending plans.\nMoving to Slide 6, we present additional detail on our recently announced new Board members.\nWith the simultaneously announced planned retirements of Mr. Melarkey and Mr. Comer at our May Annual Meeting, year-on-year we anticipate the average tenure of Southwest Gas Holdings Directors will decrease from 10.3 years to 8.\nCurrent Holdings Director Robert Boughner is anticipated to become Chairman of the Holdings Board upon Mike Melarkey's retirement in May.\nOur Board's continuing refreshment efforts ensure shareholders are represented by our Board of Directors with excellent diversity of business experience, professional background, gender and ethnicity.\nTurning to Slide 7, we recap the excellent fit and finish that are planned year end Questar Pipeline acquisition brings to Holdings shareholders.\nA comprehensive Questar Pipeline's asset brings high quality contracted customers with an average relationship length of 49 years.\nQuestar Pipelines are unique and hard to replace suite of assets that serve strong and growing regional demands and provide strong and consistent cash flows and earnings.\nQuestar Pipeline is also an excellent cultural fit with Southwest Gas Holdings given our mutual and independent prioritization of safety, reliability, affordability, customer service and environmental stewardship.\nFor Holdings, welcoming Questar Pipeline store of family increases our regulated business mix, reduces earnings volatility and business risk increases earnings per share, provides strong incremental cash flows, allows us increased participation in the energy transition with opportunities in renewable natural gas, responsibly source natural gas, hydrogen, carbon dioxide, transportation and more.\nThe acquisition will be done with the flexible financing plan that enables Holdings to maximize returns for our shareholders.\nOn Slide 8, we provide further insight into the positive ramifications of the Riggs Distler transaction that we closed during the quarter.\nThis acquisition fits a need that we've communicated to shareholders over the past two years and will accelerate earnings per share and dividends for holdings shareholders.\nAs mentioned earlier, Riggs Distler's core competencies in unionized electric services, storm restoration, 5G and renewable energy provide Centuri an enviable expansion opportunity to grow its electric services segment, expand further into the renewable energy space and support our nation's traffic changes to reduce greenhouse gas emissions.\nWe're very excited that the acquisition will be accretive for 2022 likely exhibiting a similar seasonal business revenue profile to Centuri's existing business.\nTurning to Slide 9, we show the exceptional growth in EBITDA that the Centuri business was cultivated over the past ten years.\nSorelle successive acquisitions including Link-Line, Newco, Linetec and now Riggs Distler along with organic growth has demonstrated this Board and management team's focus on creating tremendous shareholder value and growing the Centuri business.\n2020 EBITDA is five times that experience just 10 years ago while this business could have been sold two, four or six years ago it's continued growth under the stewardship of the Holding Board has allowed continued polish of this gem of a business, while EBITDA valuation multiples for the infrastructure services sector have expanded dramatically over those same periods.\nNow more than ever, Centuri is poised to increase Holdings profitability while providing a growing source of cash to fund continued capital investments and our state regulated distribution business.\nMoving to Slide 10, the Holdings Board and management team believe our utility oriented businesses, state regulated distribution systems, federally regulated pipeline assets and unregulated utility infrastructure services offer a compelling and complementary investment proposition for our shareholders.\nContinued strong growth is inherent in each aspect of the business from strong regional economies, from utilities refreshing aging distribution systems, from significant federal governmental spending initiatives to support new infrastructure and the ability for all of these businesses to support the energy transition that desires to increase renewable opportunities while recognizing customer demands for reliability and affordability.\nThe businesses exhibit great diversity from very regulatory venues, geographical calls and the symbiotic nature of state regulated segments that grow earnings through significant capital reinvestment with federally regulated and unregulated segments that produce excellent cash flows.\nThe comprehensive Holdings growth theme of reward shareholders, a strong earnings and dividend growth while maintaining investment grade credit ratings and serving current customer needs while aggressively pursuing opportunities in the years ahead to support increased deployment of renewable energy resources nationwide.\nFor today's call let's start with the summary of total company operating results on Slide 11.\nFor the 12 months ended September 30, 2021 net income was $234 million or $4.02 per diluted share compared to net income in the prior-year period of $220 million or $3.97 per diluted share.\nFor the third quarter of 2021, we reported a consolidated net loss of $0.19 per share compared to third quarter earnings per share of $0.32 in 2020.\nThe next several slides detail results by segment.\nLet's start with the third quarter natural gas operation results on Slide 12.\nThis waterfall chart shows the components of the change in natural gas operations results between quarters.\nAs a reminder due to the seasonality of this business utility losses during the third quarter expected.\nAs I previously mentioned current quarter results reflect the impact of a $5 million legal reserve.\nOperating margin increased nearly $18 million including $13 million associated with rate relief in all three states, as well as $2 million from customer growth, reflecting 37,000 first-time meter sets over the past 12 months.\nThe increase in O&M expenses includes $2.2 million of incremental temporary staffing, training and stabilization cost associated with our new customer information system which we implemented in May 2021.\nThe timing of vacation, other time off and miscellaneous employee benefits were up $2.5 million between quarters.\nI should note that last year's third quarter O&M was unusually low and reflected the impacts of COVID-19 which limited to in-person training travel, delayed the hiring of new and replacement employees, and deferred various planned projects.\nExcluding the $5 million legal reserve, O&M for the third quarter of 2021 only increased 5.2% cumulatively or 2% -- 2.6% annually since the third quarter of 2019, which was pre-COVID.\nThe $9.7 million increase in depreciation, amortization and general taxes reflects the impact of the $574 million or 7% increase in average gas plant in service including the new customer information system.\nI should note this customer information system is a 100 plus million dollar project with a 15 year depreciable life.\nThe $6 million decline in other income reflects no change in the cash surrender value of company-owned life insurance or COLI policies this quarter compared to net income of $4.5 million in last year's quarter.\nNext, let's go to Slide 13 at Centuri's quarterly results.\nCenturi our utility infrastructure services segment results for the third quarter were impacted by one-time transaction cost associated with the Riggs Distler acquisition of $13 million.\nRevenues increased $52.5 million or 9% between quarters including $49.5 million from Riggs Distler following the August 27 acquisition.\nThe overall increase in revenues was somewhat muted by reduced activities with two significant gas utility customers due to timing and mix of work and a slightly lower level of storm restoration work.\nThe increase in infrastructure expenses was primarily due to the significant growth in overall revenues including Riggs Distler at results.\nProfit margins were somewhat hampered by the lower level of storm restoration work, which generally generates-a higher profit margin and reduced operating efficiencies related to the timing and mix of projects with few significant customers.\nThe $5.8 million increase in depreciation and amortization is primarily attributable to costs added with the Riggs Distler acquisition as other equipment placed and service to support the higher volume of Centuri's businesses.\nThe $4.3 million increase in interest expense reflects the higher level of borrowings under Centuri's expanded credit facility utilized to acquire Riggs Distler.\nNext we'll transition to review our 12-month activities beginning on Slide 14.\nThis slide depicts the components of the $26.1 million increase in natural gas operations, net income between 12-month periods.\nThe $72 million or 7% improvement at operating margin reflects $52 million combined rate relief in Arizona, Nevada, and California.\nContinuing customer growth provided $13 million of the improvement in overall operating margin.\nThe increase in O&M reflects $7.3 million of service related pension costs and $1.1 million of higher bad debt allowances.\nWe continue to work with our customers to establish payment plans for those impacted by COVID-19.\nThe $31.9 million increase in depreciation, amortization and general taxes reflects the impacts of $579 million or 7% increase in average gas plant and service and the incremental Arizona property taxes that are ultimately recovered under our regulatory tracking mechanism.\nLet's move to Slide 15 and Centuri's 12-month activity.\nSlide 15 shows the components of the $9.9 million decrease in Centuri's net income between 12-month periods.\nAs shown, $14 million of one-time transaction costs associated with the acquisition of Riggs Distler caused the decline in earnings.\nRevenues increased nearly $188 million or 10% between periods, reflecting $129.5 million of incremental electric infrastructure revenues from both Linetec, which we acquired in November 2018 and Riggs Distler, which we acquired in August 2021.\nInfrastructure services expenses increased primarily due to a higher level of revenues.\nDepreciation and amortization increased $10.7 million primarily attributable to incremental costs related to electric infrastructure including $4.7 million from Riggs Distler following the acquisition.\nAdditional equipment and computer systems to support the growing volume of work also contributed to the increase in depreciation.\nThe next couple of slides are focused specifically on Riggs Distler.\nSlide 16 shows, the current primary operating areas Riggs Distler in darker red and the expanded areas where they have performed emergency storm restoration services, including the recent Hurricane Ida in lighter red.\nWe are excited about the solid Union Electric Foundation that Riggs Distler provides and the expansion into ESG and energy transition work.\nAbout a month ago, we announced that Riggs Distler had been selected as a general contractor for the Orsted/Eversource Sunrise Wind project in New York.\nWe will be responsible for building and assembling wind tower foundation parts onshore for use in this offshore wind project, this is the one piece of the growth that we expect from our acquisition of Riggs Distler.\nAs John mentioned earlier, we anticipate $600 million of revenue growth from Riggs Distler through 2024.\nIt will be a building process over time such that Riggs Distler will not only be very profitable on a stand-alone basis, but it is expected to cover the interest carrying charges and acquisition intangibles, amortization and be accretive to earnings per share in 2022.\nSlide 17, depicts the initial asset allocation of the Riggs Distler acquisition in August 2021.\nThe weighted average useful lives of the property and equipment, as well as those of the amortizable intangibles are designed to provide additional clarity and to the expected amounts of depreciation and amortization to reflect in 2021 and forward.\nOn the right side of the slide, are the key terms of Centuri's amended and restated credit facility at $1.145 billion Term Loan B that we utilize to finance the acquisition.\nSlide 18 highlights our most recent rate case outcomes that will contribute to an increase in revenues of approximately $66 million during the course of calendar year 2021.\nA continuing theme throughout each of our rate cases has been the partnerships we maintain with each of our commissions to support the very attractive growth profile of the utility.\nAs part of our most recent rate case decisions Arizona saw a 46% increase in rate base, Nevada at 20% increase, which was also on the heels of an over 30% increase in 2018 and a 73% increase in California.\nThis growth in rate base would simply not be possible without strong collaborative relationships with each of our commissions.\nTurning to Slide 19 and consistent with prior guidance that we provided about rate case timing, we filed the Nevada rate case during the third quarter.\nAs previously mentioned, the Nevada Commission preferred us to file most frequent rate cases, to timely recover our investment in the recently completed customer information system.\nIn addition to this investment, the primary driver of the request is to reflect the ongoing investments to support customer demand from new growth, as well as continuing efforts to modernize our system to ensure safe and reliable service to our customers, including minimizing fugitive methane emissions.\nThe request includes the proposed increase in revenues of $30.5 million resulting from an increase in rate base of nearly $250 million and almost 20% increase.\nThe commission also established a COVID-19 regulatory asset early in the pandemic.\nAnd we are requesting recovery of over $6 million of revenue related to the deferral of late payment charges, we're requesting to recover this amount over a period of two years.\nWe anticipate the test year ended August 2021, and we plan to request for approval of an adjustment for up to 12 months post test year plan.\nBased on our proposals, we anticipate a proposed increase to rate base of about 35% to 40%.\nMoving to Slide 20.\nLast week, the ACC approved 100% of the requested revenue requirement associated with our COYL and VSP filings that John mentioned.\nThe $14 million associated with the COYL program will be recovered over a period of one year starting this month.\nAnd the $60 million related to the VSP program will be recovered over three years, beginning March of 2022.\nWe're appreciative of the commission's commitment to consider these amounts and allow recovery over a reasonable period of time.\nLastly, moving to Slide 21.\nThis simply would not be possible without the support of our regulators through constructive rate case outcomes combined with support of regulatory mechanisms.\nSlide 21 also highlights some of these key regulatory mechanisms that have contributed to our ability to deliver on the mutual goals of providing safe, reliable service and supporting growth within our service territories as well as partnering with key stakeholders to pursue initiatives to help reduce greenhouse gas emissions and support a clean energy future.\nI'll start on Slide 22.\nOur regulated utility customers give us high marks for customer satisfaction.\nIn a survey of customers conducted through a third-party research firm, our customer satisfaction scores were an impressive 95% on a 12-month rolling average.\nAnd we are proud to rank number-one for utility customer satisfaction in three studies conducted by an independent leading national consumer insights firm.\nFor two years running, we were ranked first among gas utilities in the West region for business customer satisfaction.\nSimilarly, we were ranked first in the West region for residential customer satisfaction for 2020.\n2021 results are yet to be published.\nWe were also ranked number-one in the West for utility digital experience.\nThis ranking affirms the enhancements we made to our digital channels, including the implementation of a state-of-the-art customer information system this year.\nThis system enables us to deliver an even higher level of service to our customers.\nThese survey results are a testament to the excellent quality of service we provide our customers and a primary reason why 91% of customers surveyed in Arizona, California and Nevada indicated that they want natural gas in their homes.\nTurning to Slide 23.\nWe provide information on our diversified and growing customer base at the utility.\nCustomer growth in our service territory continues to be robust.\nIn fact, we added 37,000 first-time meter sets over the past 12 months as people continue to move to the Desert Southwest.\nIn addition, we have decoupled rate designs in all three service territories that reduce volatility for both our customers and the company.\nSlide 24 illustrates our strong liquidity position.\nWe have a $400 million revolving credit facility and a $250 million term loan.\nAs of the end of September, we have nearly $523 million availability of combined borrowing capacity and cash.\nWe highlight our capital expenditure program and funding sources for the three-year period ending December 2023 on Slide 25.\nTo serve new customer growth and ensure the safe and reliable natural gas service our customers expect, we anticipate capital spending of approximately $2.1 billion over the 3-year period.\nWe plan to fund the $2.5 billion combined capital investment and stockholder dividends with 50% from operation cash flows.\nAnd the remaining balance was an equal mix of debt and equity.\nOn Slide 26, we show the five-year rate base growth expected from our ongoing capital investments in our natural gas distribution system.\nWe expect to grow rate base from approximately $4.5 billion at the end of 2020 to $6.5 billion at the end of 2025, which translates into a 7.5% compound annual growth rate.\nMoving to Slide 27.\nYou can see that we have a stockholder dividend of $2.38 per share.\nThe dividend has increased each year for the past 15 years, and we have a compound annual growth rate for the past five years of 5.8%.\nWe target a payout ratio of between 55% and 65%.\nOur earnings per share guidance for 2021 is shown on Slide 28.\nAs we approach the final quarter of 2021, we have refined our previous guidance to a range of $4 to $4.10.\nThe adjusted earnings per share excludes the transaction costs for the recently announced acquisition of Questar Pipelines, the partial year results in costs from the Riggs Distler acquisition and costs associated with the activism response.\nOn Slide 29, we provide line item support for our 2021 earnings per share guidance range.\nAt the natural gas operations, we expect operating margin to increase 6% to 8%, pension costs to be relatively flat, operating income to increase 4% to 6%, up from a previous range of 3% to 5%; COLI earnings to be $5 million to $7 million and capital expenditures to be $650 million to $675 million.\nAt the Centuri Infrastructure business, revenues, excluding Riggs Distler for 2021, are expected to be 1% to 3% greater than the record 2020 amount.\nAnd operating income, excluding Riggs Distler, is expected to be 5% to 5.4% of revenues.\nMeanwhile, Riggs Distler is expected to generate revenues of $150 million to $170 million with an operating loss of $11 million to $13 million from the date of acquisition.\nTotal interest expenses increased to a range of $19.5 million to $20.5 million due to the term loan and credit facility in connection with the Riggs Distler acquisition.\nNet income expectations are net of noncontrolling interest and the Canadian exchange rates can influence results due to our Canadian operations.\nFinally, we anticipate transaction-related expenses at the corporate and administrative level due to the Questar Pipelines acquisition and activism response of approximately $25 million to $30 million.\nTurning to Slide 30.\nWe provide our longer-term expectations.\nAt the Southwest Gas Holdings level, we are announcing an earnings per share growth range for 2022 and 2023 of 5% to 8% based on adjusted 2021 earnings per share guidance.\nWe also expect equity issuances of $600 million to $800 million over the three years ending in 2023 and as I previously mentioned, a target dividend payout ratio of 55% to 65%.\nAt the regulated natural gas utility, we expect capital expenditures to be approximately $3.5 billion over the five years ending in 2025 and a 7.5% compound annual growth rate for rate base for that same period.\nAt the infrastructure services business, we expect revenues to increase 27% to 33% in 2022 with a full year of Riggs Distler operations.\nAnd 2023 revenues are expected to increase 7% to 10% over 2022.\nOperating income is expected to be 5.25% to 6.25% of revenues during 2022 and 2023.\nAnd EBITDA is expected to be 11% to 12% of revenues during that same period.\nWrapping up on Page 31, we believe that Southwest Gas Holdings offers a compelling value proposition for our investors.\nWe are strong and growing and positioning for the future.\nOur natural gas operations are experiencing strong customer growth and opportunities for capital investment and rate base growth while maintaining affordability of service to customers.\nWe'll continue to pursue successful regulatory partnerships on the many initiatives described by Justin earlier and look for expanded opportunities and helping address national goals for greenhouse gas emission reductions.\nAll of this with anticipation of a strong growth trajectory or increased earnings and dividends for our shareholders.\nMeanwhile, at our Centuri infrastructure services business segment, we'll continue to grow our business revenues, earnings, cash flows, customer base, service offerings and geographic footprint to maximize the value of this business for our shareholders.\nWe believe this business has great opportunities in the energy transition as it expands its electrical portfolio, grows its renewable opportunities and partners with natural gas distribution utilities to expand and refresh the natural gas infrastructure critical to support the anticipated increased deployment of renewable energy assets across our country.\nFor those who have accessed our slides, we have also provided an appendix with slides that include other pertinent information about Southwest Gas Holdings and its two business segments.\nThese slides can be reviewed at your convenience.\nOur operator, Alexander, will now explain the process for asking questions.\n", "role": "user" }, { "content": "q3 utility infrastructure revenues increased $52.5 million.\nqtrly consolidated loss of $0.19 per diluted share.\nsouthwest gas - adjustments for q3 consist of a $5 million legal reserve at utility and centuri's deal costs for riggs distler acquisition of $13 million.\nwell positioned for meaningful earnings growth in 2022.\nestimated diluted earnings per share for 2021 excluding costs is $4.00 to $4.10.\n", "role": "assistant" } ]

[ { "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 that, I'll now turn things over to Mike.\nLet me start on Slide 3 with an update on our ongoing response to the COVID-19 pandemic.\nAs we discussed in our last call, SunCoke has been designated an essential business and our facilities continue to operate safely.\nOur employees are working diligently to serve our customers with essential products and services.\nWe continue to take all necessary measures to ensure the health and safety of our workforce, and have implemented policies and procedures that follow the guidelines established by the CDC, OSHA and local health and governmental authorities.\nOur COVID-19 task force continually monitors and evaluates the evolving situation and responds and adjust to the environment changes.\nAs we move into the second half of the year, we recognize that market conditions remain challenged.\nIn response, we have taken significant steps to support our customers in the short-term, while simultaneously providing long-term stability for our stakeholders.\nAdditionally, we are making investments to expand our product capabilities and diversify into new markets.\nOn the customer side, we have addressed the lower demand environment.\nAll of our customers have idled or banked blast furnaces during the first half of 2020.\nWhile there has been modest recovery in demand, steel capacity utilization remains low at approximately 59%, and it is difficult to predict when demand will fully return to normal levels.\nIn response to these unprecedented and uncertain times, we have partnered with our customers to address their near-term coke needs.\nIn 2020, we will reduce our production by approximately 550,000 tons and now expect to produce approximately 3,750,000 tons for the whole year.\nSubstantially, all of this reduction will occur in the second half of the year.\nIn exchange for these near-term reductions, we have extended several of our coke contracts, as detailed on this slide.\nOur business model is built on long-term customer relationships.\nAnd the actions we have taken, not only address the near-term contracts that are approaching expiration, but also further strengthens our long-term customer relationships and adds meaningful certainty and stability to our business.\nAs we temporarily ramped down production in 2020 and address market conditions and logistics services, we have taken several steps to reduce cost and optimize our operations.\nThe impact of these actions coupled with lower volumes will result in a reduction of 2020 adjusted EBITDA of $40 million to $50 million from our previous guidance.\nWe now expect 2020 adjusted EBITDA to be between $190 million and $200 million.\nWe are also evaluating our cost structure to ensure that we remain a low cost provider.\nWe are taking meaningful actions, including a reduction in our workforce, which while difficult during these unprecedented times, will better position SunCoke for the future.\nWe anticipate that these initiatives will result in permanent annual savings of approximately $10 million beginning in 2021.\nTurning to Slide 4.\nAs mentioned on prior calls, we have been looking at alternative coke products, one of which is foundry coke.\nWe have been evaluating foundry coke market and developing our production capabilities over the past year.\nAfter significant testing and continued development, we have now determined that we can commercially produce and sell foundry coke.\nWe have recently successfully completed foundry coke trials with a number of potential customers, and our efforts in this area are ongoing.\nDomestic demand for foundry coke is approximately 600,000 tons per year.\nAnd recent shutdowns of foundry coke producers have forced foundries to look to imports as an alternative to domestic supply.\nWe therefore believe this is an opportune time to enter the market and establish SunCoke as a long-term reliable supplier of high quality foundry product.\nExpansion into this market provides both industry and customer diversification.\nThere are more than 30 foundry coke customers across the country and numerous related industrial coke customers.\nDuring the production of foundry coke, smaller-sized coke, known as egg, nut and stove coke is also produced and is utilized in other industrial applications such as sugar beet and rock wall [Phonetic] production.\nThe production of foundry and related industrial coke helps address the current blast furnace coke market imbalance.\nDifferences in the production process has the effect of replacing approximately two tons of blast furnace coke for each ton of foundry coke produced.\nOur initial target is to produce approximately 100,000 tons of foundry coke in 2021.\nImportantly, our ovens are capable of producing this product with no direct investment or need for production downtime to transition into the foundry coke market.\nWe're making capital investments of approximately $12 million on coal grinding, material handling, coke screening and laboratory equipment, all of which is necessary to meet market demands.\nGiven our cost efficient production process, we anticipate the payback period for these projects will be relatively short.\nWe will provide additional details on foundry coke when we provide 2021 guidance early next year.\nMoving on to second quarter performance.\nAs you can see on Slide 5, diluted earnings per share was $0.08 per share in the second quarter of 2020 compared to $0.03 per share in the second quarter of 2019.\nThe prior year period included costs associated with the simplification transaction, which is the main driver of the increase year-over-year.\nLooking at adjusted EBITDA, this came in at $59 million in the second quarter of 2020 versus $63.1 million in the second quarter of 2019.\nAdjusted EBITDA from the coke operations increased $4.2 million compared to the prior year.\nDomestic sales volumes were approximately 54,000 tons lower than the prior year due to customer turn downs.\nThe volume shortfall was more than offset by lower operating costs and better cost recovery.\nThe adjusted EBITDA contribution from the Logistics segment decreased approximately $9 million versus the second quarter of 2019.\nThroughput volumes at CMT and the domestic terminals were approximately 2.7 million tons lower versus the prior year period.\nSlide 6 bridges second quarter 2019 adjusted EBITDA to second quarter 2020 adjusted EBITDA.\nOnce again, coke operations were favorable by $4.2 million, driven by strong cost control and favorable cost recovery.\nLogistics operations were lower $8.8 million quarter-over-quarter, mainly due to Foresight and Mercury bankruptcies.\nCorporate and Other was better by $0.5 million.\nMoving on to the next slide, you can see in the chart that our cash balance at the end of the quarter was approximately $81 million, which is a more normalized cash balance.\nOur cash at the beginning of the quarter was artificially high because the company increased its borrowing under its revolving credit facility by approximately $157 million in order to preserve financial flexibility.\nWe no longer believe that enhanced cash position is necessary, and we have reduced the revolver borrowings.\nIn the quarter, cash flow from operations generated $21.8 million and we had capex of $14.1 million.\nAdditionally, we paid $0.06 per share dividend in the quarter, which was a use of cash of $5 million.\nToday, we announced the declaration of the second quarter dividend.\nWe established the dividend at a rate that we believe is sustainable even during challenging market conditions.\nAnd while this is a decision made quarterly by our board of directors, we believe we have ample liquidity to maintain this dividend.\nAt the end of the quarter, on an LTM basis, our gross leverage was 3.3 times and our net leverage was 2.96 times.\nUsing the midpoint of our new adjusted EBITDA guidance range, our year end net leverage would be 3.65 times, which is well within our leverage covenant.\nOver time as market stabilizes, we intend to resume executing on our long-term capital allocation priorities with the primary focus on reducing gross leverage to 3 times or lower.\nSlide 8 details domestic coke operating performance and 2020 outlook.\nWe sold 977,000 tons of coke in the quarter.\nSales volumes for all facilities were impacted by the volume relief provided to our customers.\nDespite these volume concessions, Indiana Harbor volumes were higher than the prior year period, which was expected given the increased volumes from the rebuilt ovens.\nQ2 2020 adjusted EBITDA per ton was approximately $63 compared to $55 per ton in Q2 of 2019 with the per ton increase driven by favorable cost recovery and strong cost management.\nLooking at domestic coke on a full year basis, we now expect domestic coke to generate between $198 million and $202 million of adjusted EBITDA in 2020 on 3,750,000 tons of production.\nThis is approximately $45 million lower than our previous adjusted EBITDA guidance, and production is estimated to be 550,000 tons lower.\nThe decrease in volumes is offset partly by lower operating costs.\nOur plans have been diligent to variablize costs where possible by managing supplies and services over time, contractor usage, optimizing capital work and various other efforts.\nMoving to Slide 9, which summarizes the logistics business and 2020 outlook.\nThe pandemic has impacted demand at our logistics facilities.\nThe domestic terminal handle [Technical Issue] million tons in Q2 2020 versus 3.6 million tons in Q2 of 2019 and 2.9 million tons in Q1 of 2020.\nCMT volume comparisons to the prior year impacted by the bankruptcy of Foresight Energy, but were also impacted by the global effects of the pandemic.\nCMT had throughput volumes of 704,000 tons, which is lower than the first quarter and lower than our original guidance.\nIn [Technical Issue] logistics operations have also taken measures to reduce costs, including a sizable reduction in our workforce as well as lowering other variable costs.\nFay, why don't I take it from here.\nAnd again, we'll look to be at the lower end of our original guidance in the Logistics segment at $17 million.\nThe next slide, Slide 10, summarizes our 2020 revised guidance.\nWe now expect adjusted EBITDA to be between $190 million and $200 million.\nThis incorporates all of the volume changes we discussed as well as foundry development expenses and cost reduction activities.\nOur capital expenditures are estimated to be approximately $80 million, which now includes $12 million of capital for foundry coke.\nThis amount was not contemplated in our original guidance.\nWe have reduced our free cash flow guidance based on revised adjusted EBITDA.\nWe now anticipate that free cash flow will be between $36 million and $52 million in 2020.\nWrapping up on Slide 11, as we continue to operate in these extraordinary times, our first priority continues to be the safety and well-being of our employees and contractors.\nWe will continue to do everything possible to ensure that they are well protected and able to perform their jobs with confidence.\nWe remain focused on our core business and how to best optimize our operations, including our logistics assets.\nAs we discussed earlier, we have made significant progress in reducing our cost structure and adding stability by working collaboratively with our customers to address both current market challenges and longer term supply needs.\nWe also continue to maintain our asset base to ensure that we are able to operate efficiently in the long-term even as operating levels may fluctuate in the near-term.\nWe are proud of the investments we have made, creating the highest quality assets in the industry, which we are committed to fully utilizing and maintaining.\nLooking forward, we are developing a new business line in foundry coke and are confident that we will be successful and able to capture significant share in the domestic foundry market.\nFinally, we are fully committed the revised financial targets we have put forward and we'll make every effort to ensure that they are achieved.\nWith that, we can open up the call to Q&A.\n", "role": "user" }, { "content": "compname reports q2 earnings per share $0.08.\nq2 earnings per share $0.08.\nrevised full-year 2020 adjusted ebitda guidance of $190 million to $200 million.\ncost savings initiative, including reduction in workforce, estimated to result in fy savings of about $10 million in 2021.\n", "role": "assistant" } ]

[ { "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 that, I will now turn things over to Mike.\nI want to discuss a few highlights of our third quarter results before turning it back to Shantanu, who will review them in detail.\nTurning to our financial performance in the quarter, we are pleased with how our teams delivered across both the coke and logistics segments.\ncokemaking operations continued to operate at full capacity, while our Logistics segment delivered another solid quarter, despite the disruption caused by Hurricane Ida.\nFor the third quarter of 2021, we delivered adjusted EBITDA of $73.9 million, representing record third quarter performance.\nAs I mentioned, CMT operations were disrupted due to Hurricane Ida, but the terminal recovered quickly with only minor damage and minimum business disruption.\nThe resilient nature of our operations and commitment to our employees was clearly visible through the speed at which CMT returned to normal operations.\nOperationally, our export and foundry coke initiatives continued to perform well as evident from our financial results.\nIn addition, positive market dynamics are proving that our entry into these markets was timely.\nOur products are well received by customers and we have established ourselves as a reliable supplier of quality products in both markets.\nOur gross leverage stands at approximately 2.5 times on a trailing 12-month adjusted EBITDA basis.\nWe are committed to continue paying down our revolver for the remainder of the year.\nBased on our year-to-date performance and the expectation of continued strength in steel and coal markets for the remainder of the year, we are well positioned to modestly exceed our full-year 2021 adjusted EBITDA guidance of $255 million to $265 million.\nTurning to Slide four, our third quarter net income attributable to SXC was $0.27 per share, up $0.30 versus the prior year period.\nThe increase is primarily driven by the absence of supply relief provided to certain customers as part of the turned down agreements during the prior year period.\nAdjusted EBITDA came in at $73.9 million for the quarter, up $26.1 million from the prior year quarter.\nOur coke operations continue to deliver strong performance and operate efficiently.\nOverall, coke operations were up $17.7 million over prior year period.\nTurning to the Domestic Coke business summary on Slide five.\nThird quarter adjusted EBITDA per ton was $62 on 1,056,000 sales tons.\nThe volumes were higher across the fleet as the prior-year period was impacted by pandemic-related turn downs.\nOur successful entry into export and foundry market is proving to be timely and when combined with full capacity utilization, we can see the positive impact on our profitability.\nWe expect full-year Domestic Coke adjusted EBITDA to come in modestly higher than the guidance range of $234 million to $238 million.\nThere are planned outages at some of our Domestic Coke facilities, which will impact the volume and profitability of fourth quarter, but is included in the full-year guidance.\nMoving to Slide six to discuss our Logistics business.\nThe Logistics business generated $11.6 million of adjusted EBITDA during the third quarter of 2021, as compared to $4.3 million in the prior year period.\nThe increase is driven by higher coal volumes, addition of iron ore as a product and higher price on coal handling all at CMT. The coal handling contract includes a quarterly price adjustment or a price kicker, which is based on the API2 price index, which benefited Q3 results.\nWe expect the benefit to continue in Q4, as well.\nAs mentioned by Mike earlier, the impact of Hurricane Ida on CMT was limited and the facility came back to normal operating levels fairly quickly.\nThe segment as a whole handled 4.9 million tons of throughput volumes during the quarter, as compared to 3.3 million tons during the prior year period.\nOur full-year guidance for Logistics volumes and adjusted EBITDA remains the same as provided in second quarter.\nTurning to Slide seven to discuss our liquidity position in Q3.\nAs you can see from the chart, we ended the third quarter with a cash balance of $54.6 million.\nIn the third quarter, cash flow from the operating activities generated close to $79 million.\nWe spent $18.4 million on capex during the quarter and paid dividends of $5 million at the rate of $0.06 per share.\nWe lowered our debt by $51.7 million with the majority of the reduction coming in the form of paydown of our revolving credit facility.\nOur total debt balance stood at approximately $615 million at the end of third quarter and we expect to continue to pay down the revolver over the balance of the year.\nIn total, we ended the quarter with a strong liquidity position of $291 million.\nWrapping up on Slide eight.\nAs always, safety and operational performance is top of mind for our organization.\nWe look to continue to perform safely, while successfully executing against our operating and capital plan for the remainder of the year.\nWe are very pleased with the progress we have made so far in the new markets we entered this year and we will continue to focus on further developing our customer base and participation in future years.\nOur aim, when we started 2021, was to run at full capacity, while introducing new products.\nAs we end the third quarter, we are fully booked for the balance of the year and we are actively working on filling the order book for next year.\nOn the Logistics side, we have made good progress on revitalizing CMT with the backdrop of positive market dynamics.\nWe will continue to build on this foundation for CMT's long-term success.\nOn the capital allocation front, we will continue to work toward reducing our revolver for the balance of the year.\nIn the longer term, we will continually evaluate the capital needs of our business, profitable growth opportunities and the need to reward our shareholders, and we'll make capital allocation decisions accordingly.\nFinally, based on reliable performance of our operating segments and success of export and foundry products, we are well positioned to modestly exceed our adjusted EBITDA guidance of $255 million to $265 million for 2021.\nWith that, let's go ahead and open it up for Q&A.\n", "role": "user" }, { "content": "q3 earnings per share $0.27.\npositioned to modestly exceed full year 2021 adjusted ebitda guidance range of $255 million to $265 million.\n", "role": "assistant" } ]

[ { "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 that, I'll now turn things over to Mike.\nThe dedication of our team is clearly visible for our safety record, operational excellence and financial results.\nOn the coronavirus front, we continue to take all necessary measures to ensure the health and safety of our workforce and the additional precautions we have taken remain in place.\nCOVID-19 task force continually monitors and evaluates the evolving situation and responds and adjust as the environment develops.\nOn Slide 3, you can see the key initiatives that we set out and how we performed against these objectives.\nWe delivered $205.9 million of adjusted EBITDA in 2020, exceeding our revised guidance range of $190 million to $200 million.\nThis reflects the strong performance of our coke operations despite running a sub-optimal utilization rates and strong cost control across the company.\nEarlier this year, we announced the companywide cost savings initiative, which we anticipate will result in approximately $10 million of annualized savings.\nThese cost savings initiatives provided benefits in 2020 and will continue in the years ahead.\nThe domestic coke operations contributed $217 million to adjusted EBITDA in 2020, which exceeded the revised guidance range for domestic coke.\nI am pleased with the safe and efficient operation of our coke facilities all while following additional precautionary measures due to the pandemic.\nAnother significant achievement for SunCoke in 2020 is the extension of existing contracts at Jewell, Haverhill 1 and Haverhill 2.\nWe helped our customers navigate through challenging market conditions earlier this year, by reducing current year production and exchange for contract extensions, which illustrates the strength and long-term nature of our customer relationships.\nWe also signed a two-year take-or-pay coal handling agreement with Javelin at CMT during the fourth quarter.\nThis contract provides stability to the operations at CMT, while we actively pursue new business opportunities.\nI also want to briefly touch on our foundry coke initiative.\nThe testing, development and capital deployment necessary for profitable foundry coke production went well throughout 2020.\nWe are now commercial in this new market with a high quality product.\nDuring the fourth quarter, we also explored export coke opportunities for 2021 and today have had good success.\nWe plan on running at full capacity in 2021 and feel confident that demand from export and foundry markets will support this level of production.\nLooking at our capital structure and deployment of free cash flow in 2020, we reduced gross debt by $110 million and net debt by approximately $61 million.\nThis includes the opportunistic open-market purchases of approximately $63 million face value senior notes.\nAdditionally, we paid a $0.24 per share annual dividend and repurchased 1.6 million shares during the first quarter.\nAs we reflect on our business, we are pleased with the strength of our core operations, which allowed us to drive robust cash flows for the year.\nThis strong cash flow has provided us the ability to weather market challenges, while also aggressively pursuing a balanced yet opportunistic approach to capital allocation.\nFay will go into more detail on this, but on a high level, we made progress on our capital allocation initiatives for the year, reducing our debt, investing in our assets and returning meaningful capital to our shareholders.\nTurning to Slide 4.\nThe fourth quarter net loss attributable to SXC was $0.06 per share, down $0.04 versus the fourth quarter of 2019.\nOn a GAAP basis, our full year 2020 net income attributable to SXC was $0.04 per share, up $2.02 versus the full year of 2019.\nAs a reminder, full year 2019 results included a $2.27 per share impairment charge recorded to Logistics goodwill and long-lived asset at CMT. After adjusting for these charges, 2020 diluted earnings per share was $0.25 lower than the prior year, due primarily to lower volumes at both the domestic coke and logistics segments.\nConsolidated adjusted EBITDA for the fourth quarter of 2020 was $37 million, down $13.8 million versus the fourth quarter of 2019.\nThe decrease was mainly driven by lower volumes in our Domestic Coke segment.\nOn a full year basis we delivered adjusted EBITDA of $205.9 million, down $42 million versus the full year of 2019.\nCoke operations were down $12.2 million due to lower volumes, which were partially offset by lower operating costs.\nYear-over-year results were also impacted by the bankruptcy of our coal customer at our Logistics segment.\nTurning to the next slide and looking further at our fourth quarter adjusted EBITDA performance.\nSlide 5 bridges fourth quarter 2019 adjusted EBITDA to fourth quarter 2020 adjusted EBITDA.\nAs we have discussed in our previous conference calls in response to challenging and -- in response to a challenging and unprecedented environment we partnered with our coke customers to address their near-term coke needs.\nIn exchange for the extension of several coke contracts, we agreed to reduce our coke production in 2020 by approximately 550,000 tons.\nThis volume reduction contributed to the lower adjusted EBITDA from coke operations in the fourth quarter of 2020 as compared to the prior year.\nStrong cost control and management partially offset the impact of lower volumes.\nLogistics operations were $1.8 million lower quarter-over-quarter due to lower volumes as well as lower pricing, which was offset partially by lower operating costs.\nCorporate and other expenses were higher by $2.9 million quarter-over-quarter, mainly due to higher non-cash legacy liability expense.\nTurning to Slide 6.\nFull year 2020 adjusted EBITDA was $205.9 million down $42 million compared to the prior year.\nOur Domestic Coke segment delivered strong operational performance despite running at reduced production level.\nLower sales volumes were partly offset by strong cost control and efficient operating procedures.\nThe Domestic Coke segment delivered full-year adjusted EBITDA of approximately $217 million, which was well above our full year revised Domestic Coke guidance.\nIncluding Brazil, our coke operations delivered adjusted EBITDA of $230.5 million.\nAdjusted EBITDA of the Logistics segment decreased $25.3 million year-over-year, primarily as a result of the Chapter 11 bankruptcy of Foresight Energy and the subsequent rejection of the contract with CMT. Finally, our corporate and other segment was unfavorable by $4.5 million.\nLower employee-related costs were offset by higher non-cash legacy liability expense and foundry related R&D cost.\nIn summary, we are very pleased with the performance across all our segments of the company especially during a very tough and challenging year.\nTurning to our capital deployment on Slide 7.\nAs Mike highlighted, we generated very strong operating cash flow, approximately $158 million in the year, which was above our full year revised guidance range of $116 million to $136 million.\nThis robust cash flow generation allowed us to make good progress on our capital deployment initiatives.\nCapex of $74 million was spent during the year, which was below our guidance and included close to $11 million for foundry related expansion work.\nAs we manage through the various constraints and challenges caused by the pandemic, we deferred certain capital projects in 2020.\nWe expect maintenance capex will be higher in 2021 as our operations return to normal levels.\nWe continue to make good progress managing our balance sheet.\nDuring the year we spent approximately $104 million of cash to reduce debt outstanding by $110 million.\nThis includes repurchasing $62.7 million face value SXCP notes at a discount.\nAs we have consistently indicated our long-term goal is to reduce our gross leverage ratio down to 3 times or lower.\nWe also returned capital to our shareholders in 2020.\nWe repurchased approximately 1.6 million shares for $7 million during the first quarter.\nWe also paid a total of $0.24 per share dividend in 2020 which was the use of cash of approximately $20 million.\nIn total, we ended 2020 with a cash balance of approximately $48 million and a strong liquidity position of approximately $348 million, setting the stage for continued progress against our capital allocation priorities in 2021.\nBefore we -- pardon me.\nBefore we review our 2021 guidance, I wanted to provide a few brief thoughts on the overall market and where we see things as we enter the New Year.\n2020 proved to be a roller coaster ride for the steel industry.\nPrior to the pandemic, utilization rates were stable at around 80%, reflecting good fundamental demand.\nAs the coronavirus took hold, capacity utilization [Indecipherable] dramatically to a low of 52% with all major integrated steel producers shutting down blast furnaces.\nAs the economy started to reopen in the fall, steel demand and capital -- and capacity utilization began to recover slowly.\nAs 2020 came to a close [Indecipherable] prices reached levels not seen in many years.\nSteel demand and capacity utilization rates largely recovered and were approaching pre-pandemic levels.\nWe anticipate 2021 to be a year of continued recovery for the steel industry, potential for passage of a long overdue infrastructure bill, coupled with continued industrial recovery provides a good backdrop for the industry.\nLooking beyond 2021, we believe that SunCoke is well positioned for long-term success.\nWe have the youngest Domestic Coke making facilities in the NAFTA region and continue to invest in our facilities to ensure they operate safely and efficiently.\nWe have leading technology with outstanding environmental performance and are recognized as the EPA MACT standard.\nOur coke production process is the cleanest and least carbon intensive in the world.\nWe believe some of the older coke supply is coming toward the end of their life cycle and will be retired in the future.\nIn addition, recent developments in the steel market have created the potential to economically produced pig iron or [Phonetic] consumption by the EAS.\nThe production of pig iron, the domestic blast furnaces will require coke, which could create opportunities for our company.\nWe are also entering new foundry and export markets, which provides on customer and market diversification.\nOn the thermal coal export side, the market is showing signs of recovery.\nAPI2 prices increased by approximately 15% in the fourth quarter versus the prior quarter.\nAnd we have seen substantial increases in export coal shipments from the Gulf Coast and East Coast ports.\nWe recently signed a new two-year take-or-pay agreement with Javelin to handle coal at CMT. We have also successfully handled iron ore at CMT and we expect that we will continue to handle this new product in 2021, fully repositioning CMT is a multi-year undertaking and it continues to be one of our top priorities.\nTurning to Slide 10.\nWe expect 2021 adjusted EBITDA to be between $215 million and $230 million.\nDomestic Coke will contribute an incremental $2 million to $7 million in 2021 as we run our Domestic Coke fleet at full capacity with uncontracted capacity being sold into the export and foundry markets.\nWe anticipate higher O&M spending as our operations and capital activities return to a more normal level in 2021.\nTurning to Logistics segment, we expect logistics to contribute an additional $3 million to $8 million in 2021.\nAs Mike mentioned, we anticipate that market conditions for coal export will continue to improve, which we anticipate will result in higher volume.\nWe also see opportunities for incremental volumes from non-coal throughput.\nLastly, we expect our Corporate and Other segment to be better by approximately $4 million to $8 million.\nThe year-over-year favorability is driven by lower employee-related costs and the absence of certain discrete items such as foundry related R&D expense.\nMoving on to Slide 11.\nIn 2021, we expect our Domestic Coke adjusted EBITDA will be between $219 million and $224 million with sales of approximately 4.1 million tons.\nOnce again, we expect to run the domestic fleet at full capacity.\nApproximately 3.85 million tons are contracted under long-term take-or-pay agreements.\nWe expect to sell the remaining volumes in the foundry and export markets.\nFoundry and export tons do not replace blast furnace tons and a ton per ton basis.\nFor example, due to the differences in the production price -- process, a single ton of foundry coke replaces approximately 2 tons of blast furnace coke.\nThese differences are reflected in our sales estimates of 4.1 million tons.\nThe total sales volume for foundry and export coke is expected to be between 250,000 tons and 270,000 tons, which is the blast furnace equivalent of approximately 400,000 tons.\nOur 2021 projections also include lower cost coal cost recovery at our Jewell facility, which is exposed to commodity risk through 2021.\nAdditionally, lower coal prices in 2021 will drive lower yield gains across our Domestic Coke fleet.\nLastly, we also expect that operating and maintenance costs will be higher in 2021 as compared to 2020.\nCertain maintenance and maintenance activities and capital projects were deferred due to constraints imposed by the pandemic as well as lower production.\nAs production ramps up and the operating conditions normalize, we expect that maintenance spending will normalize as well.\nLooking at Slide 12.\n2021 Logistics adjusted EBITDA is expected to be between $20 million and $25 million, an increase of $3 million to $8 million versus 2020.\nAs discussed earlier, we have a new contract with Javelin, which included a 4 million ton take-or-pay volume agreement for 2021 and 3 million tons for 2022.\nGiven the current coal export market and looking at the API2 forward curve, we are projecting between 4 million tons and 5 million tons of coal to be exported from CMT in 2021.\nAdditionally, we have also tested iron ore handling at our facility and continue to look for other opportunities.\nOur value estimates include between 2.5 million to 3 million tons of non-coke throughput such as pet coke, aggregates and iron ore.\nWe expect slightly higher volumes at our domestic coal terminals as well with our coke production facilities ramping back up to full production.\nBut third-party volumes will remain tempered.\nWe expect to handle 10.5 million tons through our domestic coal terminals in 2021 versus approximately 9.5 million tons handled in 2020.\nOverall, we see some positive indication that the commodity market is improving and that the initial success at CMT has achieved in test products will result in potential upside, which is contemplated in the larger guidance range for Logistics adjusted EBITDA in 2021.\nMoving to the 2021 guidance summary on Slide 13.\nThis slide provides a historical view of actual performance across many metrics as well as a summary of our 2021 guidance.\nOnce again, we expect adjusted EBITDA to be between $215 million and $230 million in 2021.\nOur coke operations are expected to ramp back up to full capacity and the Logistics segment had some upside potential with new products and higher coal export volumes.\nWe anticipate our capex requirement in 2021 will be around $80 million.\nThis includes some deferred projects from 2020 and is in line with our long-term capital capex estimates on an annual basis.\nOur free cash flow is expected to be between $80 million and $100 million after taking into account cash interest, cash taxes, capital expenditures and minimal working capital changes.\nSo wrapping up on Slide 14.\n2021 will be a year to build on our strong foundation.\nAs always safety and operational performance is top of mind for our organization.\nOur efforts will focus on successfully executing against our operating and capital plan in 2021.\nWe are entering into two new markets for 2021.\nWe tested these opportunities on a limited basis, but this year will be the first where we participate on an industrial scale.\nOur objective is to succeed in these markets by proving ourselves as a reliable supplier of high quality product.\nThese sales are important for SunCoke success in 2021 as well as in future years.\nWe will continue to pursue opportunities to optimize our asset base, specifically as it relates to CMT, repositioning Convent Marine Terminal from primarily a coal export terminal to a more diversified terminal will be an area of focus.\nSunCoke will continue working toward further expanding our customers and products in 2021.\nAs we have demonstrated in the past, we will continue to execute our well established and well balanced capital allocation goals, continuing to bring our debt balance down is critical to stabilizing and strengthening our capital structure.\nWe will continue to evaluate capital needs of our business, our capital structure and the need to reward shareholders on a continuous basis and we'll make capital allocation decisions accordingly.\nIn total, we are excited and optimistic for the New Year, after battling through an unprecedented 2020.\nWe see great potential to build on the strength of our core coke making and Logistics franchises to enter new markets, serve new customers, meet our financial targets and create value for our shareholders.\nWith that, let's go ahead and open it up for Q&A.\n", "role": "user" }, { "content": "compname posts q4 loss per share $0.06.\nq4 loss per share $0.06.\nfull-year 2021 consolidated adjusted ebitda is expected to be $215 million to $230 million.\n2021 domestic coke total production is expected to be about 4.1 million tons.\n2021 capital expenditures are projected to be about $80 million.\n", "role": "assistant" } ]

[ { "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 has now been over a year since the pandemic closed in on us all.\nLet me first start with an expression of profound gratitude to the employees of Standex, our executive team and the Board of Directors.\nThe circumstances of the pandemic required a level of agility and responsiveness that would not have been possible without a high degree of collaboration, trust and a sense of common mission.\nI'm proud of what we accomplished together.\nAs a result, Standex is emerging from the pandemic far stronger than when we entered it.\nWe had another solid quarterly performance with results ahead of our expectations and expect this momentum to continue with stronger financial performance in fiscal fourth quarter 2021.\nAt the Electronics segment, nearly half of the 35% year-on-year revenue increase in the third quarter reflected organic growth with solid demand for relays in solar and electric vehicle applications and reed switches for transportation end markets.\nOverall, we are seeing strong demand across many of our product lines and all geographies at Electronics.\nOur Scientific segment also had an excellent quarter with solid revenue and operating income growth year-on-year.\nWe continue to expect that revenue from COVID-related storage demand in fiscal 2021 will be at the higher end of our originally indicated $10 million to $20 million range.\nAt the Specialty Solutions segment, revenue and operating income sequentially increased 18.3% and 32.4%, respectively, as we see the early stages of recovery in our end markets.\nFrom a strategic perspective, we continue to position Standex around products and platforms that optimize our growth and margin profile with strong customer value propositions.\nElectronics segment backlog realizable in under one year increased approximately 26% sequentially as the demand in end markets, including electric vehicle and renewable energy, continues to trend positively.\nResults and order flow at Renco Electronics were solid as we successfully leveraged their complementary customer base and end markets.\nAt the end of the third quarter, we also announced the divestiture of Enginetics Corporation.\nOur Engineering Technologies segment will now be focused on our core spin forming capabilities with its strong value proposition, reducing material inputs and processing time, ultimately providing higher growth and margin opportunities for the segment.\nThe sale of Enginetics is also accretive to our margin profile.\nETG will continue to focus on serving the space, commercial aviation and defense end markets.\nWe are also further leveraging these demand trends and strategic initiatives with ongoing productivity and efficiency actions.\nAt the Electronics segment, we continue to make progress in the quarter, mitigating material inflation through changes in the reed switch production and material substitution.\nWe are on track to substantially complete this transition by the end of fiscal 2022.\nWe continue to allocate production capacity to our highest margin segment opportunities.\nFor instance, at the Specialty Solutions segment, Hydraulics aftermarket revenue increased 23% year-on-year in the third quarter.\nThese actions are complemented by a strong balance sheet and liquidity position, giving us the financial flexibility to deploy capital for our active pipeline of organic and inorganic growth opportunities.\nAdemir will discuss these metrics in more detail.\nIn regard to our fiscal fourth quarter 2021 outlook, we expect slight to moderate sequential revenue increase and a more significant operating margin improvement compared to the third quarter of fiscal 2021.\nUnderpinning this outlook are the following.\nSequentially, we expect revenue growth for the Electronics, Engraving and Specialty Solutions segments.\nHowever, the consolidated revenue increase sequentially will be partially offset by the absence of Enginetics, which contributed approximately $4 million in revenue in the third quarter and was divested at the end of the quarter.\nWe expect significant operating margin improvement sequentially compared to fiscal third quarter 2021 results.\nThis improvement will be driven primarily by Electronics, Engraving and Engineering Technologies.\nBesides our financial results today, we are also pleased to announce that our Board of Directors has committed to nominating Robin Davenport of Parker-Hannifin for election to the Board of Directors at Standex's 2021 Annual Shareholder Meeting.\nIn the interim, Ms. Davenport will serve as an observer and advisor to our Board of Directors.\nRobin is a highly accomplished and respected executive with comprehensive financial and global industry expertise in the manufacturing sector and significant experience and success in the areas of M&A, capital allocation and corporate strategy.\nIn my discussions with her, I found her to be very thoughtful and insightful in her views and believe she will be a valuable addition to the current Board of Directors' efforts.\nI look forward to working closely with her and the current members of the Standex Board as we further execute our strategic and financial priorities.\nRevenue grew approximately $17 million or 35.4% year-on-year with nearly half of the increase due to organic growth.\nThis growth reflected a broad-based geographic recovery, including a strengthening of demand for relays in solar and electric vehicle applications and reed switch demand in transportation end markets.\nThe recent Renco acquisition contributed revenue of $6.4 million and is proving to be a highly complementary fit with our magnetics portfolio.\nOperating income increased approximately $4.3 million or 54.2% year-on-year, reflecting operating leverage associated with revenue growth, profit contribution from Renco and productivity initiatives, partially offset by increased raw material costs.\nThe pictures highlighted on slide four are examples of how we can leverage the technological advantages of reed switches to contribute to our growth in end markets such as electric vehicles and solar power.\nIn particular, reed switches, given their unique physical properties, are well suited to safety isolation testing for electric vehicles and battery management systems.\nWe also continue to capture attractive new customer wins to support our NBO pipeline.\nIn this case, we highlighted a magnetic motion system for a defense elevator application, which will contribute more than $11 million over the next three years.\nCurrently, our new business opportunity funnel has increased to $59 million across a broad range of markets and is expected to deliver $12.4 million of incremental sales in fiscal 2021.\nSequentially, in fiscal fourth quarter 2021, we expect a modest increase in revenue and slight operating margin improvement at Electronics compared to fiscal third quarter 2021.\nOur outlook reflects a continued broad-based end market recovery, including further growth for relays in solar and electronic vehicle applications, supported by a healthy order flow with backlog realizable under a year increasing approximately $20 million or 26% sequentially in our third fiscal quarter.\nRevenue increased approximately $600,000 or 1.7% year-on-year, and operating income was similar year-on-year, as expected, at $4.5 million.\nThe revenue increase reflected favorable foreign exchange impact, partially offset by the timing of projects.\nOperating income was essentially similar year-on-year due to a less favorable project mix.\nLaneway sales of $13.6 million were an approximate 5% sequential increase, reflecting growth in soft trim tools, laser engraving and tool finishing.\nThe picture on slide five highlights a recent customer win on the Ford F-150 platform for soft trim interiors.\nOverall, we are seeing solid demand and backlog trends for our soft trim capabilities, further reinforcing the rationale behind our prior acquisition of GS Engineering, a leading provider of cutting-edge proprietary technology for the production of in-mold grained tools.\nSince the acquisition, we have further rolled out GS technology on our global platform, positioning us well in the growing soft surface markets as the auto industry focuses on interior comfort of vehicles and increasingly replaces leather with sustainable materials.\nIn fiscal fourth quarter 2021, we expect a slight revenue and more significant operating margin increase compared to fiscal third quarter 2021 at the Engraving segment.\nThe expected sequential financial performance improvement reflects a more favorable geographic mix, project timing and increased soft trim product demand leveraged over productivity and cost initiatives.\nTurning to slide six, the Scientific segment.\nRevenue increased approximately $9.6 million or 65% year-on-year, reflecting continued positive trends in retail pharmacies, clinical laboratories and academic institutions, mainly attributable to demand for COVID-19 vaccine storage.\nOperating income increased $2.6 million or approximately 81% year-on-year, due primarily to the volume increase balanced with investments to support future growth opportunities.\nIn fiscal fourth quarter 2021, we expect a moderate sequential decrease in revenue due to lower demand for COVID-19 vaccine storage combined with higher freight costs, which we expect to result in a sequential decrease in operating margin, although we still expect an operating margin above 20% in the quarter.\nAs shown on the picture on slide six, we provide comprehensive solutions with a broad product line.\nWe can meet customer requirements for different model sizes and temperature ranges across a wide variety of end markets, including pharmaceutical, medical, scientific, biotechnology and industrial.\nPicture here is a clinic with a number of different medications in small quantities requiring a variety of our storage solutions.\nFinally, I'm pleased with the progress the Scientific team is making in managing the pipeline of new product development projects, which will position the business well with future new sources of revenue.\nTurning to the Engineering Technologies segment on slide seven.\nRevenue decreased approximately $6.7 million, and operating income was about $1.9 million lower year-on-year, a 25.4% and 59.8% decrease, respectively.\nOn a year-on-year basis, fiscal third quarter 2021 results reflected the economic impact of COVID-19 on the commercial aviation markets and project timing in space and energy segments, partially offset by growth in defense end markets.\nThe decrease in operating margin was due to the lower volume, partially offset by productivity and cost initiatives.\nIn fiscal fourth quarter 2021, we expect revenue on a sequential basis to be similar to the prior quarter with growth in commercial aviation, defense and space, offset by the absence of Enginetics sales due to its divestiture at the end of fiscal third quarter 2021.\nWe expect a significant increase in operating margin, reflecting a continued broad-based end market recovery and favorable mix complemented by ongoing productivity initiatives.\nAs pictured on slide seven, we continue to win attractive long-term contracts with industry leaders to develop new platforms and the next-generation hypersonic programs.\nOur manufacturing process utilizes spin forming technology, an inherently more efficient process.\nWe start with a plate as opposed to a large block of titanium and then shape it with less material waste and cost and achieve the same functionality and strength.\nSpecialty Solutions revenue decreased approximately $3.7 million or 11.9% year-on-year with an operating income decline of about $600,000 or 12.9%.\nThis decrease primarily reflected the economic impact of the COVID-19 pandemic on the segment's end markets, particularly in food service equipment.\nI would like to commend the Specialty team for effectively managing their costs to nearly hold their margin rate despite the significant reduction in revenue.\nSequentially, Specialty Solutions revenue and operating income increased 18.3% and 32.4%.\nWe believe we are in the early stages of a recovery in food service and refuse end markets that we expect to continue into our fiscal fourth quarter.\nIn fiscal fourth quarter 2021, we expect a slight sequential increase in revenue, with operating margin expected to slightly decrease sequentially, reflecting material inflation, particularly at Hydraulics, which we are seeking to recover through pricing actions.\nPictured on the slide is a recent new product introduction, the milk and food merchandiser, developed primarily for the school market and offering several advantages, including flexibility to merchandise a wide assortment of products, easy loading/unloading and the product accessibility to young children.\nAs we return to more normalized patterns of experience outside the home, in-person learning and schools and indoor dining and restaurants, we are seeing a recovery in the school, restaurant and grab-and-go food end markets for products such as the food merchandiser.\nFirst, I will provide a few key financial takeaways from our third quarter 2021 results.\nWe had solid performance in the third quarter as both revenue and adjusted operating margin increased sequentially and year-on-year.\nRevenue increased sequentially at four of our five reporting segments, and we saw a strong recovery in many of our end markets.\nFrom a margin standpoint, adjusted operating margin improved both sequentially and year-on-year, reflecting operating leverage associated with revenue growth and the impact of our cost efficiency and productivity actions.\nOur cash generation and leverage statistics remain strong.\nWe reported a free cash flow of $12.4 million and have generated 92% free cash flow to net income conversion to the first nine months of fiscal 2021.\nAlso, our net debt to EBITDA, interest coverage ratio and available liquidity all improved sequentially.\nWe are entering our fiscal fourth quarter with positive demand trends, active pipeline of productivity and efficiency actions and an expectation for continued solid cash generation.\nWe expect our fiscal fourth quarter 2021 results will be stronger both sequentially and year-on-year.\nOn a consolidated basis, total revenue increased 10.8% year-on-year from $155.5 to $172.2 million.\nRevenue increase mostly reflected strong organic growth at our Electronics and Scientific segments, contribution from our recent Renco acquisition and favorable FX, partially offset by the economic impact of COVID-19.\nRenco contributed approximately 4.1%, and FX contributed 2.8% increase to the revenue growth.\nAs we expected, the COVID-19 economic impact was most evident in the commercial aviation and food service end markets, primarily impacting our Engineering Technologies and Specialty segments.\nHowever, we are seeing signs of sequential recovery in both of these end markets as we enter the fourth quarter of fiscal 2021.\nOn a year-on-year basis, our adjusted operating margin increased 90 basis points to 12.2%, reflecting operating leverage associated with revenue growth, profit contribution from Renco and readout of our productivity actions, partially offset by increased raw material costs.\nInterest expense decreased approximately 28% or $0.5 million year-on-year, primarily due to lower level of borrowings and a decrease in overall interest rate as a result of our previously implemented variable to fixed rate swaps.\nIn addition, our tax rate was 24.9% in the third quarter of 2021.\nFor fiscal 2021, we continue to expect approximately 22% tax rate with a rate in the low 20% range for the fourth quarter.\nAdjusted earnings per share was $1.19 in the third quarter of 2021 compared to $0.96 a year ago.\nWe generated free cash flow of $12.4 million in the fiscal third quarter of '21 compared to free cash flow of $7.3 million a year ago, supported by improvements in our working capital metrics.\nFor the first nine months of fiscal 2021, we have generated 92% free cash flow to net income conversion, inclusive of approximately $8 million in pension payments, with $3 million of that amount paid in the fiscal third quarter of '21.\nStandex had net debt of $82.1 million at the end of March compared to $90.9 million at the end of December, reflecting free cash flow of approximately $12.4 million, an additional $11.7 million in proceeds from the Enginetics divestiture.\nThis was partially offset by $8.6 million of stock repurchases, along with dividends and changes in foreign exchange.\nNet debt for the third quarter of 2021 consisted primarily of long-term debt of $200 million and cash and equivalents of $180 million with approximately $82 million held by foreign subs.\nOur key liquidity metrics reinforce our significant financial flexibility.\nStandex's net debt to adjusted EBITDA leverage was approximately 0.8 at the end of the third quarter with a net debt to total capital ratio of 14.5%.\nWe had approximately $209 million of available liquidity at the end of the third quarter and continued to repatriate cash with approximately $6 million repatriated during the quarter.\nTo date, we have repatriated approximately $31 million and remain on plan to repatriate at least $35 million in fiscal 2021.\nFrom a capital allocation perspective, we repurchased approximately 94,000 shares for $8.6 million.\nThere is approximately $27 million remaining on our current repurchase authorization.\nWe also declared our 227th consecutive quarterly cash dividend on April 28 of $0.24 per share.\nFinally, we have reduced our fiscal 2021 capital expenditures range to between $22 million to $25 million from between approximately $25 million to $28 million.\nWe expect a slight to moderate revenue increase in the fiscal fourth quarter 2021 as compared to fiscal third quarter of 2021.\nUnderpinning this outlook is expected sequential revenue increases at Electronics, Engraving and Specialty Solutions, partially offset by the divestiture of Enginetics, which contributed approximately $4 million in revenue in the third quarter.\nWe expect a significant sequential operating margin increase in the fourth quarter as we leverage demand growth, particularly at Electronics, Engraving and Engineering Technologies as well as the productivity and efficiency actions that we have undertaken companywide.\nBoth from an operational and financial perspective, we have an active pipeline of initiatives to further strengthen our performance and drive cash generation as we approach fiscal 2022.\nOur balance sheet position remains strong, and our liquidity metrics are strengthening.\nWe are well positioned to pursue an active pipeline of exciting organic growth opportunities, such as electric vehicles, renewable energy, smart grid and space commercialization as well as highly complementary acquisitions like Renco.\nWe remain focused on further growing our high-quality businesses with attractive growth and margin profiles.\nAs you saw in the examples shared today, we leverage our strong technical and applications expertise to provide customers a compelling value proposition.\n", "role": "user" }, { "content": "qtrly diluted earnings per share - adjusted $1.19.\nqtrly net sales $172.2 million versus $155.5 million.\nexpect sequentially stronger fiscal q4 2021 financial performance.\n", "role": "assistant" } ]

[ { "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 very proud of their efforts in this challenging environment and the dedication, creativity and resilience they've demonstrated.\nI will then discuss several of the key themes and accomplishments in the quarter.\nFrom there, I will discuss the segment performance and trends.\nAdemir will follow with a discussion of our consolidated results and financial position in greater detail.\nFinally, I will conclude with some comments on our outlook and key takeaways from our results and initiatives.\nOverall fiscal fourth quarter results were in line with our expectations despite the very challenging operating environment as our teams displayed a high degree of global collaboration and coordination while maintaining a safe and healthy environment.\nImportantly, since the end of April, our end markets sequentially have exhibited a gradual increase in the level of customer activity that has continued into our first quarter.\nMost notably at our Engraving, Electronics and Scientific segments.\nWe also continue to make substantial progress further positioning Standex around more profitable platforms with favorable growth prospects and compelling customer value propositions.\nAt the beginning of the quarter, we completed the divestiture of our Refrigerated Solutions Group.\nThis transaction is accretive to our consolidated operating margin profile by approximately 200 points.\nThe transaction also continued the process to begin with our divestiture of the Cooking business in early 2019.\nIn July, we announced the acquisition of Renco Electronics.\nRenco is a leading US-based custom magnetics manufacturer.\nWe believe this is a great strategic fit deepening our significant engineering and technical expertise, as well as providing a highly complementary customer base.\nIn addition, Renco will be accretive to our earnings to fiscal 2021 and additive to consolidated free cash flow.\nToday, we are also announcing the realignment of our reporting segments reflected in our fiscal fourth quarter results.\nBesides Engraving, Electronics and Engineering Technologies, our reporting segments will now include Scientific and Specialty Solutions.\nA stand-alone Scientific segment will allow us to communicate more effectively the highly attractive profile of this business and its long-term outlook.\nWe acquired this business at the end of 2016, and since then, it has experienced significant growth, focusing on the manufacturer of laboratory refrigerators and freezers, as well as cryogenic equipment for the scientific, biomedical and pharmaceutical markets.\nIn fiscal 2020, the Scientific segment reported $57 million in revenue and in excess of 20% operating margin.\nThe Specialty Solutions segment, we are introducing today as a reporting segment, will include the Hydraulics, Pumps and Merchandising businesses.\nWe will now be reporting these businesses in line with the way they are managed, under one common Group President.\nBesides the portfolio repositioning, we continue to successfully execute cost actions, and have a healthy funnel of operational excellence initiatives to implement as we enter fiscal 2021, which will strengthen our market leadership and cost positions.\nDuring the quarter, we realized $4.2 million from productivity and expense actions, and expect $7 million in annual savings in fiscal 2021.\nFurther adding to these efforts, we are building on our current foundation with support of our new VP of Operations hired this past February.\nA recurring theme and priority in how we manage Standex is to maintain a strong balance sheet and significant liquidity position supported by consistent free cash flow generation and disciplined capital allocation.\nWe generated free cash flow of $19.5 million in the fourth quarter of 2020 and repaid $13 million in debt.\nThe company ended the quarter with approximately $200 million in available liquidity and a net debt to adjusted EBITDA ratio under 1.\nAlso, Standex repatriated approximately $19 million in the quarter and $39 million in fiscal 2020 from foreign subsidiaries, ahead of our prior forecast of $35 million.\nOur significant financial flexibility positions us well as we execute on an active pipeline of organic and inorganic opportunities as in the case of Renco, which we paid for out of cash on hand without incurring additional debt.\nIn sum, as I reflect on fiscal 2020, despite the challenges associated with COVID-19, we continued to build the corporation around larger more profitable platforms in high-value markets with strong competitive advantage and customer focus.\nWe also have a healthy pipeline of internal projects and inorganic growth opportunities that can generate attractive returns.\nUnderpinning these actions is a strong balance sheet and significant financial flexibility.\nAs a result, Standex is well positioned to exit the current environment as a stronger company.\nThe Electronics segment revenue decreased approximately $5 million or 10% year-over-year as we experienced weakness in both North American and European markets, associated with the economic impact of COVID-19 pandemic.\nThis weakness was partially mitigated by a modest recovery in Asian end markets.\nOperating income decreased approximately $2.8 million or 32.3% year-over-year in the quarter.\nBesides lower volume, operating income was impacted by higher raw material input costs, as well as partial plant facility shutdowns in India and Mexico, which have since reopened.\nThese items were partially offset by cost savings and productivity initiatives.\nIn addition, the funnel of new business opportunities continues to be active, and is at a very healthy $40 million as we work with our customers on their new product designs.\nAs an example of a new product, we collaborated on a custom magnetic sensor for smart grid monitoring.\nStandex's process controls and design capabilities were key to this application.\nThis product enables remote wireless underground monitoring of electric power quality.\nAs is typical, this product had a multi-year sales cycle and will have an approximately 10-year product life cycle.\nOur fiscal first quarter 2021 Electronics segment outlook is for a meaningful sequential increase in revenue due to positive trends in our magnetic product line, as well as revenue contribution from the recently closed Renco acquisition.\nWe also expect a sequential improvement in operating margin reflecting continued cost and productivity initiatives, as well as limited sequential impact from reed switch raw material input costs.\nOur Electronics business has dramatically transformed in recent years growing from a $40 million largely North American business into an integrated global player.\nWe have recently organized the business into two separate P&Ls, one for the magnetics business, the other for switches and sensors.\nThis will allow greater focus to each of these product lines to grow organically.\nWe will also continue to expand this business with attractive bolt-on acquisitions, expanding into new markets and adjacent technologies.\nAt the Engraving segment, revenue decreased approximately $6.5 million or 17% year-over-year, primarily due to delays in the receipt of tools from customers as we indicated in our fiscal third quarter conference call.\nWe are seeing this work shift into the first fiscal quarter of 2021.\nImportantly, over the longer term, auto OEMs continue to hold on to their new program roll-out schedules.\nEngraving operating income declined $2.7 million or 51% year-over-year, reflecting volume declines associated with the economic impact of COVID-19 mitigated partially by productivity and expense savings in the quarter.\nLaneway remained healthy with a 9% year-to-date increase to $43 million, driven by soft trim tools, laser engraving and tool finishing.\nWe've been very active collaborating with designers on new electric vehicles in all regions of the world.\nThe example here shows how we leveraged our global presence and comprehensive service offering including architecture design services, chemical and laser texturizing, soft trim tools and tool finishing services to bring out this new model.\nOur fiscal first quarter 2021 outlook is for a meaningful sequential increase in Engraving revenue and operating margin in fiscal quarter -- first quarter 2021.\nThe expected revenue increase reflects both customer orders that have shifted from fiscal fourth quarter 2020 to first quarter '21, as well as an overall increase in the level of customer activity.\nThe expected margin increase is associated with higher volumes sequentially, combined with cost efficiency and productivity initiatives in North America and Europe.\nIn addition, we are beginning to leverage our global SAP platform at Engraving for enhanced productivity.\nWe have spent the last 2.5 years moving all Engraving sites with [Phonetic] common [Phonetic] ERP.\nNow, we are rolling out standard reports and operating procedures to help our regional managers better plan and manage their capacity over time and productivity.\nNow we turn to our newest segment.\nWe will begin to break out the Scientific business as a stand-alone segment.\nWhen we acquired Horizon Scientific in October 2016 and combined it with our own Scientific Refrigeration business, we had a business with $34 million of sales.\nSales grew to $57 million in fiscal year '20 even with the fourth quarter deceleration from the COVID-induced slowdown.\nIn that time, we have seen the management team continue to do what they do best, identify emerging market opportunities, and quickly develop and bring to market a solution.\nThe end market for Scientific Refrigeration is dynamic, shaped by frequent regulatory changes, as well as constant evolution and distribution strategy for medications and vaccines.\nWe have been able to strengthen this business with our growth discipline process tools and accelerated investment in R&D.\nThis is a business we expect to continue to grow organically and we are also actively exploring bolt-on acquisitions to expand its reach.\nScientific revenue decreased approximately $2.6 million or 17% year-over-year with operating income declining approximately $900,000 or 24.8% year-over-year.\nThe Scientific segment was impacted by a market shift toward consumable protective equipment due to the COVID-19 pandemic and less near-term emphasis on capital equipment expenditures by its customer base.\nHowever, in fiscal first quarter '21, we expect to see meaningful sequential revenue and margin increase as customer ordering patterns return to a more historical mix.\nIn addition, for the coming flu season, healthcare facilities plant to move even more flu vaccinations into other delivery points such as pharmacies, so they can focus on COVID treatments.\nThis is driving demand for our products from our national pharmacy chain customers where we are well established.\nScientific's prospects include other promising opportunities as well.\nOur scientific unit manufacturer's cabinet is well suited for the storage needs of COVID-19 vaccines and treatments now in the approval process.\nWe are actively evaluating and pursuing the opportunity this presents.\nTurning to the Engineering Technologies segment on Slide 7.\nEngineering Technologies revenue decreased $7.3 million or 21.7% year-over-year in the fiscal fourth quarter 2020, reflecting lower aviation-related sales offset partially by increased sales in the space end market.\nOperating income margin increased from 13.6% in fiscal fourth quarter 2019 to 15.8% in the fourth quarter of 2020 despite the sales headwinds due to favorable product mix, cost actions and manufacturing efficiencies.\nWe also continued to innovate, collaborating with customers on next generation missile nose cones using our proprietary spin forming process.\nIn fiscal first quarter 2021, we expect to see significant sequential revenue and significant operating margin decrease.\nThe decline is primarily due to the economic impact of COVID-19 on the commercial aviation market, especially our engine parts business.\nSpace end market sales will see a decline sequentially in the fiscal first quarter of '21 due to the timing of projects.\nThe segment's defense end markets are expected to increase year-over-year throughout fiscal 2021.\nWe will continue to work to further align Engineering Technologies's cost structure with the current demand environment in aviation.\nNow let's move on to Slide 8, the Specialty Solutions segment, which includes the Hydraulics, Merchandising and Pumps businesses.\nSpecialty Solutions revenue decreased approximately $8 million or 25% year-over-year in the fourth quarter of fiscal '20.\nThe revenue decrease was primarily associated with the economic impact of COVID-19 on several end markets including the food service equipment and hospitality industries at the Pumps and Merchandising businesses, and the dump market at Hydraulics.\nSegment operating income decreased $2.3 million or 39% year-over-year, reflecting lower volume, partially mitigated by cost actions including headcount reductions and temporary plant slowdowns.\nWe expect fiscal first quarter '21 revenue and operating income to be similar to fiscal fourth quarter 2020.\nUsing the Standex growth discipline process, we are introducing a new product for schools the Federal milk merchandiser, which provides several benefits, flexibility to merchandise a wide assortment of products, as well as accessible to young students.\nIt reduces labor as there is no need to remove milk every night and it includes an innovative condenser cleaning alarm using Standex Electronics to alert users to efficiency losses.\nFirst, I will provide a few key takeaways from our fiscal fourth quarter 2020 results.\nOur results were in line with the overall expectations we had entering the quarter.\nAs expected, the majority of our end markets were impacted by the COVID-19 pandemic, and as a result, we reported a year-on-year decrease in adjusted EPS.\nSecond, as David mentioned, we continued to maintain a very strong financial position as evidenced by our significant liquidity, low leverage ratios and consistent free cash flow generation.\nThis was complemented by our ongoing cash repatriation program, which came in ahead of our prior estimate for the year.\nWe plan to continue to execute on our repatriation efforts in fiscal '21.\nIn addition, our interest expense declined year-on-year, reflecting the swap of variable debt to a lower rate fixed rate debt, which was completed in our fiscal third quarter.\nWe also delivered on our cost-saving initiatives in the quarter.\nWe realized $4.2 million in savings in the fourth quarter and expect $7 million in annualized savings from these efforts in fiscal '21.\nFinally, our capital allocation remained balanced and disciplined.\nWe have announced earlier in the quarter, our acquisition of Renco Electronics, which was financed from our cash on hand.\nAdditionally, during the quarter, we repaid debt, repurchased shares and declared our 224th consecutive dividend.\nOn a consolidated basis, total revenue declined 17.4% year-on-year.\nThis reflects organic weakness associated with the economic impact of COVID-19 pandemic.\nAcquisitions had a nominal contribution of 0.1% to overall growth in the quarter, while FX was a headwind with a negative impact of 1.1%.\nGross margin decreased 200 basis points year-on-year to 33.7%, primarily reflecting the volume decline, partially offset by productivity and expense actions.\nOur adjusted operating margin was 8.7%, compared to 12.6% a year ago.\nInterest expense decreased primarily due to a lower interest rate as a result of the variable to fixed rate swap we implemented in our fiscal third quarter.\nIn addition, the tax rate of 26.7%, represented a 210 basis point increase year-on-year due to the mix of US and non-US earnings.\nAdjusted earnings were $0.65 in the fourth -- fiscal fourth quarter of 2020 compared to $1.10 in the fiscal fourth quarter of 2019.\nWe reported free cash flow of $19.5 million compared to $27.8 million in the fourth quarter of 2019.\nThis decrease reflects the lower level of net income year-on-year, partially offset by a reduction in capital expenditures from $15.6 million in fourth quarter of 2019 to $5.7 million in fourth quarter of 2020 as we focused our spending on maintenance, safety and the company's highest priority growth initiatives.\nStandex had a net debt of $80.3 million at the end of the fourth quarter compared to $102.8 million at the end of the third quarter of 2020.\nThis decrease primarily reflects the repayment of approximately $13 million of debt in the quarter, along with an increase in our cash balance due to operating cash flow generation in the quarter.\nThe company's net debt to adjusted EBITDA leverage ratio was 0.8% with a net debt to total capital ratio of 14.8% and interest coverage ratio of approximately nine times.\nWe also had approximately $200 million of available liquidity at the end of the fourth quarter.\nWe repatriated $19 million of cash in the fourth quarter of 2020 and $39 million in fiscal 2020 compared to our prior $35 million expectation.\nWe plan to repatriate an additional $35 million in fiscal '21.\nDuring the fourth quarter, we also repurchased approximately 30,000 shares for $1.4 million.\nWe have repurchased now approximately 172,000 shares since the end of fiscal 2019.\nThere is approximately $43 million remaining under the Board's current repurchase authorization.\nIn addition, in July, we declared our 224th consecutive dividend of $0.22 per share, a 10% year-on-year increase.\nSubsequent to the end of the fourth quarter, we announced the acquisition of Renco Electronics for approximately $28 million, which we financed with cash on hand.\nRenco will be accretive, both on an earnings per share and free cash flow in the first year of ownership.\nIn fiscal 2021, we expect capital expenditures to be between $28 million to $30 million compared to $19 million in fiscal '20 as capital spending returns to more normalized levels with continued emphasis on safety, maintenance and growth investments.\nOn Slide 12, we have presented a reconciliation between what the reporting segments would have looked like for fourth quarter 2020 under our prior reporting structure and under the new structure with Scientific and Specialty Solutions as stand-alone segments.\nIn the appendix on Page 17, we have also presented all four quarters of fiscal '20 under the new reporting segment structure.\nIn fiscal first quarter '21, we expect revenues to be flat to slightly above fiscal fourth quarter '20 and operating margins to improve sequentially.\nThis outlook assumes the following.\nElectronics and Engraving segments are expected to have meaningful sequential revenue increases due to an increased level of customer activity and associated volume, as well as a contribution from the recently closed Renco acquisition at the Electronics segment.\nWe also expect a meaningful sequential revenue increase in the Scientific segment as customers resume capital equipment orders.\nWe also expect to benefit from a continued increase in the level of flu vaccinations delivered through pharmacies.\nThese increases will be balanced with a significant sequential decline in Engineering Technologies due to the economic impact of COVID-19 on the commercial aviation market and the timing of orders in the space end market.\nSpecialty Solutions revenue is expected to be sequentially similar to fiscal fourth quarter 2020.\nFrom a strategic perspective, we remain active in our business portfolio in the quarter, divesting Refrigerated Solutions, acquiring Renco Electronics, and today, establishing Scientific and Specialty Solutions as stand-alone segments, all with the intention of building our higher-margin growth businesses into more significant platforms.\nCapturing cost structure efficiencies will remain a priority, with $7 million in cost savings in fiscal 2021, expected from the actions we have already announced.\nThese efforts are being supported by a significant funnel of operational excellence actions in fiscal 2021.\nOur financial position remains solid, supported by our strong balance sheet, significant liquidity, consistent free cash flow generation and continued repatriation of cash.\nThis significant financial flexibility will allow us to pursue a healthy pipeline of organic and inorganic growth opportunities.\n", "role": "user" }, { "content": "qtrly adjusted earnings per share $0.65.\nin q1 2021, expects consolidated company revenue to be flat to slightly above q4 2020.\n", "role": "assistant" } ]

[ { "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 very proud of our accomplishments in what has been an unprecedented and challenging environment over the past year and a half.\nI look forward to further collaboration as we enter fiscal 2022 with a strengthened operating profile and some very new and exciting opportunities in front of us.\nWe ended fiscal 2021 with strong fourth quarter results and solid execution on our growth strategy.\nAt the Electronics segment, approximately two-thirds of the 63% year-on-year revenue increase in the fourth quarter reflected organic growth with continued broad-based geographical recovery, including increased demand for relays in solar and electric vehicle applications.\nAs reflected in our backlog trends, we are continuing to see strong demand across many of our product lines and all geographies at Electronics.\nOur Scientific segment also had a strong quarter with solid revenue and operating income growth year-on-year.\nWe also have an active pipeline for new product development at Scientific and recently received our first product patent in this segment, which I will discuss later in the call.\nAt the Engraving segment, revenue increased approximately 16% year-on-year, reflecting a favorable geographic mix, project timing and increased soft trim product demand.\nExecution on our portfolio transformation strategy has strengthened both Standex's operating performance and strategic positioning as we further expand our end market focus and introduction of new products.\nFrom a financial standpoint, all the segments are focused around high quality businesses that optimize our growth and margin profile.\nTotal Company backlog realizable in under one year increased 19% sequentially in fourth quarter fiscal 2021, with strength in Electronics, Specialty Solutions and Engineering Technologies.\nOn a consolidated basis, we reported an adjusted operating margin of 12% in fiscal 2021, representing a 90 basis point increase year-on-year, with our fourth quarter margin of 13.3%, the highest quarterly margin Standex has ever reported.\nThe reshaping of our portfolio has also enabled us to accelerate our investment in resources to aggressively pursue opportunities in end markets that have healthy growth prospects such as electric vehicles, renewable energy and smart grid.\nOur strength and competitive advantages in these markets drive innovative product solutions, which leverage our technical and applications expertise and resonate with our customers.\nFor example, we've been partnering with a major global energy company on a multiyear development effort and have recently delivered prototype modules to support projects in the renewable energy sector.\nThe potential to scale production to support this project and to commercialize other exciting and innovative organic growth opportunities throughout the Company has reached a level that requires executive oversight.\nIt marks another step in our journey toward becoming a high performing industrial operating company.\nLast night, we announced the creation of a Chief Innovation and Technology Officer role in response to these types of new end market and growth opportunities on which we plan to capitalize.\nWe are promoting Flavio Maschera, President of Engraving, to this new innovation and technology role, which will also be a member of the Standex Corporate Executive team.\nFlavio joined our Engraving segment in July 2006 as VP of Europe and has led our efforts into successfully transforming the Engraving segment into a global texturizing business.\nHe has also championed growth laneways into our [Phonetic] performance services and expanded into the growing soft trim tool market.\nHis innovative approach has enabled Engraving to maintain its position as the technology leader globally.\nFlavio's depth of experience in innovation and new technology development and strategic insights will be a tremendous asset Companywide.\nI am also pleased to announce that Jim Hooven will step into the role of President of the Engraving segment.\nJim joined Standex in February 2020 as Vice President of Operations and Supply Chain.\nIn September 2020, Jim was also -- also took on responsibilities as Interim Vice President and General Manager North America for the Engraving segment while maintaining his role as VP of Operations and Supply Chain for Standex.\nUnder Jim's guidance, the North American business has made steady progress strengthening operational excellence processes, developing talent and achieving results.\nWe have also begun a process to address Jim's prior role of Corporate VP of Operations and Supply Chain.\nUnderpinning our growth strategy is an active pipeline of productivity and efficiency initiatives.\nThis is enabling us to mitigate the impact of supply chain issues and material and wage inflation which is affecting the broader industrial sector.\nA few of our actions which I wanted to highlight include continued lean initiatives implemented across our production plant footprint and enhanced strategic sourcing to drive direct material synergies.\nIn addition, our focus on mitigating material inflation and improving our cost position in the Electronics segment through changes in reed switch production and material substitution is expected to be substantially complete by the end of fiscal 2022.\nWe are in a very strong financial position to pursue organic and inorganic growth opportunities given our significant financial flexibility as a result of our strong balance sheet and liquidity position and consistent cash flow generation.\nAdemir will discuss our financial performance in greater detail later in the call.\nAs far as our outlook, in fiscal 2022, we expect stronger financial performance reflecting positive demand trends, the impact of additional productivity initiatives and our significantly strengthened operating profile.\nIn the first quarter of fiscal 2022, we expect a slight decrease in revenue, but a similar operating margin compared to fourth quarter fiscal 2021.\nRevenue increased $28 million or 62.7% year-on-year, reflecting a 42.2% organic growth rate or an approximate $19 million increase.\nThe Renco acquisition contributed approximately $7.3 million in revenue and continues to be a highly complementary fit with our magnetics portfolio.\nOur Electronics operating margin increased to 21.6% compared to 13.1% in the year ago quarter, reflecting operating leverage associated with revenue growth and productivity initiatives, partially offset by increased raw material cost.\nThe expansion of the Electronics segment to new markets such as electric vehicles and renewable energy as well as the impact of prior acquisitions like Agile Magnetics are adding to our prospects.\nWe continue to leverage the sales synergies of our Agile acquisition in markets such as semiconductors and through the expanded capabilities it has provided us.\nIn particular, NBOs contributed in excess of $15 million in fiscal 2021 compared to our prior estimate of $12 million on our third quarter earnings call.\nOur pipeline remains healthy, with total segment backlog realizable under a year increasing approximately $22 million or 23% sequentially in the fourth quarter as we continue to see strong growth in reed switch-based products in magnetics applications.\nSequentially, at the Electronics segment, we expect a slight increase in revenue and a moderate increase in operating margin in first quarter fiscal 2022, reflecting continued end market strength in reed switch and relay products as well as further growth in the North American magnetics market.\nRevenue increased approximately $5 million or 15.9% year-on-year with operating income growth of approximately $3.1 million or 119% year-on-year, reflecting a favorable geographic mix, timing of projects and increased soft trim product demand.\nOperating margin increased to 15.4% compared to 8.1% in the year ago quarter, reflecting the volume growth, combined with segment productivity and our cost initiatives.\nWith our GS Engineering acquisition now integrated, we have further globalized the business and leveraged its technological advantages, resulting in a very strong backlog for soft trim demand as the auto industry focuses on interior comfort of vehicles and increasingly replaces leather with sustainable materials.\nLaneway sales at Engraving were approximately $14.8 million, representing a 9% increase sequentially and greater than 50% increase year-on-year, including growth in software tools, laser engraving and tool finishing.\nSequentially, in first quarter fiscal 2022, we expect a slight to moderate revenue and operating margin decrease, primarily due to the timing of texturization projects and regional mix.\nWe do expect continued strength in soft trim demand.\nTurning to slide 6, the Scientific segment.\nRevenue increased approximately $8 million or 62.7% year-on-year, reflecting positive trends in pharmacy chains, clinical laboratories and academic institutions, primarily attributable to demand for COVID-19 vaccine storage.\nOperating income increased 48.7% year-on-year, reflecting the volume increase, balanced with investments to support future growth opportunities and higher freight costs.\nAt the Scientific segment, we have added to our engineering and product teams to further develop a growing pipeline of potential new products.\nPictured on slide 6 is our recently patent-approved controlled auto defrost refrigerator solution or CAD designed for safe and effective frozen medication storage for end markets such as pharmacies and labs and clinics.\nThis is the first product in the marketplace which enables auto defrost while guaranteeing vaccines remain below critical temperatures, thus eliminating the need to manually defrost the freezer.\nThe development of this product is reflective of our focus on increasing the exposure to proprietary technologies and growing our intellectual property portfolio.\nAt Scientific, in fiscal quarter one (sic) 2022, we expect a moderate sequential decrease in revenue and a slight decline in margin, reflecting lower demand for COVID-19 vaccine storage and refrigeration and increased freight costs, partially offset by price and productivity actions.\nTurning to the Engineering Technologies segment on slide 7.\nRevenue decreased $5.7 million or 21.8% and operating income was $1.1 million lower, representing a 25.6% decrease year-on-year.\nThe decreases primarily reflected the absence of the recently divested Enginetics business and the economic impact of COVID-19 on the segment's end markets.\nOn a sequential basis, operating margin increased to 15.1% compared to 6.2% in third quarter, reflecting a continued broad-based sequential end market recovery and favorable mix, complemented by ongoing productivity initiatives.\nSequentially, we expect a slight to moderate decrease in revenue and operating margin, reflecting the timing of projects.\nWe are entering fiscal 2022 with an active new business pipeline, particularly in the space and aviation sectors.\nHighlighted on slide 7 are numerous aerospace and space platforms we are aligned with, reinforcing the strength and appeal of our spin forming capabilities which continue to resonate with customers.\nSpecialty Solutions' revenue increased approximately $1.7 million or 7.1% as its end markets, particularly in foodservice and specialty retail, continued to recover.\nOperating income decreased approximately $700,000 or 18.7%.\nThis reflected the impact of work stoppages which have since been resolved and material inflation, which we are seeking to recover through pricing actions.\nHighlighted on slide 8 is our Procon-designed next-generation helical gear pump for food and beverage applications such as coffee/espresso milk forming, syrup and reverse osmosis.\nWe believe this product is approximately 20% more energy efficient than current gear pump technology with a longer service life.\nIn first quarter of fiscal 2022, we expect a slight sequential increase in revenue and operating margin, primarily due to growth in merchandising and the Procon pumps business, partially offset by the impact of a prior work stoppage that has been resolved.\nFirst, I will provide a few key takeaways from our fiscal fourth quarter 2021 results which exhibited strength across key financial metrics.\nWe had solid financial performance in the fourth quarter as both revenue and adjusted operating margin increased sequentially and year-on-year.\nFrom a revenue perspective, four of our five segments reported year-on-year growth, led by the Electronics and Scientific segments with total organic growth over 20% as compared to fiscal fourth quarter 2020.\nIn addition, from a margin standpoint, adjusted operating margin of 13.3% is the highest quarterly margin that Standex has ever reported, reflecting successful leverage on our volume growth, continued buildout our price and productivity actions, as well as the impact of the strategic portfolio actions David highlighted in his comments.\nOur cash generation and liquidity metrics also continue to be very strong.\nIn the fourth quarter, we reported free cash flow of approximately $26 million or 36% year-on-year increase.\nIn addition, we generated a free cash flow to GAAP net income conversion rate well in excess of 100% in fiscal 2021.\nOur net debt to EBITDA, interest coverage ratio and available liquidity, all improved sequentially.\nWe're entering fiscal 2022 with a very strong financial profile, supported by positive demand trends, our active pipeline of productivity and efficiency actions and our expectation for continued solid cash generation.\nOn a consolidated basis, total revenue increased 26.6% year-on-year from $139.4 million to $176.4 million.\nThe revenue increase primarily reflected strong organic growth across most of our segments, positive contribution from the Renco acquisition and favorable FX, partially offset by the divestiture of the Enginetics business in the third quarter of fiscal 2021.\nOrganic growth was 20.5% while Renco contributed approximately 5.2% and FX contributed 3.5% increase to the revenue growth.\nOn a year-on-year basis, our adjusted operating margin increased 460 basis points to 13.3%, reflecting operating leverage associated with revenue growth, readout of price and productivity actions and profit contribution from Renco, partially offset by the impact of work stoppages in the Specialty Solutions segment.\nIn addition, our tax rate was 20.7% in the fourth quarter of 2021 compared to 26.7% in the fourth quarter of fiscal 2020.\nWe expect a tax rate in the 24% range in fiscal 2022 with a slightly higher tax rate in the first quarter.\nAdjusted earnings per share were $1.40 in the fourth quarter of 2021 compared to $0.65 a year ago.\nOur solid working capital performance and execution was evident on several fronts.\nWe generated free cash flow of $26.4 million in fiscal fourth quarter of '21 compared to free cash flow of $19.5 million a year ago.\nIn fiscal 2021, we achieved 118% free cash flow to GAAP net income conversion, inclusive of approximately $8.1 million in pension payments made during the year.\nStandex had net debt of $63.1 million at the end of June compared to $82.1 million at the end of March, reflecting free cash flow of approximately $26.4 million, partially offset by $5 million of stock repurchases, along with dividends and changes in foreign exchange.\nNet debt for the fourth quarter of 2021 consisted primarily of long-term debt of $199.5 million, and cash and cash equivalents were $136.4 million with approximately $92 million held by foreign subs.\nOur liquidity metrics reinforce our significant financial flexibility.\nStandex's net debt to adjusted EBITDA leverage ratio was approximately 0.57 at the end of the fourth quarter, with a net debt to total capital ratio of 11.1%.\nThe Company's interest coverage ratio increased sequentially from 11.4 times to 13.1 times at the end of the fourth quarter.\nWe had approximately $245 million of available liquidity at the end of the fourth quarter and continue to repatriate cash with $6.8 million repatriated during the quarter.\nIn total, we repatriated approximately $38 million in cash in fiscal 2021, slightly ahead of our initial expectations.\nFrom a capital allocation perspective, we repurchased approximately 50,000 shares for $5 million in the fourth quarter.\nIn fiscal 2021, we repurchased a total of 267,000 shares at an average price of approximately $79 per share.\nThere is approximately $22 million remaining on our current repurchase authorization.\nWe also declared our 228th consecutive quarterly cash dividend on July 22 of $0.24 per share.\nFinally, we expect capital expenditures between $25 million and $30 million in fiscal 2022 compared to $21.5 million in fiscal 2020.\nThe transformation of our portfolio around businesses with attractive growth and margin profiles, as well as strong customer value propositions is contributing to our solid performance.\nWe are investing our resources in end markets with healthy growth prospects and are favorably aligned with global trends which leverage our technical and applications expertise.\nWe have an active funnel of productivity and efficiency initiatives focused on strengthening our market leadership and cost positions, which we believe will mitigate to some extent some of the near-term industry headwinds such as raw material price increases and supply chain issues.\nOur financial strength and consistent free cash flow generation support a disciplined and opportunistic approach to capital allocation.\nIn fiscal 2022, we expect stronger financial performance, reflecting positive demand trends, additional productivity initiatives and significantly strengthened operating profile.\n", "role": "user" }, { "content": "qtrly diluted earnings per share - adjusted $1.40.\nqtrly net sales $176.4 million versus $139.4 million.\nin fiscal q1 2022, expects a slight decrease in revenue, but similar operating margin compared to fiscal q4 2021.\n", "role": "assistant" } ]

[ { "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 Steve Rolfs Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation.\nDuring our call today, we will reference certain non-GAAP financial measures, which we believe provide investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods.\nThese non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.\nOur actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action, and the timing of a return of more normal economic activity.\nWe urge you to read Sensient's previous SEC filings and our forthcoming 10-Q for a description of additional factors that could potentially impact our financial results.\nPlease bear these factors in mind when you analyze our comments today.\nNow, we'll hear from Paul Manning.\nI'm pleased to report 4% consolidated adjusted local currency revenue growth.\nOur Flavors & Extracts Group reported 9% adjusted local currency revenue growth, more than 20% adjusted local currency operating profit growth, and 130 basis points adjusted operating profit margin improvement in the quarter.\nOur Asia Pacific Group reported 5% adjusted local currency revenue growth and over 30% adjusted local currency operating profit growth.\nOur balance sheet is strong, and our debt-to-EBITDA is now at 2.4, down from 2.9 a year ago.\nIn April, we completed the sale of our Fragrances business, and we are currently assessing various acquisition opportunities.\nOverall, I'm pleased with our first quarter results and our start to the year.\nWe continue to see an increase in new sampling requests and strong activity in the sales pipeline, both of which are good indicators of future product development opportunities and product launches.\nOur sales attrition rates continue to be at the low levels we achieved throughout 2020.\nThe impact of COVID-19 continues to vary depending on geographic region and product line.\nGeographically, we are beginning to see positive trends in the U.S. and certain Asia Pacific countries.\nHowever, Europe and Latin America continue to be impacted by government regulations, slower vaccine rollouts, and softer markets.\nFrom a product line standpoint, we continue to see growth in a number of our sweet, savory, and natural ingredient product lines.\nHowever, we continue to see headwinds in personal care, makeup, and QSR.\nWe expect much of the personal care headwind to subside later in the year.\nDuring the first quarter, we experienced an increase in the number of supply chain challenges, from shipping container shortages to Brexit disruptions, Suez Canal backups, and unusual weather in Texas.\nDespite these challenges, we continued to provide robust customer service, and we have mitigated raw material shortages and cost increases.\nI'm very pleased to report that in early April Early April we closed on the sale of our Fragrance business.\nThis completes the third of our three divestitures identified in 2019, and positions the company to be strongly focused on our core product lines within food, pharma, and personal care.\nWe continue to look at sensible acquisition opportunities that support our strategic initiatives within these core product lines.\nTurning to the Group results.\nThe Flavors & Extracts Group had another strong quarter with 9% adjusted local currency revenue growth and 21% adjusted local currency profit growth.\nThe group continues to benefit from a strong sales and customer service focus and a continued transition to more value-added product solutions.\nThe group's operating profit and profit margin improvement is a direct result of the strong sales growth, product mix shifts, and our ongoing fixed cost takeout initiatives.\nOverall, the group's adjusted operating profit margin increased 130 basis points in the quarter compared to last year's first quarter.\nWe are well on track to achieve our 50 to 100 basis point operating profit margin improvement for the year and our mid-single digit revenue growth goal for the year.\nWithin the Flavors & Extracts Group, the savory business had another very strong quarter.\nOur savory business supplies companies with flavors, flavor enhancers, and taste modulators that are found in a wide variety of products, including plant-based proteins, savory snacks, sauces, and prepared foods which are supplied to foodservice, CPG, and other innovative food companies.\nThis business continues to grow as a result of its strong flavor technologies and exceptional customer service.\nOur savory business is well positioned for growth, and I'm optimistic about its future opportunities.\nIn the first quarter, we acquired a production facility for our natural ingredients business that will give us additional capacity to better service our customers and to support the increased demand we see within this business.\nWe look forward to bringing this facility online and anticipate it contributing to the group in the latter part of this year.\nI continue to expect Flavors & Extracts Group to deliver mid-single digit revenue growth and continued operating profit margin improvement over the long term.\nWithin the Color Group, revenue for food and pharmaceutical colors was up low-single digits for the quarter.\nThe group continues to see demand for natural colors and functional extracts used in food, nutraceutical, and pharmaceutical OTC applications.\nThe group's focus on sales execution and customer service, as well as its strong technology platform and brand positions us to capitalize on the strong consumer demand for natural colors.\nWe believe our low-single-digit growth this quarter is a result of a slowdown in product launches that use natural colors.\nHowever, we expect a much improved second quarter and back half of the year due to the increasing rise in new sample request and new customer project activity.\nAlso in the Color Group, revenue in our personal care business continues to be down as a result of the negative impacts of COVID-19 on the makeup industry.\nDuring our last call, we communicated that the first half of 2021 would be challenging for this business.\nAs we enter the second quarter, we are already seeing signs of recovery.\nThe personal care business continues to make solid progress on our operational improvement plan, which is designed to consolidate some of our cosmetic manufacturing operations to better align our cost structure for the future.\nThe Color Group's adjusted operating profit was down approximately 13% in local currency in the first quarter.\nThe profit decrease is primarily result of the ongoing lower volumes in personal care.\nMany of our personal care customers experienced growth in the first quarter.\nAs our business lags their results, we are optimistic that our second quarter results and back half of this year should be much improved.\nTurning to our food and pharmaceutical business.\nWe were up in many of our markets.\nHowever, we experienced unfavorable product mix due to a soft market in Europe and lower new product launches in the U.S. Looking ahead to the second quarter of this year and beyond, we expect profit to improve in the Color Group in both personal care and the food and pharmaceutical business.\nOver the long term, I continue to expect mid-single digit revenue growth from food and pharmaceutical and mid-single digit revenue growth from our personal care business once the impact of COVID 19 subsides.\nOur Asia Pacific Group had another strong quarter with 5% adjusted local currency revenue growth and over 30% adjusted local currency profit growth.\nThe group had solid revenue growth in almost all regions driven by strong new sales wins, a strong focus on customer service, and solid utilization of our technology platforms.\nOver the last year, the group has reduced its cost structure, which along with the volume growth is contributing to the group's operating profit and margin improvement.\nBased upon current trends, I expect the Asia Pacific Group to continue to deliver mid-single digit sales growth throughout the year.\nWe've had a good start to 2021, and we are on track with our guidance, we outlined for the year.\nDespite the ongoing impact of COVID-19, we continue to see an increase in customer sample requests, which is an excellent bellwether of new product innovation.\nAs always, I'm very excited about our new sales wins.\nI remain optimistic about the year and the future of our business.\nSteve will now provide you with additional details on the first quarter results.\nThe adjusted results for 2021 and 2020 remove the impact of the divestiture-related costs, the operations divested or to be divested, and the impact of the costs related to our operational improvement plan.\nWe believe that the removal of these items provides a more clear picture to investors of the company's performance.\nThis also reflects how management reviews the company's operations and performance.\nOur first quarter GAAP diluted earnings per share was $0.75.\nIncluded in these results are $3.1 million, or $0.07 per share, of costs related to the divestitures and the cost of the operational improvement plan.\nIn addition, our GAAP earnings per share this quarter include approximately $0.05 of earnings related to the results of the operations targeted for divestiture, which represents approximately $25.6 million of revenue in the quarter.\nLast year's first quarter GAAP results include $10.9 million, or approximately $0.26 per share, of costs related to the divestitures.\nIn addition, our GAAP earnings per share in the first quarter of 2020 include $0.03 of earnings per share from the operations to be divested and approximately $36.6 million of revenue.\nExcluding these items, consolidated adjusted revenue was $334.1 million, an increase of 4% in local currency compared to the first quarter of 2020.\nThis revenue growth was primarily a result of the Flavors & Extracts Group, which was up 8.9% in adjusted local currency, and the Asia Pacific Group, which was up 4.7% in adjusted local currency.\nThe Flavors & Extracts Group reported 21.2% adjusted local currency operating income growth, and the Asia Pacific Group reported 31.4% adjusted local currency operating income growth.\nAdjusted local currency operating income in the Color Group was down 13.3%, primarily as a result of the personal care performance.\nOur adjusted local currency EBITDA was up approximately 2% for the quarter.\nOur cash flow from operations was down in the first quarter, primarily due to higher cash incentive payments in the first quarter of 2021 compared to the first quarter of 2020.\nWe continue to focus on our working capital levels and expect continued improvement throughout the rest of the year.\nWe are executing on our capital expenditure plan and have identified a number of attractive investment opportunity projects, which will bring us to the top end of our previously stated capital range of $55 million to $65 million for the year.\nDuring the first quarter, we bought back approximately $12 million of company stock.\nAbsent an acquisition, we expect to continue to pay down debt and buy back stock on an opportunistic basis.\nBased on current trends and the current tax law, we are reconfirming our previously issued GAAP EPS, adjusted EPS, and adjusted local currency EBITDA guidance.\nOur GAAP earnings per share guidance calls for mid-to-high single-digit growth compared to our 2020 reported GAAP earnings per share of $2.59.\nOur full-year guidance for 2021 includes approximately $0.30 of divestiture-related costs, operational improvement plan costs, and the impact of the businesses to be divested.\nOn an adjusted basis, our earnings per share guidance for the year calls for mid-single-digit local currency growth compared to our 2020 adjusted earnings per share of $2.79.\nOur adjusted local currency EBITDA to grow at a mid-single digit rate.\nGiven current proposals related to changes in the corporate tax law, we continue to believe that our adjusted local currency EBITDA metric provides a reliable measure for our underlying business growth.\nOur reported results include the impact of currency.\nAnd based on current exchange rates, we expect our earnings to benefit by approximately $0.10 due to currency for the year.\n", "role": "user" }, { "content": "q1 earnings per share $0.75.\nsensient technologies - reconfirming previously issued 2021 guidance for gaap diluted earnings per share to grow at a mid to high single digit growth rate.\nfull year 2021 guidance includes approximately 30 cents per share of estimated divestiture & other related costs.\ncontinues to expect, on local currency basis, 2021 adjusted diluted earnings per share to grow at mid-single digit growth rate.\nexpects earnings per share reported on a u.s. dollar basis to benefit by about ten cents based on current exchange rates.\n", "role": "assistant" } ]

[ { "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 Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation.\nDuring our call today, we will be explaining the differences between our GAAP results and our adjusted results.\nThe adjusted results for 2021 and 2020 remove the impact of the divestiture-related costs, the operations divested and the impact of the costs related to our operational improvement plan.\nWe believe the removal of these items provides investors with additional information to evaluate the company's performance and improve the comparability of results between reporting periods.\nThis also reflects how management reviews and evaluates the company's operations and performance.\nThese non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.\nOur actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action and the timing of a return of more normal economic activity.\nWe urge you to read Sensient's previous SEC filings and our forthcoming 10-Q for a description of additional factors that could potentially impact our financial results.\nPlease bear these factors in mind when you analyze our comments today.\nNow, we'll hear from Paul Manning.\nEach of our groups delivered solid adjusted revenue and operating and adjusted operating profit growth in the quarter.\nOur Flavors & Extract group had another outstanding quarter reporting 9% adjusted local currency revenue growth and 13% adjusted local currency operating profit growth.\nOur Personal Care business rebounded substantially contributing to the Color Groups 7% adjusted local currency revenue growth and 5% adjusted local currency profit growth.\nAsia Pacific had another strong quarter, delivering 11% adjusted local currency revenue growth and over 22% adjusted local currency operating profit growth.\nOn a consolidated basis, we reported 9% consolidated adjusted local currency revenue growth and mid-single-digit adjusted EBITDA growth in the quarter.\nI'm pleased with our results for the second quarter and for the first half of this year.\nLast week, we completed the acquisition of a company called Flavor Solutions.\nThis business brings a number of technology platforms and Savory Flavors, shelf life extenders and taste modulation, and it expands our portfolio for clean label flavors.\nThis acquisition aligns with our goal to continue to grow our value-added flavor technologies.\nWe continue to look at other acquisition opportunities that support our strategic initiatives within our core product lines of food, pharmaceutical excipients and personal care.\nIn each group, our new sales wins, sales pipeline and sample activity continue to be strong, and they are good bellwethers of future product development activity and launches.\nWe are also seeing increased in-person customer visits in many of our markets, and we anticipate that these visits will continue to increase as companies return to in-person work.\nAs mentioned during our first quarter call, we are encountering an increase in supply chain challenges, but we continue to manage through these matters.\nWe are also seeing an increase in certain input costs, including raw material and transportation, and we expect these costs to remain elevated for the remainder of the year.\nCOVID-19 continues to impact certain geographic regions and product lines.\nDespite the varied impacts of COVID-19 throughout the world, our Food Colors and Flavor product lines continue to see robust growth.\nAs expected and discussed during our last quarterly call, our Personal Care business has begun to strongly rebound in the second quarter.\nIn pharma, we see headwinds due to Top 2020 comparables in our nutraceutical and pharmaceutical product lines.\nOverall, I'm pleased with the growth across the company and the more recent improvements in our Personal Care business, which I anticipate to continue to improve in the second half of this year.\nTurning to the group results.\nFlavors & Extracts Group had another outstanding quarter with 9% adjusted local currency revenue growth and 13% adjusted local currency profit growth.\nThis growth is on top of the strong quarter the group achieved in last year's second quarter.\nDuring the second quarter, the Flavors & Extracts Group generated strong growth in almost all product lines.\nWe are benefiting from a robust sales and customer service focus and a continued transition to more value-added product solutions.\nThe group's adjusted operating profit margin increased 50 basis points in the quarter compared to last year's second quarter.\nWe are well on track to achieve 50 basis points to 100 basis point improvement to operating profit margin this year.\nNoteworthy within the Flavors & Extracts Group is our ice cream product line.\nThis product line continues to grow in both the US and Europe as a result of its integrated product sales and strong application capabilities.\nWe continue to invest in this product line.\nI'm optimistic about its future growth prospects.\nOur savory business is also having an outstanding year.\nThis business continues to grow and win new sales opportunities as a result of its strong flavor technologies and exceptional customer service.\nOur savory business is well positioned in the market, and I expect it to have a strong year and future.\nThe Color Group had an exceptional rebound this quarter, delivering 7% adjusted local currency revenue growth and 5% adjusted local currency profit growth.\nThe group benefited from success in both Food Colors and Personal Care.\nRevenue in the Food and Pharmaceutical product line was up mid-single-digits for the quarter.\nThe group's focus on sales execution and customer service, as well as its strong technology platforms positions us to capitalize on the consumer demand for natural colors, while continuing to maintain our strong synthetic colors business.\nThe Food and Pharmaceutical business had good growth in almost all geographies and that's experienced improvement in Europe and Latin America, areas in which we had seen softer markets in recent quarters.\nRevenue within the Personal Care business was up double-digits in the quarter.\nAs noted during our last quarterly call, we are seeing a recovery within this business and anticipate continued improvement in the second half of the year and into next year.\nPeople return to travel and other social activities that continue to be optimistic about the improvement within our Personal Care business.\nThe Asia Pacific Group delivered 11% adjusted local currency revenue growth and 22% adjusted local currency profit growth.\nThe group continues to drive revenue growth in almost all regions.\nThis growth is a result of our focus on customer service, new sales wins and utilization of our technology platforms.\nThe group's operating profit growth and margin improvement are a direct result of volume growth.\nWe delivered another good quarter and strong first half of the year.\nThe markets we have chosen to compete in, our recent divestiture activity, our robust customer service model and our technology platform are each providing the foundation for growth with our customers.\nWe are winning new sales opportunities, and our sales pipelines remain very healthy.\nWe are well on track for our full year guidance, and we are currently operating at or above the top end of this guidance.\nOver the long term, I continue to expect Flavors & Extracts to deliver mid-single-digit revenue growth and 50 basis points to 100 basis points annual improvement to operating profit margin over the foreseeable future.\nI also expect the Color Group to deliver mid-single-digit revenue growth, along with an operating profit margin at or above 20%.\nAnd I expect Asia Pacific Group to deliver mid-single to high-single-digit revenue growth over the long term.\n[Technical Issues] continue to remain very optimistic about the year and the future of our business.\nSteve will now provide you with additional details on the second quarter results.\nOur second quarter GAAP diluted earnings per share was $0.61.\nIncluded in these results are $7 million or approximately $0.16 per share of costs related to the divestitures and the cost of the operational improvement plan.\nIn addition, our GAAP earnings per share this quarter include approximately $2.2 million of revenue or $0.01 of costs related to the results of the divested operations.\nLast year's second quarter GAAP results include a gain related to the reclassification of accumulated foreign currency translation as a result of the sale of the Inks business and other divestiture-related costs.\nThe combination of these items were included within the divestiture and other related costs, which increased last year's second quarter net earnings by $1 million or approximately $0.02 per share.\nIn addition, our GAAP earnings per share in the second quarter of 2020 include approximately $28.2 million of revenue and an immaterial amount of net earnings related to the divested product lines.\nExcluding these items, consolidated adjusted revenue was $333.6 million, an increase of 9.1% in local currency compared to the second quarter of 2020.\nOur adjusted local currency EBITDA was up approximately 6% for the quarter, and our adjusted local currency earnings per share was up 8.6% for the quarter.\nOur cash flow from operations was down in the second quarter, primarily due to an increase in sales activity in the second quarter of 2021 and the resulting use of cash to fund our working capital in the current quarter.\nWhile we are currently making strategic investments in our inventory positions to support our forecasted growth, we continue to remain focused on optimizing our working capital levels.\nIn terms of capital expenditures, we continue to expect our spend to be around $65 million for the year.\nDuring the second quarter, we bought back approximately $11 million of company's stock.\nAs Paul stated earlier, we completed the acquisition of Flavor Solutions last week, and we are actively reviewing other potential acquisitions.\nOur leverage ratios are 2 times debt-to-adjusted EBITDA, down from 2.7 a year ago, leaving our balance sheet in a solid position to support potential acquisitions, share repurchases as well as our dividend payout.\nThe company will continue to be prudent in our approach to our capital allocation strategy.\nBased on current trends and the current tax law, we are reconfirming our previously issued GAAP EPS, adjusted earnings per share and adjusted local currency EBITDA guidance.\nAs Paul stated earlier, we do believe we are operating near the top end of this guidance.\nOur GAAP earnings per share guidance calls for mid-to-high single-digit growth compared to our 2020 reported GAAP earnings per share of $2.59.\nOur full-year guidance for 2021 includes approximately $0.25 of divestiture-related costs, operational improvement plan costs and the impact of the divested businesses.\nOn an adjusted basis, our earnings per share guidance for the year calls for mid-single-digit local currency growth compared to our 2020 adjusted earnings per share of $2.79.\nBased on current corporate tax law, we expect our adjusted tax rate to be approximately 22% for the last six months of 2021.\nWe now expect our 2021 adjusted local currency revenue to grow at a mid-single-digit rate.\nThis is up from our previous guidance of a low-to-mid single-digit growth rate for 2021.\nWe continue to expect our adjusted local currency EBITDA to grow at a mid-single-digit rate.\nGiven current proposals related to changes in the corporate tax law, we continue to believe that our adjusted local currency EBITDA metric, instead of EPS, provides a more reliable measure for our underlying business growth.\nOur reported results include the impact of currency.\nAnd based on current exchange rates, we expect our earnings to benefit by approximately $0.10 due to currency for the year.\n", "role": "user" }, { "content": "compname posts q2 earnings per share $0.61.\nq2 earnings per share $0.61.\nsensient expects to be at or above previously issued 2021 guidance.\nsensient is reconfirming previously issued 2021 guidance for gaap diluted earnings per share to grow at mid to high single digit growth rate.\ncompany now expects its 2021 adjusted local currency revenue to grow at a mid-single digit rate.\n", "role": "assistant" } ]

[ { "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 Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation.\nDuring our call today, we will reference certain non-GAAP financial measures, which we believe provide investors with additional information to evaluate the Company's performance and improve the comparability of results between reporting periods.\nThese non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.\nOur actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action and the timing of a return of more normal economic activity.\nWe urge you to read Sensient's filings, including our 10-K, our second quarter 10-Q and our forthcoming third quarter 10-Q for a description of additional factors that could potentially impact our financial results.\nPlease bear these factors in mind when you analyze our comments today.\nDue to changes we have made to our portfolio and the divestitures we announced last year, we are updating our group and product lines.\nThe most notable change is that our flavors and fragrances segment will now be named the flavors and extracts segment.\nYou will also notice some small changes to the names we use for some of our product lines.\nSensient's focused portfolio strengthens our ability to service the food, pharmaceutical and personal care markets.\nWe will continue to report the three divested product lines of fragrances, yogurt fruit preparations and inks as long as these product lines impact our comparisons.\nNow we'll hear from Paul.\nAnd I'm pleased to report that results were in line with our expectations and our overall guidance for the year.\nI'm very pleased with the continued revenue and profit growth in our flavors and extract group as well as our food and pharmaceutical business in the color group.\nOur Asia Pacific group also posted solid profit growth in the quarter.\nOverall, each of our groups performed well despite the adverse impact of COVID-19.\nCOVID-19 continues to be a net negative to the Company.\nThe market decline in the makeup industry continues to impact the color group's personal care business.\nAnd on a geographic basis, we continue to see headwinds in Asia Pacific, Europe and Latin America.\nIn the midst of this pandemic, we have ensured our employees are safe and healthy, our facilities remain open, our supply chain remains strong and we have delivered our products on time to our customers.\nBased on current trends, I expect that we will deliver on our earnings per share outlook for the year as the foundation of our business remains strong.\nOur focus over the years on customer service, on-time delivery and sales execution has led to a high level of revenue from new product wins during the second half of 2019 and the first half of this year.\nFurthermore, as the pandemic continues and new product development at certain companies has slowed, we have focused on regaining lost business and gaining share at our customers.\nThis focus, coupled with lower overall sales attrition, is paying off in our results and should continue to benefit future periods.\nLast year at this time, we announced three divestitures.\nIn the second quarter, we completed the sale of inks.\nAnd I'm pleased to say that we completed the sale of the yogurt fruit prep business during the third quarter.\nThis is our second completed divestiture in 2020, and I am optimistic that we will complete the divestiture of fragrances in the near future.\nAs I mentioned last year, the divestiture of these three businesses allows us to focus on our key customer markets, food, pharmaceutical and personal care.\nI'm very pleased with the progress of our flavors and extracts group this year.\nThe group had an impressive quarter with adjusted local currency revenue growth of 13% and profit growth of 24%.\nThis is the third straight quarter of revenue growth, which has resulted in continued profit and margin improvement.\nThis growth is based on the group's focus on sales execution, which has resulted in a high win rate, a focus on retaining existing business and an overall decline in the group's attrition rate.\nAdditionally, the group's focus on transitioning the product portfolio to more value-added solutions and the reduction of its production cost structure from restructuring and ongoing initiatives is complementing the revenue growth and the overall improvement in the group's profit and margin.\nWithin the flavors and extracts group, the natural ingredients business had another strong quarter with local currency sales growth of 14.5% as a result of strong demand for seasoning, snacks and packaged foods.\nThis business has a solid foundation to deliver a consistent and reliable supply of high-quality natural ingredients to its customers.\nFlavors extracts and flavor ingredients also had a nice quarter, up 12% in local currency.\nThe business' strong technology platform in flavor modulation and enhancement, its clean label solutions and its applications expertise are leading factors in the growth of this business.\nOverall, the flavors and extracts group's operating profit margin was up 110 basis points in the quarter.\nLong term, I expect mid-single digit revenue growth with continued margin improvement for the group.\nNow turning to colors.\nRevenue for food and pharmaceutical colors was up low-single digits for the quarter.\nThe group continues to see solid demand for natural colors in the market.\nThere's also strong consumer interest in functional natural extracts and nutraceuticals, and the group's product portfolio and innovation are well positioned to support this demand.\nDespite the continued growth in food and pharmaceutical colors, revenue in personal care continues to be down as a result of the negative impacts of COVID-19 on the color makeup market.\nThe demand for makeup in Europe, North America and Asia continues to be down substantially for the year.\nGiven the uncertainty with COVID-19 and ongoing restrictions, I anticipate challenges for this cosmetics product line to continue.\nThe color group's adjusted operating profit increased 3% in the quarter.\nFood and pharmaceutical colors had a great quarter, generating profit growth of more than 20% and about 15% for the first nine months of 2020.\nHowever, the lower demand for makeup and other personal care products continues to be a drag on the group's profit performance.\nOverall, the color group's operating profit margin increased 110 basis points in this quarter.\nLong term, I continue to expect mid-single digit revenue growth from food and pharmaceutical colors as well as personal care once demand normalizes from the impacts of COVID-19.\nWe've made good product -- progress in our Asia Pacific group this year.\nSimilar to flavors and extracts and colors, the group has focused on sales execution and building a stronger customer service and technology-driven organization.\nThe group has created a solid infrastructure and has been focused on localizing production.\nDuring the quarter, the group had solid sales growth in certain regions.\nHowever, this growth was offset by declines in other regions, as government COVID-19 restrictions continue to significantly impact many sales channels.\nThe group had another strong quarter of profit growth, up approximately 15% in the quarter and 17% for the first nine months of 2020.\nThe group's operating profit margin increased 200 basis points in the quarter.\nThis was the third straight quarter of strong profit improvement.\nThe Asia Pacific group is well positioned for long-term growth.\nAnd I anticipate that as certain COVID-19-related restrictions ease, the group will resume mid-to-high single-digit revenue growth.\nOverall, I'm very pleased with the results of our groups this year.\nOur flavors and extract group is having a great year, and the food and pharmaceutical business within the color group continues to have solid revenue and very strong profit growth.\nOur Asia Pacific group is well positioned for future revenue growth.\nOverall, COVID-19 continues to be a headwind for the Company.\nDespite this headwind, I'm excited about the future growth opportunities for Sensient due to the strength of our portfolio of technologies and our exceptional customer service.\nSteve will now provide you with additional details on the third quarter results.\nThe adjusted results for 2020 and 2019 remove the impact of the divestiture-related costs, the operations divested or to be divested and our recently implemented operational improvement plan.\nWe believe that the removal of these items provides a clearer picture to investors of the Company's performance.\nThis also reflects how management reviews the Company's operations and performance.\nDuring the third quarter, the Company initiated a plan primarily to consolidate some of our global cosmetic manufacturing operations.\nThe Company expects to complete this operational improvement plan during the first half of 2021.\nThe costs of this plan are estimated to be approximately $5 million to $7 million.\nOur third quarter GAAP diluted earnings per share was $0.78.\nIncluded in these results are $1.4 million or approximately $0.03 per share of costs related to the divestitures and other related costs and the cost of the operational improvement plan.\nIn addition, our GAAP earnings per share this quarter include approximately $0.04 of earnings related to the results of the operations targeted for divestiture, which represents approximately $23.6 million of revenue in the quarter.\nLast year's third quarter GAAP results included approximately $0.02 of earnings per share from the operations to be divested and approximately $34.1 million of revenue.\nExcluding these items, consolidated adjusted revenue was $300 million, an increase of approximately 6.1% in local currency compared to the third quarter of 2019.\nThis revenue growth was primarily a result of the flavors and extracts group, which was up approximately 13% in local currency.\nConsolidated adjusted operating income increased 10.1% in local currency to $41.5 million in the third quarter of 2020.\nThis growth was led by the flavors and extracts group, which increased operating income by 24.1% in local currency.\nThe Asia Pacific group also had a nice growth in operating income in the quarter, up 15.5% in local currency.\nAnd operating income in the food and pharmaceutical business in the color group was up over 20% in local currency.\nThe increase in operating income in these businesses is a result of the volume growth Paul explained earlier combined with the overall lower cost structure across the Company.\nOur adjusted diluted earnings per share was $0.77 in this year's third quarter compared to $0.74 in last year's third quarter.\nAs Paul mentioned, the overall impact of COVID on the Company's results has been a headwind.\nThe impact on our food and pharmaceutical businesses is mixed, but as we have discussed, the negative impact in our personal care business is significant.\nWe have reduced debt by approximately $60 million since the beginning of the year.\nWe have adequate liquidity to meet operating and financial needs through our cash flow and available credit lines.\nOur debt-to-EBITDA is 2.6, down from 2.9 at the start of the year.\nCash flow from operations was $143 million for the first nine months of 2020, an increase of 12% compared to prior year.\nCapital expenditures were $34 million in the first nine months of 2020 compared to $26.1 million in the first nine months of 2019.\nOur free cash flow increased 7% to $109 million for the first nine months of this year.\nConsistent with what we communicated during our last call, we expect our adjusted consolidated operating income and earnings may be flat to lower in 2020 because of the level of non-cash performance-based equity expense in 2020.\nWe also expected a higher tax rate in 2020 compared to our 2019 rate, which was lower as a result of a number of planning opportunities.\nBased on current trends, we are reconfirming our previously issued full-year GAAP earnings per share guidance of $2.10 per share to $2.35 per share.\nThe full-year guidance also now includes approximately $0.05 of currency headwinds based on current exchange rates.\nWe are also reconfirming our previously issued full-year adjusted earnings per share guidance of $2.60 to $2.80, which excludes divestiture-related costs, operational improvement plan costs, the impact of the divested or to-be-divested businesses and foreign currency impacts.\nThe Company expects foreign currency impacts to be minimal in the fourth quarter.\nWe are also maintaining our adjusted EBITDA guidance of low-to-mid single-digit growth.\nIn conclusion, we continue to expect long-term revenue growth rates of mid-single digits in each of our groups.\nOur stock-based compensation and other incentive costs have reset this year.\nGoing forward, this should be less of a headwind for us.\nWe do expect our tax rate to trend up slightly in future years under current law.\nAs a result, we believe adjusted EBITDA is a better measure of the Company's operating performance, and expect this metric to grow at a mid-single digit rate or better.\nIn terms of our capital allocation priorities, we will continue to pay down debt in the near term.\nWe also continue to evaluate acquisition opportunities.\nAbsent an acquisition, we have the ability to buy back shares.\nWe expect our capital expenditures to be in a range of $50 million to $60 million annually.\nOur divestiture activity and our operational improvement plan allows us to focus on our key customer markets of food, pharmaceutical excipients and personal care, while providing the foundation for future revenue and margin growth.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $0.78.\nq3 earnings per share $0.78.\nsees fy 2020 earnings per share $2.10 to $2.35.\nsees fy 2020 adjusted earnings per share $2.60 to $2.80 excluding items.\nconfirming its previously issued guidance of low to mid-single digit revenue growth in 2020 on a local currency basis.\n", "role": "assistant" } ]

[ { "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 Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation.\nDuring our call today, we will be explaining the differences between our GAAP results and our adjusted results.\nThe adjusted results for 2021 and 2020 remove the impact of the divestiture-related costs, the operations divested and the impact of the costs related to our operational improvement plan.\nWe believe the removal of these items provides investors with additional information to evaluate the company's performance and approves the comparability of results between reporting periods.\nThis also reflects how management reviews and evaluates the company's operations and performance.\nThese non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.\nOur actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action and the timing of a return of more normal economic activity, including impacts on our business related to current logistics challenges.\nWe urge you to read Sensient's previous SEC filings and our forthcoming 10-Q for a description of additional factors that could potentially impact our financial results.\nPlease bear these factors in mind when you analyze our comments today.\nNow, we'll hear from Paul Manning.\nEarlier today, we released our third quarter results, reported strong consolidated adjusted local currency revenue growth of 13% and double-digit adjusted EBITDA growth for the quarter.\nEach of our groups contributed to our positive performance in the quarter.\nFlavors & Extracts group had another outstanding quarter reporting 12% adjusted local currency revenue growth and 16% adjusted local currency profit growth.\nColor group had a strong quarter delivering 18% adjusted local currency revenue growth and 15% adjusted local currency profit growth, with our Food and Pharmaceutical Colors business and our Personal Care businesses both contributing to the Color Group's strong quarter.\nAsia-Pacific delivered 10% adjusted local currency revenue growth and 11% adjusted local currency operating profit growth.\nDespite some headwinds related to raw materials and logistics, I'm very pleased with our results this quarter and our performance so far this year and we are well above our expectations.\nOur positive performance in each group is a direct result of our ongoing focus on customer service, product on-time delivery and sales execution, which continue to drive a very high level of new product wins for the year.\nWe are focused on gaining share with our customers and our sales attrition rates remain low.\nThe overall sales pipelines are strong and continue to build.\nWe are seeing a resumption of larger new product launches and we are optimistic that these will continue to increase in the quarters ahead.\nAs mentioned during our past quarterly calls, we are encountering numerous supply chain challenges.\nThere's been an increase in certain input costs including labor, transportation and raw materials.\nWe're still experiencing delays in shipping and logistics.\nDespite these challenges, we believe our overall supply chain is strong and we can manage through these issues with pricing increases and by holding more safety stock to support continued good performance of on-time delivery and customer lead times.\nWe expect transportation constraints and higher input costs to remain with us throughout the end of the year and well into '22, but we are confident that we will continue to mitigate both.\nOverall, we're generating strong growth in each of our businesses and expect this momentum to continue well into the fourth quarter and next year.\nTurning to the group results.\nFlavors & Extracts group had another great quarter with 12% adjusted local currency revenue growth and 16% adjusted local currency profit growth.\nThe performance this quarter is on top of last year's strong third quarter performance of 13% adjusted local currency revenue growth and 24% adjusted local currency operating profit growth.\nDuring the third quarter of this year, the group completed the acquisition of Flavor Solutions.\nThis business brings a portfolio of technology platforms including functional flavors and taste modulation, a library of savory flavors and good customer relationships.\nThe integration of this business is proceeding as planned and the business contributed approximately $2.4 million of revenue to the Flavors & Extracts group in the third quarter.\nFlavors & Extracts group experienced growth in almost all product lines during the quarter, including sweet, beverage and savory flavors, bio-nutrients and natural ingredients.\nThe group continues to benefit from its transition to more value-added product solutions, as well as a robust sales and customer service focus.\nThe group's adjusted operating profit margin increased 50 basis points in the quarter and has increased 70 basis points year-to-date.\nWe are well on track to achieve the 50 to 100 basis point improvement that we forecasted for the year and we expect good performance in the fourth quarter and into next year.\nThe Color Group had a terrific quarter, delivering 18% adjusted local currency revenue growth and 15% adjusted local currency profit growth.\nThe group benefited from strong growth in Food and Pharmaceutical colors and the Personal Care business.\nRevenue in the Food and Pharmaceutical product line was up double digits in the quarter.\nThe group continues to see solid demand for natural colors in each of our key product lines and regions.\nThe group's product portfolio, production capacity and innovation pipeline are well positioned to support this continuing demand.\nI anticipate our Food and Pharmaceutical business to continue it's strong growth in the fourth quarter and into next year.\nThe Personal Care business continue to rebound, delivering double-digit revenue growth in the quarter.\nThe group is focused on product line diversification and we are seeing good progress on expanding our revenue in skincare, body care and other categories.\nI anticipate good growth in Personal Care in the fourth quarter and next year and ongoing success in our diversification strategy.\nThe Asia Pacific Group delivered 10% adjusted local currency revenue growth and 11% adjusted local currency profit growth in the quarter.\nThe group's focus on sales execution, customer service and new technologies related to the natural colors and flavors, continue to be the main drivers for the group's growth.\nThe group has also created a solid infrastructure, local technical support and a strong local sales force across the region.\nDuring the quarter, the group had growth in almost all regions and I anticipate the group to continue to grow into the fourth quarter and next year.\nOverall, I'm very pleased with the results of our group so far this year.\nOur Flavors & Extracts group is having another great year as is our Asia Pacific Group.\nOur Color Group is achieving solid revenue growth in Food and Pharmaceutical and Personal Care.\nThe growth in all of our businesses results from our exceptional customer service model, diverse technology platforms and our strong new product wins.\nWith the completion of our divestitures this year, we're able to focus on our key customer markets, food, pharmaceutical and personal care.\nWe are on track for the year and are operating above our previous guidance for adjusted revenue, EBITDA and EPS.\nThe strong growth we saw this quarter across our businesses came primarily from higher volumes.\nIn looking at our volume growth, while we are likely seeing some benefit as customers are ordering ahead and building larger safety stocks, the vast majority of our volume growth is coming from new wins, share gains and ongoing positive market trends in natural colors and flavors.\nWe have implemented pricing actions, but the impact of higher pricing has not yet had a significant impact on our results.\nWe expect that trend to improve moving forward.\nI continue to expect the Flavors & Extracts group to deliver mid-single digit revenue growth and 50 to 100 basis points of annual improvement to the operating profit margin for the foreseeable future.\nI also expect the Color Group to deliver mid-single digit revenue growth along with an operating profit margin above 20%.\nI expect the Asia Pacific Group to deliver mid to high single digit revenue growth over the long term.\nI'm very optimistic about this year and the future of our business.\nSteve will now provide you with additional details on the third quarter results.\nOur third quarter GAAP diluted earnings per share was $0.80, included in these results are approximately $0.04 per share of divestiture costs and the cost of the operational improvement plan.\nIn addition, our GAAP earnings per share this quarter include approximately $1.6 million of revenue and an immaterial amount of operating income related to the results of the divested operations.\nLast year's third quarter GAAP results include divestiture and operational improvement plan costs, which decreased last year's third quarter results by approximately $0.03 per share.\nIn addition, our GAAP earnings per share in the third quarter of 2020 include approximately $23.6 million of revenue and approximately $0.04 per share of earnings related to the divested product lines.\nExcluding these items, consolidated adjusted revenue was $342.7 million, an increase of 13% in local currency compared to the third quarter of 2020.\nOur adjusted local currency EBITDA was up 12.9% for the quarter and our adjusted local currency earnings per share was up 9.1% for the quarter.\nThe acquisition of Flavor Solutions contributed $2.4 million of revenue and an immaterial amount of operating income to our third quarter results.\nOur cash flow from operations was down in the third quarter, primarily due to an increase in strategic investments in our inventory position, as well as an increase in receivables due to strong sales growth in the third quarter.\nWe remain focused on optimizing our working capital levels and we will continue to make strategic investments in our inventory in the fourth quarter to support our forecasted demand and ensure we have an appropriate safety -- and ensure we have appropriate safety stock positions.\nWe still expect our capital expenditures to be around $65 million for the year.\nDuring the third quarter, we completed the acquisition of Flavor Solutions for approximately $15 million.\nWe also purchased approximately $9 million of company stock for 105,600 shares in the quarter, which brings our year-to-date total purchases to $32 million or 383,000 shares.\nWe have 1.8 million shares remaining under our share repurchase authorization.\nOur leverage ratio is now 2.0 times debt adjusted EBITDA, down from 2.6 a year ago, leaving our balance sheet in a solid position to support potential acquisition, share repurchases, as well as our dividend payout.\nYesterday, we announced a 5% increase in our dividend.\nWe have increased our quarterly dividend by 37% since 2016, resulting in a compound annual growth rate of 6.4%.\nThe company will continue to be prudent in our approach to our capital allocation strategy.\nBased on current trends and the current tax law, we are reconfirming our previously issued GAAP earnings per share guidance, which calls for mid to high single digit growth compared to our 2020 reported GAAP earnings per share of $2.59.\nOur full year guidance for 2021 includes approximately $0.25 of divestiture related costs, operational improvement plan costs and the impact of the divested businesses.\nWe now expect our full year 2021 adjusted local currency revenue to grow at a high single digit rate, which is up from our previous guidance of a mid single digit growth rate.\nWe also now expect our full year 2021 adjusted EBITDA and adjusted earnings per share to both grow at a mid to high single digit rate on a local currency basis.\nOur previous guidance called for mid single digit growth rates for both adjusted EBITDA and adjusted EPS.\nGiven current proposals related to changes in the corporate tax law, we continue to believe that our adjusted local currency EBITDA metric instead of earnings per share provides a more reliable measure for our underlying business growth.\nOur reported results include the impact of currency and based on current exchange rates, we expect our earnings to benefit by approximately $0.07 due to currency for the year.\n", "role": "user" }, { "content": "q3 earnings per share $0.80.\nreconfirming its previously issued 2021 guidance for gaap diluted earnings per share.\nnow expects its 2021 adjusted local currency revenue to grow at a high single-digit rate.\nsensient technologies - now sees 2021 adjusted local currency ebitda & adjusted earnings per share on a local currency basis, to grow at a mid-to-high single-digit growth rate.\n", "role": "assistant" } ]

[ { "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 Steve Rolfs, Senior Vice President and Chief Financial Officer of Sensient Technologies Corporation.\nDuring our call today, we will reference certain non-GAAP financial measures, which we believe provide investors with additional information to evaluate the Company's performance and improve the comparability of results between reporting periods.\nThese non-GAAP financial results should not be considered in isolation from or as a substitute for financial information calculated in accordance with GAAP.\nOur actual results may differ materially, particularly in view of the uncertainties created by the COVID-19 pandemic, governmental attempts at remedial action and the timing of a return of more normal economic activity.\nWe urge you to read Sensient's previous SEC filings and our forthcoming 10-K for a description of additional factors that could potentially impact our financial results.\nPlease bear these factors in mind when you analyze our comments today.\nNow, we'll hear from Paul Manning.\nWe continue to have strong results from our Flavors & Extracts Group, our Food and Pharmaceutical business in the Color Group and in our Asia-Pacific Group.\nOur results were at the top end of our earnings per share guidance for the year.\nOverall, the company had a strong financial and operating performance in 2020.\nFlavors & Extract Group had an outstanding year achieving high single-digit revenue growth and double-digit profit growth.\nWithin the Color Group, the Food and Pharmaceutical business also had a strong year with mid single-digit revenue growth and double-digit operating profit growth in 2020.\nThe Company's cash flow from operations increased over 23% and we reduced debt by over $90 million in 2020.\nWe completed two of our three divestitures and signed a purchase agreement for the third, which we expect to close in the first half of 2021.\nOur focus over the past years on customer service levels has been a significant factor for our strong revenue growth in 2020.\nOur continued focus on sales execution along with lower overall sales attrition across all three groups is paying off, and should continue to benefit future periods.\nIn addition, our focus on reducing fixed cost has also contributed to our overall profit improvement and strong operating leverage.\nFlavors and Extract Group had a great year in 2020 and finished with a very strong fourth quarter with adjusted local currency revenue growth of 14% and adjusted local currency profit growth of 55%.\nThe Group's revenue and profit growth are driven by high sales win rate; lower sales attrition; focus on sales execution; robust customer service and our continued transition to more value-added product solutions.\nThe cost reduction initiatives from our earlier restructuring efforts along with our ongoing fixed cost takeout initiatives have also contributed to the overall profit and margin improvement.\nWithin the Flavors and Extract Group, the Natural Ingredients business had a strong year with double-digit local currency sales growth.\nOur Natural Ingredients business supply CPG, foodservice and innovative food and spice companies around the world with the highest quality natural, organic and value-added ingredients.\nThis business continues to grow by leveraging its robust supply chain, strong customer service model and focus on new product development.\nThe business is well positioned for further growth in the years to come.\nOverall, the Flavors & Extract Group's operating profit margin was up over 300 basis points in the quarter and 50 basis points for the year.\nOver the long-term, I expect the Flavors & Extract Group to deliver mid single-digit revenue growth with continued operating profit margin improvement.\nWithin the Color Group revenue for food and pharmaceutical colors is up mid single-digits for the quarter and year.\nThe Group continues to see solid demand for natural colors and functional extracts used in food, nutraceutical and pharmaceutical OTC applications.\nThe growth in these areas as a result of our focus on Clean Label Technologies innovated natural color solutions, strong customer service and sales execution.\nAs a result of these efforts the business achieved a high win rate throughout 2020, which will continue to benefit 2021 and future years.\nAlso within the Color Group revenue in personal care continues to be down as a result of the negative impacts of COVID-19.\nOverall, the demand for makeup and hair care products in North America, Europe and Asia was down substantially in 2020.\nGiven the uncertainty with COVID-19, I anticipate continued strong headwinds for personal care at least through the first half of 2021.\nDespite this impact, we continue to make progress on our operational improvement plan, which is designed to consolidate some of our cosmetic manufacturing operations.\nThese actions will better align our cost structure in the personal care business for long-term sustainable growth and continued strong operating leverage.\nLong-term for the Color Group I expect to -- I continue to expect mid single-digit revenue growth from food and pharmaceutical colors, driven by new product launches and growth in natural colors and extracts.\nOnce the impact of COVID-19 subside, I expect mid single-digit revenue growth from our personal care business as a result of its strong technology platform and market trends toward natural products in skin hair and makeup.\nOver the long-term, we expect to maintain our EBIT margin at or above 20% for the Color Group.\nWithin our Asia Pacific Group, we are seeing high sales win rate as a result of the Group's focus on sales execution and building a stronger customer service and technology-driven organization.\nThe Group's revenue continues to be negatively impacted in certain regions by COVID-19 restrictions.\nHowever, as these restrictions begin to ease the Group should resume mid to high single-digit revenue growth.\nOverall, the Group's local currency adjusted revenue was up 3% for the year and local currency operating profit was up over 14% for the year.\nIn summary, I expect Flavors & Extracts, Asia Pacific and our Food and Pharmaceutical businesses to each grow revenue at a mid single-digit rate in 2021.\nOur personal care business will continue to face headwinds for at least the first half of 2021, due to COVID.\nOur operating profit margin within the Color Group continues to be around 20%, which is a good long-term level for the Group.\nThe operating profit margin for our Flavors & Extract Group continues to grow and we expect a 50 basis point to 100 basis point improvement in 2021.\nOur balance sheet and cash flow are strong.\nWe have made good progress on reducing our inventory, which we reduced by more than 30-days in 2020.\nThere is still more opportunity to reduce our inventory further.\nWe continue to invest in good ROI capital projects and we are evaluating sensible acquisition opportunities.\nAbsent an acquisition, we will continue to pay down debt and we have the option to buyback stock.\nOur employees remain committed to keeping our plants open and delivering our products to our customers on time.\nI'm very proud of the way that our employees adapt to do a constantly changing environment and tirelessly worked to ensure a safe and healthy workplace.\nAll while supporting our essential mission to provide ingredients to the food, pharmaceutical and personal care markets.\nSteve will now provide you with additional details on the fourth quarter results.\nThe adjusted results for 2020 and 2019 remove the impact of the divestiture-related costs; the operations divested or to be divested; the impact of the costs related to our operational improvement plan and a one-time COVID-related payment to our employees.\nWe believe that the removal of these items provides a clearer picture to investors of the company's performance.\nThis also reflects how management reviews the Company's operations and performance.\nDuring the fourth quarter, the Company's Board of Directors approved a one-time payment to our employees to recognize their commitment during the COVID-19 pandemic and the extraordinary and unforeseeable challenges associated with COVID-19.\nThe cost of this payment is approximately $3 million.\nOur fourth quarter GAAP diluted earnings per share was $0.59, included in these results are $3.2 million or approximately $0.07 per share of costs related to the divestitures; the cost of the operational improvement plan and the one-time COVID payment.\nIn addition, our GAAP earnings per share this quarter include approximately $0.06 of earnings related to the results of the operations targeted for divestiture, which represents approximately $25.2 million of revenue in the quarter.\nLast year's fourth quarter GAAP results include approximately $0.01 of earnings per share from the operations to be divested and approximately $33.7 million of revenue.\nExcluding these items, consolidated adjusted revenue was $309.5 million, an increase of approximately 7.9% in local currency, compared to the fourth quarter of 2019.\nThis revenue growth was primarily a result of the Flavors & Extracts Group, which was up approximately 14% in local currency.\nConsolidated adjusted operating income increased 19% in local currency to $36.8 million in the fourth quarter of 2020.\nThis growth was led by the Flavors & Extracts Group, which increased operating income by 54.9% in local currency.\nThe Asia-Pacific Group also had a nice growth in operating income in the quarter, up 7.8% in local currency.\nOperating income in the Food and Pharmaceutical business in the Color Group was, up nearly 15% in local currency.\nThe increase in operating income in these businesses as a result of the volume growth, Paul mentioned earlier, combined with the overall lower cost structure across the company.\nThe overall impact of COVID on the Company's results has been a net negative.\nThe impact on our Food and Pharmaceutical business is mixed, but as we have discussed, the negative impact in our personal care business within the Color Group was significant in 2020.\nOur adjusted local currency EBITDA increased 16.9% in the quarter and 3.2% for the full-year of 2020.\nOur cash flow from operations was extremely strong in 2020, up 53% for the quarter and up 23% for the year, due to our strong earnings growth and significant efforts to reduce our inventory levels.\nCapital expenditures were $52 million for 2020 and our free cash flow increased 58% in the quarter and 21% for the year.\nWe have reduced debt by approximately $90 million, since the beginning of the year.\nOur debt to adjusted EBITDA is now 2.4%, down from 2.9% at the start of the year.\nNow turning to 2021.\nWe expect GAAP earnings per share to be up mid to high single-digits, compared to our 2020 reported GAAP earnings per share of $2.59.\nOur full-year guidance for 2021, includes approximately $0.25 to $0.30 of divestiture-related costs, operational improvement plan costs and the impact of the businesses to be divested.\nOn an adjusted basis, we expect our 2021 adjusted local currency earnings per share to be up mid single-digits, compared to our 2020 adjusted earnings per share of $2.79.\nWe also expect our adjusted local currency EBITDA to grow at a mid single-digit rate in 2021.\nBased on current tax law, we expect our tax rate to be in line with our rate in 2020.\nOur reported results include the impact of currency and based on current exchange rates, we expect our earnings to benefit by approximately $0.10, due to currency.\nAs we have discussed the impact of COVID on the Company in 2020 was a net negative.\nThe impact on our Food & Beverage business was mixed, as new product launches were low and the quick service restaurant market was negatively impacted.\nOther areas such as savory products saw solid growth.\nFurthermore, the market decline in the makeup industry has significantly impacted the Color Group's personal care business, and we expect this to continue into 2021.\nThe exact timing of a recovery for our personal care business from the impact of COVID is uncertain, but we could see year-over-year improvement starting in late second quarter.\nIn conclusion, over the long-term, we continue to expect revenue to grow at a mid single-digit rate in each of our Groups and our adjusted EBITDA to grow at a mid single-digit rate or better.\nIn terms of our capital allocation priorities, we will continue to pay down debt in the near-term.\nWe anticipate our capital expenditures to be in the range of $55 million to $65 million in 2021.\nWe also continue to evaluate acquisition opportunities and we have the ability to buyback stock.\nWe expect to complete the sale of our fragrance business and the operational improvement plan in the first half of 2021.\nThe completion of our divestitures and the operational improvement plan allows us to focus on our key customer markets of food, pharmaceutical and personal care, while providing the foundation for future revenue and margin growth.\n", "role": "user" }, { "content": "compname posts q4 earnings per share $0.59.\nq4 earnings per share $0.59.\nexpects 2021 adjusted local currency revenue to grow at a low to mid-single digit rate.\nexpects, on a local currency basis, 2021 adjusted diluted earnings per share to grow at a mid-single digit growth rate.\nexpects 2021 full year gaap diluted earnings per share to grow at a mid to high single digit growth rate.\nexpects 2021 earnings per share reported on a u.s. dollar basis to benefit by anout ten cents based on current exchange rates.\n", "role": "assistant" } ]

[ { "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 information can be accessed by going to the Investor Relations section of the website.\nDuring the call, we will refer to non-GAAP financial measures in discussing the Company's performance.\nYou can find a reconciliation of these measures to GAAP financial measures in our materials for today's call.\nFinally, Synchrony Financial is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties.\nIt is truly an honor and a privilege to talk to you today for the first time as the CEO of Synchrony.\nBuilding on our strong foundation, I believe Synchrony is exceptionally well-positioned for this next chapter of our growth journey.\nThere is strong momentum in the business, driven by the ongoing implementation of our strategy and the unwavering hard work and commitment of our people.\nWhile this past year has been challenging and unprecedented in many ways, we are starting to see positive signs of recovery and we are seeing the benefits of the strategic initiatives that we accelerated in the new programs that we launched last year.\nI'm very optimistic and excited about the opportunities ahead and I'm honored to lead Synchrony into the future.\nAnd with that, I'd like to get into some of the highlights of our first quarter results.\nEarnings were $1 billion or $a 1.73 per diluted share, an increase of a $1.28 over the last year.\nThe resilience of our business has been evident as we navigated the pandemic.\nFrom the underlying fundamentals of our business, including diverse programs and networks, and solid underwriting to our ability to quickly adapt to meet the moment with easily integrated seamless digital solutions, we have demonstrated that our business is structured to execute even in the most challenging operating environments.\nAnd as we begin to emerge from this challenging period, we have seen many of our growth drivers outperform pre-pandemic levels experienced during the first quarter of last year.\nImportantly, purchase volume increased a strong 8% over last year with a substantial increase in purchase volume per account of 18%.\nWhile we're seeing strong trends on purchase volume, loan receivables were down 7% to $76.9 billion given elevated payment rates with the infusion of additional stimulus this quarter.\nThough, average balances per account have rebounded, increasing 1% over the first quarter of last year, as our new accounts which were up 3%.\nNet interest margin was down 117 basis points to 13.98% as further stimulus continue to elevate payment rates, which lowered our receivable mix and yield.\nThe efficiency ratio was 36.1% for the quarter.\nWe are on track with our strategic plans to reduce our expense base by moving $210 million of expenses by the end of the year.\nCredit continue to perform exceedingly well.\nThe net charge-offs were 3.62% this quarter compared to 5.36% last year.\nAs a result of our liquidity and funding strategy in response to the COVID-19 impact on our balance sheet.\nDeposits were down $1.9 billion or 3% versus last year.\nGiven our excess liquidity, we have been slowing our overall deposit growth.\nTotal deposits comprised 81% of our funding as our direct deposit platform remains an important funding source.\nOur ability to service and provide digital tools to customers makes our bank attractive to depositors and we will continue to build our additional capabilities.\nDuring the quarter we returned $328 million capital through share repurchases of $200 million and $128 million in common stock dividends.\nWe continue to have a solid pipeline of new opportunities across our platforms, but we are being very disciplined around risk and returns and it is critical to ensure that our partnerships are structured with strong alignment that benefits both parties.\nHaving said that, as we previously announced, we will not renew our partnership with the Gap as we were not able to reach terms that made sense for our company.\nWe expect that exiting this partnership and redeploying the capital will be earnings per share neutral relative to current program economics and accretive to proposed renewal terms.\nWe have been on a journey to grow with partners who leverage our digital capabilities to help and drive sales and meet the rapidly changing needs of our customers.\nOur ability to run programs with transformational digital innovation has been demonstrated with a number of recent wins.\nThese capabilities are also integral to the success of all of our programs as consumers are rapidly adopting technologies that enables contactless commerce and expect engagement along their digital purchase journeys.\nWe are leveraging our vast digital assets as well as our strong data analytics capabilities to make the entire consumer experience more personalized and meaningful.\nWe have continued to expand our digital penetration across the customer journey from apply, to buy, to servicing.\nApproximately 60% of our applications were done digitally during the first quarter and we grew 14% in mobile channel applications.\nIn retail part 50% of our sales occurred online and approximately 65% of payments were made digitally.\nThe investments we are making in digital and data analytics continue to pay off.\nDuring the quarter, we renewed 10 programs including American Eagle, Ashley HomeStore, CITCO, and Phillips 66.\nWe also added 10 new programs including Prime Healthcare, Mercyhealth and Emory Healthcare, which furthers our penetration of health systems.\nAnd we are also expanding the utility of our CareCredit card.\nOur patient financing app is now available on the Epic App Orchard.\nThis makes care credit available to hundreds of healthcare organizations using Epic's MyChart and enabling cardholders to use CareCredit to take co-pays, deductibles and medical expenses not covered by insurance.\nNot only does this technology integration provide a way to increase the usage and acceptance of CareCredit, it also helps health services and hospital providers to run efficient financially healthy organizations by helping to improve revenue cycle management and reduced debt risk.\nWe are excited by the prospects to support patients beyond elective care as we expand to offer payment options for non-elective medical expenses and routine care.\nI'll spend a few minutes today outlining our CareCredit strategy and providing a framework to think about the opportunities that lie ahead.\nOver the last several years we've been transforming CareCredit to become a more comprehensive solution for consumer financing and payments in healthcare, pet care and wellness by expanding our relationships with providers, retailers, payers and pharmacies.\nWe have unparalleled scale and depth in this space with $9.3 billion in receivables and acceptance of approximately 250,000 enrolled provider health and wellness retail locations.\nThe card is used by more than 8 million cardholders.\nWe earn more than 80% of dental offices nationwide and over 40 healthcare specialties, 13 of which we entered into since 2018.\nWe see big opportunity in health systems and hospitals and have rapidly expanded our reach by launching eight new programs in 2020, bringing our total to 13.\nWith the growth in our pet vertical, we are now in over 85% of that practices and have grown pets and force by 174% since our acquisition of the Pets Best insurance business two years ago.\nA big part of our success is the engagement we have with our cardholders.\nOur cardholders give us high marks as we have increased our customer satisfaction score to 92% from 78% back in 2009.\nOur net promoter score is nearly double the credit card industry average, and is proof the value our cardholders placed on the card we've been able to increase our repeat sales to nearly 60%.\nThat is a testament to the hard work that we've put into creating a strong value proposition for the card and for increasing utility as we build our network, one office and provider at a time.\nAnd our growth numbers reflect these efforts and the position we hold in this space.\nOur receivables have increased 44% in seven years.\nWe have also increased the breadth of our business with an increase in provider locations of 41% in that time frame, and active accounts currently stand at 5.7 million, another double-digit increase in seven years.\nWe have built an incredible platform for growth and we are in an enviable position as we chart the course forward continuing to evolve to capture further opportunity.\nThere is still tremendous opportunity continue to unlock growth in dental, veterinary and specialty industries.\nWe are making investments to simplify the customer and provider experience and leveraging technology to support more consumer-driven self-service capabilities with ample room for growth, with increased penetration among our existing partners and through innovation to make an increasingly easy to engage with our network.\nJust recently, we acquired Allegro Credit, which is both deepened our penetration in audiology and other industries, while also enabling new products and capabilities.\nWith the steady increase in out-of-pocket healthcare costs and the popularity of high-deductible healthcare plans consumers are assuming more of the financial responsibility for their healthcare.\nThis translates to a significant opportunity of more than $405 billion in out-of-pocket health expenditures in the U.S., but flexible and extended financing is only a small component of overall healthcare payments.\nSo, there is significant runway for growth.\nWe're also expanding beyond the traditional CareCredit industries and capitalizing on the evolving healthcare landscape that has increased focus on overall wellness.\nWe have moved beyond elective care financing and now support patients by enabling them to pay for non-elective medical bills, planed procedures, and routine medical care as we expand in the health systems and more healthcare specialties.\nThis will be enhanced by ongoing integrations with practice management software and the recent news of our CareCredit becoming available through Epic's App Orchard.\nFurther, we have expanded our utility, creating more ways to access healthcare services by partnering with pharmacies.\nCareCredit is already accepted at more than 17,000 pharmacies nationwide and we recently announced that we will become the issuer of the Walgreens co-branded credit card program in the U.S., the first such credit program in the retail health sector and expect to launch the new program in the second half of 2021.\nWe are also transforming our pet business to be a more comprehensive financial solution provider and to meet the needs of pet parents throughout their pet care journey.\nNow, more than ever Americans are invested in their pets with both pet ownership and cost increasing significantly over the past several years, and that trend grew even more during the pandemic.\nAmericans spend more than $100 billion on expenditures.\nThere is a large market outside of that practices with significant opportunity to provide new products, financing alternatives and services.\nCareCredit supports a lifetime of care for pets.\nAnd with the acquisition of Pets Best Insurance, we currently offer a complementary solution with veterinary care to support pet owners with simple, flexible financial options.\nWe continue to integrate the Pets Bets Insurance offering to capitalize on the payment and customer experience synergies and we're also looking for ways to expand into other pet adjacencies through products and services in retail.\nBy focusing on the needs of our partners and customers and bringing substantial scale and expertise, we believe we will drive loyalty to the CareCredit network and as a result should see outsized growth in the future.\nThis is an important period of time for our company, and the world as we continue to emerge from the pandemic.\nOur business and the actions we've taken over the past year, we will well positioned to take advantage of the opportunities which lie ahead of us.\nI share Brian's sentiment of appreciation and the unwavering commitment of our people.\nI'll now provide an update on our first quarter results.\nThe pandemic and resulting government stimulus actions have impact in several key areas of our business over the past year.\nHowever, our business mix has helped us to mitigate some impact from the pandemic and certain areas have performed very well, including digital, home-related products and services, veterinary services, electronics and appliances.\nPerformance in these areas have provided support against the overall effects of the economic downturn.\nAs we exit the first quarter, we are starting to see greater signs of economic recovery more broadly.\nPurchase volume an increased 8% versus last year and exceeded our expectations for the quarter.\nFrom a macroeconomic perspective, we have seen consumer confidence reached one year high March, unemployment continued to improve and the easing of some of the remaining local restrictions.\nThis is evident in the increase in purchase volume per account which is up 18% over the last year.\nAverage active accounts were down 8%, which marks a slowing in the rate of decline that remains impacted by the macroeconomic effects of the pandemic in 2020 and uneven recovery in the first quarter.\nWe did originate over 5 million new accounts, an increase of 3% versus the first quarter 2020 which is a positive sign and reflective of improved consumer sentiment.\nLoan receivables declined 7% which was worse than our expectations.\nThe driver was higher than expected elevation in payment rates, which resulted primarily from the recently enacted stimulus.\nInterest and fees on loans were down 14% from last year, driven by the elevated payment rate in addition to lower delinquencies.\nDual and co-branded cards accounted for 38% of the purchase volume in the first quarter and increased 6% in the prior year.\nOn loan receivable basis, they accounted for 23% of the portfolio and declined 10% from the prior year.\nOverall, we saw positive momentum in several of our growth metrics this quarter where higher payment rate is impacting loan receivable growth.\nWhile we're still cautious about the state of the pandemic with the recent rise in confirmed cases, we are encouraged by the progress made with the national rollout of vaccine and lifting some of the remaining restrictions.\nWe remain optimistic of the positive momentum and continued improvement as we progressed through 2021.\nRSAs increased $63 million or 7% from last year.\nRSAs as a percentage of average receivables was 5.1% for the quarter.\nThis was elevated from the historical average primarily due to the significant improvement in net charge-offs.\nWe reduced our loan loss reserves this quarter due to an improved macroeconomic outlook in line with the decline in loan receivables.\nThis coupled with lower net charge-offs resulted in a significant decrease in the provision for credit losses of $1.3 billion or 80% from last year.\nOther income increased $34 million, due to investment income.\nOther expenses decreased $70 million or 7% from last year due to lower operational losses and lower marketing costs, partially offset by an increase in employee costs.\nMoving to our platform results on Slide 9.\nOur sales platforms continue to be impacted in varying degrees due to the pandemic restrictions and elevated payment rates.\nTheir trajectories have been different based on factors such as business and partner mix, digital concentration, provider access and availability of hardline goods.\nWe have seen broad-based momentum in purchase volume as consumers become increasingly confident as we begin to exit the pandemic.\nIn Retail Card, loan receivables declined 9%, that show momentum with purchase volume increasing 11% versus last year.\nAverage active accounts were down 7% and interest in fees were down 16% due to the impact from the pandemic.\nWe're excited with our renewal of the American Eagle program and continue to see significant opportunity with our recently launched programs with Verizon and Venmo as those programs begin to build.\nThe strength of our powersports and home specialty and payment solutions continue to helped offset some of the impact from pandemic shutdowns and higher payment rates.\nDuring the quarter, loan receivables declined 1% and average active accounts were down 9%.\nInterest and fees were down 11%, which was driven primarily by lower late fees, finance charges, and merchant discount, all resulted reduction in loan receivables.\nWe did see positive momentum in purchase volume, which was up 3% over last year.\nOur focus on growing this platform resulted in several new programs being signed and renewed key partnerships, including Ashley Home furniture during the quarter.\nWe continue to drive organic growth through our partnerships and networks and added 3,900 new merchants during the quarter.\nWe also continue to drive higher card reuse, which now stands at approximately 34% purchase volume excluding oil and gas.\nAlthough, CareCredit was the largest overall impact from the pandemic restrictions, improvement in this platform has continued into 2021 as providers have increased, elective and planned services from the trough in the second quarter of last year.\nThis improvement is evident in our purchase volume being flat to last year.\nLoan receivables were down 8% this quarter and drove a decrease in interest and fees on loans of 7% as we reported lower late fees and merchant discounts.\nDuring the quarter, we continue to grow our CareCredit network, enhance the utility of the card.\nThe expansion of our network and acceptance strategy has helped us drive the reuse rate to 59% of purchase volume in the first quarter.\nThis is a powerful growth platform for our business and remain excited about the opportunities to drive future growth as the impact from the pandemic subsides.\nI'll move to Slide 10 and cover our net interest income and margin trends.\nDuring the quarter, recently enacted stimulus contributed to an elevation of payment rates, which were up about 2 percentage points on average compared to the average payment rates we experienced pre-pandemic.\nThe difference was as high as 3.5 percentage points in March when the most recent stimulus plan was enacted.\nThis has resulted in a reduction in loan receivables, which has had an impact on net interest income and net interest margin in the first quarter.\nNet interest income decreased 12% from last year, driven by lower finance charges and late fees.\nThe net interest margin was 13.98% compared to last year's margin of 15.15%, largely driven by the impact of the pandemic on loan receivables and increase in liquidity and lower benchmark rates.\nSpecifically, the loan receivables yield of 19.32% was down 135 basis points versus last year and was the primary driver of 117 basis point reduction in our net interest margin.\nThe mix of loan receivables as a percent of total earning assets declined over 3 percentage points from 81.7% to 78.6%, driven by the higher liquidity held during the quarter.\nThis accounted for 61 basis points of the net interest margin decline.\nThe liquidity yield declined as a result of lower benchmark rates and accounted for 23 basis points reduction in our net interest margin.\nThese impacts were partially offset by a 93 basis point decrease in the total interest-bearing liabilities costs to 1.57%, primarily due to lower benchmark rates.\nThis provides a 78 basis point increase in our net interest margin.\nWe continue to believe that in the second half of the year, excess liquidity will begin to be deployed into asset growth and slowing paying rates should result in higher interest and fee yields leading to increasing net interest margin.\nNext, I'll cover our key credit trends on Slide 11.\nIn terms of specific dynamics for the quarter, I saw the delinquency trends.\nOur 30-plus delinquency rate was 2.83% compared to 4.24% last year.\nOur 90-plus delinquency rate was 1.52% compared to 2.10% last year.\nHigher payment rates continue to drive delinquency improvements.\nFocusing on net charge-off trends, our net charge-off rate was 3.62% compared to 5.36% last year.\nOur reduction in net charge-off rate was primarily driven by the improving delinquency trends as customer payment behavior improved over the last several quarters.\nOur loss for credit losses as a percent of loan receivables was 12.88%.\nMoving to Slide 12, I'll cover expenses for the quarter.\nOverall expenses were down $70 million or 7% from last year to $932 million as we continue to execute on our strategic plan to reduce costs.\nSpecifically, the decrease was driven by lower operational losses and lower marketing and business development costs, partially offset by higher employee costs.\nThe efficiency ratio for the first quarter was 36.1% compared to 32.7% last year.\nThe ratio was negatively impacted by lower revenue that resulted from lower receivables and lower interest in the fee yield, which was partially offset by a reduction in expenses.\nMoving to Slide 13.\nGiven the reduction in our loan receivables and strength in our deposit platform, we continue to carry a higher level of liquidity.\nBut we believe it's prudent to maintain a higher liquidity level during uncertain and volatile periods, we are actively managing our funding profile to mitigate excess liquidity where appropriate.\nAs a result of this strategy, there is a shift in the mix of our funding during the quarter.\nOur deposits declined by $1.9 billion from last year.\nOur securitized and unsecured funding sources declined by $2.1 billion.\nThis resulted in deposits being 81% of our funding compared to 79% last year.\nThe securitized funding comprising 9% and unsecured funding comprising 10% of our funding sources at quarter end.\nTotal liquidity including undrawn credit facilities was $28 billion, which equated to 29.2% of our total assets, up from 25.3% last year.\nBefore I provide details on our capital position, it should be noted that we elected to take the benefit of the transition rules issued by the joint federal banking agencies, which has two primary benefits.\nFirst, it delays the effect of the CECL transition adjustment for an incremental two years.\nAnd second, it allows for a portion of the current period provisioning to be deferred and amortized with the transition adjustment.\nWith this framework, we ended the quarter at 17.4% CET1 under the CECL transition rules, 310 basis points above last year's level of 14.3%.\nThe Tier 1 capital ratio was 18.3% under the CECL transition rules compared to 15.2% last year.\nThe total capital ratio increased 320 basis points to 19.7%.\nAnd the Tier 1 capital plus reserve ratio on a fully phased in basis increased to 28.7% compared to 24.1% last year, reflecting the increase in the reserves as a result of implementing CECL.\nDuring the quarter, we returned $328 million to shareholders, which included $200 million of share repurchases and paid a common stock dividend of $0.22 per share.\nGiven the continued uncertainty in the operating environment, I thought it'd be helpful to provide color on our current view on the key earnings drivers for 2021, which we've laid out on Slide 14.\nOur views assume that the pressure from the pandemic and a slower economic recovery continues into the second quarter with the second half seeing the pandemic largely under control and the acceleration of the economic recovery.\nFirst quarter purchase volume was stronger than anticipated as we entered the year, as local restrictions are lifted with consumer confidence improving so to consumers willingness to spend.\nWe currently believe these trends will hold and purchase volume will continue to recover across our platforms.\nIn the second quarter, we will be comparing against a period of widespread shutdowns.\nIn the second half, we anticipate improving growth trends as the pandemic impact moderates and macroeconomic growth accelerates.\nRegarding loan receivable growth, we expect that stimulus will continue to have an impact on payment rates, and therefore, loan receivables into the next quarter.\nIn the second half of 2021, we assume payment rates will moderate as the effects of the stimulus abates and we return to more normalized consumer payment behavior patterns.\nCombining this with the expected increase in purchase volume from the improving macroeconomic environment, this should contribute to loan receivable growth.\nFor net interest margin, we expect the higher payment rates will continue to pressure on loan receivables and generate excess liquidity, impacting interest and fee yield and asset mix.\nWe continue to believe that excess liquidity will be reduced through asset growth and so payment rates in the second half of the year, which will drive improving interest and fee yields and asset mix leading to increase in net interest margin.\nWith respect to credit, delinquencies are expect to increase from the current levels.\nSo, we now believe the peak will occur later than we anticipated, likely in early 2022.\nWhile current delinquencies will result in lower net charge-offs in the second quarter, we expect net charge-offs to rise resulting from the increases in delinquencies as we move through 2021.\nGiven the magnitude of the stimulus that was deployed during pandemic, we believe the overall loss curve will be flatter than we initially thought that remains volatile and difficult to forecast due to the effects of the stimulus and industry forbearance has abated.\nWe expect reserves to be largely driven by asset growth, impacts from any rate changes in credit and in our macroeconomic assumptions and certain combinations of these factors could result in further reserve releases this year.\nWe expect RSAs to remain elevated into the second quarter, primarily reflecting strong program performance, including an improvement in net charge-offs, partially offset by lower revenue.\nIn the second half of the year, we continue to expect low RSAs generally, but slightly higher net charge-offs, partially offset by higher revenue.\nAs we outlined previously, we've implemented cost reductions across the organization and I'm pleased to report that we are in a pace which expense savings target of $210 million for the full year.\nPartially offsetting these cost reductions will be the expense increases related to growth in addition to anticipated increase in delinquent accounts.\nWe will continue to closely monitor how the pandemic develops and to impacting the macroeconomic environment.\nAt the foundation is our belief that we position ourselves well for the opportunities that will develop as the economic recovery takes from hold.\nFurther, we've made the investments to support our partners as they have been required to rapidly transform their businesses to meet the new digital realities.\nAnd will continue to make investments in our people, products, technology and platforms to drive long-term value and continue to ensure the safety of our employees, while meeting the needs of our partners, merchants, providers and cardholders.\nClearly, the pandemic has had significant impact and has in many ways changed the way we do business.\nThis quarter made it evident that we are beginning to emerge on the other side of this period.\nConsumer sentiment has improved, the unemployment rate has dropped, the U.S. retail posted the largest gain in 10 months.\nOur business is showing its resilience as growth has accelerated with purchase volume up 8% and 5 million new accounts opened in this quarter.\nAnd although the solid growth metrics were tamped down by higher payment rates which impact loan receivables and NIM, these are headwinds that we anticipate will soon abate.\nCredit performance has continued to outperform and we continue to extend our CareCredit network, delivering new products, financing alternatives and experiences with a focus on overall wellness in pet.\nThe bottom line is that we demonstrated that we were able to rapidly adapt to operate in the new environment, while continuing to keep our eye on the long-term, positioning ourselves well for the future.\nAnd in my opinion.\nWe have never been in a stronger position.\nThat concludes our comments for the quarter.\nWe will now begin the Q&A session so that we can accommodate as many of you as possible.\nI'd like to ask the participants to please limit yourselves to one primary and one follow-up question.\nIf you have additional questions, the Investor Relations team will be available after the call.\nOperator, please start the Q&A session.\n", "role": "user" }, { "content": "compname reports first quarter net earnings of $1.0 billion or $1.73 per diluted share.\nq1 earnings per share $1.73.\ngap inc. program agreement will not be renewed and will expire in april 2022.\nexpect strategic options on gap program will be accretive to diluted earnings per share relative to renewal terms.\nif gap portfolio is sold, co expects to redeploy approximately $1 billion of capital.\nqtrly net interest income decreased $451 million, or 12%, to $3.4 billion, mainly due to lower finance charges and late fees.\n", "role": "assistant" } ]

[ { "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: For today's call, I will provide opening comments followed by Preston with an update on the Wright Medical Integration.\nGlenn will then provide additional details regarding our quarterly results, before opening the call to Q&A.\nDespite the ongoing presence of the pandemic, we posted a strong quarter of organic sales growth of 4.7% versus Q1 2019.\nThis was driven by outstanding international results, particularly in Asia Pacific and the benefits of our diversified business model.\nAcross our franchises, Mako, Neurotech and Medical had excellent performances, each posting strong double-digit growth versus 2019, a trend that we expect to continue for the remainder of the year in these businesses.\nMako followed up a very strong Q4 with a banner Q1 performance, including an uptake in international installations.\nAs expected, elective procedures were negatively impacted to start the year which had the largest impact on our hip and knee businesses.\nHowever, the trends improved progressively throughout the quarter, with US hip and knee accelerating in March and into April, where we are seeing mid single-digit growth as compared to April 2019.\nWe also saw improved growth in small capital within parts of Neurotech and instruments during the quarter.\nIn addition, our order book has picked up across our capital businesses, which is a good sign of pending growth as procedure volumes return to more normal levels.\nThese trends give us confidence in achieving our guidance of 8% to 10% full year organic sales growth compared to 2019, which is equivalent to 12% to 14% organic versus 2020, despite one less selling day.\nOur momentum has continued regarding cost management and cash flow.\nAnd while spending will increase to support future growth, it will be done in a disciplined manner.\nGlenn will elaborate on our raised earnings per share guidance shortly.\nWe also published our first annual comprehensive report during the quarter, which captures our environmental, social and governance strategy as well as commitments regarding our carbon footprint, diversity and equity inclusion and supply chain transparency.\nWe are encouraged by the progress we are making in these areas.\nOverall, I am pleased with the strong start to the year and the momentum that is continuing to build.\nAnd while pandemic flash points are still occurring, we are well positioned to deliver growth at the high end of med tech, with leveraged adjusted earnings.\nMy comments today will focus on first quarter performance in our combined trauma and extremities business, an update on the ongoing integration of Wright Medical and on our most recent acquisition activity.\nDuring the quarter, our combined trauma and extremities business showed good resiliency, growing 2.6%, including Wright Medical compared to 2019 despite the ongoing impacts of COVID restrictions during the quarter.\nOur trauma business, which is less selective in nature, benefited from inclement weather in the US and Europe in February.\nPerformance in upper extremities and foot and ankle was driven by the recovery of elective procedures throughout the quarter, along with lower-than-expected sales dis-synergies through the initial stages of the integration.\nAs a result of the strong performance of our trauma and extremities business in the first quarter, we now expect the combined business to deliver mid single-digit growth for the full year when compared to 2019.\nWe remain encouraged with the progress and pace that the team has delivered with bringing the businesses together throughout the Wright Medical Integration.\nAs we have mentioned previously, we utilized the lengthy period from announce to close to build and resource the robust integration plan that we are now executing.\nAs we move through the quarter, our teams made progress against many key integration milestones.\nTo-date, the team has established three distinct business units with specialized commercial, R&D and selling organizations.\nWe believe this dedication and focus will be a core driver of future growth across trauma, upper extremities and foot and ankle.\nIn addition to establishing dedicated business units, the team made considerable progress with our US sales integration, including the establishment of sales leadership, sales channel and territory alignment and identification of cross-selling priorities.\nConsiderable progress has also been made on aligning the long-term portfolio and pipeline strategies.\nOur focus on the integration will remain a key priority for the remainder of 2021 as we balance the complexity of the integration, while minimizing sales disruption.\nOver the next few quarters, we will conclude the US commercial integration, including the initiation of cross-selling, and we will kick off sales integrations across our international markets over the next several months.\nFinally, our dedicated business development teams continue to identify and execute on tuck-in acquisitions.\nDuring the quarter, we completed the acquisition of TMJ Concepts, a medical device company that manufactures a patient-specific temporomandibular joint reconstruction prosthesis system.\nIn our craniomaxillofacial business, personalized medicine plays a critical role and the acquisition of TMJ Concepts supports their business strategy of driving category leadership through innovation and purpose of restoring form, function and hope to patients.\nThese acquisitions continue to demonstrate our focus on our strategy of driving category leadership and market-leading growth.\nAs a reminder, we are providing our comments in comparison to 2019 as it is more normal baseline given the variability throughout 2020.\nOur organic sales growth was 4.7% in the quarter.\nAs a reminder, this quarter included the same number of selling days as Q1 2019 and one less day than 2020.\nCompared to 2019, pricing in the quarter was unfavorable 1.4%.\nVersus Q1 2020, pricing was 0.9%, unfavorable.\nForeign currency had a favorable 1.3% impact on sales.\nDuring the quarter, the continued impact of the COVID-19 pandemic and related surgical procedure cancellations, primarily in the US and Europe, negatively impacted our sales.\nHowever, toward the end of the quarter, we did see improvements in sales momentum, primarily in the US and our Asia-Pacific businesses.\nAlso, as noted in the fourth quarter, demand for certain capital products continued as we saw strong results in our Mako and emergency care products.\nFor the quarter, US organic sales increased by 1%, reflecting the continuing slowdown in elective procedures as a result of the pandemic, somewhat offset by strong demand for Mako, medical products, and neurovascular products.\nInternational organic sales showed strong growth of 15% and impacted by positive sales momentum in China, Japan, Australia, and Canada.\nOur adjusted quarterly earnings per share of $1.93 increased 2.7% from 2019, reflecting sales growth partially offset by higher interest charges resulting from the Wright acquisition as well as an overall disciplined ramp-up in operating costs.\nOur first quarter earnings per share was positively impacted from foreign currency by $0.03.\nNow, I will provide some highlights around our segment performance.\nOrthopaedics had constant currency sales growth of 17.2%, an organic sales decline of 0.7%, including an organic decline of 1.7% in the US.\nThis reflects a slowdown in elective procedures related to COVID-19.\nOther Ortho grew 49% in the US, primarily reflecting strong demand for our Mako robotic platform, partially offset by declines in bone cement.\nAs noted previously, in March, we began to see good sales momentum in our US orthopedic businesses, with all segments delivering positive organic growth as compared to March 2019.\nInternationally, Orthopaedics grew 1.5% organically, which reflects the COVID-19 related procedural slowdown in hips and knees, especially in Europe, offset by strong performances in Australia and Japan.\nFor the quarter, our trauma and extremities business, which includes Wright Medical, delivered 2.6% growth on a comparable basis.\nThis includes strong performances in US shoulder and US trauma.\nIn the US, comparable growth was 4.4%.\nIn the quarter, MedSurg had constant currency and organic sales growth of 5.3%, which included 1.6% growth in the US.\nInstruments had a US organic sales decline of 3%, primarily impacted by continued procedural slowdown that impacted its power tool business, partially offset by gains in its waste management, smoke evacuation products, and services business.\nAs a reminder, during the first quarter of 2019, Instruments had a very strong growth of approximately 18%.\nEndoscopy had a US organic sales decline of 5.7%, reflecting a slowdown in some of the capital businesses, which was partially offset by gains in our General Surgery, Video & Sports Medicine businesses, the latter of which grew over 11% in the quarter.\nThe medical division had US organic sales growth of 13.6%, reflecting double-digit performance in its emergency care and Sage businesses.\nInternationally, MedSurg had an organic sales growth of 19.9%, reflecting strong growth across Europe, Canada, Australia and Japan in Medical, Endoscopy and Instruments.\nNeurotechnology and spine had constant currency and organic growth of 12.8%.\nThis growth reflects double-digit performances in our Interventional spine, neurosurgical and ENT businesses and 27% growth in our neurovascular business.\nOur US Neurotech business posted an organic growth of 12%, reflecting strong product growth in our neuro powered drills, SonoPet IQ, bipolar forceps, Bio reabsorbs and nasal implants.\nAdditionally, within our US neurovascular business, we had significant growth in all product categories, including hemorrhagic, flow diversion and ischemic.\nInternationally, Neurotechnology and spine had organic growth of 31.7%.\nThis performance was driven by strong demand in China and other emerging markets.\nNow, I will focus on operating highlights for the first quarter.\nOur adjusted gross margin of 65.4% was unfavorable approximately 40 basis points from our first quarter 2019.\nCompared to the first quarter in 2019, gross margin was primarily impacted by price, acquisitions and business mix.\nAdjusted R&D spending was 6.8% of sales, reflecting our continued focus on innovation.\nOur adjusted SG&A was 35.2% of sales, which was unfavorable to the first quarter of 2019 by 70 basis points.\nIn summary, for the quarter, our adjusted operating margin was 23.5% of sales, which is 160 basis points decline over the first quarter of 2019.\nThis reflects the dilutive impact of the Wright Medical acquisition, combined with the disciplined ramp-up in cost to fuel future growth, as well as the two-year compounding of certain costs given the comparison to 2019.\nWe also reiterate our operating margin expansion guidance of 30 to 50 basis points improvement over 2019 operating margin, excluding the impact of Wright Medical.\nRelated to other income and expense as compared to the first quarter in 2019, we saw a decline in investment income earned on deposits and interest expense increases related to increases in our debt outstanding for the funding of the Wright Medical acquisition.\nOur first quarter had an adjusted effective tax rate of 13%, given our mix of income.\nGiven our current circumstances and the outlook for the full year, we would expect to be at the lower end of our range for the full year guided effective tax rate of 15.5% to 16.5%.\nFocusing on the balance sheet, we ended the first quarter with $2.3 billion of cash and marketable securities and total debt of $13.1 billion.\nDuring the quarter, we repaid $750 million of maturing debt.\nTurning to cash flow.\nOur year-to-date cash from operations was approximately $450 million.\nThis performance reflects the results of earnings, continued good management of working capital and approximately $170 million of one number expenditures related to the Wright Medical Integration.\nBased on our first quarter performance and the current operating environment, we continue to expect 2021 organic net sales growth to be in the range of 8% to 10%.\nWe believe that the recovery ramp of elective procedures will continue to be variable based on region and geography and will continue into the second quarter of 2021.\nAs it relates to the sales expectations for Wright Medical, we now expect comparable growth for trauma and extremities to be in the mid-single digits for the full year when compared to the combined results for 2019.\nIf foreign currency exchange rates hold near current levels, we expect net sales in the full year will be positively impacted by approximately 1%.\nNet earnings per diluted share will be positively impacted by $0.05 to $0.10 in the full year, and this is included in our revised guidance range.\nBased on our first quarter performance and including consideration of our improved full year Wright Medical sales impact, disciplined cost management, and continued positive recovery outlook, we now expect adjusted net earnings per diluted share to be in the range of $9.05 to $9.30.\nAnd now I will open up the call for Q&A.\n", "role": "user" }, { "content": "q1 adjusted earnings per share $1.93.\nqtrly organic net sales increased 1.8% from 2020 and 4.7% from 2019.\ncontinue to expect 2021 organic net sales growth to be in range of 8% to 10% from 2019.\nsees 2021 adjusted net earnings per diluted share to be in the range of $9.05 to $9.30.\nexpect continued unfavorable price reductions of approximately 1% in 2021.\n", "role": "assistant" } ]

[ { "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: For today's call, I will provide opening comments, followed by Preston with an update on the Wright Medical integration.\nGlenn will then provide additional details regarding our quarterly results before opening the call to Q&A.\nFor the quarter, we posted organic sales growth of 9.3%, reflecting growth versus 2019 for all our major businesses.\nThis strong result was driven by standout performances from Neurovascular, Mako, emergency care, sports medicine and our U.S. shoulder and total ankle products.\nEach of these posted very strong double-digit growth.\nInternational organic growth outpaced the U.S. at 14.2% despite COVID challenges in some countries.\nWe posted double-digit growth in most regions, including excellent results in South Pacific, China, Canada, South Korea and many countries in Western Europe.\nWe were also pleased to see the continued rebound in elective procedures as both hips and knees saw quarter-over-quarter sequential improvement and both returned to growth.\nAlso, now that we have a fuller appreciation of Wright Medical, we are delighted to have it within the Stryker family.\nWith our first half organic growth of 7.1%, combined with continued recovery of electric procedures, a strong order book across our capital businesses and new product innovations, we have increased confidence in the full year outlook.\nThis is reflected in our upward narrowing of organic sales guidance to 9% to 10% compared to 2019.\nOur sales performance carried through the rest of our results with strong margin performance and adjusted earnings per share growth and cash flow conversion of over 100% in the quarter.\nThrough the remainder of the year, we do expect a disciplined increase in spending to support our future growth expectations.\nOur bullish sales outlook, combined with ongoing execution on margins and continued progress on Wright Medical integration has resulted in a raised full year adjusted earnings per share guidance of $9.25 to $9.40 a share.\nI continue to be impressed with the resiliency of our people and culture, which positions us well for a successful 2021 and beyond.\nMy comments today will focus on the second quarter performance of our combined Trauma and Extremities business, including an update on the ongoing integration of Wright Medical.\nDuring the quarter, our combined worldwide Trauma and Extremities business, including Wright Medical had a strong performance, growing 7% compared to 2019.\nThe performance in the quarter was driven by double-digit growth in our U.S. Trauma and Upper Extremities businesses.\nU.S. businesses were benefited by the recovery from COVID-related restrictions, which continues to outpace the rest of the world as well as the ongoing execution of the U.S. selling integration.\nThe Trauma business unit was positively impacted by the reopening of economies and the continued strong performance of key products, including T2 Alpha, and the mini-frag plating system.\nOur U.S. upper extremities business, which remains number one in shoulder arthroplasty, grew strong double digits in the quarter behind continued strength within reverse ARPA plastic portfolio with Perform reverse and revision driving the growth.\nThe upper extremities performance in the quarter was enhanced by the continued adoption of our BLUEPRINT planning software with approximately 50% of total shoulder cases completed using BLUEPRINT.\nAs a result of the strong performance of our Trauma and Extremities business, which grew approximately 5% in the first half of the year, we are confident in the combined business to grow at least 6% for the full year when compared to 2019.\nWe are now about nine months into the integration of Wright Medical and we remain very pleased with the progress and efficiency at which the team is moving through the integration.\nThe U.S. integration is pacing ahead of our expectations and cross-selling has begun in a limited capacity.\nWe expect to continue to execute on our cross-selling priorities during the second half of the year as we work to fortify the supply chain and processes to support cross-selling activities.\nOutside the U.S., the teams have successfully executed integration plans in several key markets, including the U.K., Germany, France, Japan and China with further countries to follow into 2022.\nIn addition to the commercial activities, we are also executing on the integration of other operational areas, including the consolidation of distribution and sales offices, harmonization of key operational processes and executing on our manufacturing site strategy.\nWithin R&D, the team also continues to make progress on aligning the long-term portfolio, pipeline strategies and harmonized design processes.\nWhile the team has moved through the integration, they have also remained focused on executing the critical existing projects in the pipeline.\nThis includes the recent launch of the new Tornier Perform humeral system, which offers clinical solutions for the simplest and most complex arthroplasty procedures and delivers on our mission to make healthcare better for surgeons and the patients they serve.\nToday, I will focus my comments on our second quarter financial results and the related drivers.\nAs a reminder, we are providing our comments in comparison to 2019 as it is a more normal baseline given the variability throughout 2020.\nOur organic sales growth was 9.3% in the quarter.\nThe second quarter included the same number of selling days as Q2 2019 and Q2 2020.\nCompared to 2019, pricing in the quarter was unfavorable, 0.6% versus Q2 2020, pricing was 5% unfavorable.\nForeign currency had a favorable 1.5% impact on sales.\nDuring the quarter, we saw a recovery ramp of elective procedures and accelerated sales momentum as the impact of the COVID-19 pandemic has eased in most geographies.\nHowever, the recovery ramp of elective procedures continues to be variable by region and geography and has a more pronounced impact on our orthopedic and spine implant businesses.\nFor the quarter, U.S. organic sales increased by 7.5%, reflecting the recovery of our procedural business and continued strong demand for Mako, medical products and neurovascular products.\nDuring the quarter, we had strong sequential improvement in all our U.S. businesses.\nInternational organic sales showed strong growth of 14.2%.\nOur adjusted quarterly earnings per share of $2.25 increased 13.6% from 2019, reflecting sales growth and operating margin expansion, partially offset by higher interest charges resulting from the Wright Medical acquisition and a somewhat higher quarterly effective tax rate.\nOur second quarter earnings per share was positively impacted from foreign currency by $0.04.\nNow I will provide some highlights around our segment performance.\nOrthopaedics had constant currency sales growth of 26% and an organic sales growth of 6.7%, including an organic growth of 8% in the U.S.\nThis reflects a ramp-up in elective procedures, especially in knees and trauma and extremities.\nOur knees business grew 7.5% in the U.S., reflecting the strong bounce back as the COVID-related restrictions were lifted.\nOther Orthopaedics grew 26.5% in the U.S., primarily reflecting strong demand for our Mako robotic platform, partially offset by declines in bone cement.\nInternationally, Orthopaedics grew 4% organically, which reflects sequential improvement as the COVID-19 impacts have started to ease in Europe, strong momentum in Mako internationally and strong performances in Australia.\nFor the quarter, our Trauma and Extremities business, which includes Wright Medical, delivered 7% growth on a comparable basis.\nIn the U.S., comparable growth was 12.5%, and which included double-digit growth in our Upper Extremities and Trauma businesses.\nIn the quarter, MedSurg had constant currency and organic sales growth of 8.3%, which included 6.4% growth in the U.S. Instruments had a U.S. organic sales growth of 0.9%, primarily related to growth in smoke evacuation, lighted instruments and skin closure products partially offset by slower growth in power tools.\nAs a reminder, during the second quarter of 2019, Instruments had a very strong growth of approximately 19%.\nEndoscopy had U.S. organic sales growth of 6%, reflecting strong performances in our Sports Medicine, general surgery and video products.\nThe Medical division had U.S. organic growth of 13.4%, reflecting continued double-digit performance in our emergency care business.\nInternationally, MedSurg had organic sales growth of 15.9% and reflecting strong growth in the Endoscopy, Instruments and Medical businesses across Europe, Canada and Australia.\nNeurotechnology and Spine had organic growth of 15.5%.\nThis growth reflects double-digit performances in all four of our Neurotech businesses: CMF, Neurovascular, Neurosurgical and ENT.\nIt also reflects very strong growth in our neurovascular business of approximately 30%.\nOur U.S. Neurotech business posted an organic growth of 17.3% and highlighted by strong product growth in Sonopet IQ, bipolar forceps, max space, cryotherapy and nasal implants.\nAdditionally, our U.S. Neurovascular business had significant growth in all categories of our products, including hemorrhagic, flow diversion and ischemic.\nInternationally, Neurotechnology and Spine had organic growth of 28.8%.\nThis performance was driven by strong demand in China and other emerging markets as well as Europe and Australia.\nNow I will focus on operating highlights in the second quarter.\nOur adjusted gross margin of 66% was a favorable approximately 15 basis points from second quarter 2019 compared to the second quarter in 2019, gross margin was primarily impacted by business mix and acquisitions, primarily offset by price.\nAdjusted R&D spending was 6.6% of sales, reflecting our continued focus on innovation.\nOur adjusted SG&A was 33.4% of sales, which was slightly better than the second quarter of 2019.\nThe reflects our continued cost discipline and fixed cost leverage, offset by the impact of the Wright Medical acquisition.\nIn summary, for the quarter, our adjusted operating margin was 25.9% of sales, which is five basis points improvement over the second quarter of 2019.\nThis performance primarily resulted from our positive sales momentum combined with the disciplined ramp-up in costs offset by the dilutive impact of acquisitions.\nBased on our positive momentum, we continue to reiterate our op margin guidance for the year of 30 to 50 basis points improvement over 2019, excluding the impact of Wright Medical.\nRelated to other income and expense, as compared to the second quarter in 2019, we saw a decline in investment income earned on deposits and an increase in interest expense resulting from the additional debt outstanding for the funding of the Wright Medical acquisition.\nOur second quarter had an adjusted effective tax rate of 17% and was impacted by our mix of U.S. non-U.S. income and some adverse discrete tax items included in our provision to return adjustments.\nOur year-to-date effective tax rate is 15.2%.\nFor the full year, we expect an adjusted effective tax rate of 15% to 15.5% with some variability in the remaining quarters, including a slightly lower rate in the third quarter and a more normalized rate in the fourth quarter.\nFocusing on the balance sheet, we ended the first quarter with $2.3 billion of cash and marketable securities and total debt of $12.7 billion.\nDuring the quarter, we fully repaid the $400 million of term loan debt related to the borrowings incurred for the acquisition of Wright Medical.\nYear-to-date, we have paid down $1.15 billion of debt.\nTurning to cash flow.\nOur year-to-date cash from operations was approximately $1.3 billion.\nThis performance reflects the results of earnings and continued focus on working capital management.\nAnd now I will provide a summary of our revised guidance.\nBased on our performance in sales ramp in the second quarter as well as our capital orders pipeline, we expect 2021 organic net sales growth to be in the range of 9% to 10%.\nAs it relates to sales expectations for Wright Medical, we now expect comparable growth for Trauma and Extremities to be at least 6% for the full year when compared to the combined results for 2019.\nIf foreign currency exchange rates hold near current levels, we expect net sales in the full year will be positively impacted by approximately 1%.\nConsistent with the upper range of our previous guidance, net earnings per diluted share will be positively impacted by foreign exchange by approximately $0.10 in the full year, and this is included in our revised guidance range.\nBased on our performance in the first six months and including consideration of our improved full year Wright Medical performance impact, controlled spend ramp to facilitate growth and continued positive recovery outlook, we now expect adjusted net earnings per diluted share to be in the range of $9.25 to $9.40.\nAnd now we will open up the call up for Q&A.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $2.25.\nexpect 2021 organic net sales growth to be in range of 9% to 10% from 2019.\nexpect 2021 adjusted net earnings per diluted share to be in range of $9.25 to $9.40.\nexpect continued unfavorable price reductions of approximately 1% in 2021.\nstryker - if foreign currency exchange rates hold near current levels, expect earnings per share will be positively impacted by approximately $0.10 for full year.\n", "role": "assistant" } ]

[ { "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: For today's call, I'll provide opening comments followed by Preston, with an update on the current environment and our most recent acquisitions.\nGlenn will then provide additional details regarding our quarterly results before opening the call to Q&A.\nI would like to start my comments by expressing my appreciation for the perseverance shown by our employees as they work through the many challenges that we've faced during 2020.\nThroughout the year, we maintained high employee engagement while continuing to support surgeons and caregivers around the world.\nOur fourth quarter organic sales declined to roughly 1%, reflecting the impact of a resurgence of COVID-19 infections offset by a continuation of emergent procedures and strong performance by our large capital products.\nWe are also excited about closing the Wright Medical deal during the quarter and the category leadership technique that we gain in the fastest-growing segment within the orthopaedics market.\nPreston will provide some additional updates on the integration shortly.\nThroughout the quarter, we maintained the financial discipline instituted at the beginning of a pandemic which combined with a favorable tax rate, led to an adjusted earnings per share of $2.81 in the quarter, up approximately 13% versus 2019.\nAnd we delivered impressive cash flow from operations which exceeded $3 billion for the full year.\nIn addition to closing the Wright Medical acquisition, we also made progress in many areas that will provide future growth opportunities.\nWe have established a structure focused on digital, robotics, and enabling technology where we see a significant opportunity to create a companywide unified digital ecosystem, including Mako.\nWe maintained our commitment to drive innovation across our various business units, including neurovascular where we gained new product approvals across aspiration, stent retrievers, and flow-diverting stents, and in our MedSurg segment, where we continued product introductions with a focus on safety and prevention.\nFinally, we successfully launched our ASC sales model, which leverages the Stryker portfolio to provide end-to-end solutions to meet the growing demand and shifts to the outpatient setting.\nOur continued support for our customers and our commitment to innovation will position us well for growth as the pandemic eventually subsides.\nTurning to 2021, our people and culture of execution remain strong which will allow us to deliver on our commitment to make healthcare better and to resume our customary strong organic sales growth and leverage earnings.\nMy comments today will provide an update on the current environment, trends related to the latest COVID-19 impacts, and updates on our most recent acquisitions of Wright Medical and OrthoSensor.\nDuring the fourth quarter, elective procedures were negatively pressured in those regions globally as localized infection and hospitalization rates surged through the month of December.\nAs a result, growth was uneven and correlated for the state of the pandemic in each region.\nThe areas impacted the most include the U.S. and many of the countries in Western Europe, most notably, the United Kingdom, driven by a countrywide lockdown.\nEven with the procedural variability, we saw growth in emerging markets, including China which grew double-digit over prior-year quarter.\nLooking forward, hospitals are better equipped to handle this resurgence and they are working to bring back the procedures, but have been delayed.\nBut we expect that the variability of elective procedures will continue during the first quarter until infection rates begin to decline and the distribution of the vaccines become more prevalent.\nThis slowdown in elective procedures had a negative impact on our more deferrable businesses, which make up approximately 40% to 50% of our total sales.\nHowever, the slowdown this quarter was not as impactful as the decline in the second quarter as hospitals were better equipped to manage COVID patients while maintaining some level of elective surgeries.\nIn addition, the early trends on the launch of our new ProCuity bed are positive and expected to continue into 2021.\nDuring the year, our Mako install base grew by 33% and exceeded another milestone with over 100 robots sold and installed in the fourth quarter.\nThis growth continues to highlight the demand for our differentiated Mako robotic technology, as well as our ongoing success selling and installing robots in major teaching institutions, ASCs, and competitive accounts.\nWe are also excited about our recent approvals for Mako TKA in China, Russia, and Brazil which all provide opportunities for growth as these markets continue to embrace robotic, digital and enabling technologies.\nTurning to U.S. knee procedures.\nIn the fourth quarter, approximately 44% of our total knees will make their knee procedures, a trend that continues to increase.\nThe shift toward cementless knees also continued and in the fourth quarter, cementless knees made up 42% of our U.S. knee procedures.\nDuring the pandemic, feedback from surgeons has pointed to limited trialing of competitive products in businesses like joint replacement as surgeons worked to performing procedures restricted by cancellations and deferrals.\nHowever, as the pandemic subsides and we return to a more normal environment, we expect to continue to outpace the market driven by our Mako installations throughout the year and our strong order book heading into 2021.\nWe are also enthusiastic about the Wright Medical acquisition and the category leadership we gain in both upper extremities and foot and ankle through Wright's diverse portfolio of implants, biologics, and enabling technology.\nThe combination of Stryker and Wright will continue to drive innovation that enhances our customers' ability to address patient needs across to more than $3 billion extremities market.\nThe integration has been progressing well over the last few months.\nThe long period from sign to close was used to ensure that the appropriate integration plans were in place, leveraging our years of deal experience.\nTo date, the teams have been focused on moving quickly to align the new combined organization.\nConsiderable progress has been made, including the creation of specialized business units and sales forces for trauma, upper extremities, and foot and ankle, which is a key part of our overall decentralized strategy that allows us to remain close to the customer.\nThe U.S. sales leadership organizational structure for these three specialized business units has been announced and the rollout and full alignment of territories will be finalized during the first quarter as planned.\nOutside the U.S., the leadership team is working to align the sales forces throughout the year.\nOur teams are executing the sales integration while continuing to drive day-to-day business, and during the quarter, there was minimal disruption caused by the closing in integration activities.\nFinally, I want to restate our ongoing commitment to M&A, which was most recently demonstrated by our acquisition of OrthoSensor, a leader in the digital evolution of musculoskeletal care and sensor technology for joint replacement.\nSmart devices and implants will play an important role in the future of orthopaedics and the addition of OrthoSensor will allow us to continue to innovate and advance smart sensor technology, including intraoperative sensors, wearables, and ultimately, smart implant.\nAs a release to 2021 guidance, Glenn will provide an update on our full-year guidance for sale, operating margin, and EPS.\nUpdates to this annual guidance will be made each quarter as necessary throughout the year.\nToday, I will focus my comments on our fourth quarter financial results and the related drivers.\nOur organic sales decline was 1.1% in the quarter.\nAs a reminder, this quarter included the same number of selling days as Q4 2019.\nPricing in the quarter was unfavorable 0.8% from the prior year, while foreign currency had a favorable 1.2% impact on sales.\nEarly in the quarter, there was continued momentum from Q3.\nHowever, during November, the impact of the resurgence of COVID-19 and the related cancellations of procedures, primarily in the U.S. and Europe, significantly impacted our sales momentum.\nHowever, we did see demand for certain capital products continue as we have strong results in our Mako, medical beds, and emergency care products.\nFor the quarter, U.S. organic sales declined 1.5%, reflecting the slowdown in elective procedures as a result of the pandemic, somewhat offset by strong demand for Mako, medical products, and neurovascular products.\nInternational organic sales were flat, impacted by the resurgence of the COVID-19 pandemic, primarily in Europe, which was mostly offset by growth in Canada, China, and Brazil.\nOrganic sales decline for the year was 4.8%, with a U.S. decline of 5.8%, and an international decline of 2.1%.\n2020 had one additional selling day compared to 2019 and for the year, price had an unfavorable 0.7% impact on sales.\nOur adjusted quarterly earnings per share of $2.81 increased 12.9% from the prior year, reflecting strong financial discipline, good operating expense control, and a favorable operational tax rate.\nOur fourth quarter earnings per share was positively impacted by $0.03 from foreign currency.\nOur full-year earnings per share was $7.43, which is a decline of 10%, reflecting the impact of lower sales, especially in Q2, as well as the impact of idling certain manufacturing facilities during the year, offset by strong expense discipline throughout the year.\nNow, I will provide some highlights around our segment performance.\nOrthopaedics had constant currency sales growth of 2.8% and an organic sales decline of 5.8%, including an organic decline of 5.7% in the U.S.\nThis reflects a slowdown in elective procedures related to COVID-19 and a very strong prior-year comparable as Q4 2019 U.S. organic growth was 7.2%.\nOther ortho grew 12.3% in the U.S., primarily reflecting strong demand for our Mako robotic platform, partially offset by declines in bone cement.\nThe Trauma and Extremities business also delivered positive growth led by our core trauma and shoulder products.\nInternationally, orthopaedics declined 6% organically, which also reflects the COVID-19 related to procedural slowdown, especially in Europe.\nThis was somewhat offset by stronger performances in Australia and Canada.\nDuring the quarter, the Wright Medical acquisition was successfully closed.\nFor the quarter, Wright delivered flat growth on a comparable basis.\nThis included a positive performances other than U.S. shoulder, double-digit growth in U.S. ankle, as well as strong international growth led by Australia.\nOn a comparable basis for the full year, Wright had a 10.3% decline, mainly driven by the COVID-19 related slowdown in the second quarter.\nIn the quarter, MedSurg had constant currency growth of 1.5% and organic growth of 1.3%, which included 2.2% growth in the U.S. Instruments had U.S. organic sales growth of 4.5%.\nIn the quarter, sales growth was driven by gains in its power tool, waste management, and smoke evacuation products and its service business.\nEndoscopy had a U.S. organic sales decline of 7% primarily impacted by the slowdown in the capital businesses offset by gains in the sports medicine business, which grew over 9% in the quarter.\nThe medical division had U.S. organic growth of 9.7% reflecting solid performances in patient care, emergency care, and its Sage businesses.\nInternationally, MedSurg had an organic sales decline of 2.4%, reflecting a general slowdown in instruments and endoscopy businesses and strong comparables across most geographies.\nNeurotechnology and Spine had constant currency and organic growth of 2.1%.\nThis growth reflects many strong performances within our neurotech product line including neuro-powered drills, SONOPET, and Neurovascular offset by the impact of procedural deferrals, especially in the U.S.\nOur U.S. neurotech business posted an organic decline of 1.2% as procedural deferrals impacted sales in the quarter.\nInternationally, Neurotechnology and Spine had organic growth of 13.5%.\nThis performance was driven by strong demand in Australia, Japan, and China.\nNow, I will focus on operating highlights in the fourth quarter.\nOur adjusted gross margin of 65.1% was unfavorable approximately 120 basis points from the prior-year quarter.\nCompared to the prior-year quarter, gross margin dilution was impacted by price, business mix, and unabsorbed fixed cost, as production was brought in line with reduced demand during the quarter.\nThis was primarily offset by acquisitions and foreign exchange.\nAdjusted R&D spending was 5.5% of sales.\nOur adjusted SG&A was 30.3% of sales, which was favorable to the prior-year quarter by 200 basis points.\nThis reflects the continued focus on disciplined operating expense controls, which have been in place since the second quarter.\nThese cover most of our discretionary spending including curtailments in hiring, travel, meetings, and consultants.\nIn summary for the quarter, our adjusted operating margin was 29.2% of sales, which is a 90 basis points improvement over the prior-year quarter and reflects the impact of the spending discipline previously discussed.\nRelated to other income and expense as compared to the prior-year quarter, we saw a decline in investment income earned on deposits and interest expense increases, related to increases in our debt outstanding, related to the funding of the Wright Medical acquisition.\nOur fourth quarter had an adjusted effective tax rate of 8%.\nOur full-year effective tax rate was 12.6%.\nThese rates reflect one-time operational fluctuations that arose due to the pandemic with a mix of foreign losses related to lower foreign manufacturing activity, combined with reduced U.S.-sourced income that resulted from the sharp drop in sales at the end of the year.\nFor 2021, we do not anticipate these circumstances arising as we expect to return to normalized operations during the year.\nAnd we expect our full-year effective tax rate to be in the range of 15.5% to 16.5%.\nFocusing on the balance sheet, we ended the year with $3 billion of cash and marketable securities, and total debt of $14 billion.\nDuring the quarter, we executed the Wright Medical acquisition, which resulted in the disbursement of $5.6 billion, inclusive of the retirement of Wright's convertible debt.\nTurning to cash flow, our year-to-date cash from operations was approximately $3.3 billion.\nThis historically strong performance resulted from the disciplined working capital management, somewhat offset by lower earnings.\nTurning to cash flow for 2021.\nWe will not be repurchasing any shares and we anticipate that capital expenditures will be approximately $650 million.\nAnticipating a more normalized year in 2021 and a ramping of investment in our businesses, we expect the free cash flow conversion rate as a percent of adjusted net earnings, including the one -- excluding the one-time impacts from the Wright Medical integration, about 70% to 80%.\nAnd now, I will provide 2021 guidance on a stand-alone legacy basis and further guidance including Wright Medical.\nWe are providing our guidance in comparison to 2019 as it is a more normal baseline given the variability throughout 2020.\nAs Preston indicated, we will be providing annual guidance on our organic sales growth and earnings and we'll update this throughout the year as part of our regular earnings calls.\nAs we assess the current operating environment, we believe that the recovery ramp of elective procedures will continue to be variable based on region and geography, and will continue into the second quarter of 2021.\nGiven this variability, we expect organic sales growth to be in the range of 8% to 10% for the full year 2021 when compared to 2019.\nAs a reference, our organic sales growth excludes Wright Medical, there are the same number of selling days in 2021 compared to 2019 and one less when comparing to 2020.\nConsistent with the pricing environment experienced in both 2019 and 2020, we would expect continued unfavorable price reductions of approximately 1%.\nAdditionally, as we are comparing growth to 2019, our 2021 organic sales growth guidance includes two years of price reductions.\nThe foreign exchange rates hold near current levels, we anticipate sales and earnings per share will be modestly favorably impacted as compared to 2020 and 2019.\nFor the full year 2021, we do not expect to deliver operating margin expansion as a result of the op margin dilution of the Wright Medical acquisition.\nHowever, excluding the dilutive impact from Wright, we do anticipate expansion of 30 to 50 basis points of operating margin in 2021 for our legacy Stryker business compared to 2019.\nThis includes anticipated increases in hiring, discretionary expenses, and other costs that support future growth and business expansion as our businesses continue to ramp back to more normalized levels.\nFinally, for 2021, we expect adjusted net earnings per diluted share to be in the range of $8.80 to $9.20 for the full year.\nThis includes the previously announced $0.10 dilution, driven by the addition of the Wright Medical business for the full year.\nWhile Wright Medical is dilutive in 2021, we expect it to be accretive starting in 2022.\nAs it relates to other aspects of Wright Medical, we expect comparable growth for Trauma and Extremities, to be in the low to mid-single digits in 2021 when compared to 2019.\nThis includes the integration of Stryker's legacy extremity business with Wright Medical, which will all be part of our Trauma and Extremities division.\nThis growth is impacted by the recovery from COVID-19, partially offset by the synergies from the integration activities in 2021.\nWe also reiterate our previous guidance on cost-saving synergies from the deal of approximately $100 million to $125 million over the next three years.\nAnd now, I will open up the call for Q&A.\n", "role": "user" }, { "content": "q4 adjusted earnings per share $2.81.\nquarterly organic net sales decreased 1.1%.\ncompname says expect 2021 organic net sales growth to be in range of 8% to 10% from 2019.\nsees q1 2021 adjusted earnings per share $8.80 to $9.20.\nsees 2021 adjusted earnings per share $8.80 to $9.20.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A copy of these materials can be found in the Investors section at sysco.com.\nI'll provide an update on our business transformation.\nAnd finally, I'll provide some color on the current state of our business environment.\nLet's get started with our financial results displayed on slide four.\nOur top line results sequentially increased each month of the quarter despite the presence of the Delta variant and have continued to improve into October.\nOur sequential improvement in sales and volume is a clear statement of our supply chain strength and our ability to win meaningful market share in this climate.\nWe are pleased with the top line results, and our flow-through to the bottom line exceeded our expectations for the quarter.\nThis strong start gives us confidence in reaffirming our guidance for the full year.\nKey headlines for the quarter include a growing top line that improved sequentially throughout the quarter and continued growth through October, as seen on the right side of slide four.\nQ1 represented another period of strong net new business wins for Sysco at both the national and local level.\nThese customer wins will fuel our success in quarters and years to come.\nCustomers are responding to Sysco's relative supply chain strength, our new purpose platform and our improving capabilities driven by our Recipe for Growth strategy.\nAll told, we delivered sales growth of 8.2% versus 2019.\nWe outperformed our fiscal 2022 growth goal of 1.2 times the market in the first quarter, delivering the strongest growth versus the market in the last 5-plus years.\nWe believe additional growth is still in front of us at Sysco as our volume is yet to fully recover in certain segments, such as hospitality, business and industry, foodservice management and international.\nAs these segments recover, additional momentum will be added to our business.\nWe are preparing now for select segments to further recover in early 2022 by strategically placing inventory and bolstering our staffing levels.\nFor example, we anticipate that our business and industry segment will see upward momentum in January as select customers plan to reopen their offices at that time.\nInternational travel restrictions are beginning to ease, which should benefit our hospitality sector in specific regions of our business.\nOur operational expenses for the quarter increased due to higher volumes, elevated overtime rates and in intentional expenditures that were targeted to improve our staffing health.\nWe invested in incremental marketing to advertise open positions.\nWe provided new associates with sign-on bonuses and provided referral and retention bonuses to existing staff.\nWe anticipate that these expenses will continue in our second quarter and that we can make progress in reducing the level of investment in the second half of our fiscal year.\nOur profit flow-through from the top to the bottom line should improve as a result in the second half.\nGross margin for the quarter was impacted by a high rate of inflation, which increased to approximately 13%.\nWe expect inflation to continue at a similar rate through the second quarter before beginning to taper later in the fiscal year.\nGiven current trends in the industry, we expect the tapering will begin further into the fiscal year than we had initially modeled.\nOur international business continues to show strong improvement.\nWe have improved from posting a loss in Q3 of 2021 to breaking even in Q4 to making more than $60 million of adjusted profit in our Q1 of fiscal 2022.\nIt is important to note that our international business is skewed to large contract customers that are still heavily impacted by COVID.\nFor example, we over-indexed in Europe in the business, industry and travel segments that remain constrained versus 2019 levels.\nAs such, the relative sales performance in the international sector still lags that of the U.S. segment.\nHowever, it also conveys that we have additional recovery still in front of us internationally.\nOur Recipe for Growth strategy will enable our international business segment to improve how we serve local customers over time.\nAnd we anticipate a shift in our customer mix to the more profitable local sector as we progress on our three-year strategic plan.\nIn summary, we delivered very strong top line results, increased profit per case shipped and experienced elevated operating expenses that increased our cost to serve.\nThe combination of these results delivered a strong adjusted operating income for the quarter of $685 million and adjusted earnings per share of $0.83.\nBoth results exceeded our expectations for the quarter and position Sysco to deliver our full year guidance.\nAaron will provide more details on our financials shortly, but we are pleased to be off to a strong start in the new fiscal year.\nTopic 2, let's turn to our business transformation, which is highlighted on slide five.\nOur pricing project implementation is now substantially complete.\nThe centralized pricing tool enables Sysco to strategically manage the high levels of inflation we are currently experiencing with disciplined and strategic control.\nWe can determine, at the customer item level, exactly what level of inflation to pass through.\nWe can optimize the pass-through to balance profitability and sales growth.\nThere is no better time than the present to have this powerful capability.\nLonger term, the pricing tool will enable us to accelerate sales growth profitably as we optimize pricing to increase share of wallet and increase pricing trust with our customers.\nOur work on the personalization engine continues to advance.\nThis innovative industry-leading program will enable Sysco to further penetrate lines and cases with existing customers and will improve our sales consultants' ability to win new accounts.\nWe will supplement personalization with increased service levels for top customers through an innovative loyalty program that we will discuss more in future quarterly calls.\nOur sales transformation is proving to be very successful as our sales teams continue to win new business at record levels.\nAs I mentioned in my financial narrative, our local and national sales teams delivered strong wins in the quarter that will help fuel our future growth profitably.\nLastly, we are continuing to improve the efficiency of our organization as we further reduce our structural expenses to fund our strategic initiatives.\nOver the past few quarters, we regionalized the leadership structure of our specialty businesses, FreshPoint and SSMG, and we followed the playbook of our U.S. Broadline regionalization and have now implemented the more agile and efficient model for our two main specialty businesses.\nAs shown on slide six, during our first quarter, we successfully closed on the Greco and Sons transaction, which we expect to deliver over $1 billion in incremental sales to Sysco in fiscal 2022, ahead of our deal model expectations.\nMore importantly, we plan to leverage the Greco business model to build a nationwide Italian platform that is the best in the industry, which will further deliver incremental sales beyond the $1 billion just mentioned.\nIn addition to closing the Greco transaction, we acquired a produce distributor in October that will operate as a part of our FreshPoint business segment and will improve our ability to provide fresh produce and value-added fresh-cut capabilities to the Pennsylvania and Ohio markets.\nYou may not realize that Sysco is the largest specialty produce distributor in the United States vis-a-vis our FreshPoint platform.\nOur produce business has a high-growth CAGR and attractive margins.\nGrowing in the specialty sector is a priority for Sysco, enabling us to gain more share of wallet from customers by combining our Broadline capabilities with the premium service levels, selling skills and product assortment availability of specialty.\nOur Recipe for Growth is still in the very early innings, but we can see the benefits of our developing capabilities and the new customers we are winning and the progress that we are making in market share gains.\nImportantly, our first quarter results exceeded our 1.2 times market share growth target for fiscal 2022.\nMore importantly, as the Recipe for Growth matures, the impact on our top line growth will accelerate.\nAs such, we remain committed to growing profitably 1.5 times the market as we exit our fiscal 2024.\nTopic three for today is an update on the state of the business.\nDuring our last earnings call, I highlighted the critical importance of staffing health due to the supply chain challenges that are well documented across all industries.\nAs covered on bullets on slide seven, we have made progress throughout this quarter in improving our staffing levels.\nOur leadership team, top to bottom, has been extraordinarily focused on improving our staffing health.\nA good example of our efforts is the execution of our first-ever nationwide hiring event in the second week of October.\nWe leveraged extensive digital marketing and a streamlined hiring process to net more than 1,000 new supply chain associates to bolster our troops.\nWhen coupled with our year-to-date hiring success, we are making solid progress on increasing our throughput capacity.\nAdditionally, during the quarter, we opened our first Driver Academy, our first academy classes in session, as we say at Sysco, and we are training our next generation of Sysco drivers.\nWe are bullish on expanding this program across the country in the coming year, and we are confident it will make a meaningful difference in generating a solid driver pipeline.\nFrom a product availability perspective, although our fill rates still lag our historical standards, we were able to deliver a higher fill rate to customers than the industry average.\nWe have strong relationships with our key suppliers and a merchant team that is extremely focused on finding and sourcing product substitutions.\nI have personally engaged with top suppliers to ensure a solid partnership with Sysco, and I am cautiously optimistic that our suppliers' performance will improve through the remainder of the year and into our fiscal 2023.\nSupplier improvement will be a key to improving customer fill rate and customer satisfaction.\nLastly, you may have seen the recent announcement regarding the Department of Labor's Occupational Safety and Health Administration's requirements for employers with 100 or more employees.\nI am pleased to inform you that Sysco began a weekly COVID testing regimen in September, and as such, we are already compliant with the majority of the OSHA's stated guidelines.\nThe safety of our associates and our customers is our #1 priority, and we remain steadfast in protecting our team.\nIn summary, Sysco continues to lead the industry in how we are supporting our customers during this challenging supply chain environment.\nOur Net Promoter Scores are outperforming the Broadline distribution industry, and our ability to serve customers remains best-in-class.\nWe remain the only national distributor without systemwide minimum orders, and we will endeavor to increase the flexibility and service that we provide our customers in the coming quarters and years.\nThe impact of our relative supply chain success can be seen in our results.\nWe sequentially increased sales throughout the quarter and expanded our market share capture.\nWe now have more than 10 consecutive months of gaining market share, and we are on track to deliver our stated goal for the year, growing 1.2 times the industry.\nAnd our Recipe for Growth strategy will enable us to accelerate, over the next three years, and grow at 1.5 times the industry by the end of our fiscal year 2024.\nWe are winning in the marketplace, and that would not have been possible without the dedication of our sales, logistics and merchandising teams.\nI'm honored to serve these associates and work by their side.\nAaron, over to you.\nOur strong first quarter fiscal 2022 financial headlines are: growing demand with sales exceeding Q1 fiscal 2019 by 8.2%; a profitable quarter, exceeding our plans with EBITDA comparable to pre-COVID 2019 levels; aggressive investment by Sysco against hiring a snapback, allowing Sysco to lead the industry in otherwise turbulent times; purposeful investments in working capital to continue to lead in product availability; a strong return to profitability by our international business; and great progress against our balanced capital allocation strategy, including continued investments against the five pillars of our Recipe for Growth and upgrade to BBB of our investment-grade rating by S&P the elimination of all debt covenant restrictions on our ability to repurchase shares or increase our dividend in the future; and a decision that we are announcing today, namely that we have satisfied our internal criteria to commence share repurchase.\nIn the second quarter of fiscal 2022, we will begin our repurchase of up to $500 million of shares over the course of this fiscal year.\nDuring today's call, I'm going to cover the income statement and cash flow for the quarter, and then I will close with some observations on our guidance for fiscal 2022.\nFirst quarter sales were $16.5 billion, an increase of 39.7% from the same quarter in fiscal 2021 and an 8.2% increase from the same quarter in fiscal 2019.\nIn the United States, sales in our largest segment, U.S. Foodservice, were up 46.5% versus the first quarter of fiscal 2021 and up 11.6% versus the same quarter in fiscal 2019.\nSYGMA was up 11.8% versus fiscal 2021 and up 5.1% versus the same quarter in fiscal 2019.\nYou will recall that in SYGMA, the increase in sales in the quarter is more modest because of the purposeful transition-out of an unprofitable customer, which we announced in our third quarter fiscal 2021 earnings call, and because during the quarter, some consumers are switching from their favorite QSR drive-up back to some of the excellent sit-down restaurants served by our more profitable U.S. Foodservice segment.\nLocal case volume, within a subset of USFS, our U.S. Broadline operations, increased 23.8%, while total case volume within U.S. Broadline operations increased 28.1%.\nWith respect to our international business, restrictions continue to ease across our international operations in the first quarter.\nInternational sales were up 34% versus fiscal 2021 while also improving sequentially over prior quarters to down less than 1% versus fiscal 2019, indicating that we have more upside to come.\nForeign exchange rates had a positive impact of 1.1% on Sysco's sales results.\nInflation continued to be a factor during the quarter at approximately 13%.\nThe good news is that we continue to manage our profitability well in the inflationary environment.\nLet me call out a couple of numbers, and then we'll discuss inflation further.\nGross profit for the enterprise was approximately $3 billion in the first quarter, increasing 33.9% versus the same quarter in fiscal 2021 and also exceeding gross profit in fiscal 2019 by 2%.\nThe increase in gross profit was driven by year-over-year improvements in volume versus fiscal 2021 and, compared to both fiscal 2021 and fiscal 2019, increases in gross profit dollars per case across all four of our reporting segments.\nThat's a real sign of health in our business.\nWhile it is gross profit dollars that count, inflation did impact our gross margin rates for the enterprise during the quarter as it decreased 79 basis points versus the same period in fiscal 2021 and finished at a rate of 18.1%.\nThe rate was flat sequentially with Q4 of fiscal 2021.\nThe gross margin decline versus the prior year was driven by accelerating inflation and margin changes at our higher-margin U.S. businesses with the larger USFS businesses growing volume at lower margin rates.\nWe continue to manage the inflationary pressures with both our suppliers and our customers and, thus far, have not seen much pushback on our ability to pass along pricing.\nIn addition, the fact that we are now substantially complete in our rollout of our Periscope pricing system means that we have more tools than ever before to manage our profitability while being right on price.\nTurning back to the enterprise.\nAdjusted operating expense came in at $2.3 billion with expense increases from the prior year driven by three things: first, the variable costs associated with significantly increased volumes; second, more than $57 million of onetime and short-term transitory expenses associated with the snapback; and third, more than $24 million of operating expense investments for our Recipe for Growth.\nTogether, the snapback investments and the transformation costs totaled approximately $81 million of operating expense this quarter and negatively impacted our adjusted earnings per share by $0.12.\nEven with those significant snapback and transformation operating expense investments, we leveraged our adjusted operating expense structure and delivered expense as a percentage of sales of 13.9%, an almost 200 basis point improvement from fiscal 2021 and a 64 basis [point] improvement from the same quarter in fiscal 2019.\nDoing the simple math, if we removed the transitory snapback investments and the transformation investments I referenced earlier, total opex would have been at 13.4% of sales.\nThat is a real sign of the power of our earlier cost-out efforts.\nTo repeat what we said before, during fiscal 2022, our cost-out helps us to cover snapback and transformation costs.\nFinally, for the first fiscal quarter, adjusted operating income increased $320 million from last year to $685 million, putting us basically on par with adjusted operating income for fiscal 2019, even with the snapback investments and the transformation investments.\nThis was primarily driven by a 58% improvement in U.S. Foodservice and strong profitability from international.\nAdjusted earnings per share increased $0.49 to $0.83 for the first quarter.\nPerhaps pointing out the obvious, if we extract the $51 million of incremental interest expense we are carrying in Q1 of fiscal 2022, resulting from the COVID-related precautionary bonds we issued in 2020, our adjusted earnings per share results for Q1 of fiscal 2022 would have been more in line with our pre-COVID adjusted earnings per share results for Q1 of fiscal 2019.\nIf you go a step further and exclude both the interest expense and the $81 million of snapback and transformation costs, you really begin to see why we believe that in the long term, Sysco has significant earnings potential.\nNow let me share a couple of comments on cash flow and the balance sheet.\nCash flow from operations was $111 million during the first quarter as we responded to rising sales and purposely invested in inventory in support of managing product availability during the snapback better than the industry.\nWe also purposely invested in longer-lead inventory to support customers such as K-12 schools and healthcare facilities during the snapback, consistent with Sysco's purpose statement.\nWe also saw manageable changes in receivables levels that we expected to accompany rising sales and arising from the mix of business as Sysco executes its Recipe for Growth.\nOur net capex spend was $79.4 million and is ramping up as teams submit business cases for investments against the Recipe for Growth.\nWe will manage those investments over the course of our three-year plan to ensure our growth.\nFree cash flow for the first quarter was $31 million.\nAt the end of the first quarter, after our investments in the business, payments of the acquisition price for Greco and our dividend payments, we had $2.1 billion of cash and cash equivalents on hand.\nIn May, we committed to supporting a strong investment-grade credit rating with a targeted net debt to adjusted EBITDA leverage ratio of 2.5 times to 2.75 times, which we continue to expect to hit by the end of fiscal 2022.\nLater this year, we plan to pay off the $450 million of notes due in June of 2022 and may, should the circumstances warrant it, take further action against our debt portfolio.\nWe also paid our increased dividend of $0.47 per share in July and again in October.\nGiven that we paid our increased dividend starting in July, consistent with our status as a dividend aristocrat, we expect to next address decisions around our dividend per share sometime during calendar year 2022.\nAs I mentioned earlier, we plan to commence share repurchase activity under the $5 billion share repurchase authority we announced in May at Investor Day beginning in the second quarter.\nAs I stated a moment ago, that will take the form of the repurchase of up to $500 million of shares by the end of the fiscal year.\nNow before closing, I would like to provide you with some commentary on the outlook for fiscal 2022.\nAs Kevin highlighted, we expect to continue to grow at or above 1.2 times the market in fiscal 2022.\nWe are operating in a dynamic environment with significant inflation.\nWhile we do expect inflation to moderate by the fourth quarter of fiscal 2022, it may take longer to taper than originally anticipated, though it is hard to predict.\nWe expect to pass through the vast majority of our COGS inflation.\nWe are assuming continued heavy snapback and transformation investments in Q2 at levels at least equal to the investments in Q1.\nWe are reaffirming our earnings per share guidance for the year.\nFiscal 2022 earnings per share will be in the range of $3.33 to $3.53, reflecting the $0.10 increase that we called out last quarter.\nAs always, our earnings per share guidance does not assume changes to the federal tax rate.\nAll in all, we have confidence for the rest of the year.\nIn summary, we've had a solid quarter, and the fundamentals of our business remain strong.\nWe are excited about the future as we continue to advance Sysco's Recipe for Growth.\n", "role": "user" }, { "content": "sysco delivers strong first quarter results including meaningful market share gains reiterating fiscal year 2022 guidance.\nq1 sales rose 39.7 percent to $16.5 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A copy of these materials can be found in the Investors section at sysco.com.\nI will highlight four topics today during our call: first, our financial results for the quarter.\nSecond, I will provide some color on the current state of our business and the COVID environment.\nThird, I will detail our continued share gains despite a difficult macro environment.\nAnd finally, I will outline our approach to the long game with some highlights of our Recipe for Growth transformation.\nI'll then turn over to Aaron to discuss our financial results in more detail.\nSo let's get started with our financial results displayed on Slide 4.\nOur sales and volume performance success is a testament to our supply chain strength and the advancement of our Recipe for Growth.\nOur operating expenses for the period were elevated due to the effects of COVID on our business, and as a result, our bottom-line results were below our expectations this quarter.\nKey headlines for the quarter include strong sales results and market share gains.\nWe delivered growth of more than 1.2 times the market, which exceeded our expectations for the period.\nWe delivered sales growth of 10.5% versus 2019 and sequential volume improvements throughout the quarter until the omicron variant impacted our December performance.\nMore on omicron in a moment.\nAs I mentioned, operational expenses within our supply chain were above expectations due to the challenges that COVID is presenting to our labor environment and our transportation costs.\nI will detail this complex operating environment in a moment, but we remain confident these incremental expenses driven by labor costs are near-term challenges that will improve over time.\nOur strong sales results and elevated operating expenses resulted in an adjusted earnings per share of $0.57 for the quarter.\nWe further advanced our Recipe for Growth strategy which we believe will uniquely position Sysco to win in the marketplace for the long term.\nSysco's strength of income statement and balance sheet have enabled us to continue advancing our strategy during a difficult operating environment.\nThat strategic and economic reality will enable Sysco to outperform the market for quarters and years to come.\nTopic two for today, an update on the state of the business.\nAs I mentioned a moment ago, COVID continues to negatively impact supply chains across the globe, and the effect was elevated in Q2 relative to our first quarter.\nThe impact is being felt in product availability shortages from our suppliers and higher-than-anticipated labor and transportation costs.\nI would like to further explain some of the labor cost pressures that we are addressing.\nAt Sysco, we have hired thousands of new associates over the past quarter to support the recovery of our industry, which is coming faster and stronger than had been anticipated.\nWe are also winning market share across our business sectors which adds to our hiring needs.\nAs a result of our hiring and an industrywide higher rate of associate turnover, we have a higher ratio of new associates in our labor population than we had originally planned.\nA higher population of less experienced associates has a direct negative impact on our supply chain productivity.\nThe punchline is that our tenured associates perform at a much higher rate of productivity than new associates.\nWith that said, we are confident that we can and will move our newer associates up the productivity curve over time.\nWe have also incurred higher-than-planned expenses as COVID-related illnesses accelerated in the quarter and have continued into January.\nworkforce tested positive for COVID during the month of January and were out for a minimum of several days.\nTo cover these absences, we invested in overtime and supplemental third-party resources to ensure that we properly supported our customers.\nAt Sysco, we cannot let our healthcare, education, hospitality, and important restaurant partners go without food because of these labor challenges caused by COVID.\nOur customer-centric approach to ensure that we can ship on time and in full will benefit our relationship with our customers for the long term, positively impacting retention and growth.\nWe are confident that our service performance is stronger than the industry as measured by our Net Promoter Score.\nIn fact, our NPS performance versus the market expanded in the quarter.\nOur business in Europe was impacted first with the reintroduction of major restrictions on our customers.\nOur sales and volume performances in December were impacted by those restrictions, most notably in the U.K., France and Canada.\nFor example, restaurants in the majority of Canada began closing for on-premise dining at the end of the second quarter with restrictions slowly starting to ease in February.\nThese types of restrictions impact our customers' performance and ordering patterns.\nAs a result, we expect the top-line impact from omicron to continue into the third quarter.\nThe speed of the return to pre-omicron volume levels is uncertain but we are seeing signs of progress in Europe as restrictions have begun easing.\nTopic three, let's turn to our market share performance highlighted on Slide 5.\nDespite the challenges presented by omicron at the end of the quarter, as you can see on Slide 5, Sysco delivered exceptional growth versus the market in the second quarter.\nAs a result, we are now confident we will exceed our 1.2 times the market growth target for the full fiscal year.\nOur performance versus the market expanded this quarter.\nFurthermore, looking back over the last three quarters, we are beginning to pull ahead of the industry.\nThe next slide from NPD shows how, over the last two years, we have consistently increased the percentage of customers that purchased exclusively from Sysco.\nThis compares to the dotted line that shows the percentage of customers not yet buying from Sysco.\nYou can see that the dotted line is steadily declining.\nThese slides are just two more proof points that our team is winning in the marketplace and that our strategy is working.\nLastly, topic four, I will highlight examples in our business transformation and how that progress will enable consistent profitable growth.\nToday, I will give an update on two of our growth initiatives: Sysco Your Way and our Italian cuisine program.\nAs a reminder, Sysco Your Way is a new service model that we are piloting to better serve what we call restaurant-dense neighborhoods.\nThrough this program, we are providing our customers with enhanced levels of service and sales support.\nWe are very pleased with the success of the pilot locations, and we will be expanding the program to net new neighborhoods in the spring of 2022.\nIn addition to Sysco Your Way, I would like to provide an update on our Italian cuisine platform work.\nAs a reminder, Italian is one of the largest cuisine segments and Sysco historically underpenetrated with this important customer segment.\nWe did not have an optimal assortment, and we lacked the go-to-market selling strategy to win.\nOur Greco acquisition has changed that capability in a meaningful way.\nFirst off, Greco is off to a great start and is exceeding our year one top- and bottom-line expectations.\nWe are really pleased with the Greco business and the great work that they are doing.\nAs importantly, we are leveraging the Greco product assortment and selling prowess and bringing the best-selling items to Sysco houses across the country.\nMore on that in due course.\nWinning in the specialty sectors like Italian is a priority for our Recipe for Growth strategy.\nTurning to Slide 7.\nIn summary for the quarter, we are winning as a company in the marketplace.\nWe are growing our business with new and existing customers.\nOur year-to-date growth is exceeding our 1.2 times the industry target for the year and is being driven by our supply chain strength and our Recipe for Growth strategy.\nWe also returned over $650 million of cash to our shareholders during the quarter.\nWe are confident that the impact of our initiatives will grow over time, enabling us to consistently outperform the market at large.\nThese past two years have been challenging.\nWe continue to lead the industry from a service perspective and make deliveries to our customers regardless of the COVID conditions.\nI am proud of our sales, operations, and global support center teams for their persistence and customer focus that they have displayed.\nI am honored to serve these associates and work by their side.\nTogether, they bring deep industry experience; a modern skills inventory, including finance, consumer, and digital and strategy capabilities.\nOur three new board members will be extremely valuable to Sysco in our transformation for years to come.\nHere are our second quarter fiscal 2022 financial headlines as seen on Slide 9: sales growth of 41.2% compared to last year, also up 10.5% versus fiscal 2019, leading to our highest Q2 sales ever; good management of our product cost inflation, recording the highest gross profit in absolute dollar terms for any Q2 at Sysco; a doubling of adjusted operating income and a 62.9% increase in adjusted EBITDA compared to last year, notwithstanding a cost environment which worsened during the quarter; continued investment against our long-term Recipe for Growth with $44 million of operating expense investments against our strategic investments, creating momentum with our commercial capabilities; proactive action on the COVID-generated labor and safety environments in which we are operating with $73 million in transitory snapback operating investments, such as recruiting costs, hiring marketing, vaccination promotion, contract labor, and sign-on and retention bonuses in the quarter.\nAnd while the magnitude was greater than we could foresee last quarter, we experienced productivity challenges and much higher overtime costs in the quarter, resulting from the pandemic-related workforce transition and our prioritization of customer service.\nWith respect to our capital allocation, we refinanced elements of our long-term debt during the quarter, and we returned $657 million of cash to shareholders.\nWith those headlines on the table, let's turn to some details on the financials for the quarter and some thoughts on our outlook.\nSecond quarter sales were $16.3 billion, an increase of 41.2% from fiscal 2021 and a 10.5% increase from fiscal 2019.\nLocal case volume within the subset of USFS, our U.S. broadline operations, increased 17.6% while total case volume within U.S. broadline operations increased 22.5%.\nSYGMA sales were up 16.5% versus fiscal 2021 and up 15.3% versus fiscal 2019 even with the large customer rationalization we disclosed earlier, which we expect will be complete on a comparable basis following Q3.\nInternational sales were up 43% versus fiscal 2021 and down approximately 3% versus fiscal 2019.\nSales trends were accelerating nicely in our international segment before the onset of omicron and restrictions in our key international markets, such as the U.K., and we are watching post-lockdown trends carefully.\nForeign exchange rates had a positive impact of 0.3% on Sysco's sales results.\nWe continue to monitor the impact on our customers and on our business as international restrictions are starting to ease, including in Ireland and the U.K. Inflation continued to be a factor during the quarter at approximately 14.6% in our U.S. broadline business.\nGross profit for the enterprise was approximately $3 billion in the second quarter, increasing 37.8% versus the second quarter of fiscal 2021 and also exceeding gross profit in fiscal 2019 by 4%.\nThe increase in gross profit was driven by year-over-year improvements in volume versus fiscal '21 and compared to the same quarter in both fiscal 2021 and fiscal 2019, increases in gross profit dollars per case across all four of our reporting segments as we successfully managed increased costs from our product suppliers while addressing some but not all of our increased operating costs.\nGross margin rate was 17.7% during the quarter with the margin rate math impacted by product inflation.\nOf course, it is gross profit dollars that count in an inflationary environment.\nTurning back to the enterprise.\nAdjusted operating expense came in at $2.4 billion with a combination of planned and unexpected expense increases from the prior year really driven by four things: first, the increased variable costs associated with significantly increased volumes; second, as you can see on Slide 10, more than $73 million of one time and short-term transitory expenses associated with the snapback, which we expect to decline in the third quarter.\nWhile we have increased wages in select locations, those increases are not material and have the opportunity to be offset by productivity and cost-out improvements going forward; third, $44 million of purposeful operating expense investments against our Recipe for Growth initiatives, like personalization, digital sales tools, and assortment capabilities, which remain on track to be elevated for the rest of the year; and fourth, the productivity expense challenges Kevin referenced earlier, including ramp-up time associated with new hire productivity in our warehouses and trucks, elevated overtime and third-party labor support in the face of staff absences.\nI want to emphasize that the management team at Sysco has been aggressive in pursuing the root cause of the cost increases.\nWhile the transformation continues unabated, the team has also pushed hard to identify and action incremental profit opportunities and cost reduction initiatives which should help the company in the back half and beyond as the environment stabilizes.\nTogether, the snapback investments and the transformation costs totaled approximately $116 million of operating expenses this quarter and negatively impacted our adjusted earnings per share by approximately $0.17.\nAll in, we leveraged our adjusted operating expense structure and delivered expense as a percentage of sales of 14.7%, which is flat from fiscal 2019 and down 145 basis points from fiscal 2021.\nOur cost-out efforts are meaningfully benefiting our P&L, and we continue to assess and execute against new cost-out projects each quarter.\nFinally, for the second quarter of fiscal 2022, adjusted operating income increased $262 million from last year to $496 million.\nThis was primarily driven by a 45% improvement in U.S. foodservice and continued progress on profitability from international partially offset by SYGMA.\nThe second quarter SYGMA operating loss was driven by higher-than-expected labor costs, which will be offset in future quarters by specific actions already taken by the SYGMA management team.\nAdjusted earnings per share increased $0.40 to $0.57 for the second quarter compared to last year.\nNow let me share a couple of comments on cash flow and the balance sheet.\nCash flow from operations was $377 million on a year-to-date basis, driven by our higher income and lower interest, offset by higher tax payments and a significant investment in working capital.\nNet capex was $175.9 million, somewhat lower than expected given increased lead times on fleet and equipment.\nAdjusted free cash flow year to date was $201 million.\nAt the end of the second quarter, we had $1.4 billion of cash and cash equivalents on hand.\nAs seen on Slide 15, our results this quarter also reflected incremental progress against our capital allocation priorities.\nThis included the further strengthening of our balance sheet by successfully refinancing debt during the quarter at longer maturities and more attractive rates, lowering our adjusted interest expense costs going forward.\nWe also commenced our share repurchase program during the second quarter and repurchased approximately 5.7 million shares for a total of $416 million at an average share price of $72.30.\nThis was in addition to paying our quarterly dividend of $0.47 per share in October.\nWe remain committed to growing our dividend and as previously communicated, plan to next address decisions around our dividend per share during our fiscal Q4.\nWhile our track record goes back decades, as you can see on Slide 16, over the last 7 years cumulatively, we have returned over $12 billion of cash to shareholders.\nLet's turn now to the look forward.\nOur Recipe for Growth transformation plan is on track.\nHowever, omicron had a noticeable impact on our December and Q2 results, continuing into January and now February.\nAs a result, we are reaffirming our long-term guidance that for fiscal 2024, Sysco will deliver adjusted earnings per share growth of at least 30% over our record 2019 earnings per share of $3.55.\nWe are updating our view of the back half to reflect the realities of the disruption caused by omicron and the labor environment.\nWe expect to fall below our prior earnings per share guidance for fiscal year 2022.\nFor the full year, we expect adjusted earnings per share of approximately $3 to $3.10.\nThis translates to adjusted earnings per share in the back half of about $1.60 to $1.70.\nIn a typical pre-COVID fiscal year, adjusted earnings per share for our second half is generally weighted around 40% to Q3 and 60% in Q4 due to normal seasonality of our business.\nThis year, we expect our second-half profitability to be weighted even more to the fourth quarter.\nWe expect a stronger Q4 this year relative to Q3 as a result of anticipated volume recovery, lower snapback expenses, improved operating productivity and specific actions we are taking to offset omicron.\nIn offering this perspective, we are assuming no further COVID variant disruptions to our operating environment.\nAs we conclude, I'd like to provide a brief summary.\nFirst, this quarter included substantial top-line momentum and an acceleration of our market share gains.\nWe are winning in the marketplace, and we have confidence that we will continue to win share.\nWith that said, Q2 presented challenges from omicron on both our top and bottom line.\nMore importantly, COVID-related staffing disruptions increased our operating expenses for the quarter.\nAs a result, our bottom-line results were below our expectations.\nSecond, despite the short-term impact of omicron on our business, we are confident that we will resume our volume improvement as soon as the variant recedes, and we can see green shoots of progress in February from a volume perspective.\nAs it relates to expenses, we have a management plan to improve our year-to-go operating expenses.\nWe are meaningfully focused on improving associate retention, training and productivity.\nThese activities are a core competency of Sysco, and our experienced field leadership team has a plan to deliver improvement for the remainder of the year.\nThird, we remain confident in the long-term trajectory at Sysco.\nAnd as Aaron stated, we are reaffirming our long-term guidance that includes significant sales and earnings per share growth.\nOur Recipe for Growth transformation is creating capabilities at Sysco that will help us profitably grow for the long term.\nThe customer-first solutions we are developing will enable us to grow our share profitably and also enable Sysco to be more efficient.\nThere are bright days ahead for Sysco, and I am proud to be part of the journey.\n", "role": "user" }, { "content": "q2 sales rose 41.2 percent to $16.3 billion.\nqtrly non-gaap earnings per share $0.57.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And actual results could differ in a material manner.\nA copy of these materials can be found in the Investors section at sysco.com.\nTo ensure that we have sufficient time to answer all questions, we'd like to ask each participant to limit their time today to one question and one follow-up.\nI'm pleased to report that Sysco had a strong fourth quarter to close out a fiscal year unlike any other in our company's history.\nI'm proud of our team for their hard work, the results we delivered and the unrelenting support that we have provided to our customers.\nI'll start my comments today with a few key points about the quarter.\nFirst, our business recovery is stronger than anticipated in the U.S. and the recovery is taking hold in our international markets.\nOur sales growth exceeded our internal projections and has continued to accelerate into our Q1 of fiscal 2022.\nSecond, our profitability for the quarter were stronger than anticipated, driven by the aforementioned strong sales and disciplined expense management.\nThird, our strong results drove improved cash performance, exceeding the cash flow guidance that Aaron provided in our last earnings call, which allowed us to pay down more debt than originally planned.\nFourth, we made meaningful progress in advancing our Recipe for Growth strategy.\nI will highlight our progress on select initiatives during our call today.\nSysco's results for the fourth quarter reflect the strength of the overall market recovery, Sysco's ability to win new business and some early wins coming from our Recipe for Growth.\nSysco's sales for the quarter across all of our businesses were up 82% versus 2020 and up 4.3% versus 2019.\nOur sales results in our U.S. business were up 7.7% versus 2019.\nSales results in June benefited from accelerating inflation which Aaron will discuss in detail.\nThe restaurant sector of our business is near full recovery with local sales and case shift up versus 2019 volume levels.\nThe volume recovery has happened much faster than the industry predicted, despite the presence of the Delta variant.\nThe U.S. foodservice industry in total is now within 5% of 2019 levels.\nMost notably, Sysco increased market share in a rapidly expanding market.\nThese two factors of a rapidly expanding market and Sysco's gaining of market share resulted in a strong sales quarter.\nWe anticipate that these trends will accelerate further in fiscal 2022.\nConsumer spending power as featured on Slide 8 is robust and strong.\nThe key message is that food away from home is not permanently impaired.\nIt is vibrant, it is healthy.\nSysco is best positioned to support the rapidly increasing demand due to our balance sheet, our large physical footprint and our substantial human capital investment in sales people and in supply chain resources.\nThe momentum shown in the fourth quarter has continued in the first period of fiscal 2022, where our July results have further accelerated.\nWe see a sequentially improving market as additional sectors of recovery kick in; international, specialty, schools and colleges, business office cafeterias, just to name a few.\nThere is ample additional recovery beyond the robust business we are currently experiencing with restaurant partners.\nSysco's success can be directly attributed to the proactive steps we took to be ahead of the COVID business recovery.\nThe net promoter score of our delivery operations continues to lead the industry.\nWith that said, we are working aggressively to increase staffing levels across our operations, so that we can maintain our leading service position and win additional net new business.\nThe distributors that can ship on time and in full at this critical period have an opportunity to take market share for both the short and the long term.\nOne proof point of this success is the amount of net new national account wins since the onset of the pandemic.\nDuring the fourth quarter, we won another $200 million of business with national customers bringing the cumulative total to $2 billion of net new wins since March of 2020.\nWhile we don't plan to report on this number moving forward, as we transition to a more normalized financial reporting cadence, it is a strong indicator of our capabilities as the industry leader to gain share during a period of disruption.\nAs you can see on Page number 12 of our slides, in addition to the large national account wins we have delivered, we have grown our local customer account by about 10%, which is a pace of 2.5 times greater than the broadline industry.\nIn June, we increased our market share by 60 basis points and posted our sixth consecutive month of market share gains.\nOur sales force is very motivated to win, our supply chain continues to lead the industry from a service perspective despite the substantial hiring challenges and our Recipe for Growth strategy is beginning to benefit the business and our customers.\nOur top line results during the quarter were positively influenced by higher-than-normal inflation.\nDuring the fourth quarter, our inflation rate was approximately 9.6%.\nOur performance in the non-restaurant sectors of our business trailed the success of restaurants for the quarter.\nWith that said, we are beginning to see improvements in the travel, hospitality and FSM sectors of our business as restrictions eased and leisure travel has commenced this summer.\nAs businesses begin returning more to an office environment, we expect our FSM segment to further improve.\nOur international segment improved sequentially throughout the fourth quarter as restrictions on businesses began easing in late May and into June.\nNotably, our international segment broke even for the quarter, reflecting a $92 million profit improvement over the third quarter.\nThe improvement displays the positive impact that increased sales and disciplined expense management will have on our international P&L.\nWe expect to benefit significantly in fiscal 2022 from the improving international financial statements.\nI would like to take a few moments to provide an update on our Recipe for Growth transformation.\nYou will remember our introduction of the Recipe for Growth at our May 20 Investor Day.\nI'll quickly provide an update on the main pillars of our growth strategy.\nDigital; our first pillar is to become a more digitally enabled company so that we can better serve our customers.\nWe continue to see excellent utilization of our Sysco Shop platform by our customers and we are enhancing the website with new features and benefits every month.\nOur pricing system is now live in over 25% of our regions, and we remain on track to complete the implementation by the end of this calendar year.\nOur personalization engine, which is currently under construction, remains on track and initial manual tests of the capability with pilot customers are proving beneficial.\nProducts and solutions; our second pillar is to improve our merchandising and marketing solutions to grow our business.\nIn this regard, our team is doing good work in developing improved merchandising strategies against specific cuisine segments.\nI'll speak more about the Greco acquisition in a moment and how that acquisition accelerates our efforts to better serve Italian customers.\nSupply chain; growth pillar number three is to develop and create a more nimble, accessible and productive supply chain.\nAs I mentioned earlier, we are better positioned to support customers in their recovery as our supply chain network is better staffed than the industry at large.\nWe remain the only national distributor with no order minimums for our customers at a time when competitors have been increasing their order minimums and select competitors are releasing customers who can't hit those raised minimums.\nLastly, our strategic projects to increase delivery frequency and enable omni channel inventory fulfillment remain on track.\nCustomer teams; our fourth growth pillar is to improve the effectiveness of our sales organization.\nAs we have said many times, our sales consultants are our number one strength.\nThe net promoter scores our associates receive is the best indication of their impact on our business.\nMeanwhile, our efforts to better leverage data to increase the yield of our sales process are paying dividends.\nFuture horizons; our final growth pillar is to explore and develop future horizons.\nThis work has two major parts; assessing new business opportunities, including M&A and becoming a more efficient company so that we can fund our growth.\nWe are pleased to report that we will close on the Greco and Sons acquisition in the coming weeks.\nGreco's business is highly specialized in the Italian segment and brings net new capabilities and products that are accretive to Sysco.\nSysco is excited to expand the Greco Italian specialty platform to new geographies across the U.S. As I mentioned, our future horizon's work also includes becoming a more efficient company so that we can fund our growth.\nWe are making substantial investments in technology and infrastructure capabilities to strengthen the Company.\nOur disciplined cost network is funding those investments.\nWe are on track to deliver $750 million of structural cost reductions inclusive of what we delivered in fiscal 2021.\nAaron will discuss this program in more detail in a few moments.\nAs I stated at our Investor Day, the power of our Recipe for Growth comes from our ability to deliver all five of the growth elements that are displayed, not just from one key element.\nWe believe only Sysco has the breadth, depth and expertise to leverage each of these five elements to better serve our customers.\nThe food-away-from-home supply chain is under significant pressure.\nA robust customer demand environment is outpacing the available supply in select categories.\nOur supplier partners are struggling with meeting the demand of Sysco's orders.\nAnd certain product categories remain in short supply.\nI am confident that Sysco is performing better than the industry at large in delivering what we call customer fill rate.\nBut we are performing below our historical performance standards.\nOur merchant teams are working closely with current suppliers, actively sourcing incremental supply from new suppliers, and we are working with our sales teams to offer product substitutions to our customers.\nThis work is challenging, but we can execute this work better than others in this industry.\nIn addition to the challenges we've experienced with product supply, the labor market has been challenging.\nWe mentioned in a previous earnings call that we would hire over 6,000 associates in the second half of fiscal 2021.\nI am pleased to report that we have successfully achieved our hiring target, but we continue to have hiring needs as the business recovery is happening faster than we had modeled.\nIt is a very tight labor market out there and we are working extremely hard to ensure we can fill all of our warehouse and driver positions.\nWhile we are in decent shape nationally, we have hotspots around the country that present challenges.\nThe product and labor shortages situation is undoubtedly putting some pressure on our cost to serve at this time.\nI would describe these incremental costs as mostly transitory as we are making responsible decisions on where and how to invest.\nI am confident we will see a return to a more balanced supply and demand equation in the future, which will return inflation to more normal levels.\nI cannot predict a specific by-when date on inflation normalization, but I am confident it will eventually normalize.\nIn the meantime, we have robust sales results that are offsetting the margin rate pressure introduced by elevated inflation.\nIn regards to labor cost, we are being very judicious to avoid creating a structural cost increase going forward.\nWhat that means specifically is that we are being very aggressive in adopting mostly temporary wage actions like hiring bonuses, referral bonuses and even retention bonus programs, all of which can be leveraged extensively while the hiring process remains challenging and then reduced or eliminated as conditions improve.\nWe intend to be responsible and judicious in structural increases to base pay that cannot be easily removed when the labor market improves.\nWe will work aggressively to offset these cost increases in wage through improved productivity.\nWe are also taking aggressive actions to improve the labor market itself by investing in our future.\nI'm excited to announce today that we are investing in our first Sysco Driver Academy.\nThe Driver Academy will enable us to recruit our own drivers and train them in the work we do at Sysco.\nWe will be better able to source drivers from our own warehouse associate population and teach them to become drivers with this unique industry program.\nWe will pay trainees to attend our academy and we'll cover all of their licensing and certification fees.\nThese associates will sign a contract to work for Sysco for an agreed-upon period of time.\nI'm excited for what this driving academy will do for our recruitment pipeline and I believe we are likely to expand the program nationally once we have worked through the learning curve of our first location.\nIn summary, we had a strong fourth quarter that exceeded our sales and profit expectations.\nThe results during the quarter sequentially accelerated and they bode well for a successful fiscal 2022.\nDuring fiscal 2022, we expect to achieve growth at a rate of 1.2 times the industry.\nThat rate of growth is expected to accelerate across the three years of our long-range plan and we intend to deliver 1.5 times the market growth in fiscal 2024.\nWe expect to expand our leadership position while we grow profitably and we intend to return compelling value to our shareholders.\nThe business recovery has presented challenges that our business associates have embraced head on.\nAaron, over to you.\nOur key fourth quarter fiscal 2021 headlines are strong demand; increasing sales; a profitable quarter increasingly reminiscent of pre-COVID operations; and stronger cash flow than anticipated.\nOur fiscal fourth quarter results provide excellent proof points that consumers continue to seek relief from food-at-home fatigue that the restaurant industry recovery is in full swing in the U.S., and that the international restaurant industry has the potential to come roaring back.\nDuring the fourth quarter, we did what we said we were going to do at Investor Day as we balanced five financial priorities, early and tactical investments in labor and inventory to be better prepared than anyone else in the industry for the chaotic industry recovery; thoughtful strategic investments in capabilities and technologies to advance our Recipe for Growth over the long-term; continued focus on our cost-out program to fund both the snap-back costs and our growth agenda; accelerated reduction of our debt levels; and increased return of capital to shareholders.\nToday, I'm going to lead off with the income statement for the quarter, briefly discuss the cash flow and balance sheet, and then I will close with a positive update to our guidance for fiscal year 2022, which reflects the rapid acceleration of the recovery of our business and other factors.\nAs Kevin noted, fourth quarter sales were $16.1 billion, an increase of 82% from the same quarter in fiscal 2020 and a 4.3% increase from the same quarter in fiscal 2019.\nPlease note that this year, our fiscal year had a 53rd week, which included 14 weeks in the fourth quarter as compared to only 13 weeks in the fourth quarter of each of fiscal 2020 and fiscal 2019.\nThat additional week was worth just under $1.2 billion in sales.\nSales in U.S. foodservice were up 88.4% versus the fourth quarter of fiscal 2020 and up 7.7% versus the same quarter in fiscal 2019.\nSYGMA was up 45.3% versus fiscal 2020 and up 20.9% versus the same quarter in fiscal 2019.\nFor the quarter, local case volume within a subset of U.S. FS, our U.S. Broadline operations increased 74.3% while total case volume within U.S. Broadline operations increased 71.4%.\nGiven the interest in the recovery curve from COVID-19, today we are disclosing that our July fiscal 2022 sales were also quite strong.\nSales were more than $4.9 billion, an increase of 44.3% from the same period in fiscal 2021 and a 7% increase over the same period in fiscal 2019.\nKevin brought up the top of inflation.\nThe headline is that inflation during the quarter was up 9.6% for total Sysco.\nManufacturers passed inflation to us and we successfully passed it on to our customers across categories and customer types.\nLet me call it a couple of numbers and then we'll discuss our response to inflation further.\nGross profit for the enterprise was $2.9 billion in the fourth quarter, increasing 86.2% versus the same quarter in fiscal 2020.\nMost of the increase in gross profit was driven by year-over-year increases in sales, the 53rd week in fiscal 2021 worth about $208 million and marginal rate improvement at our largest business U.S. FS.\nGross margin as a percentage of sales during the quarter actually increased 41 basis points versus the same period in fiscal 2020 and finished at a rate of 18.1%.\nThe gross margin increase was driven by business mix with the higher margin in U.S. foodservice businesses growing alongside improvements in higher margin countries in our international segment.\nImportantly, the enterprise margin rate improvement was also driven by 17 basis points of margin rate improvement in our largest business.\nNow, I'm sure you think I'm calling out the obvious when I say that in an inflationary environment, what counts at the end of the day is the health of our dollar gross profit that which we put in the bank.\nThe good news for us is that in the U.S., as our sales have been rising in part due to inflation, our dollar profit per case has also been increasing.\nNotably in the U.S., our dollar profit per case is higher now than it was in fiscal year '19.\nYou may ask why do we have confidence that we can protect gross profit dollars in the short term and rate over time.\nThe answer is that Sysco has some advantages.\nWe have significant scale in purchasing, which is an asset, and which our suppliers will be hearing more about as we leverage the power of buying as One Sysco.\nIn addition, the majority of our customer contracts contain cost escalation clauses.\nFinally, our merchandising transformation includes implementation of center-led pricing technology and other changes, which allow us to navigate through the inflationary environment.\nNo one tactic should be viewed in isolation, but the combination of our efforts arms us to deal with what we expect to be continued inflation in categories like poultry, beef, paper and disposables.\nThat said, you can expect that we will be careful and tactical as we keep our eye on the real prize, execution against our Recipe for Growth.\nLet's now turn to our international business.\nRestriction started to visibly ease in key jurisdictions toward the end of the quarter.\nFor the fourth quarter, international sales were up 83.4% versus fiscal 2020, but down 14.6% versus fiscal 2019.\nForeign exchange rates had a positive impact of 2.9% on Sysco's sales results.\nWhat we see in our largest international markets gives us additional signs of confidence for fiscal 2022.\nLocal consumers are eager to get back to normal.\nAnd importantly with the playbook established and significant operational change behind us, we do not expect that the reimposition of additional COVID restrictions would, if it happened, have a severe of an impact on our business as was the case during the past year.\nJust like our efforts in the U.S., the international operations have been sourcing inventory and hiring staff aggressively to move up the recovery curve.\nTurning back to the enterprise, adjusted operating expense increased 44.5% to $2.3 billion with increases driven by the variable cost that accompanies significantly increased volumes, one-time and short-term expenses associated with the snap-back, and investments against our Recipe for Growth.\nOur expense performance reflects the great progress we have made against our $350 million cost-out savings goal as well as the need to invest in both the current demand recovery and the long-term issues that Kevin mentioned earlier.\nIn fact, we exceeded our $350 million cost-out goal during the full year.\nAs we have highlighted in prior calls, the majority of the savings are coming from SG&A, but there are some savings from cost of goods sold as our teams continue to improve our capabilities to better optimize supplier relationships.\nWithin our operating expenses, key examples of the cost savings efforts are regionalizing first our broadline operations and most recently, our specialty produce operations.\nOther examples of areas where we achieved good cost savings would be indirect sourcing, technology cost savings and sourcing of freight contract costs.\nAs I called out in Q3, we are investing heavily against the business both in support of the snap-back and in support of the transformation.\nDuring the fourth quarter, we estimate that we spent more than $36 million against the snap-back including incremental investments against recruiting, training, retention and maintenance.\nWe also estimate that we spent more than $50 million against our transformation initiatives such as our customer-centered growth, pricing, supply chain and technology strategic initiatives.\nEven with those significant investments, our adjusted operating expense as a percentage of sales improved to 14.3% from fiscal 2020 and moved to within 30 basis points of fiscal 2019's 14% as a percentage of sales for the fourth quarter.\nIf we adjust out the purposeful snap-back and transformation investments we are making as temporary, we can better see the savings as our opex as a percentage of sales would have been 13.8% on an adjusted basis.\nHere are couple of points of emphasis for you.\nPart of the future horizon's component of our Recipe for Growth is achieving cost-out to fund the growth.\nWe are leading with the cost-out before we make the investments.\nThe savings are structural.\nWe are not counting variable expense changes.\nOur savings goals are owned by our entire executive leadership team.\nThe savings are intended to increase over time.\nRecall that we raised our objective to $750 million with the incremental savings coming largely over the course of fiscal '23 through fiscal '24.\nKevin and I must approve all new spend on our developing capabilities that offset the savings.\nRemember, it is these capabilities that are generating the market share gains of 1.2 times to 1.5 times through fiscal 2024.\nAll in all, we view cost-out as a good news part of our long-term story.\nFinally, for the fourth quarter, adjusted operating income increased $639 million to $605 million for the quarter.\nOur adjusted effective tax rate was 20.2%.\nAdjusted earnings per share increased $1 to $0.71 for the fourth quarter.\nThe primary difference between our GAAP earnings per share and our adjusted earnings per share was the impact of our debt tender premium payment.\nWe are pleased with the improvement each quarter as our business has recovered from the onset of COVID over the course of the last year or so.\nLet me just wrap up the income statement by observing that for the year, all in, we delivered $1.02 of GAAP earnings per share and $1.44 of adjusted EPS.\nNow, a couple of comments on cash flow and the balance sheet.\nCash flow from operations for the fourth quarter was $424 million.\nNet capex for the quarter was $180 million or 1.1% of sales, which was $79 million higher compared to the same quarter in the prior year.\nFree cash flow for the fourth quarter was $244 million, significantly above our anticipated free cash flow, even while we grew and maintained inventory at a level $400 million higher than Q4 fiscal '19.\nAt the end of fiscal 2021, after our investments in the business, our significant reductions in debt and our dividend payments, we had $3 billion of cash and cash equivalents on hand.\nDuring the year, we generated positive cash flow from operations of $1.9 billion, offset by $412 million of net capital investment, resulting in positive free cash flow of $1.5 billion for the year.\nAs you know, at Investor Day, we articulated, our debt pay down plans.\n$2.3 billion of deleveraging already accomplished during the fiscal year through May 2021.\nPlans for an additional $1.5 billion will further debt reductions by the end of fiscal year '22.\nBecause we have sized the headline on our Q4 tender offer to $1 billion, we are already tracking $150 million ahead of our debt repurchase commitments.\nLastly, we returned almost $1 billion of capital to shareholders in fiscal year '21 in the form of our quarterly dividends.\nWe were pleased to announce at Investor Day a $0.02 per share increase to our dividend, on which we made the first payment in July.\nThis brings our dividend to $1.88 per share for the full calendar year 2022 and enhances our track record of increasing our dividends and our status as a Dividend Aristocrat.\nNow, before closing, I would like to provide you with some updated guidance for fiscal year 2022.\nIn May, I laid out our growth aspiration of growing at 1.2 times to 1.5 times the market.\nAlso recall that we said, in fiscal year '22, we expected adjusted earnings per share of $3.23 to $3.43.\nWe also called out that in fiscal year '24, we expect adjusted earnings per share of 30% more than our high point in fiscal year 2019, call it more than $4.65.\nOur projections and guidance were tied to the Technomic market projections as they existed at the time.\nFrankly, the speed of recovery of consumer demand has been nothing short of remarkable.\nWe are seeing the positive impact broadly across our business.\nSales are recovering more quickly than we or the market trend experts anticipated.\nThat means that to hit our 1.2 times market growth in fiscal year 2022, we have to grow faster and we are.\nAs a result, we are raising our sales expectations and now expect sales for the enterprise to exceed fiscal '19 sales by mid-single digits, adding roughly $2.5 billion to our top line guidance.\nEvery segment of our business other than our other segment and the FSM component of our U.S. FS business is now forecast to exceed fiscal '19 sales by the end of fiscal year '22.\nInflation is more of a factor than we had anticipated for the first half of fiscal '22 and we expect it to continue into the first half of our new year, but our business is proving that it can pass along at least the increases necessary to preserve dollar per case profit.\nAs a result, while margin rate may be weaker than originally expected in the first half of the fiscal year, we expect strong gross profit dollars growing with sales and are holding to our Investor Day guidance that gross margins will improve over fiscal '21 and move toward fiscal '19 levels for the full year.\nRegarding the cost-out program, we are working it aggressively.\nWe expect to invest most of the fiscal '22 savings into the snap-back, including the transitory incremental cost that Kevin discussed earlier and important transformational initiatives.\nFrom a tax perspective, we expect our overall effective rate to be approximately 24% in fiscal 2022, as we are not assuming changes to federal tax rates in this guidance.\nAnd based on the early strength of the recovery that Kevin mentioned during his remarks, as impacted by inflation and our continued progress against managing through the snap-back and investing for growth, we are increasing our guidance on adjusted earnings per share by $0.10 for fiscal year 2022 by moving the range up to $3.33 to $3.53.\nNow, let's be clear, no one can forecast the unknown.\nThe Delta variant is out there and our updated guidance does not bake in a shutdown case.\nWe are providing this guidance based on what we can see in our business right now and we will follow with further updates, positive or negative, as the environment evolves around us, and we continue to execute against the transformation and the snap-back.\nIn addition, with rising sales comes an increase in operating cash flow.\nWe continue to maintain the balanced capital allocation strategy that we highlighted at Investor Day.\nFirst, investing in our business for long-term growth and increasing our industry-leading position.\nCapital expenditures during fiscal 2022 are expected to be approximately 1.3% of sales, reflecting the increased sales levels.\nWe continue to look for further sources of smart, inorganic growth as we laid out at Investor Day.\nSecond, we plan to maintain a strong balance sheet and expect to hit our announced net debt to EBITDA target during fiscal year '22.\nAnd finally, recall that in May, we announced the conditions to the initiation of share repurchase, resulting from the new $5 billion share repurchase authorization.\nThe market recovery must be robust; that is happening.\nThe investments in the business must be fully funded, including M&A.\nWe expect to have more than adequate capital for our planned investments.\nOur debt reduction must continue and our investment grade rating must be preserved.\nAs I discussed, we are ahead of schedule on reductions of debt and expect to hit our leverage target for the end of the year.\nExcess liquidity must exist to fund the repurchase program.\nIt is early days, but with the accelerating recovery, we anticipate available cash to exceed our earlier forecast.\nApplying the criteria we announced in May, if business trends continue, then we will consider options to return more capital in fiscal '22.\nHowever, having said those words out loud, I want to be clear, our decision tree is based on our balanced capital allocation strategy.\nIn summary, our performance over the past year has been strong and the fundamentals of our business are solid as we look to the coming year.\nWe are excited about the future as we kick off fiscal year 2022.\n", "role": "user" }, { "content": "q4 sales $16.1 billion versus refinitiv ibes estimate of $14.65 billion.\nqtrly adjusted earnings per share $0.71.\ncurrently no signs of delta variant impacting demand; strong july sales.\nraise earnings per share guidance for fiscal year 2022 to $3.33 to $3.53.\n", "role": "assistant" } ]

[ { "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 results and events could differ materially.\nThese non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.\nThese non-GAAP measures are not intended to be a substitute for our GAAP results.\nThis is the start of an open and informative dialogue.\nWe value trust and transparency, and I'll have the opportunity to model this as a public company.\nAnd since this is our first earnings call, I'd like to give some background on our journey and how we got here.\nI will then turn it to Nick and Dave to provide some highlights from our most recent quarter and outlook.\nWe launched SentinelOne in 2013 with the idea that cybersecurity incorporated faster speeds, greater scale, higher accuracy, and most importantly, do this through more dimension.\nWe created an autonomous cybersecurity platform to deliver our vision.\nAttacks and threats are only becoming more sophisticated and more common, and legacy solutions and human defenses just can't keep up.\nLook no further than all the ransomware attacks.\nUnfortunately, this isn't new, and it isn't going away, and it's impossible to ignore.\nOur mission to protect our customers and our way of life has never been more important in a digitized world.\nThere are several structural forces at play that will drive long-term and sustained growth for us and our industry.\nThe growing threat landscape is just one of them.\nNext is the digital enterprise environment, more devices, more places, more data, requires updates to critical enterprise infrastructure, and that includes new attack surfaces such as containers and workloads.\nAt the same time, we've moved to a hybrid work environment.\nThis is the new normal, forcing the evolution of how we work, where we work from, and fundamentally how we secure the future of work.\nThe only way to ensure safety and security is with zero trust across the entire enterprise, from endpoint to cloud.\nCompanies want partners and platforms, not siloed point solutions.\nOur open XDR approach is helping unify the entire enterprise view from data to device to cloud.\nPutting all of this together, cybersecurity has never been more critical and more challenging for the enterprise.\nThat gives me tremendous confidence in the long-term growth potential in front of SentinelOne.\nOver the last eight years at SentinelOne, we've developed AI and machine learning models, built patented Storyline technology, and created an in-house cloud data platform.\nWe knew from the beginning that the best solution would have to harness the power of data and AI.\nAnd as a result, we're delivering real-time industry-leading threat detection and response from endpoint to IoT to cloud.\nTo us, prevention is the fundamental component of modern-day cybersecurity.\nEqually critical is machine speed detection, response, and remediation.\nWe've achieved many important milestones already this year.\nCertainly, the IPO is part of that.\nAt the same time, top scores from MITRE ATT&CK, the industry standard test for EDR, as well as the highest score in the Gartner Critical Capabilities for each buyer type has helped build credibility and industry recognition.\nOperationally, we've expanded our board of directors and instituted an advisory board.\nAnd with an eye to the future, we just announced that we'll be opening an R&D facility in the Czech Republic to support our growing scale and global presence.\nFinally, delighting our customers.\nI'm especially proud that our Net Promoter Score, or NPS, has risen every single quarter in the past year.\nIt jumped in Q2 to above 70.\nThat puts us well above the ranks of many consumer and technology companies and ahead of category-defining technologies loved by users such as the iPhone.\nOur customers choose us as their cybersecurity partner, and we take the responsibility and trust seriously.\nWe're helping our customers stay ahead of our adversaries, prevent breaches and autonomously respond through innovation.\nTurning to the business.\nIn Q2, our ARR growth accelerated to 127% year over year, and our revenue was up 121%.\nI want to pause on that for a second.\nOur business is expanding well into the triple digits both for ARR and revenue, and our guidance for Q3 shows that we expect that to continue.\nOur growth is very well balanced across new and existing customers, as well as large and midsized enterprises.\nEnterprises represents about two-thirds of our business today, and we're gaining even more traction.\nIn Q2, we added the highest number of customers with ARR over $1 million compared to prior quarters.\nWe're also expanding with existing customers through securing more devices and services, along with bringing new security control and visibility modules.\nOur net retention rate was the highest it's ever been at 129%.\nOur channel partners are bringing us into an increasing number of opportunities, giving our sales teams access, scale, and reach around the globe.\nNick will talk a lot more about our differentiated go-to-market and how that's fueling growth.\nI'm proud of the technology and the innovation we're bringing to customers through our Singularity XDR platform.\nWe sell three platform tiers, Core, Control, and our most comprehensive and popular tier, Complete.\nThese tiers enable us to bring our technology to a diverse set of buyer types and organizations, from medium-sized businesses all the way to the world's largest Fortune 500 enterprises.\nWe also offer more than 10 modules that extend our platform value to more enterprise needs, from IoT discovery and security to cloud and container workload protection.\nOur modules help customers with today's critical management, protection, and visibility challenges.\nIn Q2, we enhanced our capabilities around automation, zero trust, and data.\nAutomation is key to neutralizing threats effectively and in real time.\nSecurity teams simply can't analyze and respond to billions of events every day.\nThe response piece is especially important.\nA human-powered 1-10-60 benchmark is a legacy model.\nOur customers want real-time response and protection.\nThis is why our patented Storyline technology is so important.\nIt monitors and contextualizes all events across an enterprise at machine speed.\nThat means fewer and more accurate alerts based on data.\nIt also means autonomous remediation, taking machine-delivered responses to a whole new level of automatic efficiency.\nThe chief information security officer of a Fortune 500 oil company captured it well saying, \"SentinelOne's Storyline technology fundamentally changes EDR. Instead of people having to manually assemble data points, the technology assembles stories for us and even makes decisions in real time.\nWe listen to our customers, adding even more automation capabilities.\nIn Q2, we added Storyline Active Response, or STAR.\nWith STAR, security teams can now create custom detection and response rules and deploy them in real time.\nIn other words, write the rules once and let it trigger automatic alerts and instant responses enterprisewide.\nThat's more control, and more automation, and more prevention.\nThe second area of focus is around zero trust.\nEvery edge of the network must be secured.\nWe did this in two ways in Q2, tackling rogue IoT devices and expanding zero trust partnerships.\nAn enterprise can protect what it can see, including IoT and unmanaged devices.\nOne compromised printer can quickly become an adversary's home base for an attack.\nThe solution for the IoT and unmanaged device challenges our Ranger module.\nRanger identifies and corrects all rogue IoT devices, and we've just released auto-deploy.\nOur new auto-deploy capability tackles one of the oldest problems in enterprise IT, quickly deploying protection to unmanaged and sometimes unreachable assets with ease.\nRanger auto-deploy takes a SentinelOne endpoint and enables it to transmit protection to any and all unmanaged devices surrounding it.\nThis is a first, and we're already seeing demand for auto-deploy, which helped secure $1 million customer win in Q2, where we replaced legacy AV in one of our other major next-gen competitors.\nWe also expanded our marketplace ecosystem through new partnerships with Zscaler and Cloudflare.\nPartnering with other zero-trust leaders strengthens our customers' security postures.\nFinally, we're focused on data.\nCybersecurity is fundamentally a data problem.\nWe use AI to parse petabytes of data, identify anomalies and autonomously mitigate attacks in real time.\nEarlier this year, we acquired Scalyr, enhancing our ability to ingest index-free data at scale from structured and unstructured sources.\nOur goal is to optimize for scale, performance, and cost.\nWe're excited about the future go-to-market synergies.\nWe've also begun transitioning our data back into Scalyr for new proof-of-concept deployments, onboarding new customers at scale.\nBefore I turn it to Nick and Dave, I want to say I'm excited about what we've achieved as a company.\nI'm proud of the scale of our business and the triple-digit growth rates we've now delivered for two consecutive quarters.\nThis is truly a testament to the hard work of the entire team at SentinelOne.\nYour feedback and trust puts us in the winning side of cyber warfare every day.\nI'm even more excited about what we can do from here.\nThe endpoint security market is large and growing, and we're just at the beginning.\nCyber defense should be even more holistic.\nIt has to be flexible and automated.\nAnd that means not just across endpoint operating systems but also IoT devices, servers, cloud workloads, and the data itself.\nThis is XDR. We are XDR. And with that, let me turn it to Nick Warner, our chief operating officer.\nI've been at SentinelOne for over four years now.\nEveryone here has a lot to be proud of, especially how quickly we scaled in just the past year alone.\nWe've built a go-to-market flywheel of sales and marketing, our channel, and technology partners.\nTogether, our brand and market traction is reaching new highs.\nLet's discuss the business.\nARR of nearly $200 million and growing 127% is nothing short of astounding.\nLooking back, it took over three years to reach $100 million in ARR and just three quarters to nearly reach the next $100 million.\nOur future is unbounded.\nThat's because of vision, execution, and listening to the needs of our customers.\nOver 5,400 customers use our Singularity XDR platform.\nThat's over 2,000 more than last year.\nI'm delighted to help protect that many businesses.\nOur customers are diverse in size, scope, and geography.\nOur focus on automation, speed, and accuracy is critical to any enterprise -- in fact, all enterprises.\nWe're protecting even more mission-critical businesses.\nIn Q2, we added one of the largest telecommunications and mass media companies in North America.\nAnd we also added one of the world's largest global financial institutions as well.\nMake no mistake, this is a competitive market.\nWe go up against incumbent and next-gen players all the time.\nWhen I think about how we're doing in the market, three things capture it most effectively: one, our 97% gross retention rate, which means our customers are happy and staying with us; two, we don't compete with our channel partners.\nSo, they are able to lead with our technology platform.\nWe enable and embrace the channel; and three, we win more than 70% of POCs against the competition.\nThat's a significant majority of competitive wins and displacements against any and all competing vendors.\nLet me share some more details from the quarter.\nWe're making tremendous progress with large enterprises, which represent about two-thirds of our business.\nWe grew customers with ARR over $100,000 by 140% versus last year.\nWe added the highest number of million-dollar ARR customers this past quarter.\nIn the past year, we've more than tripled the number of customers with ARR over $1 million.\nIt's clear from both of those points that we're succeeding with larger customers and landing in larger deals.\nOur net retention rate was 129%, a new record for our company, fantastic execution from our sales and go-to-market teams.\nWe're helping customers expand agent deployments, access more functionality with package tiers, and adopt new module solutions.\nWhen it comes to our modules, our innovations help enterprises do more.\nJust looking at our modules that cover IoT, cloud, and data, these grew more than six times year over year in Q2 and represent over 10% of the quarter's new business.\nWe're still early with our modules and see this as a long-term lever for our business.\nNext, I'll share some insights on our go-to-market.\nOur internal sales and support teams, combined with our diverse and growing partner ecosystem, gives us an incredibly vast reach.\nEarlier this year, we rolled out a new channel partner training and accreditation program.\nFeedback has been positive, and we've issued over 2,000 accreditations to date.\nOur strong channel metrics are leading pipeline and traction indicators.\nWe partner with managed security service providers, MSSPs; managed detection and response providers, MDRs; and incident response, IR, partners.\nWe equip them with industry-leading capabilities.\nAnd in return, we get tremendous market access and scale.\nWe don't compete with them.\nWe support and enable their business.\nWe're rapidly expanding this ecosystem, and it's driving meaningful growth for us.\nI want to double-click on our incident response partnerships.\nDriven by the rising wave of ransomware attacks, breaches have become pervasive for businesses around the world.\nIn the unfortunate but often common case of a company being breached, IR partners are called in to identify and remediate the attack.\nThey use our technology to understand what's going on, stop the attack and remediate the network.\nOur ecosystem of IR partners are armed with the best technology available when it comes to rapidly recovering from a breach.\nAfter seeing the immediate value of our technology, we see extremely high adoption rates post breach as post-breach enterprises standardize on SentinelOne as a modern approach to cybersecurity.\nIn Q2, we added over a dozen additional IR partners and are bringing more online in Q3 and beyond.\nIt's not just quantity but quality.\nIn Q2, we added world-renowned IR partners like Kroll, Alvarez & Marsal, and Group IB.\nThese and others are global leaders with extensive enterprise relationships.\nThese are the go-to experts who cyber insurers and Boards call when there is a breach.\nIn fact, our IR partner ecosystem is our fastest-growing channel.\nFor all of us at SentinelOne, our values and goals align on protecting customers and putting them first.\nFrom sales to support, marketing to channels, business development to customer success, Vigilance MDR to SentinelLabs, our go-to-market organization is world class.\nAnd I'm proud to work with this global team of relentless Sentinels each and every day.\nI'll touch on a few of the highlights before we open for Q&A.\nWe are very excited about our performance in the second quarter.\nLooking at our Q2 results.\nWe achieved record revenue of $46 million, increasing 121%.\nFueled by new customers and existing customer expansion, we delivered ARR of $198 million in the quarter, accelerating 127% year over year.\nEven after backing out the $10 million in acquired ARR from Scalyr, our organic growth was still well into the triple digits.\nObviously, we're very enthusiastic about our top-line drivers.\nNow I'll discuss our costs and margins and then provide our guidance outlook.\nOur non-GAAP gross margin in Q2 was 62% and expanded 900 basis points, a healthy pickup from last quarter.\nThe biggest benefits are coming from our increasing scale and business expansion.\nAdditionally, we're also starting to see benefits from our renegotiated cloud hosting agreement, which we signed earlier this year to align with our expected growth.\nLooking at the rest of our P&L.\nWe're investing for growth, and it's clear that it's working, once again reflected in our triple-digit top-line growth rate.\nDuring the quarter, we made strategic investments in preparation for becoming a public company, enhancing our product and scaling our go-to-market.\nOur non-GAAP operating margin was negative 98%, an improvement over negative 101% in the year-ago quarter, even as we prepared for our IPO.\nIn the shareholder letter, we've reiterated our long-term margin targets.\nThese are the same targets that we shared during the IPO.\nThe key point is that as we progress to our long-term targets, we intend to invest in growth while also improving our margins and profitability.\nA recent example is the diversification of our R&D footprint outside of Israel and Silicon Valley.\nWe just announced that we'll be expanding our engineering excellence into the Czech Republic.\nWith all of this opportunity in front of us, fiscal 2022 remains an investment year.\nNow for our outlook for Q3 and the full fiscal year.\nIn Q3, we expect revenue of $49 million to $50 million, reflecting growth of 102% at the midpoint.\nFor the full year, we expect revenue of $188 million to $190 million or 103% growth at the midpoint.\nWe expect the strong momentum we saw in Q2 to continue next quarter and our structural tailwinds to persist.\nCombined with ongoing benefits from our product innovation, improved brand awareness, and continuing to scale our go-to-market, this collectively supports our triple-digit growth outlook.\nWe expect Q3 non-GAAP gross margin to be between 58% to 59% and full-year gross margin of 58% to 60%.\nMost importantly, this remains well above 53% we reported in the first fiscal quarter this year and at or above 58% we delivered in fiscal 2021.\nWe are benefiting from increased scale, cloud hosting agreements, and processing efficiency gains.\nReflected in our guidance is our plan to migrate existing customers to our Scalyr back end in Q3 and Q4.\nThe migration will result in some duplicative storage and processing cost as we ensure data and performance continuity.\nThis is intended to further improve data processing for the future and unlock long-term platform and go-to-market synergies.\nExcluding the redundant costs for the Scalyr migration, we estimate fiscal 2022 gross margin would be roughly similar to our gross margin we achieved this quarter.\nFinally, for operating margins, we expect negative 96% to 99% in Q3.\nOur full-year operating margin guidance is for negative 99% to 104%.\nThis is an improvement upon our fiscal year 2021 operating margin of negative 107%.\nWe see tremendous opportunity for growth, and the investments we're making today will put us in a position to succeed for the long term.\nFinally, we have two quick housekeeping items.\nBoth of these are included in the shareholder letter with more detail as well.\nThe first item is share count.\nWe ended Q2 with total basic shares outstanding of 265 million.\nThis is the base run rate going forward.\nThe second item is the lockup.\nWe have two triggers.\nThe first is on September 28.\nIf the stock price remains at current levels, it will unlock up to approximately 40 million outstanding shares as of July 31, 2021, excluding vested equity awards.\nThe remainder of the lockup will expire subsequent to our Q3 earnings report.\nIn closing, Q2 was an excellent quarter with strong execution, and we're expecting that momentum to continue into the second half of the year.\n", "role": "user" }, { "content": "total customer count grew more than 75% year-over-year to over 5,400 customers as of july 31.\nsees fy revenue $188-190 million.\nsees q3 revenue $49-50 million.\n", "role": "assistant" } ]

[ { "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: [Operator Instructions] If you have technical questions on the quarter, please take them up with me or Traci Mangini on the IR team in the days and weeks to follow.\nAnd GAAP reconciliations for any non-U.S. GAAP measures are included in our news release or otherwise available on our website.\nAlso, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars.\nSo with that, over to you, Gavin.\nWell, what a year it's been so far.\nIf you're like most people, there are probably a lot of words that come to mind when you think of 2020.\nBut for Molson Coors, this year, can be summarized in three words: persistence, perseverance and progress.\nThat is how 2020 has been defined by the Molson Coors Beverage Company as we drive for top line growth.\nWe're very pleased with our performance in the third quarter as we beat top and bottom line expectations and made tangible progress on our revitalization plans.\nWe had bold plans at the beginning of 2020, to build on the strength of our iconic core brands, aggressively grow our Above Premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities.\nYet 2020 has presented new obstacles for everyone, for which we've had to adjust.\nLike all other beverage companies, one of the biggest challenges this year has been packaging supply.\nTo put into perspective the scope of the challenges, we sold 300 million more cans of beer in the first nine months of 2020 than we did in the same period in 2019 in the United States alone.\nAnd there have been times over the past few months when demand for tall cans was four times what it was in 2019.\nI'm pleased to report that while work remains, inventory is steadily improving in the U.S.\nWe are approaching historical levels of paperboard supply.\nWe are confirming most orders for bottled beer and seeing steady improvement in supply.\nOur 12-ounce industry standard can supply is stabilizing, and we anticipate it will continue to increase through the year as we return to full inventory, and we are starting to more fully cover demand for tall cans and expect steady improvement in inventory through the balance of the year.\nWhen 2020 has shown as challenges like this, we've, met each challenge head on, and we have never lost sight of our plan.\nNow we're able to show what's possible as we execute that plan as we drive toward top line growth.\nCoors Light and Miller Lite grew 6% to 9.5%, respectively, in the U.S. off-premise so far this year.\nAs of today, the combined segment share has grown for 24 consecutive quarters.\nThat is six straight years, and our aim now is to stabilize our biggest brands in the total beer category.\nAbove Premium products, a record higher portion of our U.S. portfolio since the business formed in 2008 despite the on-premise restrictions.\nBy the end of 2021, we plan to capture a double-digit share of the U.S. seltzer market, backed by what arguably is the most complete seltzer portfolio in the business.\nTruss, our Canadian joint venture has quickly become a market share leader of ready-to-drink cannabis beverages in Canada.\nThe company estimates market share of over 50% in key markets such as Quebec.\nAnd we believe that our emerging growth division can become a $1 billion business in revenue terms in three years' time.\nWe are expanding our production capacity for seltzers by over 400% and for Blue Moon Lightsky by approximately 400%.\nWe will continue prioritizing capital projects that will allow us to further expand our seltzer and innovation production capacity.\nWe will continue to take tangible steps to build a brighter future for our people and our communities.\nI want to pause here.\nI know there are questions about the complexity of our revitalization plan and about our ability to execute.\nBut not only can it be done in the future, we are already doing it today.\nAs you can see, we are building on the strength of our core while growing our above-premium portfolio and planting the seeds for future growth beyond beer.\nAnd we're investing in our capabilities and our people to make it all possible.\nI want to drill down on each of these a little more.\nAs I mentioned earlier, it's a great sign of strength of our core brands that Coors Light and Miller Lite grew 6% and 9.5%, respectively, in the U.S. off-premise so far this year.\nAnd the combined segment share of our two largest U.S. brands has grown for six straight years.\nAnd Coors Light, again, achieved a record high segment share in the U.S. since the business formed 2008, per Nielsen.\nAnd our market research shows Coors Light has seen the biggest year-to-date improvement in consideration across the category, especially with 21- to 34-year-old consumers.\nIn Canada, Molson Ultra has performed very well this year, up 32% so far and has surpassed a large competitor in share of grocery in Quebec based on the recent 4-week data per Nielsen.\nOur national champion brands in Europe saw significant trend improvement as a large percentage of the on-trade had reopened at the beginning of the third quarter.\nIn 2020, we have increased our number of major sports alliances across all of North America.\nAnd while we aren't spending money against a lot of them this year during the pandemic, these partnerships should benefit our biggest brands for years to come.\nWe have also seen great progress in growing our Above Premium portfolio.\nAbove Premium products grew in the third quarter and have reached a record high portion of our overall portfolio in the United States since the business was formed in 2008.\nBlue Moon Lightsky, which launched in February, has sold over 1.6 million cases through the end of the third quarter and is 2020's top-selling new beer in the United States per Nielsen.\nAnd LightSky is highly incremental to the Blue Moon brand.\nBlue Moon Belgian White, largest craft brand in the United States, has seen the third highest growth in the off-premise among all craft brands in 2020, according to Nielsen.\nWith the Lightsky at number one, the Blue Moon family has easily achieved the highest off-premise growth in 2020 among all craft franchises, according to Nielsen.\nAnd this progress in Above Premium beer extends to Europe.\nIn Europe, but outside of its home market, the Staropramen brand grew by 9% in volume in the quarter.\nAnd our export and license team grew volumes by 3% in the quarter, thereby expanding the footprint and the size of our premium positioned brands across the wider European segment.\nVizzy has risen to number eight on the Nielsen top 10 Growth Brands chart in 2020, selling over 2.5 million cases since its April launch, and it is seeing the highest repeat purchase rate among all seltzers made by the major beer suppliers.\nAnd we are incredibly excited by the early results for Coors Seltzer, which has matched Vizzy's hot sales in its first months on shelves.\nIn some key retailers, the Coors Seltzer variety pack is outselling the Bud Light Seltzer for hourly pick.\nFolks, we are building out arguably the deepest most diversified portfolio of hard seltzers in the industry.\nWe came into 2020 with an under two share of the segment.\nWe are now four share.\nAnd by the end of next year, we plan to capture a double-digit share of the U.S. seltzer market.\nThat is possible because of the depth and differentiation of our seltzer portfolio, We believe Vizzy, with its Acerola cherry, high antioxidants from Vitamin C is the best positioned product on the market in the better-for-you space.\nWe believe Coors Seltzer can become the number one beer brand in the segment through the strength of its name and its social mission around restoring America's waterways.\nTopo Chico hard seltzer is something no other product offers.\nThe benefit of the massive following of the Coca-Cola Company's Topo Chico Sparkling mineral water in a number of major markets across the United States.\nProof Point will also launch next year, differentiating itself with premium ingredients like real spirits.\nAnd I would remind you that with our distribution deal for Bodega Bay hard seltzer in the U.K. and Ireland, also Coors as an early mover among European hard seltzers.\nWe had even more Above Premium both opportunities coming in 2021, when we bring Yuengling westward under our new joint venture.\nThere are 25 states open for expansion under the JV, all with 0 Yuengling distribution today and tens of millions of legal-age drinkers.\nThat is a significant growth opportunity for our company and for Yuengling.\nOur emerging growth division has been doing a great job planting the seeds for future growth opportunities beyond the beer aisle.\nEarlier in the year, we launched Mollo, our first canned one and the Truss joint venture launched Veryvell CBD and THC drops in Canada.\nAnd in the third quarter, we stepped it up.\nTrust launched its first ready-to-drink cannabis beverages in Canada partway through the quarter and already, it has become a market share leader.\nThe company estimates market share of over 50% in key markets like Quebec.\nWe launched a new line of nonalcohol products created in the beverage incubated L.A. Libations.\nWe took a minority stake in ZenWTR by noted beverage innovator Lance Collins, and we launched Vyne Botanical Hop water in Canada.\nIn Europe, we signed an exclusive agreement with Miami Cocktail Company to distribute their growing brands in the United Kingdom and Ireland.\nThis is really just the beginning for us.\nWe're learning in some of the spaces in a capital-efficient way, I would add.\nAnd we'll apply what we learn to future growth opportunities beyond beer.\nThat is why I'm confident that altogether, our emerging growth division can become a $1 billion business.\nFor as much activity as you've seen in the past few months, you can expect to see more coming.\nIn the next few weeks, our U.S. Truss joint venture with HEXO will launch its first CBD-based products in Colorado, making us an early mover in this area.\nAnd soon, Molson Coors be a distributor of La Colombe's incredible lineup of ready-to-drink coffees in the off-premise, starting with drug and convened store channels, another great example of how we can leverage our strengths to find meaningful, profitable top line growth.\nAnd to achieve growth and our revitalization plan, we can't just rely on our stellar marketing team.\nWe are investing in our capabilities to make it happen.\nWe intend to expand our hard seltzer production capacity by over 400% by the end of this year.\nBy early 2021, we expect to complete a project to expand Blue Moon Lightsky production capacity by approximately 400% as well.\nWe just turned on a new sleek-can production line at the Rocky Mountain Metal Company, our joint venture with Ball Corporation, capable of producing 750 million cans a year.\nWe're modernizing our brewery in Golden, Colorado, making it easier to brew the beverages of the future.\nDuring the coronavirus, we have improved online sales in the U.S. by approximately 200% through the 3-tier structure, while also developing new e-commerce and direct-to-consumer channels for our business in Canada.\nThese investments will help power our business forward, and we will continue prioritizing capital projects to continue expanding our production capacity for seltzers and innovations in 2021 and 2022.\nI've talked a lot about how the revitalization plan shapes our business actions, and it's also shaping how we support our people and our communities.\nThat started earlier this year when we redefined our company values, starting with putting our people first, we built from there all year long.\nJust this month, we held our first week of inclusion.\nWe redirected social media spending to 25 national and local organizations working to address issues of equality, empowerment, racial justice and community building.\nWe launched a new scholarship program, supporting people of color and LGBTQ+ students seeking degrees in brewing or fermentation sciences.\nWe have the opportunity and the responsibility to drive change, and we are doing just that, and we're not going to slow down.\nWhen complete, the modernization project in Golden will significantly reduce CO2 emissions from the brewery, it will reduce energy usage by 15%, and it will reduce our water usage by 100 million gallons per year.\nLook, we've made a lot of news over the past two months, from our continued investments behind our core brands, in the expansion in our seltzer production capacity to our joint venture with Yuengling, to our new line of nonalcohol beverages, to the launch of Coors Seltzer, to the addition of Topo Chico Hard Seltzer, to the distribution deal with La Colombe.\nThese are not a series of one-offs that all represents parts of one single strategy, drive our business to top line growth.\nNow we've faced a lot of criticism over the years about the shape of our portfolio in the U.S., where it is too heavily weighted toward our two premium light brands.\nI understand the viewpoint, but I believe our core is our strength.\nAnd as I've outlined, a key part of our plan is to build on the strength of our iconic core brands.\nAnd yet interestingly, under this strategy, as we roll out plans to aggressively grow our above-premium portfolio and expand into fast-growing Above Premium beverages beyond the beer aisle.\nThere have been questions as to whether these actions add too much complexity or distraction, and we should stick to our core.\nBut to suggest that we must focus only on our core brands or only on innovations is a false choice.\nPart of our revitalization strategy, we organized our business to do exactly that.\nThe progress we are making is promising.\nOur 2020 Above Premium innovations have already delivered an incremental 5.7 million cases for our business.\nThe health of our iconic core brands continues to improve, and we are planting the seeds for new growth opportunities beyond the beer aisle.\nThat is the plan we announced last October.\nThat is the plan we're executing, and that is the plan we believe will deliver top line growth for this business.\nAnd now I'll pass it over to Tracey for the financial highlights.\nI will first cover the quarter on a consolidated and regional basis and then move to our outlook.\nSo to recap the quarter, net sales revenue decreased 3.6% in constant currency, a significant improvement from our second quarter performance.\nIn the third quarter, we saw volume declines, principally in the on-premise channels, along with the corresponding negative channel mix implications across all major markets.\nThese impacts were partially offset by higher net pricing as well as the U.S. overcoming channel mix challenges to deliver positive brand mix behind strong performances in Vizzy, Blue Moon Lightsky and Coors Seltzer.\nNorth America shipment timing was positive in the third quarter, but remain impacted by the packaging material constraints.\nNet sales per hectoliter on a brand volume basis increased 2.1% in constant currency, reflecting positive net pricing in the U.S. and Canada, more than offsetting negative mix effects globally due to the various market dynamics and consumer shifts caused by the coronavirus pandemic.\nWhile a significant number of the on-premise establishments were opened throughout the quarter, those that were opened were not operating at full capacity.\nThis had an adverse impact, albeit improving from second quarter levels on mix globally.\nAs many of our higher-end products are skewed toward the on-premise, closures or restrictions in this channel has an unfavorable impact on our brand and channel mix.\nWorldwide brand volume decreased 5.2%, while financial volume decreased 5%.\nUnderlying COGS per hectoliter increased 1.5% on a constant currency basis, driven by inflation and volume deleverage, partially offset by cost savings initiatives.\nUnderlying MG&A decreased 7.6% on a constant currency basis, driven by reduced marketing spend, partially offset by slightly higher G&A as we cycled onetime benefits related to long-term incentive compensation reversals in the third quarter of 2019.\nThis was largely offset by revitalization cost savings and lower discretionary spend.\nAs a result, underlying EBITDA grew 0.5% on a constant currency basis.\nUnderlying free cash flow of $1.160 million for the nine months ended September 30, 2020, was $275 million favorable to the prior year period driven by favorable working capital.\nThe working capital benefit was driven by the deferral of over $200 million in tax payments from various government-sponsored payment deferral programs related to the coronavirus pandemic, of which we currently anticipate approximately half to be paid in the fourth quarter of 2020, while the remaining amount to be paid beyond this fiscal year.\nIn North America, net sales revenue decreased 0.8% in constant currency, driven by financial volume declines of 4%, reflecting lower brand volume.\nNorth America brand volumes decreased 5.2% as the on-premise closures or limited capacity reopenings during the quarter more than offset the strength in both the U.S. and Canada in the off-premise.\nAlso contributing to the decline was packaging constraints, which primarily impacted the economy and premium segments as we prioritize higher-margin SKUs.\nIn the U.S., brand volumes decreased 5.3% compared to domestic shipment declines of 3.9% in our efforts to address the year-to-date under shipment positions attributed to the aluminum can supply constraints.\nNet sales per hectoliter on a brand volume basis increased 3.6% in constant currency, driven by net pricing increases in the U.S. and Canada and favorable brand and package mix in the U.S., partially offset by negative brand and channel mix in Canada, attributed to the shift of volume from the on-premise to the off-premise.\nIn the U.S., net sales per hectoliter on a brand volume basis increased 4.6%, driven by favorable sales mix and net pricing.\nThe U.S. delivered its best quarterly sales mix performance in the last decade and the best brand mix performance since the first quarter of 2014.\nIn Canada, negative mix more than offset the net pricing increases.\nWhile in Latin America, net sales per hectoliter on a brand volume basis was largely consistent with the prior year.\nUnderlying EBITDA increased 2.5% in constant currency as SG&A reductions more than offset unfavorable gross profit from lower financial volumes and COGS inflation.\nThe MG&A reductions were driven by lower marketing spend in areas impacted by the coronavirus pandemic, such as sports, events and festivals.\nWe also adjusted the timing of marketing investments behind brands and tax for which we experienced supply constraints.\nHowever, media and advertising spend ramped up sequentially within the quarter and increased compared to the prior year period as we supported core brands and key innovations.\nAlso contributing to the MG&A reduction were other cost mitigating actions and the continued progress in realizing cost savings related to the revitalization plan.\nAll of this was partially offset by cycling lower incentive compensation in the prior year period, largely due to the onetime benefits from long-term compensation reversals in the third quarter of 2019, as mentioned earlier.\nFor Europe, which is more heavily skewed toward the on-premise, net sales on a reported basis decreased 15.3% in constant currency due to lower volumes and lower net sales per hectoliter, reflecting the impact from the coronavirus.\nNet sales per hectoliter on a brand volume basis declined 5.9% in constant currency, driven by unfavorable channel, brand and geographic mix, particularly in the high-margin U.K. business, partially offset by slightly higher net pricing.\nFinancial volumes decreased 7.7% and brand volumes decreased 5.4%, a significant improvement from the year-on-year declines experienced in the second quarter as more on-premise accounts were open, even though many were not operating at full capacity in the quarter.\nWe have also greatly improved our capacity levels to meet the highest levels of demand in the off-premise.\nEurope's underlying EBITDA decreased 8% on a constant currency basis versus the prior year, driven by gross margin impact of volume declines and unfavorable geographic and channel mix, partially offset by lower MG&A expenses as a result of cost mitigation actions to navigate the coronavirus pandemic.\nWhich takes me to our financial outlook.\nOn March 27, we withdrew our guidance due to the uncertainty driven by the pandemic.\nWith the rise in the new virus cases in both North America and Europe, governments are mandating new closures, were imposing lockdowns to varying degrees, and thus, set uncertainty remains.\nAs a result, we have not reinstated guidance but are providing additional visibility on forward trends and a perspective on how we believe we will be impacted by the coronavirus.\nWe do not expect to continue to give this visibility once conditions have stabilized or we resume guidance.\nAnd we are very proud of our performance and agility in navigating the coronavirus pandemic and executing against our revitalization plan, but recognizing there are still headwinds ahead.\nThe pandemic continues to impact our businesses due to on-premise losses and across all our geographies and disproportionately, in Europe.\nAlso, we continue to face the fire constraints.\nHowever, we do expect to return to full inventory of 12-ounce industry standard cans by year-end, and we're making progress on remediating constraints for the Coors Light pour can.\nAs a result, we expect domestic shipment trends in the U.S. to be higher than brand volume trends in the fourth quarter as we continue to build inventories.\nFor SG&A, we expect marketing investment to increase in the fourth quarter from the prior year as we build on the strength of our core brands and ramp up support for key innovations like Blue Moon LightSky, Vizzy and Coors Seltzer, in alignment with additional supply coming online.\nWe will continue to be nimble, adapting to the environment to ensure we are achieving the highest possible return on our marketing investments, while supporting strong brand equity.\nTherefore, as of the third quarter, some of our anticipated fourth quarter spend will be dependent on factors, including the occurrence of live sports and events.\nAnd finally, as discussed on our second quarter call, in the fourth quarter, we will stifle lower incentive compensation and a nonrecurring vendor benefit, which occurred in the fourth quarter of 2019 and totaled approximately $27 million.\nIn response to the coronavirus pandemic, we have shifted our focus to ensure adequate liquidity for the near term while positioning the business for medium and long-term success.\nThis included a desire to maintain our investment-grade rating, which is important for all of our stakeholders.\nBeing investment-grade rated reduces our cost of debt, improved our access to capital markets, including commercial paper and gives us more operational flexibility to execute against our strategy.\nAs previously discussed, we have significantly improved our liquidity position by favorably amending the covenant terms of our $1.5 billion revolving credit facility, adding a GBP300 million commercial paper facility for our U.K. business, which is incremental to the borrowing capacity under the $1.5 billion facility, suspending the dividend in May for the remainder of 2020, reducing previously planned capital expenditures by around $200 million for 2020 and generally reducing discretionary spend where possible.\nAnd in the third quarter, we continued to reduce our debt position with a payment of CAD500 million that is due, using a combination of cash and commercial paper.\nAs of quarter end, we had reduced our net debt position by just over $1.2 billion since we began the revitalization program.\nAnd we have maintained strong borrowing capacities on both our facilities.\nAs of October 29, 2020, we had $1.4 billion under our U.S. facility and the full GBP300 million under the U.K. facility in available capacity.\nSo we invested in our business to support medium- and long-term growth objectives.\nIn addition to necessary safety and maintenance projects, we are making capital investments that deliver cost savings and high-return growth initiatives such as our significant investment behind hard seltzer and innovations in our Fort Worth and Milwaukee brewery.\nAnd over the next few years, we plan to prioritize capital investment to include hundreds of millions of dollars to add significant capacity for our innovation, including seltzers and slim can capacity.\nGiven the operating environment, we are very pleased with our third quarter financial performance, making another quarter of progress on our revitalization plan to drive long-term value creation.\nWe achieved solid financial and operating results and again, exceeded top and bottom line expectations.\nAnd we did so while navigating the continued changes posed by the coronavirus pandemic, further improving our liquidity and investing in efforts to advance our long-term goals.\nWe are mindful of the challenges and continued uncertainty ahead and remain focus on doing what is best not only in the near term but positioning the business for medium and long-term success, and we look forward to updating you on our continued progress.\n", "role": "user" }, { "content": "qtrly total worldwide brand volume down 5.2%.\ncurrently remain unable to provide an updated detailed financial outlook.\n", "role": "assistant" } ]

[ { "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: GAAP reconciliations for any non-U.S. GAAP measures are included in our news release.\nAnd also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars.\nWith that, over to you, Gavin.\nI'm going to change things up a bit here from our normal structure, and I'm going to share seven key headlines from our third quarter.\nFirstly, Coors Light is growing share of the total beer category in the United States.\nThis is our biggest brand in our biggest market, a brand that many doubters could get back onto this trajectory, and it's growing share in the industry for the first time in more than five years.\nTwo, globally, Molson Coors' net sales revenue from its above premium portfolio has surpassed 25% of our brand volume net sales revenue on a trailing 12-month basis for the first time since the revitalization plan was announced.\nThird, Molson Coors' grown share of the U.S. above premium segment for two straight quarters for the first time in over five years.\nFour, as we expand beyond beer and with three months still left in the year, Molson Coors has sold nearly two million cases of non-alcohol beverages in the United States; five, Molson Coors' total market share trend in Canada has improved for eight straight months, leading to national share growth in the third quarter, and the European business has bounced back, essentially reaching 2019 revenue levels; sixth, challenges in the global supply chain impacted our third quarter volumes.\nWe are already seeing improvements in brewery output in October.\nWe are back to shipping approximately one million barrels per week in the U.S. during the fourth quarter.\nAnd in aggregate, distributor inventories are starting to improve; and seventh, like for so many others, transportation availability and transportation costs are worse than they have been in years.\nSo I want to start there and then we'll work backwards.\nLike we've discussed for the second quarter and like other CPG companies, inflation was again a challenge in Q3, specifically with respect to transportation.\nFuel prices are up, truckers are in short supply around the world and freight costs are up 2%.\nAs Tracey highlighted in our second quarter earnings, we have long-term contracts with carriers and a robust hedging program as well as meaningful cost savings programs to mitigate price fluctuations.\nThe driver shortages at our existing carriers are forcing us to use the spot market and to pay spot market rates, which are significantly higher than they have been in many years.\nRight now, up to one in every four shipments are at these high spot rates.\nThat level of inflation cannot be completely absorbed or avoided, and you're seeing the results in our COGS for the quarter.\nBeyond the hedging and cost savings, we are taking steps to reduce the impact, including shipping more beverages on rail.\nAlso, we expect gross margin benefits as we continue to premiumize our portfolio under our revitalization plan and achieve improved efficiencies through our economy SKU deprioritization and rationalization plans.\nBut even with those steps, inflation will continue to be a pressure point for us and for just about every other company.\nOur shipment trends in the third quarter were not what we wanted them to be.\nSome of that is related to the challenges of moving finished goods to distributors and also moving suppliers within our brewery network.\nSome of that is related to our own suppliers having difficulty in getting us the materials we needed since they're facing the same supply chain challenges as everyone else in the world.\nBut the good news is that this trend, as I've said, has already started turning.\nWhile August and September were difficult production months, the steps we have taken in the third quarter to expand our base of material suppliers and improve our availability for most packaging materials have allowed us to increase shipments so far in the fourth quarter.\nWe are once again shipping approximately one million barrels per week in the U.S., and that has helped us increase distributor inventories by approximately 20% over the past few weeks.\nSo that is, of course, the measurement of our total network and that is a trend we expect to build on.\nI also want to quickly address volume.\nSome of you may look at our North American volume trends with concern.\nBut I want to remind you that this is predominantly the result of an intentional and strategic decision we made to deprioritize and eliminate a number of large -- a large number of lower-margin, slower moving SKUs in the U.S. that were mainly in the economy segment.\nThe intention was to simplify and premiumize our portfolio, and that is exactly what is happening.\nSo our volume is down, but our net sales revenue per hectoliter is up.\nAnd I can again tell you that we are on track to deliver on our full year key financial guidance for 2021.\nThis is what is happening in Canada.\nWe have improved our national share trend for eight straight months, leading to total share growth in the third quarter.\nThis is the best share trend performance we have seen in at least six years.\nAs the on-premise reopens in Canada, our share is growing above 2019 levels, a big driver of our progress.\nCoors' growing share of the segment in Canada as well with Miller Lite also growing approximately 30% in the quarter.\nMolson Ultra has seen strong year-to-date performance with volume growing mid-single digits along with strong share gains.\nThese are all very good signs for our business in Canada.\nNot to be outdone, our European business has bounced back strongly.\nIn the U.K., our on-trade net sales revenue has now reached 2019 levels, and margin has surpassed 2019 levels as the business continues to premiumize, which I'll touch on in more detail in a moment.\nAs we look to the fourth quarter, we plan to keep this momentum up by stepping up our European marketing investments.\ntwo years after shifting from a beer company to a beverage company, we have reached a significant milestone.\nFor the first nine months of the year, we have sold nearly two million cases of non-alcohol beverages as we continue to drive toward our $1 billion revenue ambition for our emerging growth business by 2023.\nWe have launched into categories where we think we can create scale offerings like water, energy and coffee.\nFirst, of course, is our partnership with Zoa, which has been making some serious noise since its launch just over six months ago.\nIt's the number one new energy franchise in 2021, and it's already a top 20 energy drink brand.\nZoa already has 31,000 buying outlets and over 115,000 points of distribution with more coming online every day.\nThere's a lot of upside for this brand.\nWe have the distribution partnership for La Colombe's incredible lineup of ready-to-drink coffee, one of the fastest-growing spaces in the beverage industry.\nGrowing beyond the beer aisle is no longer an aspiration.\nWe're doing it, and we're driving scale.\nMolson Coors' grown share of the U.S. above premium segment for two straight quarters for the first time in over five years.\nThat mark is largely driven by the continued success of our U.S. hard seltzer portfolio, and this is another space I want to take a little more time to discuss.\nThere's been a lot of noise over the past few months about hard seltzers in the U.S., a lot.\nNot all of it has been accurate, and much of it has been unproductive.\nNow hard seltzer is going to keep growing at 200% per year.\nBut of course, not.\nAnd we've been clear since last fall that we didn't expect them to do so.\nBut in spite of the rosy forecast some had a year ago and the bleak forecast being thrown about today, there are some clear truths.\nHard seltzers are here to stay.\nThere are over 10% of beer category sales and growing.\nBut the segment has matured and the easy growth is over.\nMoving forward, it is going to take distinctive, differentiated brands in order to succeed, and that's why we feel so confident about our portfolio.\nWhile so many of the mainstays are declining, Molson Coors has the fastest-growing hard seltzer portfolio in the United States.\nVizzy brand volumes grew 50% in the third quarter versus the prior year and passed yet another competitor to become the number four hard seltzer in the United States.\nDespite only being launched in 16 different markets in the U.S., Topo Chico Hard Seltzer occupies the number three slot as a new item in the general malt beverages category.\nThe brand also garnered a 2.4% share of the U.S. market according to IRI, and this success has led to the national expansion of the brand.\nBut that is not the extent of our premiumization.\nOur joint venture with Yuengling launched in Texas this quarter, and we are very pleased with the very early results.\nBy the end of August, it was already available for purchase in 40,000 locations across the state.\nAs the on-premise continues to strengthen, so have two of our biggest above premium brands.\nPeroni is up double digits, gaining share in the category and outpacing all other European imports.\nBlue Moon Belgian White is up high single digits.\nAnd this quarter, we announced plans to build upon the success of Blue Moon LightSky, which our data shows is 96% incremental to the flagship Belgian White.\nBlue Moon LightSky continues to see double-digit growth year-to-date after finishing 2020 as the number one new beer in the United States.\nIn 2022, we'll add more muscle to the Blue Moon family as we launched LightSky Tropical Wheat.\nAs I said in our second quarter earnings call, premiumization is here to stay at Molson Coors.\nAll that growth in the U.S. is contributing to a significant premiumization of our entire global portfolio.\nSo much so that as of the third quarter, the percentage of Molson Coors portfolio that is above premium has surpassed 25% of our brand volume net sales revenue on a trailing 12-month basis for the first time since the revitalization plan was announced.\nAnd that progress is being seen throughout the company.\nThe early returns on our Canadian Hard Seltzer portfolio have exceeded expectations with both Vizzy and Coors sales are generating strong market share.\nWe will extend that streak when we introduced Topo Chico Hard Seltzer in Canada in 2022, which we announced this month.\nSix Pints, our Canadian craft business, is growing double digits despite on-premise restrictions.\nCombined with the growth of Miller Lite and Molson Ultra, this has continued to drive the premiumization of our business in Canada.\nIn Western Europe, our new Mediterranean lager, Madre, has already doubled its distribution goal for the year, now at approximately 5,500 on-premise outlets with more coming in the fourth quarter.\nIn Central and Eastern Europe, New Smooth pilsner lager Pravha, has been performing above expectations across the market with presence in more than 15,000 outlets supported with strong media campaigns, reaching over 13 million consumers.\nAnd in Latin America, Coors Light is growing in Puerto Rico for the first time in 15 years, where it sells at an above premium price point.\nIn the face of many doubters, Coors Light is growing share of industry in the United States for the first time in more than five years.\nThe brand's strong performance in the third quarter was aided by the continued success of our Made to Chill campaign and through increased marketing investment.\nWe're actually making progress on the things that are within our control and driving measurable results that continue us on the path to delivering on our goal of sustainable, long-term top and bottom line growth.\nWe are two years into our revitalization plan, and I remain confident that we are on track to deliver our full year key financial guidance for 2021, while continuing to invest behind our brands.\nAnd I'm very optimistic about the future for Molson Coors.\nAs Gavin mentioned, we are again reaffirming our key financial annual guidance for 2021.\nWe continue to make real progress executing our revitalization plan.\nWe invested behind our business, driving premiumization of our portfolio of our brands and strengthening our core business while continuing to delever our balance sheet and to reinstate the dividend.\nBut like most consumer product companies, we face supply chain challenges and inflationary cost headwinds in the quarter, which had an impact on our quarterly results.\nNow let me take you through our quarterly results in more detail and provide an update on our outlook.\nConsolidated net sales revenue increased 1% in constant currency, delivering over 99% of third quarter 2019 level despite the on-premise continuing to operate below pre-pandemic levels.\nConsolidated financial volumes declined 3.9%, primarily due to lower brand volumes, which were down 3.6%, largely due to the economy segment, including the economy SKU deprioritization program.\nTop line performance benefited from strong global net pricing, favorable brand mix levels in North America as we continue to premiumize our portfolio, double-digit revenue growth in Europe and positive channel mix.\nNet sales per hectoliter on a brand volume basis increased 3.6% in constant currency, driven by the strong pricing growth, coupled with positive brand and channel mix.\nUnderlying COGS per hectoliter increased 8.9% on a constant currency basis, driven by cost inflation, including higher transportation and input costs, mix impact from premiumization and volume deleverage.\nHowever, with our robust hedging and cost savings programs, we have been able to mitigate some of the inflationary pressure.\nUnderlying MG&A in the quarter increased 3.5% on a constant currency basis due to higher marketing investment behind our core brands and innovation as well as parking targeted reductions to marketing spend in the prior year period due to the pandemic, which was largely offset by lower G&A expenses.\nAs planned, we increased marketing investments in the quarter to levels above second quarter 2021 and third quarter 2019 levels, ensuring strong commercial pressure behind our key innovations and core brands.\nAs a result of these factors, underlying EBITDA decreased 10.9% on a constant currency basis.\nOur effective tax rate in the quarter was significantly impacted by a discrete tax item.\nYou may recall in the second quarter of last year following the issuance of certain U.S. tax regulations, we recognized a material discrete tax expense of $135 million.\nIt was related to previously taken tax positions over several years.\nIn the third quarter of this year, we reached a settlement with the tax authorities with regard to our tax positions impacted by those tax regulations.\nAs a result of the settlement, we had a release of unrecognized tax benefit positions in the quarter that resulted in a P&L tax benefit of $68 million, including a $49 million discrete tax benefit in the third quarter.\nUnderlying free cash flow was $933 million for the first nine months of the year, a decrease in cash received of $227 million, from the prior year period.\nThis decrease was primarily driven by the repayment of taxes related to various government-sponsored deferral programs related to the pandemic.\nAs a reminder, in 2020, working capital was positively impacted by over $200 million for benefits related to these government tax deferral program.\nCapital expenditures paid was $363 million for the first nine months of the year as we continue to invest behind capability programs such as our previously announced Golden Brewery modernization project and our new Montreal brewery expected to open by year-end.\nCapital expenditure levels were relatively consistent with the comparable period in the prior year.\nNow let's look at our results of our business units.\nIn North America, the on-premise has not returned to pre-pandemic levels, but continued to improve on a sequential quarter basis.\nIn the third quarter, the on-premise channel accounted for approximately 14% of our net sales revenue in the quarter, compared to approximately 12% in the second quarter of 2021 and 16% in the same period in 2019.\nIn the U.S., the on-premise accounted for about 88% of 2019 net sales revenue in the quarter.\nIn Canada, restrictions continue to ease throughout the quarter with the on-premise net sales rising to 80% of 2019 levels in the third quarter, up from about 25% in the second quarter.\nNorth America net sales revenue was down 2.1% in constant currency as net pricing growth and positive brand mix were more than offset by lower volume.\nIn the U.S. domestic shipment volumes decreased 6.6%, trailing brand volume declines of 5.2%, driven by unfavorable shipment timing and declines in the deprioritized economy segment.\nEconomy was down double digits as we deprioritize and announced the rationalization of approximately 100 non-core SKUs, which were primarily in the economy segment.\nConversely, our U.S. above premium portfolio was up high single digits.\nCanada brand volumes improved 0.5% in the quarter, and Latin America brand volumes continued their strong performance and experienced 9% growth, reflecting the easing of on-premise restrictions.\nNet sales per hectoliter on a brand volume basis increased 2.4% in constant currency with net pricing growth and favorable brand mix, partially offset by unfavorable geographic mix given the growing license volume in Latin America.\nU.S. net sales per hectoliter increased 3.2%, driven by net pricing growth and positive brand mix, led by best premium innovation brands, including Vizzy, Topo Chico Hard Seltzer and Zoa.\nNet sales per hectoliter on a brand volume basis grew in Canada due to positive brand and channel mix as well as net pricing increases while Latin America also increased due to favorable sales mix.\nUnderlying cost per hectoliter increased 7.3%, driven by inflation, including higher transportation and packaging materials and brewery costs, volume deleverage and mix impact from premiumization.\nUnderlying MG&A decreased 1% as higher marketing investments were offset by lower G&A due to lower incentive compensation expense and the recognition of the Yuengling Company joint venture equity income.\nWe increased marketing investments behind our innovation brands and our iconic core brands, Coors Light and Miller Lite, including an increase in local tactical spend as on-premise restrictions eased throughout the quarter.\nAs planned, we increased U.S. marketing investment compared to not only the same period in 2020, but also versus 2019.\nNorth America underlying EBITDA decreased 14.3% in constant currency.\nEurope net sales revenue was up 14.7% in constant currency, with an 11% increase in net sales per hectoliter on a brand volume basis driven by positive brand, channel, geographic and packaging mix and positive net pricing.\nTop line performance also benefited from the on-premise reopening in the U.K. on July 19.\nAnd of note, in the third quarter of 2020, the on-premise have fewer restrictions than in the second and fourth quarters of that year.\nThe U.K. on-premise channel net sales revenue reached similar levels of pre-pandemic levels in the quarter.\nEurope financial volumes decreased 2% and brand volumes decreased 3%.\nThe decline was primarily due to lower Central and Eastern European volumes driven by increased on-premise restrictions related to the coronavirus and the disposal of our India business in the first quarter of 2021.\nThis was partially offset by growth in the above premium brand volumes, which reached another record high portion of our Europe portfolio.\nUnderlying EBITDA increased 2.7% in constant currency as revenue growth was partially offset by higher marketing investments.\nTurning to the balance sheet.\nAs of September 30, 2021, we had lowered our net debt to underlying EBITDA ratio to 3.3 times and reduced our net debt to $6.6 billion, down from 3.5 times and $7.5 billion, respectively, as of December 31, 2020.\nOn July 15, we announced that we had repaid in full the $1 billion, 2.1 senior notes that are maturing that day using a combination of commercial paper and cash on hand.\nWe ended the third quarter with strong borrowing capacity with approximately $1.5 billion available capacity under our U.S. credit facility.\nNow turning to our financial outlook.\nWe are again reaffirming our 2021 key financial annual guidance originally provided on February 11, 2021.\nWhile we are sitting in a better place than we were a year ago, it bears reminding that uncertainty pertains to the coronavirus and its variants remains severely decreased by market.\nIf restrictions are reinstated in some of our larger markets, this could have a significant impact on our financial performance over the next few months.\nNow I'll provide some underlying expectations to provide some additional context for the balance of the year.\nWe expect to deliver mid-single-digit net sales revenue growth for the full year on a constant currency basis.\nWe continue to work to build inventories with wholesalers, which have been at low levels.\nAnd as Gavin mentioned, we are making progress.\nIn the U.S., we expect on-premise trends to continue to improve as we lack restrictions in the prior year period.\nIn Canada, we continue to see greater on-premise reopenings bearing by COVID, which should continue to provide positive channel mix.\nIn Europe, the U.K. top line should strongly benefit from the prior year fourth quarter, given the on-premise was fully locked down for November and December of 2020, which are typically strong months given the holidays.\nOur guidance also anticipates continued strength in our both premium portfolio, particularly hard seltzers, innovations and imports.\nAlso, we expect continued solid progress against our previously discussed emerging gross revenue goal of $1 billion in annual revenue by 2023, against which we continue to track ahead of plan driven by Zoa, La Colombe and Latin America.\nWe continue to anticipate underlying EBITDA to be roughly flat compared to 2020 as top line growth is expected to be offset by continued cost inflationary headwinds largely transportation and packaging materials, including aluminum and the Midwest premium and increased marketing investments to deliver against our revitalization plan.\nUnder the revitalization plan, 2021 has been a year of investment for the company, and we intend to continue to increase marketing investments to build on the strength of our core brands and support successful innovation.\nAs Gavin mentioned, we expect fourth quarter marketing investment to be higher than the fourth quarter of 2019, as we continue to ramp up supply and put commercial pressure to support our big bet brands in both North America and Europe.\nWe continue to anticipate underlying depreciation and amortization of $800 million, and net interest expense of $270 million, plus or minus 5%.\nHowever, due solely to the discrete tax benefit in the third quarter, we have adjusted our effective tax rate range for 2021 only to 13% to 15% from 20% to 23% previously.\nAlso, as a reminder, in 2020, our working capital benefited from the deferral of approximately $130 million in tax payments from various government-sponsored payment deferral programs related to the coronavirus pandemic.\nWe currently anticipate the majority to be paid this year as they become due.\nMoving to capital allocation.\nWe continue to prioritize investing in our business to drive top line growth and efficiencies, reducing debt and returning cash to shareholders.\nFirst, we plan to continue to prudently invest in brewery modernization and production capacity and capabilities to support new innovations and growth initiatives, improve efficiencies and advance toward our sustainability goals.\nSecond, we have a strong desire to maintain and, in time, upgrade our investment grade rating.\nAs such, we expect to continue to improve our net debt position and reaffirm our target net debt to underlying EBITDA ratio to be approximately 3.25 times by the end of 2021, and below three times by the end of 2022.\nAnd third, on July 15, our Board of Directors determined to reinstate a quarterly dividend on our Class A and Class B common shares and declared a quarterly dividend of $0.34 per share payable on September 17.\nThe Board made the decision to reinstate the dividend at a level that they believe is sustainable and provides room for future increases as business performance improved.\nIn closing, to be sure we have faced challenges in the quarter, but are proud of our agility and the actions we have taken to manage through them.\nThrough it all, we have continued to successfully execute against our revitalization plan with clear premiumization of our portfolio.\nAnd despite all the ups and downs throughout this year, we have reaffirmed our key financial annual guidance yet again.\nLike most consumer product companies, we face near-term challenges, but the fundamentals of our business remains strong, and we are confident we are on the right path toward long-term sustainable revenue and underlying EBITDA growth.\n", "role": "user" }, { "content": "reaffirms key 2021 financial guidance.\nqtrly net sales revenue per hectoliter increased 3.6%.\nqtrly net sales $2,822.7 million versus $2,753.5 million.\n", "role": "assistant" } ]

[ { "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: Please limit yourself to one question and if you have more than one question, please ask your most pressing question first and then reenter the queue to follow up.\nIf you have technical questions on the quarter, please pick them up with our IR team in the days and the weeks to follow.\nGAAP reconciliations for any non-US GAAP measures are included in our news release or otherwise available on our website.\nAlso, unless otherwise indicated, all financial results the Company discusses are versus the comparable prior-year period and in US dollars.\nAnd with that, over to you, Gavin.\n2020 was an incredibly challenging year for everyone, Molson Coors included.\nBut in many respects that consider us lacking.\nThe revitalization plan we put in place in October of 2019 positioned our Company well to weather the storms of 2020.\nOur business was leaner and more nimble, which put us in a better position to conserve resources as the circumstances dictated.\nAnd we deployed them effectively at the circumstances a lot, and the results bear that out.\nWhen you consider what we set out to do on our revitalization plan, we accomplished an incredible amount in 2020 and that has given us a tremendous springboard for 2021.\nOur two largest brands, Coors Light and Miller Lite, our iconic core grew 6.1% and 8.6% in the US off-premise respectively.\nOur above premium brands in the US reached a record high percentage of the portfolio in the second half of 2020.\nBeyond beer, our first foray into non-alcoholic cannabis beverages through the Truss joint venture has netted the number 1 dollar share spot in the entire Canadian cannabis beverage market.\nWe increased our production capacity for our fast growing seltzers by approximately 400%.\nAnd we approximately doubled our annual investments in our hometown communities.\nThat is the story of Molson Coors in 2020.\nNow you may be wondering why I have such confidence, especially if you only look at our consolidated top line results in the fourth quarter.\nBut that number alone does not tell the full story.\nAnd if you only look at that piece of data, you've missed it.\nOur top line results in the fourth quarter were overwhelmingly due to losses resulting from government restrictions in the European on-premise channel.\nTo put it more bluntly, Europe alone accounts for 92% of our fourth quarter top line plants.\nSo those results are not reflected of the performance we've seen across the rest of the business.\nAnd the story is very different in our largest market.\nIn the fourth quarter, Molson Coors grew net sales revenue in the United States.\nWe grew the top line in the United States.\nOur plan is working.\nSo let's look deeper in our results in 2020, and what we have in store for 2021.\nOur first pillar under the revitalization plan was to build on the strength of our iconic core.\nIn the US, our largest beers, Coors Light and Miller Lite delivered 6.1% and 8.6% expected growth in the off-premise.\nAgain grew share in the premium light beer segments and they finished 2020 with stronger brand health.\nWe're pleased, but not satisfied with those results.\nSo in 2021, we're going to put even more marketing behind these two iconic brands.\nAnd we're thinking big as you may have noticed around the big game of last weekend.\nAnd again, I want to point something out here.\nWe are demonstrating our ability to grow in seltzers and expand beyond beer while strengthening our core brands.\nWe are demonstrating, we can do both.\nThe revitalization plan was specifically designed to free up resources, so we can meaningfully invest behind our core.\nOur growth in above premium and our expansion beyond beer.\nIn the second half of 2020, above premium products hit a record high portion of our US portfolio relative to any prior-year comparable period.\nWe doubled our share itself in the US moving toward our double-digit share goal by the end of this year.\nVizzy is going to top 10 growth plan for nearly six straight months.\nAnd this incredible growth has been accomplished with basically just one pick.\nIn a few weeks, we plan to add more firepower to that brand with a second variety pack.\nAnd a few weeks later, we plan to launch Vizzy Lemonade, a lineup, we believe is tailor-made for Vizzy given its unique antioxidant Vitamin C attributes.\nAnd we are excited about the opportunity for Coors Seltzer which launched at the end of September.\nWe are seeing promising signs including the peak rates that are stronger than Bud Light Seltzer and Corona Seltzer at same point during their launch.\nIn 2021, we have strong plans to accelerate marketing support behind Coors Seltzer as well as its commitment to help save Americas' rivers.\nAnd that's just the beginning.\nWe are about to launch Topo Chico Hard Seltzer which is getting a lot of attention from retailers and distributors alike.\nTopo Chico mineral water is beloved in the biggest markets throughout the United States, especially in Texas, high potential market.\nQuickly on its heels, we plan to bring Topo Chico ranch water to market.\nAnd again, we see, this brand is best positioned to take advantage of the ranch water craze that has been inspired by Topo Chico mineral water enthusiast, mixing our branch water at home.\nAnd still to come is Proof Point, our first voted spirited seltzer.\nWhen all four seltzers are in market later this spring, we believe we will post the strongest most differentiated Seltzer line up in the United States.\nAnd while we started behind others in the United States, in Canada and Europe, we are early entrants in the Hard Seltzer category.\nIn the next couple of weeks, we are taking both Vizzy and Coors Seltzer into Canada.\nIn Europe, building on an existing brand partnership already in markets, the launch of our own threefold brand seltzer is planned for March and we will be leading the development of the category across Central and Eastern Europe with an own brand in the second quarter.\nIn above premium beers, we have high expectations for Blue Moon LightSky, which ended 2020 as the number 1 new beer in the United States per Nielsen.\nWe've expanded its production capacity by approximately 400%.\nWe're putting more marketing muscle behind it and we believe, this is a brand and its going to continue to rise for quite some time.\nOur regional craft portfolio in the United States grew 17% as per Nielsen in 2020.\nOutpacing, the crafts segment once again.\nIn next month, we will be taking Hop Valley national in the US and Canada.\nIt's our first national IPA.\nWe believe, it will be another driver of growth for our above premium portfolio.\nAnd do not forget about Yuengling this form -- the newly formed joint venture plans to bring Yuengling to one of America's biggest beer drinking states, Texas.\nThe reception has already been incredible.\nAnd there is significant upside potential with Yuengling as the joint venture begins its Westwood expansion.\nAt the beginning of last year, we changed our name to the Molson Coors Beverage Company, and it wasn't just words.\nBy the end of the year, our non-alc strategy came into focus, repiloting our own brands with our partner, L.A. Libations, we've taken equity investments in other opportunities, including two with legendary non-alc innovator, Lance Collins, we signed distribution agreements to enter the fast-growing space like RTD coffee with La Colombe and energy drinks with ZOA through our new energy drink partnership with the leadership team led by Dwayne Rock Johnson.\nZOA is getting very positive reaction from retailers and distributors.\nThe Rock isn't just putting his name on this.\nHe is personally making close to retailers.\nWe're bringing that to market this spring.\nWe think that ZOA could be a game-changing in the energy drink space.\nTruss Canada, our Canadian cannabis joint venture with -- launched the beverage portfolio in August.\nAnd by December, they jumped to the number 1 dollar share position with four of the top five cannabis beverage SKUs in Canada.\nAnd Truss USA is building on that.\nActually a first line up was throughout CBD beverages in Colorado, which entered the market in December.\nWe are learning a lot about the exciting category following the launch.\nThis entire line-up is a tremendous growth opportunity for our business.\nIt will be a driving force behind our goal to build our emerging growth division into a $1 billion revenue business by 2023.\nAnd as a reminder that ambition does not include hard seltzers.\nAnd we recently announced our first entry into the fast-growing RTD cocktail space through an exclusive equity and distribution agreement with super, an above premium tequila-based Paloma.\nLast year, we also made major investments to help our business grow the top line we invested in our e-commerce capabilities, all around the globe with more staff and more robust digital capabilities and it paid off last year.\nWith 230% growth in e-commerce in the US alone.\nWe expanded our Seltzer production capacity by approximately 400%.\nAnd we also expanded our Light Sky production capacity by approximately 400%.\nWe completed a sleek can production line capable of manufacturing approximately 750 million sleek cans annually.\nAny on the topic of kent, I'm really pleased to say that our packaging material suppliers vastly improved with glass bottles, paperboard and toll cans with all returning to more material.\nour Coors Light can inventory is higher than it was at this point last year.\nAnd our industry standard can supply is improving.\nWe have sourced cans from four continents and worked closely with our supplier to keep up very high rate of consumer demand and we expect to return to normal material availability by the end of this quarter.\nWe will continue investing in our capabilities throughout the year as we work to grow our ability to produce higher margin above premium products.\nLast but certainly not least, is how we are supporting our people and our communities.\nThis one is particularly important to me.\nWhen I took over as CEO, I made it clear that I want Molson Coors at a people first culture.\nNet approach guided our decision making throughout the last year.\nThe work in this space is never done, but we are making important progress.\nAcross the country, among salaried employees and in leadership positions, each market availability shows we have room for improvement.\nWe have made progress toward that goal and we expect to continue to do so.\nWe also increased our support for organizations dedicated to quality, common, racial justice, community building and provided nearly 3 million meals to families in our hometown communities struggling with food and security.\nBut we must do more.\nSo today I'm proud to announce that not only will we recommit to matching last year's investments in our communities, we have also committed to spend a total of $1 billion with diverse suppliers over the next three years.\nThis is a commitment that benefits all of us.\nA wider base of talented suppliers, with different backgrounds and life experiences will be a benefit to our Company, and a diverse supply to earn our business will be able to turn in -- in turn hire more talented employees into their businesses.\nLast time we said that Molson Coors' response to addressing racial injustice would not just be a moment in time.\nPassing thing satisfied and forgotten other priorities took over.\nThat would be unacceptable.\nOur commitment to investing in our communities and striving for equal opportunity for all people will not fade.\nEven with the unforeseeable challenges of last year, we built on the strength of our iconic core.\nThe second half of 2020, we achieved a record high portion of our US portfolio in above premium products.\nWe expanded beyond the beer aisle.\nWe invested in our capabilities, we supported our people and our communities.\nAnd we are not about to stop now.\nWhen I took over this role, I told you that we would plan and invest to grow our top line.\nWe're going to follow through on that and we're on the pathway there.\nThis is our revitalization plan and action.\nI know there have been questions about whether or not we can execute all of this, but no one has to wonder any longer.\nWe'll be doing it, right now today.\nThe coronavirus pandemic had a significant impact on our 2020 financial performance primarily due to the on-premise restrictions and lockdown.\nOur Europe business was the most impacted, particularly in the UK.\nThere are business skews heavily toward the on-premise and drove revenue and EBITDA declines in both the fourth quarter and for the full year 2020.\nIn fact, Europe which accounted for only 16% of our revenue in 2020 contributed to 61% of revenue decline, and 83% of our EBITDA decline for the year, and 92% of the revenue decline and 56% of our EBITDA decline for the fourth quarter.\nDespite these incredible challenges in 2020, we are proud of our resilience and the financial performance as we have navigated through this unprecedented times.\nNow, let me take you through our full year performance and then I'll touch on our quarterly results, before moving on to our outlook.\nRecapping the year, consolidated net sales revenue decreased 8.7% in constant currency of which North America was down 4.3% while Europe was down 28.4% on a constant currency basis.\nWhile we delivered net pricing growth in North America and Europe as well as positive brand and packaged mix in the US.\nThis is more than offset by volume declines and unfavorable channel mix principally driven by varying degrees of on-premise restrictions throughout much of the year due to the coronavirus pandemic, which also drove packaging material constraints due to the unprecedented can demand.\nBrand volumes declined 7.8% and financial volumes declined 8.9%.\nNorth American shipment trends improved in the second half of the year as certain packaging material constraints ease and we both distributed inventory.\nNet sales per hectoliter on a brand volume basis grew 1.1% in constant currency due to pricing growth in North America and Europe as well as positive brand and package mix in the US.\nThe success of our both premium innovations including Vizzy, Blue Moon LightSky and Coors Seltzer, help drive US net sales per hectoliter up 2.3% for the year.\nUnderlying COGS per hectoliter increased 2.8% on a constant currency basis driven by cost inflation including higher transportation costs, volume deleverage and mix impacts from premiumization in North America, partially offset by cost savings.\nHigher can sourcing cost in North America contributed to the higher cost inflation.\nAfter the onset of the coronavirus pandemic we aggressively begin sourcing additional aluminum cans from all over the world to support our core brands to address unprecedented off-premise demand.\nAlso we saw tightening of the freight market throughout the year which has led to higher transportation costs.\nUnderlying MG&A decreased 9.9% on a constant currency basis as we quickly took action, pivoting spend away from the areas impacted by the coronavirus pandemic, particularly live in the payments events and sporting events due to shortened or delayed seasons such as the delayed start of the NH-alc season into 2021.\nIn the second half of the year, we began to progressively increase marketing spend, particularly in social and TV media stepping up support behind our new innovations, such as Vizzy, Blue Moon LightSky and Coors Seltzer in alignment with additional supply coming online as well as continuing to support our core Coors Light, Miller Lite and other -- our chronic core brands.\nMG&A declines were also driven by targeted cost mitigation actions and significant cost savings in the fifth year of our revitalization cost savings program.\nIn aggregate, we delivered approximately $270 million across MG&A and cost of goods sold, chasing us on track to meet our $600 million target in total gross savings.\nThese reductions were offset by innovations, in fact in lower incentive compensation and a non-recurring vendor benefit in the prior year which we referenced last quarter.\nAs a result, underlying EBITDA decreased 10% on a constant currency basis.\nUnderlying free cash flow was $1.3 billion for the year, a decrease of $104 million from the prior year driven by lower underlying EBITDA and higher cash taxes partially offset by favorable working capital.\nThe working capital benefit was driven by the deferral of approximately $150 million in tax payments on various government bonds with payment deferral programs related to the coronavirus pandemic of which, we currently anticipate the majority to be paid in 2021 as they become due.\nCapital expenditures incurred were $530 million for the year.\nWith improved liquidity and strong cash management, we were able to accelerate certain investments in expanding our production capacity and capabilities to support new innovations and growth initiatives.\nIn addition to the strong free cash flow performance, we made tremendous stride in improving our financial flexibility, including continuing to pay down debt favorably amending our US revolving credit facilities and suspending our dividend in May for the remainder of 2020.\nWe reduced our net debt position by $1.1 billion in 2020 and reduce our trailing 12 month net debt to underlying EBITDA ratio to 3.5 times as we remain committed to maintaining our investment grade rating.\nNow let's discuss the fourth quarter.\nWe're again Europe due to the on-premise lockdown had a significant and disproportionately negative impact on our results.\nConsolidated net sales revenue declined 8.3% in constant currency principally due to financial volume declines as a result of the on-premise restrictions along with corresponding negative channel mix, partially offset by net pricing growth in North America and Europe as well as positive brand and package mix in the US.\nNorth America net sales revenue was down 1% in constant currency.\nHowever, in the US, despite increased on-premise restrictions and aluminum can supply constraints, we delivered net sales revenue growth of 1.9% in the quarter.\nAnd we continue to build this distributor inventory in the US with brand volumes down 6.2% compared to domestic shipment declines of 2.3%.\nGrowth in the US business was more than offset by lower volumes and negative mix in Canada, and to a lesser Latin America as a result of the on-premise restrictions.\nIn Europe, net sales revenue was down 59.4% in constant currency driven by volume declines and negative mix due to increased on premise restriction with the most meaningful in the UK, which experienced a return to almost total on-premise locked down for November and the historically strong month of December and with the subdued nature of many festive celebrations during the fourth quarter, we did not see a big shift of volume into the off-premise.\nNet sales per hectoliter on a brand volume basis increased 3.7% in constant currency reflecting net pricing growth in North America and Europe more than offsetting the negative mix effect of the various market dynamics and consumer shift caused by the coronavirus pandemic.\nIn the US net sales per hectoliter on a brand volume basis increased 4.2% driven by favorable sales mix from new innovations and strong net parking growth.\nWhile in Europe, net sales per hectoliter on a brand volume basis decreased 8.2% due to unfavorable mix, particularly driven by the higher margin UK business which more than offset pricing increases.\nUnderlying COGS per hectoliter increased 6.4% on a constant currency basis, as we saw a greater impact on price inflation and US mix premiumization in Q4 compared to the full year.\nMG&A in the quarter increased 5.8% on a constant currency basis due to higher planned marketing spend to support our core brands and key innovation as well as backing lower incentive compensation and a non-recurring vendor benefit in the fourth quarter of 2019.\nThis was partially offset by cost savings and lower discretionary spend.\nAs a result, underlying EBITDA decreased 33.6% on a constant currency basis disproportionately driven by Europe.\nGiven the length and severity of the impact of the coronavirus pandemic on our Europe business as well as the projected recovery currently expected in certain on-premise markets, we recognized a goodwill impairment charge of $1.5 billion in our Europe segment.\nWe also recognized $39.6 million of asset impairment charges in our North American segment.\nThese charges are non-cash and are not included in underlying results.\nSo this takes me to our financial outlook.\nAs you may recall, on March the 27 of last year, we withdrew our guidance due to the uncertainty driven by the coronavirus pandemic.\nWhile uncertainty remains in an effort to help enhanced visibility, we have determined to reinstate our practice of providing guidance.\nWe have also determined to adjust the matrix provided which includes adding garden for net sales revenue, a metric which aligns with our revitalization can goals for driving top line growth as well as net debt to underlying EBITDA leverage ratios, given our commitment to remaining investment grade.\nWe are very proud of our performance and agility navigating the coronavirus pandemic and executing against our revitalization plan, but recognize that headwinds remain.\nThe pandemic continues to impact our business due to on-premise losses across all our geographies and disproportionately starting in Europe as well as Canada.\nWe expect big domestic shipment trends in the US to continue to be higher than brand volume trends in the third quarter as we continue to build inventories hitting into the peak season.\nFor the year, we maintain our annual goal of shipping to consumption in the US.\nIn Europe, we continue to experience significant lockdowns and expect third quarter volumes will be materially impacted due to the prior year period similar to what was experienced in the fourth quarter of 2020.\nFor 2021, we expect to deliver mid-single-digit net sales revenue growth.\n2021 is intended to be a Europe investment as we continue to de-lever our revitalization plan and drive toward long-term growth.\nThis entails increasing year-over-year marketing spend to build on the strength of our core brands and support our successful 2020 launches including Blue Moon LightSky, Vizzy and Coors Seltzer and new innovations to come as well as investing in further expanding our capabilities to drive productivity and efficiency.\nWe expect significant increases in Spain, beginning in the second quarter, which is the prior comparable quarter.\nWhile we continue to expect revitalization plan savings as I discussed, given this increase in along with cost headwinds related to higher inflation including transportation costs and continued premiumization of our portfolio, we anticipate 2021 underlying EBITDA to be approximately flat compared to the prior year.\nWe anticipate underlying depreciation and amortization of $800 million, net interest expense of $270 million plus or minus passed the same.\nAnd an effective tax rate in the range of 20% to 23%.\nWe entered 2021 with greatly improved financial flexibility.\nLater enabling us to not only continue to invest in our business to continue to pay down debt and return cash to shareholders in 2021.\nAs I mentioned we significantly reduced our net debt position by $1.1 billion in 2020 and reduce our leverage ratio to 3.5 times as of December 31, 2020.\nWe are proud of this progress and are establishing a target net debt to underlying EBITDA ratio of approximately 3.25 times by the end of 2021 and below 3 times by the end of 2022.\nAnd we currently anticipate that our Board of Directors will be in a position to reinstate a dividend in the second half of this year.\nWe are doing all of this while continuing our commitment to maintaining anytime upgrading our investment grade rating.\nGiven the operating environment, we are pleased with our financial performance, which underscores our strong progress against our revitalization spend and the resilience of our Company and our people to successfully navigate and overcome challenges posed by the coronavirus pandemic.\nWhile these challenges have created some near term fluctuations in financial and operating results, we are confident on the right cause of driving toward long-term revenue and underlying EBITDA growth.\nWe look forward to updating you on our continued progress.\n", "role": "user" }, { "content": "molson coors sees for 2021 underlying ebitda of about flat compared to 2020 on a constant currency basis.\nmolson coors beverage co - reinstating financial guidance for 2021.\nmolson coors beverage co - expect board of directors will be in a position to reinstate a dividend in the second half of 2021.\nmolson coors beverage co - fourth quarter net sales revenue decreased 7.7% reported and 8.3% in constant currency.\nmolson coors beverage co - sees for 2021 net sales revenue, mid-single digit increase on a constant currency basis.\nmolson coors beverage co - fourth quarter net sales revenue in the u.s. increased 1.9%, on a brand volume basis.\nmolson coors beverage co - sees for 2021 underlying ebitda of approximately flat compared to 2020 on a constant currency basis.\n", "role": "assistant" } ]

[ { "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 our Chief Executive Officer, Patrick Beharelle.\nWe use non-GAAP measures when presenting our financial results.\nAny comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.\nOur first quarter results are a tale of two quarters.\nCompared to our December exit rate, year-over-year revenue trends improved in January and February with particular improvement in our largest segment, PeopleReady.\nHowever, those trends reversed course in March and the second half of March saw a significant drop in demand associated with government and societal actions to address the COVID-19 threat.\nFor the quarter, our total revenue was down 11% and we posted a net loss of $150 million or $4.04 per share, which included a pre-tax non-cash impairment charge of $175 million.\nMany of the customers we serve have been deemed essential and we continue to support these clients.\nWe've seen increased demand from grocery and e-commerce retailers.\nOn the other hand, many of the businesses we serve are completely shut down, which is significantly impacting the demand for our services.\nExamples include sports venues, automotive manufacturers and non-essential retailer operations.\nIn total, declining clients have outpaced growing clients and we expect this will be the case for some time.\nIn response, we have taken decisive and significant actions that will reduce our operating expenses by approximately $100 million this year.\nTo ensure we are well-positioned when business conditions improve, we continue to invest in client and candidate facing technologies and are keeping our branch footprint fully intact.\nTurning to our business segments, PeopleReady is a leading provider of on-demand labor and skilled trades in the North American industrial staffing market.\nPeopleReady's revenue was down 8% during the quarter, which was lower than our outlook of minus 7% to minus 4% due to the effect of COVID-19 late in the quarter.\nPeopleManagement is a provider of contingent on-site industrial staffing and commercial driving services in the North American industrial staffing market.\nRevenue was down 10% during the quarter, which was lower than our outlook of minus 5% to flat, also due to the effect of COVID-19 late in the quarter.\nPeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings.\nRevenue was down 21% during the quarter, which was within our outlook of minus 26% to minus 18%.\nThe results were adversely impacted by COVID-19 beginning in March.\nNow I'd like to shift gears and talk in more detail about our operations and strategic focus in the wake of the COVID-19 crisis.\nThe health and safety of both our employees and our clients remains front and center in everything we're doing right now.\nWe implemented comprehensive measures across our brands to keep our workers and clients healthy and safe, including adherence to guidance from the CDC, World Health Organization, OSHA and other key authorities.\nWe formed a specialized task force tracking the most up-to-date developments and safety standards, as well as created an internal information hub with safety protocols, dashboards, FAQs, and daily reporting by location on COVID-19 impact.\nIn addition to posting TrueBlue's action plan on our external websites, we are actively sharing information on how companies and workers can protect themselves via ongoing emails, social outreach, webinars and other digital communications.\nWe are fully leveraging our JobStack app to help companies and workers connect safely through a digital environment and are testing and rolling out a new virtual onboarding capability to minimize in-person branch visits.\nWe are also leveraging our Affinix technology to enable companies to connect with permanent talent through virtual hiring and sourcing.\nWorking closely with clients to enforce safety standards, we are supporting efforts in providing masks for associates, hand sanitizers, workplace disinfecting, social distancing and infrared temperature checks.\nWe instructs all of our workers to stay home if they are not feeling well or have been exposed to COVID-19.\nImmediate notification and self-quarantine protocols are in place if a staff member, an associate or a client's employee is exposed to COVID-19.\nAnd our field safety specialists closely evaluate any assignments related to cleanup of potentially infectious job sites.\nTo ensure business continuity and support for our clients who need workers for essential services, we set up a Centralized Branch Support Center and are ready to implement regional command centers as needed to service back-up for our 600-plus branches.\nOur branches follow strict sanitation and social distancing guidelines.\nIn addition, across the TrueBlue organization, we suspended all international travel and restricted non-essential domestic travel for our employees and are providing remote work capabilities for our Tacoma and Chicago support centers, as well as other location.\nThe progress we've made on our digital strategies are more important than ever to helping us serve our clients by connecting people with work.\nWe filled 785,000 shifts via JobStack in Q1 2020, representing an all-time high digital fill rate of 51%.\nOur client users also hit all-time high of 23,500, up more than 50% compared to Q1 2019.\nJobStack has the obvious advantage of allowing us to remotely dispatch workers, straight from home to the job site.\nBut it also has become a cornerstone to keep our contingent employees safe by providing routine and job-specific health and safety notifications.\nThroughout the current economic crisis, and especially as the world begins to emerge, TrueBlue's underlying mission-connecting people with work, is as important as ever.\nAs we manage through this challenging time, I'd like to emphasize the following points.\nFirst, employee and client safety are our top priority.\nHow we operate and how we relate to workers and clients matters more than ever in a world where profit, principle and sheer trust are inextricably linked.\nWe will continue to work with stakeholders to ensure the strongest safety measures for all involved.\nSecond, through careful planning, we exited 2019 with no net debt, allowing us to enter this crisis from a position of considerable balance sheet strength.\nThird, we have taken thoughtful cost management actions to preserve liquidity, which will continue to be a top priority this year.\nFourth, the sales and operations team have developed formal bounce back strategies to ensure we are well positioned when our economies begin their reopening efforts.\nFinally, we have a deep leadership team that understands the key levers to flex the business based on the economic conditions.\nDerrek and I both sat in CFO and CEO positions, respectively during the last recession and are surrounded by a seasoned team of operating leaders.\nI'll now pass the call over to Derrek, who will share greater detail around our financial results.\nTotal revenue for Q1 2020 was $494 million or down 11% in comparison with our outlook of $503 million to $528 million.\nThere are two stories in our first quarter results.\nThe first is the story that covers the first two months, with revenue for January down 9% and February down 6%, which was on track with our expectation.\nThe total company revenue trend during these months was driven by PeopleReady which posted a 7% decline in January and a 3% decline in February with growth of 2% in the last week of February.\nThe second story is with the month of March during which we experienced the swiftest revenue deceleration in the company's history as society sheltered itself from COVID-19 and businesses shuttered.\nFor March as a whole, total revenue was down 16%.\nFor the first three weeks of March, for our staffing businesses, which make up 90% of total company revenue were down approximately 6%.\nDuring the last week of March, revenue was down about 30%.\nTurning to April, staffing revenue for the first four weeks was down 41%.\nThere are possible signs of stabilization with April weekly revenue results falling within a range of minus 43% to minus 38% but it's admittedly hard to make a call on stabilization at this point.\nWe posted a net loss of $150 million or $4.04 per share in comparison with our outlook of a loss of $0.07 to $0.00.\nIncluded in our results is a non-cash impairment charge of $175 million or $152 million net of tax, which translates to $4.08 per share.\nAbout $120 million of the pre-tax charge was in PeopleScout and $55 million in PeopleManagement.\nAdjusted net loss per share was $0.01, which is less than our outlook of net income per share of $0.04 to $0.11 as a result of revenue falling short of the midpoint of our revenue outlook.\nAdjusted EBITDA was down 73%, primarily due to lower revenue and gross margin, which in combination with the operating leverage in our business, contributed to a drop in adjusted EBITDA margin of 210 basis points.\nIt's also important to note that the sharp decline in profitability is also due to the fact that Q1 is our seasonally lowest revenue quarter.\nConsequently, the decline in revenue has a more pronounced impact on year-over-year profitability.\nGross margin of 25.5% was down 110 basis points.\nAbout 100 basis points of the decline came from our PeopleScout business due to a previously disclosed client headwind and overall volume declines which outpaced the timing of reductions to our recruiting staff.\nOur staffing business contributed 50 basis points of headwind from a change in revenue mix associated with larger declines in our higher margin local accounts in comparison with our lower margin national accounts.\nThis was offset by 40 basis points of net benefit from lower Affordable Healthcare Act costs which we do not expect to reoccur, which was somewhat offset by a workers compensation benefit in Q1 2019 associated with prior insurance carriers.\nSG&A expense improved by $11 million or by 8% compared to Q1 2019.\nWe had an income tax benefit this quarter of 14% as compared to our expectation of income tax expense of 12% due to the pre-tax loss and permanent differences associated with certain aspects of the impairment charge.\nTurning to our segments, PeopleReady, our largest segment representing 63% of trailing 12-month revenue saw an 8% decline in revenue and segment profit was down 33%.\nMarch revenue was down 14%.\nRevenue declined significantly during the last two weeks of March due to COVID-19 with revenues dropping 20% for the week ended March 22, 32% for the week ended March 29.\nPeopleManagement, representing 27% of trailing 12-month revenue and 8% of segment profit saw a 10% decline in revenue and segment profit was down 114%.\nMarch revenue was down 14%.\nRevenue declined significantly during the last two weeks of March due to COVID-19 with revenues dropping 15% for the week ended March 22, and 30% for the week ended March 29.\nPeopleScout, representing 10% of trailing 12-month revenue and 25% of segment profit saw a 21% decline in revenue and segment profit was down 76%.\nMarch revenue was down 28%.\nThe decline in revenue for the quarter was a carry over from the trend in Q4 2019, associated with client losses and lower same customer volume as well as the impact of COVID-19.\nAs previously discussed, the client headwind created 8 percentage points of drag on revenue and 25 percentage points on segment profit.\nNow let's turn to the balance sheet and cash flows.\nWe entered 2020 from a position of strength, given the fact that our balance sheet has a zero net debt at the end of 2019.\nIn March, we drew substantially all of the remaining availability on our $300 million revolving credit facility to further enhance our liquidity position.\nAt the end of Q1, we had $265 million of cash on the balance sheet and total debt of $294 million.\nOur debt-to-capital ratio was 41% or 4% on a net debt basis and our total debt to adjusted EBITDA multiple stood at 3.0, which is higher than the ratio defined by our lending agreement, which includes some different adjustments, including the add-back of stock-based compensation resulting in a ratio of 2.7.\nWhile we experienced a significant decline in adjusted EBITDA this quarter, cash flow from operations increased by roughly 25% compared to Q1 last year due to the accounts receivable based deleveraging, which will continue to be a source of capital with future revenue declines.\nWe dedicated $52 million of cash toward the repurchase of common stock in February, $12 million through open market purchases, and $40 million through an Accelerated Share Repurchase program or ASR.\nOn February 28, we executed the ASR and $40 million of cash was provided to an investment bank.\nIn return, $32 million of stock was delivered to the company at a price of $14.88 and these shares were removed from our outstanding share count.\nBut the full weighted impact will not be present until Q2.\nThe remaining $8 million of stock will be delivered no later than July 2 and the total number of shares repurchased will be trued up based on the volume weighted average price over the four-month term of the agreement, less a discount.\nWe do not plan to repurchase additional shares until market conditions improve.\nNow, I'd like to take a few minutes to discuss our future outlook.\nGiven the uncertainty of when societal and business restrictions will be lifted, we're not able to provide a customary outlook for the next quarter with an appropriate amount of precision.\nI'll provide some highlights on this information starting with the top-line.\nTrueBlue revenue has historically fluctuated along with changes in gross domestic product.\nRegression analysis suggests that TrueBlue revenue would be down approximately 9% if GDP was flat and would decline approximately 7 percentage points for every additional point of year-over-year GDP decline.\nFor example, if the year-over-year decline for GDP was 5% for a particular quarter, this would imply a decline in TrueBlue revenue of roughly 44%.\nIt's important to note that these are year-over-year GDP rates, not seasonally adjusted annualized rates.\nIn addition to GDP, there are a multitude of variables that can impact the demand for our services.\nConsequently, we can't assure you these relationships will be indicative of future results.\nAlso there could be additional variation in our future results as the historical company results using this analysis did not include periods with such swift and significant revenue declines that have occurred in the current environment.\nBut we are using this analysis as a source of direction in our own planning and we have provided it with the hope that it is helpful.\nAs Patrick mentioned, we took swift and decisive action to reduce our expected operating expenses in 2020.\nGiven the current environment, we chose to take significant action to quickly adjust the company to a new normal and reduce the risk of organizational fatigue that can ensue from round after round of cost cuts.\nWe also attempted to be thoughtful in our actions to not only preserve our financial strength, but also preserve our operational strength, so that we are well positioned when business conditions improve.\nBased on these actions, we expect SG&A to be about $100 million less in 2020 in comparison with 2019 including a workforce reduction charge of $1 million in Q1 and about $8 million in Q2.\nAll in, this would produce a SG&A decrease of about 20% in 2020.\nTurning to fiscal year 2020 gross margin, we expect a contraction of 180 basis points to 120 basis points.\nThis gross margin headwind is associated with a mix shift in the PeopleReady business based on an assumption that our higher margin local account business will see bigger declines than the national account business.\nPricing pressure will occur in our staffing businesses, lower volume will occur in our PeopleScout business and the fact that our previously disclosed customer headwind at PeopleScout will not anniversary itself until Q3.\nFor capital expenditures, we expect about $22 million for the full year.\nPlease note that our outlook is net of $8 million in build out costs for our Chicago headquarters that will be reimbursed by our landlord in 2020.\nOur outlook for weighted average shares outstanding for fiscal year 2020 is 35.7 million shares.\nTurning to our tax rate for the year, we're not able to provide an effective income tax rate outlook due to uncertainty surrounding the amount of pre-tax income or loss we will incur.\n", "role": "user" }, { "content": "q1 adjusted loss per share $0.01.\nq1 loss per share $4.04.\nq1 revenue $494 million versus refinitiv ibes estimate of $498.9 million.\nfor q1 took a non-cash goodwill and intangible asset impairment charge of $175 million.\not providing customary quarterly guidance.\ncovid-19 pandemic is creating a material impact on demand for our services.\n", "role": "assistant" } ]

[ { "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 our Chief Executive Officer, Patrick Beharelle.\nWe use non-GAAP measures when presenting our financial results.\nAny comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.\nI am pleased to report we had a strong start to the year.\nWe delivered net income of $7 million in the first quarter versus a loss of $150 million in the first quarter of the prior year.\nAs a reminder, the first quarter last year included a non-cash asset impairment charge of $152 million net effects.\nGrowth, excluding the impairment charge, was led by a series of new client wins, improving industry performance, including those hit the hardest last year, and disciplined cost management.\nI'm pleased that on an adjusted basis, we experienced growth of $9 million in both adjusted net income and adjusted EBITDA year-over-year.\nBefore turning to the segment results, I want to highlight the early new win successes at PeopleManagement and PeopleScout as we are beginning to see increased interest in clients using more variable labor.\nIn PeopleManagement, new wins on an annualized basis are $44 million this year, up from $16 million same time last year, mainly in manufacturing, logistics and retail.\nWe have seen similar growth at PeopleScout where annualized wins are $30 million this year, up from $3 million the same time last year.\nNew client growth is coming from a variety of industries, including retail, healthcare and transportation, which is very encouraging.\nNow let's turn to our results by segment, starting with PeopleReady.\nPeopleReady is our largest segment, representing 59% of trailing 12-month revenue and 69% of segment profit.\nPeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market.\nWe service our clients via national footprint of physical branch locations, as well as our JobStack mobile app.\nPeopleReady's revenue was down 13% during the quarter versus down 18% in Q4.\nPeopleManagement is our second largest segment, representing 33% of trailing 12-month revenue and 22% of segment profit.\nPeopleManagement provides onsite industrial staffing and commercial driving services in the North American industrial staffing market.\nThe essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multi-year multi-million dollar onsite for driver relationships.\nPeopleManagement revenue is reaching pre-pandemic levels, by growing 7% in the first quarter versus up 5% in Q4.\nTurning to our third segment, PeopleScout represents 8% of trailing 12-month revenue and 9% of segment profit.\nPeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings.\nRevenue was down 13% during the quarter, versus down 24% in Q4.\nNow I'd like to shift gears and update you on our key strategies by segment starting with PeopleReady.\nOur long-term strategy at PeopleReady is to further digitalize our business model to gain market share and improve the efficiency of our service delivery cost structure.\nMost of our competitors in this segment are smaller mom and pops that don't have the scale or capital to deploy something like our JobStack mobile app.\nThis along with our nationwide footprint is what makes us unique.\nAs a reminder, we began rolling out JobStack to our associates in 2017.\nAnd in 2018, we launched the client side of the app.\nWe now have digital fill rates north of 50% and more than 26,000 clients are using the app.\nIn Q1 2021, we sold 716,000 shifts via JobStack, representing a digital fill rate of 58%.\nOur client user count ended the quarter at 26,500, up 13% versus Q1 2020.\nThe rise in heavy client user growth continues to be our primary focus.\nHeavy client user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker, or approving time.\nJobStack heavy client users continue to post better year-over-year revenue growth rates compared to the rest of the customer base.\nIn Q1 2021, the revenue growth differential between heavy client users and non-users was over 35 percentage points on a same customer basis.\nThis growth differential is largely driven by wallet share takeaways from competitors as heavy client users are telling us a major reason they are moving share to PeopleReady is due to JobStack's unique capabilities.\nOur focus on heavy user growth is become more material in our overall results.\nWe increased our heavy client user mix from 24% of PeopleReady's business in fiscal 2020 to 31% in Q1 2021.\nWith the foundation of our digital strategy in place, our focus has turned to how we can better serve our existing customers and reach new clients.\nCombining the strength of our geographic footprint with technology, centralized work activities and repurposed job roles will allow us to achieve this goal with greater efficiency.\nAt the end of the first quarter, we launched two market pilots.\nPilots use the elements I mentioned to provide an altered go-to-market approach and are intended to strengthen the local presence in the communities where we do business.\nWhile it's still too early to report results, we are encouraged by the progress made by the team.\nWe'll continue to update on this front as the pilot progresses.\nTurning to PeopleManagement, our strategy is to focus on execution and grow our client base.\nLast year, we sharpened our vertical focus to target essential manufacturers and made investments in our sales teams to enhance productivity.\nWith these initiatives in flight, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets.\nWe are seeing strong results, as mentioned earlier, with new win growth during the first quarter.\nFinally, we are investing in customer and associate care programs in an effort to serve our client needs better and improve retention.\nTurning to PeopleScout, the strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth.\nBefore COVID struck, we along with our competitors experienced a trend toward more insourcing, with some clients bringing more recruitment functions in-house.\nMany of the in-house teams have been reduced or eliminated during the pandemic and we're seeing companies move to hybrid and fully outsourced models as the economy recovers.\nTo capitalize on this trend, we've made investments in our sales.\nWe believe there is a big opportunity to increase wallet share at our existing clients and diversify the industry mix within our portfolio by adding new clients.\nThese efforts are already delivering results as shown by the $30 million of annualized new business wins across multiple sectors as I referenced earlier.\nI'll now pass the call over to Derek, who will share greater detail around our financial results.\nTotal revenue for Q1 2021 was $459 million, representing a decline of 7%.\nWe posted net income of $7 million or $0.20 per share, compared to a net loss of $150 million in the prior year, which included a non-cash impairment charge of $152 million net of tax.\nOn an adjusted basis, we delivered adjusted net income of $9 million or $0.25 per share, an increase of $9 million compared to Q1 2020.\nThe increase in adjusted net income was driven by a decline in SG&A expense.\nAdjusted EBITDA was $13 million, an increase of 189% compared to Q1 2020 and adjusted EBITDA margin was up 200 basis points.\nGross margin of 24.1% was down 140 basis points.\nOur staffing businesses contributed 150 basis points of compression with 130 basis points due to a benefit in the prior year for a reduction in expected healthcare costs.\nAdjusting for this, our overall gross margin was nearly flat.\nThere are also some other offsetting gross margin trends that I would like to point out.\nIn our staffing businesses, higher pay rates in relation to bill rates and sales mix provided 90 basis points of drag offset by 70 basis points of benefit from workers compensation expense, largely related to favorable development in our reserves.\nPeopleScout also contributed 10 basis points of expansion.\nTurning to SG&A expense.\nWe delivered another quarter of strong results with expense down $20 million or 17%.\nMaintaining our cost discipline is important but of equal importance is doing it in a way that preserves our operational strengths to ensure the business is well positioned for growth as economic conditions continue to improve.\nWe are also implementing pilot projects to further reduce the cost of our PeopleReady branch network through greater use of technology, centralizing work activities and repurposing of job roles while maintaining the strength of the geographic footprint.\nThese pilots will occur throughout 2021.\nAnd if successful, could lead to additional efficiencies in 2022.\nOur effective income tax rate was a benefit of 2% in Q1, as a result of our job tax credits exceeding the income tax associated with our pre-tax income.\nTurning to our segments.\nPeopleReady saw revenue decline 13%, while segment profit was up 55% due to lower expense.\nPeopleReady experienced encouraging intra-quarter revenue improvement with March down 3% compared to January down 18%.\nWe were also pleased to see revenue trends improve in some of our hardest hit markets.\nNon-residential construction improved to a decline of 8% in March versus a decline of 24% in Q4 2020.\nAnd hospitality improved to a decline of 9% from a decline of 49% for these same time periods.\nCalifornia was our largest market pre-COVID and was one of our hardest hit geographies.\nCalifornia's revenue trend improved to a decline of 4% in March versus a decline of 27% in Q4 2020.\nPeopleManagement saw revenue increase 7%, which in combination with lower expense drove a $3 million increase in segment profit.\nPeopleManagement also experienced encouraging intra-quarter revenue improvement with March up 15% compared to 5% in January.\nOf the $44 million of annualized new business wins Patrick mentioned, $2 million was recorded in Q1 and approximately $28 million is expected over the remainder of the year.\nPeoplescout saw revenue declined 30% while segment profit increased 61% as a result of lower expense.\nSequentially, revenue was up 11% compared to Q4 2020.\nAs Patrick noted, we are encouraged by the new business wins and the results within our hardest hit industries including travel and leisure which went from a decline of over 50% in Q4 2020 to a decline of about 25% in March.\nWe are also optimistic about the long-term signals we are seeing in these new win.\nFirst, there are signs of a growing interest from clients to shift back from an in-house model to an outsource model.\nSecond, wins are coming from a variety of industries, including retail, healthcare, and manufacturing.\nOf the $30 million of annualized new business wins Patrick mentioned, $2 million was recorded in Q1 and approximately $14 million is expected over the remainder of the year.\nNow let's turn to the balance sheet and cash flows.\nOur balance sheet is in excellent shape.\nWe finished the quarter with $88 million of cash, no outstanding debt and an unused credit facility.\nWhile our profitability increased compared to Q1 last year, cash flow from operations was flat largely due to less benefit from working capital associated with better revenue trends this year.\nIn regards to the topline, the historical sequential revenue growth from the first quarter to the second quarter has averaged about 10%.\nThis average excludes 2020.\nTurning to gross margin for the second quarter, we expect expansion of 180 basis points to 220 basis points.\nSegment revenue mix and operating leverage from higher volumes at Peoplescout are expected to drive approximately 120 basis points of the improvement with the remainder coming from non-repeating workforce reduction costs incurred in Q2 2020.\nWe expect gross margin expansion of 40 basis points to 100 basis points for the full year.\nFor SG&A, we expect $108 million to $112 million for the second quarter and $446 million to $454 million for the full year.\nI'd also like to remind everyone that we will anniversary most of our 2020 cost reduction actions in April of 2021.\nFor capital expenditures, we expect about $14 million for the second quarter and $37 million and $41 million for the year.\nIncluded in our capital expenditure plan are build out costs for our Chicago support center, much of which will be reimbursed by our landlord.\nOur outlook for fully diluted weighted average shares outstanding for the second quarter of 2021 is $35.1 million.\nWe expect our effective income tax rate for the full year before job tax credits to be about 26% to 30%.\nAnd we expect the benefit from job tax credits to be $8 million to $10 million.\nWith the momentum of our first quarter results, a solid balance sheet, and a strong mix of operational and technology strategies, we feel we are well positioned to take advantage of growth opportunities during the recovery and beyond.\nPlease open the call now for question.\n", "role": "user" }, { "content": "trueblue q1 earnings per share 20 cents.\nq1 adjusted earnings per share $0.25.\nq1 earnings per share $0.20.\nq1 revenue fell 7 percent to $459 million.\n", "role": "assistant" } ]

[ { "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 our Chief Executive Officer, Patrick Beharelle.\nWe use non-GAAP measures when presenting our financial results.\nAny comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.\nWe will continue to face revenue challenges until the economic recovery from COVID-19 gains greater momentum and clients are more fully back on their feet.\nBut our actions to reduce expenses are paying off while allowing us to help maintain our profitability and balance sheet strength.\nTurning to our second quarter results, we experienced a significant decline in the demand for our services during the quarter.\nTotal revenue was down 39% and we posted a net loss of $8 million or $0.23 per share.\nWe saw moderate demand improvement toward the end of the quarter, which continued into July.\nIn light of these trends, we expect the second quarter to be our trough, though full recovery will take time and the pace of the recovery may vary by segment.\nOn that note, let's turn to our segment results.\nPeopleReady is a leading provider of on-demand labor and skilled trades in the North American industrial staffing market.\nPeopleReady's revenue was down 43% during the quarter and we saw modest intra-quarter improvement with revenue down 39% in June versus down 46% in April.\nPeopleManagement is a provider of contingent on-site industrial staffing and commercial driving services in the North American industrial staffing market.\nRevenue for PeopleManagement was down 23% during the quarter and snapped back well as the quarter progressed with the top line down 16% in June versus down 30% in April.\nAnd comparing PeopleReady and PeopleManagement's performance, there are two key points to note.\nFirst is client mix.\nPeopleReady has a higher exposure to hard hit sectors such as hospitality and construction whereas PeopleManagement's client mix sits [Phonetic] more favorably supporting e-commerce supply chains for instance.\nSecond is an outsourced versus supplemental dynamic.\nThe essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multi-year, multi-million dollar on-site relationships.\nThese type of client engagements tend not to be impacted as much as PeopleReady's typical engagement which involves supplying supplemental labor with shorter duration assignments.\nWe saw this dynamic in the previous recession as well.\nTurning to our last segment, PeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings.\nRevenue was down 53% during the quarter.\nPeopleScout results were particularly impacted by exposure to large travel and leisure clients.\nNow I'd like to shift gears and talk in more detail about our operations and strategic focus in the wake of the COVID-19 crisis.\nThe health and safety of both our employees and our clients remains front and center in everything we're doing right now.\nLast quarter, we talked about the comprehensive measures implemented across our brands to keep our workers and clients healthy and safe including adherence to guidelines from the CDC, WHO, OSHA and other key authorities.\nThe good news is that these plans are working.\nFirst, Trueblue's is providing masks for all its staff and associates.\nSince the start of the crisis, we've distributed approximately 120,000 masks across our staffing brands.\nSecond, we have symptom checks before entering the building at all of our on-site locations and we've distributed over 600 infrared thermometers for branch offices and job sites that requested or required them.\nThird, as in any crisis, communications is essential.\nWe've established a resource center for staff and safety specialists regularly meet with operational teams and clients to discuss the latest guidelines.\nFourth, we're creatively adapting the way we run the business, including the introduction of drive-in job fairs and supporting our corporate staff so they can work from home.\nTurning to our key initiatives, the progress we've made on our digital strategies is more important than ever in helping us serve our clients by connecting people with work.\nWe filled 551,000 shifts via JobStack in Q2 2020, representing an all-time high digital fill rate of 53%.\nOur client user count ended the quarter at 24,300, up 38% versus Q2 2019.\nJobStack has the obvious advantage of allowing us to remotely dispatch workers straight from home to the job site, but it has also become a cornerstone to keep our contingent employees safe by providing routine and job-specific health and safety notifications.\nThe other initiative we've been working on digital onboarding which allows associates to complete their application entirely on their smartphone rather than physically going into a branch office.\nThis new technology has been deployed in all 50 states and early results are favorable.\nDigital onboarding has resulted in PeopleReady cutting the medium time to complete an application in half and not surprisingly, we're seeing substantially higher percentages of workers completing the hiring process and being put to work.\nIt's still early days for digital onboarding and we'll have more to share in coming months.\nLast quarter, I mentioned that our sales and operation teams we're developing formal bounce back strategies to ensure we are well positioned when our economies begin their reopening efforts and I'd like to take another minute to share a few highlights.\nAt PeopleReady, we're focusing our sales efforts on high-need areas such as reconfigurations for social distancing and change-outs for out of season merchandise.\nWe've won several new client engagements from these efforts.\nWe've also implemented centralized tracking of competitor closures so we can target customers who need a new supplier of labor.\nIn addition, we're working on having a broader worker pool as digital onboarding becomes a reality.\nAt PeopleManagement, we're targeting essential manufacturers and leveraging our strength in e-commerce.\nThese are verticals that have held up well relative to the decline in non-essential goods at traditional bricks-and-mortar retailers.\nAt the same time, we're also focused on consolidating client wallet share since consolidation brings natural economies of scale.\nFinally, at PeopleScout, we're supporting clients that laid off their in-house recuritment teams and have had some recent successes focused on project hiring.\nIn closing, I'll remind everyone that even as the COVID-19 pandemic and economic crisis have forced everyone to rethink the way they do business, our underlying mission here at TrueBlue remains the same, connecting people with work is more important than ever.\nWe remain dedicated to the health and safety of both our employees and our clients, we're committed to our digital strategies, and we're making choices to preserve and enhance the long-term strength of our operations.\nI'll now pass the call over to Derek, who will share greater detail around our financial results.\nTotal revenue for Q2 2020 was $359 million representing a decline of 39%.\nWe posted a net loss of $8 million or $0.23 per share and adjusted net loss of $4 million or $0.12 per share.\nAdjusted EBITDA was a loss of $5 million, down from a profit of $34 million in Q2 2019, primarily due to lower revenue and gross margin.\nGross margin of 23.2% was down 340 basis points.\nPeopleScout contributed 240 basis points of compression with 80 basis points from severance and 160 basis points from client mix and lower volume.\nOur staffing businesses contributed another 100 basis points of compression from unfavorable mix and from pricing.\nWhile bill rate inflation was consistent with our trend over the last couple of quarters, we saw an increase in pay rates that were necessary to attract associates given COVID-19 health concerns and supplemental federal unemployment benefits.\nWe do not expect gross margin compression in the back half of 2020 to be as pronounced as it was in Q2, which I will discuss more in my future outlook commentary.\nTurning to SG&A, I'm pleased to report that our cost management strategies are on track.\nThe quick actions we took in March reduced expense by $29 million or by 23% compared to Q2 2019.\nWe had an income tax benefit this quarter of $13 million, which equates to a 62% effective rate on our pre-tax loss of $22 million.\nGiven our losses this year, we expect our income tax benefit rate to stay elevated this year due to the semi-fixed nature of work opportunity tax credits and the CARES Act, which allows us to carry back pre-tax losses to periods when the federal income tax rate was 35%.\nBeginning in Q2 2020, we will not be making any adjustment to the GAAP tax rate in our adjusted net income calculation until our profitability rises to a more substantial level.\nAdditional information on the components of our effective tax rate is available in our 10-Q filed today.\nTurning to our segments.\nPeopleReady, our largest segment representing 62% of trailing 12-month revenue and 71% of segment profit saw a 43% decline in revenue and segment profit was down 97%.\nWe did see modest intra-quarter improvement with June revenue down 39% compared to 46% in April.\nFor the first three weeks in July, PeopleReady was down 31% or 33% excluding the benefit from fourth of July falling on Saturday this year versus Thursday last year.\nWe are cautiously optimistic that our revenue trends for our staffing businesses will continue to improve.\nHowever, we recognize the rising number of COVID-19 cases and the potential negative business impacts from corrective actions to reverse these trends.\nOn a positive note, we believe that there could be upside to the demand for our services once the Paycheck Protection Program loan forgiveness incentive which is available to small businesses for retaining employees runs its course.\nPeopleManagement representing 28% of trailing 12-month revenue and 9% of segment profit saw a 23% decline in revenue and segment profit was down 56%.\nPeopleManagement experienced encouraging intra-quarter improvement with June revenue down 15% compared to 30% in April.\nMonth-to-date or July, PeopleManagement was down 11% or 12% excluding the timing benefit from the fourth of July.\nPeopleScout representing 10% of trailing 12-month revenue and 20% of segment profit saw a 53% decline in revenue and segment profit was down 125%.\nIntra-quarter revenue declines were similar to the decline for the quarter.\nAs Patrick noted, PeopleScout results were adversely impacted by exposure to travel and leisure clients, which made up roughly 30% of the prior year mix and revenue for this vertical was down 80% year-over-year.\nNow let's turn to the balance sheet and cash flows.\nCash flow from operations was $103 million, which was higher than Q2 last year of $37 million due to the deleveraging of accounts receivable.\nAt the end of Q2 2020, our cash exceeded our debt by $47 million compared to our debt exceeding our cash by $29 million at the end of Q1 this year.\nFor Q2, our total debt-to-capital ratio was 10% and our total debt to trailing 12-month adjusted EBITDA multiple stood at 0.8.\nWhile we would have been in compliance with our prior banking covenants at the end of Q2, we thought it was prudent to amend the covenants to provide additional flexibility given the amount of economic uncertainty.\nUnder our recently completed amendment, our lenders agreed to suspend testing of our debt to EBITDA ratio and fixed charge coverage ratio through June 27th, 2021.\nThese covenants have been temporarily replaced with a minimum asset coverage ratio, minimum liquidity calculation, and minimum EBITDA amounts.\nThe specific calculations for these covenants can be found in the 8-K filed on June 26th and our Q2 covenant calculations can be found in the 10-Q filed today.\nA couple of last thoughts on the balance sheet and capital return.\nWith an adequate supply of liquidity in the banking system and our covenant negotiations behind us, we plan to run the company with about $30 million of cash and apply any excess cash toward debt.\nAlso, as a reminder, we executed $52 million of share repurchases in Q1 prior to the COVID-19 impact.\nWe do not plan to repurchase additional shares until economic conditions improve.\nNow I'd like to take a few minutes to discuss our future outlook.\nDue to the continuing uncertainty surrounding COVID-19 and its impact on the business environment, we are not providing customary guidance.\nI'll provide some highlights on this information.\nCommencing in March, we took swift action to reduce operating expense in 2020.\nOur cost management strategies are on track and we expect expense to be down $90 million to $100 million in comparison with 2019.\nAll-in, this would produce a decrease in SG&A expense of about 20% in 2020.\nAs noted in our Q2 results, we consider any government expense subsidies related to COVID-19 to be non-core to our performance and we will continue to exclude these amounts from our adjusted net income and adjusted EBITDA calculations.\nTurning to fiscal year 2020 gross margin, we expect a contraction of 200 basis points to 140 basis points.\nThis implies that we expect less contraction for the remainder of the year in comparison with Q2 due to favorable mix, the absence of severance, the anniversary in Q3 of the loss of a highly profitable PeopleScout client, and less recruiting staff in our PeopleScout business given current revenue volume.\nFor capital expenditures, we expect about $22 million for the full year, which is net of $4 million in build-out costs for our Chicago headquarters that are to be reimbursed by our landlord in 2020.\nOur outlook for weighted average shares outstanding for fiscal year 2020 on an anti-dilutive basis is 35.3 million.\nWe are providing shares on an anti-dilutive basis since the non-cash goodwill and intangible asset impairment charge we took in Q1 this year will more than offset any profits we posted in 2020.\nWe've taken the right actions to adjust our costs while preserving our operational strength and technology strategies to ensure we are prepared to bounce back strong as the economy recovers.\n", "role": "user" }, { "content": "trueblue q2 loss per share $0.23.\nq2 adjusted loss per share $0.12.\nq2 loss per share $0.23.\nq2 revenue $359 million versus refinitiv ibes estimate of $347.2 million.\nwill continue to face revenue challenges until economic recovery from covid-19 gains greater momentum.\nexperienced a significant decline in demand for our services during quarter.\nsaw moderate demand improvement toward end of quarter which continued into july.\nnot providing quarterly guidance.\n", "role": "assistant" } ]

[ { "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 our Chief Executive Officer, Patrick Beharelle.\nWe use non-GAAP measures when presenting our financial results.\nAny comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.\nI am pleased to report, our strong revenue momentum from earlier in the year carried into the second quarter.\nSecond quarter revenue was $516 million, an increase of 44% compared to the second quarter of the prior year.\nGrowth was driven by both new client wins and higher existing client volumes as we capitalize on strong demand in the markets and industries we serve.\nWe delivered net income of $16 million in the second quarter versus a loss of $8 million in the second quarter of the prior year, and adjusted EBITDA was up $30 million year-over-year with the related margin up 640 basis points.\nBefore turning to our segment results, I want to highlight three performance areas as they relate to our second quarter results and some thoughts regarding worker supply going forward.\nFirst, we are excited our PeopleManagement and PeopleScout segments have nearly recovered to their pre-pandemic revenue for the second quarter.\nAt PeopleManagement revenue is down just 1% versus Q2 2019 supported by a doubling of new client wins through June versus this time last year.\nRevenue for PeopleScout was down only 2% versus Q2 2019 as the travel and leisure segment rebounded strongly growing over 200% during the quarter.\nRevenue for PeopleReady was down 19% versus Q2 2019.\nPeopleReady has not rebounded as quickly as the other segments.\nThe worker supply shortage hits this segment harder due to the short notice period we receive from customers to deliver contingent workers.\nIn addition, the federal unemployment benefits provide more compensation than typical low-wage, on-demand jobs.\nWe are seeing both dynamics in certain industries, such as commercial construction, which is 12% of our mix and has only recovered 60% of Q2 2019 revenue.\nSecondly, segment profit margins are improving across all segments.\nIn our staffing segments, favorable workers' compensation trends, combined with improving bill/pay rate spreads were the primary drivers of the margin expansion.\nIn PeopleScout, higher volumes and utilization of our recruiting staff are leading to improved operating leverage.\nNow, I'd like to take a moment to touch on worker supply.\nLike many companies across the United States, we are experiencing some pressure on worker supply at PeopleReady and PeopleManagement.\nTo proactively address the situation, both segments have launched programs to retain existing associates, reengage former associates and source new candidates.\nFor our current associates, we started to provide attendance bonuses and rewards to our top performers.\nTo reengage, we launched a campaign in states eliminating the federal unemployment programs targeting those who have not worked over the last 18 months.\nFinally, we are running a JobStack referral program to attract new workers.\nFor our full-time employees, we are providing incentives to our recruiting team for putting people to work.\nWe expect worker supply to gradually improve during the third quarter as broader federal unemployment program ends for all states and schools reopen.\nHowever, we are monitoring the impact of the latest stimulus payments that started on July 15th, focused on providing support for families with children, which could prolong the challenges.\nNow let's turn to our results by segment, starting with PeopleReady.\nPeopleReady is our largest segment representing 58% of trailing 12 month revenue and 64% of segment profit.\nPeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market.\nWe service our clients via a national footprint of physical branch locations as well as our JobStack mobile app.\nPeopleReady revenue was up 43% during the quarter versus down 13% in Q1.\nPeopleManagement is our second largest segment representing 32% of trailing 12 month revenue and 16% of segment profit.\nPeopleManagement provides onsite industrial staffing and commercial driving services in the North American industrial staffing market.\nThe essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multiyear, multimillion-dollar onsite or driver relationships.\nPeopleManagement revenue is reaching pre-pandemic levels with year-over-year growth of 28% in the second quarter versus growth of 7% in Q1.\nTurning to our third segment, PeopleScout represents 10% of trailing 12-month revenue and 20% of segment profit.\nPeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings.\nPeopleScout revenue is also nearing pre-pandemic levels with year-over-year growth of 106% in the second quarter versus a decline of 13% in Q1.\nWe are very excited about the accelerated pace of their recovery.\nNow I'd like to shift gears and update you on our key strategies by segment, starting with PeopleReady.\nOur most important strategy at PeopleReady is to further digitalize our business model to gain market share and improve the efficiency of our service delivery cost structure.\nMost of our competitors in this segment are smaller mom and pops, that don't have the scale or capital to deploy something like our JobStack mobile app.\nSo this, along with our nationwide footprint, is what makes us a leading provider within industrial staffing.\nSince rolling out JobStack to our associates in 2017 and our clients in 2018, digital fill rates have increased 3 times to nearly 60% with 788,000 shifts filled via the app during the quarter.\nOur JobStack client user count ended the quarter at 27,100, up 12% versus Q2 2020.\nDriving heavy client user growth continues to be a key focus.\nA heavy client user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker or approving time.\nJobStack heavy client users continue to post better year-over-year revenue growth rates compared to the rest of the customer base, with the Q2 2021 growth differential exceeding 40 percentage points on a same customer basis.\nThis growth differential is largely driven by wallet share takeaways from competitors as heavy client users tell us a major reason they are moving share to PeopleReady is due to JobStack's unique capabilities.\nHeavy client users are becoming more material in our overall results as they now account for 46% of PeopleReady US on-demand revenue compared to 30% in Q2 2020.\nWith the foundation of our digital strategy in place, we've expanded our focus on how to better serve existing clients and reach new ones.\nCombining the strength of our geographic footprint, JobStack technology, and repurposed job roles, PeopleReady is well-positioned to more effectively and efficiently serve clients.\nAt the end of the first quarter, we launched two market pilots that utilize centralized service centers responsible for recruiting, onboarding and local delivery.\nThe service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch.\nThis enhanced go-to-market approach includes repurposed job roles with the creation of dedicated account managers who are responsible for growing and building client relationships.\nWe believe we will be able to use the cost savings from reducing non-client facing roles to more than offset the cost increases from adding more client facing roles such as account managers.\nThis fundamental shift in how we deliver our services requires thorough training and change management for our employees.\nWhile it is still early, we are gathering key learnings that will improve our operating model, leading to higher digital fill rates, increased productivity and higher customer satisfaction.\nWe'll continue to provide updates as the pilots progress.\nTurning to PeopleManagement, our strategy is to focus on execution and grow our client base.\nLast year, we sharpened our vertical focus to target essential manufacturers, and warehouse and distribution clients, and made investments in our sales teams to enhance productivity.\nWith these initiatives implemented, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets.\nWe are seeing strong results as PeopleManagement secured $63 million of annualized new business wins so far this year compared to $32 million this time last year.\nFinally, we are investing in customer and associate care programs in an effort to better serve our clients' needs and improve retention.\nTurning to PeopleScout, the strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth.\nBefore COVID struck, we, along with our competitors, experienced a trend toward more in-sourcing, with some clients bringing more recruitment functions in-house.\nMany of the in-house teams were reduced or eliminated during the pandemic, and we are seeing companies return to hybrid and fully outsourced models.\nTo capitalize, we have made investments in our sales team.\nWe believe there is a big opportunity to increase wallet share at our existing clients and diversify the industry mix within our portfolio by adding new clients.\nThese efforts are already delivering results as shown by the $33 million of annualized new wins secured by PeopleScout so far this year versus $9 million this time last year.\nI'll now pass the call over to Derrek who will share greater detail around our financial results.\nTotal revenue for Q2 2021 was $516 million, representing growth of 44%, driven by new business wins and higher existing client volumes.\nWe posted net income of $16 million, or $0.45 per share, an increase of $24 million compared to a net loss of $8 million in the prior year.\nRevenue growth, gross margin expansion, cost management and operating leverage contributed to the net income growth.\nAdjusted net income was $16 million, or an increase of $21 million, which is less than the increase in GAAP net income, primarily due to $11 million of workforce reduction charges in Q2 2020 that are excluded from adjusted net income.\nWe delivered adjusted EBITDA of $25 million, an increase of $30 million, and adjusted EBITDA margin was up 640 basis points driven by the same items previously mentioned for net income.\nGross margin of 26.4% was up 320 basis points.\nOur staffing segments contributed 70 basis points of margin expansion aided by lower workers' compensation costs due to favorable development of prior year reserves.\nGross margin also benefited from bill rate inflation that exceeded pay rate inflation but was offset by increased sales mix from our energy and industrial business which has a lower gross margin due to the pass-through of transportation and per diem costs.\nPeopleScout contributed 250 basis points of expansion with 170 basis points associated with operating leverage from higher volumes.\nThe remaining 80 basis points was due to non-repeating workforce reduction costs incurred in Q2 2020, which are excluded from our adjusted net income and adjusted EBITDA calculations.\nTurning to SG&A expense, we delivered another quarter of favorable results.\nSG&A was up 14% but as a percentage of revenue was down 570 basis points.\nExcluding the workforce reduction charge in Q2 last year, SG&A was up 24%, which was roughly half the rate of revenue growth, and was down 340 basis points as a percentage of revenue.\nWe continue to balance cost discipline with preserving our operational strengths to ensure we are well-positioned for continued growth.\nWe are also piloting opportunities to further reduce the costs of our PeopleReady branch network through greater use of technology, centralizing work activities and repurposing job roles, while maintaining the strength of our geographic footprint.\nThese pilots will occur throughout 2021, and if successful, could lead to additional efficiencies in 2022.\nOur effective income tax rate was 19% in Q2.\nTurning to our segments, PeopleReady revenue increased 43% with segment profit margin up 590 basis points.\nTrends improved across most geographies and industries.\nYear-over-year revenue in our three largest verticals, construction, transportation and manufacturing, improved by over 30 percentage points versus Q1 results.\nCalifornia, our hardest hit geography and largest market was up 66% versus a decline of 18% in Q1, and hospitality, our hardest hit vertical doubled in Q2 versus a decline of 34% in Q1.\nSegment profit margin benefited from lower workers' compensation costs and higher bill rates compared to pay rates, which were partially offset by higher sales mix from our energy and industrial business.\nSegment margin also benefited from cost management and operating leverage.\nPeopleManagement revenue increased 28%, while segment profit increased 79% with 60 basis points of margin improvement driven by operating leverage.\nPeopleManagement had $63 million of annualized new business wins through June, primarily in the retail and transportation industries, with $7 million of new business revenue recorded this quarter and $26 million expected over the remainder of the year.\nPeopleScout revenue increased 106% after being down 13% in Q1, with segment profit of $11 million yielding a 16.9% margin versus a loss of $3 million in Q2 last year.\nRevenue benefited from strong recovery in our hardest-hit industries, including travel and leisure, which grew 200%.\nNew business wins also contributed to revenue growth as PeopleScout delivered $33 million of annualized new wins through June this year versus $9 million in the comparable prior year period.\nNew wins generated $4 million of revenue in Q2 with $20 million expected over the remainder of the year, coming from a variety of industries, including retail, healthcare and transportation.\nSegment margin expansion was the result of cost management, operating leverage and increased utilization of recruiting staff.\nNow let's turn to the balance sheet and cash flows.\nOur balance sheet is in excellent shape.\nWe finished the quarter with $105 million in cash, no outstanding debt, and an unused credit facility.\nWhile our profitability increased compared to Q2 last year, cash flow from operations decreased largely due to higher levels of working capital associated with our revenue growth and an increase in days sales outstanding largely associated with increased sales mix at PeopleScout, which carries a higher days sales outstanding in comparison with the blended average.\nOur cash balance will drop in Q3 due to a repayment of $60 million in government payroll taxes that the government allowed businesses to defer last year and about $35 million of additional working capital from sequential revenue growth associated with the seasonal nature of our business and year-over-year revenue growth.\nLooking forward, we are excited about the possibility of achieving a higher EBITDA margin in this economic cycle versus the last cycle.\nOur technology strategies provide us with an opportunity to differentiate our services, capture more market share and take advantage of the operating leverage associated with our business model while also creating a more scalable cost structure.\n", "role": "user" }, { "content": "compname reports q2 earnings per share of $0.45.\nq2 earnings per share $0.45.\nq2 revenue $516 million versus refinitiv ibes estimate of $508.3 million.\n", "role": "assistant" } ]

[ { "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 our Chief Executive Officer, Patrick Beharelle.\nWe use non-GAAP measures when presenting our financial results.\nAny comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.\nI am pleased to report our strong revenue momentum from earlier in the year carried into the third quarter.\nThird quarter revenue was $577 million, an increase of 22% compared to the third quarter of the prior year.\nGrowth was driven by businesses of all types turning to flexible workforce solutions as they grapple with worker supply challenges and a variety of uncertainties related to the COVID business environment.\nThis dynamic, combined with new client wins, helped us deliver net income of $19 million in the third quarter versus $9 million in the third quarter of the prior year.\nAnd adjusted EBITDA was up $11 million year-over-year, with corresponding margin up 130 basis points.\nBefore turning to our segments, I want to provide an update on the pace of our recovery and thoughts on key topics impacting our business.\nFirst, we are excited third quarter revenue for PeopleScout, our highest-margin business, surpassed pre-pandemic levels, up 9% versus Q3 2019.\nVolume across most industries are increasing due to high employee turnover, which is leading to an acceleration in demand from existing clients and new demand from first-time RPO adopters.\nOur hardest hit market, travel and leisure, was up 308% during the quarter, and new business wins were up 217% year-to-date, with annualized revenue of $38 million.\nAt PeopleManagement, revenue was down only 1% versus Q3 2019.\nNew business wins continue to be strong for this segment, which had $22 million of new wins in August, bringing the annualized total to $86 million or up 34% year-to-date.\nRevenue for PeopleReady was down 16% versus Q3 2019.\nPeopleReady has been negatively impacted by the workers supply shortage, which I will address momentarily, and increased COVID cases from the Delta variant, which peaked in the U.S. late in the third quarter.\nHowever, we continue to be encouraged by the demand within PeopleReady, specifically in the solar energy space.\nRenewable energy is a focal point for the Biden administration to reduce U.S. carbon emissions.\nWe expect solar energy to be an area of growth to support this directive.\nWe have serviced this industry for 15 years and have specialized teams and processes in place to capitalize on this market expansion.\nNow I'd like to take a moment to touch on worker supply.\nLike many companies across the U.S., we are experiencing pressure on worker supply.\nThe shortage is especially hitting PeopleReady due to the short notice period we received from customers to deliver contingent workers.\nWhile fill rates have softened in recent quarters, revenue recovery has been steady as job orders have increased.\nIt is difficult to gauge the pace and magnitude at which supply will rebound.\nMany workers supported through government stimulus were able to increase their savings, which afforded them the option to temporarily exit the labor force.\nAdditionally, the Delta variant has been a contributing factor to the labor shortages.\nHowever, while still in the early days, since enhanced federal unemployment benefits ended in early September, we are seeing signs of supply returning.\nFor example, in PeopleReady, billable associates are up 9% in October versus the Q3 weekly average.\nPeopleReady weekly revenue trends in October are encouraging as well, up 17% year-over-year versus a 14% increase year-over-year in September.\nWe've launched programs to retain existing associates, reengage former associates and source new candidates, including attendance bonuses and rewards to our top performers, enhanced referral programs, enhanced recruiter incentives and much more.\nWe are closely monitoring the situation, and we'll continue to provide updates.\nNext, I want to take time to address a potential vaccine mandate.\nThe impact on our results could have a wide range of outcomes.\nThere are many uncertainties, including whether the mandate will survive court challenges, when the mandate could take effect, the definition of a qualified employee and the costs associated with testing workers.\nWe are actively communicating with national officials to understand the logistics behind the plan, and are well prepared to comply with the mandate if and when it takes effect.\nOn a smaller scale, we have already successfully implemented vaccine tracking measures as some large clients have required that only vaccinated associates can be assigned to their locations.\nWe will communicate more information as the mandate becomes more clear.\nAlso, as announced on September 22, due to Brannon Lacey leaving PeopleScout to accept a tech company CEO role, Taryn Owen's role is expanding as she has been named President and COO of PeopleScout in addition to her President, COO position at PeopleReady.\nTaryn served as President of PeopleScout from 2013 to 2019 and led the organization through a period of substantial growth, global expansion and digital transformation.\nTaryn's track record of success, combined with her deep knowledge in recruiting and staffing, perfectly positions her to lead both brands into the future.\nCarl Schweihs will continue in his role as President and COO over the people management brands.\nNow let's turn to our results by segment, starting with PeopleReady.\nPeopleReady is our largest segment, representing 58% of total trailing 12-month revenue and 62% of total segment profit.\nPeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market.\nWe service our clients via a national footprint of physical branch locations as well as our JobStack mobile app.\nYear-over-year, PeopleReady revenue was up 19% during the quarter.\nPeopleManagement is our second largest segment, representing 31% of total trailing 12-month revenue and 13% of total segment profit.\nPeopleManagement provides on-site industrial staffing and commercial driving services in the North American industrial staffing market.\nThe essence of a typical people management engagement is supplying an outsourced workforce that involves multiyear, multimillion-dollar on-site or driver relationships.\nYear-over-year, PeopleManagement revenue grew by 7% in the third quarter.\nTurning to our third segment.\nPeopleScout represents 11% of total trailing 12-month revenue and 25% of total segment profit.\nPeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing services as well as offering managed service provider solutions.\nPeopleScout revenue surpassed pre-pandemic levels with year-over-year growth of 108% in the third quarter.\nWe are very excited about the accelerated pace of recovery.\nShifting gears, I will now provide an update on our key strategies by segment, starting with PeopleReady.\nOur most important strategy at PeopleReady is to further digitalize our business model, to gain market share and improve the efficiency of our service delivery cost structure.\nThe U.S. temporary day labor market is highly fragmented, and there are very few large players in the industrial staffing segment where PeopleReady competes, with the bulk of the market made up of smaller companies.\nThese smaller regional companies are typically not able to spend the type of investment required to deploy something like our JobStack mobile app.\nSo this, along with our nationwide footprint, is what makes us a leading provider within industrial staffing.\nOur goal is to use JobStack to deliver value through differentiated associate and client experiences, leading to increased market share and operational efficiencies.\nSince rolling out the application to associates in 2017, and our clients in 2018, associate adoption has grown to over 90%, and our JobStack client user count ended the quarter at 29,100, up 11% versus Q3 2020.\nWe continue to focus on converting clients to heavy users.\nAs a reminder, a heavy user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker or approving time.\nOverall, heavy client users account for 56% of PeopleReady U.S. on-demand revenue compared to 31% in Q3 2020.\nWe've also seen continued growth in our digital fill rates, which have increased 3 times to nearly 60% with 940,000 shifts filled via the app during the quarter.\nWith the foundation of our digital strategy in place, we've expanded our focus on how to better serve existing clients and reach new ones more effectively.\nAt the end of the first quarter, we launched two market pilots that utilize centralized service centers responsible for recruiting, onboarding and local delivery.\nThe service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch.\nThis enhanced go-to-market approach includes repurposed job roles with the creation of dedicated account managers, who are responsible for growing and building client relationships.\nWe believe we will be able to use the cost savings from reducing non-client-facing roles to offset the cost increases from adding more client-facing roles such as account managers.\nThis fundamental shift in how we deliver our services requires thorough training and changed management for our employees.\nWhile it is still early, we are gathering key learnings that will improve our operating model, leading to higher digital fill rates, increased productivity and higher customer satisfaction.\nWe are excited with the progress of the pilots, and we'll continue to provide updates.\nTurning to PeopleManagement, our strategy is to focus on execution and grow our client base.\nLast year, we sharpened our vertical focus to target essential manufacturers as well as warehouse and distribution clients, and made investments in our sales teams to enhance productivity.\nWith these initiatives implemented, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets.\nWe are seeing strong results as PeopleManagement secured $22 million of new deals in August, bringing the year-to-date annualized new business wins to $86 million, up more than 40% versus the three prior year comparable average.\nAdditionally, we are investing in customer and associate care programs in an effort to better serve our clients' needs and improve retention.\nTurning to PeopleScout, our strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth.\nMany companies reduced or eliminated their in-house recruiting teams during the pandemic.\nAnd now we are seeing companies return to hybrid and fully outsourced models.\nTo capitalize, we made investments in our sales teams to expand wallet share at existing clients and obtain new clients.\nOur efforts are delivering results with annualized new wins of $38 million so far this year, versus the three prior year comparable average of $9 million.\nIn addition, many of our clients were forced to reduce their employee base during the pandemic, especially within travel and leisure, our largest industry vertical.\nOur ability to hire large volumes of workers quickly has us well positioned to help our clients restaff quickly.\nThis has led to a rapid recovery in the third quarter, where revenue exceeded pre-pandemic levels by 9%.\nI'll now pass the call over to Derrek, who will share greater detail around our financial results.\nTotal revenue for Q3 2021 was $577 million, representing growth of 22%, driven by new business wins and higher existing client volumes.\nWe posted net income of $19 million or $0.53 per share, an increase of $10 million compared to net income of $9 million in the prior year.\nRevenue growth and gross margin expansion contributed to the net income growth.\nAdjusted net income was $21 million or an increase of $13 million, which is greater than the increase in GAAP net income, primarily due to $4 million of government subsidies in Q3 2020 that were excluded from adjusted net income.\nWe delivered adjusted EBITDA of $29 million, an increase of $11 million and adjusted EBITDA margin was up 130 basis points, again driven by revenue growth and gross margin expansion.\nGross margin of 25.4% was up 210 basis points.\nOur staffing segments contributed 110 basis points of margin expansion comprised of 70 basis points from lower workers' compensation costs primarily due to favorable development of prior period reserves, and the remaining 40 basis points largely due to increased sales mix from our PeopleReady segment, which has a higher gross margin profile than PeopleManagement.\nPeopleScout contributed 100 basis points of expansion driven by operating leverage from higher volumes.\nSG&A expense increased 32%, which was higher than our revenue growth of 22% due to the severity of the cost actions taken in Q3 last year.\nIn Q3 2020, our cost management actions produced a decline in SG&A of 31%, which outpaced the revenue decline of 25% for that quarter.\nQ3 2020 also benefited from $4 million in government subsidies, which were excluded from our adjusted net income and adjusted EBITDA calculations.\nWe are running the company more efficiently today than we did prior to the COVID pandemic based on numerous changes in how we operate and leverage technology.\nCompared to Q3 2019, SG&A as a percentage of revenue in Q3 2021 was 20 basis points lower despite having $60 million less revenue.\nOur effective income tax rate was 15% in Q3.\nTurning to our segments.\nPeopleReady revenue increased 19%, while segment profit increased 32% with margin of 70 basis points.\nStrong recovery continued across most geographies and industries with the hospitality and service industries, both above Q3 2019 levels.\nConstruction grew sequentially but was down versus prior year, as projects have been delayed due to building material shortages.\nSegment profit margin benefited from lower workers' compensation costs.\nWe're encouraged by our trends as we enter the fourth quarter.\nPeopleReady revenue was up 17% during the first three weeks of October versus growth of 14% in September.\nWe also saw some improvement in worker supply.\nPeopleManagement revenue increased 7%, while segment profit decreased 48% with 160 basis points of margin contraction.\nDuring the quarter, supply chain challenges slowed the pace of recovery but are being offset by new business wins.\nPeopleManagement had $86 million of annualized new business wins through September, with $9 million of new business revenue recorded this quarter and approximately $30 million expected for the full year.\nThe decline in segment profit margin is partially due to the severity of employee-related cost reductions last year, such as cuts in pay and 401(k) match as well as additional recruiting costs to stay ahead of the holiday surge given the tight labor market.\nUpfront costs associated with new business wins and a drop in same customer revenue associated with supply chain challenges are also impacting profitability.\nPeopleScout revenue increased 108% with segment profit up $9 million and nearly 1,300 basis points of margin expansion.\nRevenue benefited from strong recovery in our hardest hit industries, including travel and leisure, which grew over 300%.\nNew business wins also contributed to revenue growth as PeopleScout delivered $38 million of annualized new wins through September this year versus $9 million in the prior three-year comparable average.\nNew wins generated $5 million of revenue in Q3 with $28 million expected for the full year.\nOperating leverage and increased recruiting staff utilization contributed to the higher year-over-year segment margin.\nNow let's turn to the balance sheet and cash flows.\nOur balance sheet is in excellent shape.\nWe finished the quarter with $49 million in cash and no outstanding debt.\nWhile our profitability increased compared to Q3 last year, cash flow from operations decreased largely due to a $60 million payment in Q3 this year for 2020 employer payroll taxes that were allowed to be deferred as part of the CARES Act.\nWe also had higher levels of working capital associated with our revenue growth, and an increase in days sales outstanding since the beginning of the year, which was a multiyear level.\nCompared to Q3 last year, days sales outstanding was down two days.\nWe like where our business sits today.\nOur services are in high demand as businesses increasingly look for solutions to deal with tight labor pools as well as a variety of uncertainties, including COVID and supply chain challenges.\nLikewise, our technology strategies are making us increasingly relevant in today's business environment, and along with changes in how we operate the business, more efficient in delivering our services.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $0.53.\nq3 earnings per share $0.53.\nq3 revenue rose 22 percent to $577 million.\n", "role": "assistant" } ]

[ { "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 our chief executive officer, Patrick Beharelle.\nWe use non-GAAP measures when presenting our financial results.\nAny comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated.\nBefore I discuss our fourth quarter results, I want to take a moment to reflect on the past year.\n2021 was an extraordinary year across many levels.\nAs the world continued to learn how to live in a pandemic, I am very proud of the TrueBlue community for growing together to deliver solid results.\nThe demand for our services has never been higher as businesses turn to flexible solutions to solve their workforce challenges.\nDespite the ongoing challenges associated with COVID, including lower worker supply and supply chain disruptions, our ongoing commitment toour digital investments and numerous operating adjustments positioned us to emerge stronger from this downturn.\nRevenue grew 18% for the year and is on pace to recover to pre-pandemic levels two years faster than the previous recession.\nNew client wins at PeopleManagement and PeopleScout throughout the year and existing client recovery at PeopleReady and PeopleScout in the second half drove this growth.\nCompared to where we were prior to the pandemic, we now find ourselves with a stronger, more agile and more efficient business model.\n2022 will be my fourth year as CEO of TrueBlue, and I've never been more optimistic about the momentum we have in the business.\nNow let's turn to our fourth quarter results.\nI am pleased to announce our fourth quarter results surpassed pre-pandemic levels.\nRevenue was $622 million, an increase of 20%, compared to Q4 2020 and up 5% versus Q4 2019.\nPeopleReady's revenue growth accelerated throughout the quarter, driven by improved worker supply and strong performance within the retail sector, while same customer demand and new customer wins continued to produce impressive PeopleScout results.\nThese factors produced adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020 and an increase of $15 million compared to Q4 2019.\nLet's take a closer look at the performance of each of our three segments, starting with PeopleReady.\nPeopleReady is our largest segment, representing 59% of total trailing 12-month revenue and 63% of total segment profit.\nPeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market.\nWe service our clients via a national footprint of physical branch locations, as well as our JobStack mobile app.\nYear-over-year PeopleReady revenue was up 22% during the quarter.\nCompared to the fourth quarter of 2019, we recovered 99% of our revenue, which is an improvement of 15 points from the recovery rate in the third quarter of this year.\nPerformance was boosted by improving worker supply trends and solid results within the retail vertical.\nFor worker supply, we saw an increase in the number of applicants, resulting in a 13-point improvement from September to December in associates put to work compared to 2019.\nRetail results were strong during the quarter, increasing 100% year-over-year led by a seasonal surge, combined with ongoing project work.\nPeopleManagement is our second largest segment, representing 29% of total trailing 12-month revenue and 10% of total segment profit.\nPeopleManagement provides industrial staffing and commercial driving services in the North American industrial staffing market.\nThe essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multiyear, multimillion dollar onsite and driver relationships.\nEven though PeopleManagement revenue exceeded the comparable 2019 period by 4%, revenue declined 1% in the fourth quarter.\nThis decrease is primarily due to lower same-site sales, which are being negatively impacted by recent supply chain disruptions impacting several of our clients.\nTurning to our third segment, PeopleScout represents 12% of total trailing 12-month revenue and 27% of total segment profit.\nPeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing services, as well as offering managed service provider solutions.\nRevenue momentum at PeopleScout continued during the fourth quarter, growing 96% year over year and surpassing the comparable 2019 period by 49%.\nPeopleScout's strong results were driven by growth in existing client volumes of 71% year over year due to surging client demand and new customer wins.\nNow I'd like to shift gears and update you on our key strategies by segment, starting with PeopleReady.\nAt PeopleReady, our most important strategy is to further digitalize our business model to gain market share and improve the efficiency of our service delivery cost structure.\ntemporary day labor market is highly fragmented, and there are very few large players in the industrial staffing segment where PeopleReady competes, with the bulk of the market made up of smaller companies.\nThese smaller, regional companies are typically not able to spend the type of investment required to deploy something like our JobStack mobile app.\nSo this, along with our nationwide footprint, is what makes us a leading provider within industrial staffing.\nOur goal is to use JobStack to deliver value through differentiated associate and client experiences, leading to increased market share and operational efficiencies.\nSince rolling out the application to associates in 2017 and to our clients in 2018, associate adoption has grown to over 90%, and our JobStack client user count ended the quarter at 29,700, up 13% versus Q4 2020.\nWe continue to focus on converting clients to heavy users.\nAs a reminder, a heavy user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker, or approving time.\nOverall, heavy client users account for 56% of PeopleReady US on-demand revenue compared to 35% in Q4 2020.\nWe've also seen continued growth in our digital fill rates, which have increased 3x since rollout to nearly 60%, with 964,000 shifts filled via the app during the quarter.\nWith our digital strategy providing a differentiated experience, our centralized service centers to better serve existing clients and reach new ones more effectively is a major focus.\nAs a reminder, the service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch.\nThis enhanced go-to-market approach includes repurposed job roles with the creation of dedicated, territory-based account managers who are responsible for new client acquisition and management of existing client relationships.\nWe expect the new structure will deliver a greater sales focus and provide elevated customer service, while nonclient facing positions will be reduced, resulting in a net cost reduction.\nBased on progress made over the past nine months, I am excited to announce we have expanded our two service center pilots by consolidating additional branches into each.\nIn addition, we are testing a virtual service center model and opening a service center to support our skilled trade customers and tradespeople.\nWe view these actions as the next step in the journey.\nWe will expand existing locations and add new ones over time as long as we are able to meet the needs of our clients and achieve a variety of operational performance metrics.\nWe have developed a standard rollout framework to ensure service continuity for our clients and associates.\nThis includes aligning account managers to specific territories and client portfolios in advance of go-live, adjusting service center staffing levels to ensure adequate coverage, and a robust training and quality assurance process to ensure operational and service delivery excellence.\nOnce the service center rollout is complete, we expect annual run-rate cost savings of $10 million to $15 million.\nTurning to PeopleManagement, our strategy is to focus on execution and grow our client base.\nLast year, we sharpened our vertical focus to target essential manufacturers as well as warehouse and distribution centers and made investments in our sales teams to enhance business development activities.\nWith these initiatives implemented, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets.\nPeopleManagement secured annualized new business wins of $95 million this year, up more than 40% versus the three prior year comparable average, helping to offset recent supply chain challenges.\nAdditionally, we are investing in customer and associate care programs in an effort to better serve our clients' needs and improve retention.\nTurning to PeopleScout, our strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth.\nMany companies reduced or eliminated their in-house recruiting teams during the pandemic, and now we are seeing companies return to hybrid and fully outsourced models.\nOur ability to hire large volumes of workers quickly has us well-positioned.\nAnd to capitalize further, we made investments in our sales teams to expand wallet share at existing clients and obtain new clients.\nOur efforts are delivering results with annualized new wins of $39 million this year versus the three-year prior comparable average of $11 million.\nFinally, I want to quickly address vaccine mandates.\nOn January 13, the Supreme Court blocked the Biden administration's vaccine mandate for large employers.\nLeading up to the ruling, we were taking the appropriate steps to comply with the mandate.\nAs such, in the event vaccine mandates are enacted at the federal, state, or local levels, we will be prepared to service our clients.\nLooking forward, connecting people and work remains at the center of the TrueBlue strategy.\nAs the economy improves and people return to work, we are excited about the prospects of the industry and our business.\nI'll now pass the call over to Derrek who will share greater detail around our financial results.\nTotal revenue for Q4 2021 was $622 million, representing growth of 20% compared to Q4 2020 and growth of 5% compared to Q4 2019.\nThis growth was driven by strong results at PeopleReady and PeopleScout.\nStrong overall demand, particularly in the retail sector, along with improvements in worker supply drove the PeopleReady results.\nWhile PeopleScout benefited from strong client demand, as well as turnover in the employee base of its clients.\nWe posted net income of $20 million or $0.57 per share, an increase of $12 million compared to Q4 2020 and an increase of $11 million compared to Q4 2019.\nRevenue growth and gross margin expansion contributed to the net income growth in 2021.\nWe delivered adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020 and an increase of $15 million compared to Q4 2019.\nAdjusted EBITDA margin was up 160 basis points compared to Q4 2020 and up 230 basis points compared to Q4 2019, with growth in 2021, again, driven by revenue growth and gross margin expansion.\nGross margin for Q4 2021 of 26.8% was up 350 basis points.\nOur staffing segments contributed 310 basis points of margin expansion, comprised of 110 basis points from lower workers' compensation costs mainly due to favorable development of prior-period reserves; 70 basis points from favorable bill/pay spreads; 70 basis points from increasing PeopleReady sales mix, which carries a higher margin than PeopleManagement; and 60 basis points from PeopleReady customer mix.\nHigher PeopleScout sales mix contributed the remaining 40 basis points of expansion.\nSG&A expense increased 33%, which was higher than our revenue growth of 20% due to the magnitude of the cost actions taken in Q4 last year.\nAs a reminder, in Q4 2020, our cost management actions produced a decline in SG&A of 22%, which outpaced the revenue decline of 12% for the quarter.\nAs we anniversary these cost reductions, we expect SG&A growth to moderate.\nSG&A as percentage of revenue in Q4 2021 improved by 30 basis points in comparison with Q4 2019.\nOur effective income tax rate was 21% in Q4, which was slightly higher than expected due to lower tax credits.\nTurning to our segments, PeopleReady revenue increased 22%, while segment profit increased 69%, and segment margin was up 210 basis points.\nPeopleReady revenue growth accelerated throughout the quarter, driven by improved worker supply and high demand in the retail sector.\nRevenue in the retail sector increased 100% year over year, largely due to a seasonal surge from one client, which contributed about half of the retail sector growth, or 4 percentage points of growth for the PeopleReady business, which we do not expect will carry into the first quarter.\nThe rest of the retail growth came from a combination of retail and distribution-related support, as well as store remodels.\nRevenue growth trends were also favorable across most industry sectors and geographies.\nSegment profit margin benefited from lower workers' compensation costs and positive bill/pay spreads.\nPeopleManagement revenue decreased 1%, while segment profit decreased 20%, with 60 basis points of margin contraction.\nSame-site sales are being negatively impacted by supply chain disruptions, which created a drag of approximately 4 percentage points during the quarter.\nThis headwind is being offset by solid performance from commercial driving services and new business wins.\nThe decline in segment profit margin is a function of the decrease in same-site sales, which carries a higher margin than new business wins due to the associated implementation costs, as well as higher employee-related costs reinstated during 2021 that were temporarily cut during 2020.\nPeopleScout revenue increased 96%, with segment profit up $7 million and over 300 basis points of margin expansion.\nDuring the quarter, same customer demand surged 71% year over year.\nOf the increase, approximately 15 percentage points was related to clients catching up to pre-pandemic hiring levels.\nOperating leverage from higher sales volume contributed to the improvement in year-over-year segment profit margin.\nNow let's turn to the balance sheet and cash flows.\nOur balance sheet is in great shape.\nWe finished the quarter with $50 million in cash and no outstanding debt.\nWhile we experienced an improvement in net income this year, cash flow from operations is down, primarily due to the repayment of 2020 employer payroll taxes that were allowed to be deferred as part of the CARES Act and higher accounts receivable associated with our revenue growth.\nDays sales outstanding increased three days compared to last year, which was a multiyear low but was one day lower than Q4 of 2019.\nDuring the quarter, we repurchased $17 million of common stock and $13 million was purchased during the first quarter of this year.\nThe board of directors also authorized an additional $100 million in share repurchases, which we intend to complete over the next three years.\nWe are in the early stages of redesigning our PeopleReady technology platform to better support our digital strategy and new service center model.\nThis investment will replace a 20-year old internally built system and improve our ability to interact with clients and associates, which will also help us run our business with fewer branches.\nIn the first quarter, we expect approximately $3 million in operating costs as we prepare to implement this system at the end of this year and roughly $10 million for the full year.\nOnce the system implementation is complete, we do not expect these costs to continue.\nAnd as such, we are excluding them from our adjusted EBITDA and adjusted net income results.\nIn connection with this transition, we are accelerating the depreciation of the existing systems that will be replaced by the new technology platform.\nWe expect $2 million in accelerated depreciation for full year 2022.\nThe accelerated depreciation will be excluded from our adjusted net income results.\nAs we head into 2022, we are optimistic about the business.\nOur services are in high demand, and with the supply of workers improving, we are better able to meet customer demand.\nAnd our technology strategies are creating competitive differentiation and additional operating efficiencies to further enable sustainable growth.\n", "role": "user" }, { "content": "q4 earnings per share $0.57.\nq4 revenue rose 20 percent to $622 million.\n", "role": "assistant" } ]

[ { "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: Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today; followed by Mark Culhane, Teradata's Chief Financial Officer, who will discuss our financial results.\nWe will also discuss other non-GAAP items such as free cash flow and constant currency revenue comparisons.\nA replay of this conference call will be available later today on our website.\nTeradata is off to a very good start in fiscal 2021.\nWe had solid growth in revenue and free cash flow and we exceeded our quarterly outlook on public cloud ARR growth, and both GAAP and non-GAAP EPS.\nYou all saw that we issued a release on April 21, pre-announcing our first quarter 2021 results as our quarterly earnings per share performance was higher than the guidance issued during our fourth quarter 2020 earnings call.\nWe saw significantly higher earnings per share resulting from strong performance in revenue and gross margin, as well as continued solid expense discipline.\nWith our customer base among the world's largest enterprises, and with large transactions, we can have non-linear quarters, which is why we encourage you to focus on a full-year outward and results rather than quarterly.\nDuring his remarks, Mark will explain in more detail.\nNow, on to the quarter.\nTeradata grew in all three geographic regions.\nGrowth was driven by large cloud and subscription deals from customers making meaningful commitments to Teradata, adding to or expanding the workloads on Vantage.\nWe also executed higher margin consulting project data and a small fast-growing contribution from new customers and partners.\nOur focus on profitable growth is as strong as ever, and we generated more profit dollars both year-over-year and sequentially.\nWe are resolute and dedicated to keep that momentum going and are building upon our solid fundamentals to energize growth.\nIn Q1, we continue to advance our cloud transformation, tightening the aperture on the strategy, and growing close momentum with customers, prospects, and partners by reinforcing our cultural ethos of inclusion and accountability.\nWe confirmed our market strength and differentiation for Teradata Vantage, our connected multi-cloud data platform for enterprise analytics.\nTeradata holds a significant position in a large, important, and growing market.\nAs enterprises continue the digital transformation, the opportunity in cloud is significant and we are moving with speed and purpose to accelerate our positioning.\nTeradata's capabilities in delivering outcomes across multi-cloud and hybrid environments, providing flexibility and lowering risk for the world's leading companies is being recognized with customers and the industry.\nAs a connected data platform, Vantage brings an integrated set of capabilities with open extensibility enabling partnerships with cloud-service providers, systems integrators, and independent software vendors.\nOur heritage is an enterprise analytics with unparalleled skill to cost effectively address business challenges of governance and security for the largest companies in the world.\nAnd their technology differentiation supports the large enterprises and their complex, mixed workloads containing strategic and operational, traditional, and advanced analytics, as we help customers drive business outcomes.\nOur Q1 results demonstrate that our strategy is the right one, and it is resonating with current and prospective customers.\nWith 176% year-over-year growth and public cloud ARR during the first quarter, customer engagement and acceptance continues to grow and become more evident.\nCustomers are recognizing that our Vantage Cloud Platform is a great fit for their needs, and delivers business value from enterprise analytics in today's connected multi-cloud world.\nVantage offers the deployment flexibility they need.\nVantage software is consistent across all environments, whether multi-cloud, public-cloud, or on prem, supporting fast, easy, and low-risk migrations to the cloud.\nOur flexible cloud pricing options are also strongly resonating with customers and could use just two quarters ago, customers liked having choice in selecting a more predictable blended pricing, or our usage based pay as you go option.\nThe unmatched power and skill in our Vantage platform, combined with deployment flexibility, and the pricing options we offer are all contributing to our public cloud ARR growth.\nLet's walk through a representative sample of our Vantage cloud wins.\nThe team is running cloud business in all regions and with all of the leading cloud service providers, a tangible demonstration of the strength and the strategy and multi-cloud data platform.\nA worldwide [Indecipherable] retailer is migrating it's on prem environment to Vantage on as your customer utilizes Vantage for sales and inventory analytics and reporting.\nThe move to Vantage on Azure allows for incremental and flexible growth needed to support more users and additional customer data driving enhanced insights into buying behavior that will result in more targeted offers.\nTeradata is blended pricing model enables their customer to cost effectively move away from the confines of on prem architecture, and easily steal compute and storage as needed.\nThis customer also considered Snowflake and Azure Synapse Analytics, but ultimately chose to migrate Teradata and take advantage of the capabilities and Vantage as a service, including support for native objects to work new languages like Python and R, utils, like Jupiter and our studio and advanced analytics in machine learning and graph engines as well.\nSirius XM, the leading audio entertainment company in North America, with more than 150 million listeners is migrating to Vantage on AWS as it modernizes its data and analytics ecosystem.\nSirius XM is committed to continue innovation, using technology to understand listeners and drive more personalized communications.\nVantage on AWS will serve as a mission critical foundational component to the customer's hybrid, best of breed analytics ecosystem, supporting increasing users, more sophisticated analytics, and an ever growing amount of data.\nPeoples decision to migrate to the cloud is the ability of Vantage to utilize low cost data storage offered with native object store.\nSirius XM considered other cloud native solutions that determined they wanted a multi-cloud environment and Teradata offered the flexibility and support to deploy across multiple public cloud platforms.\nAn American-based global health services company is migrating to Vantage on AWS for analytics and data science.\nWorking with Accenture, Teradata won this deal over competition from Snowflake and Amazon Redshift.\nThe Vantage on AWS environment will serve as the foundation for the customer to create a data superset that will enable innovation to improve patient health and lower healthcare costs to drive win-win growth.\nOne of Europe's leading mail and package delivery companies is migrating as on prem environment to Vantage on Google Cloud.\nBanking serves as a platform for critical analytics used cases that support the company's strategic initiatives to drive an increase in its domestic parcel business.\nWe partnered with Accenture, and executed a successful personal concept against cloud native offerings.\nTogether our teams are able to demonstrate to the customer the flexibility and scalability of Vantage on Google cloud.\nOne f the world's largest auto manufacturers headquartered in Asia Pacific has a strategic plan to enable data analytics at scale, best global manufacturer has added to his Vantage platform on AWS to accommodate the increased volume of IoT data, and additional premiums coming from business users.\nInsights from connected car data will drive product innovations and operational improvements in research and development.\nWith this expansion, the environment has become one of our largest cloud customers in APJ.\nAs we accelerate our cloud momentum, we are adding strong cloud leadership to the team.\nWe recently appointed Barry Russell, as General Manager of Cloud and SVP of Business Development.\nBarry brings outstanding credentials in driving cloud transformations, and has successfully navigated through change initiatives similar to ours.\nBarry is working across all the organizations in the company, unifying our efforts on acquired growth strategies to scale our cloud business.\nHe is also building partnerships and driving stronger collaboration with leading cloud service providers.\nAlong with the growth we see in public cloud, we also continue to have strong on prem and private cloud business.\nHybrid capabilities are extremely important to our customers as they move along their digital transformation journey.\nWe see customers making meaningful long-term commitments to Teradata, and investing in their on prem and private cloud environments as they continue along the transition continuum to public cloud.\nThese significant investments come as a result of receiving tangible and ongoing business value from Teradata and mutually beneficial business relationships.\nFor example, one of the top five wireless carriers in the U.S. expanded in the Teradata environment to support the integration of a number of new business units.\nThis customer is running over 7 million analytical queries and upwards of 20 million total queries per day to support 80 business applications critical to running its operations.\nThe customer needed the scale and complex workload management that we uniquely provide that support its high growth.\nIn a go to market transformation, we have added very capable and experienced leaders to augment a cloud first sales momentum and drive consistent value-based customer success.\nThese senior level appointments include sales leaders in both the EMEA and Americas regions, a worldwide TTM strategy and operations head, and their new global leader of alliances, each bringing a great deal of cloud experience to rapidly move us forward.\nWe're also going wide and deep in adding cloud [Indecipherable] experience to our selling teams.\nOur total TTM headcount or selling capacity is growing sequentially.\nWe are seeing a cloud pipeline up a very strong double-digit percentage in core key verticals, as we have been addressing perceptions, increasing prospecting, and reinforcing strong customer relationships based on delivering lasting value.\nOur GTM leadership has also kept his attention on tuning our consulting organization to contribute very specifically to our efforts in increasing cloud ARR.\nWe are building partnerships that will extend our reach in and our TTM efforts.\nAnd all regions we are growing collaboration with cloud service providers and are creating joint go to market initiatives.\nWe are seeing increasing momentum with global systems integrators, gaining customers in the digital transformation journeys and helping them migrate Teradata on prem environments to Teradata in the cloud and in emerging markets such as in APJ, we're increasingly working with distributors to help us scale more rapidly.\nIn the quarter, we [Indecipherable] an open partnering approach, and announced alliances with core industry verticals that have needs for cloud based data analytics.\nBut imagine a couple.\nWe jointly announced new offerings with GE Aviation that we believe will help airlines improve passenger experience and revenue growth.\nThis partnership illustrates how integrating multiple data types helps organizations enable greater analytics ability.\nWe recently announced a partnership with Antuit.\nTogether, we will deploy the latest AI innovation to help retailers and consumer packaged goods companies optimized decision making for demand planning, assortment, allocation, and pricing.\nWe also joined the open manufacturing platform, where we will be working with other leading manufacturers to drive innovation and industrial IoT and manufacturing an automotive industry for.\nzero solutions through cloud based data analytics.\nAlong with stronger partnerships, our technology innovation engine is going strong.\nOur large airline modernizes data architecture by leveraging object stores as a journey to the cloud with advantages native object store feature and accelerated business insights by seamlessly joining data between the Vantage Cloud data warehouse and semi-structured data on object stores on demand.\nAlong with AWS, Google Cloud and Azure with verified compatibility with seven private cloud S3 compatible object storage technologies.\nOur support for cloud native integrations was fathered as we enable our customers to securely collaborate with our consumers and partners, sharing and leveraging data across organizations to augment their analytics.\nWith Vantage users can now publish data to and subscribe data from cloud native data marketplaces like AWS Data Exchange, and Azure Data Share.\nDemonstrating the strength of our technology garnered industry recognition in the quarter, Teradata was again named a leader.\nThis time Forrester named as a market leader in Cloud Data Warehouse.\nIn this ranking, we are solidly positioned as a leader along with three major cloud service provider platforms.\nThis endorsement validates the Teradata the top choice for those that need a multi-Cloud Data Warehouse platform for their enterprise analytics.\nThe strength of our company is in our people, and to build a continuously strong and vital organization our focus on diversity, equity, and inclusion or DE&I has woven into all that we do.\nWe know that we are a stronger organization when we embrace DE&I as that enables transparency, belonging, and opportunity, all contributing to business practices that drive consistent, profitable growth.\nLast year, we committed to and met our goal of ensuring a diverse slate of candidates for all director and above positions, and we remain committed to working to eliminate unconscious bias throughout our hiring processes.\nWithin our senior leadership ranks, in the last two quarters, 60% of our appointments were diverse, including 40% female.\nDE&I had an ongoing prioritized focus for us, and we are dedicated to actively and systemically ensuring we are driving a culture that values inclusion and supports, diversity, and equity of all forms.\nAlso, in the environmental, social, and governance arena, we are pleased to again be named one of the 2021 world's most ethical companies by ecosphere.\nOperating with integrity at our core has always been our ethos, and we remain committed to doing business the right way.\nWe were honored to be recognized for the 12th consecutive year with best meaningful designation.\nThroughout our transformation, we are reimagining Teradata into a more modern and relevant technology company.\nAs we grow, we are designing a more modern future of work environment with greater flexibility for our people and greater agility for the company with more hybrid work arrangements.\nAnd as the world looks ahead to emerge from the veil of the COVID-19 pandemic, we're beginning a carefully phased reopening of our offices worldwide.\nUnsurprisingly, we're using data and analytics to guide us to return an allocation only when safe for our employees in line with all local government and health advice.\nAnd every situation we put our employees' health and well being first.\nOur teams demonstrated great resilience throughout the past year, collaborating across changing work environments, and remaining accountable to our customers and to each other.\nBest resilience set us up to thrive despite the challenges of the pandemic.\nA year ago tomorrow, I was honored to be named as Teradata's next CEO, and my passion for this company and what we do has grown immensely.\nI am very proud to work with this talented team of professionals that are committed to the power of data to transform how businesses work, and people love, and are obsessed with the success of our customers.\nAnd even more proud of this teams unequivocal pivot to the cloud, our results, customer validation, and industry recognition are testimony to the focus and dedication to drive lasting business value for our customers and shareholders.\nAs I hand the call to Mark to discuss the financial performance in more detail, our Q1 results when another step in our strategy to win in the cloud, and achieve annual profitable growth.\nWe affirm a fiscal 2021 annual ARR and revenue outlook and reins of fiscal 2021 outlook for earnings per share and free cash flow.\nOver to you, Mark.\nAdditional commentary on key metrics and segment trends can be found in the earnings discussion document on our Investor Relations webpage at investor.\nI also want to remind everyone of the financial reporting change that we made for 2021 and announced on our prior earnings call since it appears that some street models use numbers not reflective of the reporting change.\nTo reiterate, beginning in fiscal 2021, we reclassified managed services related ARR and revenue from recurring revenue and into non-recurring consulting revenue.\nAnd we reclassified third-party software related ARR and revenue out of recurring revenue and into non-recurring perpetual revenue.\nAccordingly, the year-over-year comparisons that I will cite in my comments are based on the reclassified amounts for the first quarter of 2020.\nAnd the full-year 2021 outlook that I provided on our prior earnings call is based on a comparison to the reclassified amounts for the full-year 2020.\nLet's move on to the results for the quarter.\nWe are off to a very solid start to the fiscal year as Teradata exceeded the quarterly outlook we provided for public cloud ARR, as well as GAAP earnings per share and non-GAAP EPS.\nThe company exceeded the outlook we provided due to solid execution by our go to market team, strong product market fit for our customers, our team's continued focus on profitable growth, and a strong focus on cash flow.\nWe pre-announced our preliminary results two weeks ago once it became evident that we would materially exceed our first quarter expectations in GAAP earnings per share and non-GAAP EPS.\nAs Steve noted, we released this information during our normal quiet period, and we could only provide limited context as we had not completed our full analysis of results at that time.\nI will go through the drivers of the quarter.\nBut before I do, I want to remind everyone that Teradata engages in large transactions with large enterprise customers.\nWe provided an annual outlook for fiscal 2021 ARR in revenue versus quarterly forecasts because of the reasons explained during our Q4 2020 earnings call that can create more variability in our quarterly results and make quarterly forecasts more difficult.\nLet's start with ARR.\nPublic cloud ARR grew sequentially by over 18 million, ending the quarter at 124 million as reported or 176% growth year-over-year.\nWe exceeded our outlook of 165% growth year-over-year, due to continued natural momentum of our Vantage multi-cloud platform.\nWe continue to see customer demand for Vantage across all three leading public clouds.\nWhile today, we have mostly been focused on our existing customers, we are encouraged by the potential new customer activity we see in the cloud pipeline as we move forward into the future with our new efforts on customer acquisition.\nImportantly, we are also very pleased to see continued good organic growth by our annual cloud customer cohorts, especially from those customers who moved to the cloud with Teradata during the first quarter, where we saw strong double-digit growth during the quarter.\nExpansion rates continue to be very healthy.\nWe are very pleased by the value our customers see for Vantage in the cloud, which gives us confidence to reaffirm our outlook for fiscal 2021 public cloud ARR year-over-year growth to be at least 100%.\nTotal ARR increased to 1.404 billion at March 31, 2021 from 1.254 billion at March 31, 2020.\nTotal ARR grew 12% year-over-year as reported.\nOn a sequential basis total ARR was down 1% as reported and flat in constant currency given very strong FX headwinds.\nConsistent with prior years, our first quarter ARR sequentially declined, as it is our seasonal low point for ARR, and the fourth quarter is our seasonal high for ARR.\nAs such, we continue to see and expect growth in subscription and public cloud ARR during 2021 and we reaffirm our full-year 2021 total ARR year-over-year growth of mid-to-high single-digit percentage.\nTurning to revenue, we had strong performance in all revenue categories, which increased total revenue to 491 million as reported from 434 million, an increase of 13% year-over-year, and 10% in constant currency.\nAs a reminder, this is our first quarter reporting with our new revenue classifications, which has no impact on total revenues, but has the net impact of moving certain revenues out of recurring revenues into perpetual and consulting revenues.\nI'll refer you to this quarter's supplemental financial schedules, and our prior quarter's earnings discussion document for proper comparisons to prior reporting periods on the investor relations website at investor.\nRecurring revenue as reported increased to 372 million from 311 million, a 20% increase year-over-year, and a 17% increase in constant currency.\nThere were two key drivers for this increase.\nFirst, we had a very strong Q4 2020 ARR growth, both public cloud and subscription, which contributed to the foundation for the strong year-over-year increase in recurring revenue.\nAnd second, as I mentioned in our fourth quarter earnings call, we expected that given our high-end enterprise customer base, we may see many of our existing customers operate Vantage on premises, as well as in the cloud.\nAnd that may change the revenue recognition for some existing on premises contracts to a different ratable recognition period, other than quarterly.\nWe experienced a few significant transactions, principally driven by two significant renewals, one from a major health services company and another from a major Telco company where these customers made substantial commitments to Teradata and extended and expanded their arrangements with us not only on premises, but also added the ability to use Vantage in the cloud.\nUltimately, the terms of these arrangements resulted in components of on premise software recurring revenue being recognized on a recurring annual basis, rather than on a recurring quarterly basis under U.S. Generally Accepted Accounting Principles.\nWe have not changed our accounting policies.\nThese few significant transactions resulted in approximately 24 million of 2021 recurring revenue recognized in the first quarter, rather than ratably across each of the four quarters of 2021.\nThis will not impact the full-year 2021 recurring revenue associated with these transactions.\nOnly the timing of recognition within 2021 was impacted.\nThere will not be any impact of fiscal 2022 and beyond revenue.\nWe plan to see the same amount of recurring revenue in the first quarter each year in the future during the multi-year term of these contracts.\nThe variability in recurring revenue caused by these types of arrangements is a significant reason why we stated in our prior earnings call, we were not providing quarterly recurring or total revenue outlooks, but rather encourage you to focus on our annual outlook.\nThe overall economics of these transactions have not changed.\nOnly the timing of recognition of recurring revenue.\nAnd importantly, these few transactions are not included and did not impact the 176% year-over-year growth and public cloud ARR we reported this quarter.\nTurning to perpetual and consulting revenue, perpetual revenue of 23 million as reported showed flat growth year-over-year, but was ahead of the outlook comments we provided at the beginning of the year.\nWhile we are not emphasizing perpetual in our go-to-market model, perpetual revenue performed better than we anticipated, due primarily to deal mix in EMEA and third party software products.\nConsulting revenue as reported decreased to 96 million from 100 million a 4% decrease year-over-year.\nAs we noted in our outlook comments last quarter, we anticipated consulting revenue to decline by 15% year-over-year in the first quarter of 2021, and to gradually improve throughout fiscal 2021.\nOur first quarter performance was well ahead of that trajectory as we saw better execution of engagements around the world, from both direct engagement with customers and joint engagement with partners that resulted in increased revenue in the quarter.\nTurning to gross profit, Q1 gross margin was 64.2%, approximately 10 percentage points greater than last year's period and approximately 5 percentage points greater than last quarter.\nWe generated 315 million in gross profit dollars, which is 80 million higher than the same period last year, and 24 million better than last quarter, despite our total revenues been unchanged sequentially.\nThe primary reasons were: first, we had a higher amount of recurring revenue at an improved gross margin rate driven by greater subscription and more cloud efficiencies versus prior year.\nSecond, gross profit dollars benefited directly from the recurring revenue recognized annually in the quarter that I mentioned previously.\nAnd third, perpetual gross profit dollars were higher than anticipated driven by both perpetual revenue and gross margin rate higher than anticipated, driven by deal mix.\nAnd last, consulting margin was higher than anticipated driven by more profitable revenue mix.\nTurning to operating expenses, total operating expenses were down 1% year-over-year and 11% sequentially.\nThis is due primarily to a lower cost based beginning fiscal 2021, spending less in discretionary SG&A year-over-year, less sales commission expense in Q1 2021 when compared to our traditionally high bookings in Q4 2020, and a focus on efficient operational execution.\nAs a reminder, we undertook some cost actions in Q3 2020 to drive operational efficiencies that funded reinvestment in our strategic cloud initiatives.\nTurning to earnings per share, earnings per share of $0.69 significantly exceeded our outlook range of $0.38 to $0.40 provided last quarter, by $0.30 when using the midpoint.\nTo provide some context are the main drivers of this $0.30 differential, approximately $0.16 is attributable to the few transactions where recurring revenue was recognized on an annual basis in the first quarter instead of on a quarterly basis throughout full-year 2021.\nThis has no impact on full-year 2021 EPS.\nThe remaining $0.14 was driven by the following and will impact full-year 2021 EPS.\nThe higher than expected perpetual revenue and related higher gross margins, higher than expected consulting revenue, and related higher gross margins, and better recurring revenue growth in operational efficiencies.\nTurning to free cash flow, we had an excellent quarter of free cash flow generation driven by strong cash collections, higher operating margin, and other favorable working capital dynamics.\nFree cash flow in the quarter was 105 million, well ahead of the pace needed to achieve the annual free cash flow outlook of at least 259 we provided at the beginning of the year.\nAs an update to cash payments related to our Q3 2020 cost actions, we previously expected to make total cash payments of approximately 42 million during fiscal 2021 and that 27 million was to be paid in the first quarter of fiscal 2021.\nWe now expect total cash payments in fiscal 2021 of 36 million.\nWe paid 18 million during the first quarter of fiscal 2021, and the remaining 18 million is expected to be paid during the remainder of fiscal 2021.\nAbout 14 million of the remaining 18 million is expected to be paid in the second quarter.\nTurning to stock buyback, we bought back 2.6 million shares at an average price of $32.94 or 85 million in total, as we take advantage of our strong balance sheet to buy back stock and offset dilution for shares issued this year.\nTurning to our outlook, as a reminder, the outlook we're providing is based on the financial reporting change that we made for 2021 and announced on our prior earnings call.\nTo reiterate beginning in fiscal 2021, we reclassified managed services related ARR and revenue from recurring revenue and into non-recurring consulting revenue.\nAnd reclassified third party software related ARR and revenue out of recurring revenue and into non-recurring perpetual revenue.\nAccordingly, the year-over-year comparisons that I will cite in my comments for the second quarter and full-year 2021 outlook is based on a comparison to the reclassified amounts for the full-year and second quarter of 2020.\nFor the full-year, we are reaffirming our fiscal 2021 outlook for ARR and revenue.\nProbably cloud ARR is expected to grow at least 100% year-over-year from 106 million at December 31, 2020.\nTotal ARR is anticipated to grow in the mid-to-high single-digit percentage range year-over-year from the restated balance of 1.425 billion at December 31, 2020.\nTotal recurring revenue is expected to grow in the mid-to-high single-digit percentage range year-over-year from the restated balance of 1.309 billion for the year ending December 31, 2020.\nTotal revenue is anticipated to grow in the low-single-digit percentage range year-over-year from the 1.836 billion for the year ended December 31, 2020.\nWe are raising our full-year fiscal 2021 non-GAAP earnings per share and free cash flow outlook.\nNon-GAAP earnings per diluted share are expected to be in the range of $1.61 to $1.67, which at the new midpoint of $1.64 is a $0.10 increase from the midpoint of the range previously provided.\nAs I mentioned in my comments regarding first quarter 2021 results, $0.14 is flowing through to the full-year, but is offset by $0.06 of higher tax rate and weighted average diluted shares outstanding.\nWe are raising our full year earnings per share outlook further by $0.02 at the midpoint.\nFree cash flow for the year is expected to be in the range of 275 million to 300 million, which is an increase from the prior outlook of at least 250 million.\nWe expect to continue to be opportunistic in share buybacks and have approximately 352 million of share repurchase authorization at March 31, 2021.\nSimilar to last quarter, we wanted to provide you with a few markers to assist you with your modeling of the second quarter of 2021.\nWe anticipate Q2 recurring revenue to be slightly down to Q1.\nQ2 consulting revenue to be roughly flat to Q1 and Q2 perpetual revenue declined by about a third from the Q1 2021 amount.\nWe anticipate Q2 gross margins to be up approximately 40 basis points to 50 basis points from the comparable quarter in the prior year, and Q2 operating margins to be up approximately 250 basis points from the comparable quarter in the prior year.\nWe now expect the full-year tax rate to be approximately 24% to 25%.\nGiven the rise in our stock price, and its impact in calculating fully diluted weighted average shares outstanding for earnings per share purposes, we now assume about 114 million fully diluted weighted average shares outstanding for both the full-year and the second quarter.\nWith that, the outlook for the second quarter for 2021 is as follows: Public cloud ARR is expected to grow at least 155% year-over-year or in the range of 15 million to 20 million sequentially.\nNon-GAAP earnings per diluted share to be in the range of $0.47 to $0.49.\nAnd with that, operator, we are ready to take questions.\n", "role": "user" }, { "content": "q1 non-gaap earnings per share $0.69.\nq1 gaap earnings per share $0.47.\nq1 revenue rose 13 percent to $491 million.\nsees q2 non-gaap earnings per share $0.47 to $0.49 excluding items.\nfy non-gaap earnings per diluted share, excluding some items, is now expected to be in range of $1.61 to $1.67.\n", "role": "assistant" } ]

[ { "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: Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today; followed by Mark Culhane, Teradata's CFO, who will discuss our financial results.\nWe will also discuss other non-GAAP items such as free cash flow and constant currency revenue comparisons.\nA replay of this conference call will be available later today on our website.\nI'm truly honored as well as incredibly excited to join Teradata as CEO and lead this great organization that is rich with opportunities.\nI've joined at quite a unique time in history when this pandemic has caused companies to rethink and rework their business models.\nThe crisis has made one thing very clear: the essential role Teradata plays and our customer success.\nOrganizations need data to help them manage through these tumultuous times.\nAs companies address rapidly changing market situations and customer needs reengineer supply chains to source critical supplies or pivot to remotely support all operations, they realize the need to leverage data as an important asset to make better informed business decisions.\nLeveraging all of the relevant data possible helps organizations have the agility they need to weather through the disruptions of today's uncertainties.\nCompanies of the size and reach of our customers need access to data at the scale only Teradata can address with the reliability, security and dependability they require and we deliver.\nData and analytics are foundational elements to digital transformation, a transformation which will be accelerated for many by the pandemic.\nOrganizations need to rapidly adapt to this changing landscape and to transform themselves to be leaders in the new economy.\nTo accomplish the transformation, they need analytic insights leveraging data from all relevant sources.\nTeradata's ability to deliver these enabling capabilities in both hybrid and multi-cloud is unique and presents us with a tremendous opportunity.\nWith that market backdrop, it gives me great pleasure to open my first earnings call as CEO, delivering news of strong results in Q2.\nThe organization executed extremely well in the quarter despite the uncertainties caused by COVID-19.\nIn Q2, we exceeded our expectations and Street guidance for our key metrics.\nWith strong sales execution and good cost discipline, we generated robust ARR growth, significant free cash flow, strong recurring revenue growth and solid earnings per share.\nMark will cover our financial results in greater detail as usual.\nAnd today, I will speak to three areas important for Teradata's success: first, our ongoing technology innovation; second, our resilient execution during these unprecedented times; and third, our continued customer success.\nAnd then I will close with a few personal comments as Teradata's new CEO.\nI want to start with our technology innovations, particularly in the cloud.\nAs I spent time learning about the company, I was pleased to see the robust body of work from our products organization as we develop and engineer new data and analytics technologies for both hybrid and multi-cloud environments.\nWe are pleased that Vantage with Native Object Store, or NOS, support has become generally available in the cloud on AWS and Azure, and we will be delivering Vantage on GCP very soon as well.\nWith NOS, analytic models can take advantage of exponentially greater amounts of data stored in public cloud environments, massively improving the scope and activity of the resulting insights.\nNOS support also reduces the friction in using data in a cloud object store with data already in Vantage.\nThis new release of Vantage continues our focus on driving innovation in our software so that customers can apply analytic insights to data wherever it resides, in an on-premise appliance, external data store or cloud storage environment.\nBecause Vantage software is consistent from one environment to the next, risk is reduced and the process is greatly simplified, bringing faster time to value with the scale, security, availability and analytics performance customers rely on from Teradata.\nVantage with NOS support was developed with direct input from our customers and partners about the real-world use cases.\nOne early access customer leveraged Vantage and IoT sensor data stored in AWS three to perform predictive maintenance on more than 650,000 pieces of equipment, keeping the fleet running, drives more consistent and predictable operations for them and increasing customer satisfaction.\nWe're also bringing a 30-day trial of Vantage in the cloud for customers to directly access and experience the power of Vantage and test out advanced analytics on our leading platform in the cloud.\nStarting in Q2, this global program is available by invitation and brings faster evaluations as well as reduced pain to value for our customers.\nThe trial offers end database analytics and NOS support and includes access to preloaded data sets so that customers can easily explore various business outcomes from advanced analytics.\nThe trial also showcases our completely modernized UX for Vantage, which makes it easier for business users to take advantage of our platform.\nWhile I'm still evaluating the business, I am pleased to see the strength of innovation at Teradata.\nHowever, we can improve our execution in this arena and accelerate our cloud efforts and momentum.\nTurning to our execution during the COVID-19 crisis.\nThe Teradata team demonstrated great resiliency and pivoted quickly and smoothly to remote work environments.\nWe're focused on supporting our employees through the challenges posed by the pandemic as well as being there to support our customers regardless of physical constraints.\nTo further support our customers during the pandemic, we enabled customers to extend their knowledge of how to leverage data and its impact by offering our training for free.\nIn a great showing of the demand for Teradata expertise, we saw more than 14,000 people take advantage of that learning opportunities.\nFurther, we reimagined all of our events into 100% virtual experiences, and our teams collaborated remotely with hundreds of customers and prospective customers explaining how companies can leverage Teradata to get the insights they need.\nLast quarter, we talked about developing virtual executive briefing centers to advance our sales motions while the world needed to work remotely.\nWe have had tremendous response from customers as well as superior contributions from Teradata employees to these high-quality virtual interactions.\nOur virtual engagements have and are continuing to develop into opportunities for us.\nAs we move through Q3, our virtual engagements continue and our offices remain closed.\nOur goal is the safety of our employees globally in the face of this highly dynamic situation.\nWe plan to reopen offices only when we believe there will be safe environments for our employees and guests.\nIn the meantime, we will continue to operate remotely.\nAnd I am pleased with how our teams have demonstrated their ability to adapt and keep advancing the business.\nOur strong relationships with our stable customer base, combined with a deeply rooted dedication to delivering business value for our customers, are serving us well during these uncertain times.\nAs we continue to support our customers in their digital transformation, we are modernizing our go-to-market motions.\nIn Q2, we continued the rollout of our customer success program, where our teams are working to ensure our customers are maximizing the business value from their investment in Teradata technology.\nOur customer success program also focuses on increasing customer satisfaction.\nWe are seeing very positive response from customers with this program and believe it will drive significant expansion opportunities over time.\nThe work on building our modern sales capabilities remains under way as we enter Q3.\nSimultaneously, our marketing programs are pivoting to focus on customer use cases and deeper digital experiences.\nWe are assertively taking back the narrative on Teradata's capabilities in the cloud with an integrated campaign addressing the misperceptions that others have proliferated.\nIt's great to see us on the offense.\nJust one example is an outstanding webinar we recently held with independent analyst William McKnight; and Brinker International, one of the world's leading casual dining restaurant companies with brands Chili's and Maggiano's Little Italy.\nThis webinar centers on Brinker's journey to the cloud with Teradata and why Brinker chose Vantage on AWS to drive advanced analytics, machine learning and data science across its organization.\nWith Vantage delivered as a service in the cloud, Brinker can now apply advanced analytics and predictive modeling to its business to improve demand and traffic forecasting, team member management and recommendation engines for customers and more.\nIt's available from our website.\nSo we are advancing on many fronts, all to support and grow our customer base.\nWe have a broad number of wins in the quarter, and I'd like to walk through a small sample of our recent cloud wins.\nVodafone extended its strategic partnership with Teradata with a new multiyear, multimillion-dollar commitment, utilizing Vantage to improve network intelligence, digital customer experience, IoT and finance.\nWe look forward to continuing to work with Vodafone to help drive its vision for the telco of the future.\nA major U.S. supermarket chain is migrating to Vantage on AWS, and here, we won over cloud-only vendors.\nThis is the first step in growing Teradata's value proposition and expanding into new use cases, including expanded store information, tray loss prevention, HR analytics and more.\nA European energy company migrated to the cloud with Vantage on AWS.\nHere, we won against competition from cloud-only providers.\nBased on our unmatched capabilities to scale and the flexibility in our pay-for-what-you-use consumption model, the customer has an extensive set of use cases, including expanding its 360-degree view of its 11 million B2C customers, improving the customer journey and defining use customer segments based on advanced analytics.\nOne of the world's largest gaming and hospitality companies selected Vantage on Azure versus a cloud-only technology.\nThe firm utilizes Teradata to drive its loyalty rewards program and $9 out of every $10 of revenue flows through applications run on Vantage.\nAs the company continues to modernize and transform its business, it's working with Teradata to simplify the way stakeholders analyze data to make better and more timely decisions across the entire enterprise with a consistent data set.\nTeradata will be collaborating with global integrator, Cognizant, on this project.\nA leading U.S. wholesaler is migrating two on-prem systems to Vantage on AWS.\nDespite competition from cloud-only providers, Teradata's new consumption model won the deal.\nThe customer is beginning a multiphase deployment that will ultimately replace redundant data marks running on other databases throughout its ecosystem.\nTeradata is collaborating with AWS and a major global systems integrator to expand usage of Vantage and drive business value for this customer.\nA large Canadian retailer is migrating key applications to the cloud as part of its cloud-first mandate.\nTeradata and Microsoft work together to provide a compelling offer that involves replicating data on a near real-time basis from the customer's on-prem system to Vantage on Azure.\nThis allows it to seamlessly transition key business reporting initiatives in the case of a disaster with minimal disruption.\nThis customer has a long history of working with Teradata and knew that with the volume of [crews] processed daily, it couldn't seriously consider a cloud-only solution that cannot scale to meet its price performance requirements.\nWe will continue to work to accelerate our cloud efforts and drive high-quality wins, foster lasting relationships based on business value in our differentiated technology and services.\nBefore I pass the call to Mark, I would like to take a little time to talk to you about why I joined Teradata, what I see as our opportunity and how I see our business.\nTeradata's market position and opportunity are tremendous.\nAs I previously stated, data and analytics are the foundation of a company's digital future, and Teradata provides the best technology in the world to enable companies to leverage their data, apply analytics to solve mission-critical problems and compete in the market.\nThis is why companies build their future on Teradata, and the incredibly knowledgeable people we have bring truly unmatched expertise to help companies get great value out of the data.\nI've only been at Teradata for two months, so now is not the time for new strategy statements.\nBut rest assured, we are tirelessly working on driving our cloud transformation and improving financial returns.\nA primary focus of mine is to create the strategic context and operating plans for the company, which we will share in the coming quarters.\nFor now, I want to address a few foundational elements crucial to our future.\nWe will win in the cloud, and we'll continue to offer choice and cloud deployment options to meet our customers' needs.\nThat part of the strategy will not change, and I will make sure we are focused on accelerating our move to the cloud.\nIn addition, I believe great technology companies focus on platform and not product, and there's a huge opportunity as we transform Teradata to be the leading analytics platform for a hybrid and multi-cloud world.\nWe will continue to leverage our differentiated expertise in consulting and services to enable our customers and our partners to achieve the best analytic outcomes.\nAnd finally, we will aim to grow profitability with a balanced focus on growth and returns, optimizing and streamlining our operations where needed without impacting our customers.\nWe will operate with a sense of urgency and productive paranoia as we move Teradata into the future.\nAs we grow, our ethos will continue to be one that values inclusion and diversity.\nOur entire leadership team recently stood together and pledged to all employees to take a set of actions, ensuring that Teradata cultivate a workplace where equality, inclusion, diversity and openness are a companywide priority.\nAnd to align with our deep commitment to social responsibility, we have begun holding dialogues in some of the challenges facing the world today as open conversation and knowledge are key to driving change.\nWhile we have more work to do and it will take some time to get to where we should be, we are starting from a strong foundation.\nWe have the technology built for a hybrid and multi-cloud world.\nWe have outstanding people and a very strong customer base.\nWe have a vibrant and strong culture, and the passion I see to help customers get the greatest value from the data assets is absolutely energizing.\nI'm confident that I made the right decision in joining Teradata.\nWith the ongoing pandemic, the second half remains uncertain for many organizations, and no one knows when everything will return to a more normal, predictable environment.\nDespite uncertainties, we are listening to the market and our customers.\nWe are committed to responding with speed and agility and ensuring we are providing value for our customers, supporting our people and delivering on our expectations.\nI look forward to providing updates as we progress.\nWith that, I'll pass the call to Mark.\nAs Steve said, we had a very solid quarter with healthy results in all three regions, and I am very proud of the way the organization has come together and executed.\nWe generated robust ARR growth, strong free cash flow growth, healthy recurring revenue growth and solid earnings per share enabled by actions we took to manage expenses given the uncertain environment.\nWe mentioned on our last call, some of the actions we took in Q1 in support of our customers, including temporary free capacity or extended payment terms, and these actions helped move transactions forward this quarter, but more importantly, helped us to deepen our relationships with our customers.\nAdditionally, commentary on key segment trends can be found in the earnings discussion document on the IR website at investor.\nWe generated $52 million in incremental ARR this quarter, $39 million in constant currency.\nThis resulted in $358 million in recurring revenue, growing 6% reported and 8% in constant currency and was well above our guidance range.\nAs we said last quarter, we wanted to remain conservative in our outlook given the overall uncertainty.\nBut as you can see, we had a very strong quarter.\nConsulting revenue declined 26%, 24% in constant currency.\nThis is an area that has seen more headwinds from COVID-19 as some customers continue to manage discretionary spending.\nWe believe consulting will continue to see headwinds in the second half given the ongoing uncertainty due to various levels of outbreaks and continued remote work mandates.\nMoving on to gross margins.\nRecurring revenue gross margins were 69.8%, up 230 basis points sequentially but down 120 basis points year-over-year as the mix of recurring revenue that includes hardware and lower-margin cloud revenue created a near-term headwind.\nOver time, we expect recurring revenue gross margins to expand as we see less mix headwinds and expect to see significant gross margin expansion in our cloud offering over the next 18 to 24 months.\nConsulting revenue gross margin was 15.9% as improved utilization and better price realization helped drive significant movement versus last year.\nSome of this performance was due to catch-up of projects impacted at the end of Q1 and will normalize in the second half.\nAnd we are still expecting consulting revenue margins to be in the low double digits for the year.\nTotal gross margins came in at 58.9%, up 620 basis points year-over-year.\nThe improvement was driven primarily by revenue mix shift to higher-margin recurring revenues and away from perpetual and consulting revenue.\nTotal operating expenses were up 2% year-over-year.\nThe primary driver of this increase was amortization from capitalized sales compensation as required under ASC 606.\nWe continue to reallocate spend toward our cloud initiative as well as our expanded go-to-market efforts with partners and customer success.\nTo fund these efforts as well as manage expenses given the uncertain environment, we took several actions to manage operating expenses, including limiting travel and entertainment, moving marketing events to virtual as well as limit other discretionary spend.\nAdditionally, we also converted a portion of our annual performance cash-based incentive comp to share-based performance grants that potentially helps non-GAAP operating margin and earnings per share in 2020 between 50 and 100 basis points and $0.05 to $0.10 of EPS, which we believe will have no significant share dilution impact in 2021 when the final annual performance incentive achievement is determined.\nFor the full year, we will continue to look for areas to optimize our cost structure while investing in our key strategic initiatives in cloud and transforming our go-to-market organization to support our recurring revenue model and expand our opportunities in the market.\nAs a result of the cost actions we have taken in the first half, we now expect full year operating expenses to be roughly flat to down year-over-year.\nWe had an exceptionally strong free cash flow quarter driven by excellent execution from our collection organization.\nAs we mentioned last quarter, we had roughly $30 million in collections that slipped from Q1 but were collected in April.\nAnd this, combined with the overall strong quarter, resulted in free cash flow for the quarter of $115 million, bringing free cash flow for the first half to $130 million.\nAs we said last quarter, we are confident that 2019 was the bottom for free cash flow during our transition, and we have already exceeded that number as of the first half of 2020.\nIn addition, we expect incremental free cash flow for the second half to be positive as well.\nOur financial position remains very strong and we ended the quarter with $494 million in cash.\nAfter the initial shock in late March and early April to our customer base, we saw conditions stabilize and then customer engagement return to very healthy levels.\nAs a result, linearity in the second quarter was better than our expectations for Q2.\nAnd so far, customer engagement trends have remained healthy at the start of Q3.\nWe will continue to support our customers in these unprecedented times and believe our long-term relationships and rock-solid technology are advantages that will allow us to continue to expand our existing customer relationships.\nWhile our customer base isn't immune, we serve the largest, most stable companies in the world.\nAs a reminder, less than 12% of our revenue comes from industries hardest hit by the economic changes brought on by COVID-19.\nWe came into the year set up for a strong year and remain cautiously optimistic based on the pipeline we see for the second half.\nHowever, with continued disruption of daily life and uncertain business conditions, we believe it's prudent to remain conservative.\nAnd consistent with last quarter, we will only be providing guidance for Q3.\nFor Q3, we expect recurring revenue in the range of $359 million to $361 million and non-GAAP earnings per share between the range of $0.28 and $0.31.\nIn addition, we continue to expect our full year tax rate to be approximately 23% and a full year share count of approximately 111 million shares.\nAnd finally, out of an abundance of caution, our share buyback program will remain suspended until further notice.\n", "role": "user" }, { "content": "sees q3 non-gaap earnings per share $0.28 to $0.31 excluding items.\n", "role": "assistant" } ]

[ { "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: Steve McMillan, Teradata's President and Chief Executive Officer; will lead our call today; followed by Claire Bramley, Teradata's Chief Financial Officer, who will discuss our financial results.\nWe will also discuss other non-GAAP items such as free cash flow and constant currency revenue comparisons.\nAdditional commentary on key metrics and segment trends can be found in the earnings discussion document on our Investor Relations web page at investor.\nA replay of this conference call will be available later today on our website.\nI'm pleased to report Teradata delivered a solid second quarter, worldwide sales and operational execution as well as our continued cost discipline resulted in year-over-year growth and outperformance in key financial and operational metrics, including 157% growth in public cloud ARR as well as growth in recurring revenue, non-GAAP earnings per share and free cash flow.\nWe will maintain our executional focus and with this ongoing attention, we expect to drive sustained revenue growth margin expansion and an increased stream of free cash flows.\nI am also pleased to report our cloud business continues its upward growth trajectory.\nOur large enterprise scale customers are accelerating their digital transformation agendas to address the ongoing challenges of the global macro environment.\nOrganizations need data and analytics to provide the business insights that will help them manage through these changing environments.\nThey need access to all relevant data as they address new customer buying behaviors and remote work models stemming from the pandemic as well as ever-increasing volumes of data coming from AI, machine learning, 5G and IoT.\nTeradata has proven that we can help customers get real insights from their data regardless of where it resides, whether in public cloud or in on-prem environments.\nWe are competing and winning in a large and growing market.\nThere is not a day that goes by with less data than the previous one.\nThe technologies we deploy help customers get the most value from their data environment at enterprise scale and with outstanding price performance giving us an advantage in the hypergrowth enterprise market.\nOur purpose to transform how businesses work and people live through the power of data, gives the alignment of our entire team, and the team executed quite well in Q2.\nCustomers increasingly see Teradata as being uniquely able to support their multi-cloud strategies through our ability to seamlessly support multiple cloud environments on-prem or a hybrid combination.\nWe have a 40-plus year track record providing unparalleled expertise in helping customers with the largest data environments leverage their volumes of data to get great insights and achieve breakthrough business results.\nThis is certainly a differentiator for us.\nOur expertise, combined with our powerful vantage connected multi-cloud platform is driving cloud growth across our targeted verticals around the globe and with each of the leading cloud service providers.\nA robust growth in the cloud is coming from both new customers and existing accounts.\nSince June of 2020, we've experienced more than 50% growth in cloud customers, and we are adding new logos in each of our three geographic regions.\nWhile starting numbers are small, the trend is clear.\nAs companies realize they received tangible business results from Vantage in the cloud just as we do with our on-prem environment.\nThey continue to expand the Teradata cloud environment.\nOur top 10 customers in terms of cloud ARR at the end of June last year grew significantly year-on-year.\nAnd these types of ongoing success and ease of scalability are helped driving growth.\nWe further saw broad-based subscription ARR growth in every region and across many of our target industries, including financial services, healthcare and government as our customers realize the enterprise scale and price performance of Vantage.\nLet's look at a few examples of our wins from the quarter.\nOne of the world's largest automators based in Europe as a new cloud customer, it chose Teradata to help optimize production as part of its strategic growth plan.\nVantage on AWS will manage significant volumes of IoT data captured from robots on the plant floor to boost quality across its smart manufacturing initiative.\nOne of Europe's top financial services groups and a long-standing Teradata customer, is migrating to Vantage on Google Cloud as part of its public cloud transformation strategy.\nThis customer was an early cloud adopter with Vantage on AWS and considered adding a big clear environment.\nHowever, our multi-cloud capability demonstrated that Vantage in the cloud will be the best in helping this institution comply with governmental regulations to support its operations in the event of a stressed exit.\nCerdia and Accenture are collaborating closely to help this customer continue to grow with Vantage and now in a multi-cloud environment.\nThis customer is a great example of companies realizing the value of Teradata Vantage as the fastest, lowest risk and most cost-effective path to our modern cloud deployment.\nWe are taking this financial use case forward to other institutions facing the same compliance mandate.\nColby Steel, a major manufacturer in Japan is another one of our new cloud accounts.\nIt selected Vantage on AWS to improve analytics and its research division gaining greater understanding of the properties have produced and its manufacturing processes.\nAs this industrial gain proceeds with digital transformation for all aspects of this business, it plans to add IoT data at the machine and factory level.\nBanco Itau, the largest financial institution in Latin America, is migrating its on-prem Teradata environment to Vantage on AWS.\nVantage supports most of the bank's major applications, including cost, purchasing and regulatory reporting.\nHere, we are positioned as a key partner for the bank well into the future, establishing Vantage of the customers' preferred cloud data warehouse platform and paving the way to deliver increased business value through new use cases.\nConsumption-based pricing was really important to this customer, enabling it to pay for exactly what it needs and uses.\nMany of our large customers now operate in a hybrid cloud environment of connected on-prem and cloud ecosystems.\nCustomers also continue to have substantial data environments on-prem.\nThis portion of our business remains healthy.\nThe enterprise scale customers we serve realize that to win in this new era, they must leverage all of the data possible all of the time, respective of deployment option and often in blended environments.\nI'd like to share one hybrid and one on-prem win.\nA large U.S.-based healthcare services company has chosen Vantage on Azure as it revamps its analytical environment scale and support aggressive agile development and deployment processes.\nThis customer chose Vantage on Azure as its first step toward implementing a hybrid cloud strategy, leveraging a flexible and transparent consumption pricing model along with the inherent advantages provided by a cloud infrastructure provisioning.\nMiddle Eastern tax authority joined the ranks of Teradata customers in Q2 to like in Vantage on-prem to help it develop analytical use cases, including risk mitigation, fraud prevention, tax peer segmentation and behavioral analytics.\nWorking in concert with the local SI, we replaced Oracle and beat a category of legacy vendors.\nWinning factors included our deep expertise in helping tax authorities around the world are focus on tangible outcomes for the agency and shown how Teradata provides the fastest and most reliable path to the cloud when this entity is ready to migrate.\nThis sampling of wins from Q2 are great examples of the differentiated position we hold and our ability to deliver in whatever environment the customer has, connecting a suite of multi-cloud ecosystems, connecting cloud and on-prem as the customer moves through digital transformation.\nThis is where Teradata excels and is the key reason we have significant momentum across the market.\nWe are continually innovating.\nIn the quarter, we brought out enhancements to QueryGrid, our patented technology that enables a data fabric across multi-cloud ecosystems and multiple data platforms.\nWe regret our customers to federate queries without requiring unnecessary data movement.\nThis functionality optimizes SLAs and costs in hybrid and multi-cloud environments.\n-- lighting business users who can now seamlessly get access to the data.\nHere's one recent example, a world-leading manufacturer of consumer electronics is using QueryGrid to enable business agility throughout its extended data ecosystem with new functionality and enhancements to QueryGrid, performance was improved by orders of magnitude from 10 to 15 hours to just over three minutes.\nThe performance boost improves the tech leader's ability to rapidly share data between lines of business and make better informed decisions across its Federated enterprise.\nOur world-class industry data models are another facet of our technology that helps customers get to value faster.\nAnd in the quarter, we brought out enhancements to our media and entertainment data model.\nThese models are the backbone for modern data management and provide high-value business information to support customers in their vertical industry.\nWe have also been strengthening our partnerships with leading SIs and ISVs as we grow.\nIn the quarter, we announced a joint initiative with Deloitte to help customers easily and efficiently migrate from on-prem to Vantage in the cloud.\nWe're collaborating with Deloitte to take the complexity out of data migration and equip organizations for a modern cloud future.\nWhile customers are recognizing the value in our multi-cloud solutions, so as the industry, in July, Teradata again garnered recognition of our strength in the cloud in Gartner's new solution comparison for cloud data warehouse platforms.\nGartner noted that cloud data warehouses are central to organizations and compared a number of vendors.\nTeradata scored exceedingly well, receiving the highest score possible and more attributes than any other vendor.\nWe intend to keep earning these types of recognition.\nWe also remain dedicated to being a socially responsible corporate citizen.\nAnd just recently, we issued our annual environmental, social and governance report.\nYou can find the full report on our website, but I'd like to share a couple of them.\nOur report notes are pledged to the UN Global Compact principles of ethical behavior and human rights, a careful monitoring and reduction of greenhouse gas emissions and specifically, the reduction of total Scope one and Scope two emissions of about 40% since 2018.\nOur strength lies in our people.\nand a report notes the various actions we took in support of diversity, equity and inclusion to ensure an inclusive workplace and to reinforce our commitment to creating a culture of belonging.\nIn 2020, the company participated in the Corporate Equality Index of the Human Rights Campaign Foundation, demonstrating Ally ship to our LGBTQ employees.\nThe company scored 90 out of 100 and we are using the inputs and learning how to better support our LGBTQ colleagues.\nFurthermore, we were recently recognized by Sustainalytics for our conscientious management of ESG issues.\nThe solid performance in the quarter came up from across the organization, reflecting our focus and operational rigor and our go-to-market organization, our transformation is accelerating.\nWe have added seasoned sales talent in our regions and have further strengthened our customer success and renewals organization.\nComplementing our go-to-market efforts and to accelerate our momentum we have added highly experienced cloud leadership and talent dedicated to driving growth across the leading cloud providers.\nClaire's extensive senior leadership experience in corporate finance and accounting as well as our deep knowledge of the technology industry is a perfect fit for us.\nClaire's appointment continues our commitment to building the strongest team possible to execute our strategy and accelerate profitable growth.\nAnd I know she is looking forward to spending time with all of you.\nWe remain relentlessly dedicated to meet and exceed customers' expectations and achieve outstanding business outcomes from the data.\nOur capabilities across multi-cloud, on-prem and hybrid of what customers need today and into the foreseeable future, and we will continue to innovate to address tomorrow's needs as well.\nWe have an incredibly talented team who keeps the customer at the center of all we do.\nThese are the healthy fundamentals of our company, ones that we believe will deliver significant shareholder value.\nClaire, over to you for a more in-depth look at our financial results and our 2021 outlook.\nI am excited to join you all today for the first time.\nI was drawn to this incredible company because we value the same thing: world-class technology, a true customer focus and creating a strong culture that helps people.\nI am truly honored to be part of this very talented and motivated leadership team as we look to take advantage of the huge opportunities ahead of us.\nIn the second fiscal quarter, Teradata delivered solid financial and operating results.\nHere are some of the highlights.\nOur sales and product teams executed well, delivering in line with our outlook and growing public cloud ARR by 157% year-over-year and growing recurring revenue by 16% year-over-year as reported.\nOur operational execution was very efficient across the Board, driving an operating margin of 23.8% and non-GAAP earnings per share of $0.74, which is above the previous outlook.\nFinally, our cash collections were strong.\nEnabling us to generate $219 million in free cash flow.\nThese results demonstrate that Teradata combines strong financial fundamentals and operational discipline.\nTogether with our market-leading technology, these qualities differentiate Teradata in the market and give us a robust base to continue to grow from.\nWith regards to ARR, as Steve highlighted, customers are adding mission-critical workloads that drive increased adoption and consumption of Vantage in the cloud, on-premises and in hybrid environment.\nThese digital transformation activities resulted in total ARR growing by 9% year-over-year as reported and by 7% year-over-year in constant currency.\nTotal ARR grew by $22 million sequentially.\nWe achieved growth in both public cloud and subscription ARR across all three geographical regions year-over-year and sequentially.\nPublic cloud ARR grew by $15 million sequentially, of which more than half resulted from customers migrating to Vantage in the cloud from on-premises perpetual and subscription licenses.\nWe also continue to experience healthy expansion rates in the cloud, maintaining the positive trends that we have seen over the last several quarters.\nTo top things off, we added several new name brand customers in the quarter, that provide us with future expansion opportunities.\nWe saw strong growth in subscription ARR, driving a 20% increase year-over-year and approximately a 5% increase sequentially.\nWe grew in all three regions from both existing and new enterprise customers.\nThese customers are choosing Teradata for the combination of best price and performance at scale in hybrid environments.\nNow turning to revenue.\nTotal revenue was $491 million, a 7% increase year-over-year and 4% in constant currency, driven by strength in all three revenue components.\nWe continue to build on a higher base of recurring revenue, growing 16% year-over-year and 13% in constant currency.\nWe also benefited in the quarter from the timing of revenue recognition of certain on-premise customers expanding or renewing their contract with us.\nSimilar to last quarter, the economic structure of these arrangements resulted in the upfront recognition of approximately $22 million in recurring revenues in the second quarter.\nWe expect this to recur annually in the same quarter of the following years during the multiyear term of these contracts.\nThis $22 million was approximately $4 million higher than what we forecasted in our second quarter outlook and will lower recurring revenue in the next three quarters by approximately $7 million per quarter.\nI plan to cover this again when I update you on our outlook.\nBoth perpetual and consulting revenues performed slightly better than we expected due to demand.\nWe continue to perfectly manage perpetual revenue down given our shift from a perpetual to a subscription model.\nWe also continue to gradually manage a decline in consulting revenues, given our strategic shift to increase collaboration with partners in order to drive higher adoption and consumption of Teradata.\nSecond quarter gross margin expanded to 64.8%, which was approximately six percentage points higher than last year's second quarter primarily for four reasons.\nWe continue to shift our mix to subscription-based recurring revenue, which carries a higher margin.\nSecond, our continued operational execution drove sustainable efficiencies in both subscription and cloud recurring revenue gross margin.\nThird, the margin benefit associated with the upfront recurring revenue recognition and fourth, rate and mix improvements impacting perpetual and consulting margins.\nSecond quarter operating margin expanded to 23.8%, significantly ahead of what we anticipated, driven by the combination of benefits flowing through gross margin and a lower cost structure as a result of last year's cost actions and continued cost discipline.\nTotal operating expenses were down 2% year-over-year and flat sequentially.\nConsistent with what we said previously, we are reinvesting savings back into the business and we'll continue to expand our cloud investment into the second half of the year.\nI'll comment further on this in a few moments.\nSecond quarter earnings per share of $0.74 and exceeded our outlook range of $0.47 to $0.49 by $0.26 at the midpoint.\nOf the $0.26, $0.18 flows through to full year EPS.\nThe remaining $0.08 only benefit the second quarter.\nThe $0.08 includes the $0.03 from additional upfront recurring revenues, $0.02 from currency, $0.02 from cost delays and $0.01 related to tax rate and weighted average share assumptions.\nTurning to free cash flow and capital allocation.\nWe have already exceeded our annual free cash flow outlook with first half free cash flow of $324 million.\nIn the second quarter, greater operational efficiency on cash collections resulted in free cash flow of $219 million.\nSecond quarter DSO was 55 days, which was 12 days better than last quarter and 13 days better than last year.\nWhile we look to maintain our collection efficiency, we view 55 days as exceptional and generally not sustainable.\nWe continue to take advantage of our strong balance sheet buying back stock to offset dilution.\nIn the second quarter, we repurchased approximately 850,000 shares for $36 million in total.\nFor the first half of the fiscal year, we spent $121 million on share repurchases or a return of 37% of year-to-date free cash flow to shareholders.\nFor the full year, we anticipate returning approximately 50% of free cash flow to shareholders via share repurchases while continuing to make investments in the company to support our strategy for profitable growth and cloud acceleration.\nLooking to the second half of the fiscal year, we expect total ARR growth to peak in the fourth quarter in line with historical seasonality.\nWe anticipate tougher public cloud ARR comparison in the second half, resulting from Teradata's cloud-first focus that accelerated under speed leadership in July of 2020.\nWe could see more upfront recurring revenue.\nAlthough difficult to predict, we have included our best current view for this activity in our May fiscal 2021 earnings per share outlook.\nAs noted previously, this activity may impact revenue linearity in the second half of fiscal 2021 and in fiscal 2022.\nAs I mentioned earlier, we are continuing our plans to increase spending in cloud that support R&D and go-to-market activities.\nThe incremental investments are anticipated to have a $0.02 to $0.03 impact on earnings per share in each quarter in the second half.\nFree cash flow generation in the second half is expected to be positive, but not as strong as the first half.\nThis is due to the earnings impact of the items previously mentioned, an anticipated increase in billings at the end of the year, which is in line with normal seasonality and less favorable working capital dynamics, particularly with regards to collections.\nWith that, let me take you through our outlook.\nThe outlook for the third quarter of fiscal 2021 is public cloud ARR is expected to grow at least 90% year-over-year or by at least $15 million sequentially.\nNon-GAAP earnings per diluted share to be in the range of $0.30 to $0.34, the fiscal second quarter operational outperformance about $0.04 flows through a sustainable improvement in the quarter, offset by the incremental investments I previously mentioned.\nWe anticipate the tax rate to be between 17% and 18% and a weighted average shares outstanding to be between 113 million and 114 million.\nFor the year, we are reaffirming our fiscal 2021 outlook for public cloud and total ARR growth year-over-year.\nPublic cloud ARR growth is expected to be at least 100% and total ARR growth is expected to be in the mid- to high single-digit percentage range.\nWe are raising several elements of our fiscal 2021 outlook.\nTotal recurring revenue is now expected to grow in the high single to low double-digit percentage range year-over-year.\nTotal revenue is now anticipated to grow in the low to mid-single-digit percentage range year-over-year.\nNon-GAAP earnings per diluted share is expected to be in the range of $1.92 to $1.96.\nWe anticipate the tax rate to be approximately 23% and the weighted average shares outstanding to be between 113 million and 114 million.\nFree cash flow for the year is now expected to be at least $400 million.\nI am very encouraged by the strength of Teradata fundamentals and see real opportunity to build on these in the future.\nOur operational execution and disciplined investing enables Teradata to deliver innovation to our customers, expand adoption and consumption in the modern market rate and drive profitable growth.\nIt truly is an exciting time to be at Teradata today.\nI look forward to speaking with you about how we will execute our future strategy and continue to drive increased shareholder value at our Investor Day on September 9.\n", "role": "user" }, { "content": "teradata q2 adj earnings per share $0.74.\nq2 non-gaap earnings per share $0.74.\nq2 revenue $491 million versus refinitiv ibes estimate of $475.4 million.\nsees q3 gaap diluted earnings per share to be in range of loss per share of $0.01 to earnings per share of $0.03.\nteradata sees q3 non-gaap eps, excluding stock-based compensation expense, reorganization-related expenses, other special items, to be $0.30 to $0.34.\nfy total revenue is now expected to grow at a low-single-digit to mid-single-digit percentage year-over-year.\nteradata - fy non-gaap eps, excluding items, is now expected to be $1.92 to $1.96.\n", "role": "assistant" } ]

[ { "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: Steve McMillan, Teradata's President and Chief Executive Officer will lead our call today.\nFollowed by Mark Culhane, Teradata's CFO, who will discuss our financial results.\nWe will also discuss other non-GAAP items, such as free cash flow.\nA replay of this conference call will be available later today on our website.\nI'm pleased to report that Teradata executed extremely well in Q3 and delivered good results for our shareholders.\nWe exceeded our expectations and guidance, and for all key metrics, including ARR, recurring revenue, free cash flow and non-GAAP earnings per share.\nThe strong performance comes as a result of concentrated efforts from across the organization.\nThe team delivered very well, delivered solid sales execution in all regions, provided ongoing support for our customers to help them obtain the greatest value from the data assets and significantly advanced the technology for the cloud.\nWe also stepped up and directly address outdated market perceptions with clear market messages and implemented focused cost discipline as well.\nAs a testament to a growing momentum in the cloud, I will start today's remarks by sharing examples of our code-first success with customers.\nWe are starting from a great base and a well-established a strong commitment to helping customers leverage their data assets and solve their complex data challenges at scale.\nWe are therefore seeing substantial growth in our cloud business across regions, industries and public cloud platforms.\nLoblaw's, a large Canadian retailer is migrating key applications and database technologies to the cloud with Teradata.\nThis customer is a great example of her ability to operate in a hybrid multi-cloud model, and Loblaw's now runs Teradata Vantage in more than one public cloud platform.\nA leading truck manufacturer in Asia has selected Vantage on AWS and its cloud data analytics platform.\nThe customer will leverage Vantage in the cloud from real time analysis of vehicle data to reveal insights from vehicle functionality and performance, drive predictive maintenance and determine value-added services to offer its customers.\nNext one, we are partnering with a regional provider of Integration Services.\nA global Fortune 500 CPG company headquartered in Europe connected to Teradata Vantage on Azure in the quarter.\nThe significant competitive wins was the result of our team's ability to prove its credentials in migrating the customers large and complex workloads to the Azure cloud.\nOur customer will leverage with advanced analytical capabilities of Vantage on Azure to drive rapid innovation and expedite the delivery of new, high value business outcomes for his global finance, supply chain, sales, marketing and HR functions.\nA large American retailer and long-standing Teradata customer is migrating its Teradata environment to Azure.\nIts scale of production analytics is enormous, with millions of queries run weekly, that reviewed alternative Cloud Data Warehouse Solutions, and selected Vantage on Azure.\nVantage offers unmatched performance and reliability.\nOur customer will continue to support a myriad of business critical functions, including merchandising and assortment planning, finance, supply chain and demand forecasting, as well as digital marketing, price management, and its growing data science operations.\nAnd finally, we brought in a significant Vantage on Azure win when that Fortune 100 CPG company.\nWhen this customer completes his migration to the cloud, that will be our largest Vantage on Azure deployment.\nThe customer is leveraging its data assets for analytic use, by all major divisions of its worldwide business, and relies upon Vantage across its entire organization to democratize analytics, and finance [Phonetic] and HR, drive down the cost of inventory and supply chain, while increasing revenues from sales, marketing and e-commerce.\nI'll just run through a small selection of the code wins we are seeing, but I wanted to commence my remarks highlighting a strong positive momentum and significant increases in cloud ARR.\nNow, I'll provide an update on four areas that are propelling us forward and fueling that momentum.\nFirst, our technology innovations, second, our ongoing progress and execution and efficiency.\nThird, an update on how we are strengthening our executive leadership to gauge our future and profitable growth.\nAnd finally, I'll wrap up by providing a status on our transformation efforts.\nLet's start with the advancements we've made in the quarter with our code-first technology.\nWe had a great milestone with the general availability of Teradata Vantage on Google Cloud.\nAnd of course, Google Cloud customer wins.\nTeradata is now the only data analytics platform provider with hybrid multi-cloud offerings across all three of the top public clouds, providing utmost deployment flexibility for our customers.\nIt's important to our customers vantage software is consistent across all environments, with a multi cloud, hybrid or on prem.\nThis flexibility makes migration to cloud environments easier, faster, and lower risk for providing the scale they need without compromise.\nIt makes it easy for customers to benefit from data analytics in the cloud, we introduced new flexible code pricing options.\nOur blended pricing option is ideally suited for enterprise class usage and provides predictability and building [Phonetic] while delivering the lowest cost of scale.\nOur cloud consumption pricing option is an affordable pay-as-you-go usage-based offer.\nBusinesses leveraging our consumption pricing model, we never worry about utilization, system sizing or resource status, since we manage these on their behalf.\nWe further make it risk-free to get started with Teradata Vantage in the cloud with zero down [Phonetic] consumption pricing option.\nLong time Teradata customer, True Value Company, one of the world's leading hardware wholesalers is one customer now taking advantage of the company's new cloud consumption pricing model.\nWe introduced a new cloud cost calculator on our website to help people understand the cost advantage in cloud.\nToday to help change the inaccurate cost perceptions of the Teradata.\nBy answering five simple questions visitors will see a cost estimate for using Vantage in the cloud, including the recommended consumption model, either blended or consumption.\nVisitors can get a customized cost report based on their inputs.\nMany organizations are surprised when they consider a code only option and realize how fast the cost escalate when they try to scale.\nAs customers scale what goes in the cloud, Teradata has the lowest cost per query in the cloud because of our industry leading query optimization and workload management.\nAs we accelerate our Vantage roadmap on the cloud, integrations with cloud native services continue to remain a top priority.\nWe recently released connections to manage Hive and Spark on the base three [Phonetic] cloud platforms, that extend their hybrid cloud and multi cloud capabilities, as customers move workloads to the cloud.\nWe further extended cloud-native Vantage integrations with AWS AppFlow and ensure data factory.\nAs an example, our customers can combine data and vantage with customer sentiment data from social media and the opportunity information in Salesforce, as well as support and call logs from ServiceNow to build a complete customer 360 profile that can help them and their customers increase sales and reduce churn.\nSo, overall, a great quarter of advancing our cloud-based data analytics platform technology.\nYou can be assured that we will keep up the pace here, as going forward, we will be allocating approximately three quarters of our research and development and to quote faster initiatives.\nThis is a significant redirection from just a year ago.\nAnd we believe it will fuel our growth and movement to the cloud.\nAt Teradata, we firmly believe that businesses will continue to increase their need to leverage massive amounts of data and develop their enterprise with the future.\nData is proliferating, and organizations need partners who will help them leverage their data in the cloud without rapidly escalating consumption costs.\nThis leads to a tremendous growth opportunity for Teradata.\nAs enterprises test multiple cloud solutions, and connect or reconnect to Teradata, we look forward to continuing our leadership roles in that exciting market.\nWe believe and we proved to customers every day that Teradata have best technology and expertise to help them leverage data, cost effectively and at massive scale to unlock real business value.\nWhile we are building our cloud momentum, we are also seeing customers add to their Vantage on-prem solutions.\nTexas Health Resources, our regional healthcare provider expanded the Teradata environment.\nAnd here we work in partnership with TelBru's [Phonetic] The customer is capturing, cleansing and orchestrating patient data, using predictive decision models to drive virtualized care options to the right patients in real time, particularly important now during COVID-19.\nThere's a great article that our IR team will be happy to share and how this customer is using predictive analytics to improve patient care.\nNow the telecom company, a telco leader in the Middle East, as well as being an industry leader in the adoption of analytics continues to expand its Teradata platform.\nThe expansion will address both the strategic direction in digital transformation, as well as key programs in their own customer value management, and support the Saudi National initiative to help government and healthcare with COVID-19 analytic.\nSaudi Telecom continues to drive success with its Teradata platform and has tripled its capacity for analytics to Teradata over the last 18 months.\nComplementing our progress in technology innovations, we correspondingly made advancements in our execution during the quarter.\nIn Q3, we expanded our partner ecosystem, and Teradata became a partner of the Volkswagen industrial cloud.\nWe will support Volkswagen on this open IoT platform by providing cloud-based data analytics to optimize production processes, and drive productivity increases in Volkswagens plans.\nAlso, we have actively stepped up our marketing to increase market awareness of our cloud [Phonetic] plus division.\nWe are proud of our hybrid multi cloud differentiation and are committed to building awareness around leadership and helping businesses unlock value as they turn data into a strategic asset or remain vigilant and publicly address misperceptions in the market, as we declare our differentiated possession.\nOur organization also continues to prove its resilience with remote work arrangements to keep our people and our customers safe during the pandemic.\nAnd I'm very proud of our team and their persistence and dedication in this unprecedented time.\nWe're executing customer engagements and executive briefings virtually around the globe.\nAnd these focus sessions are leading to great opportunities.\nWe're seeing much greater engagement with customers at the executive level on our cloud first offerings.\nTeradata has received some outstanding industry recognition, as the firm's who follow technology are acknowledging the ever-increasing importance of data-driven decisions, and taking note of our strength of the cloud data analytics platform.\nWe were named by IDC in the FinTech top 100 Rankings as number 34, Inclusion and Netflix, recognizing our compelling value proposition, as the leading supplier of technology to the financial services industry.\nAs you know, financial services remain an important vertical for us, and we remain steadfast in our commitment to providing best in class data Analytics to support this dynamic industry.\nIDC also named Teradata and its Asia Pacific MarketScape recognition of major vendors for cloud data analytics platforms.\nIn this research IDC noted that Teradata is a good match for companies that need hybrid cloud flexibility and prioritize security and performance for the analytics workloads.\nAs such, further pointed out, the Gen Z workers and large enterprises concerned with operations and governance, often look Teradata solutions.\nThese recent industry analyst recognitions follow a strong score in the Forrester Wave on data management for analytics from earlier this year.\nIn fact, By Teradata received the highest score in the current offering category.\nThe report noted that Teradata remains a prominent choice, especially for hybrid deployments, for scalability and availability are critical.\nNow, I'll turn to how we are strengthening our executive ranks, as we accelerate our drive to the cloud and an increasing rate of profitable growth.\nWe brought in Nicolas Chapman, as the Chief Strategy Officer to ensure we have a well-defined strategic and operational plan, as we accelerate our transformation to cloud first company.\nTeradata has made solid progress on this front, and Nicolas will help build on our success momentum.\nNicolas has a proven track record of driving organizational performance through cohesive strategy planning and execution, and joins us from Imperva and McKenzie.\nAdditionally, we appointed Hillary Ashton, as our Chief Product officer, and brought together all aspects of our technology innovation into one organization dedicated to ensuring delivery, differentiated value to our customers, and an extraordinary customer experience from a cloud first technology.\nHillary joined us from PTC just under a year ago and has accelerated her innovation cadence of keeping a customer centered approach.\nI'm also very pleased that we have appointed Molly Treese, as our Chief Legal Officer, exceeding Laura Nyquist, who recently retired as a former General Counsel.\nMolly is a seasoned leader with outstanding judgment and deep knowledge of Teradata and will help get guidance forward.\nFurther, we've named Erica Hausheer', as our Chief Information Officer.\nErica will lead Teradata as IT and Security organizations and will drive the ongoing use of our own data analytics technology to advance her business objectives.\nOf course, we too are using data to drive her business.\nErica joins us from 3d Systems and Hewlett-Packard Enterprise.\nIt's very gratifying to have these incredibly capable executives in our leadership rank.\nThese definitely reflect our commitment to enhancing diversity and inclusion through our culture, as we hire the best talent to help us move the company forward into our next chapter of market success.\nI do want to recognize Scott Brown, our Chief Revenue Officer, who just departed the company as he becomes the President and CEO of FinancialForce.\nWe wish him the best in his great career opportunity.\nImprovements began in our go-to-market organization contribute to our Q3 success, and I have great confidence in our GTM team to execute their plans and ensure a seamless continuation of our sales efforts going forward.\nWe have an active executive search in progress for a new CRO.\nBefore I pass the call to Mark, I would like to provide an update on our transformation efforts.\nAnd what we have been undertaken to better align our investments through code-first initiatives.\nIn Q3, every organization and the company has reviewed their operations and is working to just cost, to better possession that corporations for a move to the cloud and the continuation of profitable growth.\nThis encompasses non-revenue generating programs, real estate rationalization, and so way headcount reductions, including a voluntary separation program, in a more recent end voluntary reduction program that will result in more -- and therefore costs.\nOur efforts should result in a more optimized business model for financially healthy footing as we enter 2021.\nYou'll hear more from Mark on the actions to realign our cost structure under investment to accelerate our business and strengthen our bottom line.\nAs we near the end of such a tumultuous year resulting from the global pandemic, has become abundantly clear that enterprises of the future need to be able to adapt with agility and speed to unpredictable situations.\nTo do that, they need data.\nAnd there is no better data analytics platform than ours.\nTeradata's hybrid, multi cloud architecture gives businesses the flexibility and portability to manage through dynamically changing environments.\nOur platform is built for today's hybrid, multi cloud world.\nAnd we are going to keep the firm momentum going strong.\nI am pleased to report that the company delivered a strong quarter with better than expected recurring revenue, ARR growth, non-GAAP earnings per share and free cash flow generation.\nWe accomplished these strong financial results, while making further progress in realigning our R&D and product management organization, and investing to support our cloud first initiatives, as well as taking actions to reduce and streamline our overall cost structure.\nAdditional commentary on key metrics and segment trends can be found in the earnings discussion document on the IR website at investor.\nWe delivered $365 million in recurring revenue, which was above our guidance range, and was 6% growth year-over-year.\nWe generated $47 million in incremental ARR this quarter, and exited the quarter with a total ARR balance of $1.501 billion, an 8% increase over Q3 of 2019.\nWe were particularly pleased with the strength we saw in our EMEA and APJ regions, which helped drive recurring revenue and ARR ahead of our expectations.\nPerpetual revenue came in as expected at $17 million, slightly up from the prior year.\nAlthough the mix of deals varied from expectations, driving better than expected gross margins.\nConsulting revenue declined to 28% as expected, as we continue to refocus our consulting business on higher margin engagements to drive increased software consumption within our customer base.\nIn addition, we had continued impact from the ongoing COVID-19 pandemic, as some customers cancelled certain projects as they continue to manage their discretionary spending, especially for on-site consulting engagements.\nWe expect to see a continued year-over-year decline in consulting revenue in the fourth quarter, given our overall strategy and the ongoing uncertainty around COVID-19.\nTurning to gross margins, recurring revenue gross margin was 70.4%, up 70 basis points from the third quarter of 2019 and up 60 basis points sequentially from Q2.\nWe benefited from a couple of one-time items in Q3, including favorable FX revaluation, which we don't expect to carry over into Q4.\nIn addition, we are expecting our increased cloud momentum to be a headwind to our Q4 recurring revenue gross margin and expect recurring revenue gross margin on an annual basis to be flat year-over-year.\nAs we have previously stated, we are more than happy to incur short term recurring revenue gross margin impact from accelerating cloud ARR momentum.\nPerpetual revenue gross margins came in well ahead of our expectations at 58.8%, driven by a large US customer purchasing hardware on a perpetual basis.\nWe expect Q4 perpetual revenue gross margin to be similar to prior year Q4 level.\nConsulting margin was 13.9% versus 9% in the third quarter of 2019, as improved utilization, improved cost management, and better price realization helped drive significant improvement over last year.\nWe continue to expect consulting margins to increase sequentially in the fourth quarter, and to be in the low double digits for the year.\nTotal gross margin came in at 61%, up 500 basis points year-over-year and ahead of our expectation.\nThe improvement was driven by better than expected gross margins in each revenue category, as well as the continued favorable revenue mix shift to higher margin, recurring revenues and away from perpetual and lower margin consulting revenues.\nWe expect Q4 gross margins to sequentially decline and be approximately 400 basis points higher than Q4 of the prior year.\nTurning to operating expenses.\nTotal operating expenses were down 2% year-over-year, and came in lower than expectations, primarily due to certain expenses shifting to Q4, as well as our focus on expense management.\nWe continue to reallocate spend toward our cloud initiatives and offers, modernizing our go-to-market sales motions, and redirecting our marketing focus to virtual events and other higher ROI areas during COVID.\nWe expect our fourth quarter operating expenses to be up sequentially, primarily driven by higher sales commissions, as well as from sales and marketing investments in our cloud initiatives and modernizing our go-to-market sales motions.\nWe are continually evaluating opportunities to optimize our cost structure, while investing in our cloud first initiatives and transforming our go-to-market organization, to accelerate our recurring revenues growth and expand our opportunities in the market, particularly in the cloud.\nWe had an exceptionally strong free cash flow quarter, driven by our shift in subscription model, as well as excellent execution by our collection organization.\nFree cash flow in the third quarter was $58 million, which contributed to year-to-date free cash flow of $171 million, well ahead of prior year, actual full year free cash flow of $89 million and our beginning of the year expectations of $150 million.\nAs Steve mentioned, we took an initiative to realign the company to be cloud first, more agile and position Teradata for increased growth, profitability and capitalize on our opportunity for the long term.\nThe first action we took was to offer a voluntary separation program for certain employees, which gave us more flexibility, realigning the company, as well as reducing our expense level.\nThe second program was an involuntary reduction in force action that will enable us to realign our investments and operating expenses to accelerate our move to the cloud, add new talent to support our cloud first initiative and reduce our overall expense structure.\nIn addition, we are rationalizing our real estate footprint around the world, especially given that working virtually is likely to become more commonplace in the future.\nWe will provide more commentary on this topic in the future, but is another opportunity to more efficiently operate and realign additional investment dollars to our cloud initiative.\nFrom these actions, we expect to incur restructuring charges of approximately $70 million to $80 million, of which approximately $28 million was recorded in Q3 and the remaining balance to be recognized in Q4 and 2021, with the vast majority of it in Q4 of 2020.\nCash usage for these restructuring actions is expected to be approximately $75 million, of which approximately $50 million is expected to be used in the fourth quarter of 2020.\nWe currently estimate these actions will reduce annual expenses by approximately $80 million to $90 million.\nBefore considering any reinvestment toward our strategic initiatives for 2021 and beyond, as well as any further cost reduction considerations, both of which are currently being evaluated.\nWe will provide more commentary on these topics on our Q4 call in early 2021.\nAs a result of our strong free cash flow quarter in Q3, and our expectation for another strong cash flow generation quarter in Q4, we expect our Q4 free cash flow after including the aforementioned Q4 restructuring cash payments to be breakeven to slightly positive, resulting in our full year free cash flow to be approximately $170 million to slightly higher for the full year, which is a significant increase over the prior year free cash flow of $89 million.\nAlthough COVID-19, has been disrupted for our customers and employees, we are quite pleased with how our team has adapted and supported our customers, as well as realign the company to be cloud first.\nWe came into the year setup for a strong year and remain optimistic based on the pipeline we see for the fourth quarter.\nFor Q4, we expect recurring revenue in the range of $371 million to $373 million.\nWe expect a higher mix of cloud ARR and recurring revenue in Q4, which is fantastic.\nHowever, it does come at lower margin.\nBut we are happy to take the short-term gross margin impact for the favorable shift to the cloud.\nIn addition, we will see higher operating expenses in Q4 compared to Q3, driven by higher sales commission expense and sales and marketing expense related to our cloud initiatives and modernizing our go-to-market motion.\nLastly, the benefits from our restructuring activities predominantly impact 2021 and will not be a tailwind to expensive and margin in Q4.\nWe continue to expect our full year tax rate to be approximately 23% and our full year share count of approximately 111 million weighted average shares.\nTaking all this into account, we expect non-GAAP earnings per share in the $0.23 to $0.25 range.\nIn terms of ARR, we expect another quarter of strong incremental ARR growth and expect ARR to grow 8% or higher for the full year.\nAs in prior years, we anticipate providing guidance and commentary for 2021 when we report the results at the end of the year.\nAnd with that, operator, we are ready to take questions.\n", "role": "user" }, { "content": "sees q4 non-gaap earnings per share $0.23 to $0.25 excluding items.\nqtrly recurring revenue was $365 million, up 6%.\nfor q4 of 2020, teradata expects recurring revenue between $371 million and $373 million.\n", "role": "assistant" } ]

[ { "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: Steve McMillan, Teradata's President and Chief Executive Officer will lead our call today, followed by Mark Culhane, Teradata's Chief Financial Officer, who will discuss our financial result.\nA replay of this conference call will be available later today on our website.\nI'm very pleased to lead off call by sharing that Teradata delivered another solid quarter in Q4, culminating in a strong finish to 2020 and we also exceeded earnings per share and free cash flow.\nI'm incredibly proud of our team's performance and strong execution, particularly given the impacts of the global pandemic.\nWe have effectively completed our transition to a subscription model that generates recurring revenue and are vigorously executing on transformation to a cloud-first company.\nThe team drove another quarter of solid year-over-year and sequential growth in total ARR.\nThis was especially true for public cloud ARR, which exceeded $100 million.\nThe growth we are seeing demonstrates that are cloud-first positioning is resonating with the market.\nMore importantly, it shows that customers are increasingly seeing the value advantage in the public cloud, powering effective analytics at scale and delivering meaningful business returns.\nPublic cloud ARR of $106 million at the end of 2020 was a 165% increase from the prior year.\nTo provide some color on our momentum, I'd like to highlight a handful of our public cloud wins.\nOne of the world's largest airlines committed to Teradata on Azure for its next generation analytics in the cloud.\nThis win is a great demonstration of the essential role Teradata established for our customers.\nLeveraging all relevant data to help our customers navigate through tumultuous times, its crucial, and no one does that better than we do.\nWe signed a long-term agreement at a Fortune 100 insurer, as it modernizes its IT infrastructure, less competitive win against several cloud native vendors came after the customer recognized that Teradata provides significantly higher value and quality at significantly lower cost than others.\nOne of the largest non-profit healthcare systems in the US chose Vantage on Azure for his patient experience and the data analytics capabilities enabled by our data platform.\nWe conducted an extensive evaluation of Vantage on Azure versus credit only competitors.\nOur customer selected Teradata for unsurpassed workload management capabilities, platform ability and ability to reliably and securely execute company's more than 26 million queries per day.\nTeradata is partnering with Capgemini, one of our global consulting partners on less customers migration to the cloud, and its future growth opportunities.\nA North American based global e-commerce marketplace reconnected to Teradata to modernize its analytics environment.\nAfter it tested the cloud native offering, experienced in technical challenges and extended migration delays brought the customer to the realization that it would not achieve the business value they expected from its intended move to Snowflake.\nSelecting Vantage on AWS offered a seamless transition to the cloud ensures its mission critical production workload is maintained and allows its people to focus on creating gold forward business value.\nA Fortune 50 healthcare company selected to Teradata on AWS to continue to run its business intelligence reporting and analytics for claims, case management and provider efficiency.\nThis too, was a competitive win against multiple cloud native vendors with Teradata's ability to scale and handle very high workload volumes as the main differentiators for this growing customer.\nAnd we are helping a leading retailer and APJ transition to the cloud with Vantage on Azure.\nThis customer chose our consumption pricing model pervasive elasticity to quickly scale and address the changing retail market environment.\nThese are just a few examples that illustrate how well our teams kept the focus and executed to drive the pandemic.\nOrganization, who is proving offerings and capabilities to customers.\nThe company's resolute cloud first focus and commitment came to the forefront throughout 2020, and was manifested across the entire business.\nSome of our advances from the last few months include, launching of Vantage trial program.\nThis trial program places the power of Teradata, directly in the hands of customers to help companies quickly, easily and at no cost experienced the capabilities of Vantage in the cloud.\nThis free trial is preloaded with ready to use examples to get customers started.\nUsers can also upload their own data to see how Vantage advanced analytic functions enable faster evaluation and accelerated time to value.\nAnd as with every Teradata environment, there is no limit to the number of complexity of queries that maybe submitted.\nOnly Vantage enables analytics across multi cloud, on-prem and hybrid environments, and to offer maximum flexibility and choice for our customers.\nVantage is available across the top public cloud vendors, Google Cloud, AWS, and Microsoft Azure.\nWe also recently announced that Teradata Vantage is now available in AWS, Azure, and Google Cloud marketplaces.\nThese new purchasing channels offer another means to make it easy for customers to purchase and use Vantage.\nWith full multi-cloud support, their software is consistent across all of these environments, making processes easier, reducing risk and de-levering faster team to value and all with the scale, security, availability and performance customers rely on from Teradata.\nThis is a tremendous benefit to our customers as many have multi-cloud strategies and roadmaps.\nWith Vantage, companies can leverage all of the data, all of the time and that scale being need to achieve breakthrough business results from their analytics.\nOur support of multi-cloud environment combined with our new flexible pricing options make it easy for customers to benefit from data analytics in the cloud as we unlock that value in the data assets.\nAdditionally, with the latest release of Teradata QueryGrid, we are making it easier for customers to connect to data sources, regardless of where the data resides and the quote and multiple clouds are on-prem.\nThis is important as organizations increasingly transition to the cloud and need to be able to access and combine information from all of the data environments at the same time and its scale.\nOur R&D team is relentlessly working to ensure that Vantage is the fastest, lowest risk, highest performing and most cost effective path to the cloud.\nThe focused organization has delivered more cloud capabilities in 2020 than ever before.\nIt's a driving force behind our cloud growth and will continue to accelerate as we architect our software for the cloud.\nI am confident in our accelerating cloud roadmap, a rapid cloud migration work and the growth it will deliver.\nOur development efforts remain centered on driving complete and compelling cloud offerings at scale and the team is bringing forth cloud native integrations at record pace.\nCompanies must take advantage of all of the data that is available to them to succeed.\nAnd we will remain steadfast in providing the enterprise scale and flexibility they need with our cloud data warehouse and the analytic capabilities we enable as a platform.\nAs I referenced last quarter, we undertook a careful review of our operations to align our cost to better support our cloud growth objectives.\nWe will be investing 75% of all R&D spends or over $200 million in fiscal 2021 in our cloud initiatives.\nWe are making these investments while also planning to improve operating margins and increased free cash flow.\nLooking ahead, as we begin 2021, we anticipate significant year-over-year growth in public cloud ARR.\nAdditionally, we expect year-over-year growth in total revenue, profitability and free cash flow.\nGoing forward, a majority of our revenue will be recurring and we expect total revenue growth for the first time since 2018, as the shift to a subscription model is no longer a headwind for our reported results.\nMark will talk more about that in his comments, along with financial reporting changes we anticipate making in 2021 as a result of the way I am looking at and operating the business.\nWe are a cloud software platform company and our future lies in bringing enterprise data warehousing and analytics software to the world's leading organizations.\nConsulting services and third party software sales don't equate to high quality recurring product revenue.\nTherefore, we believe the changes Mark will describe for eight new and seeing our true progress.\nWe have taken clear actions to prepare for growth in 2021.\nOne of the ways, we strengthened our execution during 2020 was focusing on driving awareness and demand for our cloud offerings.\nWe have made meaningful headway and are stepping up our efforts to further focus our marketing and sales teams, refined our sales compensating our salespeople to grow also simplified and aligned our marketing message to cloud first and are taking the message to the market to drive awareness and demand for Teradata Vantage on public cloud within our target markets and customers.\nAdditionally, we received a significant industry endorsement of Teradata's emerging strength as a leading cloud First Data platform as Teradata was named a leader in Gartner's cloud database management magic quadrant.\nThe report noted that our move to the cloud, a new pricing models make our price performance more apparent and furthermore the report encouraging customers to run a proof of concept to understand how competitive Teradata's price performance is.\nTeradata garnered the highest scores in three out of four use cases in Gartner's report on critical capabilities for Cloud Database Management Systems for analytical use cases.\nThis evaluation clearly demonstrates Teradata's ability to meet the largest and most demanding customer's data analytics needs from all industries.\nWe are continuing to add strong leadership to our executive ranks.\nI am very pleased that we named Todd Cione as Chief Revenue Officer.\nTodd brings to Teradata more than 25 years of experience in global sales, marketing, channel and operations at large multinational technology organizations, including most recently at Apple and previously with Oracle, Rackspace and Microsoft.\nHe drive for results has a track record of delivering predictable and profitable growth, and has successfully led organizations through cloud-based transformations, with an intense focus on delivering lasting value for customers, Todd has already hit the ground running and is deeply engaged with our go-to-market teams.\nI would like to highlight the recognition Teradata recently received regarding our ongoing Environmental, Social and Governance, or ESG efforts.\nI am pleased to share that Teradata was named in the Dow Jones North American Sustainability Index for the 11th consecutive year, and we have also been included in the Corporate Equality Index for the first time.\nWe believe social responsibility, sustainable business practices and responsible governance are good for our world and right for our business.\nWe will continue to build on our commitment to sustainable corporate citizenship that leads to long-term value creation for all of Teradata stakeholders.\nWe look forward to share more on our corporate strategy including ESG at an Analyst Day later this year.\nIn closing, I would like to reinforce critical dimensions, whether that'd be data volume, the number or complexity of queries, response times or managing SLAs of different business needs.\nThis is where Teradata technology excels, and a rapidly growing cloud ARR shows the customers are recognizing this value from Teradata.\nAdditional commentary on key metrics and segment trends can be found in the earnings discussion document on our Investor Relations webpage at investor.\nIShares' view that Teradata had a strong finish to 2020 in our global environment impacted by the pandemic.\nI am pleased to report that the company delivered another quarter with better than expected recurring revenue, earnings per share and free cash flow, while effectively completing our pivot from a perpetual license model to a subscription license model.\nWe also exceeded our original guidance for the full year for ARR growth, earnings per share and free cash flow despite the impact of COVID-19.\nWe ended the year with $1.587 billion in ARR, which was 11% growth year-over-year at the beginning of the year, delivered $86 million.\nAnd -- the $1.58 7 billion of ARR breaks down as follows; $960 million represents subscription and cloud ARR.\nAs Steve noted in his introductory remarks to give investors better insight into our Cloud business in momentum, we are disclosing our public cloud ARR for the first time.\nPublic Cloud ARR totaled $106 million at the end of 2020, which was a 165% increase from the end of 2019.\nPublic Cloud-related ARR is comprised of Teradata Vantage running on the public cloud, AWS, Azure and Google Cloud, and does not include private cloud, which continues to be included in subscription ARR.\nWe are not including private cloud as our cloud first strategic focus is on public cloud.\nThe remaining subscription amount of $854 million represents on premises and private cloud subscriptions in grew 30% year-over-year.\nThe remaining ARR balance of $627 million represents; maintenance, software upgrade rights and other ARR down 14% year-over-year, and reflects our strategic move to subscription and the cloud.\nMoving into recurring revenue.\nIn Q4, we generated $383 million in recurring revenue, which was above our guidance range of $371 million to $373 million and represented 9% growth year-over-year.\nBetter than expected ARR growth and consistent sales execution throughout the quarter both positively contributed to the increase in recurring revenue.\nMoving on to consulting revenue.\nConsulting revenues declined 27% year-over-year, as expected, as we continue to refocus our Consulting business on higher margins engagements that also drive increased software consumption within our customer base.\nIn addition, we experienced the impact from the ongoing COVID-19 pandemic as some customers cancelled or delayed certain projects as they continue to manage their discretionary spending, especially for onsite consulting engagements.\nWe expect consulting revenues to start to stabilize during 2021 and expect consulting revenues to decline at a significantly lower rate than we have experienced over the last few years.\nTurning to gross margins.\nTotal gross margin came in at 59.3%, up 610 basis points a year-over-year.\nThe improvement was driven by the continued favorable revenue mix shift to higher margin recurring revenues and away from lower margin perpetual and consulting revenues, as well as increased recurring revenue and perpetual revenue gross margins year-over-year.\nCost savings of about $6 million from the actions announced during our Q3 2020 earnings call aided our gross margin in the fourth quarter, and will also benefit our gross margin dollars in 2021.\nRecurring revenue gross margins was 17.5%, up 190 basis points from the fourth quarter of 2019 and up 10 basis points sequentially.\nThe year-over-year increase in recurring revenue gross margin the expected recurring revenue growth.\nHowever, the greater than expected recurring revenue dollars and our cost saving actions both drove the better than expected recurring revenue gross margin.\nConsulting gross margin was 8.4% versus 14.9% in the fourth quarter of 2019.\nConsulting margins declined year-over-year and sequentially as revenue decreases outpaced cost reductions.\nAs part of our restructuring actions, we have moved to a more variable consulting cost structure starting in 2021 to improve the future profitability of our Consulting business and enable more consulting with third-party partners.\nTurning to operating expenses, total operating expenses were up 4% year-over-year.\nThe primary driver of this increase were additional incentive plan expenses, given our strong Q4 performance.\nExcluding incentive plan expenses, total operating expenses decreased slightly year-over-year.\nOn our Q3 earnings call, we disclosed that the restructuring efforts we announced were expected to result in expense reduction between $80 million to $90 million on an annualized basis.\nWe expected to invest a portion of these savings into our cloud first and related go-to-market initiatives and return the remainder to investors through increased earnings.\nAs an update, the actions taken resulted in approximately $80 million of total cost savings.\nOf this amount, approximately $12 million benefited operating income in the fourth quarter.\nWe will discuss the impact in 2021 when I get to guidance shortly.\nTurning to earnings per share, earnings per share of $0.38 exceeded our guidance range of $0.23 to $0.25 provided last quarter.\nWe cleanly beat expectations as we generated about $0.09 from better than expected revenue growth and about $0.08 of earnings per share from the cost actions discussed on the Q3 earnings call, partially offset by the primarily lower consulting margins and higher incentive planning expenses as previously mentioned.\nTurning to free cash flow, we had another solid quarter of free cash flow generation driven by higher operating margin, strong cash collection, and other favorable working capital timing differences.\nFree cash flow in the fourth quarter was $45 million, which contributed to full year free cash flow of $216 million, well ahead of the annual free cash flow guidance of $150 million we provided at the beginning of the year.\nAs a reminder, we expected to make cash payments of approximately $75 million related to the restructuring actions that we discussed during our Q3 earnings call, of which approximately $15 million were expected in the fourth quarter.\nOur current forecast for total cash usage is now approximately $65 million, down $10 million from the prior estimate.\nOf the $65 million, $23 million was paid in the fourth quarter.\nThe remaining $42 million is expected to be paid during 2021.\nHowever, even after taking the restructuring cash payments into account, our Q4 free cash flow was still better than we expected.\nLet's start by discussing the two key assumptions underpinning our 2021 outlook.\nFirst, I would like to inform you of our financial reporting change starting in Q1 2021 that Steve mentioned in his introductory remarks.\nTo better align our financial reporting with how Steve is managing the business going forward, we will be reclassifying managed services related ARR and revenue out of recurring revenue and into non-recurring consulting revenue as these services are principally consulting delivered services.\nIn addition, that ARR and into other non-recurring software will not be a focus for us, but rather will be driven directly to the third-party software partner.\nThe reporting change will result in no change to previously reported total revenue or total gross profit or gross margin percentage.\nWe are making this change to better reflect and disclose the important revenue and margin metrics that Steve and our company are focused on driving moving forward.\nSee the earnings discussion document on the Investor Relations webpage for more information regarding the revenue and gross margin component impacts of this change.\nI would like to provide you the reclassified amount of ARR at December 31, 2020 by category reflecting these changes.\nAfter reclassifying managed services and third-party software ARR, total AAR was $1.425 billion at the end of 2020 which still grew over 11% year-over-year.\nAnd it consisted of the following $917 million of subscription and cloud related ARR, which increased 38% from the end of the prior year with public cloud ARR of $106 million of this total and $508 million of maintenance and software upgrade rights related ARR, which decreased 17% as expected, due to our shift to a subscription model.\nSecond, we look to continue our growth in the cloud as we accelerate our product roadmap, focus our go-to market to grow cloud while protecting our base and drive awareness and demand for our platform, a mix the ongoing pandemic.\nGiven our cloud momentum and the purchasing behavior of our high-end enterprise customer base as more of them move to Vantage in the cloud, we expect that we will contract differently with our customer base versus what we have historically done on-premises.\nWe anticipate that some or many of our customers may choose to purchase or use committed volumes of cloud instances directly from the public cloud providers rather than through us.\nThis could create variability in our total ARR and recurring revenue in subsequent quarters.\nAs only the ARR and recurring revenue associated with our Vantage software will flow through our P&L rather than that plus the cloud infrastructure.\nHowever, we are happy to take that trade-off as that recurring revenue has a higher gross margin for Teradata and it is easier for our customers to a elastically consume Teradata in the public clouds versus on-premises.\nAdditionally, as more customers and workloads move to the cloud, it is likely more of our business will be consumption based and will not necessarily be recognized ratably creating more variability in the recurring revenue we report by quarter.\nFurthermore, many of our customers will operate Vantage on-premises as well as in the cloud.\nAnd thus we expect that may change our on-premises contracts with customers, which could result in on premise revenue recognized other than ratably which also may create more variability in the recurring revenue we report by quarter.\nAs a result we anticipate it becoming more difficult to forecast our recurring revenue, especially on a quarterly basis.\nTherefore, we will not be providing guidance for recurring revenue by quarter.\nWith that said, our 2021 annual guidance, which considers the week is expected to grow total ARR is anticipated to grow in the mid to high single-digit percentage range year-over-year.\nWe expect total recurring revenue to grow in the mid to high single-digit percentage range year-over-year.\nWe expect total revenue growth for the first time since 2018.\nWe anticipate total revenue to grow in the low single-digit percentage range year-over-year.\nNon-GAAP earnings per share are expected to be in the range of a $1.50 to $1.58 which would be about 18% year-over-year growth at the midpoint and we expect free cash flow of at least $250 million.\nNow I'd like to provide some color on 2021 to help you understand our business, which again considers the reclassification I recently mentioned we expect public cloud AR to become a more meaningful part of total AR within the total revenue guidance we provided, we anticipate mid single-digit percentage reduction in consulting revenue year-over-year and a continued reduction of perpetual and other revenue, by at least half in 2021 versus 2020.\nWe expect our total gross margin rate in 2021 to be approximately the same as in 2020, given our significant movement to the cloud.\nAnd we also expect recurring revenue gross margins to be in the low 70% range.\nPerpetual another gross margin is expected to be in the mid 20% range and consulting gross margin to be in the low teens percentage range.\nWe expect to improve operating margins by 100 to 150 basis points as we continue to drive efficiencies in our operating model to drive profitable growth, while increasing our investment in cloud sales and R&D capabilities.\nAs previously discussed, the majority of the $80 million of expected annual run rate cost savings are being reinvested back into R&D and go to market, cloud initiatives.\nHowever on a net basis, we anticipate 5 to 10 said some benefit to 2021 EPS.\nThis is on top of the benefit recognized in earnings per share for the fourth quarter of 2020.\nNon-GAAP earnings per share includes the cost savings I just mentioned.\nThe free cash flow guide, I mentioned, reflection is reduced by the $42 million of restructuring cash payments previously discussed.\nWe anticipate approximately $27 million of the $42 million being paid during the first quarter.\nWe expect our non-GAAP effective tax rate to be approximately 23% for the full year and assume $112 million fully diluted shares outstanding.\nWe plan to be opportunistic about share buybacks during 2020, while we are focused on executing against our full year guidance we wanted to provide you with a few markers to assist you with your modeling of Q1 2021, which again considers the reclassifications I previously mentioned.\nThey cloudy are is expected to grow 155% or more from the $44 million in Q1, 2020 probably cloud ARR or about 10 million to 15 million increase sequentially from the end of 2020.\nTotal revenue in the first quarter is expected to be higher year-over-year, but lower sequentially which is consistent with our historical seasonal pattern however, we anticipate that decline rate for total revenue from Q4, 2020 to Q1 2021 while we expect -- and with that operator, we are ready to take questions.\n", "role": "user" }, { "content": "q4 non-gaap earnings per share $0.38.\nsees fy 2021 non-gaap earnings per share $1.50 to $1.58 excluding items.\nsees q1 non-gaap earnings per share $0.38 to $0.40 excluding items.\nannual recurring revenue (arr) increased 11% from prior year period.\npublic cloud arr increased to $106 million, a 165% increase from end of 2019.\nfourth-quarter recurring revenue of $383 million exceeded company's guidance range.\nfy 2021 total revenue is expected to grow at a low-single-digit percentage year-over-year.\nfy 2021 total arr is expected to grow at a mid- to high-single-digit percentage year-over-year.\nfy 2021 public cloud arr is expected to increase by at least 100% year-over-year.\nq1 public cloud arr is expected to increase by at least 165% year-over-year.\n", "role": "assistant" } ]

[ { "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: Please visit our website at transdigm.com to obtain a supplemental slide deck and call replay information.\nThe company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA as defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures.\nAs usual, I'll start with a quick overview of our consistent strategy, a few comments about the quarter, and then Kevin and Mike will expand and give more color.\nTo reiterate, we are unique in the industry in both the consistency of our strategy in good and bad times as well as our steady focus on intrinsic shareholder value creation through all phases of the cycle.\nTo summarize, here are some of the reasons why we believe this: About 90% of our net sales are generated by proprietary products, and around three quarters of our net sales come from products for which we believe we are the sole source provider.\nMost of our EBITDA comes from aftermarket revenues, which generally have significant higher margins, and over any extended period of time, have typically provided relative stability through the downturns.\nWe follow a consistent long-term strategy.\nSpecifically, we own and operate proprietary aerospace businesses with significant aftermarket content.\nSecond, we utilize a simple, well-proven, value-based operating methodology.\nThird, we have a decentralized organization structure and unique compensation system closely aligned with shareholders.\nFourth, we acquire businesses that fit this strategy and where we see a clear path to a PE-like return.\nAnd lastly, our capital structure and allocations are a key part of our value-creation methodology.\nOur long-standing goal is to give our shareholders private equity-like returns with the liquidity of a public market.\nTo do this, we stay focused on both the details of value creation as well as careful allocation of our capital.\nThe commercial aftermarket revenue, typically the largest and most profitable portion of our business, dropped sharply in the second half of fiscal-year 2020, as we expected, following the steep decline in air travel due to COVID.\nSharp drops have happened during other severe shocks though not to this magnitude and likely duration.\nAt this point, there are some indications that Q3 of our fiscal-year 2020 was the bottom.\nTo the positive, we saw significant sequential increases in commercial aftermarket bookings in our fiscal-year Q1, but the stalling of the air travel recovery concerns us with regards to timing.\nOur commercial aftermarket simply will recover as more people worldwide fly again, though not necessarily in lockstep.\nThis is starting to happen slowly and somewhat erratically, but the timing of the recovery is still not clear.\nIn addition to safety, the two most important items we continue to focus on are the things we can, to some degree, control.\nOne, we are tightly managing our costs.\nOur revenues were down significantly in fiscal-year 2021, Q1 versus the prior year Q1, but our costs are down about the same.\nThe mixed impact of low commercial aftermarket revenues continues to impact our margins, but we have been able to mitigate part of this impact.\nWe raised an additional $1.5 billion at the beginning of our third quarter of fiscal-year '20.\nThe money raised was an insurance policy for these uncertain times.\nIt now seems unlikely that we will need it.\nWe continued to generate cash in Q1 of 2021.\nWe generated about $275 million of positive cash flow from operations and closed the quarter with almost $5 billion of cash.\nThis is prior to the acquisition that we made in January.\nAbsent some large additional dislocation or shutdown, we should come out of this with substantial firepower.\nWe continue to look at possible M&A opportunities, and are always attentive to our capital allocation.\nBut the M&A and capital markets are always difficult to predict, but especially so in these uncertain times.\nIn general, on capital allocation, we still tend to lean toward caution, but we feel better now than we did six months ago for sure.\nM&A activity in this last quarter was more active.\nAs I'm sure you saw, we made a good-sized acquisition after the quarter end.\nWe bought the Cobham Aero Connectivity business, which is an antenna and radio business, for a purchase price of $965 million.\nI must admit, it does feel good to play some offense again.\nThis is a good proprietary sole-source business with high aftermarket content.\nWe also like the customer diversity.\nAs usual, we expect to get a PE-like return on this transaction.\nThough we are not giving overall guidance for TransDigm, for the little less than nine months that we will own the Cobham business in fiscal '21, we expect it to contribute roughly $160 million in revenue with EBITDA as defined margins running in the 25% to 35% range.\nThe revenue is impacted somewhat by the historical calendar year versus fiscal-year shipment timing.\nWe paid for the Cobham business with cash on hand, so -- but for the tax impacts, much of this will drop right through the earnings.\nWe also sold two small nonproprietary former Esterline businesses that did not fit our model for about $30 million so far in 2021.\nThe total revenues for these businesses in fiscal-year '20 were roughly $35 million, and EBITDA was in the 10% revenue range.\nWe continue to investigate the sale of a few other less proprietary defense businesses that don't fit as well with our consistent long-term strategy.\nAt this point, it's too soon to know when or if we will sell these businesses.\nWe still don't have sufficient clarity to give 2021 guidance.\nWhen the smoke clears enough for us to feel more confidence, we'll reinstate the guidance.\nIn general, we are planning to keep tight control on expenses and hold our organization roughly flat until we see more clear signs of a pickup.\nWe believe we are about as well positioned as we can be for right now.\nWe'll watch the market develop and react accordingly.\nNow let me hand it over to Kevin to review our recent performance and to give more information on Q1 and other thoughts.\nToday, I'll first provide my regular review of results by key market and profitability of the business for the quarter.\nI'll also comment on fiscal 2021 outlook and some COVID-19-related topics.\nOur Q1 fiscal 2021 was another challenging quarter, considering the continued slowdown across the commercial aerospace industry in a difficult global economy.\nIn Q1, we continued to see a significant unfavorable impact on the business from the pandemic as demand for travel has remained depressed.\nDespite these headwinds, I am pleased that we were able to achieve a Q1 EBITDA as defined margin approaching 43%, which was a sequential improvement from our Q4 EBITDA as defined margin.\nNow we will review our revenues by market category.\nFor the remainder of the call, I will provide color commentary on a pro forma basis compared to the prior year period in 2020.\nThat is assuming we own the same mix of businesses in both periods.\nIn the commercial market, which typically makes up close to 65% of our revenue, we split our discussion into OEM and aftermarket.\nOur total commercial OEM market revenue declined approximately 40% in Q1 when compared with Q1 of the prior year period.\nThe pandemic has caused a significant negative impact on the commercial OEM market.\nWe are under the assumption that demand for our commercial OEM products will continue to be reduced throughout fiscal 2021 due to reductions in OEM production rates and airlines deferring or canceling new aircraft orders.\nLonger term, the impact of COVID-19 is fluid and continues to evolve, but we anticipate negative impacts on our commercial OEM end market for some certain -- uncertain period of time.\nOn a positive note, Q1 demonstrated significant sequential bookings improvement compared to Q4, which is likely an indicator of OEM destocking slowing.\nAdditionally, it is encouraging that the MAX has been recertified in multiple countries and added back to route schedules, although the near-term impact to our business will likely be minimal given the low build rates.\nNow moving on to our commercial aftermarket business discussion.\nTotal commercial aftermarket revenues declined by approximately 49% in Q1 when compared with Q1 of the prior year period.\nIn the quarter, the decline in the commercial transport aftermarket was primarily driven by decreased demand in the passenger and interior submarkets.\nThere was also a decline in the commercial transport freight market but at a less impactful rate.\nOn a positive note, the total commercial aftermarket revenues increased sequentially by approximately 5% when comparing the current quarter to Q4 fiscal 2020.\nThis increase was driven by the commercial transport aftermarket.\nOur quarterly commercial aftermarket bookings were down in line with observed flight traffic declines resulting from decrease in air travel demand and uncertainty surrounding COVID.\nHowever, Q1 also demonstrated significant sequential bookings improvement compared to Q4, and the bookings in Q1 modestly outpaced sales.\nThis is likely the result of destocking slowing at the airlines.\nTo touch on a few key points of consideration.\nGlobal revenue passenger miles are still at unprecedented lows, though off the bottom as a result of the pandemic.\nIATA's most recent forecast expects the final reported revenue passenger miles for calendar year 2020 to be 66% below 2019 and that calendar year 2021 average traffic levels will be about 50% of pre-COVID crisis levels.\nCargo demand was weaker prior to COVID-19 crisis as FTKs have declined from an all-time high in 2017.\nHowever, a loss of passenger belly cargo due to flight restrictions and reduced passenger demand has helped cargo operations to be impacted to a lesser extent by COVID-19 than commercial travel.\nBusiness jet utilization data was -- point to stagnant growth before the current disruption.\nNow during the pandemic and in the aftermath, the outlook for business jets remains unpredictable as business jet flights were rebounding but due to personal and leisure travel as opposed to business travel.\nHowever, now we face the typical slower winter season, and the sustainability of this trend is especially difficult to foresee.\nAlthough the longer-term impacts of the pandemic are hard to predict, we continue to believe the commercial aftermarket will recover as long as air traffic continues to improve.\nThe recent approval and rollout of several vaccines will greatly aid in this recovery.\nWe believe there is a global pent-up demand for travel.\nAnd in due time, passengers across the globe will return, and flight activity will increase.\nHistorically, personal travel has accounted for the largest percentage of revenue passenger miles, and forecasts still seem to indicate a pickup in personal travel in the back half of this calendar year, followed later by business travel.\nWe are hopeful this will be the case.\nFor now, the timing of the recovery is uncertain.\nAnd in the meantime, we will continue to make the necessary business decisions and remain focused on our value drivers.\nNow let me speak about our defense market, which traditionally are at or below 35% of our total revenue.\nThe defense market, which includes both OEM and aftermarket revenues, grew by approximately 1% in Q1 when compared with the prior year period.\nDefense bookings declined slightly in the quarter driven primarily by a modest decline in defense aftermarket bookings.\nAs we have said many times, defense sales and bookings can be lumpy.\nWe continue to expect our defense business to expand throughout the year due to the strength of our current order book.\nI'm going to talk primarily about our operating performance, or EBITDA as defined.\nEBITDA as defined of about $474 million for Q1 was down 30% versus prior Q1.\nEBITDA as defined margin in the quarter was just under 43%.\nI am pleased that amid a disrupted commercial aerospace industry and in spite of the mix impact of low commercial aftermarket sales, we were able to expand our EBITDA as defined margin by approximately 40 basis points sequentially.\nThis result was made possible by our cost-mitigation efforts and a consistent focus on our operating strategy.\nNow moving to our outlook for 2021.\nAs Nick previously mentioned, we are not in a position to issue formal fiscal 2021 sales, EBITDA as defined and net income guidance at this time.\nWe will look to reinstitute guidance when there is less uncertainty and we have a clearer picture of the future.\nWe, like most aero suppliers, remain hopeful that we will realize a more meaningful return of activity toward the second half of the calendar year.\nThis will be driven by increased vaccination availability and an initial recovery in personal and vacation travel.\nFor now, we are encouraged by the recovery in commercial OEM and aftermarket bookings in the first quarter.\nAs for the defense market, and as we said on the Q4 earnings call, we expect defense revenue growth in the low single-digit to mid-single-digit percent range for fiscal 2021 versus prior year.\nAdditionally, given the continued uncertainty in the commercial market channels and consistent with our commentary on the Q4 earnings call, we are not providing an expected dollar range for EBITDA as defined for the 2021 fiscal year.\nWe assume a steady increase in commercial aftermarket revenue going forward and expect full year fiscal 2021 EBITDA margin roughly in the area of 44%, which could be higher or lower based on the rate of commercial aftermarket recovery.\nThis includes Cobham Aero Connectivity, which should have limited dilutive effects to our EBITDA margin.\nBarring any other substantial disruptions of the commercial aerospace industry recovery, we anticipate EBITDA margins will continue to move up throughout the year, with this fiscal Q1 being the lowest.\nMike will provide details on other fiscal 2021 financial assumptions and updates.\nAdditionally, I would like to touch on our environmental, social and governance initiatives or ESG initiative.\n2020 was a year of progress for our ESG program, though we are still in the beginning of our ESG journey.\nOngoing conversations with our stakeholders have been an integral part of building and evolving our ESG efforts.\nAs a leader in the aerospace industry, we recognize we need to extend our industry leadership to ESG initiatives as well.\nThese initiatives are a priority, and we are dedicated to continuous improvement as we move forward on our ESG journey.\nMore information regarding our ESG initiatives can be found within our recently published 2020 Stakeholder Report that is posted on the TransDigm homepage.\nLet me conclude by stating that although Q1 of fiscal 2021 continued to be significantly impacted by the pandemic's disruption of the commercial aerospace industry, I am pleased with the company's performance in this challenging time and with our commitment to drive value for our stakeholders.\nThere is still much uncertainty about the commercial aerospace market, but we have a strong tenured management team that is always ready to act quickly and as necessary.\nThe team is focused on controlling what we can control while also monitoring the ongoing developments in the commercial aerospace industry and ensuring that we are ready to respond to demand as it comes back.\nI am confident that as a result of our swift cost-mitigation efforts and focus on our operating strategy, the company will emerge more strongly from the ongoing weakness in our primary commercial end markets.\nWe look forward to the remainder of 2021 and expect that our consistent strategy will continue to provide the value you have come to expect from us.\nI'm going to quickly hit on a few additional financial matters.\nSo I'm not going to rehash that in detail.\nFor the quarter, organic growth was negative 24% driven by the commercial end market declines that Kevin mentioned.\nA quick note on taxes.\nThe lower than expected GAAP tax rate for the quarter was driven by significant tax benefits arising from equity compensation deductions.\nThis is just timing.\nBarring some deviations in the rates in this first quarter, our tax rate expectation for the full year is unchanged.\nThat is, we still anticipate our GAAP cash and adjusted tax rates to all be in the 18% to 22% range.\nMoving to cash and liquidity.\nWe had a nice quarter on free cash flow.\nFree cash flow, which we traditionally define at TransDigm as EBITDA as defined less cash interest payments, capex and cash taxes, was roughly $200 million.\nWe then saw an additional $70 million-plus come out of our net working capital driven by accounts receivable collections.\nWe ended the quarter with $4.9 billion of cash, up from $4.7 billion of cash at the end of last quarter.\nNote that this was prior to the acquisition of the Cobham Aero Connectivity business, the majority of which closed on January 5.\nThere's one remaining piece of that acquisition, a Finland facility, representing 2% of the purchase price that's going through regulatory approvals now and should close soon.\nPro forma for the closing of this acquisition, our Q1 net debt-to-EBITDA ratio was a shade higher than 7.5 times Assuming air travel remains depressed, this ratio will continue ticking up through the end of Q2 of our fiscal 2021 when the last remaining pre-COVID quarter rolls out of the LTM EBITDA computation.\nBeyond Q2 of fiscal '21, the ratio should stabilize with a potential for improvement should our commercial end markets start to rebound.\nFrom an overall cash liquidity and balance sheet standpoint, we think we remain in good position and well prepared to withstand the currently depressed commercial environment for quite some time.\n", "role": "user" }, { "content": "fiscal 2021 financial guidance will not be issued at this time.\ncommercial air travel demand recovery is expected to continue to be slow and uneven.\n", "role": "assistant" } ]

[ { "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: Please visit our website at transdigm.com to obtain a supplemental slide deck and call replay information.\nThe company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA as defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures.\nAs usual, I'll provide a quick overview of our strategy, then a few comments about the organizational change we announced.\nAnd Kevin and Mike will give color on the quarter and the performance.\nTo reiterate, we are unique in the industry in both the consistency of our strategy in good and bad times as well as our steady focus on intrinsic shareholder value creation through all phases of the aerospace cycle.\nTo summarize some of the reasons we believe this are about 90% of our net sales are generated by proprietary products and over three-quarters of our net sales come from products for which we believe we are the sole-source provider.\nMost of our EBITDA comes from aftermarket revenues, which generally have significantly higher margins and over any extended period of time have typically provided relative stability in the downturns.\nWe follow a consistent long-term strategy.\nSpecifically, we own and operate proprietary aerospace businesses with significant aftermarket content.\nSecond, we utilize a simple, well-proven, value-based operating methodology.\nThird, we have a decentralized organization structure and a unique compensation system closely aligned with shareholders.\nFourth, we acquire businesses that fit this strategy and where we see a clear path to PE-like returns.\nAnd fifth, our capital structure and capital allocation are a key part of our value-creation methodology.\nOur long-standing goal is to give our shareholders private equity-like returns with the liquidity of a public market.\nTo do this, we have to stay focused on both the details of value creation as well as careful allocation of our capital.\nAs you saw from our earning release, we had a good quarter, especially considering the market environment.\nWe are still seeing some recovery in the commercial aerospace markets.\nWe continue to generate significant cash.\nWe have a little over $4.5 billion as of this quarter -- as of the end of this quarter.\nAbsent any capital market activity or other disruptions, we should have about $4.8 billion cash by the end of September fiscal year.\nAnd we expect to steadily generate significant additional cash through fiscal year 2022.\nWe continue to look at possible M&A opportunities and are always attentive to our capital allocation.\nBoth the M&A and the capital markets are always difficult to predict, but especially so in these times.\nOn the divestiture front, during Q3, we completed the sale of three less proprietary businesses for about $240 million.\nAt this time, we have decided not to sell the one remaining primarily defense business that we were previously considering for sale.\nFor now, our Esterline-related divestitures are about done.\nAt this time, I don't anticipate that we will make any significant dividend or share buyback for the next two quarters.\nWe'll keep watching and see if our views change.\nWe believe we are pretty well positioned.\nAs usual, we'll closely watch the aerospace and the capital markets develop and react accordingly.\nI'd like to address the executive chairman to chairman change that we announced today.\nJust to be very clear, there is no change in the duration of my commitment to TransDigm.\nMy contract had a term that ran through 2024 and this modification anticipates a term through 2024 and likely beyond, if the board and shareholders believe I continue to add value.\nGoing forward, as chairman of the board and chairman of the executive committee, I will be particularly focused on mergers and acquisition, capital allocation and major strategic issues.\nI will, of course, work with Kevin to keep the underlying value of TransDigm moving forward.\nBoth Kevin and I believe that now is a good time to move into the next phase in the transition.\nThe board and I believe that Kevin has done a fine job over the last three years as CEO and come up to speed very well.\nThe last three years have been eventful.\nFor the first roughly 18 months, Kevin and his team successfully integrated Esterline Technologies, by far, the largest and most complicated acquisition in our history.\nFor the second roughly 18 months, Kevin and his team dealt with the unprecedented COVID-19-generated downturn in our largest market, the commercial aerospace market.\nThey responded quickly and effectively.\nAdditionally, they kept our base business running as smoothly as possible during this tough period and began to integrate another decent-sized acquisition.\nNo easy task given this level of market disruption.\nAll in all, a real baptism of fire.\nThough there is more value to create, the heavy lifting in the Esterline integration and related portfolio adjustments are about complete.\nWe believe that we are now starting to see some light at the end of the tunnel on the COVID-related market dislocation.\nSo the time seems appropriate.\nThe company also saves a little money by this.\nAs a personal asset test -- acid test, I remain a sizable investor in TransDigm and feel very confident that Kevin will continue to create substantial value for us all.\nNow let me hand you over to Kevin.\nHe has made the succession planning process a rewarding experience for both of us.\nI look forward to continuing our work together with this fantastic team as we embrace our modified rules.\nNow to the business of today is I will first provide my regular review of results by key market and profitability of the business for the quarter.\nI'll also comment on recent acquisition and divestiture activity and outlook for the remainder of fiscal 2021.\nOur current Q3 results have returned to positive growth as we are now lapping the first quarter of fiscal 2020 fully impacted by the pandemic.\nHowever, our results continue to be unfavorably impacted in comparison to pre-pandemic levels due to the reduced demand for air travel.\nOn a positive note, the commercial aerospace industry has increasingly shown signs of recovery with vaccination rates expanding and increased air traffic, especially in certain domestic markets.\nIn our business, we saw another quarter of sequential improvement in commercial aftermarket revenues with total commercial aftermarket revenues up 6% over Q2.\nAdditionally, I am very pleased that we continue to sequentially expand our EBITDA as defined margin.\nContributing to this increase is the continued recovery in our commercial aftermarket revenues as well as the careful management of our cost structure and focus on our operating strategy in this challenging commercial environment.\nNow, we will review our revenues by market category.\nFor the remainder of the call, I will provide color commentary on a pro forma basis compared to the prior-year period in 2020.\nThat is assuming we own the same mix of businesses in both periods.\nThis market discussion includes the acquisition of Cobham Aero Connectivity.\nWe began to include Cobham in this market analysis discussion in the second quarter of fiscal 2021.\nThis market discussion also removes the impact of any divestitures completed by the end of Q3.\nIn the commercial market, which typically makes up 65% of our revenue, we will split our discussion into OEM and aftermarket.\nOur total commercial OEM revenue increased approximately 1% in Q3 compared with Q3 of the prior year.\nBookings in the quarter were very strong and solidly outpaced sales.\nSequentially, both Q3 revenue and bookings improved approximately 10% compared to Q2.\nAlthough we expect demand for our commercial OEM products to continue to be reduced in the short term, we are encouraged by build rates gradually progressing at the commercial OEMs. Recent commentary from Airbus and Boeing also included anticipated rate ramps for their narrow-body platforms in the near future.\nHopefully, this will play out as forecasted.\nNow, moving on to our commercial aftermarket business discussion.\nTotal commercial aftermarket revenues increased by approximately 33% in Q3 when compared to prior-year Q3.\nGrowth in commercial aftermarket revenues was primarily driven by increased demand in our passenger submarket, although all of our commercial aftermarket submarkets were up significantly compared to prior-year Q3.\nSequentially, total commercial aftermarket revenues grew approximately 6% in Q3.\nCommercial aftermarket bookings are up significantly this quarter compared to the same prior-year period and Q3 bookings continued to outpace sales.\nTo touch on a few key points of consideration.\nGlobal revenue passenger miles are still low but modestly improving each month.\nThough the time line and pace of recovery -- of the recovery remains uncertain with expanded vaccine distribution and lifting of travel restrictions, passenger demand across the globe will increase as there is global pent-up demand for travel.\nThe Delta variant of COVID and other future evolutions may further complicate this picture.\nWe see evidence of this demand through the recovery in domestic travel.\nDomestic air traffic increased each month during our fiscal Q3 and into July.\nAirlines also continued to see strength in bookings and strong demand for domestic travel, especially in the U.S. And Europe is also starting to pick up.\nChina has now become a watch point, however.\nThe pace of the international air traffic recovery has been slow and international revenue passenger miles have only slightly recovered.\nThere is potential for international travel opening more as vaccinations increase and governments across the world start to revise travel restrictions.\nCargo demand has recovered quicker than commercial travel due to the loss of passenger belly cargo and the pickup in e-commerce.\nGlobal cargo volumes are now surpassing pre-COVID levels.\nBusiness jet utilization data has shown that activity in certain regions has rebounded to pre-pandemic or even better levels.\nThis rebound is primarily due to personal and leisure travel as opposed to business travel.\nTime will tell if business travel -- or business jet utilization continues to expand but current trends are encouraging.\nNow, let me speak about our defense market, which traditionally is at or below 35% of our total revenue.\nThe defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 12% in Q3 when compared with the prior-year period.\nOur defense order book remains strong and we continue to expect our defense business to expand throughout the remainder of the year.\nNo particular program was driving this uptick as the growth was well distributed across the business.\nI'm going to talk primarily about our operating performance or EBITDA as defined.\nEBITDA as defined of about $559 million for Q3 was up 32% versus prior Q3.\nEBITDA as defined margin in the quarter was approximately 45.9%.\nWe were able to sequentially improve our EBITDA as defined margin versus Q2.\nNext, I will provide a quick update on our recent acquisition and divestitures.\nThe Cobham acquisition integration is progressing well.\nWe have now owned Cobham a little over seven months and are pleased with the acquisition thus far.\nOn the divestiture front, we closed the sales of Technical Airborne Components, ScioTeq and TREALITY during Q3.\nThe divestiture of these three less proprietary and mostly defense businesses was previously discussed on our Q2 earnings call.\nAs a reminder, for the divestitures, the financial results of these businesses will remain in continuing operations for all periods they were under TransDigm ownership.\nNow moving to our outlook for 2021.\nWe are still not in a position to issue formal guidance for the remainder of fiscal 2021.\nWe will look to reinstitute guidance when we have a clearer picture of the future.\nWe, like most aero suppliers, are hopeful that we will realize a more meaningful return of activity in the second half of the calendar year.\nWe continue to be encouraged by the recovery we have seen in our commercial OEM and aftermarket bookings throughout the fiscal year, along with the continued improvement we have seen in our commercial aftermarket revenues.\nAs for the defense market and consistent with our commentary on the Q2 earnings call, we expect defense revenue growth in the mid-single-digit percent range for fiscal 2021 versus prior year.\nAdditionally, given the continued uncertainty in the commercial market channels and consistent with our past commentary, we are not providing an expected dollar range for fiscal 2021 EBITDA as defined.\nWe assume another steady increase in commercial aftermarket revenue in this last quarter of our fiscal year and expect full-year fiscal 2021 EBITDA margin roughly in the area of 44%, which could be higher or lower based on the rate of commercial aftermarket recovery.\nThis includes a dilutive effect to our EBITDA margin from Cobham Aero Connectivity.\nMike will provide details on other fiscal '21 financial assumptions and updates.\nLet me conclude by stating that I'm pleased with the company's performance in this challenging time for the commercial aerospace industry and with our commitment to driving value for our stakeholders.\nThe commercial aerospace market recovery continues to progress and current trends are encouraging.\nThere is still uncertainty about the pace of recovery, but the team remains focused on controlling what we can control.\nWe continue to closely monitor the ongoing developments in the commercial aerospace industry and are ready to meet the demand as it returns.\nWe look forward to this final quarter of our fiscal 2021 and expect that our consistent strategy will continue to provide the value you have come to expect from us.\nI'm going to quickly hit on a few additional financial matters.\nRegarding organic growth, we're now done lapping the pre-COVID quarterly comps and have therefore returned to positive growth territory.\nOrganic growth was positive 15% on the quarter.\nOn taxes, our expectations for the full year have changed.\nWe now anticipate a lower GAAP and cash tax rate in the range of 0% to 3%, revised downward from a previous range of 18% to 22% and an adjusted tax rate in the range of 18% to 20%.\nThe reductions in the GAAP and cash rates for the current fiscal year are onetime in nature and were driven by the release of a valuation allowance pertaining to our net interest deduction limitation and some discrete benefits from exercises of employee stock options.\nRegarding tax rates out beyond FY '21, we're still monitoring potential changes in the U.S. tax code under the new administration.\nAnd we'll provide some guidance on our future rate expectations once any legislation is finalized.\nOn interest expense, we still expect the full-year charge to be $1.06 billion.\nMoving over to cash and liquidity.\nWe had another quarter of positive free cash flow.\nFree cash flow, which we traditionally define at TransDigm as EBITDA as defined less cash interest payments, capex and cash taxes, was roughly $305 million.\nFor the full fiscal year, we expect to continue running free cash flow-positive.\nAnd in line with our prior guidance on free cash flow, we still expect this metric to be in the $800 million to $900 million area for our fiscal '21 and likely at the high end of this range.\nWe ended the third quarter with $4.5 billion of cash, up from $4.1 billion at last quarter end.\nAnd finally, our Q3 net debt to LTM EBITDA ratio was 7.6 times, down from 8.2 times at last quarter end.\nIn coming quarters, this ratio should at worst remain relatively stable but more likely continue to show gradual improvement as our commercial end markets rebound.\nThe pace of this improvement remains highly uncertain and will depend heavily on the shape of the commercial end-market recovery.\nFrom an overall cash liquidity and balance sheet standpoint, we think we remain in good position and well prepared to withstand the currently depressed commercial environment for quite some time.\n", "role": "user" }, { "content": "fiscal 2021 financial guidance remains suspended at this time.\n", "role": "assistant" } ]

[ { "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: Please visit our website at transdigm.com to obtain a supplemental slide deck and call replay information.\nThe company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA as defined, adjusted net income and adjusted earnings per share, all of which are non-GAAP financial measures.\nFirst, I'll start off with a quick overview of our strategy, a summary of a few significant items in the quarter, and discuss our fiscal 2022 outlook.\nThen Jorge and Mike will give additional color on the quarter.\nJorge Valladares is joining our earnings call today and will do so going forward.\nJorge is currently our chief operating officer and has been in the role since 2019.\nOver the last 20-plus years with TransDigm, Jorge has had an unusually broad operating background and has been a key culture carrier.\nHe most recently served as our COO of Power and Control, where all of the Power Group businesses reported to Jorge.\nPrior to this role, he served four years as an executive vice president and was president at two of our larger operating units, AvtechTyee and AdelWiggins.\nJorge initially started at AdelWiggins Group and held various positions of increasing responsibility in engineering, manufacturing and sales as he worked his way up.\nWe're excited to have him join the earnings call and offer his expertise.\nNow moving on to the business of today.\nTo reiterate, we are unique in the industry in both the consistency of our strategy in good and bad times as well as our steady focus on intrinsic shareholder value creation through all phases of the aerospace cycle.\nThis should sound similar to what you have always heard from TransDigm.\nTo summarize, here are some of the reasons why we believe this.\nAbout 90% of our net sales are generated by proprietary products, and over three quarters of our net sales come from products for which we believe we are the sole source provider.\nMost of our EBITDA comes from aftermarket revenues, which generally have significant higher margins and over any extended period have typically provided relative stability in the downturns.\nWe follow a consistent long-term strategy.\nSpecifically, we own and operate proprietary aerospace businesses with significant aftermarket content.\nWe utilize a simple, well-proven, value-based operating methodology.\nWe have a decentralized organization structure and unique compensation system closely aligned with shareholders.\nWe acquire businesses that fit this strategy and where we see a clear path to private equity-like returns.\nOur capital structure and allocations are a key part of our value-creation methodology.\nOur long-standing goal is to give our shareholders private equity-like returns with the liquidity of a public market.\nTo do this, we stay focused on both the details of value creation as well as careful allocation of our capital.\nWe continue to see recovery in the commercial aerospace market and are encouraged by the trends in air traffic among other factors.\nOur current Q4 results continue to show positive growth in comparison as we are lapping another fiscal 2020 quarter fully impacted by the pandemic.\nHowever, our results continue to be unfavorably affected in comparison to pre-pandemic levels due to the reduced demand for air travel.\nOn a more encouraging note, the commercial aerospace industry has continued to show signs of recovery with increasing air traffic and vaccination rates expanding.\nThe recovery has remained primarily driven by domestic leisure travel, though we are optimistic for the recovery of international travel as more governments across the world soften travel restrictions.\nIn our business, we saw another quarter of sequential improvement in commercial aftermarket revenues with total commercial aftermarket revenues up 14% over Q3.\nI am also very pleased that even in this challenging commercial environment, we continue to sequentially expand our EBITDA as defined margin.\nContributing to this increase is the continued recovery in our commercial aftermarket revenues as well as the careful management of our cost structure and focus on our operating strategy.\nAdditionally, we continued to generate significant cash in Q4.\nWe had strong operating cash flow generation of almost 300 million and closed the quarter with approximately 4.8 billion of cash.\nWe expect to steadily generate significant additional cash through 2022.\nWe continue to look at possible M&A opportunities and are always attentive to our capital allocation.\nBoth the M&A and capital markets are always difficult to predict, but especially so in these times.\nFirst, I'd like to address the Meggitt situation that occurred this quarter.\nWe have long admired and studied the Meggitt business and believe that a combination between us and Meggitt could provide value to investors of both companies.\nHowever, based on the quite limited due diligence information that was made available and the resulting uncertainties, we could not conclude that moving forward with an offer of 900 pence per Meggitt share would meet our long-standing goals for value creation and investor returns.\nWe've put substantial time and effort into evaluating this potential transaction, as we had communicated previously.\nHowever, as we have said many times before, we are very disciplined with our capital allocation.\nAnd when we make acquisitions, we need a reasonable degree of certainty for achieving our investment return goals, especially for a deal of this magnitude.\nThe diligence made available to us was too limited to provide the assurance needed to move forward, and our additional diligence requests were not met.\nThese additional diligence requests were very similar to what was typically received in the almost 90 acquisitions we have done over the life of the company.\nIt was a disappointment that we could not move forward, but it was the most prudent decision for the company and all of our stakeholders.\nIn regard to the current M&A pipeline, we are still actively looking for M&A opportunities that fit our model.\nAcquisition opportunities in the last quarter was still slower than pre-COVID, but we are starting to see some pickup in activity.\nWe remain confident that there is a long runway for acquisitions that fit our portfolio, primarily in the small to midsize opportunities, and look forward to continued M&A activity far into the future.\nAt this time, we don't anticipate that we make any significant dividends or share buybacks for at least the next quarter, but we will keep watching and see if our views change.\nNow moving to our outlook for 2022.\nWhile we are not providing full financial guidance at this time as a result of the continued disruption in our primary commercial end markets, we are providing guidance on select financial metrics for fiscal 2022, including EBITDA as defined margins, expected defense market revenue, growth, tax rates, and other key financial assumptions.\nWe do continue to be encouraged by the recovery we have seen in both our commercial OEM and aftermarket revenues and bookings in fiscal 2021, but many unknowns remain for the pace and shape of the recovery.\nWe will look to reinstitute guidance when we have a clearer picture of the future.\nCurrently, we expect COVID-19 to continue to have an adverse impact on our financial results compared to pre-pandemic levels into fiscal 2022 under the assumption that both our commercial OEM and aftermarket customer demand will remain depressed due to lower worldwide air travel, although recent positive trends in commercial air traffic could impact us favorably.\nGiven what we know today, our teams are planning for our commercial aftermarket revenue to grow in the 20 to 30% range, planning for our commercial aftermarket revenue to grow in the 20 to 30% range.\nWe expect our commercial OEM revenue to grow significantly as well, but at a rate slightly less than the commercial aftermarket.\nAs you know, we aim to be conservative and would be happy to have both of these end markets rebound more strongly.\nJorge will provide further detail on a few key points of consideration that will drive our ultimate commercial growth.\nAs for the defense market, we expect defense revenue growth in the low single-digit percent range versus fiscal 2022.\nNow a bit more color on EBITDA as defined expectations for fiscal 2022.\nWe expect full year fiscal 2022 EBITDA margins to be roughly in the area of 47%, which could be higher or lower based on the rate of commercial aftermarket recovery.\nThis guidance assumes a steady increase in commercial aftermarket revenue throughout fiscal 2022, with Q1 being the lowest.\nIn similar fashion, we anticipate that EBITDA margins will move up throughout fiscal 2022, with Q1 being the lowest and sequentially lower than Q4.\nAs a final note, this margin guidance includes the unfavorable headwind of our recent Cobham acquisition of about 0.5%.\nAs a reminder, and consistent with past years, with roughly 10% less working days than the subsequent quarters, fiscal year 2022 Q1 revenues, EBITDA, EBITDA margins are anticipated to be lower than the other three quarters of fiscal year 2022.\nWe believe we are well positioned as we enter fiscal '22.\nAs usual, we'll closely watch the aerospace and capital markets development and react accordingly.\nLet me conclude by stating that I'm pleased with the company's performance in this challenging time for the commercial aerospace industry and with our commitment to driving value for our stakeholders.\nThe commercial aerospace market recovery continues to progress, and current trends are encouraging.\nThere is still uncertainty about the pace of the recovery, but the team remains focused on controlling what we can control.\nWe remain confident that in the fullness of time, the commercial aerospace market will return to pre-pandemic levels.\nWe look forward to fiscal '22 and the opportunity to create value for our stakeholders through our consistent strategy.\nNow let me hand it over to Jorge to review our recent performance and a few other items.\nI'm glad to be speaking with all of you today and look forward to being on these calls in the future.\nI'll start with our typical review of results by key market category.\nFor the remainder of the call, I'll provide color commentary on a pro forma basis compared to the prior year period in 2020.\nThat is assuming we own the same mix of businesses in both periods.\nThis market discussion includes the acquisition of Cobham Aero Connectivity.\nWe began to include Cobham in this market analysis discussion in the second quarter of fiscal 2021.\nThis market discussion also removes the impact of any divestitures completed in fiscal 2021.\nIn the commercial market, which typically makes up close to 65% of our revenue, we will split our discussion into OEM and aftermarket.\nOur total commercial OEM revenue increased approximately 1% in Q4 and declined approximately 25% for full year fiscal 2021 compared with prior year periods.\nBookings in the quarter were very strong compared to the same prior year period and solidly outpaced sales.\nSequentially, both Q4 revenue and bookings improved approximately 5% compared to Q3.\nAlthough we expect demand for our commercial OEM products to continue to be reduced in the short term, we are encouraged by build rates gradually progressing at the commercial OEMs. Recent commentary from Airbus and Boeing reiterated anticipated rate ramps for their narrow-body platforms in the near future.\nHopefully, this will play out as forecasted.\nNow moving on to our commercial aftermarket business discussion.\nTotal commercial aftermarket revenue increased by approximately 41% in Q4 and declined approximately 18% for full year fiscal 2021 when compared with prior year periods.\nGrowth in commercial aftermarket revenue was primarily driven by increased demand in our passenger submarket, although all of our commercial aftermarket submarkets were up significantly compared to prior year Q4.\nSequentially, total commercial aftermarket revenues grew approximately 14%, and bookings grew more than 25%.\nCommercial aftermarket bookings are up significantly this quarter compared to the same prior year period, and Q4 bookings very solidly outpaced sales.\nTo touch on a few points of consideration, global revenue passenger miles are still low but have been modestly improving throughout fiscal 2021.\nIATA recently forecast a 39% decrease in revenue passenger miles in calendar year 2022 compared to pre-pandemic levels.\nWithin IATA's estimate is the expectation that domestic travel will be back to 93% of pre-pandemic levels in calendar year 2022.\nThough the pace of the recovery remains uncertain, we continue to believe there is pent-up demand for travel.\nAs vaccine distribution expands and travel restrictions are rolled back, passenger demand across the globe will increase.\nThe emergence and spread of COVID variants and other future evolutions may further complicate this picture, but for now, trends remain positive.\nWe see evidence of the pent-up demand through the recovery in domestic travel.\nDomestic air traffic trended upward throughout fiscal 2021.\nAirlines also continued to see strength in bookings and strong demand for domestic travel, especially in the U.S., with Europe catching up.\nChina is currently a watch point with its recent drop-off in air traffic.\nThe pace of the international air traffic recovery has been slow, and international revenue passenger miles have only slightly recovered.\nHowever, vaccinations continue to increase globally, and governments across the world are starting to reduce travel restrictions, which provides for optimism on the international air traffic recovery.\nCargo demand has recovered more quickly than commercial travel due to the loss of passenger belly cargo and the pickup in e-commerce.\nGlobal cargo volumes continue to surpass pre-COVID levels, and it is generally expected that airfreight demand will likely remain robust into 2022.\nBusiness jet utilization in certain regions rebounded to pre-pandemic or better levels earlier this year and remain strong.\nCommentary from business jet OEMs and operators has been encouraging with these higher levels of business jet activity may be here to stay, though time will tell.\nNow let me speak about our defense market, which traditionally is at or below 35% of our total revenue.\nThe defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 2% in Q4 and approximately 5% from full year fiscal 2020 when compared with prior year periods.\nThis was in line with the expected revenue growth expectations we provided for fiscal 2021 of mid-single-digit percent range growth.\nWe continue to expect our defense business to expand due to the strength of our current order book.\nAs Kevin mentioned earlier, we expect low single-digit percentage range growth in fiscal 2022 for our defense market revenues.\nLastly, I'd like to wrap up by stating how extremely pleased I am by our operational performance throughout this fiscal year that continued to be heavily impacted by the pandemic.\nOur management and their teams remain diligent and focused on our value drivers and will continue to do so in this new fiscal year.\nWe are ready to meet the demand as it returns.\nI'm going to first quickly hit on profitability trends for the business, then address a few additional financial matters for fiscal '21.\nAnd finally, I'll provide some more detail on expectations for fiscal '22.\nFirst, in regard to profitability for fiscal '21, EBITDA as defined of about 636 million for Q4 was up 28% versus prior year Q4.\nOn a full year basis, EBITDA as defined was about 2.19 billion, down 4% from the prior year.\nEBITDA as defined margin in the quarter was approximately 49.7%.\nThis represents sequential improvement in our EBITDA as defined margin of almost 400 basis points versus Q3 of '21.\nMoving on, a few quick notes on the full '21 fiscal year.\nI want to provide one quick M&A-related data point that you might find helpful for your financial models as we head into FY '22.\nAs you know, we divested several businesses during 2021, all of which were sold out of continuing operations.\nAs a result of the accounting treatment applied, roughly 130 million of revenue and 25 to 30 million of EBITDA as defined from these divested operating units remains in our FY '21 results.\nThis revenue and EBITDA will obviously not carry over into FY '22.\nOn cash and liquidity, we ended the year with approximately 4.8 billion of cash on the balance sheet, and our net debt-to-EBITDA ratio was seven times.\nIn the early days of October, we repaid the 200 million revolver drawdown that we made at the onset of COVID back in April of 2020.\nThis was done out of an abundance of caution at the time, and we don't need the cash, so we've repaid it.\nPro forma for the revolver paydown, our cash balance is 4.6 billion.\nNext, on the FY '22 expectations.\nWe aren't giving full guidance, as Kevin mentioned, but we are providing guidance on select financial metrics, including the following.\nInterest expense is expected to be about 1.08 billion in FY '22.\nOn taxes, our fiscal '22 GAAP and cash rates are anticipated to be in the range of 21 to 24%, and the adjusted tax rate will be a few points higher and in the range of 26 to 28%.\nOn the share count, we expect our weighted average shares outstanding will increase by about 800,000 shares to 59.2 million in FY '22, and that assumes no buybacks occur during the fiscal year.\nSimilar to prior years, the increase in shares outstanding is due to employee stock options that vested at the end of our FY '21.\nWith regard to liquidity, we expect to continue running free cash flow-positive throughout FY '22.\nAs we traditionally define our free cash flow from operations at TransDigm, which as a reminder is our EBITDA as defined less debt interest payments, less capex, less cash taxes, we expect this metric to be in the 1 billion area, maybe a little better, in fiscal '22.\nAssuming no M&A, no dividends or share repurchases, and no additional debt capital markets activities, this free cash flow generation, together with a higher EBITDA figure, should the COVID rebound continue, will likely reduce our net debt-to-EBITDA ratio to something more like six times at the end of fiscal '22 versus the current seven times level.\nFinally, one last note on the DoD Inspector General audit.\nAs we mentioned previously, we've been actively engaged with the IG office with some ebbs and flows, and this engagement is now complete.\nAnd our best assessment and based upon what we saw, this audit appeared to be similar in scope to prior audits.\nWhile it's difficult to know exactly when a final report will be issued publicly, we expect that this could happen any day now, very likely during the first quarter of our fiscal '22.\n", "role": "user" }, { "content": "will not provide full fiscal year 2022 guidance at this time.\n", "role": "assistant" } ]

[ { "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 hope that you and all your families are doing well.\nWe provide guidance for both adjusted operating income before depreciation and amortization for OIBDA and adjusted earnings before interest, taxes, depreciation and amortization or EBITDA, to highlight the contributions of UScellular's wireless partnerships.\nIn terms of our upcoming IR schedule, Slide 3, we're doing the J.P. Morgan Virtual Non-Deal Roadshow on May 11th and on June 16th we are attending a Virtual Investor Corporate Access Event with the New York Stock Exchange.\nAnd as always, our open-door policy remains, an open phone or open video policy, so please reach out to us, if you're interested in taking it up.\nIt will be this change not only aligns with how we manage the business and evaluate operating performance today, but also enhances the visibility into how TDS Telecom is performing against its strategic objectives.\nThe change in segments... I'm sorry, The change in... Yeah.\nSo you still there?\nYou cut out for a minute.\nThe combined view better depicts our progress and success, and success in leveraging a single cost base to become the pre-eminent broadband provider in each market in which we operate.\nThe change in segment reporting has no impact on the net income of TDS Telecom in prior periods.\nAlso in terms of the results and impacting year-over-year comparisons, I want to remind everyone that we have a higher tax rate in 2021 compared to 2020 due to the income tax benefits of the CARES Act, which provided a one-time rate benefit in 2020 that does not recur in 2021.\nRegarding our balance sheet, both TDS and UScellular are taking action to lower interest expense, given the favorable market environment.\nIn April TDS and UScellular both announced redemptions of select senior notes.\nTDS is redeeming $225 million of its 6.875% Senior Notes and $300 million of its 7% Senior Notes and UScellular is redeeming $275 million of its 7.25% Senior Notes for a total of $800 million.\nWe will continue to look for ways to avail ourselves of other low cost financing vehicles to further lower our interest expense.\nAs we've discussed on prior calls, maintaining financial flexibility is one of the pillars of our corporate strategy.\nOver the years, we have worked to retain relatively low leverage levels, long dated debt maturities, sufficient undrawn revolving credit facilities, and significant cash balances, while at the same time making sure we have the financial resources we need to fund our businesses.\nAs you see on Slide 4 at the end of the first quarter, TDS continues to have a good financial position, including ample available funding sources consisting of cash and cash equivalents, and available credit facilities.\nWhile we will be using some of our available cash and partially drawing on our TDS revolver to call the notes previously mentioned.\nWe believe we will have ample remaining cash balances, as well as excellent access to the debt markets if additional capital is required and as further steps to reduce our interest expense are taken.\nUScellular and TDS Telecom are currently both in investment cycles.\nWith UScellular investing in network modernization 5G and spectrum and TDS Telecom aggressively investing in fiber expansion.\nIn March, TDS issued $420 million in perpetual preferred stock, which will be used primarily for funding fiber deployments and the repayment of debt.\nThis transaction enabled us to raise significant proceeds while protecting our credit rating.\nTDS continues to return value to its shareholders primarily through dividends, both TDS and UScellular each opportunistically purchased a small amount of their shares in the quarter.\nTDS purchased $3 million worth and UScellular purchased $2 million worth of shares.\nIn sum, we are in a financially solid position to take advantage of growth opportunities in each of our businesses.\nFlip to slide 6, our strategic imperatives are simple.\nIt's going to drive growth and improve return on capital over time.\nI think we're off to a really good start this year.\nI'm going to let Doug cover the operational and financial highlights of the first quarter.\nI'm going to provide a few thoughts on strategic priorities.\nFirst, I think on previous calls that one of our areas of opportunity is to enter into strategic partnerships, better leverage the value of our assets and grow the business.\nWe made progress on this objective in April by signing a Tower MLA or a Master Lease Agreement with DISH Wireless.\nWe expect this agreement to contribute to our tower revenue growth beginning in 2022.\nAny details on the deal have to remain confidential.\nSo please keep that in mind, if you've got additional questions.\nI spoke to you last quarter about some of our new initiatives to drive growth, a regionalized approach to drive market share, plans for our business and Government and Prepaid segments.\nWe have full steam on even, I'm pleased with our progress.\nYou see that year-over-year improvement in gross additions and improvements in churn of our postpaid and prepaid.\nI'm also excited for the next evolution of our brand journey, our new tag line, America's locally grown wireless.\nUScellular has always been known for its outstanding network, branding highlights strong local presence, we have in our markets.\nI think this is what sets us apart from our competition.\nAnd it reflects our culture and our values.\nWe're about competition, the competitive intensity in the wireless industry remains high.\nAnd we intend to respond as appropriate.\nGiven the total spend on the C-band auction, I'm expecting continued rational pricing and most of the promotional activity will remain related to devices.\nAnd I think that's a world we can live in economically.\nA few words on our network addition, network performance continues to be a hallmark of our strategy.\nWe're continuing our network modernization program and our multi-year 5G deployment.\nWe can deploy 5G over each layer of spectrum, low, mid and millimeter wave.\nOur initial deployment for coverage is on cleaning low band spectrum.\nWe have 5G available to some degree in 18 states today.\nWe were largely satisfied with our C-Band purchases when combined with our CBRS Holdings, we now have mid-band spectrum in nearly all of our operating footprint.\nAlso we deployed millimeter wave spectrum in order to offer fixed wireless access in three test markets.\nPilot launch in those markets is expected to occur in the third quarter of this year.\nWe will formalize and communicate our plans when the results become available.\nWe're going to be optimistic on the performance capabilities in millimeter wave spectrum.\nWe recently performed additional millimeter wave spectrum testing, base station and radio enhancement and we achieved a line of sight propagation distances of seven kilometers with average speeds approaching one Gigabit per second.\nThis exceeds our results from last year where we achieved a distance of five kilometers with average speeds of 100 Megabits per second.\nOne thing I just want to say we've got talent and we're convinced than ever that attracting and retaining talent is a significant differentiator.\nThis past year stressed everyone's approach to people, but I'm really pleased with how UScellular has responded.\nI do believe that the drivers of talent of yesterday aren't the same as the drivers of tomorrow.\nPay and benefits will continue to be important.\nWe're going to need to think even harder about work flexibility, a constant learning environment and a invisible focus on diversity, equity and inclusion.\nWe're nearly complete with a comprehensive strategy to help our team move to a more matrixed work environment, splitting time between home and the office.\nCertain associates have been working from home, will start returning to the office in June on a volunteer basis.\nThey will be returning to a more flexible and smart environment.\nI expect this will help us increase engagement.\nI also think it's going to help us manage costs.\nOn the diversity front, we were recently ranked 75th, well above all of our peers by Forbes, as one of America's Best Employers for diversity in 2021.\nThis award many others like it provide us brand recognition as we compete to attract and retain the very best talent.\nAnd he is going to cover the details of the quarter.\nAs LT mentioned, we're off to a good start this year.\nLet's start with the review of customer results starting on slide 7.\nPostpaid handset gross additions increased due to higher switching activity and our ability to capture a larger portion of that switcher group this year versus last year.\nThe switcher group increase was driven primarily by March activity which was severely depressed last year as a result of the unfolding pandemic, it was bolstered this year by stimulus payments.\nOur ability to track switchers increased year-over-year due primarily to the success of our build requirements messaging and make promotional offers.\nWe saw connected device gross additions decrease by 3,000 year-over-year.\nThis was driven by lower gross additions of Internet products such as hotspots and routers compared to the prior year when we experienced an increase in demand due to COVID-19.\nThe decline in hotspots and relative sales was partially offset by an increase in connected watch gross additions.\nWrapping up this slide, total smartphone connections increased by 13,000 during the quarter and a 56,000 over the course of the past 12 months.\nThat helps to drive more service revenue given that smartphone ARPU is by $20 higher than feature phone ARPU.\nNext, I want to comment on the postpaid churn rate shown on slide 8.\nCurrently churn on both handsets and connected devices continues to run at low levels.\nPostpaid handset churn depicted by the blue bars was 0.92% down from 0.95% a year ago.\nThis was due to lower involuntary churn, which continues to run lower year-over-year as a result of having acquired customers and better credit mix and improved customer payment behavior.\nTotal postpaid churn combining handsets and connected devices was 1.12% in the first quarter of 2021 also, lower than a year ago.\nNow let's turn to the financial results on slide 9.\nTotal operating revenues for the first quarter were $1.023 billion, an increase of $60 million or 6% year-over-year.\nRetail service revenues increased by $40 million to $685 million, the increase is primarily due to a higher average revenue per user, which I will discuss in a moment as well as an increase in average postpaid subscribers.\nInbound roaming revenue was $28 million that was a decrease of $9 million year-over-year driven by the decrease in data volume.\nWhatever factors contributed to this data volume decrease is the merger of Sprint and T-Mobile, and the migration of Sprint roaming traffic to T-Mobile's network.\nOther service revenues were $58 million, an increase of $4 million year-over-year, including a 9% increase in tower rental revenues.\nFinally, equipment sales revenues increased by $51 million year-over-year due to an increase in units sold, an increase in sales of higher-priced units as well as an increase in accessory sales as a result of higher volume.\nNow a few more comments on postpaid revenue shown on slide 10.\nAverage revenue per user or connection was $87.65 for the first quarter, up $0.42 or approximately 1% year-over-year.\nOn a per account basis average revenue grew by $2.33 or 2% year-over-year.\nThe increases were driven primarily by an increase in regulatory recovery revenues, feasible plan and product offering mix and an increase in device protection revenues.\nTurning to slide 11 as we continue our multi-year network modernization and 5G rollout, control of our towers remains very important.\nAs you can see on the slide with the assistance of our third-party marketing.\nWe have seen a steady growth in tower rental revenues.\nAs I mentioned first quarter tower rental revenues increased by 9% year-over-year.\nAs we told you earlier New Master Lease Agreement we signed with DISH Wireless and we will continue to focus on growing revenues from these strategic assets.\nMoving to Slide 12.\nI want to comment on adjusted operating income before depreciation, amortization and accretion and gains and losses.\nTo keep things simple, I'll refer to this measure as adjusted operating income.\nAs shown at the bottom of the slide, adjusted operating income was $258 million, an increase of 12% year-over-year.\nAs I commented earlier, total operating revenues were $1.023 billion, a 6% increase year-over-year.\nTotal cash expenses were $765 million, increasing $33 million or 5% year-over-year.\nTotal system operations expense increased 3% year-over-year.\nExcluding roaming expense, system operations expense increased by 2% due to higher service costs.\nRoaming expense increased $1 million or 4% year-over-year resulting from an 80% increase in off-net data volume, that was largely offset by a decrease in rates.\nCost of equipment sold increased $58 million or 26% year-over-year due to an increase in units sold, an increase in sales of higher-priced smartphones, as well as higher accessory sales volume.\nSelling, general and administrative expenses decreased $30 million or 9% year-over-year, driven primarily by a decrease in bad debt expense.\nBad debt expense decreased $26 million due to lower write-offs driven by fewer non-paying customers as a result of a better credit mix and improved customer payment behavior.\nWe also recorded bad debt expense in the first quarter of 2020 related to the FCC's Keep Americans Connected Pledge, which contributed to the year-over-year decrease.\nIn addition, advertising expense decreased year-over-year.\nTurning to Slide 13.\nI'll touch on adjusted EBITDA, which starts with adjusted operating income and incorporates the earnings from our equity method investments along with interest and dividend income.\nAdjusted EBITDA for the quarter was $302 million, an increase of $21 million or 8% year-over-year.\nEquity in earnings of unconsolidated entities decreased by $3 million or 7%.\nNext, I want to cover our guidance for the full year 2021.\nFor comparison, we're showing our 2020 actual results.\nOur guidance assumes that COVID-19 does not cause any significant incremental economic consequences that would negatively impact our business.\nTotal service revenues, we have increased our midpoint by $25 million to a range of $3.05 billion to $3.15 billion.\nThis increase is driven by an increase in our projections for build revenues and miscellaneous service revenues.\nWe have raised the midpoint of our adjusted operating income and adjusted EBITDA ranges by $25 million by increasing low end of the ranges, with no change to the high end of the ranges resulting in new ranges of $850 million to $950 million, and $1.025 billion to $1.125 billion respectively.\nIn addition to the increase in our projections for the service revenues, the updated ranges incorporate favorability in bad debt, and selling and marketing expenses.\nThis favorability is partially offset by expected increase in loss of equipment for the remainder of the year, compared to our earlier projections.\nFor capital expenditures, we are maintaining our guidance range of $775 million to $875 million and we have provided a breakdown by major category.\nI'm very pleased with our results for the first quarter.\nWe had strong growth in both Broadband connections and revenue.\nOverall, we grew total organic connections for the third consecutive quarter.\nWe added 13,000 fiber service addresses to our footprint, and continue to execute on our fiber strategy.\nOverall, we grew our top line 4%.\nWe have been on a trajectory to integrate our businesses around the common strategy of providing superior broadband service and complementing that with value-added video and voice service bundling.\nWhether it is our markets where we have upgraded copper, or building fiber or provided DOCSIS 3.1 capability, we are striving to increase Internet speed to better serve our customers.\nOn a combined basis we are able to offer 1 gigabit speed to 55% of our total service addresses.\nWe remain committed to our strategic priorities, we've been invested in for several years.\nOur primary strategic objective is to provide growth by investing in our high-speed broadband services.\nWe have a multifaceted approach to this growth that includes leveraging our existing networks and constructing greenfield fiber in opportunistic locations.\nWith support from the FCC's A-CAM program and State Broadband grants, TDS Telecom is also deploying high-speed broadband to customers in rural areas within our incumbent market.\nTotal telecom broadband residential connections grew 9% in the quarter as we continue to fortify our network with fiber and expand into new markets.\nBolstered by this growth Wireline broadband residential connections grew 10% and Cable increased 8%.\nTotal broadband penetration continued to increase, up 100 basis points to 38%.\nOverall, higher value product mix and price increases drove a 5% increase in average residential revenue per connection.\nCable average residential revenue per connection reflects a higher mix of video connections relative to Wireline.\nOur investment in TDS TV Plus and our expansion into new markets will drive video connection growth.\nOn Slide 18, you can see the broadband connection growth across all markets.\nThis quarter, we achieved a major milestone reaching 0.5 million total broadband subscribers.\nResidential broadband revenues grew 16% in total in the quarter.\nWe are offering up to 1 Gigabit broadband speed in both our fiber and DOCSIS 3.1 market.\n1 Gigabit product is an important tool that allows us to defend market and win over customers and new markets.\nIn areas where we offer 1Gig service we are seeing 17% of our new customers taking the superior product.\nNow turning to Slide 19, we have augmented our success, growing broadband with our TDS TV Plus offering.\nOur next generation video platform enhances the customer viewing experience, and as a bundle these products provided best-in-class customer service, and helped us to increase our broadband market share and reduce churn.\nResidential video connections held nearly flat.\nWireline growth of 7%, driven by our expansion markets nearly offset losses in the Cable market.\nVideo continues to remain important to our customers.\nOur strategy is to increase our video connections through the offering of our cloud-based TDS TV Plus product.\nThis rollout of this product currently covers about 60% of our total operation.\nWe continue to be bullish on our fiber strategy, which is shown on Slide 20.\nFiber is the most economical long-term solution to deliver the best broadband experience.\nSelecting the right markets remains key and we have an attractive funnel of markets identified.\nIn fact, Idaho Coeur d'Alene, Idaho and Spokane, Washington, half the list of the countries hardest emerging housing market.\nThis is according to the recent rating by the Wall Street Journal.\nOur marketing and sales techniques enable us to effectively market at a neighborhood level.\nThis gives us tremendous flexibility over timing and execution to consistently target a high broadband take rate.\nOur strategy to cluster our markets is critical as it gives us the economies of scale and better returns over time.\nAdditionally, our strategy capitalizes on strong macroeconomic trends, such as growing work at home environment, strong population migration in our chosen markets, favorable advances in technology and bipartisan support for rural broadband funding.\nSlide 21 shows the progress we are making this year on our multi-year fiber footprint expansion, which includes fiber into incumbent markets and also expansion into new markets.\nAs a result of this strategy over the last several years 321,000 or 38% of our wireline service addresses are now served by fiber, which is up from 32% a year ago.\nThis is driving revenue growth while also expanding the total wireline footprint 6% to 855,000 service addresses.\nMoving on to slide 22, we've highlighted the total service addresses for the clusters that are in construction and we are actively marketing.\nWe have completed 321,000 fiber service addresses through the first quarter and are working to build out the footprint in these announced markets to 620,000 service addresses by 2024.\nWe have identified other attractive opportunities where we can be first to market and expect the plants are flagged in these markets in the near future, which will increase these numbers.\nWe continue to be pleased with overall take rate in the areas we have launched to date.\nOur pre-registration rate which syndicate the demand we are trying to satisfy are even higher than our expectations.\nAnd we have a very high conversion rate when construction is completed.\nWe are scaling up and are expecting our fiber service address delivery to double in 2021 from the prior year.\nOn slide 23, total revenues increased 4% to $249 million, largely driven by the strong growth in residential revenues, which increased 9% in total.\nThe chart includes residential revenue mix, which highlights the increasing contribution of our expansion markets.\nIncumbent wireline market also showed impressive growth of 6% due to increases in broadband and video connections as well as increases from within the broadband product mix.\nThis was partially offset by a 2% decrease in residential voice connection.\nCable residential revenues grew 9% due to an 8% increase in broadband connections.\nCommercial revenues which continue to be impacted by C like decline, decreased 6% to $47 million in the quarter.\nAnd wholesale revenues decreased 3% to $45 million, primarily due to reductions in special access in the incumbent wireline market.\nSo let me sum up the combined financial results for the quarter shown on slide 24.\nRevenues increased 4% from the prior year as growth from our fiber expansions and increases in cable broadband subscribers exceeded the declines we experienced in our legacy business.\nCash expenses increased 5% due to additional employee and advertising expense related to our expansion market.\nWe also saw increases in video programing costs and information processing expenses, while we are making IT investments to simplify and consolidate our support system.\nAdjusted EBITDA declined 1% to $81 million on lower interest income compared to last year.\nCapital expenditures increased 30% from last year to $70 million as we continue to increase our investment in fiber deployment for the success base band for new customer installs.\nAnd finally, moving to slide 25.\nWe have presented guidance, which is unchanged from what we shared in February.\nWe have had strong broadband connection growth across all our markets of operation, combined with increased average residential revenue per connection.\nWe continue the rapid advancement of our fiber deployment in new markets but we have portions of our fiber build that depend on third parties which may impact our ability to stay on a very aggressive service address delivery schedule.\nI will continue to update you as we move through the year.\nWe have had a successful start to the year and look forward to updating you on the second quarte.\nAnd operator, we're ready to take questions.\n", "role": "user" }, { "content": "uscellular raises 2021 guidance.\nsees tds telecom operating revenue for fy unchanged from before.\n", "role": "assistant" } ]

[ { "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 do want to send out our very best wishes that you and your families are well.\nWe provide guidance for both adjusted operating income before depreciation and amortization or OIBDA and adjusted earnings before interest, taxes, depreciation and amortization or EBITDA to highlight the contributions of U.S. Cellular's wireless partnerships.\nIn terms of our upcoming IR schedule, slide three, we will be virtually attending the Raymond James SMID Cap Company Showcase virtually on November 12 and 13, and we are attending the UBS Global TMT Conference virtually on December 8.\nAnd our open-door policy, now more of an open-phone or open-video policy, so please reach out to us if we can arrange something.\nBefore turning the call over, I do want to remind everyone that due to the FCC's anti-collusion rules related to the RDOF auction and Auction 107, we will not be responding to any questions related to FCC auction.\nI'm going to make some brief comments about the balance sheet and our liquidity position, but before doing so, I'd like to recognize the impressive operational and financial results of both businesses during the quarter.\nAs we've discussed on past calls, maintaining financial flexibility is one of the pillars of our corporate strategy.\nOver the years, we have worked to retain relatively low leverage levels, long-dated debt maturities, sufficient undrawn revolving credit facilities and significant cash balances while, at the same time, making sure that we have the financial resources we need to fund our businesses.\nAs you can see on slide four, at September 30, TDS continued to have a strong financial position, including $2.2 billion in immediately available funding sources, consisting of cash and cash equivalents, available credit facilities, undrawn term loans and undrawn portions of our EIP securitization facility.\nIn the quarter, U.S. Cellular took advantage of favorable market conditions and issued $500 million of 6.25% retail senior notes due in 2069.\nIt is very typical for us to opportunistically tap the market for funding when conditions are favorable, as they certainly were in August.\nAs highlighted on the slide, we have a number of potential funding sources.\nIn this instance, given market conditions, we judged that the retail debt market was relatively favorable, taking into account all factors, including term, callability, ease of execution, lack of impact on the business operations, lack of meaningful covenants and, of course, the all-in cost of financing relative to our other potential alternatives.\nIn October, U.S. Cellular upsized its EIP securitization agreement from $200 million to $300 million.\nWhile shorter in term than some of our other financings, this is our lowest cost financing facility, and we have a solid pool of receivables against which we can raise funds.\nIn sum, we are in a very strong position to invest in the growth opportunities identified by both of our businesses.\nKind of hard to believe that I've been on the job for four months already, and I'm really looking forward to providing all of you with a brief update on the progress we've made over that time.\nBut before we pass by this page, page five, I just want to point out the new logo that we introduced in September.\nThis logo is just another aspect of our program to elevate and evolve the U.S. cellular brand.\nThis provides, I think, a much more modern look, reflects the rapidly evolving technologies and the services we provide to our customers.\nYou can expect to see further changes to this brand in the marketplace in the coming quarters, but this logo is the first step.\nLet's turn to page six and talk a little bit about the quarter.\nSo we reported a really impressive quarter, and I'm really proud of how the team executed.\nWe had strong subscriber and financial results.\nAnd I think that's evidence of just how essential our industry is, the value that customers ascribe to the services we provide, but it's also a credit to the talent and the resiliency of the organization.\nWe saw strong sales of connected devices, and that, coupled with low churn, helped us grow our base.\nWe also maintained significant expense discipline and drove adjusted EBITDA to increase 10% year-over-year.\nThose results are the primary drivers of our increased guidance for the year.\nAnd Doug is going to provide a couple more details on that in a moment.\nI do want to remind you that one factor that impacted year-over-year comparability is the later iPhone launch.\nSo last year, the device launch was late in the third quarter, and as you know, it was in October of this year.\nWe're excited about this launch and how that new timing is serving as the kickoff to this very nontraditional and pandemic-influenced holiday selling season.\nThe timing should also help us to spread customer traffic out over the holiday selling season.\nAnd it's really important consideration to keep our customers and our employees safe during the pandemic.\nSimilar to previous launches, you have competitive offers that appeal, we believe, to both new customers and our existing customers who are ready to upgrade their devices.\nWe're really pleased that the new iPhone 12 series of devices support our network requirements.\nThat includes full support 5G 600 megahertz spectrum that we're currently deploying as well as millimeter wave in the future.\nAs with all businesses, we continue to face challenges from the pandemic.\nSafety of our frontline associates and our customers is of utmost importance.\nOur stores remained open throughout the quarter, but store traffic continues to trend below prior year levels.\nWe continue to have favorable experience in terms of customer payment behavior that contributed to year-over-year favorability in bad debt expense.\nIn addition, with respect to our participation in the FCC's Keep Americans Connected Pledge, 70% of customers that participated in the pledge paid on a partial payment or entered into payment arrangements.\nTalking just a bit about 5G.\nOn the 5G front, working with Qualcomm Technologies and Ericsson, we completed an extended-range 5G millimeter wave data session over a distance of more than five kilometers with speeds ranging from 100 megabits per second near the edge to 1.8 gigabits per second closer to the cell site, and this is a world record.\nAnd it means that we're going to be able to connect our communities with fiber-like speeds over wireless in the future, and we're excited about that.\nOur network modernization and our 5G program continue to be on track.\nBy year-end, we're going to deploy 5G to cell sites that handle about 50% of our overall traffic.\nLet me turn briefly to our organization.\nSo I've spent the last couple of months speaking with customers, employees, leadership team.\nAnd I have to tell you we have a fantastic culture in this company.\nWe have amazing associates.\nWe have an award-winning network.\nWe have great distribution and great customer care.\nAnd we're in the process of making some changes that are going to promote even more organizational speed and agility, and this includes flattening the organization to create a faster and more decentralized decision-making process.\nAnd as part of that, we've redefined some of our leadership roles.\nSo Eric Jagher is now responsible for consumer sales and operations.\nCourtland Madock is responsible for operational marketing, Verchele Roberts for brand management.\nWe've also brought in some terrific new talent like Kimberly Kerr, who's expanding our participation in the business and government sector; as well as Austin Summerford, who's going to be focusing on business development, enhancing our partnerships and maximizing the return from our tower assets.\nJay has announced he's going to be retiring effective January 1, 2021.\nHe's currently serving as a special advisor to me.\nAnd like most of you, we're watching closely and regularly refreshing our Twitter feeds to stay up to date with the situation.\nBut that being said, regardless of who occupies the White House, I hope and my expectation is that the administration will focus on improving and investing in American infrastructure.\nAs part of that, I think it's important to separate two issues that are critical to our customer base, and we talked about this in other forums.\nFirst, we need to ensure that strategies are put in place to ensure American competitiveness and leadership in 5G, particularly expanded access to spectrum for commercial use.\nBut secondly, we need to focus on ensuring access to quality, affordable wireless service, and that's regardless of G, in difficult-to-reach and expensive-to-serve rural areas.\nWe're going to be focused on this as a company.\nThese are issues that we think will resonate regardless of who wins the election.\nWe're truly operating in unprecedented times, and it requires a huge amount of operational flexibility.\nWe've had a really strong quarter, which is a testament to the hard work and the dedication of the team.\nI think we're in a really strong position moving into the busy holiday season.\nLet me touch briefly on postpaid connections results during the third quarter, shown on slide seven.\nPostpaid handset gross additions decreased primarily due to lower switching activity and decreased store traffic due primarily to the impacts of COVID-19 and to a lesser extent, the delayed iPhone launch.\nThis decrease is partially mitigated by increased demand for connected devices.\nTotal smartphone connections increased by 3,000 during the quarter and by 45,000 over the course of the past 12 months.\nThat helps to drive more service revenue given that smartphone ARPU is about $21 higher than feature phone ARPU.\nAs mentioned, we saw connected device gross additions increase by 27,000 year-over-year.\nThis was driven by gross additions of hotspots, routers and fixed wireless devices as a result of an increase in demand by customers seeking wireless products to meet their need for remote connectivity due to the impacts of COVID-19.\nDuring Q3, we saw an average year-over-year decline in store traffic of 25%, related to the impacts of COVID, as well as some heavier activity in the prior year when we had service plan pricing changes and the iPhone launch.\nThe decrease in store traffic had a negative impact on gross additions, although connected device activity remained stronger than prior year.\nNext, I want to comment on the postpaid churn rate, shown on slide eight.\nCurrently, as you would expect, churn on both handsets and connected devices is winding at very low levels.\nPostpaid handset churn, depicted by the blue bars, was 0.88%, down from 1.09% a year ago.\nThis was due primarily to lower switching activity as customer shopping behaviors were altered due to the COVID-19 pandemic, and we also saw more customers upgrading their devices with us, resulting in a 4% increase in upgrade transactions year-over-year.\nThe FCC's Keep Americans Connected Pledge ended on June 30, and 70% of the customers that were on the pledge at June 30 are current or remain on payment arrangements.\nTotal postpaid churn, combining handsets and connected devices, was 1.06% for the third quarter of 2020, also lower than a year ago.\nNow let's turn to the financial results on slide nine.\nTotal operating revenues for the third quarter were $1.027 billion, a slight decrease year-over-year.\nRetail service revenues increased by $11 million to $674 million.\nThe increase is due to a higher average revenue per user, which I'll cover on the next slide, partially offset by a decline in the average postpaid subscriber base.\nInbound roaming revenue was $42 million.\nThat was a decrease of $12 million year-over-year, driven by lower data rates and to a lesser extent, a decrease in data volume.\nOther service revenues were $59 million, an increase of $2 million year-over-year due to an increase in tower rental revenues and miscellaneous/other service revenues, partially offset by a prior year tower rental revenues accounting adjustment that increased tower rental revenues in the prior year.\nFinally, equipment sales revenues decreased by $5 million year-over-year due to a decrease in new smartphone unit sales and lower accessory sales.\nNow a few more comments about postpaid revenue, shown on slide 10.\nThe average revenue per user or connection was $47.10 for the third quarter, up $0.94 or approximately 2% year-over-year.\nOn a per-account basis, average revenue grew by $3.40 or 3% year-over-year.\nThe increase was driven by several factors, including increased device protection revenues, an increase in regulatory recovery revenues and having proportionately fewer tablet connections which, on a per-unit basis, contribute less revenue than smartphones.\nAs part of caring for our customers during the COVID-19 crisis, we elected to waive overage charges from March through July.\nThese waived charges partially offset the increases to ARPU.\nTurning to slide 11.\nAs we continue our multiyear network modernization and 5G rollout, control of our towers remains very important.\nWe have added this slide to provide visibility to rental income growth from our towers.\nBy owning our towers, we ensure that we are located at the optimal location of the tower, and it gives us the operational flexibility to move equipment, which is very important when you're going through a technology evolution.\nWhile the towers support our network strategy, we also recognize that they are valuable and provide a financing alternative, which we evaluate along with our other financing options.\nAs you can see on the slide, since we entered into a third-party marketing agreement, we have seen steady growth in tower rental revenues.\nWe will continue to focus on growing revenues from these strategic assets.\nMoving to slide 12.\nI want to comment on adjusted operating income before depreciation, amortization and accretion and gains and losses.\nTo keep things simple, I'll refer to this measure as adjusted operating income.\nAs shown at the bottom of the slide, adjusted operating income was $232 million, an increase of $24 million or 12% year-over-year.\nAs I commented earlier, total operating revenues were $1.027 billion, a slight decrease year-over-year.\nTotal cash expenses were $795 million, decreasing $28 million or 3% year-over-year.\nTotal system operations expense increased year-over-year.\nExcluding roaming expense, system operations expense increased by 1%, mainly driven by higher cell site rent expense.\nNote that total system usage grew by 54% year-over-year.\nRoaming expense increased $2 million or 5% year-over-year due to a 69% increase in off-net data usage, partially offset by lower rates.\nCost of equipment sold decreased $9 million or 4% year-over-year due primarily to a reduction in the number of new smartphone unit sales and a decrease in accessory sales.\nSelling, general and administrative expenses decreased $23 million or 6% year-over-year, driven by a decrease in bad debt expense.\nBad debt expense decreased $22 million due primarily to lower write-offs driven by fewer nonpaid customers and lower EIP sales in 2020 versus 2019.\nTurning to slide 13 and adjusted EBITDA, which starts with adjusted operating income and incorporates the earnings from our equity method investments, along with interest and dividend income.\nAdjusted EBITDA for the quarter was $282 million, a $26 million or 10% increase year-over-year due to the improvement in adjusted operating income as well as an increase in equity and earnings of unconsolidated entities, partially offset by a decrease in interest income.\nMoving to slide 14.\nGiven the strong results this quarter and overall improved visibility given where we are in the year, we have revised our 2020 guidance in a number of ways.\nFirst, we have narrowed our guidance for service revenues to a range of $3.025 billion to $3.075 billion, maintaining the midpoint.\nFor adjusted operating income and adjusted EBITDA, we have both increased the midpoint and narrowed the range.\nAdjusted operating income is now expected to be between $800 million and $875 million.\nAdjusted EBITDA is now expected to be between $975 million and $1.05 billion.\nWe are planning for aggressive promotional activity during the holiday season, which is reflected in these estimates.\nWe are maintaining our guidance for capital expenditures at the $850 million to $950 million range as we work to meet our deployment goals for the year.\nWe are well positioned to close out the year successfully, and we look forward to reporting those results to you in February.\nTDS Telecom had a very strong third quarter.\nWe grew both revenue and adjusted EBITDA, up 7% and 8%, respectively, and we made significant progress on advancing our strategic and our operational priority.\nThese include our fiber deployment strategy to generate growth and the work we're doing to upgrade our plant with A-CAM and state broadband grant as we continue to promote higher sales and customer satisfaction in existing markets.\nLet me first begin by giving an update on the actions we've taken in the quarter.\nDisruptions caused by COVID-19 and steps taken to prevent its spread continue to impact our way of doing things day to day and probably will for a long time.\nWe have established and continue to enhance protocols to keep our employees and customers safe.\nWe monitor and safeguard our networks to ensure service availability during these times of critical need, and we are partnering with our communities to share our resources to support their critical programs.\nCertainly, the pandemic has shown a spotlight on just how important connectivity is to our society and our economy, and we are proud to be providing these services to all of our customers, especially those in rural and underserved markets.\nAs it relates to the election, we have a history of working cooperatively with administrations from both parties.\nAnd we'll continue to do so in order to provide high-quality, affordable broadband service to rural America.\nThe pandemic has also become an inflection point in our economy, and we are positioned to be a critical part of new and emerging workplace trends.\nAs innovation and human capital spreads from cities to rural areas, broadband services become increasingly important and will provide the connection that allows people and businesses to succeed, and we are perfectly positioned to provide that cornerstone.\nFinally, as we expand into new markets, dependencies on third parties such as vendors, contractors and local governments have presented diverse challenges during this pandemic, which we are learning from and leveraging to create momentum in future projects.\nWe are progressing with our launch of our cloud TV product called TDS TV+ across our IPTV market and across our largest cable market.\nWhile it's still early in its launch, we are focused on ensuring its success across our markets.\nWe're currently assessing initial customer feedback and making upgrades to the product.\nWe plan to continue rolling out TDS TV+ to the remaining cable markets and to our out-of-territory fiber market.\nIn our out-of-territory fiber markets, presales continue to exceed our expectations.\nWe are currently installing service in our Wisconsin and Idaho clusters and began construction in Spokane, Washington, which followed closely after its recently launched presale activities.\nWe have completed construction in four Wisconsin markets and remain focused on construction through the remaining communities.\nWe've identified additional attractive markets that support our selection criteria and are evaluating expansion in our major clusters.\nWe are continuing to drive faster speeds in our established markets by building to meet our A-CAM obligations.\nIn all our markets, we utilize targeted local marketing, and demand for our products is strong.\nThis investment is providing necessary services to underserved areas.\nOverall, we remain committed to achieving our strategic priorities through the remainder of the year, as outlined on slide 16.\nNow let me highlight our financial results for the quarter, as shown on slide 17.\nConsolidated revenues increased 7% from the prior year.\nThis growth is the result of our broadband initiative and the contributions from the Continuum cable acquisition.\nOur fiber expansions are driving incremental increases in wireline broadband and video revenue.\nThrough September, our entry into new markets has produced $15 million of revenue and is expected to contribute over $20 million for the year.\nIn addition to impacts from the acquisitions, we continue to see strong growth in cable residential ARPU and broadband subscribers.\nCash expenses increased 4%, about half of which is from the acquisition.\nIn addition, expenses increased related to launching our new fiber markets and cost to maintain and upgrade our existing facilities.\nRevenue increases exceeded growth in expense, driving an 8% increase in adjusted EBITDA to $78 million.\nCapital expenditures increased to $92 million as we continued to increase our investment in our fiber deployment and success-based spend.\nI will cover our total fiber program in more detail in a moment, but for now, let's turn to our segments, beginning with wireline on slide 18.\nBroadband residential connections grew 8% in the quarter as we continued to fortify our network with fiber and expand into new markets.\nFrom a broadband speed perspective, we are offering up to one gig broadband speeds in our fiber market, and 12% of our wireline customers are taking this product where were offered.\nAcross our wireline residential base, including our out-of-territory markets, 38% of broadband customers are taking 100 megabit speeds or greater compared to 31% a year ago.\nThis is helping to drive a 5% increase in average residential revenue per connection in the quarter.\nWireline residential video connections grew 9%.\nAnd at the same time, we expanded our IPTV markets to 53 up from 34 a year ago.\nVideo remains important to our customers.\nApproximately 40% of our broadband customers in our IPTV markets take video, which for us is a profitable product.\nOur strategy is to increase this metric as we expand into new markets that value these services and through our new TDS TV+ product.\nOur IPTV services in total cover about 39% of our wireline footprint today.\nThis is leading an opportunity to further leverage our investment in video.\nSlide 19 shows the progress we're making this year on our multiyear fiber footprint expansions, which includes fiber into existing markets and also out-of-territory fiber builds.\nAs a result of this strategy over the last several years, 280,000 or 34% of our wireline service addresses are now served by fiber, which is up from 29% a year ago.\nThis is driving revenue growth while also expanding the total wireline footprint 5% to 823,000 service addresses.\nOur current fiber plans include roughly 320,000 service addresses that will be built over a multiyear period.\nAnd year-to-date, we have completed construction of 40,000 fiber addresses in addition to the 40,000 addresses we turned up in 2019 related to this program.\nOverall, take rates are generally exceeding expectations in the areas we have launched to date.\nWe are expecting our fiber service address delivery to accelerate in the remainder of the year, even though we continue to experience some delays in construction, as I've mentioned in previous quarters, which will shift some of this growth into next year.\nLooking at wireline financial results on slide 20.\nTotal revenues increased 2% to $173 million, largely driven by the strong growth in residential revenues, which increased 8% due to growth from video and broadband connections as well as growth from within the broadband product mix, partially offset by a 2% decrease in residential voice connection.\nConsumer (sic) commercial revenues decreased 8% to $38 million in the quarter, primarily driven by lower CLEC connections.\nWholesale revenues increased slightly to $45 million due to certain state USF support timing.\nWireline cash expenses were flat on lower employee expenses, legal expenses and the capitalization of new modems previously expensed, offset by higher video programming fees and maintenance expense.\nIn total, wireline adjusted EBITDA increased 3% to $53 million.\nMoving to cable on slide 21.\nCable total revenues increased as customers continue to value our broadband services.\nTotal cable connections grew 12% to 377,000, which included 31,000 from the acquisition and a 9% organic increase in total broadband connections.\nOn an organic basis, broadband penetration continued to increase, up 200 basis points to 46%.\nOn slide 22, total cable revenues increased 19% to $74 million, driven in part by the acquisition.\nWithout the acquisition, cable revenues grew 10%, driven by growth in broadband connections for both residential and commercial customers.\nOur focus on broadband connection growth and fast reliable service has generated a 29% increase in total residential broadband revenue, including organic growth of $5 million or 20%.\nAlso driving the revenue change is an 8% increase in average residential revenue per connection, driven by higher-value product mix and price increases.\nCable cash expenses increased 18% due primarily to costs related to the acquisition or 8% excluding acquisition due to increased employee expense.\nAs a result, cable adjusted EBITDA increased 20% to $25 million in the quarter.\nOn slide 23, we've provided our revised guidance for 2020, reflecting the strong performance so far this year.\nWe are maintaining our revenue and capital expenditure guidance and are increasing our expectations for adjusted EBITDA by increasing the midpoint and narrowing the range to $305 million to $325 million.\nWe are pleased with our results through the first three quarters of the year.\nAnd even with some uncertainty related to the pandemic and construction schedules, we remain aligned with our strategic goals and financial objectives.\nOur fiber builds are expected to increase in the last quarter of the year, and with additional success-based spend, we expect to be within the guidance range for capital expenditures.\nWith all these efforts, we look forward to updating you on our progress in February.\n", "role": "user" }, { "content": "increases to 2020 guidance.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And from TDS Telecom, Jim Butman, President and Chief Executive Officer; and Vicki Villacrez, Senior Vice President and Chief Financial Officer.\nWe provide guidance for both adjusted operating income before depreciation and amortization or OIBDA, and adjusted earnings before interests, taxes, depreciation and amortization or EBITDA to highlight the contributions of US Cellular's wireless partnership.\nIn terms of our upcoming IR schedule on slide 3, we'll be attending the Raymond James Institutional Investors Conference on March 2 in Orlando, and the Morgan Stanley Technology, Media and Telecom Conference on March 5 in San Francisco.\nI will be doing a Non Deal Roadshow with Strategas Securities in Portland on March 6.\nAnd as you know we have an open door policy.\nSo if you're coming to Chicago and would like to meet with members of management or the IR team, please let us know and we will try to accommodate you, calendars permitting.\nAlso, I did want to highlight that we have yet again announced an increase in our dividend rate for 2020, this being the 46th consecutive year that we've raised our dividend.\nAnd before turning the call over, I want to remind everyone that even though the auction -- FCC Auction 103 has ended, we are still in the assignment phase and we are unable to respond to any questions related to any FCC auctions.\nI'll start on slide 5.\nAnd before talking about 2019 and 2020, I first want to take a step back and look at some of our multi-year investments that have positioned us to better serve our customers into the future.\nLet's start with Spectrum.\nWhile I cannot comment on Auction 103, I do want to point to the success we've had in Auctions 101 and 102 where we secured an important spectrum for our 5G plans.\nIn terms of the customer experience, the introduction of unlimited plans has been a game changer for this entire industry.\nAnd as much as I still worry about the long-term economics of unlimited plans, customers do love them.\nThey have improved overall satisfaction levels and the migration to these higher-priced plans has helped drive increases in average revenue per user.\nTo support the increased data usage, we have continued to invest in our network capacity.\nOther investments we've made include a brand refresh turnaround Bringing Fairness to Wireless and designed to broaden our appeal in the marketplace.\nWe have also enhanced our websites so the customers have a better and faster online experience, giving us a platform for future growth in this channel.\nAlso there are very positive developments in our roaming economics.\nVoice over LTE technology has broken down the old CDMA, GSM only roaming patterns and today we have roaming agreements with all of the big four carriers.\nAs a result, we have seen roaming traffic and roaming revenues growing and roaming expenses declining, a very nice combination.\nWe've also invested in our culture.\nWe know it's our frontline associates that delivers the outstanding customer experience US Cellular is known for in the marketplace.\nWe have numerous programs to ensure our exceptionally high levels of engagement remain and our culture continues to thrive.\nOur associates are our secret sauce and I greatly appreciate all of their efforts.\nAs mentioned earlier, we continue to invest in the network to meet capacity and the ongoing growth in demand and to improve speeds too.\nWe are completing the final stages of our Voice over LTE rollout and beginning our multi-year rollout of 5G.\nOur initial 5G rollout in 2020 will use 600-megahertz spectrum.\nWe're planning to augment it with millimeter wave spectrum to increase speeds and support future use cases.\nThese charts on this page show how while meeting our customers' ever-increasing demands for data, we have at the same time managed the businesses to drive annual increases and adjusted earnings before taxes, depreciation -- and depreciation and amortization.\nWe'll continue to make investments for the long term, including Voice over LTE, network modernization, Spectrum and 5G.\nTurning to 2019, slide 6, we worked hard in 2019 to protect our customer base and smartphone connections grew by 71,000 during the year.\nFor the full year, handset churn increased slightly from the previous year, but still low indicating strong levels of customer satisfaction, especially in this ultra-competitive market.\nAnother priority was growing revenues.\nWe reported a 2% increase in service revenues for the year driven by a 2% increase in postpaid average revenue per customer, and a 6% increase in prepaid average revenue per customers.\nFactors that drove this growth include a shift in mix in connected devices to smartphones, customers migrating to higher priced service plans and increases in the penetration of device protection plan.\nAlso contributing to the growth in service revenues was a 13% increase in roaming revenue.\nFor the third year in a row, we tightly managed costs throughout the company.\nIn fact, for the year, cash operating expenses rose just four-tenths of 1%.\nKey to this was a company wide initiative that has provided $500 million of cumulative cost savings over the last three years, and we believe we have more opportunities in 2020.\nOne highlight was our ability to manage network costs, given the impact from increased data usage.\nTo put this in perspective for the full-year, data usage grew 39% while systems operation expenses were essentially flat, quite an accomplishment.\nThe combined result of all these actions as we grew adjusted EBITDA 5% in 2019.\nNetwork quality remains core to our customer satisfaction strategy.\nIn 2019, we continue to invest in the network to accommodate increased data usage and to enhance the customer experience.\nWe ended the year with VoLTE technology available to nearly 70% of our customers and deployment to the final markets is expected to be largely completed in 2020.\nAnd we'd aim to deploy 5G technology in Wisconsin, our first 5G markets with commercial launches planned in the next couple of months.\nI want to talk first about postpaid handset connections shown on slide 7.\nPostpaid handset gross additions for the fourth quarter were 130,000, down from 136,000 a year ago due to aggressive industry wide competition on both service plans and devices.\nPostpaid handset net additions for the fourth quarter were positive 2,000.\nThis was down from 20,000 last year, driven by the decline in gross additions and higher churn.\nI'll touch more on churn in a moment.\nOn a sequential basis, both gross and net additions improved due primarily to the normal seasonal trend.\nIn addition to smartphone gross additions, we continue to have existing handset customers upgrading from feature phones to smartphones.\nAs you can see on the graph on the right side of this slide, including the upgrades, total smartphone connections increased by 27,000 during the quarter and by 71,000 over the course of the past year that helps to drive more service revenue given that ARPU for a smartphone is about $22 more than ARPU for a feature phone.\nNext I want to comment on the postpaid churn rate shown on slide 8.\nPostpaid handset churn depicted by the blue bars was 1.11% for the fourth quarter of 2019, higher than last year, driven primarily by aggressive industry wide competition.\nTotal postpaid churn by handsets and connected devices was 1.38% for the fourth quarter of 2019 higher than a year ago and flat sequentially.\nNow let's turn to the financial results.\nTotal operating revenues for the fourth quarter were $1 billion, essentially flat year-over-year, while service revenues increased $9 million.\nRetail service revenues increased by $3 million to $666 million.\nThe increase was due largely to higher average revenue per user, which I'll cover on the next slide.\nInbound roaming revenue was $42 million that was an increase of 11% or $4 million year-over-year, driven by higher data volume.\nFinally, equipment sales revenues decreased by $8 million or about 3% year-over-year.\nThis was primarily driven by a decrease in the number of devices sold.\nAs I mentioned earlier, there was a decrease in gross additions activity year-over-year that impacted device sales.\nIn addition, we are continuing to see that existing customers are holding onto their devices for increasingly longer periods, resulting in a slight decrease in upgrade transactions.\nNow a few more comments about postpaid revenue shown on slide 10.\nAverage revenue per user or connection was $46.57 for the fourth quarter, up $0.99, or approximately 2% year-over-year.\nThe increase was driven by several factors, including a higher mix of smartphones relative to connected devices, a shift in service plan mix to higher priced plans and increased device protection revenue.\n43% of our postpaid connections are now on unlimited plans versus 27% a year ago.\nPartially offsetting these increases were higher promotional sales costs.\nAlso there was a decrease in universal service fund revenues resulting from the FCC's December 2018 ruling that revenues from text and multimedia messaging services are no longer assessable under the universal service fund.\nAs a result this year US Cellular stopped charging customers and will no longer pay the FCC USF fees on these revenue streams.\nBecause this change also affected general and administrative expense by a light amount, it is neutral to earnings.\nLooking through this change, ARPU on a comparable basis increased by a $1.39 year-over-year versus the reported increase of $0.99, a pretty strong result.\nOn a per account basis, average revenue grew by $1.39 year-over-year.\nExcluding the USF impact that I just discussed, ARPU increased by $2.42, or 2%.\nLet's move next to our profitability measures.\nFirst, I want to comment on adjusted operating income before depreciation, amortization and accretion and gains and losses.\nTo keep things simple, I'll refer to this measure as adjusted operating income.\nAs shown at the bottom of the slide, adjusted operating income was $181 million, up 6% from a year ago.\nCorrespondingly, the margin as a percent of total operating revenues was up 1 percentage point to 17%.\nFor those watching service revenue margins, the current quarter result was 24%, an increase of 1 percentage point year-over-year.\nAs I commented earlier total operating revenues of over $1 billion were essentially flat year-over-year.\nTotal cash expenses were $871 million, decreasing $10 million or 1% year-over-year.\nTotal system operations expense decreased year-over-year.\nExcluding roaming expense, system operations expense decreased by 2% despite a 47% growth in total data usage on our network.\nRoaming expense decreased 4% year-over-year primarily due to lower rates, partially offset by a 50% increase in off-net data usage.\nCost of equipment sold decreased due to a decrease in the number of devices sold and a higher mix of used device sales, which primarily represent the resale devices returned or traded in by customers through our device service program vendors.\nSG&A expenses increased 1% year-over-year due to higher selling and marketing costs.\nShown next is adjusted EBITDA, which starts with adjusted operating income and incorporates the earnings from our equity method investments along with interest and dividend income.\nAdjusted EBITDA for the fourth quarter was $222 million, up 4% from a year ago.\nThe improvement is due to the increase in adjusted operating income.\nThis was partially offset by slight decreases in equity and earnings of unconsolidated entities as well as interest and dividend income.\nAdjusted operating income and adjusted EBITDA, do not include depreciation, amortization and accretion expense.\nIn connection with the network modernization and 5G initiatives, we are upgrading several of the network equipment elements.\nThis results in the recognition of accelerated depreciation and certain of the assets being replaced.\nAs a result, depreciation, amortization and accretion expense was up 10% from a year ago.\nTotal operating revenues were $4 billion, an increase of $55 million or 1% year-over-year.\nThis was driven by an increase in retail service revenues due to higher average revenue per user.\nAlso contributing to the increase was higher inbound roaming and tower rental revenues.\nTotal cash expenses were $3.2 billion, an increase of $13 million year-over-year.\nThis was due primarily to an increase in selling, general and administrative expenses driven by information system initiatives as well as increase in bad debt expense.\nSystem operations expense was essentially flat despite a 39% increase in data usage on our network, and a 33% increase in off-network data usage.\nAdjusted operating income and adjusted EBITDA grew 5%.\nThis is primarily driven by the increase in operating revenues.\nSlide 14, our plans for the year 2020.\nIn order to strengthen our base, we'll build on a number of initiatives already in the works.\nFor example, earlier this month, we initiated service in Sioux City, Iowa in Northern Wisconsin expanding our addressable market.\nWe will continue to build on the branding work we introduced last year, and we'll continue to evolve our plans and pricing but in a economically responsible manner.\nIn terms of revenue growth, unlimited plans are still only 43% of our base.\nSo we expect customers to continue to migrate to these plans.\nWe also expect customers to purchase additional services like device protection and we still have 396,000 future phones on our network, which provides us the opportunity to migrate these customers to smartphones also.\n5G should help to address customers' growing demand for more data and faster speeds, as well as create opportunities for new services.\nI'm also optimistic about the opportunities in the B2B marketplace, what you call Smart City Internet of Things interest is growing, and fixed wireless broadband continues to be a complementary product for those customers who do not have access to adequate broadband service today.\nCustomer expectations are always changing and we are rolling out new programs and new tools to ensure that we better understand and engage with our customers that are using data and analytics.\nWe continue to utilize to life cycle management programs and we are embarking on a number of initiatives like personalization that can be both predictive and proactive.\nContinuous evaluation of the format and location of our retail stores is even more important as customers continue to change their shopping preferences.\nTurning to slide 15, in 2020, we will continue to foster associate engagement, especially since our associates who are US Cellular's competitive advantage.\nAnd lastly, we will continue to invest in the network to meet ever increasing data demand, finish the last of VoLTE launches, and start down the road to 5G.\nDoug will provide greater detail on our capital spending plans in just a minute or so.\nIn closing, I'm very proud of this organization.\nWe have built a great foundation.\nAnd we have the best associates in the industry.\nThat team and the opportunities in front of us have me excited about 2020.\nOur guidance for 2020 is shown on slide 16.\nFor comparison, we're also showing our 2019 actual results.\nFirst, I want to comment on the change in our revenue guidance approach.\nRather than providing guidance on total operating revenues, which includes both service and equipment revenues, we are providing guidance on service revenues only.\nVariations in equipment revenues typically have a corresponding impact on cost of equipment sold and as a result are less impactful to our profitability measures and therefore we believe that service revenues are the more meaningful revenue measure for guidance purposes.\nFor total service revenues, we expect a range of approximately $3.0 billion to $3.1 billion.\nThis reflects our expectation of a continued highly competitive environment.\nWe expect adjusted operating income to be within a range of $775 million to $900 million and adjusted EBITDA within a range of $950 million to $1.075 billion.\nThis guidance reflects our estimates for low-single digit growth in revenue and the increased network costs related to our 5G deployment and ongoing network modernization programs, partially offset by the impact of cost savings initiatives.\nFor capital expenditures, the estimate is in the range of $850 million to $950 million.\nThis year in order to provide more transparency on actual 2019 and estimated 2020 capital expenditures, we have provided a breakdown by major category.\nThere is a lot going on in the network space in 2020.\nWe will be completing our organizational VoLTE rollout, continuing our low band 5G rollout and hopefully beginning our targeted millimeter wave 5G deployment.\nAdmittedly, this is a large increase that we could be affected by potential constraints on the availability of network equipment and services.\nAs a result, we may not be able to complete all of our plans this year.\nIn that case, we would be at or even below the low end of our guidance.\nI am pleased to be able to share with you that our transformation is well under way and our future at TDS Telecom is bright.\nAs Ken did, I want to spend a few minutes providing a little longer-term perspective on the progress we have made and how our investments are paving the way for the future.\nWe are in a strong position today due to a number of growth focused initiatives that we have been executing on for over five years.\nThese initiatives include our fiber strategy both in and out of our existing footprint and our acquisition strategy.\nOur investments in fiber-to-the-home are not new.\nIn fact, we made a strategic shift away from upgrading copper in our most attractive ILEC markets to deploying fiber, augmented with superior products and hyper localized marketing and sales.\nThe success we saw with this transformational change was the catalyst for us to develop, then test our out-of-territory fiber deployment strategy.\nDuring 2019, we scaled up and now our out-of-territory strategy, fiber strategy is in full swing.\nWe now have approximately 230 fiber service addresses in the hopper.\nVicki will go into further detail of where these are in the process.\nTo address the broadband needs of our most rural markets, we advocated relentlessly and then secured over $1 billion in A-CAM funds over the program period.\nThis is allowing us to bring higher broadband speeds to our most rural customers which helps drive fiber much deeper into our network.\nWe also secured over $30 million in State Broadband Grants over the past five years.\nWe bought our first cable company in 2013 and have continued to add to that part portfolio with smart cable acquisitions and tuck-ins.\nThese acquisitions are a natural extension of our broadband strategy and we have been able to leverage expertise and resources across our business to drive strong financial results.\nOver the past five years, our cable segment generated $1 billion in revenue and $289 million in adjusted EBITDA, helping to drive growth and offset secular declines in our legacy business.\nDuring that period, we improved our cable adjusted EBITDA margin from 24% to 33%.\nThese charts show our investment thesis in position is very different from our peers.\nTurning to the specifics for 2019 for our wireline segment, it was really all about fiber construction in launching new markets both within and outside of our current footprint.\nHowever, there was so much foundational work that was done that you cannot see in our reported results.\nIdentifying additional markets and scaling up our organization to be able to execute on this program, today, and for years to come.\nWe are successfully redeploying cost savings from our legacy businesses to investing in our broadband growth initiatives.\nOur cable segment continues to perform well, showcasing the success of our broadband strategy.\nWe purchased cable properties in attractive markets, which continue to provide a nice tailwind to our growth and we are very pleased with our cable acquisitions.\nThe latest one, Continuum closed on December 31 of last year.\nThe Continuum markets located just north of Charlotte, North Carolina represent just the type of demographics and household formation growth we find attractive.\nLet me briefly highlight our financial results for the full year shown on slide 21.\nRevenues, cash expenses and adjusted EBITDA are relatively flat.\nHowever, as Jim mentioned, this result masks the significant transformations taking place across our business.\nConsolidated revenues increased slightly from the prior year, as revenues from our investments in both fiber expansions and cable have exceeded the declines we've had in our legacy business.\nCash expenses increased 1%, as we redeployed spending from our legacy businesses to our growth initiatives.\nAdjusted EBITDA was effectively the same as last year at $313 million.\nOn slide 22, for the fourth quarter, we see repetition of these trends.\nTDS Telecom grew consolidated revenues 1% due to $4 million of growth in cable revenues, which was partially offset by the decline in wireline revenues.\nCash expenses increased 2%, mostly in the cable operations, which incurred closing costs related to the Continuum acquisition.\nAs a result, adjusted EBITDA in the fourth quarter decreased 3% to $75 million from a year ago.\nCapital expenditures increased 35% to $124 million as we continued to invest in our fiber deployment.\nThis quarter, we launched three new out-of-territory fiber markets.\nOne, in our Southern Wisconsin cluster and two in our Coeur d'Alene, Idaho cluster.\nAnd so far, we are very pleased with how these markets are performing.\nMore to come on our total fiber program in a minute.\nBut for now, let's turn to our segments, beginning with wireline on slide 23.\nFrom a broadband perspective, residential connections grew 3%, driven by significant growth in our out-of-territory markets.\nWe are offering up to 1 gig broadband speeds in our fiber market.\nAcross our wireline residential base, 30% of all broadband customers are now taking 100 megabit speeds or greater compared to 24% a year ago, helping to drive a 4% increase in average residential revenue per connection in the quarter.\nWireline residential video connections grew 8% compared to the prior year.\nVideo is important to our customers.\nApproximately 40% of our broadband customers in our IPTV markets take video, which, for us, is a profitable product.\nWe expect to see increasing trends in this metric as we are seeing higher results in our out-of-territory markets.\nTDS Telecom continues to grow its overall IPTV customer base by targeting markets and segments that find value in bundling services.\nSlide 24 summarizes the status of our multi-year fiber program.\nAs a result of our fiber deployment strategy, over the last several years, 30% of our wireline service addresses are now served by fiber.\nThis is driving revenue growth while expanding the total wireline footprint.\nOur current fiber plans include roughly 230,000 service addresses, of which about 50,000 were turned up in 2019.\nPlans for our current footprint are aimed at household growth and expansion in our current fiber market as well as overbuilding existing copper market.\nPlans for our out-of-territory markets currently include our Wisconsin and Idaho clusters, which we have recently expanded to include the Meridian, Idaho area.\nWe are planning for additional markets in the Pacific Northwest and are evaluating expansion in our major clusters.\nNow looking at the wireline financial results on slide 25.\nTotal revenues decreased 1% to $171 million.\nResidential revenues increased 3%, due to growth from video and broadband connections as well as growth from within the broadband product mix, partially offset by a 4% decrease in residential voice connections.\nCommercial revenues decreased 10%, primarily driven by lower CLEC connections, and wholesale revenues were flat compared to 2018.\nWireline cash expenses were flat.\nWe continue to see reduced cost of legacy services, partially offset by higher video programming fees.\nEmployee expenses were held flat as we staffed up to launch new markets, which were offset by a continued focus on cost discipline.\nMaintenance expense increased as we incurred storm damage during the year.\nWireline adjusted EBITDA decreased 6% to $54 million, due primarily to the reduction in commercial revenues.\nNow moving to cable on slide 26.\nCable total revenues increased as customers continue to value our broadband services.\nAs Jim mentioned, we acquired Continuum at December 31.\nSo while we've included connections in our results, we did not have any income statement impact for 2019 other than closing cost.\nTotal cable connections grew 10% to 371,000, which included 31,000 from the acquisition and a 6% organic increase in total broadband connections.\nOrganic broadband penetration continued to increase, up 100 basis points to 44%.\nOn slide 27, total cable revenues increased 7% to $64 million, driven primarily by growth in broadband connections for both residential and commercial customers.\nOur focus on broadband connection growth and fast reliable service has generated a 17% increase in total residential broadband revenue.\nAlso driving this growth is an 8% increase in average residential revenue per connection, driven in part by customers rolling off promotions, higher product mix and price increases.\nCash expenses increased 8%, due primarily to additional costs related to the acquisition and plant maintenance.\nAs a result, cable adjusted EBITDA increased 4% to $21 million in the quarter.\nI think of our investment priorities in three buckets; network, products and people.\nBroadband is our primary product and our investments are focused on fiber deployments, strengthening our cable operations and meeting our first milestone of the A-CAM program.\nWe also will continue to innovate what we sell and how we sell it.\nTDS TV+, our next-gen cloud-based TV service was launched this week in our first market, and we will roll it out throughout 2020 in our cable and wireline operations.\nTDS TV+ plus is a far superior product that makes it simple to find great programming with a recommendation engine and voice search that integrates traditional TV content with Netflix, YouTube and other over-the-top apps.\nThis service is available on our new set-top box, along with Apple and Android phones and tablets.\nWe are also helping our customers lower their bill, with a road map that will allow them to use the service on streaming devices in lieu of purchasing extra set-top boxes.\nContinuing on slide 29, a critical component of our success this year and into the future is our ability to identify markets where our formula wins.\nWe have built a robust model, whereby we screen for criteria listed here and prioritize the most attractive market.\nExtensive analysis goes into this along with detailed financial modeling for each potential market.\nOur models are adjusted in real-time with actual results and key learnings.\nFinally, I want to call out a significant strength of our organization, and that is how lean we operate.\nWhile we have wonderful growth opportunities ahead of us, we can't lose sight of the need to continuously take cost out of the legacy business so we can redeploy those savings into our growth initiatives.\nThis is a team that has demonstrated time and again, they can execute.\n2019 was an incredibly busy year, full of lots of successes as well as key learnings.\nEnergy, confidence and enthusiasm everyone comes to work with each day has positioned TDS Telecom to achieve great things for many years to come.\nBack to you, Vicki.\nOn Slide 30, we've provided our 2020 guidance.\nWe are forecasting total telecom revenues of $950 million to $1 billion compared to $930 million in 2019.\nFor wireline, new fiber market growth will be strongly additive to continued growth in residential broadband and video connections and revenues.\nCommercial revenues and residential voice revenues will continue to decrease as well, wholesale revenues.\nWe expect organic cable revenue growth in the mid-single-digits, reflecting continued strong growth in broadband.\nOur recently completed acquisition will add an excess of $20 million to revenue.\nAdjusted EBITDA is forecast to be within a range of $290 million to $320 million compared to $313 million in 2019.\nContributions from wireline broadband and video growth, combined with growth from Cable as well as cost reductions, will continue to help offset pressures in the legacy wireline business and expected its fiber expansion costs in our new markets.\nCapital expenditures are expected to be between $300 million and $350 million in 2020 compared to $316 million in 2019.\nWireline capex guidance includes $150 million dedicated to in and out-of-territory fiber deployments, a 50% increase over 2019 spending as well as $60 million in success-based spending for both wireline and cable and approximately $30 million allocated to the A-CAM program.\nAnd just a quick update on OneNeck IT solutions.\nOneNeck IT solutions continues to make very good progress, driving revenues in strategic solutions, including multi-cloud hosting, managed services and professional services.\nThe OneNeck team had a strong finish to the year, showing improvements in revenues while driving operational improvements in its cost structure.\nOneNeck is well positioned going into 2020 as they continue to leverage a multi-cloud strategy with plans to roll out their next-generation ReliaCloud platform and plans to expand upon their public cloud strategy by offering additional platform-based services via both ReliaCloud and Azure.\nOffering customers solutions architected around a highly secured framework will continue to be the cornerstone of OneNeck's offering.\n", "role": "user" }, { "content": "sees 2020 tds telecom total operating revenue $950-$1,000 million.\nsees 2020 tds telecom adjusted ebitda $290-$320 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: There are risks, uncertainties and other factors that may cause the company's actual future performance to be materially different from that stated or implied by any comment that we may make during today's conference call.\nThis document is available on our website or through the SEC at sec.gov.\nAlso during the call, we'll present both GAAP and non-GAAP financial measures.\nAllow me to start off by making a few remarks on the ongoing pandemics impact on the shipping industry.\nI'll then discuss how we are doing on executing the plan we outlined on the first quarter call and provide some updates to our outlook for the remainder of 2020.\nOn our two most recent earnings calls, I mentioned the critical role the international travel infrastructure plays and moving our mariners around the world as they embark and disembark our vessels.\nThere are over 50,000 ships around the world of all different types and today an estimated 200,000 plus mariners are stranded on vessels and in need of repatriation.\nShipping moves 80% of the global commerce and as an essential part of keeping the global economic recovery going.\nSo my call to action is this, please join us in supporting the formal recognition of these individuals as key workers.\nThis would exempt mariners from travel restrictions and enable them to travel to and from ships.\nGroups like the International Chamber of Shipping, the International Maritime Organization, the International Labor Organization and the International Transport Workers Federation are all championing this issue.\nTo the extent that you can help us cause, I urge you to do so.\nWhen we last spoke, I outlined our revised outlook for 2020 and our performance in the second quarter was consistent with that revised outlook.\nWe stated last quarter that our revised estimated revenue for 2020 was $395 million and the estimated cash operating margin would be 35%.\nWe now anticipate full year revenue to be approximately $390 million, which is down $5 million from what we estimated as the full-year revenue on the last call.\nWe still anticipate cash operating margins of 35%, which would result in cash from core operations of $136 million for the year.\nFurther, we budgeted $20 million for frictional costs associated with the pandemic, and we still see this as the annual impact of the crisis.\nThis is the increased cost of travel and salaries, cost of quarantine mariners, the cost of fuel to transit vessels coming off hire to their layup locations, and the incremental cost of those vessels being in a layup.\nThis $20 million of cost gets us down to cash flow of $117 million.\nGeneral and administrative expense is now anticipated to be $77 million for the year, a $4 million improvement from $81 million we forecasted on the earlier call and that gets us to $40 million of cash flow.\nVessel disposals of $40 million less dry-dock expenditures of $36 million gets us another positive $4 million.\nWe are still anticipating a liquidation of working capital, net of taxes and other costs of $21 million for the year.\nSo our current 2020 outlook compared to the outlook on the last call has cash operating margin down approximately $2 million, dry-dock expenditures are up $3 million, and general and administrative expenses are down $4 million, down $1 million overall to $64 million of free cash flow for the year and consistent with what we laid out on the first quarter call.\nIn light of the decrease in offshore vessel activity in our revised forecast of the slope of the recovery in the industry, we reassessed the fleet and certain receivables to us from our joint ventures in Africa.\nThis reassessment resulted in impairments and other charges that totaled $111.5 million for the quarter.\nThe vessel impairments of $55.5 million reflects two components.\nThe first relates to moving into the asset held for sale category 22 additional vessels were the revised forecasted day rates and utilization, resulted in a present value from continuing to operate those vessels that was lower than their current disposal value.\nSo we move them into the asset held for sale category and mark them to their anticipated net realizable value.\nFurther, in addition to the adjustment in book value for those 22 vessels, the second component is a similar mark-to-market adjustment on the 24 vessels that were already classified as assets held for sale.\nSo we currently have a total of 46 vessels in this category, valued at $29 million and our intention is to dispose of these vessels over the next 12 months.\nAlthough all the regions of the world have been impacted by the downturn in the oil market in the pandemic, the onshore oil and gas industry of Africa has been impacted disproportionately.\nOur activity levels in West Africa are down over 80% and our operations in East Africa for the time being, have been completely shut down.\nOther areas of the continent were negatively impacted although more in line with the roughly 25% global average decline, we noted on the first quarter call.\nSince 2014, we have had a significant receivable due from our joint venture in Angola.\nThe balance was in excess of $400 million in 2014 and 2015 and although the balance has been substantially reduced during the intervening years, the current pullback in activity has resulted in us reassessing the collectability of the remaining balance.\nAs a result of that assessment we recognized an impairment of $42 million.\nRelated but separate, as a result of the decrease in immediate opportunities to expand our Angolan joint venture with our existing partner, we and our partner mutually agreed to dividend out, substantially all of the cash held by the joint venture.\nThat resulted in the receipt by Tidewater of $17.1 million of cash in the quarter and dividend income of the same amount.\nAlso on the continent of Africa, as a result of the steep decline in the business and the outlook in Nigeria, we recognized an impairment on the $12 million owed to Tidewater by our joint venture there and we established a liability for a $2 million loan guarantee, Tidewater provided to the joint venture, back in 2013.\nDelivering on our free cash flow objective for 2020 will require similar quarterly results in the third quarter and the fourth quarter as we achieved in the second quarter.\nAnd the formula is the same.\nWe must continue to minimize dry-dock expense.\nWe must quickly layup and de-crew idle vessels.\nWe must timely collect what is due from us from large multinationals and national oil companies and importantly, we have to dispose of older lower specification vessels.\nAll executed well in the second quarter and all achievable in the second half of 2020 as well.\nRight now we have $40 million forecasted for proceeds from vessel disposals and we remain on track with 25 vessels sold for $21 million in the first half of 2020.\nThe generation of free cash flow remains our key focus and is the key determinant of our cash incentive compensation.\nIn the second quarter, we generated revenue of $102.3 million, which is a decrease of 19% from the same quarter in the prior year.\nThis was principally driven by decreases in vessel activity in our West Africa segment, which had a fewer active vessels in the second quarter and our Europe Mediterranean segment, which had 14 fewer active vessels.\nBoth segments were significantly affected by the decrease in demand caused by the pandemic and the general oversupply of oil.\nOverall, we had 26 fewer average active vessels in the second quarter of 2020 then in the second quarter of 2019.\nIn addition, active utilization decreased from 79% in the same period in 2019 compared to 75% in the second quarter of 2020, which is result of vessels going off hire and into layup.\nConsolidated vessel operating costs for the quarters ended June 30, 2020 and 2019 were $64.8 million and $80.4 million respectively.\nThe decrease year-over-year is driven by the decrease in the number of active vessels, but also a 5% decrease in operating cost per active day.\nOur general and administrative expense for the quarters ended June 30, 2020 and 2019 were $17.6 million and $23.7 million respectively, which is down 23% year-over-year.\nThe significant restructuring of our executive management and corporate administrative functions in 2019 and ongoing cost measures resulted in this 12% decrease in G&A expense per active day, down from $1,587 million in the prior year to $1,401 million in the second quarter of this year.\nDepreciation expense for the quarter ended June 30, 2020 and 2019 were $28.1 million and $25 million respectively.\nThe decrease in depreciation is due to the sale in 2019 of over 40 vessels and the reclassification of the aforementioned 46 vessels to assets held for sale.\nLooking at our results of the segment level, despite the industry downturn our average day rates across the company improved to approximately $10,800 for the quarter, up approximately 3% from the same quarter last year.\nThis was driven by a tailwind of increasing day rates from contracts entered into before the crisis began and complemented by a mix shift as lower day rate vessels were retired through our disposal program or went off hire early in the downturn.\nNaturally, the contract protections you get for lower specification, lower day rate vessels are less, and as a result, they tend to come off hire first in the pull back.\nOur Americas segment saw revenue decreases of 3% or $1.2 million during the quarter ended June 30, 2020, compared to the quarter ended June 30, 2019.\nThe decrease is primarily the result of five fewer active vessels operating in the region year-over-year driven by lower demand.\nVessel operating profit for the Americas segment for the second quarter was $5.4 million, excuse me, $4.5 million, $1.6 million higher than the prior year quarter.\nThe higher operating profit was due to a $3.5 million decrease in operating expenses, resulting from fewer dry-docks and better vessel uptime in the second quarter of this year.\nOur Middle East Asia-Pacific region had been impacted as negatively as a major operators in the area did not cut back production like they do in other areas of the world and consequently, planned vessel activity increases commenced in this region, whereas in other regions there was a sharp pullback.\nVessel revenues increased 17% or $3.5 million during the quarter ended June 30, 2020 as compared to the quarter ended June 30, 2019.\nActivity utilization for the quarter increased to 76% from 75% average, day rate increased almost 10% and average active vessels in the segment increased by 2%.\nThe Middle East Asia Pacific segment reported an operating profit of $600,000 for the quarter compared to an operating loss of $2.1 million for the same quarter of the prior year.\nFor our Europe and Mediterranean region our vessel revenues decreased 41% or $14.4 million compared to the year ago quarter.\nThe lower revenue was driven by 14 fewer active vessels and lower average day rates, which were down 2%.\nHowever, active utilization increased 2 percentage points during the quarter.\nThe segment reported an operating loss of $1.8 million for the quarter ended June 30, 2020 compared to an operating profit of $2.8 million for the prior year quarter due to decreased revenue, partially offset by $7.9 million of decreased operating cost, which was primarily due to lower personnel and lower repair and maintenance costs associated with the drop in active vessels.\nFinally to West Africa where vessel revenues in the segment decreased 32% or $10.6 million during the quarter compared to the same quarter of the prior year.\nThe active vessel count was lower by -- inactive utilization decreased from 76% during the second quarter of 2019 to 55% during the second quarter of this year.\nAverage day rates increased 13% due to the vessel mix of remaining contract, similar to what I mentioned earlier.\nThe decrease in revenue was almost entirely the result of lower demand caused by the downturn as the significant number of vessels in Nigeria went off hire during the quarter.\nVessel operating profit for the segment decreased from $3.1 million for the quarter ended June 30, 2019 to an operating loss of $4 million in the current quarter due to the decrease in active utilization.\nAlthough the magnitude of the business is shrinking, free cash flow generation is increasing.\nEach of our four regions had higher average day rates than the previous quarter.\nOperating cost per active day are down 10% from the previous quarter and down 4% from the year ago quarter.\nOf course, because of those facts on a consolidated basis, we had higher operating margin percentages, as compared to the previous quarter and the year-ago quarter.\nG&A cost per active vessel day is down on sequential quarterly and year-over-year basis and down substantially on an absolute dollar basis.\nWe're generating more cash by operating fewer vessels at higher day rates of lower operating cost per vessels and at a lower G&A cost per vessel.\nWe're doing this while carefully minding the capital expenditure and working capital investments.\nThe company is free cash flow positive and our objectives and compensation are all geared to keeping it go in that way.\n", "role": "user" }, { "content": "qtrly total revenues $102.3 million versus $125.9 million.\n", "role": "assistant" } ]

[ { "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 Jason VanWees, Vice Chairman of Teledyne.\nAnd of course, actual results may differ materially.\nI'm very pleased with both our operational execution and our financial performance in the third quarter.\nWe achieved record revenue, 75.2% greater than last year, driven by organic growth of 11.9% and the remaining 62.3% of sales increase contributed by Teledyne FLIR.\nRevenue increased organically in every major business group but was especially strong in our commercial imaging and electronic test and measurement instrumentation businesses where organic growth for each was greater than 20% in the quarter.\nFurthermore, orders exceeded sales for the fourth consecutive quarter with the third quarter book-to-bill of 1.1 GAAP earnings per share of $2.81 increased 13.3% compared to last year, and was $0.03 less than our record GAAP third quarter earnings achieved in 2019.\nHowever, excluding acquisition-related charges, earnings were $4.34 per share in the third quarter, an increase of 61.9% on a comparable basis from 2020.\nCash flow was a third quarter record allowing repayment of $300 million of debt while our leverage ratio declined to 3.3 from 3.7 at the end of the second quarter.\nTeledyne FLIR performed strongly in its first full quarter.\nIntegration efforts have been swift and we are increasingly excited about the long-term future with Teledyne.\nWe continue to accelerate the pace of plant synergies and currently expect to achieve our annualized cost saving target of $80 million before the middle of 2022 as opposed to the end of 2022 as we described in our July earnings call, and compared with 2024 as noted when we announced the transaction in January of 2021.\nRegarding our execution in the quarter, Teledyne is not immune to supply chain issues, inflation, and other operational challenges.\nHowever, to-date, we have been successfully navigating and managing these issues, and today, we are pleased to increase our full year sales, margin, and earnings outlook compared with the outlook we presented in July.\nOn a full year basis, we now think a reasonable outlook for organic sales growth in 2021 is approximately 7% to 7.5%, led by forecasted growth of almost 13% in digital imaging, which excludes Teledyne FLIR.\nThis translates to total sales of $4.59 billion with contribution of $2.4 billion from digital imaging, including FLIR.\nI will now further comment on the performance of the four business segments.\nIn our Digital Imaging segment, third quarter sales increased 217.3% largely due to the FLIR acquisition but organic growth in our combined commercial and government imaging businesses was also very strong at 17.9%.\nSales of industrial and scientific vision systems were a record and healthcare sales return to pre-pandemic levels.\nGAAP segment operating margin was 12.5%, but adjusted for transaction costs and purchase accounting segment margin was 23.9%.\nIn our Instrumentation segment overall quarter sales increased 9% versus last year.\nSales of test and electronic test and measurement systems, which includes oscilloscopes and protocol analyzers were exceptionally strong and increased 20.8% year-over-year to record levels.\nSales of environmental instruments increased 7.6% from last year with sales related to human health and safety market such as drug discovery and gas and flame detection being strongest in the quarter.\nSales of marine instrumentation increased 3.2% in the quarter.\nIn addition, orders were the strongest in the last six quarters with a quarter book-to-bill of 1.13.\nOverall, Instrumentation segment operating profit increased 24.3% with segment operating margin increasing 270 basis points or 247 basis points, excluding intangible asset amortization.\nIn the Aerospace and Defense Electronics segment, third quarter sales increased 11.7% driven by 8.4% growth in defense, space, and industrial sales combined with a 27% increase in sales of commercial aerospace products versus last year's pandemic-related tough quarter.\nGAAP operating profit increased 34.5% with margin 375 basis points greater than last year.\nFinally in the Engineered System segment, third quarter revenue increased 1.4% but operating profit and margin declined slightly since we exited the higher margin turbine engine business earlier this year.\nBut before turning the call over to Sue, I want to comment on our margin and earnings outlook.\nFor several years, we've been on a journey to move our overall operating margin from the low-teens to over 20%.\nOver the last 2.5 years, we made tremendous progress with it -- with stand -- notwithstanding the pandemic and the recent supply chain and inflationary pressures.\nTo date, the approximate $1 increase in our earnings outlook is primarily the result of further improvement in our full-year 2021 forecasted operating margin which excluding acquisition-related charges is 100 basis points better at approximately 21% from our 20% forecast in July.\nAnd now to Sue.\nI will first discuss some additional financials for the quarter not covered by Robert, and then I will discuss our fourth quarter and full year 2021 outlook.\nIn the third quarter, cash flow from operating activities was $192.8 million including all acquisition-related costs.\nExcluding acquisition-related cash costs, net of tax, cash from operations was $194.9 million compared with cash flow of $150.3 million for the same period of 2020.\nFree cash flow that is cash from operating activities, less capital expenditures excluding acquisition-related costs was $165.7 million in the third quarter of 2021 compared with $135.1 million in 2020.\nCapital expenditures were $29.2 million in the third quarter compared to $15.2 million for the same period of 2020.\nDepreciation and amortization expense was $90.2 million for the third quarter of 2021 compared to $29.2 million in 2020.\nIn addition, non-cash inventory step-up expense for the third quarter of 2021 was $35.2 million.\nWe ended the quarter with approximately $3.89 billion of net debt that is approximately $4.44 billion of debt less cash of $551.8 million.\nStock option compensation expense was $5.8 million for the third quarter of 2021 compared to $5.7 million for the same period of 2020.\nResulting from the FLIR acquisition, restricted stock unit expense for FLIR employees was $1.8 million in the third quarter of 2021.\nTurning to our outlook.\nManagement currently believes that GAAP earnings per share in the fourth quarter of 2021 will be in the range of $2.53 to $2.69 per share, with non-GAAP earnings in the range of $4.07 to $4.17.\nAnd for the full year 2021, our GAAP earnings per share outlook is $9.13 to $9.29 and on a non-GAAP basis $16.35 to $16.45 compared with our prior outlook of $15.25 to $15.50.\nThe 2021 full year estimated tax rate, excluding discrete items is expected to be 23.9%.\nIn addition, we currently expect less discrete tax items in 2021 compared with 2020.\nI'll now pass the call back to Robert.\n", "role": "user" }, { "content": "teledyne technologies q3 gaap earnings per share $2.81.\nq3 non-gaap earnings per share $4.34 excluding items.\nq3 gaap earnings per share $2.81.\nq3 sales rose 75.2 percent to $1.312 billion.\nsees fy non-gaap earnings per share $16.35 to $16.45.\nsees q4 non-gaap earnings per share $4.07 to $4.17.\nsees fy gaap earnings per share $9.13 to $9.29.\nsees q4 gaap earnings per share $2.53 to $2.69.\n", "role": "assistant" } ]

[ { "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: Due to the large number of participants on the Q&A portion of today's call, we're asking everyone to limit themselves to one question to make sure we can give everyone an opportunity to ask questions during the allotted time.\nWe are willing to take follow-up questions, but ask that you rejoin the queue if you have a second question.\nBefore I get into the slides, I would like to share some perspective on our first quarter.\nAs you will see in the results, we are benefiting from our diverse portfolio and are continuing to execute on our margin expansion plans.\nWhile markets have been very dynamic over the past year, we are seeing improving conditions across the majority of them.\nAgainst this backdrop, we are demonstrating not only the resiliency of our operations, but also the ability to drive organic content growth ahead of our markets while expanding operating margins and demonstrating strong free cash flow generation that is in line with our business model.\nWe are positioned to continue to benefit from secular trends and growing markets, while driving the margin expansion plans that we've highlighted to you.\nAnd you'll see the benefit of these efforts in our first quarter results, as well as our guidance for the second quarter.\nWith that as a quick backdrop, let me now frame out some of the key messages of today's call.\nFirst, I am very pleased with our execution in the first quarter and I believe our teams delivered strong results.\nWe delivered sales growth of 11% and adjusted earnings-per-share growth of 21% year-over-year, demonstrating the strength and diversity of the portfolio and the benefits from our operational improvements.\nOur sales were ahead of our expectations in each segment, but with the greatest outperformance in transportation, where we continue to generate strong content growth from electrification of the powertrain as well as increased data in the vehicle.\nWe continue to demonstrate our strong cash generation model with our quarter-one free cash flow being at a first quarter record of approximately $530 million.\nWe continue to expect approximately 100% free cash flow conversion to adjusted net income for this fiscal year.\nAnd as we look to our second quarter, we are expecting our strong performance to continue.\nWe expect sales and adjusted earnings per share, similar to the first quarter, at approximately $3.5 billion of revenue and a $1.47 in earnings per share.\nAnd like in the first quarter, we again expect double-digit sales and adjusted earnings-per-share growth year-over-year.\nNow, I'd like to take a moment to discuss our performance relative to where our markets were in the pre-COVID timeframe of our fiscal 2019.\nAnd we do hope this will provide a baseline for evaluating our performance and progress this year.\nAt the overall company level, our revenue is approximately back to pre-COVID levels, despite the majority of our markets being below 2019 levels and I'd like to give you some color by the three different segments.\nIn our Communications segment, we have seen strong improvement in our end markets.\nAnd this has helped enable sales to recover above pre-COVID levels and for example, in Data and Devices as well as in Appliances, we're benefiting from continued data center build-outs and home investments respectively.\nIn our Industrial segment, it is a very different environment.\nWe have markets that continue to remain weak as a result of COVID impacts.\nCommercial layer and medical markets and car sales are still well below pre-COVID levels.\nHowever, what we are seeing is it does look like order patterns are indicating that we could be touching along the bottom in both of these businesses and we could see some improvements later in the year.\nAnd in our Transportation segment, our Auto and Commercial Transportation businesses are now generating revenue above the levels we saw prior to COVID, even though global auto and truck production is still forecasted to be below fiscal 2019 levels.\nContent growth and share gains have driven the outperformance, reflecting our leadership position in these markets.\nTE products and technology are designed in the next generation of sustainable vehicles at every leading OEM worldwide.\nThe real proof of the traction is our content-per-vehicle progression.\nIn fiscal 2019, our content per vehicle in Auto was in the low 60s and it's now trending into the low 70 range.\nAs consumer adoption increases for hybrid and electric vehicles and we continue to bring more innovation to our customers, we expect our content per vehicle to expand into the 80s over time.\nWhat surprises is that consumer preference continue to drive the features and the technology and we will continue to benefit as vehicles become more safe, green and connected, driving more content for connector and sensing solutions.\nWhile I am pleased with our results and the progress that we've made operationally, I'm even more excited about the sales growth and margin expansion opportunities that we still have ahead of us.\nWe continue to execute on our margin expansion plans in Transportation and Industrial that we started prior to COVID and accelerated during the pandemic.\nI'm also very proud of the margin progression in Communications, which has offset the volume-related pressure that we're seeing in Industrial as a result of the market impacts due to COVID.\nQuarter-one sales of $3.5 billion were better than our expectations, up 11% on a reported basis and 6% organically year-over-year.\nWe had 12% organic growth in both Transportation and in Communications with growth across all businesses in those two segments.\nIndustrial segment sales were down 8% organically due to the COVID-related impacts I already talked about.\nDuring the quarter, we saw orders of $4 billion and this was up 25% year-over-year, reflecting an improvement in the majority of the end markets we served and I'll come back to orders in a couple of slides.\nFrom an earnings per share perspective, our adjusted earnings per share was $1.47.\nThis was up 21% year-over-year.\nIt is a strong operational performance where we showed adjusted operating income being up approximately 25% year-over-year.\nAs we look forward, we expect our strong performance to continue into our second quarter, with sales and adjusted earnings per share being similar to first-quarter levels despite lower sequential auto production.\nFor the second quarter, we expect sales to be approximately $3.5 billion and this is up approximately 10% year-over-year on a reported basis and mid-single digits organically.\nSimilar to our first quarter, year-over-year growth will be driven by Transportation and Communications, partially offset by an organic decline in Industrial.\nAdjusted earnings per share is expected to be approximately $1.47 in the second quarter and this will be up 14% year-over-year with adjusted operating margin expansion included in the earnings performance.\nFor the first quarter, our orders will approximately $4 billion with a book-to-bill of 1.15.\nI would like to highlight that this level of orders reflects improvements in a number of our end markets, as well as some supply chain replenishment.\nAs we see markets improving, it is not surprising that our orders reflect the impact of supply chains being replenished after the shutdowns that occurred in the U.S. and Europe in the third quarter of last year.\nWe are also seeing customers placing advanced orders in some cases due to product constraints in the broader electronic component categories like semiconductors and certain passive components.\nAnd the guidance that we give does factor in the impacts of these supply chain dynamics.\nIn looking at orders by segment, on a year-over-year basis, Transportation and Communication orders both grew 36% with broad-based growth across all businesses.\nIndustrial orders declined slightly year-over-year, but on a sequential basis, we did see orders grow in all businesses in each segment.\nSo, let me also add some color on what we're seeing in orders from a geographic perspective and I'll provide this on an organic basis.\nIn China, our orders were up 33% in the first quarter with growth, driven by Transportation and Communications.\nWe are benefiting from our strong position in Auto, Commercial Transportation and Appliances and continue to see strong improvement across those markets in China.\nWe also saw 26% year-over-year growth in Europe, with growth in all segments.\nThis represents the second consecutive quarter of orders growth in Europe with some markets improving, following the large drops from COVID, back in the middle of last year.\nAnd in North America, our orders were flat with growth in Transportation and Communications being offset by declines in Industrial.\nNow, what I'd like to do is touch upon our segment results briefly and I'll cover those on Slide 5 through 7 of the slides we issued.\nStarting with Transportation, our sales were up 12% organically year-over-year, with growth in each one of our businesses.\nIn Auto, sales were up 11% organically versus global auto production growth in the low single digits.\nThe outperformance is driven by continued strong content growth and some benefits from the supply chain replenishing.\nWe are seeing gains from our leadership position in next generation products and technology and the value that we bring to our customers.\nAs I mentioned earlier, we are seeing strong content growth from the move to an electric powertrain and increased data connectivity, as well as the continued electronification of the vehicle.\nIn our Commercial Transportation business, we saw 25% organic growth, driven by electronification trends, which are helping content outperformance as well as ongoing share gains.\nWe are also benefiting from higher emission standards and new increased operator adoption of Euro 5 and 6 in China and new emission standards in India.\nWe saw growth in all regions as well as all market verticals that we serve in our Commercial Transportation business and continue to benefit from our strong position in China.\nWe are also seeing increased program wins in the electric powertrain and commercial transportation that will provide future content growth.\nIn Sensors, we saw 29% growth on a reported basis, which included the revenue contribution from the First Sensor acquisition.\nOn an organic basis, sales increased 3%, driven by growth in auto applications and we continue to expand our design win pipeline in auto sensing and expect growth at these platforms continue to increase in volume.\nFrom an operating margin perspective, the segment expanded margins by 200 basis points to 19.4%, driven by strong operational performance.\nNow, let me move over to the Industrial segment, where, as I mentioned, our sales declined 8% organically year-over-year and our adjusted operating margins were down slightly to 13.5% despite the 8% organic sales decline.\nI am very proud, we were able to maintain our mid-teens adjusted operating margins due to the cost actions that we initiated over the past couple of years.\nDuring the quarter, the segment continued to be impacted by the decline in the commercial aerospace market, with our AD&M business declining 22% organically.\nAs I mentioned earlier, we do believe we're touching along the bottom in this business and could see improvement in Comm Air later in this year.\nOur Industrial Equipment business was up 8% organically, with growth in all regions and strength in factory automation applications.\nAnd we continue to see weakness in our Medical business with ongoing delays in interventional elective procedures that have been caused by COVID.\nWe anticipate this to be a short-term dynamic in Medical that is consistent with what our customers are seeing and expect this market to return to growth as these procedure start to increase later in the year.\nAnd lastly, in our Energy business, we saw a 4% organic decline, driven by COVID impact on utility spending, but we did see growth in renewable energy applications and the wind and solar applications.\nNow, let me turn to the Communications segment, where our sales grew 12% organically year-over-year, with growth in both Data & Devices as well as appliances.\nWe do continue to benefit from the recovery in China and Asia more broadly, which represents over half of our sales in this segment.\nIn Data & Devices, our sales grew 5% organically year-over-year due to the strong position we've built in high-speed solution for cloud applications.\nAnd in Appliances, we grew 21% organically year-over-year, with growth across all regions and benefits from home investments and an improved housing market.\nI would have to say, our Communication team continues to perform very well, delivering 17.6% adjusted operating margins, which is up 550 basis points versus the prior year.\nAdjusted operating income was $624 million, up approximately 25% year-over-year with an adjusted operating margin of 17.7%.\nGAAP operating income was $448 million and included $167 million of restructuring and other charges and $9 million of acquisition-related charges.\nWe plan for the restructuring to be front-end loaded this year and continue to expect total restructuring charges in the ballpark of $200 million for fiscal '21 as we continue to optimize our manufacturing footprint and improve the fixed cost structure of the organization.\nAdjusted earnings per share was $1.47 and GAAP earnings per share was $1.13 for the quarter and included a tax-related benefit of $0.09.\nWe also had restructuring, acquisition and other charges of $0.43.\nThe reconciliation is provided.\nThe adjusted effective tax rate in Q1 was approximately 20%.\nFor the second quarter, we expect our tax rate to be in the high teens and continue to expect an effective tax rate of around 19% for fiscal '21.\nImportantly, we expect our cash tax rate to stay well below our reported ETR for the full year.\nCurrency exchange rates positively impacted sales by $106 million versus the prior year.\nWe are demonstrating our business model execution with adjusted earnings per share of $1.47, up 21% year-over-year.\nAdjusted operating margins were 17.7% as I mentioned earlier, and that is an expansion of 190 basis points versus prior year.\nI am pleased with the progress we are making in driving improvements to our cost structure and our strong operational performance.\nAnd we continue to execute on our footprint consolidation and cost reduction plans in both Transportation and Industrial, and we are now benefiting from the heavy lifting that we have already completed in our Communications segment.\nTransportation adjusted operating margin was 19.4%, which is nearing our business model target of 20%.\nIndustrial adjusted operating margins remained in the mid teens, despite significant volume drops, which demonstrates the benefits of our cost actions we have been discussing with you over the past few years.\nI'm also very pleased with the 17.6% adjusted operating margin in Communication, which reflects our strong operational execution that I mentioned earlier.\nIn the quarter, cash from continuing operations was $640 million and we have very strong cash flow for the quarter of approximately $530 million, which represents a first-quarter record, as Terrence mentioned.\nAnd we returned $286 million to shareholders through dividend and share repurchases.\nOur strong cash flow performance last year and into the first quarter of this year demonstrates the strength of our cash generation model and we continue to expect free cash flow conversion to approximately 100% for the full year.\nWe remain committed to our disciplined use of cash and over time, we expect two-thirds of our free cash flow to be returned to shareholders and about a third to be used for acquisitions.\nAnd before we go on to questions, I want to reiterate that we remain excited about how we've positioned our portfolio with leadership positions in the markets we serve, along with organic growth and margin expansion opportunities ahead of us.\nTo summarize, we've discussed the benefits of secular trends across our portfolio.\nYou are seeing content growth enabling sales performance above our markets in Auto and Commercial Transportation, benefits from the market recovery in Data & Devices and Appliances and some markets that have been impacted by COVID in the Industrial segment that are now showing signs of stabilization.\nWe initiated cost actions well ahead of the COVID downturn and you are seeing strong margin expansion as a result of our efforts.\nWe expect to continue to generate strong cash flow, maintain a disciplined and balanced capital strategy and drive to business model performance and our focus on value creation for our stakeholders going forward.\nSujal, Sherryl, could you please give the instructions for the Q&A session?\n", "role": "user" }, { "content": "q1 adjusted earnings per share $1.47.\nq1 gaap earnings per share $1.13 from continuing operations.\nq1 sales $3.5 billion versus refinitiv ibes estimate of $3.26 billion.\nsees q2 adjusted earnings per share about $1.47.\nsees q2 sales about $3.5 billion.\nqtrly orders of approximately $4 billion, up 25% year over year.\n", "role": "assistant" } ]

[ { "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: Due to the large number of participants on the Q&A portion of today's call, we're asking everyone to limit themselves to one question to make sure we can give everyone an opportunity to ask questions during the allotted time.\nWe are willing to take follow-up questions, but ask that you rejoin the queue if you have a second question.\nBefore I get into the slides, let me give you some perspective on our second quarter.\nAnd I think as you'll see in our results, we are continuing to demonstrate the strength of our diverse portfolio and the benefit of content growth across our businesses.\nWe are delivering organic growth ahead of our markets as well as strong operational performance and free cash flow generation.\nI would say this performance is in a world with an improving economic backdrop that is dealing with global supply chains that are trying to keep up with the broader macro recovery.\nWe are continuing to execute our business model, and you can see this in our second quarter results as well as the guidance that we provide for the third quarter, and I'll talk about a little bit more today.\nSo let me also provide some key messages about today's call.\nFirst off, I am very pleased with our execution in the second quarter.\nWe delivered sales growth of 17% and generated record quarterly adjusted earnings per share of $1.57, and this earnings per share represents growth of 22% year-over-year.\nOur sales were ahead of our expectations, and it was broad across each segment, driven by the continued recovery in most end markets we serve, our broad leadership positions and the benefits of the secular trends that we're strategically positioned to capitalize on.\nAlso, our adjusted operating margins expanded 80 basis points year-over-year to 17%, and this was driven by margin expansion in both our Transportation and Communications segments.\nI also believe that you're going to continue to see us demonstrate our strong cash generation and truly evident of that is our year-to-date free cash flow, which was approximately $1 billion, which is also a Company record for the first half of the fiscal year.\nAnd as we look into our third quarter, we are expecting our strong performance to continue, with sales and adjusted earnings per share at similar levels to what we just delivered in the second quarter.\nWith that as a little bit of a backdrop, I do want to take a moment to frame out the current market environment and our business relative to where we were just 90 days ago when we last spoke.\nIn our Transportation segment, consumer demand in autos continues to remain strong, and auto production is remaining stable in the range of 19 million to 20 million units per quarter globally, even with the well-documented semi shortages, and we've also seen further strength in our commercial transportation end markets.\nThe trends around content growth remain strong as we continue to benefit from increased electrification of vehicles and higher production of electric vehicles, which will enable us to continue to outperform auto production going forward.\nIn our Industrial segment, we see increased momentum in the recovery of industrial equipment markets due to factory automation and increasing manufacturing capital expenditure trends.\nAlso in our Industrial segment, the Commercial Aerospace and Medical businesses are still being impacted by COVID, and this is similar to what we mentioned last quarter, but we do continue to see indicators of stability in our orders in both of these businesses.\nIn our Communication segment, the market trends we mentioned last quarter are continuing.\nConsumer demand is getting stronger, and globally we've seen an increase in appliance demand.\nWe continue to see strong ongoing capital expenditure trends in the cloud applications as well as acceleration of demand around the data center.\nAnd when you think about these trends I just covered in our segments as a backdrop, the faster than expected recovery in the markets that I mentioned has resulted in some challenges as the industries we serve replenish their supply chain and look to further secure supply.\nWhile this dynamic has benefited our orders, which remains strong, it has caused broader supply chain pressure, and the pressure we're experiencing is factored into our expectations for the third quarter guidance, and Heath will provide more color on this in his section.\nAnd the last thing I want to highlight is, let's all remember that we are still in a world that's still on COVID.\nWe continue to see countries go into lockdown again, and this is impacting some of our customers and their supply chains.\nAnd certainly while vaccines are getting rolled out in certain parts of the world, the pace of the deployment and availability of the vaccines varies greatly by country, so some uncertainty remains.\nOur focus has been and will continue to be on keeping our employees safe while also helping our customers capitalize on the improving economic conditions.\nSecond quarter sales of $3.7 billion were better than our expectations in each of our segments.\nThey were up 17% on a reported basis and 11% organically year-over-year.\nWe had 15% organic growth in our Transportation segment, with double-digit growth across all businesses.\nWe also had very strong performance in our Communications segment, with organic growth of 29%, which was strong double-digit growth in both of the businesses in that segment.\nAnd in our Industrial segment, sales were down 4% organically due to the ongoing weakness in the commercial aerospace market.\nFrom an orders perspective, second quarter orders were $4.6 billion, and this was up 36% year-over-year.\nIt reflects both the improvement in the markets that I mentioned, along with inventory replenishment in the supply chain by our customers.\nOur earnings per share was a record at $1.57 in the quarter, and this was up 22% year-over-year and was driven entirely by our operating performance, resulting in adjusted operating margins being up 80 basis points year-over-year.\nI am pleased that we were able to manage the broader supply chain pressures which all companies are dealing with and had margin expansion.\nFrom a free cash flow perspective, in the second quarter free cash flow was $477 million, with approximately $340 million being returned to shareholders.\nAs we look forward, we expect our strong performance to continue into the third quarter, with sales and adjusted earnings per share being similar to our second quarter levels.\nFor the third quarter, we expect sales to be approximately $3.7 billion, and this is up significantly year-over-year on both a reported and an organic basis, and we expect adjusted earnings per share to be $1.57, which is in line with the levels we just saw in the quarter we just closed.\nAs I already stated in the quarter, our orders were very strong at approximately $4.6 billion, and we had a book to bill of 1.22.\nOrders in transportation and in Communications were up 50% and 45% respectively.\nAnd this increase reflects both market recovery and supply chain replenishment in both of those segments.\nIn these segments, customers are not only placing orders to meet current production needs, but also replenishing the supply chains that were depleted during fiscal 2020.\nI would also highlight that with some of the shortages in semiconductors and certain passive components, we are seeing some areas where customers are placing orders to secure supply beyond our lead times.\nIn our Industrial segment, it is a different picture than what we're seeing in Transportation and Communications.\nBut what is nice is that despite the year-over-year sales decline we had in this segment, we have seen orders growth of 7%, and that's driven by the continued recovery in the industrial equipment market, partially offset by the weakness in commercial aerospace segment.\nLet me also, on orders, add some color what we're seeing organically on a geographic basis, and I want to do this on a sequential basis to show where order momentum is.\nIn China, our orders were up 3% from a strong base from fiscal quarter one.\nAnd that growth was really driven by our Industrial and Communication segments.\nOrders on a sequential basis in Europe were up 14%, and North America sequential orders were up 22%, and that was broad based growth across all our segments than those two regions.\nSo let me get into our year-over-year segment results and there are slides 5 through 7.\nTransportation sales were up 15% organically year-over-year, with growth in each of the businesses.\nIn auto, our sales were up 14% organically.\nAnd year-to-date, we are generating content outperformance over production in our expected 4% to 6% range.\nWe continue to benefit from our leading global position and increased production of electric vehicles, and as you've probably seen, the number of EV launches are increasing by our customers around the world.\nIn commercial transportation, similar to our first quarter, we saw 25% organic growth, driven by ongoing emission trends, content outperformance and ongoing share gains.\nWe are continuing to benefit from stricter emission standards and the increased operator adoption of Euro 5 and 6 in China which reinforces our strong position in that country.\nWe saw growth in all regions in our commercial transportation business, along with double-digit growth in all market verticals that we serve in this business.\nThe other nice thing that we continue to see is, we see increased wins on electric powertrain platforms and trucks which give us confidence about the future content potential in this market in out years.\nIn our sensors business, we saw 13% organic growth with growth in all markets and double-digit growth in auto applications.\nWe do continue to expand our design win pipeline in auto sensing and expect growth as these platforms continue to increase in volume.\nFrom a margin perspective, adjusted operating margins for the segment expanded 80 basis points to 18.1%, driven by higher volumes versus the prior year and despite the supply chain pressures.\nSo if we now turn to the Industrial segment.\nAs I said earlier, our sales declined 4% organically year-over-year.\nDuring the quarter, the segment continued to be impacted by the decline in the commercial aerospace market, with our aerospace, defense and marine business declining 21% organically year-over-year.\nAs I covered already, based upon the order patterns we do believe this business is showing signs of stabilization at the current quarter levels.\nAnd when you think about our industrial equipment market, it was very strong and up 16% organically, with growth in all regions and increasing strength in factory automation applications where we're benefiting from accelerating capital expenditures in areas like semiconductor equipment as well as along the auto manufacturing supply chain.\nWe continue to see weakness in our medical business in our Industrial segment, and it was down 13% organically year-over-year, and this is being driven by ongoing delays in interventional elective procedures caused by COVID, and the dynamics we're experiencing in medical are consistent with what our customers are seeing, and we expect this market to return to growth as these procedures start to increase later in the year.\nAnd lastly in the Industrial segment, our energy business, we saw 4% organic growth, and this was driven by increase in penetration of renewables, especially benefiting from solar applications around the world.\nFrom a margin perspective, in Industrial Solutions our margins declined year-over-year to 12.5%, and that was really driven by the significant drop in commercial aerospace volumes.\nSo let me cover the Communications segment.\nAnd in this segment, we continue to benefit from both the market recovery and share gains while delivering very strong operational performance.\nSales in the segment grew 29% organically year-over-year, with strong growth in both data & devices and appliances.\nIn data & devices, our sales grew 24% organically year-over-year due to the strong position we have built in high-speed solutions for cloud applications.\nFavorable secular trends in cloud services are leading to increased capital expenditure by our customers and our content and share gains are enabling us to grow on cloud-related sales at double the market rate.\nJust to give you an example, at one of the major cloud providers we are now providing 6x the content on the next-generation server applications versus the prior generation.\nIn our appliances business, we are also seeing strong growth trends.\nSales grew 35% organically year-over-year, driven by our leading global market position, share gains and ongoing market improvement across all regions.\nFrom a margin perspective, our Communications segment and team delivered very strong execution in the quarter and delivered 21% adjusted operating margins, and these were up 720 basis points versus the prior year.\nI am pleased with the way our team has worked through the supply chain pressures to deliver the strong operating margin expansion in this environment and our Communication teams are capitalizing on growth trends in their end markets, while delivering strong operational execution, and you see this reflected in our results.\nAdjusted operating income was $637 million, up approximately 23% year-over-year with an adjusted operating margin of 17%.\nGAAP operating income was $612 million and included $17 million of restructuring and other charges and $8 million of acquisition-related charges.\nWe continue to optimize our manufacturing footprint and improve the cost structure of the organization and continue to expect total restructuring charges in the ballpark of $200 million for fiscal '21.\nAdjusted earnings per share was $1.57 and GAAP earnings per share was $1.51 for the quarter and included restructuring, acquisition and other charges of $0.06.\nThe adjusted effective tax rate in Q2 was approximately 17%.\nFor the third quarter, we expect our tax rate to be up slightly sequentially and continue to expect an adjusted effective tax rate around 19% for fiscal '21.\nImportantly, we expect our cash tax rate to stay well below our reported ETR for the full year.\nNow turning to slide 9.\nSales of $3.7 billion were up 17% versus the prior year and 6% sequentially, demonstrating the strength of our portfolio.\nCurrency exchange rates positively impacted sales by $115 million versus the prior year.\nAdjusted earnings per share of $1.57 was up 22% year-over-year and 7% sequentially, reflecting our strong operational performance.\nAdjusted operating margins were 17% and expanded 80 basis points versus the prior year.\nWhile we would have expected higher fall-through on this level of sales growth, we saw impacts of higher freight charges and other supply chain pressures in the quarter, and these will continue into the third quarter.\nAnd as you are aware, these supply chain issues are having a broader impact on our customers and suppliers as well.\nAs Terrence mentioned, the supply chain is catching up to the increased level of demand we are seeing in many of our end markets, and given these dynamics, I'm pleased with the results we delivered in the quarter and of our momentum going forward, as shown in our third quarter guidance.\nIn the quarter, cash from operating activities was $580 million.\nWe had very strong free cash flow for the quarter of $477 million and a year-to-date free cash flow of approximately $1 billion, which is a record for the first half of a fiscal year.\nWe returned approximately $340 million to shareholders through dividends and share repurchases in the quarter.\nOur strong free cash flow performance demonstrates the strength of our cash generation model, and we expect to -- we continue to expect free cash flow conversion to approximate 100% for the full year.\nWe remain committed to our disciplined use of cash, and over time, we expect two-thirds of free cash flow to be returned to shareholders and one-third to be used for acquisitions.\nBefore we go to questions, I want to reiterate that we remain excited about how we have positioned our portfolio with leadership positions in the markets we serve, along with organic growth and margin expansion opportunities ahead of us.\nTo summarize, the outlook for many of the markets we serve is consistent with what we were seeing 90 days ago, along with some acceleration of growth in the commercial transportation, industrial equipment and communications markets.\nWe are continuing to see the benefits of secular trends across our portfolio and are capitalizing on these opportunities.\nThe economic recovery has been faster than expected, and we are seeing the corresponding near-term pressures in the broader supply chain as a result.\nThese impacts will be resolved, and nothing has changed with respect to our growth and margin expansion expectations.\nWe are executing well with things we can control, and our outlook for Q3 continues to reflect the strength of our portfolio.\nWe expect to continue to generate strong free cash flow, maintain a disciplined and balanced capital strategy and drive to our business model performance.\nAnd we remain focused on value creation for our stakeholders going forward.\nMichele, could you please give the instructions for the Q&A session?\n", "role": "user" }, { "content": "q2 adjusted earnings per share $1.57.\nq2 gaap earnings per share $1.51 from continuing operations.\nq2 sales $3.7 billion.\nsees q3 adjusted earnings per share about $1.57.\nsees q3 gaap earnings per share about $1.51 from continuing operations.\nsees q3 sales about $3.7 billion.\n", "role": "assistant" } ]

[ { "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: Ladies and gentlemen, this is the operator.\nWe are currently having technical difficulties.\nYour call will resume shortly until that time you'll be placed on mute in the call.\nWe will now resume our call.\nTerrence, you may begin.\nAnd I'll start at the beginning in my comments just to make sure we know where we broke off.\nBut I want to talk about our results for the fourth quarter as well as fiscal 2021 as well as the outlook for the fiscal 2020 first quarter.\nSo before Heath and I get into the slides, let me frame out the performance relative to the broader market environment that we're operating in.\nI am pleased with our results in the fourth quarter as well as the strong performance that we delivered for the full year.\nWe continue to experience global GDP growth with strong end market demand across most end markets that we've strategically positioned TE to focus on, and this broad growth that we're seeing is both in the consumer and capital spending areas.\nAnd let me bring some color to that, how that relates to TE.\nOn the consumer side, demand for autos and appliances remain strong, and we continue to see increases in medical procedures that benefit medical device sales.\nOn the capital spending side, we see increased investments that relate to cloud and data centers, factory automation, semiconductor capacity as well as the need for more renewable energy sources.\nAnd when you look at the results we're going to talk about today, you're going to see this broad strength reflected in our orders in our backlog and that will benefit us as we go into 2022 as well as our results in 2021.\nWhile certainly, this demand environment is a positive, the balance of this is that the reality is we're still in a world that's dealing with COVID, and global supply chains that have not been able to keep up with the strong demand trends.\nWithin this backdrop, we are continuing to capitalize on growth opportunities across our served markets.\nIn the fourth quarter, we delivered 16% organic growth despite auto production declines caused by our auto customer supply chain.\nThis performance demonstrates the strength as well as the diversity of our portfolio.\nWe have strategically positioned TE around certain secular trends, and you're seeing the market outperformance in each of our segments as a result of this positioning.\nIn transportation, our leadership position is enabling us to deliver content growth from both electrification of the core as well as increased adoption of electric vehicles globally.\nIn industrial, we're benefiting from accelerated global capital spending around factories and in communications, we're driving content and share gain in cloud applications.\nIn addition to the strong top line growth outperformance versus our markets this year, we have executed well to deliver margin expansion in each of our three segments.\nThe last proof point that I think is important is -- and shows the strength of the portfolio is how our full year results compared to pre-pandemic levels of 2019.\nBoth our sales and adjusted earnings per share in fiscal 2021 were up double digits versus 2019, and we expanded adjusted operating margins by over 100 basis points by continuing the margin journey that we're on.\nMore importantly, we also remain excited about the additional growth and margin opportunities that we still have ahead of us.\nNow with that as a backdrop, let me get into the slides, and I'll discuss the highlights that we have listed on slide three.\nOur teams had strong execution results in the fourth quarter despite reductions in auto production and ongoing challenges in the broader global supply chain.\nWe generated sales of $3.8 billion with 16% organic growth and adjusted earnings per share ahead of guidance at $1.69, which was up 46% year-over-year.\nAdjusted operating margins were 18.5% as a result of the increases across all three segments, and I'll share more details about segment results a little bit later.\nWhen you look at the full year, year-over-year sales were up 23%, adjusted operating margins expanded approximately 400 basis points and adjusted earnings per share was up over 50% to $6.51.\nAlso, as important of earnings is where we generated in free cash flow.\nOur free cash flow was above $2 billion with approximately 100% conversion to adjusted net income for the year, demonstrating our strong cash generation model.\nWe also continue to remain balanced in our capital deployment with about 3/4 of our free cash flow return to owners this past year and the remainder used for M&A including the earning acquisition in the industrial segment that we mentioned last quarter.\nWhen you look at our orders in the fourth quarter, they remained strong at $4.1 billion, with strength in each segment, and our book-to-bill was 1.08.\nWith these orders and where we position TE, we do expect a strong performance of our portfolio to continue into the first quarter with approximately $3.7 billion in sales, which will be up mid-single digits organically year-over-year despite a roughly 20% expected decline in year-over-year auto production.\nWe expect strong double-digit growth in both our industrial and communications segments, and I think this is another point that reinforces diversity of the markets that we serve.\nAdjusted earnings per share is expected to be approximately $1.60 in the first quarter, and this will be up 9% year-over-year.\nNow let me talk about the market, and frame it to where we were just 90 days ago when we last spoke.\nIn transportation, consumer demand for autos remained robust, but clearly, ongoing challenges with semiconductors and the broader supply chain continue to impact our auto OEM customers' ability to produce.\nGlobal auto production came in lower than we expected just 90 days ago as our customers reduced production to enable the supply chain to catch up.\nAuto production was approximately two million units lower than we anticipated in the fourth quarter.\nAnd we're expecting auto production to be in the 18 million unit range in our first quarter.\nThis first quarter production will be well below the nearly 23 million units made in the first quarter of 2021.\nThe key for us is that the trends around content growth for TE remains strong, and we expect content growth to be at the high end of the four to six point range in fiscal 2022 as we continue to benefit from increased electronification and higher production of electric vehicles.\nNow versus 90 days ago in our industrial segment, the key is that we continue to see an improving backdrop, which is benefiting our industrial equipment and energy businesses, and our medical business is growing year-over-year as interventional procedures increase.\nThe one area that we've not seen improved is the commercial aerospace business.\nIt's sort of staying stable, and we've not seen an inflection point in that business yet, to hire or lower growth.\nIn communications versus 90 days ago, we continue to see favorable end market trends with global growth in cloud capital expenditures and strength in residential demand benefiting our appliances business.\nNow while that's a view of what we've seen versus 90 days ago from a market perspective, I also believe in this environment, so it's important to tell you what we're seeing in our supply chain.\nWhile challenges remain in the broader supply chain, we have seen some improvement in our availability of certain raw materials in our own supply chain versus 90 days ago.\n90 days ago, we thought we were impacted by about $100 million of revenue due to us not having availability of supply.\nThis quarter end, we're only -- that's down to about $50 million.\nAnd with this improvement, this will enable us to increase production and inventory levels accordingly to ensure we can meet demand as our customers resolve their supply issues.\nNow before I move into orders, I will start on slide four.\nI do want to take a moment to mention a few key highlights on the progress we made this year on our ESG initiatives.\nEarlier this year, we issued our 11th corporate responsibility report, which discusses our One Connected World strategy, which really encapsulates our ESG strategy.\nAnd we hope that you read this report, which highlights the efforts that we're driving internally related to our impact on the planet as well as the innovation our engineers bring to our customers to make sure we're enabling sustainable applications.\nSome of the key highlights I want to mention is that on the environmental side, we set up a new goal to decrease Scope one and Scope two greenhouse gas emissions by over 40% on an absolute basis by 2030.\nAnd this new goal is above and beyond the 35% reduction we've already made in absolute greenhouse gas emission reductions over the past decade.\nWe also continue to make progress on sourcing renewable electricity.\nAnd today, I'm happy to say over 20% of TE's production currently uses carbon-free electricity.\nAnd also, this past year, we began to report Scope three emissions back in July.\nIf you look at social initiatives, we set a goal to increase women in leadership position by over 26% by 2025.\nAnd I'm happy to say we continue to focus on employee safety and engagement throughout the pandemic.\nWe've gotten good feedback from our employees on how we've been there for them during this typical time.\nSo clearly, I'm pleased with the continued progress that we're making toward what our purpose is as a company, which is to create a safer, sustainable, productive and connected future.\nSo now let me please get into the orders on slide four, and we'll go through it by the segments in both -- and also, on a geographic basis.\nFor the fourth quarter, our orders were over $4 billion, with year-over-year order growth in all regions.\nOur order trends and backlog remains strong in each segment, and the order patterns we're seeing are as we expected.\nAs we've been mentioning through the year, and as you've seen in our book-to-bill ratios, order levels have been elevated with customers placing orders for delivery beyond the current quarter due to the broader supply chain situation.\nAs a result, we're coming into fiscal 2022 with a strong backlog position that is higher than we typically see for our business.\nWhen we look at the order patterns at a segment level, industrial and communication orders are trending as expected, with continued momentum in areas like factory automation and cloud applications.\nI also want to highlight and remind you that in the industrial and communications segment, we have a relatively large portion of our business that goes through our channel partners.\nAnd we're seeing our booking patterns begin to align more closely to our settlement, which is a good sign.\nThe other key thing to highlight around our channel partners is that in 2021, we did not see inventory levels increase with them, even though they had a much higher level -- business levels that really they had a much higher churn in their inventories this year.\nWe are seeing order levels match the production dynamics that are aligned with our guidance.\nWhen you look beyond the near-term noise of auto supply chain pressure, it is important to remember that consumer demand for autos remain strong and dealer inventories remain extremely low.\nSo we believe this is a very favorable setup for medium- and longer-term auto production growth.\nNow let me add some color on what we're seeing organically from a geographic perspective on a year-over-year basis.\nWe continue to see growth in Asia, where China orders were up 17%, and growth across all three segments.\nIn Europe, orders were up 21% and North America orders were up 26%.\nOn a sequential basis, we saw orders decline in each region that reflect the order patterns I just talked about in our segments.\nBut the one key difference is we did see growth in our transportation segment orders in China sequentially where our auto orders were up 9%.\nSo with that, with an order backdrop, let's get into the segment year-over-year results, and they'll be on your slides five through seven.\nSo starting with transportation.\nSegment sales were up 16% organically year-over-year with growth in each of our businesses.\nOur auto business grew 12% organically despite the declines in auto production that I mentioned.\nWe continue to benefit from increased production of electric vehicles as our technology and products are enabling high-voltage architectures and applications with every leading customer on the planet.\nHybrid and electric vehicle production grew 50% year-over-year increasing from roughly six million units produced in 2020 to roughly nine million units produced globally in 2021.\nWe also continue to benefit from content growth in nonelectric vehicles driven by ongoing safety, certainly data connectivity, comfort and autonomy features.\nAs a result of these content drivers, our content per vehicle has accelerated over the past couple of years from the -- in the low 60s per vehicle into the mid-70s this year.\nAnd we expect to continue to outperform auto production going forward as the content that we've set up and the wins we have continues to grow.\nTurning to our commercial transportation business.\nWe saw 38% organic growth with increases across all submarket verticals.\nWe are continuing to benefit from stricter emission standards and the increased operator adoption of Euro VI, which reinforces our strong position in China.\nAlso -- we're also pleased to announce that two leading heavy truck OEMs have awarded us the high-voltage connectivity wins on their new electric vehicle platforms that they're rolling out.\nThis will provide future content growth and reinforce our market leadership position in the commercial transportation market.\nIn our sensors business in the segment, we saw 15% organic growth driven by transportation applications with the new program ramps that we've talked to you about in the past few years.\nAnd for this segment, adjusted operating margins expanded nearly 500 basis points to 18% driven by higher volume and strong operational performance by our team.\nNow turning to the industrial segment.\nOur sales increased 6% organically year-over-year.\nIndustrial equipment was up 32% organically with double-digit growth in all regions driven by momentum in factory automation applications where we continue to see the benefit from accelerated capital expenditures in areas like semiconductor manufacturing as well as in the automotive space.\nOur AD&M business declined 18% organically year-over-year driven by the continued market weakness I talked about earlier.\nAnd in our energy business, we saw 8% organic growth driven by increases in renewables, especially global solar applications.\nAnd it was nice that our medical business grew 5% year-over-year, and it's growing in line with the recovery that we're seeing in the interventional procedures.\nAt a margin level, the segment expanded margin year-over-year by 200 basis points to 15.9% driven by strong operational performance.\nNow let me turn to communications.\nAnd clearly, our teams continue to demonstrate strong operational execution, while capitalizing on the growth trends in the markets that we serve in this segment.\nSales grew 36% organically year-over-year for the segment, and in both businesses.\nIn data and devices, performance continues to be driven by the position we built in high-speed solutions for cloud applications.\nWe continue to see capital expenditures increasing by our cloud customers, and our content growth enabled us to grow cloud-related sales at double the market rate this year.\nIn our appliance business, we saw double-digit growth in all regions driven by both consumer demand as well as continued share gains.\nIt's clear that our communications team continues to deliver an outstanding performance with record adjusted operating margins of 24.7%, and this is up 300 basis points versus a strong quarter in the prior year.\nOverall, our segment teams are capitalizing on the growth trends in their end markets.\nThat's demonstrating the diversity of our portfolio while delivering on strong operational execution in a challenging supply chain environment.\nYou're seeing this reflected in our results, both for our fourth quarter as well as our full year, and we expect this to continue into 2022.\nSo with that as a segment and a market overview, let me turn on to Heath, who will get into more details on the financials as well as our expectations going forward.\nSales of $3.8 billion were up 17% on a reported basis and 16% on an organic basis year-over-year.\nCurrency exchange rates positively impacted sales by $51 million versus the prior year.\nAdjusted operating income was $706 million with an adjusted operating margin of 18.4 -- I'm sorry, 18.5%, with strong year-over-year fall-throughs.\nGAAP operating income was $660 million and included $38 million of restructuring and other charges and $8 million of acquisition-related charges.\nFor the full year, restructuring charges were $208 million, in line with expectations, and I expect restructuring charges to decline in fiscal 2022 to approximately $150 million.\nAdjusted earnings per share was $1.69 and GAAP earnings per share was $2.40 for the quarter and included a tax-related benefit of $0.92, primarily related to decreases and our valuation allowances associated with tax planning.\nWe also had a charge of $0.07 related to the annuitization of the proportion of our U.S. pension liabilities.\nAdditionally, we have restructuring, acquisition and other charges of $0.14.\nFree cash flow was approximately $535 million for the quarter.\nAnd during the quarter, we utilized approximately $300 million for acquisitions, including earnings in our industrial segment, which Terrence mentioned earlier.\nThe adjusted effective tax rate in Q4 was 20% and approximately 19% for the full year.\nFor 2022, we expect an adjusted effective tax rate of around 19% but continue to expect our cash tax rate to be in the mid-teens.\nSo turning to slide nine.\nThis slide puts some perspective on our performance this year and shows how we performed from fiscal 2019 to 2021.\nOver this time period, we had to overcome a challenging operating environment, and our performance is demonstrating the strength and diversity of our portfolio and the strong execution of our teams.\nWe are back above the 2019 pre-COVID levels on every financial metric, with sales up 11%, adjusted operating margins expanding over 100 basis points, adjusted earnings per share increasing by 17% and free cash flow up 29%.\nI am pleased with how our teams performed to deliver the strong results through this cycle.\nTo provide some segment-level examples, our transportation sales are up approximately 15% versus fiscal 2019, despite auto production declining over 11% during that same time frame.\nSimilarly, in our communications segment, sales are up approximately 25% over this time period, significantly outperforming our end markets.\nThis also demonstrates some of the content benefits we are seeing across the portfolio.\nTurning to year-over-year comparisons.\nFiscal 2021 sales of $14.9 billion were up 23% on a reported basis and 18% organically year-over-year.\nCurrency exchange rates positively impacted sales by $444 million versus the prior year.\nWe would expect currency exchange rates to be a year-over-year headwind on in our first quarter and could remain a headwind for fiscal 2022 if the dollar remains at the current levels relative to other currencies.\nAdjusted operating margins of 18.1% and expanded by nearly 400 basis points year-over-year with expansion in every segment.\nOur adjusted earnings per share expanded 53% year-over-year to $6.51.\nI'm pleased with our performance given the inflationary pressures we are experiencing.\nWe have -- as we have discussed in prior quarters, we have implemented price increases across our business in fiscal 2021, and we expect further increases in fiscal 2022.\nTurning to cash flow.\nWe generated approximately 100% conversion to adjusted net income with record free cash flow of approximately $2.1 billion for the year.\nAs we go forward, we are confident that end demand will be robust for our products.\nAnd given our strong balance sheet, we are in a position to do strategic inventory builds to meet anticipated customer demand given the broader supply chain uncertainty.\nIn FY 2021, we continue to maintain our balanced capital strategy, returning capital to shareholders and remaining active in M&A.\nDuring the year, we returned over $1.5 billion to shareholders and utilized over $400 million for acquisitions.\nGoing forward, we remain committed to our balanced capital deployment strategy and expect to return 2/3 of our free cash flow to shareholders while supporting our inorganic growth initiatives through bolt-on acquisitions.\nBefore we go to questions, I want to reiterate that we are performing well in this environment despite challenges in the broader supply chain.\nOur results for the quarter and for the year demonstrate the strength and diversity of our portfolio, with contributions from each of our three segments.\nOur first quarter guidance represents a continuation of our strong performance, and we are excited about the growth and margin expansion opportunities as we move forward.\nEma, can you please give the instructions for the Q&A session?\n", "role": "user" }, { "content": "te connectivity q4 adjusted earnings per share $1.69.\nq4 adjusted earnings per share $1.69.\nq4 gaap earnings per share $2.40 from continuing operations.\nsees q1 sales about $3.7 billion.\nq4 sales rose 17 percent to $3.8 billion.\n", "role": "assistant" } ]

[ { "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: Earlier today, we released our third quarter 2021 earnings results and related financial information.\nWhen we say EBITDA, it means adjusted EBITDA.\nUnless specifically described otherwise, margin refers to value-add adjusted EBITDA margin.\nIn the near term, we're looking forward to participating in the virtual Barclays Global Automotive Conference on November 17th and speaking with many of you there.\nOur agenda for today we'll start with CEO, Brian Kesseler, giving an overview of the third quarter and our COO, Kevin Baird will provide more details on our performance at the segment level.\nOur CFO, Matti Masanovich will discuss our balance sheet progress and provide an updated outlook for 2021.\nBrian will then wrap up our prepared comments before we move into the question-and-answer session.\nPlease turn to Page 4 for a review of the key themes from our third quarter.\nAs we're all aware, the operating conditions in the end-to-end supply chain environment are unprecedented from semiconductor shortages affecting our OE customer bill rates, the freight and labor availability to escalating raw material and component costs, we are managing through a unique operating landscape and are planning for more of the same through the end of 2021 and into 2022.\nMore specifically, in the very near term, we are planning for Q4 global light vehicle production to be about the same as Q3.\nWith that as a backdrop, it's important to note that our global scale and market mix and structural cost improvement actions helped us mitigate the impact of the challenging operating environment.\nOn a year-over-year basis, our volume and mix was down only 5% compared to a 20% decline in global light vehicle unit production.\nOn a constant currency basis, our light vehicle value-add revenues outperformed global light vehicle production and our position in various commercial truck, off-highway and industrial end markets and the aftermarket, help support our revenue performance.\nMaterial cost recovery actions with our customer base are on track and contributed to revenues in the quarter, but with no margin.\nImportantly, our Accelerate+ structural cost actions more than neutralized the effects of unanticipated manufacturing inefficiencies related to the light vehicle semiconductor shortages during the quarter.\nPlanning ahead, we have initiated new structural cost actions that will add to the $35 million benefit from the Accelerate+ program that are expected to carry over in 2022.\nWe are well positioned to benefit from the eventual recovery of light vehicle production volumes.\nLastly, our core growth drivers, continue to build momentum.\nMotor Parts and the commercial truck off-highway and industrial space delivered revenue growth year-over-year.\nOur Performance Solutions segment is launching 34 BEV and hybrid programs expected to yield annualized revenues of $200 million.\nKevin will add more color on the launches later in the call, but in addition, our advanced suspension technologies or AST business within Performance Solutions were supply advanced, passive and semi active suspension for light vehicle and specialty markets, received very positive reviews in the automotive press for our innovative suspension technologies equips on new BEVs from Rivian and Geely.\nTurning to Page 5.\nLet's take a look at an overview of our third quarter results.\nRevenue was $4.3 billion, up 2% year-over-year, driven by our diversified end market mix and includes $1 billion of pass-through substrate sales.\nAs a reminder, substrate sales are only in our Clean Air segment and are passed through to the customer at cost plus the small handling fee.\nExcluding substrates, our value add revenue was $3.3 billion, down 2% year-over-year, excluding the impact of foreign currency exchange rates.\nAs I highlighted on the previous page, this compares favorably to the industry light vehicle production decline of 20% and includes material cost recovery of $110 million.\nThe scale and diversification in our regions and markets served are evident in the charts on the right.\nIn the third quarter, just over 50% of our business was generated from aftermarket and commercial truck off-highway and industrial applications.\nAdding the light vehicle portion of our Performance Solutions business, which is agnostic to the vehicles powertrain, 65% of our value-add revenue is unrelated to OE light vehicle ICE technologies.\nWe expect this mix to expand to 80% plus by the end of the decade.\nAdjusted EBITDA was $279 million and adjusted EBITDA margin was 8.5%.\nDespite the volatile production environment, we maintained strong liquidity and our third quarter net leverage ratio improved 1.1 times since the end of 2020.\nOn Page 6, we show our enterprise performance.\nOn the left side of the slide, light vehicle production declines due to the semiconductor and supply chain shortages negatively impacted our volume.\nWe estimate the value-add revenue impact of the semiconductor shutdowns during the quarter was approximately $400 million and our most important geographies experienced the largest adjustment.\nIn a normal operating environment, we would have expected to produce a low 20s incremental EBITDA margin on that revenue contribution.\nAlso, our third quarter value-add revenues included $110 million of material cost recovery via price in the quarter, although no margin dollars came with that contribution.\nOn the right side of the page, adjusted EBITDA was $279 million at a value-add margin rate of 8.5%, down 330 basis points with almost half of the year-over-year margin rate decline due to temporary cost actions put in place last year that were not expected to repeat this quarter.\nMaterial cost recovery lag also represented a significant margin headwind compared to Q3 2020.\nWe remain on our plan to recover the higher commodity costs, but there is a lag.\nIn each of our business segments, our recovery arrangements vary based on region and customer, which creates timing differences on a comparative basis.\nIn the box on the right, you can see our Accelerate+ restructuring savings more than offset manufacturing inefficiencies associated with the supply chain shortages, which resulted in positive other operating performance of 60 basis points versus the prior year.\nOverall, solid performance by the operating teams in the quarter, we value their resilience and fortitude in a difficult operating environment.\nLet's turn to our motor parts business performance on Page 8.\nAftermarket revenue was $769 million, up 4% year-over-year on a constant currency basis on continued strong demand and relative to the second quarter, it is in line with normal seasonality.\nWe saw revenue growth in all three regions, including Americas, EMEA and Asia Pacific in spite of the lengthening supply chain lead times that are having an effect on our component and finished goods availability.\nAdjusted EBITDA for the quarter was $115 million, delivering a 15% EBITDA margin.\nCompared to the prior year, margin was impacted by non-recurring temporary cost actions taken in the third quarter of 2020, as well as higher commodity price recoveries in the quarter that dilute margins.\nBefore I discuss the OE segments, you will hear some common themes across all three, including the impact of non-recurring temporary cost actions on margins in the state of our net material cost recovery.\nAs Brian mentioned earlier, our commodity recovery agreements differ by product, region and customer.\nSteel is our most important raw material input and it's used by all three OE segments.\nAlso Clean Air and Powertrain have differing commodity exposures, which I'll touch on shortly.\nIn addition, the late notice on OE customer production schedule changes, trapped inventory of approximately $250 million as of quarter end.\nLet's turn to our Performance Solutions segment on Page 9.\nThird quarter revenue was $686 million, down slightly year-over-year in constant currency.\nLight vehicle applications, representing approximately two-thirds of the business, were down 10% excluding currency, outperforming industry production by 10 percentage points.\nCommercial truck off-highway and other applications were up 58% year-over-year and made up almost 20% of revenues.\nAdjusted EBITDA was $38 million in the third quarter for a margin of 5.5%.\nYear-over-year earnings comparisons were impacted by the flow-through of lower volumes, the impact from temporary cost actions taken in the prior year and net material price inflation due to the recovery lag.\nEarlier, Brian mentioned the positive market reviews on our advanced suspension technology on the Rivian Electric Pickup Truck program.\nIn addition to our AST product line, we also supply that program with NVH and system protection products.\nAs a reminder, the five product lines in this segment are agnostic to the powertrain technology in the vehicle.\nIn the third quarter, we continued to win new business and are making inroads with China domestic OE manufacturers and their EV platforms.\nEarlier this week, we announced our CVSAe electronic suspension technology, will make its China debut on the new premium electric brand Zeekr from Geely.\nLastly, approximately 80% of our alternative propulsion launches in 2021 are battery electric vehicles.\nOn Page 10, we show Clean Air's results.\nClean Air value-add revenues were $897 million and fell 8% year-over-year, excluding foreign currency effects.\nLight vehicle value-add revenues declined 22% year-over-year.\nHowever, commercial truck off-highway and industrial value-add revenues increased 48% year-over-year.\nClean Air's China commercial truck revenues, as well as North America's and Europe's off highway revenues expanded nicely year-over-year, driving the bulk of the segments CTOHI growth.\nCommercial truck off-highway and industrial comprised 27% of the segment's value-add revenues in the third quarter, compared to 19% for all of 2020.\nAdjusted EBITDA was $137 million.\nValue-add adjusted EBITDA margin was 15.3% compared to 15.6% in the prior year period.\nStrong manufacturing performance and effective material cost management helped offset most of the negative impact from weaker volume and the non-recurrence of benefits from temporary cost actions realized in Q3 of 2020.\nIn addition to base steel, Clean Air uses large amounts of stainless steel in its operations.\nPage 11 has a summary of Powertrain.\nIn constant currency, revenues were about flat versus the year ago period.\nCTOHI and OE service revenues both expanded more than 20% year-over-year, which helped offset a 13% decrease in light vehicle revenues.\nPowertrain experienced broad strength in its CTOHI and OE service in Europe and benefited from the strong year-over-year volume in the North America on-road commercial truck market.\nAdjusted EBITDA was $74 million and adjusted EBITDA margin was 7.9%.\nThe year-over-year margin decline was attributable to material cost inflation due to recovery lag and non-recurring temporary cost actions in the year ago period.\nSteel is Powertrains most important raw material input, but the business consume several other metals, including significant amounts of aluminum and copper.\nAccelerate+ restructuring savings more than offset inefficiencies related to the semiconductor volume losses.\nI'll begin my comments on Page 13.\nAs of September 30th, our net leverage ratio was 3.2 times, which represented a 1.1 times improvement from our year-end ratio.\nWith net debt approximately even with year-end, our free cash flow performance year-to-date has been neutral.\nAs a reminder, the normal seasonality of our cash flow is weighted toward the fourth quarter.\nThe leverage improvement is driven by higher LTM adjusted EBITDA.\nWe are staying focused on cash conversion, while managing a volatile customer order schedule in this challenging supply chain environment.\nOur focus includes net working capital efficiency and reducing capital intensity.\nOur mid-term net leverage target range is 1.5 to 2 times.\nWe ended the quarter with strong liquidity of $2.1 billion with our revolver undrawn and no significant near-term debt maturities.\nAs we have in the past, we plan to stay opportunistic regarding our future refinancing needs.\nPage 14 shows our updated 2021 guidance.\nWe have revised our fiscal year 2021 value-added revenue guidance to a range of $13.55 billion to $13.65 billion, which compares to our prior range of $13.8 billion $14.1 billion.\nThe change largely stems from lower global light vehicle production relative to our last update.\nOur guidance assumes Q4 global light vehicle production volumes of approximately 16.5 million units, flat with the third quarter, which is more conservative than IHS's most recent Q4 update.\nActual customer production schedules have deviated from their releases over the past several months and this has continued into the fourth quarter.\nOur guidance incorporates the sequential market volume decline in our key off-road markets and a sequential volume decline in our aftermarket business, consistent with normal seasonality.\nWe expect our material cost recovery via price to continue to build, but will be dilutive to our margin rate comparisons.\nWe have reduced our 2021 adjusted EBITDA range from $1.25 billion to $1.28 billion from a range of $1.36 billion to $1.44 billion.\nThe primary driver of the change is a lower global light vehicle production due to the semiconductor shortages.\nThe EBITDA decline associated with the loss revenues is slightly higher than normal because of the sudden nature of the shutdowns since mid-year.\nIn some cases, we have received little notice from the customers that production was being canceled, creating inefficiencies and trapped costs.\nWe continue to recover the higher material costs, but there is a lag and commodity inflation remains elevated.\nWe believe that the lag for material cost inflation will continue into the first half of 2022 as our commodity recoveries timing gets caught up and assuming year-over-year inflation growth rates begin to stabilize.\nFor the full year 2021, we continue to expect year-over-year savings of $110 million from our Accelerate+ Cost Reduction program.\nWe expect our net debt to improve to approximately $4.3 billion at year-end.\nSeasonally, Q4 is our largest free cash flow quarter.\nRelative to our expectations, our inventory levels remained elevated in the third quarter due to the sudden and sharp light vehicle production reductions at several of our customers.\nAs Kevin mentioned, we estimate the trapped inventory approximately $250 million in the third quarter.\nWe are working diligently to reduce the inventory and expect to partially unwind and contribute to our free cash flow generation in the fourth quarter.\nWe have reduced our estimate for full year capex spend by $50 million due to the softer operating environment and our cash taxes are estimated to be approximately $140 million, $10 million lower than prior expectation.\nThe work our team has done since the beginning of 2020 in lowering our capital intensity and our focus on free cash flow conversion, has us in a strong liquidity position with significant cushion on covenants.\nThe management team remains focused on improving our balance sheet.\nTurning to Page 15.\nI'll close with a summary of our major priorities to increase shareholder value.\nFirst, we have taken significant structural cost out of the business and we're not stopping with the Accelerate+ program.\nWe have identified and initiated new projects that we expect will contribute meaningfully in 2022 on top of the $35 million of carryover savings from Accelerate+.\nI want to emphasize that this continued focus positions the company to materially improve its margin rate performance once supply chain constraints are relieved and production volumes begin returning closer to 2019 levels.\nSecond, we have lowered the capital intensity of the business to enhance our free cash flow conversion.\nWe remain disciplined with our capital spending levels and intend to continue to enhance our working capital returns.\nIn the mid-to-long term, we target a free cash flow to EBITDA ratio in the neighborhood of 25% to 30%.\nWe're investing in our businesses that have above-average growth characteristics and returns on capital.\nWe believe the investments being made today in key businesses with our motor parts and Performance Solutions segments will enhance the company's organic growth over the long term.\nFurther, we have significant opportunities to grow our CTOHI revenue base over the next several years as new regulations in our key geographies increase quote and content opportunities.\nOn a go-forward basis, we believe the 65% of our revenue base, not associated with light vehicle IC applications, can outgrow the market and drive above market value-add revenue growth for the entire enterprise as the company transitions to a predominantly non-light vehicle IC revenue mix by the end of the decade.\nWe're proud of the high level of service they deliver to our customers as they continue to improve our operating performance.\nOperator, we'll now answer any questions.\n", "role": "user" }, { "content": "q3 revenue rose 2 percent to $4.3 billion.\nsees fy2021 value-add revenue$13.55 billion - $13.65 billion.\nsees fy2021 adjusted ebitda$1.25 billion - $1.28 billion.\n", "role": "assistant" } ]

[ { "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 John Garrison, Chairman and Chief Executive Officer; and John Duffy Sheehan, Senior Vice President and Chief Financial Officer.\nIn addition, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance.\nReconciliations for these non-GAAP measures can be found in the conference call materials.\nMost importantly, I hope you and your families are remaining safe and healthy.\nThroughout these challenging times, we are proud of all Terex team members who are keeping themselves and others safe, meeting the needs of customers and helping our communities.\nSafety remains a top priority in the company, driven by Think Safe, Work Safe, Home Safe.\nAll Terex team members have contributed to our effort to continue to produce for our customers, while following the protocols and maintaining a safe working environment.\nBefore I discuss our Q1 results, I would like to review our commitment to ESG.\nEnvironment, social and governance is not a new concept at Terex.\nIt has been front and center for many years through our Zero Harm safety program and our commitment to maintaining a vibrant and supportive working environment.\nESG is foundational to the Terex culture.\nOur company purpose is to help improve people's lives.\nThrough our Terex Way Values, we are focused on strong governance, a commitment to diversity, equity, and inclusion at every level and supporting the communities where we live and work, including being responsible, environmental stewards.\nFirst, strong governance and leadership.\nOur independent and engaged board with diverse backgrounds, perspectives and experience adds value for all stakeholders.\nSecond, we've enhanced our DE&I governance and we are energized by the engagement of our team members.\nAnd third, electrification, by interview using sustainable products, such as our new Genie electric drive scissors.\nWe've made good progress in our sustainability program, including publishing our first annual ESG report, which enhances our ESG communications.\nWe're working on standard reporting frameworks, which a group of company senior leaders are charged with implementing.\nWe will keep stakeholders apprised through our investor conferences and quarterly earnings calls.\nWe believe companies that recognize the importance of ESG are better able to identify strategic opportunities and meet competitive challenges.\nTurning to slide five.\nWe're off to a very strong start to 2021.\nCustomer demand continued to increase during the quarter, resulting in revenues exceeding our expectations.\nWe increased operating margins and backlog in AWP and MP year-over-year.\nWe significantly improved our first quarter earnings per share compared to last year, and we are increasing our full year sales, operating profit, cash flow and earnings per share outlook.\nDespite having to address supply chain challenges, AWP delivered improved margins in Q1.\nMaterials process continued its strong execution by overcoming supply disruptions and delivering increased sales and profitability.\nAs a result of the improved execution in both segments, year-over-year operating margins of the company improved by 800 basis points.\nOur intense focus on net working capital management and improved profitability drove $40 million of positive free cash flow in the quarter, which is an excellent start to the year.\nDuring the first quarter, our team continued to meet increased customer demand, tightly managed all costs and delivered outstanding positive free cash flow.\nOverall, our Q1 financial performance demonstrated strong execution by our global team in the face of increasing supply chain challenges.\nWe continue to improve Terex's global cost competitiveness.\nOur SG&A cost reduction initiative, with a target of full year 2021 of approximately 12.5% or better SG&A to sales remains on track.\nWe are maintaining strict cost discipline.\nIn addition, during the quarter, we announced the plan move of our Oklahoma City Telehandler production to Monterrey, Mexico.\nThis action will position us with cost competitive Telehandler products to the North American market.\nThe team is addressing increasing supply chain disruptions.\nOur operations team are demonstrating adaptability and flexibility to overcome the dynamic supply chain environment.\nWe continue to listen to our customers, ensuring our products and services offer the features and benefits that provide value.\nWe'll also invest in our connected assets and digital capabilities to better serve customers.\nFor example, our new Genie E-Drive scissors are designed to offer significant performance improvement and reduce maintenance cost by 35% over the life of the machine.\nCustomer and dealer integration, or CDI, is a global initiative spearheaded by our parts and service organization.\nDealers are sharing their data, which allows the team to better serve customers.\nFinally, we continue to invest for future growth.\nOur MP team is in the process of executing a localization plans in China to meet growing demand for industry-leading crushing and screening products, as it is the world's largest aggregate market.\nTerex is well-positioned for growth in 2021 and beyond, because we have strong businesses, strong brands and strong market positions.\nWe continue to invest including a new products, digital capabilities and manufacturing capacity.\nTurning to slide seven.\nI'll provide some comments about our end markets and what we are seeing today.\nIn our Genie business, in North America, fleet utilization continues to improve, rental rates are improving, used equipment pricing is strong, which are all positive signs of a recovering and growing rental industry.\nIn Europe, the market continues to demonstrate improvement, and in China, adoption of working safely at height with Genie equipment is driving significant growth.\nGlobally, the secular trend toward rental continues.\nTurning to our utilities business.\nDemand is strong across its end markets of tree care, rental and investor owned utilities.\nNext, the Materials Processing.\nWe expect global demand for crushing and screening equipment to continue to grow.\nBroad-based economic growth, construction activity, and aggregates consumption are the primary market drivers.\nWe're seeing continued improvement in our cement mixer, material handler and environmental businesses.\nOverall, we're seeing improved market conditions around the world for our industry-leading products and solutions.\nTurning to slide eight.\nLooking at the first quarter, we achieved net sales higher than our expectations.\nThroughout the quarter, we saw our end markets continue to strengthen.\nOverall, revenues of $864 million were up 4% year-over-year.\nNotably, our Materials Processing segment's revenues were up almost 20% year-over-year.\nFor the quarter, we recorded an operating profit of $62 million compared to an operating loss of $7 million in the first quarter of last year.\nWe achieved an operating margin of over 7% through disciplined cost control and meeting strengthening customer demand.\nThe first quarter operating profit includes severance and charges associated with the closure of our Oklahoma City manufacturing facility, which were offset by the gain on the sale of our TFS on book financing portfolio.\nImproved gross margins and lower SG&A as a percent of sales allow Terex to expand operating margin by 800 basis points year-over-year.\nInterest and other expense was approximately $4 million lower than Q1 of last year, because of several factors, including lower interest expense and a $3 million mark-to-market gain recognized in other income.\nOur first quarter 2021 global effective tax rate was approximately 16%, driven by two favorable discrete items in the quarter.\nOur tax rates estimate for the remainder of the year remains 19%, consistent with our previous outlook.\nFinally, our reported earnings per share of $0.56 per share includes the nearly offsetting operating impact and the favorable benefits in other income that I just discussed Turning to slide nine, and our AWP segment financial results.\nAWP sales of $477 million were down 7% compared to last year, driven by a decline in North America, offset by improvement in Europe and Asia-Pacific.\nThe utilities market improved significantly evidenced by strong customer bookings.\nAWP delivered significantly improved operating margins in the quarter, driven by increased production and aggressively managing all costs.\nAWP delivered 680 basis points improvement in operating margin, which includes $3 million of severance and charges for the closure of our Oklahoma City facility.\nFirst quarter bookings of $961 million were up to dramatically compared to Q1 2020, while backlog at quarter-end was $1.3 billion, up 82% from the prior year.\nNow, turning to slide 10, and Materials Processing's Q1 financial results.\nMP had another strong quarter, achieving 13% operating margins, as end markets are strengthening is a testament to the MP team's operational strength to deliver these consistent positive operating margins.\nSales were higher at $378 million, driven by improving customer sentiment across all end markets and geographies.\nThe MP team has been aggressively managing all elements of cost, as end markets improve resulting in incremental margin performance of 38%.\nBacklog of $713 million more than doubled from last year and was up 36% sequentially.\nMP saw its businesses strengthened through the quarter, with bookings up more than 100% year-over-year.\nCustomer sentiment in both segments continues to dramatically improve, as equipment is being utilized and ordered as end market demand strengthens Turning to slide 11.\nI'd like to update you on how we currently anticipate the full year to develop financially.\nIt's important to realize that while the end market demand environment has improved significantly, increasing supply chain headwinds are impacting results.\nWe have taken these factors into consideration in the outlook we're providing today.\nAs for commercial demand, we have seen our end markets improved dramatically over the course of the first quarter.\nAlthough, there are things being equal, we do expect continued and market improvement in both segments and increasing levels of AWP customer's fleet replenishment.\nFrom a quarterly perspective, we expect revenues for the full year to be slightly higher in the first half than the second half of the year, with the second quarter being the strongest of the year.\nOperationally, the absolute amounts of operating profit and operating margins are expected to increase each quarter year-over-year, with operating profit relatively evenly split between the first half of the year versus the second half of the year.\nWe continue to plan for incremental margins, which meet or exceed our 25% target for the full year 2021.\nCorporate and other costs will occur relatively evenly throughout the remainder of the year.\nOn April 1st, we completed the refinancing of our revolving credit facility and unsecured bond.\nThese transactions will result in Q2 charges of $25 million, which were not previously included in our 2021 financial outlook.\nIncluding $0.30 per share of costs for refinancing of our capital structure, our earnings per share outlook is increased to $2.35 to $2.55 per share, based on sales of approximately $3.7 billion.\nQuarterly earnings per share are expected to be generally consistent with the development of operating profits during the year.\nFor the full year 2021, we are estimating free cash flow of approximately $150 million, reflecting another year of positive cash generation.\nWe continue to plan for capital expenditures, net of asset dispositions of approximately $90 million.\nThe largest project included in capital expenditures is for the Genie Mexico manufacturing facility John referenced earlier.\nTurning to slide 12, and I'll summarize our updated 2021 earnings per share outlook.\nWe expect the strong customer sentiment demonstrated in Q1 by our AWP and MP customers to continue throughout 2021.\nOur 2021 full year earnings per share outlook comprehends, first, our Q1 outperformance.\nSecond, the operating profit contribution on additional revenue for Q2 through Q4.\nThird, price and manufacturing efficiency, which is only partially offsetting increasing supply chain headwinds.\nAnd finally, reduced interest expense and one-time capital structure charges of approximately $27 million, representing $0.30 per share.\nOverall, our 2021 outlook represents a significant improvement in operating performance when compared to 2020.\nWe will continue to aggressively manage costs, while positioning the business for growth.\nTurning to page 13, and I'll review our disciplined capital allocation strategy.\nOur team members remain vigilant and will continue to aggressively manage production, especially within our AWP segment and scrutinize every expenditure.\nThe strong positive free cash flow of $40 million in the quarter demonstrates the hard work of our team members to tightly manage net working capital.\nTerex has ample liquidity of approximately $1.2 billion available to us, with no near term debt maturities.\nSo, we can manage and grow the business.\nAs discussed during the Q1 earnings call, the proceeds from the sale of the TFS on book portfolio and our strong liquidity position allowed us to prepay $196 million of term loans in early February.\nThis prepayment resulted in reducing outstanding debt, lowering, leverage, and saving annual cash interest expense of approximately $7 million.\nThis deleveraging action resulted in a rating agency upgrading Terex's outlook and providing positive momentum for refinancing our capital structure.\nOur refinancing included successfully renewing our $600 million revolving credit facility and placing 600 million of new bonds with a 5% coupon.\nThese new bonds replaced our 5.625% bonds due to mature in 2025 and reduce annual cash interest expense by approximately $4 million.\nImportantly, Terex obtained lower costs, unsecured funding for the remainder of this decade.\nThis strong action demonstrates our commitment to improving Terex balance sheet, while maintaining flexibility to execute on our organic and inorganic growth plans.\nTurning to slide 14, to wrap up our remarks.\nTerex team members around the world are focused on the right things, safety, health, customers, and improve productivity.\nEnd markets are strong, and the team is managing the increasing supply chain headwinds.\nWe're driving positive free cash flow.\nWe're continuing to invest in innovative products to meet increased customer demand.\nWe are focused on both organic and inorganic growth.\nAs a result of these actions, Terex is well-positioned to deliver strong 2021 results.\n", "role": "user" }, { "content": "sees fy earnings per share $2.35 to $2.55 including items.\nsees fy sales about $3.7 billion.\nquarterly earnings per share from continuing opns $0.56.\ncompname says increased its full-year outlook for sales to about $3.7 billion with earnings per share range of $2.35 to $2.55.\n", "role": "assistant" } ]

[ { "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 John Garrison, Chairman and Chief Executive Officer; and John Duffy Sheehan, Senior Vice President and Chief Financial Officer.\nIn addition, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance.\nReconciliations for these non-GAAP measures can be found in the conference call materials.\nI will take a moment and emphasize once again the Terex' actions are always guided by our values.\nWe consistently act with integrity, operate with excellence and care for our team members, customers and communities.\nThat is true every quarter, but it has been especially important in the past 18 months as the world have dealt with the unprecedented challenges brought on by the COVID-19 pandemic.\nWhile risks remain many of the world's economies are moving forward.\nSafety remains the top priority in the Company, driven by Think Safe, Work Safe, Home Safe.\nAll Terex team members have contributed to our effort to continue to produce and service equivalent for our customers, while following the protocols and maintaining a safe working environment.\nI would like to offer my gratitude to our team members and distributors that worked through so many unique circumstances over the last year.\nWe owe our results to the incredible efforts of our operations and parts team members, who kept our facilities running.\nOur sales and service team members, along with our distributors have also gone above and beyond to meet the needs of our customers.\nFinally, we are proud to be a values based company with process leadership in environmental, social and governance practices.\nThis past quarter we spend time speaking to some of our investors regarding ESG.\nIf you'd like to learn more about our initiatives, please see our Investor Relations website.\nNow let me recap some of our results, which Duffy will describe in greater detail.\nWe continue to deliver positive results as the customer demand remained strong during the quarter.\nWhile revenues were below our expectations, due to supply chain challenges, limited production output, we increased operating margins and bookings in both AWP and MP dramatically year-over-year.\nWe significantly improved our second quarter earnings per share, compared to last year and we are increasing our earnings and free cash flow outlook for full year 2021.\nAWP and MP continue to effectively manage supply chain disruptions.\nAs a result of the strong execution in both segments, second quarter 2021, operating margins, improved dramatically to 11.8% for the company, with both segments, delivering double-digit operating margins.\nThis represents a 170 basis point adjusted operating margin improvement on revenues, 20% lower than the second quarter of 2019.\nOur intense focus on networking capital management and improved profitability drove $101 million of positive free cash flow in the quarter.\nAnd more than $140 million of free cash flow year-to-date.\nDuring the second quarter, our team continued to respond to increased customer demand.\nEffectively manage supply chain and logistics disruptions, tightly managed all cost and delivered improved margins, and outstanding positive free cash flow.\nOur financial results demonstrate that our strategic priorities are working to improve the Company and deliver positive financial results for shareholders.\nWe delivered strong financial results as our strategic, operational priorities, of execute, innovate and grow, continue to make excellent progress.\nFirst we continue to improve Terex' global cost competitiveness.\nWe expect our SG&A as a percentage of sales to be below our target of 12.5% for the full year 2021.\nWe are maintaining strict cost discipline while recognizing that growth in the business will necessitate investment spending.\nIn the first quarter, we announced the planned move of our Oklahoma City Telehandler production to Monterrey, Mexico.\nThis action is on track and will reduce the cost of manufacturing of Telehandler products for the North American market.\nThe team is addressing continued supply chain disruptions, across various supply inputs and product lines.\nSuppliers and logistics providers are currently working hard to ramp up and meet our production requirements and we are committed to meeting customer demand.\nOur team members in both segments have worked hard to adapt and maintain production schedules.\nWe continue to listen to our customers, ensuring our products and services at the features and benefits that provide value.\nWe have also invested in our connected assets and digital capabilities to better serve customers.\nFor example our new Genie micro scissors increases on the job productivity.\nTerex Utilities recently introduced a new bigger gear for construction and maintenance of the electric grid and MP continues to develop, implement and rollout digital solutions, such as Connected Dealer Inventory, Telematics and e-commerce.\nFinally we are investing in inorganic opportunities for future growth.\nWe recently completed two actions.\nFirst, we acquired a facility in China to localize production to meet increasing demand for our industry-leading mobile crushing and screening products and we are excited about the growth prospects in China.\nSecond, we completed a bolt-on acquisition, purchasing MDS International, which is a well-established business of heavy duty aggregate trommels that broadens our product offerings.\nWhile this was not financially significant investment, it demonstrates our progress with inorganic growth, via bolt-on acquisitions, as we previously communicated.\nTerex is well positioned for growth in 2021 and beyond because we have strong businesses, strong brands and strong market positions.\nWe continue to invest, including a new innovative products, digital capabilities and manufacturing capacity.\nTurning to Slide 6.\nThe AWP and MP segments continue to perform well, allowing us to capture the benefits from the positive market fundamentals that we are seeing.\nFirst in Genie, the current market dynamics point to a multi-year replacement cycle for access equipment.\nThe average age of fleet globally is increasing and customers need to replenish their fleets, so the replacement cycle is kicking in.\nWe are beginning to see positive indicators for nonresidential investment as well as continued strong order activity.\nBefore wrapping up my comments regarding Genie, I am pleased that we announced earlier this week that Simon Meester, was named President of Genie.\nI thoroughly enjoyed working with Simon and the Genie team over the past year.\nSimon is the right leader for the Genie business.\nTurning to our Utilities business.\nDemand is strong across its end markets of tree care, rental and investor-owned utilities.\nIn addition, we are experiencing strong growth in our utilities parts and service business.\nNext on Materials Processing.\nWe expect global demand for crushing and screening equipment to continue to grow.\nBroad-based economic growth, construction activity and aggregates consumption, are the primary market drivers.\nWe are seeing strong markets for the cement mixer, material handling and environmental businesses.\nIn addition, global monetary and fiscal stimulus programs has supported stronger demand in our end markets.\nOverall, we are seeing robust market conditions around the world for our industry leading products and solutions.\nTurning to Slide 7.\nLet's look at our second quarter results.\nOverall revenues of $1 billion were up 50% year-over-year with both of our operating segments revenues up significantly.\nFor the quarter, we recorded an operating profit of $123 million compared to only $7 million in the second quarter of last year.\nWe achieved an operating margin of approximately 12% from disciplined cost control and fulfilling as much customer demand as possible, given the realities of the global supply chain during the quarter.\nThe second quarter operating profit does include $4 million of benefits from the release of a financing receivable reserve and the recording about that receivable related to prior years, offset by a $1 million charge for business impairment and restructuring.\nImproved gross margins and lower SG&A as a percent to sales allowed Terex to expand operating margin significantly year-over-year.\nInterest and other expense was approximately $22 million higher than Q2 of last year driven by $26 million of costs in connection with the refinancing of a significant portion of our capital structure, offset by $4 million in interest savings.\nOur second quarter 2021 global effective tax rate was approximately 17% driven by a mix of discrete items in the quarter.\nOur tax rate estimate for the full year remains 19% consistent with our previous outlook.\nFinally, our reported earnings per share of $1.02 per share includes $23 million of interest charges and other callouts that I just discussed had amounted to $0.26 per share reduction in earnings per share in the quarter.\nTurning to Slide 8, and our AWP segment financial results.\nAWP sales of $595 million were up 44% compared to last year, driven by a dramatic improvement in all our global markets.\nThe Utilities market improved significantly as evidenced by strong customer bookings.\nAWP delivered double-digit operating margins in the quarter, driven by increased production and aggressively managing all costs.\nSecond quarter bookings of $747 million were up dramatically compared to Q2 2020 while backlog at quarter end was $1.4 billion, close to 3 times the prior year.\nNow turning to Slide 9 and Material Processing's Q2 financial results.\nMP had another great quarter.\nSales of $441 million were up 67% compared to last year, driven by strong customer sentiment across all end markets and geographies.\nThe MP team has been aggressively managing all elements of cost as end markets improve, resulting in an operating margin above 15%.\nIt is a testament to the MP team's operational strength to deliver these robust operating margins.\nBacklog of $868 million more than tripled from last year and was up 22% sequentially.\nMP saw its business has strengthened through the quarter with bookings up approximately 160% year-over-year.\nCustomer demand in both segments is very positive.\nEquipment is being ordered, utilized and serviced as end market demand continues to remain strong.\nTurning to Slide 10.\nI will now review our updated financial outlook for the full year.\nThis outlook takes into consideration the current end market demand environment as well as the supply chain headwinds that we have discussed today.\nAs for commercial demand, we have seen our end markets remain robust over the course of the second quarter.\nAll other things being equal, we expect continued end market strength in both segments over the remainder of the year and increasing levels of AWPs customer fleet replenishment.\nOur full year revenue outlook is limited though as a result of the availability of components from our supply chain.\nFrom a quarterly perspective, we now expect revenues for the full year to be slightly higher in the second half than the first half of the year with the third quarter being the strongest of the year.\nWe continue to expect both our operating profits, and margins to increase each quarter year-over-year in 2021.\nHowever, as a result of commodity cost increases, outpacing, customer price increases, the absolute amount of operating profit in the second half of 2021 is expected to be lower than the actual operating profit achieved in the first half 2021.\nWe continue to plan for total company incremental margins for the full year 2021, which meet or exceed our 25% target.\nAs a result of positive first half callouts, corporate and other costs are expected to be slightly higher in the second half versus the first half of the year, including $0.26 per share of cost for refinancing of our capital structure and the other callouts in Q2.\nOur full year earnings per share outlook is increased to $2.85 to $3.05 per share based on sales of approximately $3.9 billion.\nQuarterly earnings per share are expected to be generally consistent with the development of operating profits during the year.\nFor the full year 2021, we are estimating free cash flow of approximately $200 million, reflecting a strong year on positive cash generation.\nFull year free cash flow includes approximately $75 million from income and VAT tax refunds, which are not expected to reoccur.\nDuring the first half of 2021, we received approximately $35 million of these refunds.\nWe continue to plan for capital expenditures, net of asset disposition of approximately $90 million.\nThe largest project, including capital expenditures is for the Genie Mexico manufacturing facility.\nTurning to Slide 11.\nI will now summarize our updated 2021 earnings per share outlook.\nWe expect the strong customer sentiments demonstrated in Q2 by our AWP and MP customers to continue throughout 2021.\nOur 2021 full-year earnings per share outlook reflects first, our outperformance over the first half of the year.\nSecond, the operating profit contribution on additional revenue for Q3 and Q4.\nAnd third, net cost pressures from material cost headwinds.\nOverall, our 2021 outlook represents a significant improvement in operating performance when compared to 2020.\nWe will continue to aggressively manage costs while positioning our businesses for growth.\nTurning to Slide 12.\nAnd I will review our disciplined capital allocation strategy.\nOur team members remain vigilant and will continue to efficiently manage production and scrutinize every expenditure.\nThe strong, positive free cash flow of $101 million in the quarter demonstrates the focus and discipline our team members continue to demonstrate to tightly manage net working capital.\nTerex has ample of liquidity.\nWe have over $1.1 billion available to us with no near-term debt maturities, so we can manage and grow the business.\nOur strong liquidity position and cash generation allowed us to prepay $83 million of term loans during Q2, which is in addition to the $196 million of term loans prepaid in early February.\nIn addition, we continue to pay our quarterly dividend.\nWe are committed to strengthen Terex's balance sheet while maintaining flexibility to execute on our organic and inorganic growth plan.\nTurning to Slide 13, to wrap up our remarks.\nTerex team members around the world are focused on the right things, Safety, health, customers and improved productivity.\nEnd markets are strong and the team is managing supply chain headwinds.\nWe are driving positive free cash flow, we are continuing to invest in innovative products to meet increased customer demand.\nWe are focused on both organic and inorganic growth.\nAs a result of these actions, Terex is well positioned to deliver strong 2021 results.\n", "role": "user" }, { "content": "terex sees fy sales about $3.9 bln.\nsees fy earnings per share $2.85 to $3.05.\nsees fy sales about $3.9 billion.\nq2 sales $1.0 billion versus refinitiv ibes estimate of $1.02 billion.\nqtrly earnings per share from continuing operations $1.02.\n", "role": "assistant" } ]

[ { "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 John Garrison, chairman and chief executive officer; and Julie Beck, senior vice president and chief financial officer.\nIn addition, we will be discussing non-GAAP information that we believe is useful in evaluating the company's operating performance.\nReconciliations for these non-GAAP measures can be found in the conference call materials.\nWe are proud of all Terex team members who are keeping themselves and others safe, meeting the needs of customers and helping our communities.\nSafety remains the top priority of the company, driven by think safe, work safe, home safe.\nOur strong commitment to zero harm is driving improvement of safety metrics, such as total recordable incident rates, which has significantly improved over the past five years.\nThis is a testament to the hard work and dedication of our team members.\nOur strong environmental, social, and governance foundation drive stakeholder value.\nA few highlights as we progress on our ESG journey.\nTerex products help our customers to meet their sustainability goals.\nTwo-thirds of Genie scissors, one-third of Genie booms, and 60% of material processing products have an electric option.\nDiversity, equity, and inclusion is being embraced and driven throughout the organization.\nNext, leading with strong governance.\nOur ESG efforts are led by senior management, with oversight from our board of directors.\nWe are firm believers in our actions matching our words, whether it's producing sustainable products; promoting diversity, equity and inclusion; or being good global citizens.\nThe team recognizes there is more work to do around this important topic, and we will provide updates throughout the year.\nWe had an excellent quarter, earnings per share of $0.82 nearly quadrupled year over year, sales were up 26% year over year and we ended 2021 with a record backlog of $3 billion, up 122%, driven by strong customer global demand.\nAnd focused cost management continued, resulting in 300 basis points of operating margin improvement.\nOverall, the fourth quarter financial performance demonstrated strong execution for our team members in a dynamic and challenging operating environment.\nOur execute, innovate, and grow strategy has strengthened our business operations in 2021.\nOn Execution, the team proactively managed supply chain disruptions to deliver sales growth of 26% year over year, aggressively managed costs to deliver a 430 basis point improvement in SG&A as a percent of sales and improved Genie's future cost competitiveness as our temporary Mexico facility is now producing telehandlers and continues to ramp up.\nWe introduced new products, including environmental and recycling solutions in materials processing; new electric offerings in Genie; and electric grid products in utilities.\nWe continue to invest in connected assets and digital capabilities, such as customer dealer integration and telematics across the enterprise to better serve customers.\nWe invested in our business for future growth, both organically and inorganically.\nThe team expanded production capabilities of mobile crushing and screening equipment in China and Northern Ireland; acquired MDS International, offering adjacent products for our MP customers; and continued expansion of service facilities, such as our new Houston, Texas location for utilities customers.\nMaterials processing segment is a consistent strong performer.\nIt is a diversified, high-performing portfolio of businesses, which continues to invest for future growth.\nMP brands have leading positions in their respective markets with excellent end market product and geographic diversification.\nWe have a great opportunity to grow organically through innovation, product and service development, and expanding into product adjacencies, including conveying, washing, environmental, and recycling.\nParts & services remains a focus for the segment, as it continues to develop digital offerings for dealers and customers.\nMore than 8,000 of MP's machines are fitted with telematics hardware, and the number of dealers using customer and dealer integration, or CDI, has doubled in 2021.\nMP's end market diversification is a strength, whether it's aggregates, construction, recycling, or global infrastructure.\nAll of these markets are growing.\nStarting with our utilities business.\nIt has excellent growth prospects.\nThe need to maintain and grow the electric grid, along with continued 5G rollout, will drive multiyear demand.\nSome key product lines for Terex utilities include bucket trucks, digger derricks, and tree trimmers, used for the maintenance and expansion of electrical grids.\nAlso, we recently invested in Viatec's battery technology for utility trucks called Smart power takeoff, or SmartPTO.\nThis environmentally friendly solution allows our utility booms to operate without truck idling.\nAs a result, our customers can reduce vehicle maintenance and carbon emissions.\nTurning to our Genie business.\nGenie is a globally recognized brand with great products.\nThe 60-foot J-Boom was named the contractors top 50 new product.\nHybrid power options on scissors and booms provide indoor and outdoor job site flexibility and quiet emission-free performance.\nAnd our new telehandler offers increased lift capacity and lower cost of ownership.\nThese products demonstrate Genie's strength in listening to customers and responding with innovative industry-leading products.\nGenie's end markets of construction, infrastructure, and industrial applications will drive demand.\nFurther, we are at the beginning of a new multiyear replacement cycle in North America and European rental markets.\nLike most other industrial companies, we are facing shortages and cost pressures for materials, logistics, freight, and labor.\nThese headwinds have constrained our growth in the short term.\nThe significant increase in COVID cases in January and February around the world are impacting our production and supplier deliveries.\nHowever, we are aggressively managing these challenges.\nThe team continues to mitigate cost pressures and minimize production disruption by staying close to our existing suppliers and expanding our supply base.\nWe designed components to maximize availability of critical inputs to improve production, provide transparent communication of delivery and cost headwinds for our customers and we have taken pricing actions, but they have not been sufficient to offset unprecedented material and logistics inflation, which accelerated in the back half of 2021.\nWe anticipate these challenges to continue in the first half of 2022.\nHowever, for the full year, we anticipate material costs stabilizing and being price cost neutral as price realization improves throughout the year.\nOur production and supply chain team members are working tirelessly.\nThey are demonstrating resilience and flexibility to increase customer deliveries.\nI am very excited to have joined Terex with its great brands, Terex way values, strong history, and strong balance sheet.\nI look forward to working with the team to drive operational margin improvement, free cash flow generation, growth, and enhancing value for all stakeholders.\nNow turning to Slide 10.\nI want to congratulate the team on posting excellent fourth quarter results.\nLooking at the fourth quarter, sales of $990 million were up 26% year over year and year-end market demand remained strong.\nFor the quarter, we recorded an operating profit of $70 million, more than double our operating profit of $32 million in the fourth quarter of last year.\nOperating profit increased due to strong sales and $3 million of positive financial call-out.\nOperating margins improved 300 basis points in the quarter, driven by actions to prudently manage and reduce costs.\nWe achieved this positive operating results through disciplined cost control, while adapting to a dynamic market environment.\nInterest and other expense was approximately $8 million lower than the fourth quarter of 2020, due to a gain related to the relocation of our Genie administrative office and reduced debt levels.\nOur effective tax rate of approximately 15% benefited from discrete items, including the favorable resolution of tax audits.\nOur fourth quarter earnings per share of $0.82 increased nearly four times, representing a $0.61 improvement over last year.\nThe financial call-out, highlighted in this slide, represent a $0.16 benefit in the quarter.\nFree cash flow for the quarter was below our expectations.\nFirst, we have not yet received an approved $39 million IRS refund.\nAnd second, inventories increased due to disruption and logistics delays.\nTurning to Slide 11 and our materials processing segment financial results.\nMP continues to perform very well with sales of $454 million, up 24% compared to the fourth quarter of 2020 and the business ended the year with a backlog of $1 billion, which is nearly double that of a year ago.\nThese results were driven by continued strong customer demand in all end markets and geographies.\nMP delivered 13.8% operating margins by driving sales growth, while managing material costs and manufacturing headwinds.\nThis is a testament to the team's operational execution.\nTurning to Slide 12 and our aerial work platforms segment financial results.\nAWP sales of $534 million increased by 30% compared to last year, driven by strong global end market demand.\nAWP fourth quarter bookings of $922 million were up 23% year over year, while backlog at quarter end was nearly $2 billion, up 137% from the prior year.\nAWP delivered improved operating margin of 4.8% in the quarter driven by strong customer demand and prudent expense management.\nTurning to Slide 13 and full year 2021 financial highlights.\nOur performance in 2021 reflected strong improvement in the business and the extraordinary efforts of our team members.\nEarnings per share increased significantly from $0.13 to $3.07 or a $2.94 improvement.\nSales of $3.9 billion were up 26% year over year as end markets recovered.\nOperating margin of 8.4% expanded 620 basis points, driven by strict expense discipline.\nSG&A spending was $42 million lower year over year at 11% of sales, beating our 12.5% target.\nWe delivered a 32% incremental margin, exceeding our 25% target.\nAnd we repaid $0.5 billion of debt, reducing net leverage to 1.1 times.\nTurning to Slide 14.\nThis slide summarizes our 2021 financial results and call-out.\nIncluded in our operating profit were $5 million of positive call-out.\nBelow the line, there were $29 million of noncash charges associated with our debt refinancing and term loan repayment.\nThis was partially offset by a $12 million cash gain related to our Genie administrative office relocation.\nTurning to Slide 15.\nI want to reaffirm our disciplined capital allocation strategy, including a strong balance sheet and free cash flow generation to enable growth.\nOur team members remain vigilant and aggressively manage all costs, generating $125 million of free cash flow in the year.\nOur strong free cash flow generation and proceeds from the sale of our Terex financial services portfolio in February 2021, allowed us to repay $0.5 billion of debt this year, resulting in net leverage of 1.1 times.\nAs a reminder, we have no near-term maturities.\nOur next maturity is in 2024.\nWe continue to invest in the business in 2021 with $60 million of capital expenditures.\nOur strong balance sheet and free cash flow generation allowed our board of directors to reinstate and pay out a quarterly dividend for 2021.\nJust this week, the board has approved an increased dividend of $0.13 per share as we continue to return cash to our shareholders.\nWe have ample liquidity with $867 million available to us at year end so we can manage and grow the business.\nNow turning to Slide 16 and our full year 2022 outlook.\nI would like to update you on how we currently anticipate 2022 to develop financially.\nIt is important to realize we are operating in an unprecedented supply chain environment and a pandemic, so results could change negatively or positively.\nWith that said, this outlook represents our best estimate as of today.\nWe anticipate earnings per share of $3.55 to $4.05 based on sales of approximately 4.1 to $4.3 billion.\nTraditional seasonality of sales is less applicable in 2022 as the supply chain environment has extended product deliveries.\nThis sales outlook reflects the latest dialogue with our suppliers.\nOur 2022 sales are not a function of demand, rather the ability of the supply chain to deliver components.\nWe have the internal capacity to produce more and have demonstrated such in the past.\nAWP sales of 2.3 to $2.4 billion and MP sales of 1.8 to $1.9 billion reflects strong customer demand, but with the constraint presented by the supply chain.\nTurning to operating margin.\nWe expect operating margin for the year to be in the range of 8.8 to 9.5%.\nOperating margin is expected to be lower in the first half of 2022 and higher in the second half as supply chain headwinds abate and pricing actions taken are realized as backlog is shipped.\nTo help frame the development of operating margin in 2022, the first quarter of 2022 will see increased cost pressures compared to the fourth quarter of 2021.\nMP's margins of 14 to 14.5% will be relatively balanced throughout 2022, but the first quarter will be challenged by supply chain constraints.\nAWP margins of 7.8 to 8.5% reflects significantly higher input costs peaking in the first quarter with price realization improving throughout the year as we work through the backlog.\nIn the first quarter of 2022, we expect AWP operating margin in the low single digit and meaningfully improving throughout the year.\ntax on rest of world income.\nFor 2022, we are estimating free cash flow of 175 to $225 million, reflecting another year of positive cash generation.\nWe also estimate capital expenditures net of asset disposition will be approximately $90 million, the largest component being our Genie Mexico facility.\nCorporate & other costs are planned to occur relatively evenly throughout the year.\nOverall, our 2022 guidance represents a continued improvement in operating performance when compared to 2021 despite the challenging supply chain environment.\nTurning to Slide 17.\nOur 2022 earnings per share outlook reflects the following assumptions: From an operational perspective, sales will increase as customer demand remains strong; pricing actions, along with manufacturing efficiencies, will offset cost pressures; SG&A reflects prudent investment in the business, including our new product development, engineering and digital initiatives and remains at 11% of sales.\nFurther, nonoperational impacts include unfavorable foreign exchange headwinds due to a lower euro exchange rate when compared to 2021.\nIn addition, we have an unfavorable tax impact as our full year effective tax rate is expected to normalize to approximately 20.5% as favorable discrete items from 2021 are not expected to repeat.\nThese two items together amount to a $0.30 per share headwind.\nNext, favorable interest and other expense due to lower debt levels and interest rates.\nFinally, onetime items, both positive and negative related to our bond refinancing and Genie administrative office relocation are not expected to reoccur.\nTaken together, these assumptions result in our 2022 earnings per share outlook of $3.55 to $4.05.\nThis outlook is the best view at this time and can be impacted positively or negatively depending on how the supply chain develops in 2022.\nTurning to Slide 18.\nLooking ahead to 2022, let me provide you a few highlights from our execute, innovate, and grow strategy.\nExecution is the foundation to deliver on our commitments to our team members, customers, and shareholders.\nWe must and will continue to drive operational improvements.\nWe are investing in new product development, whether it's electrification of our products or new end market applications, such as recycling and environmental.\nWe're also investing in digital in multiple facets of the business, improving our internal business processes, and enhancing the ease of doing business with Terex.\nGrowing Terex is a focus for all team members.\nWe are investing in parts and service capabilities and expanding manufacturing capacity as we look to better serve our customers.\nWe have a disciplined M&A process and are looking to grow from acquisitions.\nTerex is well positioned to deliver increased shareholder value in 2022 because we have strong businesses, strong brands, and strong market positions, upon which we can grow.\nWe will continue to invest, including in new products and manufacturing capacity, where demand calls for it.\nAnd we have demonstrated resiliency and adaptability in a challenging environment.\nI am confident this will result in Terex being an even stronger company.\n", "role": "user" }, { "content": "q4 earnings per share $0.82 from continuing operations.\nsees 2022 sales of $4.1 billion to $4.3 billion and earnings per share of $3.55 to $4.05.\n", "role": "assistant" } ]

[ { "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 our call today.\nWe have our Chairman and Chief Executive Officer, Kelly King; President and COO, Bill Rogers; and CFO, Daryl Bible, who will highlight a number of strategic priorities and discuss Truist's first quarter '21 results.\nChris Henson, Head of Banking and Insurance; and Clarke Starnes, our Chief Risk Officer, will also participate in the Q&A portion of our call.\nWe also want to note that Ryan Richards, the former Head of Investor Relations has left Truist to pursue an opportunity outside of the Company.\nIf you have questions following today's call, please contact me or Aaron Reeves of Investor Relations.\nWe had overall I consider a strong quarter with strong earnings and returns, very good expense control and strong fee income, especially in insurance and investment banking, excellent asset quality, which Clarke will talk about, really good progress on merger integration and excellent internal recognitions, including an outstanding CRA rating for our community development efforts.\nIf you're following along on Slide 4, we always like to focus on the most important, which is our culture.\nAs you've heard us say many times, we continue to reiterate culture is the primary determinant of our long-term success.\nOur purpose really connects with our teammates.\nWe've been really excited about this.\nOur teammates are driven to really help our clients.\nWe really enjoy serving our communities and our shareholders.\nEven with COVID, we've made great progress in activating our culture, created a cultural council, which works every day with our EL team causing our culture to really come alive.\nSo we've made excellent progress in terms of culture, which is ultimately the driver.\nOn Slide 5, just a couple of points and some things that I think are good with regard to how we are serving our communities.\nWe were very excited to be the first issuer of a social bond of the US regional banks, a $1.25 billion bond that was well, well-received 120 investors, very favorable pricing.\nWe're very excited about that in terms of our ability to focus on affordable housing and other community needs.\nWe became the lead investor for Greenwood, which is very excited in innovative digital banking platform designed for Black and Latinx consumers and business owners.\nWe signed the Hispanic Promise, a first-of-its-kind national pledge to prepare, hire, promote, retain, and celebrate Hispanics in the workplace.\nAnd we received 100% score on Human Rights Campaign's Corporate Equality Index, and we were named the Best Place to Work in '21.\nWe also continue to make great progress in terms of executing on our $60 billion Community Benefits agreement and we are already at 114% of our annual target.\nWe were very proudly recognized once again by Fortune as one of the world's most admired companies.\nOn Slide 6, just a few indicators for you about how well the merger is going.\nI just want to point out to you that the risk of executing our merger has already been reduced substantially and is going down daily as we do conversion and we're getting a lot of the actual merger work done.\nA huge amount of work has already been done on the core bank conversion.\nAnd you will see in the bubble chart there that a number of conversion has already been done.\nFor example, Truist Securities conversion, wealth brokerage conversion.\nWe did huge amount of work in terms of grading all of the Truist jobs.\nAnd that is all being executed.\nWe already in the process of testing protocols for our core bank conversion, our wealth trust conversion is well along -- occurring in just a few weeks.\nSo you can see that we are making tremendous progress and I just want to emphasize the point that for those who think that the risk is going to remain high and won't subside until we do the final branch conversion that is not a good way to look at it.\nThe risk is being mitigated daily as we do these various conversions and make progress in terms of preparing for the final conversion.\nWe did close 226 branches in the first quarter, which was part of our strategy.\nWe have been very, very happy with our teammates reaction to that.\nThey're very, very engaged.\nRecall that we promised all of our client-facing performing teammates that they would not lose their jobs.\nAnd so, it's going very, very well.\nAnd our clients are very supportive because remember, most of these branches are very, very close to each other.\nAnd so, it's no inconvenience to our clients.\nWe are very focused on meeting our expense targets, which Daryl will talk about and we believe we will be able to accomplish that.\nJust a few performance highlights on 7A.\nI think it was a very, very good quarter.\nWe had strong adjusted net income of $1.6 billion, or $1.18 per share adjusted, both up 42% versus the first quarter of '20.\nWe had adjusted ROTCE of 19.36%.\nRecall that we said our mid-term target was in the low-20s.\nSo we are well on the way to achieving that already and we have huge cost saves yet to come.\nWe recorded investment banking and trading income at a record level along with insurance.\nIt was offset some by decreases in residential mortgage income and commercial real estate-related income.\nStrong expense discipline, as our adjusted non-interest expense decreased $57 million sequentially, and our merger-related and restructuring charges decreased $167 million.\nWe significantly had lower provision for credit losses of $48 million versus $177 million in the fourth quarter.\nSo we had a reserve release of $190 million.\nClarke will talk about that more if we have questions.\nNPAs decreased $88 million, or 6.3%, which we were very happy about.\nWe completed $506 million of the share repurchases.\nSo we had a total payout for the quarter of about 83%.\nWe did redeemed $950 million of preferred stock during the quarter at an after-tax cost of $26 million, or $0.02 per share, which was not excluded in terms of our adjustment to net income.\nSo overall, if you look at Slide 8, you will see how the adjustments worked with the merger-related charges having a diluting impact of $0.08, incremental operating expenses related to the merger that are not in our ongoing recurring charges going forward was $0.10 and an acceleration for cash flow hedge unwind expense of $0.02.\nSo overall, it was a very strong quarter across the wide array of performance areas.\nImportantly, we continue to execute on our T3 concept, which is the concept of seamlessly integrating technology and touch so that we yield a high level of trust, creasing a very high value proposition, which is providing excellent client focus, which is ultimately the most important factor in terms of judging our current and our future performance.\nNow, let me turn it to Bill for some additional detail.\nIf you can see from Page 9, our clients continue to adopt digital at a rapid pace.\nSince last March, the population of active mobile app users has increased 11% to more than 4 million users, and that marks an important milestone along our digital journey of the Company.\nWe're absolutely committed to meeting our clients where they are.\nAnd increasingly these interactions are happening in the digital space.\nOur digital commerce data bear this out as digital client needs have met -- digital client needs met have improved 44% since the first quarter of 2020 and represent more than one-third of total bank production of core bank products.\nThis percentage is even higher when you include LightStream and Mortgage.\nAs we accompany clients along their digital journey we also interact with them across multiple digital products and services, mobile check deposits and Zelle are two examples, both of which were up significantly from a year ago and this just creates additional opportunities to deepen those relationships.\nImportantly, the increase of digital transaction activity allows our teammates to spend less time on manual execution and more time assessing the meeting client needs enabled by our Integrated Relationship Management.\nWe're also excited about the new Truist digital experience that's rolling out our clients later this year.\nIn order to complete the digital migration ahead of the core bank conversion, we're utilizing an innovative proprietary approach known as the Digital Straddle.\nThe Digital Straddle allows us to migrate clients to the new digital experience in waves, reducing migration risk, as Kelly discussed earlier, and avoiding a one-time migration early next year.\nWe recently launched a successful internal pilot of our new digital experience and expect to migrate our clients on a series of waves during the third and fourth quarter.\nFirst quarter balance sheet dynamics reflected a combination of mild loan demand, ongoing government stimulus and elevated liquidity.\nAverage loans decreased $8.2 billion, compared to the fourth quarter, primarily due to a $4.5 billion reduction in commercial balances and $3 billion of residential mortgage run off.\nThe decrease in commercial loan balance was primarily attributable to lower revolver utilization and continued pay down of PPP loans, which outpaced new loan commitments.\nApproximately $3.3 billion of PPP loans were repaid during the quarter, impacting average commercial balances by $1.8 billion.\nRevolver utilization remained low as clients continue to hold elevated liquidity and access the capital markets.\nIn addition, the dealer floor plan portfolio continues to experience headwinds related to supply chain disruptions.\nAverage consumer loans decreased $3.6 billion as ongoing refinance activity impacted residential mortgage, home equity and direct loan balances.\nThese declines though partially offset by higher indirect order balances, which benefited from strong production, especially in the prime segment.\nWe made a conscious decision in support of our purpose to lean in on PPP loans and we've been the largest lender in many of our markets.\nWe recognize these are headwinds, but we're also optimistic that given vaccination rates, government stimulus and our own view of productivity and pipelines, all supported economic recovery and corresponding core loan growth.\nLet me switch to the next page and talk about deposits.\nAverage deposits increased $7.9 billion sequentially and are up more than $28 billion from the first quarter of 2020, reflecting government stimulus and pandemic-related client behaviors.\nAverage balances increased across all deposit categories except time deposits.\nWhile the largest increases were in interest checking and money market and savings, the deposit mix remains favorable, as non-interest-bearing accounts represent one-third of total deposits.\nTruist continues to experience strong deposit growth while maximizing our value proposition to clients outside of rate paid as we continue to experience net new household growth.\nDuring the first quarter, average total deposits cost decreased 2 basis points to 5 basis points and average interest-bearing deposit cost declined 4 basis points to 7 basis points.\nDue to new stimulus, we are up double digits in total deposits since the quarter end.\nContinuing on Slide 12.\nNet interest income decreased $81 million linked quarter due to fewer days, lower purchase accounting accretion and lower earning asset yields.\nReported net interest margin was down 7 basis points, reflecting a 4 basis point impact from lower purchase accounting accretion.\nCore net interest margin decreased 3 basis points as deposit inflows resulted in higher combined Fed balances and securities.\nInterest sensitivity decreased slightly as the investment portfolio grew in response to the elevated liquidity.\nTurning to Slide 13.\nNon-interest income decreased $88 million despite record income from insurance and investment banking and trading.\nInsurance income increased $81 million linked quarter, reflecting seasonality, $28 million from recent acquisitions, and $19 million due to a timing change related to certain employee benefit accounts.\nOrganic revenue grew 6.4% due to strong new business, stable retention and higher property and casualty rates.\nInvestment banking and trading rose $32 million, benefiting from strength in high-yield, investment-grade and equity originations, as well as a recovery in CVA.\nResidential mortgage income decreased $93 million due to lower production margins and volumes.\nCommercial real estate income decreased $80 million due to seasonality and strong fourth quarter transaction activity.\nOther income was down $18 million as lower partnership income was partially offset by gains from a divestiture.\nContinuing on Slide 14.\nExpense discipline remained strong in the first quarter.\nNon-interest expense was down $223 million linked quarter, reflecting a $167 million decrease in merger-related and restructuring charges.\nAdjusted non-interest expense decreased $57 million, primarily due to lower professional fees and non-service-related pension costs offset by personnel expense.\nPersonnel expense increased $34 million, reflecting higher equity-based compensation, higher incentive compensation and payroll tax resets, partially offset by lower salaries and wages.\nTurning to Slide 15.\nWe are taking full advantage of our unique opportunity to grow the best of both franchise.\nThe best of both is harder to execute in a typical acquisition.\nBut we are convinced that the client benefits and internal efficiencies justify the effort and expense.\nAs we said in January, we continue to expect total combined merger costs of approximately $4 billion.\nThis consists of merger-related and restructuring charges of approximately $2.1 billion and incremental operating expenses related to the merger of approximately $1.8 billion.\nThese costs are not in the future run rate and will come out in 2022 after we complete the core bank conversion and decommission redundant systems.\nSince the merger was announced, we have incurred $1.3 billion of merger-related and restructuring charges and $900 million incremental operating expenses related to the merger.\nContinuing on Slide 16.\nStrong asset quality metrics remained relatively stable, reflecting diversification benefits from the merger and effective problem asset resolution.\nNon-performing assets were down $88 million, or 2 basis points as a percentage of total loans, largely driven by decreases in the commercial and industrial portfolio.\nNet charge-offs came in 33 basis points, which was at the lower end of the guidance range.\nLinked quarter increase was mostly driven by seasonality and indirect auto.\nThe provision for credit losses was $48 million, including a reserve release of $190 million due to lower loan balances and improved economic outlook.\nThe allowance for credit losses was relatively stable at 2.06% of loans and leases.\nOur exposure of COVID sensitive industries was essentially flat at $27 billion.\nTurning to Slide 17.\nTruist has strong capital and ended the first quarter with a CET1 ratio of 10.1%.\nWith respect to capital return, we paid a common dividend of $0.45 per share and had $506 million of share buybacks.\nWe also redeemed $950 million of preferred stock, resulting in an after-tax charge of $26 million, or $0.02 per share that was not excluded from the adjusted results.\nWe have $1.5 billion in repurchase authorization remaining under the share repurchase program the Board approved in December.\nWe intend to maintain approximate 10% CET1 ratio after taking into account strategic actions, stock repurchases and changes in risk-weighted assets.\nAs a result, we anticipate second quarter repurchases of about $600 million.\nWe continue to have strong liquidity and are ready to meet the needs of our clients and communities.\nContinuing on Slide 18.\nThis slide shows excellent progress toward the net cost saves of $1.6 billion.\nThrough fourth quarter, we reduced sourceable spend 9.3% and are closing in on our 10% target.\nIn terms of retail banking, we closed 226 branches in the first quarter, bringing the cumulative closures to 374.\nWe are on track to close approximately 800 branches by the first quarter of '22.\nWe've reduced our non-branch facilities by approximately 3.5 million square feet and are making progress toward the overall target of approximately 5 million square feet.\nAverage FTEs are down 9% since the merger announcement.\nWe expect technology savings of $425 million by the end of 2022 compared to 2019.\nWe continue to look at these expense buckets and are broadening to look at other across the board.\nWe are highly committed to our $1.6 billion cost savings target.\nContinuing to Slide 19.\nThe waterfall on the left shows that we measure core expenses and cost savings.\nBeginning with adjusted non-interest expense and then adjusting for the non-qualified plan and the insurance acquisition expenses, we arrive at a core expense of $3.65 billion.\nIf you adjust for seasonality of high payroll taxes, equity compensation and variable commissions, core expenses would approach fourth quarter target of $2.94 billion.\nOur adjusted return on tangible common equity was 19.36% for the first quarter.\nWe maintained our medium-term performance and cost saving targets for 2021 and 2022.\nFurther moderation of the merger and economic risks may enable us to revisit our target CET1 ratio.\nNow, I will provide guidance for the second quarter, expressed in linked quarter changes.\nWe expect taxable equivalent revenue excluding security gains to be relatively flat.\nWe expect reported net interest margin to be down high-single-digit, driven by a mid-single-digit decrease in core margin and 3 basis points to 4 basis points of purchase accounting accretion run off.\nNet interest income should be relatively flat due to the growth of the balance sheet.\nNon-interest expense adjusted for merger costs and amortization expected to be relatively flat.\nWe anticipate net charge-offs in the range of 30 basis points to 45 basis points and a tax rate between 19% to 20%.\nAs you look out into 2021, our prudent economic conditions may allow for further reserve releases.\nOverall, we had a strong quarter, including excellent expense management and strong asset quality.\nNow, let me hand it back to Bill for an update on IRM.\nAnd I'm going to take us to Page 20.\nI'm going to take this opportunity to share our progress on Integrated Relationship Management and share two examples of what we call natural fit businesses working together to benefit our clients.\nWhen Truist was formed, we said, we create value by combining our distinctive client-focused banking experiences with greater investment in technology and a stronger mix of financial services offerings.\nAs Kelly noted earlier, we call this approach T3, touch integrated with technology equals trust.\nWe're confident in this strategy because it really builds on Truist strengths.\nThose strengths include industry-leading client service and loyalty, an advice-based business model, differentiated offerings included Truist Securities, Truist Insurance Holdings and the Truist Leadership Institute and leading technology like our mobile banking app.\nIntegrated Relationship Management is a framework for putting T3 into practice across Truist through all of our lines of businesses and most importantly, for all of our clients.\nWe start with the client, understand their needs and engage our business partners through a common technology-based referral and accountability process.\nAs mentioned, we have natural synergies such as the relationship between Commercial Community Bank and Truist Securities.\nThis business is by nature a little lumpy and episodic-driven by client needs, but we're very pleased with our momentum.\nReferrals are up by a factor of three- and one-year and have more than doubled since last quarter.\nWe continue to train bankers and are increasing both the number and quality of referrals.\nAs we share client wins, teammates gain confidence and motivation to fully leverage all the tools that we have for the benefit of their like clients.\nMoving to Slide 21, we'll discuss the effort of Truist Securities and Truist Insurance Holdings and the relationship with heritage SunTrust clients, in particular.\nReferrals to insurance have increased more than 2.3 times compared to the first quarter of 2020 and more than 50% sequentially.\nWe've aligned systems and trained around the similar practice groups, which allows us to double down on industry expertise for our clients.\nI can really speak from experience if this was a real area of excitement from heritage SunTrust and this is really just in the early stages of growth.\nSo Integrated Relationship Management is working.\nIt's been embraced fully by our teammates.\nIt's in support of our clients and a distinguishable benefit for our shareholders.\nKeep in mind, this is a long game, but you do see the beginning of this incremental opportunity in the overall insurance and investment banking results even in this quarter.\nSo, Kelly, let me turn that back over to you.\nSo, on Slide 22, I just want to point out and reemphasize our value proposition.\nWe believe it is a very strong value proposition, driven by our purpose to inspire and build better lives and communities.\nWe have an exceptional franchise with diverse products, services and markets, some of the best in the world.\nWe are uniquely positioned to deliver best-in-class efficiency and returns while investing in the future and you're seeing that happening already.\nWe've very strong capital and liquidity vision with very strong resilience in terms of our risk profile enhanced by the merger.\nSo we have a growing earnings stream with less volatility relative to many of our peers over the long-term.\nSo if you think about the quarter in all and overall and wrapping up, I'll just say, again, I think it was a very strong quarter in a very interesting and challenging times.\nBut look, things are getting better.\nCOVID is getting better.\nIt's too soon to declare this over, but hospitalization rates are down and infection rates are down and vaccines are getting out really, really fast.\nSo we're encouraged by that.\nThe economy is clearly improving.\nWe've said before and I'll reemphasize, we believe as we head into the second half, we will have a snap back economy.\nThis economy was not wounded before we headed into this.\nWe simply shut it down for appropriate reasons.\nNow we're beginning to see the opportunities that we believe could happen, which is turning it back on as easy than it might have been on the other types of economic crisis that we've seen.\nSo Truist is positioned really, really well.\nWe have a great culture.\nWe have great markets.\nWe have a great team.\nWe have a great purpose to inspire and build better lives and communities and it's creating really engaged teammates.\nWe have real benefits from the merger that are being realized every single day.\nYou've heard some of those.\nA very strong performance in T3 and IRM as Bill described, and that's really powerful.\nThe merger integration is on track.\nWe are reducing risk every single day.\nIt's all going really, really well.\nWe believe we had the opportunity to accelerate and to what I consider to be a very positive snap back economy.\nWe fully believe our best days are ahead.\nKatie, at this time, if you will come back on the line and explain how our listeners can participate in the Q&A session?\n", "role": "user" }, { "content": "q1 adjusted earnings per share $1.18 excluding items.\n", "role": "assistant" } ]

[ { "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: Additionally, during this conference call, you will hear management make references to the estimated positive or negative impact that COVID-19 had on our operations during the fourth quarter and full year of 2020.\nYou'll also hear management make statements regarding intra-quarter business performance during the first quarter of 2021.\nManagement is providing this commentary to provide the investment community with additional insights concerning trends and these disclosures may not occur in subsequent quarters.\nIt's a pleasure to speak with you today.\nI'd also like to take a moment to again recognize the Teleflex employees around the world.\nThis past year has been challenging, but our team has done a tremendous job serving our customers and patients globally, overcoming obstacles to manufacture and distribute our products to the people that need them most.\nNow turning to our results.\nConsidering the volatile environment we operate in, we are pleased with our Fourth quarter performance as our business did better than we expected and trends continued to improve across many of our product categories and geographies.\nWe saw better-than-expected sequential improvement from quarter to 2 quarters and from quarter 3 to quarter 4.\nDespite a rising number of COVID-19 infections that occurred throughout the fourth quarter, the recovery in our business was led by product lines that were initially most negatively impacted by COVID-19, those being our Interventional Urology, Interventional Access and Surgical businesses as well as continued strength within our Vascular Access and other product categories.\nWhile from a regional perspective, we saw strength within the Americas as well as positive growth within EMEA and improving trends in Asia.\nQuarter four revenues totaled $711.2 million, which represents an increase of 2.3% as compared to the prior year period on a constant currency basis.\nGrowth in the quarter was aided by 2 additional selling days, which we estimate contributed approximately 3% points.\nExcluding the impact of the additional selling days, we estimate that our constant currency revenues declined approximately 1%.\nThe days adjusted declines reflect continued recovery progression relative to the 4% decline we experienced during the third quarter of the year and the 12% decline we experienced during the second quarter of the year and it was ahead of the expectations we had at the time of the third quarter earnings call.\nDuring the fourth quarter, we estimate that headwinds associated with COVID-19 caused a net negative impact of approximately $61 million or approximately 9%.\nif we were to normalize for the negative impact, we estimate that our underlying business grew by approximately 11% on a constant currency basis, or 8% when normalizing for the selling day impact.\nIn addition to seeing continued sequential improvements in our constant currency revenue performance during Q4, we also saw a significant sequential improvement within our adjusted gross and operating margins as compared to the second and third quarters of the year.\nThis improvement drove adjusted earnings per share, which exceeded our internal expectations.\nLastly, I am happy to announce that on December 28th, we closed the acquisition of Z-Medica a market leader in hemostatic products.\nWe are pleased to be able to deploy capital for a differentiated product portfolio that leverages the existing Teleflex call points and is immediately accretive to our revenue growth rates, adjusted gross and operating margin profile and our adjusted earnings per share.\nTurning to a more detailed review of our fourth quarter results.\nAs I just mentioned.\nQuarter four revenue grew 2.3% on a constant currency basis and 4.4% on an as reported basis.\nThe increase in revenue was driven by our Vascular Access Portfolio, which saw some tailwinds in terms of COVID- related purchasing and solid mid single-digit growth of Interventional Urology and our other segment.\nFrom a margin perspective, we had generated adjusted gross and operating margins of 58% and 26.6% respectively.\nThis translated into a year-over-year declines of 120 basis points at the gross margin line and 50 basis points at the operating margin line.\nHowever, from a sequential standpoint, this represented an improvement of[Phonetic] AZ[/Phonetic] and 150 basis points respectively compared to quarter three levels.\nOn the bottom line, adjusted earnings per share was $3.25.\nOverall, our financial performance in the quarter demonstrates the sustained resilience of our diversified global product portfolio and it gives us confidence in our ability to achieve our long-term financial objectives once we get past COVID-19.\nLet's now turn to a discussion of our quarterly revenue trends, which will be on a constant currency basis.\nThe Americas delivered revenues up $419.5 million in the fourth quarter, which represents an increase of 5% over the prior year period.\nGrowth within the Americas was driven by Vascular Access and respiratory products which both saw elevated demand driven by COVID.\nIn addition, Interventional Urology was a strong contributor as UroLift continues to be our fastest recovering procedure.\nHowever, there were offsets with declines in other product categories.\nWe estimate that the Americas would have grown approximately 12% excluding the impacts that COVID-19 had on the region.\nEMEA reported revenues of $161.4 million in the fourth quarter, representing growth of 4.1%.\nDuring the quarter, EMEA benefited from a one-time order of tracheostomy products and from the [Phonetic]extra [/Phonetic]selling days, the combination of which more than offset our estimated 1% COVID headwinds.\nRevenues totaled $78.6 million in the fourth quarter, which represents a decline of 7.2%; however, we estimate that we would have had positive constant currency revenue growth in the mid-single digits, if not for the impact of COVID-19.\nAdditionally during the fourth quarter, we finished transitioning a distributor in Japan.\nWhen normalizing for both COVID and the distributor change, growth in the region would have been in the mid to high single-digit range.\nAnd lastly, our OEM business reported revenues up $57.7 million in the fourth quarter, which was down 6.9% on a constant currency basis.\nAs we anticipated during the fourth quarter, our OEM business saw aligned impact related to COVID relative to our other businesses.\nInvestors familiar with Teleflex will be aware that our OEM business supplies device companies with complex catheters and surgical sutures and the quarter four impact reflects reduced orders from these customers whose business is tied to non-emergent procedures.\nExcluding the impact COVID-19 had, the business grew roughly 31%, which includes a benefit of approximately 13% from the acquisition of HPC.\nAs it relates to HPC, I am pleased to report that we remain on track with our integration efforts.\nLet's now move to a discussion of our revenues by global product category.\nStarting with Vascular Access, fourth quarter revenue increased 16% to $182.5 million.\nWe estimate that COVID-19 positively impacted the growth rates of our vascular products during the fourth quarter by approximately 5%.\nKey drivers of revenue growth included PICC, which increased approximately 20%, CVCs which increased approximately 16% and EZ-IO which grew approximately 14%.\nMoving to Interventional Access, fourth quarter revenue was $106.7 million or down 6.9% as compared to the prior year period.\nThe decrease was largely due to the delay in the recovery of certain non-emergent procedures because of COVID 19 along with the negative impacts stemming from a catheter recall and distributor conversion in Japan, both of which began last quarter.\nWe estimate that the recall and distributor issue impacted our business negatively by approximately $3 million.\nWe expect the impact on the recall to continue to linger for the next few quarters as we do not expect to be back on the market with this product until September of this year while the distributor inventory headwind should reverse and be a modest tailwind for us in 2021.\nWhen normalizing for the impact that COVID had along with the aforementioned headwinds, we estimate that underlying growth was in the high single digits consistent with our long-term growth outlook for the segment.\nIn addition, we are pleased that Manta grew 33% globally in quarter four.\nNow turning to Anesthesia, revenue was $86.1 million, which is lower than the prior-year period by 2.1%.\nThe revenue decline was the result of lower sales of laryngeal masks and endotracheal tube products.\nWe estimate that COVID had an approximate 1% negative impact in the quarter, implying flattish performance on an underlying basis.\nSince we closed the Z-Medica acquisition just days before year-end, it's impact was immaterial on quarter four results.\nRevenues declined by 5.7% to $92.3 million driven by lower sales of our ligation portfolio.\nWe estimate a 9% headwind from COVID during quarter 4 indicating recovery as compared to the estimated 13% COVID headwind in quarter three.\nMoving to Interventional Urology.\nQuarter four revenue increased by 5.3% to $93.9 million, which represents a new high watermark in terms of revenue dollars in any given quarter.\nOn a year-over-year basis, the business faced a difficult growth comparison but sequentially, it grew by 15% versus quarter three.\nWe estimate an approximate 28% COVID-19 related headwind during quarter four.\nNotwithstanding the significant headwind on our growth in quarter four, we are pleased with the path to recovery for this business unit and are also happy with the impact of the national DTC campaign, which is exceeding our expectations.\nAdditionally, we are encouraged that we trained approximately 130 new urologists in quarter four moving to a cadence that is consistent with our expectations prior to COVID and a positive leading indicator for future growth.\nAnd finally, our other category, which consists of our respiratory and urology care products grew 6.1% totaling $98.1 million.\nWe estimate the growth during the quarter was partly due to increased demand for certain humidification and breathing products resulting from COVID-19 mainly in the Americas.\nThat completes my comments on quarter four revenue performance.\nTurning to some recent clinical and commercial updates.\nStarting with UroLift, the response to our national DTC campaign is exceeding our expectations.\nThe strategic role of DTC is important as about half of the 12 million men being treated for BPH believe prescription medications are their only solution.\nOverall, we view the pilot national DTC as a successful campaign.\nKey statistics include a doubling of brand awareness among men age 45 are higher post campaign versus pre-campaign levels.\nApproximately 150% increase in visits to UroLift.com during the campaign and direct response numbers that exceeded our internal projections by a wide margin.\nLastly, we know that Google search trends demonstrate a significant and sustained increase in response to the campaign.\nAs such, we expect to continue the national DTC effort in 2021 and beyond.\nTurning to UroLift too.\nWe have completed the market acceptance test and received positive feedback across more than 100 procedures completed by 20 urologists.\nWe have begun a full controlled launch.\nThe launch is controlled due to restrictive access caused by COVID-19.\nThis will ensure we don't disrupt growth recovery with a more fulsome rollout beginning in the second half of 2021.\nWe remain confident that conversion to the UL2 will occur over time and we continue to expect to generate significant margin expansion as the revenue base is fully converted.\nRegarding Japan, we remain on track for reimbursement decision in 2021 and view the approximate $2 billion addressable market as an incremental growth driver, that will be a positive catalyst for seeable future.\nOverall between nationwide DTC, Japan rollout, and the launch of UL2, we have multiple drivers to build momentum as we seek to further expand our leadership position in BPH.\nTurning to the next slide on key clinical updates.\nRecently a comparative analysis of sexual function outcomes from UroLift studies and the Medical Therapy of prosthetic symptoms trial was published in the peer-reviewed journal European Urology Focus.\nThe comparison reveals that UroLift is superior to BPH medical therapy in preserving erectile and ejaculatory function and sexual satisfaction.\nImportantly, this study challenges the idea that medical therapy is the most conservative treatment option for BPH.\nOver time, we believe that more clinical research like this publication consider UroLift as a first-line therapy for treating BPH.\nTurning to an update on Interventional Access.\nRegarding the CTO-PCI study that we mentioned on our Q2 earnings call, I am pleased to announce that we have completed enrollment for this study.\nThis is a prospective, single-arm IDE study of 150 patients across 13 sites to evaluate the performance of the entire range of Teleflex coronary guidewires and specialty catheters in chronic total occlusion percutaneous coronary intervention procedures, which is the most demanding PCI environment.\nOnce the study results are finalized, we anticipate updated labeling for our Guidewire and Specialty Catheter products which can address an estimated 100,000 CTO-PCI procedures.\nOverall, we continue to invest in clinical and commercial catalysts that will help to sustain our upper single-digit revenue growth aspirations in a normalized environment.\nLastly, turning to EZPlas.\nI am happy to update the investment community that we successfully submitted our BLA to the FDA in late January.\nWe recently performed a market assessment update and still see a $100 million initial market opportunity for EZPlas.\nWe are increasingly confident in our ability to address this commercial opportunity with revenue likely ramping in early 2022.\nIn addition, we believe there are potential revenue synergy opportunities with Z-Medica to leverage their sales reps as well as our channel strength across the healthcare and government call points which could add to our baseline expectations, which brings me to an update on our latest acquisition.\nOn December 28th, we completed the acquisition of Z-Medica, an industry leading manufacturer of hemostatic products, that is a classic Teleflex deal and a great strategic fit.\nInvestors familiar with Teleflex will be aware that we aim to invest in innovative products and technologies that can meaningfully enhance clinical efficacy, patient safety and comfort, reduce complications, and lower the overall cost of care.\nGiven their differentiated products and attractive end markets, we view the Z-Medica acquisition like that of Vidacare from a few years ago.\nSince we acquired Vidacare in 2013, we have more than double the sales which are still growing in the healthy double-digit range.\nOne difference is that Z-Medica is growing into a $600 million addressable market while Vidacare is addressable market was closer to $250 million.\nRegarding our long-range financial targets.\nZ-Medica only reinforces our ability to get to those goals, and we remain committed to delivering constant currency revenue growth of at least 6% to 7% on an annual basis and reaching 60% to 61% and 30% to 31% adjusted gross and operating margins once we return to a more normalized environment.\nWe plan to hold an Analyst Day event in the fall of this year, at which time we intend to provide updated long-term financial goals and timetables.\nGiven the previous discussion of the company's revenue performance, I'll begin with the gross profit line.\nFor the quarter, adjusted gross margin was 58%, a decrease of 120 basis points versus the prior year period.\nThe decrease in gross margin was primarily due to COVID-related impacts, including unfavorable product mix and higher manufacturing costs along with a modest foreign exchange headwind.\nIn total, we estimate that COVID negatively impacted our adjusted gross profit by approximately $44 million in the quarter.\nWe continue to tightly manage discretionary spending, partially offset the reduced revenue and gross profit resulting from COVID.\nAs a result of the efforts, we estimate that operating expenses were reduced in the fourth quarter by approximately $13 million.\nFor full year 2020, we managed opex lower by an estimated $78 million.\nFourth quarter operating margin was 26.6%, were down 50 basis points year-over-year.\nContinuing down the income statement.\nNet interest expense totaled $18.5 million, which is an increase of 10% year-over-year and reflects higher average debt balances versus the prior year period due to the acquisitions of HPC and Z-Medica.\nMoving to taxes, for the fourth quarter of 2020, our adjusted tax rate was 10.1% as compared to 7.7% in the prior year period.\nAt the bottom line.\nfourth quarter adjusted earnings per share declined modestly to $3.25 from $3.\n28 a year ago.\nIncluded in this result is an estimated adverse impact from COVID of approximately $0.55 and a foreign exchange tailwind of approximately $0.05.\nTurning to select balance sheet and cash flow highlights.\nIn 2020, cash flow from operations was flat as compared to 2019 totaling $437.1 million.\nWe are pleased with this outcome given COVID headwinds and increased contingent consideration payments that flowed through cash flow from operations in 2020 as compared to 2019.\nOverall as we exited 2020, the balance sheet remains in good shape.\nAt year-end, our cash balance was $375.9 million as compared to $301.1 million as of December 2019.\nOver the course of the year, we deployed more than $750 million for external business development opportunities.\nWe'll continue to balance our investments across both organic, inorganic initiatives to fuel our growth and drive margin expansion with M&A as our primary focus for capital deployment.\nInclusive of Z-Medica financing, we net leverage ended 2020 at [Phonectic]2.98 times[/Phonetic ], which remains well below our 4.5 times covenant.\nLastly, we have no near-term debt maturities of material size.\nIn summary, despite facing the challenging operating environment during 2020, the organization adapted quickly and executed well.\nWe remain optimistic toward the future and expect to recovery beginning in the second half of 2021.\nAs such, we are reinstating financial guidance for 2021.\nTo begin, I'll provide a framework of key assumptions underlying our financial guidance.\nOur outlook contemplates COVID disruption continuing through much of the first half of the year, with the second half of the year much closer to a normal operating environment.\nOur baseline assumption assumes that healthcare systems can manage through incremental COVID surges while applying past learnings to avoid widespread procedure shutdowns.\nIt also excludes any material regulatory, healthcare or tax reforms, as well as any future M&A.\nLastly from a selling day perspective, we will have 2 fewer selling days in the first quarter as compared to the year-ago period, we will have one additional day in the 4th quarter as compared to the year-ago period, and there will be no differences in the number of days during the second and third quarters.\nIn 2021, we project constant currency revenue growth between 8% and 9.5% as compared to 2020.\nWe expect our Interventional Access, Surgical and Vascular Access product offerings to be key contributors to our constant currency revenue growth during 2021.\nWe also expect our Interventional Urology business to increase at least 30% over 2020 levels.\nAdditionally, Z-Medica is expected to contribute $60 to $70 million of revenue or approximately 2.5 points of growth.\nWe expect foreign currency exchange rates will be a tailwind to revenue growth of approximately 2%.\nAs a result, we expect our as-reported revenue to increase between 10% in 11.5% over 2020 and this would equate to $1 range of between $2.791 million and $2.829 million.\nTurning next to gross margin.\nDuring 2021, we anticipate that adjusted gross margin will increase between 130 and 230 basis points to a range of between 8% and 59%.\nWe expect gross margin expansion will be driven primarily by a favorable mix of high margin products primarily, Interventional Urology as well as the acquisition of Z-Medica which will add approximately 50 basis points to gross margin.\nMoving to adjusted operating margin.\nDuring 2021, we anticipate that adjusted operating margin will increase between 110 and 210 basis points to a range of between 26% and 27%.\nThe increase in adjusted operating margin will be sourced from the gross margin expansion, partially offset by normalization of certain 2020 COVID-related spending reductions, which were temporary in nature as well as further strategic investments into UroLift and Manta.\nAdditionally, the acquisition of Z-America is expected to provide a modest tailwind to year-over-year operating margin expansion.\nGiven the relatively higher opex cost structure of Z-0Medica versus Teleflex, operating margin accretion from Z Medica will be less than the 50 basis points of gross margin accretion.\nThat takes me to our adjusted earnings per share outlook for 2021.\nThis slide serves as a bridge for our full-year 2020 adjusted earnings per share results to our full-year 2021 adjusted earnings per share outlook, beginning with the 2020 adjusted earnings per share of $10.67.\nFrom an operating standpoint in 2021, we project additional earnings between $1.58 and $1.66 per share or an increase of approximately 15%.\nOur 2021 earnings per share guidance also assumes the following: Foreign exchange is planning to [Indecipherable] for key currencies including a full year euro to dollar exchange rate of $1.21.\nFor 2021, foreign exchange is expected to provide a tailwind of approximately $0.35.\nWe now project Z-Medica to contribute between $0.21 and $0.26 of adjusted earnings per share in 2021, and this is an increase from our original expectation, which call for contribution of between $0.07 and $0.15.\nThe increase in the Z-Medica accretion is due to the change in our planned approach for financing the acquisition, which we now believe to be done through a combination of borrowings under our revolver and free cash flow versus a previous expectation for bond offer.\nIn 2021, we expect interest expense to range between $63 and $65 million/.\nThe year-over-year reduction in interest expense is expected to contribute between $0.17 and $0.19 of earnings accretion if you would exclude the incremental financing costs for Z-Medica.\nDuring 2021, we project that our adjusted tax rate will be in the range of 13.5% and 14% and will result in adjusted earnings per share headwind of between $0.33 and $0.38.\nThe projected year-over-year increase and the adjusted tax rate is a result of a greater expected mix of US taxable income principally resulting from UroLift growth and certain 2020 tax benefits that we do not expect to reoccur in 2021.\nAdditionally, our assumption is that 2021 windfall benefit from stock based compensation is at a reduced level versus the typically high level realized in 2020.\nWe estimate that weighted average shares will increase to $47 million for full year 2021 which is diluted by approximately $0.10.\nDespite several headwinds, our adjusted earnings per share outlook of $12.50 to $12.70 is robust, representing growth of between 17.2% and 19% versus 2020.\nGiven the expectation of continued COVID impact into 2021, I'll highlight some considerations regarding quarterly expectations.\nAs I mentioned previously, our outlook is predicated on the assumption that COVID will continue to cause disruption during the first half of the year with a particular negative impact during the first quarter.\nAdditionally, the first quarter of 2021 has few fewer selling days as compared to 2020.\nIn closing, we delivered solid fourth quarter results as our diversified portfolio showed continued improvement relative to the second and third quarters of the year on both the top and bottom lines.\nExcluding the impact of COVID, we see our underlying business performance as encouraging and while the next several quarters still will have elements of uncertainty, we remain confident in our ability to execute in 2021 and are up [Technical Issue] and we'll continue to focus on serving our hospital customers and working with our key stakeholders.\nWe are excited about the prospects for our business.\nWe have several revenue drivers including UroLift, Manta, Z-Medica, PICC, Vidacare, EZPlaz and HPC to name but a few.\nWe will manage the business prudently while staying focused to capitalize on the long-term potential of our global product portfolio.\nAs an organization, we remain well positioned to create value for all our stakeholders.\n", "role": "user" }, { "content": "estimates negative impact from covid-19 on q4 emea revenue of about $1 million (not sees q4 2020 revenue about $1.0 million).\nq4 adjusted earnings per share $3.25 from continuing operations.\nq4 revenue $711.2 million versus refinitiv ibes estimate of $687.7 million.\nsees fy 2021 adjusted earnings per share $12.50 to $12.70 from continuing operations.\nsees fy 2021 revenue up 10 to 11.5 percent.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I hope you're all safe and well.\nEarlier today, we reported our first quarter results for fiscal year 2022.\nI'm pleased to share that Triumph demonstrated strong organic growth and year-over-year improvement in margins companywide, driven by increased MRO volumes, all while we continue to come through the pandemic and clean up our portfolio and balance sheet.\nHaving stabilized and exited most of our structures business, our focus in Q1 was on strengthening and improving our core business, while pivoting to growth and retiring several nonrecurring cash uses.\nOur cost reduction actions continue to boost our results as the market recovers.\nWe continue to see promising macro trends this quarter on multiple fronts.\nFirst, increases in demand for commercial aviation translated into higher orders for maintenance, repair and overhaul work.\nMRO order flow, both in terms of volume and the nature of the work coming in, continue to be a strong indicator of recovery.\nOur MRO job inductions metrics, which serve as an early indicator for carrier traffic recovery, increased 37% for the quarter with a 6% sequential increase overall led by engine accessories and the sales structures.\nAftermarket spares and repairs, sales were up overall more than 70% for the quarter.\nSecond, military continues to be a source of strength for Triumph, with new wins contributing to both revenue and backlog, offsetting planned declines in commercial aviation.\nThese platforms enjoy continued budget support, particularly those we supply.\nFavorable trends in Systems & Support military helicopter and engine programs and increasing narrow-body production rates were key contributors to our continued recovery and reinforce the hidden value of Triumph's diversified customer base and platform content.\nWe're optimistic this upward trajectory will continue.\nCommercial air travel indicators continue to be positive.\nDelays in widebody recovery have been offset by narrow-body programs.\nOrders for the A320 and 737 MAX have seen new highs since the beginning of the pandemic.\nI want to congratulate Boeing for completing the first flight of the 737 MAX-10 on June 18, which was followed by June 29 order from United Airlines for 150 aircraft.\nOrders for commercial transport aircraft are up in 2021 as Airbus and Boeing have reported 721 new orders, offset by 476 cancellations.\nBright spots include United's June order for 737 MAX and A321neo aircraft, the FedEx order for 767, and the May Southwest Airlines orders for the MAX.\nCommercial transport backlog now stands at approximately 12,000 aircraft.\nThe industry's focus is now shifting to mitigating production ramp risks.\nBoeing recently announced a slowing of the 787 production rate.\nTriumph had already de-risked its twin-aisle build rates with our 787's percentage of sales and inventory, reflecting conservative assumptions.\nSimilarly, we are on a path to exit the A350 build-to-print brackets production line in our interiors business.\nReductions in these rates will not have a material effect on Triumph.\nThe combined benefits of strong military demand and recovering commercial MRO demand, coupled with our comprehensive actions to improve financial performance, create positive momentum for fiscal 2022 and the years to follow.\nAfter 18 months of uncertainty, we have more clarity on near-term OEM and MRO demands as markets continue to stabilize, and we see lift from military and cargo demand.\nCombined with our diversification, we are now able to provide guidance for fiscal '22 that reflects increasing revenue and positive cash flow over the balance of the year.\nEnvironmental, social and governance initiatives remain a high priority for Triumph and our Board.\nWhile reducing CO2 emissions, wastewater and energy usage, considerable investment has been made in the development of new products to enhance aircraft fuel efficiency.\nWe are adopting additive manufacturing across our core products, which has the benefits of lower production costs and substantially lower weight.\nWe are making similar advancements in heat exchangers to enable a more efficient airframe with less drag.\nTriumph is investing in energy efficiency projects such as eliminating lead-based components and implementing closed-loop solvent recycling systems and converting hazardous waste to non-potable water.\nTriumph has launched an energy conservation project in our largest production facility, which will reduce electrical power use by 25% annually.\nAs a result of this work, Triumph's Seattle R&D facility will be featured in a future episode of Earth with John Holden, which showcases an inspiring array of companies with eco-friendly initiatives that are enhancing the lives of Earth's inhabitants through advanced technologies.\nOverall, we're pleased with Triumph's first quarter results, which are either in line with or above our expectations, enabling us to meet our objectives.\nOn slide four, I summarized some of the quarter's highlights.\nMRO and aftermarket spares continue to be a leading indicator of the market recovery.\nOur portfolio actions, cost reduction efforts and expanding sales resulted in improved operating margins across the enterprise.\nWe are on track to complete our final 747 production components this month, and in the last of our significant loss-making programs.\nWe repaid the remaining balance of our 2022 bonds while preserving strong liquidity.\nLast, continued improvements and stability in the broader markets enhances our confidence in our outlook as we initiate financial guidance for fiscal 2022.\nAt this point, the worst of the pandemic is behind us and the macro trends remain positive, yet we recognize that the market recovery will continue to be uneven over the next several quarters.\nSo we're prudently maintaining our cost reduction austerity measures from last year, with intentions to reverse them as the market continues to improve.\nOur actions, combined with OEM and MRO rate increases will support expanded margins and cash flow, putting us on a path to de-lever the company year-over-year.\nOn slide five, I quantify the drivers for this quarter's results.\nFirst, organic growth was 11%, led by improved MRO and aftermarket spare sales within our core Systems and Support business.\nOEM sales were driven by Airbus A320, 321 shipments, Bell 429 gearboxes and E2D actuation.\nSystems & Support revenues for our third-party MRO increased 19%, while proprietary spare sales, primarily for military rotorcraft and commercial narrow-body production rates, more than offset commercial widebody declines.\nShipments to FedEx and UPS are up 52% for the quarter as cargo aircraft returned for deferred maintenance.\nWe continue to anticipate a bow wave of MRO repairs as deferred maintenance returns to our shops.\nMilitary sales now comprise 53% of our sales in Systems & Support helping to offset the temporary commercial aerospace decline.\nMilitary platforms such as the E2D, UH-60 and CH-47 contributed to the sequential sales growth driving a 12% increase in our military sales year-over-year.\nAs mentioned, we will deliver our final 747 structures this month, at which point Triumph will fulfill our program obligations.\nWe will close the second of two large structures facilities dedicated to the 747 in December, ending a long period of losses.\nSetting the legacy cash-consuming programs, stabilizing performance across all of structures allowed them to be solidly profitable in Q1 on an adjusted basis.\nJim will provide an update on our exit of non-core structures business.\nWe remain on track to achieve our future state configuration as a largely pure-play Systems & Support provider to military and commercial customers, with interior structures capabilities.\nMoving forward, we are increasingly leveraging our installed capacity and intellectual property portfolio to secure price increases on an annualized basis, which will benefit margin expansion plans.\nA few updates on the state of the economy and our industry.\nEarly indicators within the aviation industry indicate steady progress in the quarter toward 2019 levels with airline travel bookings improving from 46% to 69% and corporate bookings up from 18% to 40% as strong summer bookings benefited domestic carriers.\nReflecting a return to airline normalcy and profitability, average airfare prices, weekly load factors and TSA throughput continue to recover in the U.S. Parked fleets have declined substantially with over 1,800 aircraft returned to service since March.\nFinally, we are watching emerging defense legislative [marks] closely and are encouraged to see strong support for defense in key military programs on both the House Appropriations and Senate Appropriations committees, which should ensure stability and predictability in our defense programs for fiscal '22, including programs such as the CH-53K, F-15EX and E2D in our backlog.\nAs you know, the single-aisle segment will lead the aviation recovery, gratifying the OEM single-aisle deliveries for both Boeing and Airbus increase each month within the quarter, culminating in strong June numbers with Airbus delivering 62 single aisles and Boeing delivering 36.\nWe expect this positive trend to continue and are making plans across the supply chain to be ready for the ramp.\nOverall, this is encouraging news, and I expect Triumph to gain momentum as the aviation recovery continues through the balance of the fiscal year.\nWe are well positioned to capture returning MRO business and OEM rate increases while expanding our defense programs.\nTurning to wins for the quarter.\nOur Systems, Electronics and Controls team are designing and upgrading engine controls for the global fielded fleet of T700 engines.\nWe received orders for FADECS upgrades to both U.S. Navy Seahawks and U.S. Army Apaches.\nWe are upgrading heat exchangers on the F-22 F119 engine for Pratt & Whitney, where we have significant IP.\n95% of our heat exchangers are designed and developed by Triumph engineering teams.\nWe secured orders from GE for the F/A-18 E/F, F414 aircraft-mounted accessory drives.\nThis complex gearbox builds on the legacy of our F/A-18 C&D gearbox for the F404 engine.\nTriumph is the world's largest and most capable third-party provider of gear and gearbox solutions, spanning the entire life cycle of gear products from design, development and test through manufacturing and sustainment.\nOur customers value our capabilities and engage us in new and exciting opportunities such as the T-7A, the KF-X, Future Vertical Lift and classified programs.\nSome of our largest customers in the MRO space are OEMs and Tier 1s.\nWe look to Triumph to support legacy program offloads, allowing them to concentrate on new platforms.\nFor the quarter, we completed another important Tier one agreement with Collins Aerospace, overhauling air cycle machines.\nFinally, I'd like to highlight several strategic developments in our thermal business.\nWe are actively engaged with the Air Force Research Laboratory and the University of Dayton to design heat exchangers that use additive manufacturing to replace castings in an effort to address Air Force fleet sustainment issues.\nWhile we started with heat exchangers, we believe additive has the potential to expand into other areas, which are traditionally constrained by casting suppliers, including gearbox and pump housings.\nFinally, we completed an agreement with Paragon space to develop heat exchangers for their space vehicle life support systems.\nIn summary, we are pivoting from restructuring and contraction to growth across higher-margin IP-driven market segments.\nIn summary, our markets are improving, and we expect this trend to continue as commercial production rates increase into the next year.\nWe grew margins in the quarter across the enterprise, and retired several nonrecurring cash uses giving us the confidence to initiate financial guidance for fiscal 2022 with improving cash outlook quarter-over-quarter and year-over-year.\nThe combined lift of cost reductions, volume increases where favorable pricing and new product and service introductions, support our goal of doubling our profitability over our planning horizon while de-leveraging the company.\nWe will continue to invest sustainably in the development of our people, operations and products to enhance shareholder value year-over-year.\nWith that, Jim will now take us through results for the quarter in more detail.\nWe started our fiscal year with solid year-over-year organic growth and improving margins across the enterprise as the commercial aerospace market continues its recovery.\nThe actions we have taken through this first quarter enable us to have positive free cash flow over the balance of the year.\nWe continue to execute on our plans to pair the few remaining non-core businesses and product lines to decrease debt, maintain liquidity and focus on our profitable core business.\nOur performance in the quarter, the improving market environment and the diversification of our business give us the confidence to establish financial guidance for the fiscal year.\nI will discuss our consolidated and business unit performance on an adjusted basis.\nOn slide 10, you'll find our consolidated results for the quarter.\nSales are up 11% organically.\nWhile the impact of the recent divestitures and sunsetting programs and structures led to lower sales compared to the prior year.\nQ1 adjusted operating income was $31 million.\nAdjusted operating margin was 8%, up 477 basis points from the prior year.\nWe continue to improve profitability on an adjusted basis quarter-over-quarter.\nWith respect to the segment results, on slide 11, net sales in Systems & Support were up 8%, and benefited from continued recovery in the aftermarket.\nWhile an increase in narrow-body OEM work offset wide-body headwinds.\nThis segment sales were 53% military this quarter, up from 51% in the prior year quarter.\nAdjusted operating margins for Systems & Support was 14%, 235 basis point improvement from the prior year, and benefited from increasing MRO demand.\nSummarized on slide 12.\nFirst quarter net sales for structures increased 15%, largely due to the prior year's impacts of the pandemic after adjusting for divestitures and the sunsetting 747 and G280 programs.\nAs noted on our prior call, the divestitures of the Composites and Red Oak businesses were completed in the quarter on May 7.\nThe results for the quarter include modest revenues and earnings through the date of the sale.\nThe continuing business is stable and improving as evidenced by the 10% adjusted operating margin compared to 1% in the prior year.\nDuring the quarter, I visited our Grand Prairie, Texas facility and saw the significant progress our team has achieved to successfully complete the production of the 747 later this month.\nOur remaining large structures facility in Stuart, Florida is a profitable business, and we are in active discussions with several strategic parties.\nTurning to slide 13.\nIn Q1, we retired $100 million of discrete cash obligations related to advances, settlements, restructuring and wind down of 747 production.\nQ1 included two quarterly payments of our advanced liquidations with no liquidation expected in Q2.\nExcluding these sunsetting uses of cash, we used $51 million of cash in the first quarter on modest working capital growth in support of anticipated production rate increases, primarily on commercial narrow-body platforms.\nWe remain focused on aggressively managing our working capital with several initiatives across the enterprise targeted to improve our inventory turns.\nCapital expenditures will accelerate over the remaining three quarters as we anticipate investment in our core Systems & Support segment in support of rising OEM and MRO demand.\nOn slide 14 is a summary of our net debt and liquidity.\nOur net debt at the end of the quarter was approximately $1.4 billion, and our combined cash and availability was about $263 million.\nIn the quarter, we completed the mandatory paydown of approximately $112 million of first lien notes and redeemed the remaining $236 million of outstanding 22 notes.\nOur next debt maturity is not until 2021 which gives us time to continue executing our deleveraging actions to strengthen our cash flow and improve our credit.\nslide 15 is a summary of our FY '22 guidance.\nBased on anticipated aircraft production rates, and excluding the impacts of potential divestitures, for FY '22, we expect revenue of $1.5 billion to $1.6 billion.\nWe expect adjusted earnings per share of $0.41 to $0.61.\nOur earnings expectations take into consideration certain supply chain and inflationary pressures.\nThe good news is we have secured adequate inventory and supply commitments for critical materials, and we work to lock in the vast majority of our unit costs for the fiscal year and beyond.\nCash taxes, net of refunds received, is expected to be approximately $4 million for the year, while interest expense is expected to be approximately $140 million, including approximately $137 million of cash interest.\nAfter approximately $150 million of free cash use in the first quarter, we expect in total to generate free cash flow over the balance of the year, with about $40 million to $60 million of use in Q2, approximately breakeven in Q3 and solidly cash positive in Q4.\nFor the full year, we expect to use $110 million to $125 million of cash from operations with approximately $25 million in capital expenditures, resulting in free cash use of $135 million to $150 million.\nWe've made significant progress in improving the predictability of our profitability and our cash flow.\nWe had solid organic growth and improving margins in Q1, and we expect to be cash positive over the balance of the year.\nCost reductions and operational efficiencies will help us to continue to improve margins as volume increases.\nMeasures we have taken and are taking are making us a stronger, more competitive and sustainable company moving forward.\nWe're off to a good start as are our customers, as we put the pandemic behind us.\nIncreasing OEM narrow-body production rates with continued signs of recovery within the MRO markets give us confidence that the worst of the pandemic is behind us.\nConsistent with our full year guidance, we'll build momentum quarter-over-quarter by continuing the track record of growth and margin expansion in our core business and drive to positive free cash flow over the balance of the year.\nWe continue to take the hard actions to position Triumph for the future, including cost reduction, the exit of loss-making programs and divestitures.\nTriumph is becoming a leaner, more profitable and cash positive company.\nWe continue to make strides toward our future state configuration, and we're unlocking the hidden value in our business, improving our win rates and delivering benefits for all stakeholders in a responsible and sustainable way.\nKevin, we're now happy to take any questions.\n", "role": "user" }, { "content": "sees fy adjusted earnings per share $0.41 to $0.61.\nsees fy sales about $1.5 billion to $1.6 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: In a few moments, Brian, Christina, John, and Michael will provide their perspective on our third quarter performance and our outlook and priorities for the fourth quarter and beyond.\nFollowing the remarks, we'll open the phone lines for a question-and-answer session.\nFollowing the call, Michael and I will be available to answer your follow-up questions.\nThe most important of which are described in our most recently filed 10-K.\nAlso, in these remarks, we refer to non-GAAP financial measures, including adjusted earnings per share.\nOur third quarter results are consistent with what our team has been delivering quarter after quarter for years now.\nAnd they continue to demonstrate the extraordinary level of engagement we're seeing from our guests, both with our brand and with our team.\nIn the third quarter, comparable sales expanded 12.7%, on top of a nearly 21% increase one year ago.\nConsistent with recent quarters, traffic was the primary driver of this year's growth as our guests increasingly turned to Target to serve their wants and needs.\nAcross our sales channels, store sales were the primary growth driver this quarter, while same-day services propelled our digital growth.\nSince the third quarter of 2019, prior to the pandemic, Q3 store sales have expanded by $3.8 billion, while digital sales have increased another $3.1 billion.\nThis provides a vivid demonstration of the flexibility of our operating model to serve our guests no matter how they choose to shop.\nAll of these results reflect the level of guest engagement far beyond what many would have imagined a few years ago when we started making huge investments throughout our business in our stores, new brands, same-day services, supply chain, and, importantly, our team.\nBack then, Target was already known for a world-class team, a differentiated shopping experience, unique assortment, and an iconic brand.\nBut we knew there was much more to do.\nWe saw a clear opportunity to build on that solid foundation, finding new ways to enhance our capabilities while strengthening the bond with both our team and our guests.\nAnd today, those bonds have never been stronger.\nAs I mentioned, within our digital capabilities, more and more of our guests are trying and embracing our industry-leading same-day services.\nThird quarter sales through these services have expanded by nearly 400% or $2 billion over the last two years.\nThrough the first three quarters of the year, sales through these services have grown by more than $6 billion since 2019, a number larger than the total sales of many prominent retailers.\nBeyond fulfillment capabilities, our balanced multi-category assortment is another key driver of flexibility and resiliency within our business model.\nThe breadth of our assortment, both within and across our core categories, allows our team to quickly and seamlessly serve our guests, even when their wants and needs are changing rapidly.\nIn the third quarter, we saw a consistent strong growth across our entire merchandising portfolio.\nMore specifically, all five of our core merchandise categories saw double-digit growth in the quarter, ranging from the low-double digits to the mid-teens, resulting in strong market share gains on top of unprecedented share growth in 2020.\nAnd we're not slowing down in our efforts to serve our guests.\nWe continue to invest in key partnerships that enhance our assortment and experience, including the opening of more than 100 Ulta Beauty shop-in-shops and our recent announcement that we're doubling the number of enhanced Apple experiences in electronics.\nChristina will provide more details in a few minutes.\nIn our conference call three months ago, we outlined multiple actions we're taking to support our inventory and in-stocks, given the supply chain challenges that have emerged throughout the pandemic.\nAnd as you know, those pressures only intensified in the third quarter.\nAnd our team has done an outstanding job in the face of these challenges, identifying bottlenecks and finding solutions to keep inventory flowing throughout our network.\nAlthough efforts drove some incremental costs in the quarter, we view them as a continuation of the many productive long-term investments we're making in our business in support of the trust we have built with our guests.\nAnd obviously, our guests responded to these efforts with strong third quarter traffic, which we expect will continue in Q4 and beyond.\nBeyond our supply chain, the team has done a great job navigating through broader cost pressures as many vendors have raised wholesale prices to accommodate higher costs within their businesses.\nAs our team face these cost increases, they maintained a guest-first approach and a focus on value while managing overall profitability as well.\nAs a result, our business delivered strong third quarter financial results from the top to the bottom of the P&L while building on the trust we've established with our guests.\nBecause of your agility, energy, and selfless collaboration, Target delivered for our guests and our shareholders in the third quarter.\nAnd as we enter the fourth quarter and ramp up for the peak holiday season, we are really well positioned to continue delivering for all of our stakeholders and close out an already amazing year.\nSo, the theme you'll hear in today's call is that we're excited and ready for the holiday season.\nWe know our guests are excited to celebrate, following a year in 2020 when many families stayed apart due to safety concerns.\nThis year, our guests have eagerly started their holiday shopping as they respond to our holiday promotions, low-price guarantees, and our ongoing efforts to provide ease, reliability, safety, and value across every shopping experience.\nAnd importantly, we've taken multiple actions to support our guests during the holiday season and beyond.\nOn top of the investments in inventory, in-stocks, and value I outlined earlier, we've announced that we're hiring 30,000 new year-round supply chain team members to support our current and expected growth.\nIn our stores, we're providing our team members with more pay, flexibility, and reliable hours this holiday season, offering more than 5 million additional hours to our existing team, an investment of more than $75 million over the holiday season.\nTo supplement the additional hours from our existing team, we're hiring another 100,000 seasonal team members throughout the country, many of whom have an opportunity to stay on with Target after the holidays.\nAnd importantly, during a season in which our guests are busier than any other time of the year, our merchandising and marketing teams are focused on cutting through the clutter.\nThat means we're keeping our marketing messages and promotions simple and our operations flexible.\nThey're offering easy and reliable experience for our guests no matter how they choose to shop.\nAnd finally, while Target has already had an outstanding year, our team is looking ahead and not slowing down.\nWe're continuing to invest in our future, in our new stores and existing stores, our supply chain and fulfillment capabilities, in our owned and national brands, and the safety and well-being of our team.\nWe're investing in Target forward, an ambitious commitment to procreate an equitable and regenerative future together with our guests, partners, and communities.\nAll of these efforts are focused on advancing Target's leadership position within retail, taking a guest-led approach to everything we do, and supporting our company values to care, grow, and win together.\nI had the privilege of working alongside this great team as they bring our values to life every day across every part of the company.\nI'm endlessly grateful for their passionate support of our guests, of our brand, and for each other.\nOur third quarter results demonstrate what happens when our team lives out our purpose: to help all families discover the joy of everyday life.\nWhen we lead with our guests first, we continue to build upon the trust that we have carefully earned with them over time.\nAnd when our strategies are guest-led, we grow our business which supports our team, our financial performance, and our ability to give back to our communities and the planet.\nAs you heard from Brian, third quarter comparable sales grew 12.7%, reflecting double-digit growth in every one of our core merchandising categories.\nEven within those core categories, sales strength was broad-based, and virtually every area of the business grew over last year.\nThis shows the power of our multi-category assortment in driving guest relevance and affinity for Target.\nWhile growth came from all categories, third quarter performance was led by our essentials, beauty, and food and beverage categories, all of which delivered comp growth in the mid-teens.\nThese businesses continue to deliver substantial share gains on top of last year's gains through both trip frequency and basket growth.\nIn essentials, growth was led by baby care, pets, and over-the-counter healthcare categories.\nStrengthened food and beverage was most notable in our fresh and frozen categories, as well as in snacks and candy.\nHardlines, which comped in the mid-teens on top of mid-30% comps last year, was fueled by incredible momentum in our toys and sporting goods businesses, which both saw a comp growth north of 20%.\nElectronics delivered low single-digit comp growth on top of last year's comp of nearly 60%.\nIn our apparel business, comp sales grew in the low double digits despite unseasonably warm weather across much of the country.\nPerformance was strongest in swim, young contemporary, intimates, and hosiery.\nIn home, low double-digit comp growth was led by seasonal and stationary categories and reflected record-setting performance in the back-to-school, back-to-college, and Halloween seasons.\nWe have seen consistently strong results across seasonal categories, results that clearly signal that our guests are excited to celebrate the holidays with loved ones in new, old, and reimagined ways.\nHowever they celebrate, our guests remain focused on meeting their wants and needs with ease, convenience, and value.\nAnd as the holidays approach, they are turning to Target for these solutions.\nSo this is about more than just checking items off a list.\nBeyond working through the logistics of the holiday, our guests are looking to us to provide joy.\nAnd a joyous holiday is exactly what we plan to deliver.\nWe continuously evaluate our guests' mindset, which serves as a north star for all our strategies and decisions.\nWe remain laser-focused on their experiences with us and expectations of us, and we strive to build flexibility and agility into our plans to ensure we show up at our best for them during the holidays and all year around.\nWe are confident in our ability to navigate the broader retail landscape, and we're eager to share all that we've planned for the upcoming holidays.\nWhether our guests are rekindling old holiday traditions or finding new ways to celebrate the season, we're focused on making Target the destination that makes it easy, safe, inspiring, and affordable to celebrate what matters most: the magic of spending time with those we love.\nAs John will outline in more detail, our teams are working diligently to get the right inventory to the right place at the right time.\nDoing so has driven some near-term gross margin pressure and appropriate long-term investment in the relationship with our guests.\nBottom line, based on the incredible efforts of our team, we feel good about our inventory levels heading into the holiday season.\nIn addition to the investments in our inventory position, we remain committed to providing great value with every trip to Target.\nAnd that value goes far beyond delivering exceptional everyday pricing.\nIt includes offering compelling holiday deals, great quality products, and an array of options to support all budgets, including accessible payment options.\nLast year, we spread our promotions throughout the month of November and December to avoid crowding in stores, and we heard from our guests that they loved it.\nAs a result, we're spreading savings throughout the season again this year to give guests flexibility to get the best deals on their terms whenever and however they choose to shop.\nWe'll feature compelling offers throughout the season on top items, great weekly deals, and surprise deals of the day, both in-store and online, as well as additional deals for Target Circle members.\nAnd to reinforce value throughout the season, we recently announced the launch of our holiday price match guarantee, our most robust price match ever.\nWhen guests see holiday best deals at Target, they can shop confidently, knowing they are getting Black Friday-sized savings with our best-planned price of the season.\nIn essence, any time they see a deal at Target, our guests can be confident it's the right time to buy.\nWe also know that our guests want flexibility, not just in what they want to buy and how they want to shop, but how to manage their budget as well.\nThat's why with the help of two new partners, Sezzle and Affirm, we've added new payment solutions that allow our guests to buy what they need now, take advantage of our best deals, and pay at a pace that works best for them.\nWith a strong inventory position and a great value proposition, we're able to lean into our uniquely Target assortment to build upon our tradition offering great gifting ideas and easy-gathering solutions.\nLike even more creative, Gingerbread House-making kits, Bullseye's top toys, and gift sets for any budget.\nSpanning beauty, apparel, food and beverage, and more, these gifting options will bring together the best of only at Target-owned brands with curated national brands.\nAnd for those seeking extra inspiration, our thoughtfully curated digital shopping lists will bring the joyful discovery our guests love, helping them find the perfect gifts for anyone on their list, whether they are shopping our stores or on our site.\nIn addition to gifting, guests our focused on gathering with friends and family, and we have everything they need to create memorable moments.\nWhether it's preparing a delicious meal, throwing a festive family party, or hosting a game night with friends, from Good & Gather cheese board starter kits and favorite day-baked goods, to Threshold fall collections, including festive baking dishes, serving platters in the color of the season, and an array of plates, linens, and other table-toppers, all $15 and under.\nWe want to create joy for all of our guests this holiday season, and we are excited to do so with our most inclusive assortment to date.\nThroughout our digital and in-store shopping experience, our guests are sure to see themselves reflected in our culturally relevant gifting and gathering solutions.\nWe'll highlight Black-owned businesses and beauty, hardlines, food and beverage, and home, including McBride Sisters wine pairings, BIPOC Authors in our $10 book assortment, and a limited-time Black artist partnership in wrapping paper.\nAnd our guests will see themselves represented in inclusive gift card messaging and imagery, providing options that celebrate the many meaningful holidays of the season, including Kwanzaa and Hanukkah.\nWe're also delivering joy beyond our holiday assortment by building on our incredible legacy of creating differentiated shop-in-shop experiences that drive traffic and inspire our guests.\nThey continue to tell us how much they love our exciting and expanding partnerships, with brands like Disney, Ulta Beauty, and Apple.\nWith each partnership, we're adding excitement, convenience, and newness for our guests, while unlocking incremental growth for each of the partners.\nSo, it's no surprise we're building on this momentum in time for the holiday season.\nWe are tripling the number of Disney stores at Target locations and doubling our Apple shop-in-shop experiences.\nOn top of that, of course, this will be our debut holiday season featuring Ulta Beauty at Target.\nAnd on the subject of Ulta Beauty at Target, our guests are telling us it's clearly hitting the bullseye, with makeup, skincare, bath and body, hair care, and fragrance for more than 50 top brands now available at Ulta Beauty at Target, both in-stores and online.\nThere's plenty to love about this new partnership, and we are so excited for all that is yet to come.\nAnd we'll build on our tradition of joy-making partnerships this December, when we will launch an exclusive lifestyle collection of products with one of the most beloved toy brands ever, Lego.\nThink brick-inspired hooded sweatshirts, colorful Lego-shaped tumblers, and, of course, iconic Lego brick and mini figure sets.\nThis collection builds on our long-standing partnership with the Lego Group and reflects our shared values of inclusivity, optimism, and joy.\nWith nearly 300 must-haves for the family, pets, and home, and most of the colorful brick-inspired items under $30, our guests are sure to find something everyone would love on any budget.\nJoy, ease, value, inclusivity, the ingredients helping to deliver on our purpose: to help all families discover the joy of everyday life, a recipe that we refine quarter after quarter by listening to our guests, learning from their choices, and working across our talented team.\nAnd these plans wouldn't come to life without the many talents and contributions of our dedicated team.\nYou inspire me with all that you do.\nAnd because of you, I know we will win this holiday season.\nEveryday, across the operations team, we focus on execution.\nOn our supply chain team, the focus is on moving the right amount of inventory to the right place at the right time.\nIn our stores, which fulfill more than 95% of our total sales, the team focuses on delivering a great guest experience across hundreds of millions of guest transactions every quarter.\nAnd on our properties team, the team focuses on optimizing our physical footprint, including the planning and construction of new stores and distribution facilities, along with our investments to maintain and enhance the productivity of our existing buildings.\nOf course, all of these aspects of operations matter all year long.\nBut in the fourth quarter, when we handle the largest volumes of the year, everything moves faster, making the need for detailed planning and precise execution even greater.\nThat's why every year, we construct our plans with the fourth quarter in mind, so we can remove distractions and roadblocks in advance of the holiday peak.\nThat means, on the properties team, we plan our remodel and new store projects, so they're completed before the holidays, and our technology team rolls out new systems and tools on the same timeline.\nIn the supply chain and in our stores, we carefully plan the ramp-up of seasonal hiring and team member training in advance of the holidays so everyone is ready to handle the additional volume.\nThat's what happens every year.\nBut as Brian and Christina have already mentioned, this year, our teams have been facing additional out-of-the-ordinary challenges as they plan for and deliver record-setting volumes while facing unprecedented bottlenecks in the global supply chain.\nSo while I'm lucky to work with our amazing team every day, it's at times like these that our team shines brightest.\nBeyond their skill and expertise, they face every challenge with good nature and a collaborative mindset.\nI can't describe how proud I am to represent everything they've accomplished this year as they've delivered historically strong growth on top of record increases a year ago.\nWithin our supply chain, the team has been methodically working around multiple obstacles and challenges throughout the network, prioritizing our holiday-sensitive categories within our import receipts while thoughtfully planning domestic transportation to ensure products reach the shelf at the right time, and while we continue to see some periodic outages across different items and categories, wearing the holidays with a very healthy inventory position overall.\nSpecifically, at the end of the third quarter, inventory on the balance sheet was more than $2 billion higher than last year, representing growth of about 18% from a year ago.\nLooking back to the pre-COVID period, our Q3 ending inventory has grown more than $3.5 billion since the end of Q3 2019, representing 31% growth over a two-year period.\nA sizable amount of this inventory will continue to flow to our stores over the next few weeks, and our team has clear visibility to where the inventory is located and when it will arrive in our stores.\nIn our overseas operations, we've benefited from a significant reduction in delay times.\nAnd, of course, given that we were already anticipating tight conditions many months ago, the team has been writing this year's holiday purchase orders much earlier than last year to proactively mitigate the risk of both known and unexpected delays.\nWe're also benefiting from really strong performance across our domestic transportation network.\nAnd we've secured the necessary capacity across both rail and over-the-road trucking to accommodate anticipated shipments throughout the fourth quarter.\nAt the intersection of our overseas and domestic supply chains, the team continues to work around significant port delays, diverting shipments to less-congested entry points and relying on air freight in certain cases.\nAnd while Target's port operations have long been considered best in class, our team has been actively collaborating with government and port officials to help find solutions that will allow everyone's containers to move through the ports more quickly.\nAnd we're encouraged with the changes that have recently been put in place.\nI also want to pause and emphasize the ongoing collaboration that's been happening between our supply chain, merchandising, and marketing teams.\nThese teams have worked together to develop promotional and marketing plans that are much more fluid and nimble than in the past, enabling the incorporation of real-time data on inventory availability and location within our holiday plans in order to maximize their impact to the benefit of both our guests and operations.\nIn our stores, the team is preparing for fourth quarter all year.\nAnd they're energized and ready to serve our guests throughout the season.\nThis will be the first holiday season since we launched our new service initiative, which is all about empowering our teams and increasing their confidence to build authentic connections with our guests.\nAlso, new this year, we've rolled out a new point-of-sale system across more than 90% of our stores, providing more speed, efficiency, and enhanced experience at both the checkout and our service counter.\nTo continue building on an industry-leading in-store pickup and Drive Up experiences, we've been rolling out new capabilities all year.\nThese efforts include capital projects to add permanent storage capacity in more than 200 high-volume stores, investing in flexible fixtures to provide temporary storage areas to support seasonal peak, adding thousands of new items to the list available for pickup and Drive Up, doubling the number of Drive Up parking stalls compared with last year, and designating stall numbers to help our teams deliver Drive Up orders more efficiently.\nEven as we're adding these new capabilities, we're also supporting our long-standing commitment to providing a safe shopping experience, maintaining the enhanced COVID cleaning and safety routines that we implemented throughout the pandemic.\nWe've also been investing in team member hours, processes, and training to prepare our team to handle record freight and fulfillment volumes this year, all on enhancing safety messaging and actively monitoring processes to protect the safety of both our guests and our team.\nAnd, of course, as Brian mentioned, our team is focused on being fully staffed across the store and supply chain throughout the holiday season.\nOur stores have been hitting our seasonal hiring milestones.\nAnd because of the advancements we've made in scheduling this year, average hours per store team member are running significantly higher this year in comparison to past years.\nIn fact, unlike what you're hearing from many others, because of the investments we've made in pay and benefits and our focus on team member training and engagement, the hourly turnover rate in our stores is actually running lower this year compared with 2019, particularly for our newly hired team members.\nAnd we're continuing to invest in our team.\nFollowing the recent rollout of the most comprehensive debt-free education program in the industry, we announced that to sustain our momentum through the holidays, we're offering pay premiums during peak periods in our stores and distribution centers over the holiday season.\nAs we've said many times, our investments in the team are the most productive ones we've made.\nTurning to the work of the properties team, we expect to finish about 145 remodels in 2021, having completed more than 40 remodels prior to the end of Q3 with more than 100 additional projects slated to wrap up before the holiday.\nThe team also opened another 15 new stores in the third quarter, bringing the year-to-date total up to 30.\nAmong those projects, we've opened new stores ranging from 11,000 to 160,000 square feet, which demonstrates the flexibility we've developed to design the optimal store size for an individual neighborhood based on their local needs and available real estate in the market.\nTo increase the capacity and efficiency of our supply chain, our team has also opened two new distribution centers this year.\nIn addition, we have two new sortation centers set to open in the fourth quarter, with two more on track to open early next year.\nThese are highly complex projects across multiple geographies, which require precise coordination across a large number of regional construction providers along with a diverse group of fixture and equipment vendors, all of whom have been facing the same bottlenecks we've been facing in our merchandise supply chain.\nOur construction team has handled all of these challenges with good humor and resilience, allowing us to continue reaching guests in new neighborhoods and support the growing supply chain needs of the entire chain.\nIn support of those growing needs, we recently announced that we're adding more than 30,000 permanent positions across our supply chain network to support the growth we expect to continue delivering in the fourth quarter and beyond.\nThese team members will support new buildings in our regional DC network, adding replenishment capacity to support an increasingly productive store network.\nThey'll also be staffing and supporting our new sortation centers, which deliver efficiency, speed, and additional capacity in support of last mile fulfillment.\nAnd it's amazing to pause and look back at how much our network needs have grown in a short time.\nFor the entire fiscal year in 2018, our business generates $74 billion in sales.\nLess than three years later, our business had already delivered $74 billion in sales through the third quarter, with the biggest quarter of the year still ahead of us.\nOur team and supply chain infrastructure have done an outstanding job in supporting that growth.\nAnd given that we don't expect it to end anytime soon, we are committed to growing our physical footprint and our team, so they can continue to deliver on behalf of all of our stakeholders in Q4 and beyond.\nWhen I first started working here in 1996, Target delivered just under $18 billion in revenue for what was then called Dayton Hudson Corporation.\nWhile many things have changed since then, both in retail and at this company, we successfully maintain what's made Target's successful and unique for nearly 60 years.\nWe've maintained our focus on offering affordable design in support of a unique merchandise assortment, providing a differentiated and outstanding shopping experience, investing in the best team in retail, and giving back to the communities that sustain us.\nThis is another example of what we call the Power of And.\nThe reason Target has stayed relevant for so many decades is our ability to stay true to our values and continually evolve in the way we serve our guests.\nOver time, we've emphasized our commitment to making the appropriate investments in our business, ones that will deepen Target's relationship with our guests, driving engagement which ultimately leads them to shop at Target more often.\nAnd while it's our job to focus on driving performance every day, we've committed to making investment decisions with a long-term perspective, not limiting our horizon to a month, a season, a quarter, or even a year, but thinking about how to position Target as a leading retailer for generations.\nThat's how I think about our third quarter.\nIn the face of multiple challenges in the external environment, we maintained our focus on our guests and took specific actions to ensure we have a healthy inventory position going into the holidays, even though those actions involve some incremental cost.\nAnd importantly, as we face those decisions, we had the resources we needed including the best team in retail, a sophisticated global supply chain, and a durable model that could accommodate those guest-focused investments.\nAnd while we're making these decisions with a focus on the long term, we've already seen the benefit of this year's inventory investments, given that they helped to power third quarter traffic and sales growth that exceeded our expectations.\nIn addition, given strong expense discipline across the organization, we benefited from a compelling amount of leverage on our SG&A and D&A expenses, resulting in solid earnings per share growth despite the sizable investments we were choosing to make.\nAs Brian mentioned, our 12.7% comp in the third quarter came on top of a nearly 21% increase a year ago.\nAs expected, within the quarter, we saw a shift in a portion of our back-to-school sales back into August, given that most schools across the country began the school year with in-person learning.\nAs a result, our August comp was our strongest of the quarter, our September comp dipped down to about 10%, and we accelerated back into the low-teens in October.\nAmong the component drivers of our sales, growth continues to be driven by traffic, even as we retain nearly all of the basket growth that happened a year ago.\nSpecifically, third quarter traffic increased 12.9% on top of a 4.5% increase last year.\nWhile average ticket declined only slightly, about 20 basis points, after growing more than 15% a year ago.\nAmong our sales channels, stores comparable sales grew 9.7% in the quarter on top of 9.9% last year, while digital comp sales grew 29% on top of 155% growth a year ago.\nWithin our digital fulfillment, sales on orders shipped to home increased slightly over last year, while same-day services grew about 60% on top of a more than 200% increase a year ago.\nAmong those same-day options, both in-store pickup and Shipt grew more than 30% in the quarter, while Drive Up grew more than 80% on top of more than 500% a year ago.\nPut another way, since 2019, sales through Drive Up have expanded more than 10 times for about $1.4 billion in the third quarter alone.\nMoving down the P&L, our third quarter gross margin rate of 28% was 2.6 percentage points lower than a year ago.\nAmong the drivers, core merchandising accounted for 2 percentage points, or more than three quarters of the rate decline, driven primarily by incremental freight and other inventory costs.\nAmong the other gross margin drivers, payroll growth in our supply chain accounted for about 70 basis points of pressure, while category sales mix contributed about 10 basis points of benefit.\nNotably, digital fulfillment had an approximately neutral impact on gross margin rate in the quarter as the cost associated with higher digital volume were offset by the benefit of a shift in fulfillment mix toward our same-day options, which have meaningfully lower average unit costs compared with traditional e-commerce.\nOn the SG&A expense line, we saw about 160 basis points of improvement in the third quarter, reflecting disciplined cost management combined with the leverage benefit of unexpectedly strong sales.\nOn the D&A line, we saw about 20 basis points of rate improvement as sales growth more than offset the impact of higher accelerated depreciation, which reflects the continued ramp-up in our remodel program.\nAltogether, our third quarter operating margin rate of 7.8% was about 70 basis points lower than a year ago but more than 2 percentage points higher than two years ago.\nOn a dollar basis, operating income was 3.9% higher than a year ago and double the number recorded in the third quarter of 2019.\nMoving to the bottom of the P&L, our third quarter GAAP earnings per share of $3.04 was 52% higher than last year when we recorded more than $500 million of interest expense on early debt retirement.\nOn the adjusted earnings per share line, where we excluded early debt retirement expense, we earned $3.03 in the quarter, representing an 8.7% increase from a year ago.\nCompared with two years ago, both GAAP and adjusted earnings per share have increased more than 120%.\nTurning now to capital deployment, I'm going to start as always with our long-term priorities.\nFirst, we look to fully invest in our business, and projects that meet our strategic and financial criteria.\nNext, we support the dividend and look to build on our long history of annual increases, which we've maintained every year since 1971.\nAnd finally, we return any excess cash within the limits of our middle A credit ratings through share repurchases over time.\nOn the capex line, we'd invested $2.5 billion through the first three quarters of 2021 and expect to reach about $3.3 billion for the full year.\nAs I mentioned last quarter, this is somewhat lower than our expectation going into the year and reflects a retiming of project spending into next year, given that we've experienced delays on some projects relating to external factors like permitting and inspections in some communities.\nHowever, as John mentioned earlier, we're eager to invest in a long list of productive growth opportunities over the next few years, adding new stores, remodeling existing stores, building replenishment capacity in our supply chain, and rolling out additional sortation centers.\nAs of today, we continue to believe these investments will amount to capex in the $4 billion to $5 billion range in 2022, and we'll continue to refine our view in the months ahead.\nTurning now to dividends, we paid $440 million in dividends in the third quarter, up $100 million from last year.\nThis increase reflects a 32% increase in the per-share dividend, partially offset by a decline in share count.\nI want to pause here and take note of the fact that with the payment of our December dividend, we'll officially achieve our 50th consecutive year of annual increases in the per-share dividend, something very few companies have achieved.\nAnd lastly, given our cash position and strong cash generation by our operations, we continue to have ample capacity for share repurchases within the limits of our middle A ratings, even after we've made robust investments in capex and dividends.\nIn the third quarter, we deployed $2.2 billion to repurchase 8.8 million of our shares, bringing our year-to-date total up to $4.9 billion.\nAs I've mentioned in prior quarters, given our continued strong financial performance, our debt leverage has been lower and cash on the balance sheet has been higher than we'd expect to maintain over the longer term.\nAs a result, going forward, we expect to increase our leverage and reduce our cash position at a pace that's consistent with our financial expectations, credit rating goals, and assessment of the external environment.\nI've mentioned before that the timeline to move those metrics fully back to historical levels will likely be a multi-year journey.\nAnd the rapidly changing conditions we've seen over the last two years demonstrate why it's prudent to maintain a thoughtful pace.\nAs always, I'll end my review of performance with our after-tax return on invested capital, which measures the quality of our current performance in the context of the investments we've made over time.\nFor the trailing 12 months through the end of Q3, our business generated an after-tax ROIC of 31.3% compared with 19.9% a year ago.\nThis is incredibly robust performance and demonstrates why we are enthusiastically planning to continue investing in our business.\nNow, let me turn to our expectations for the fourth quarter and full year.\nNinety days ago, we said we were planning for high single-digit growth in our comparable sales over the back half of the year.\nWhile we still believe that's in the range of possible outcomes for the fourth quarter, we just exceeded that expectation in Q3.\nAs such, we're planning for a Q4 comp in the high single-digit to low double-digit range, consistent with the range we've seen over the last two quarters.\nIn terms of profitability, we continue to expect that our business will deliver a full year operating margin rate of 8% or higher, up significantly from 7% in 2020.\nThis rate favorability, combined with the full year sales growth we're positioned to deliver, would translate into another incredibly strong year of profit growth, following a record year in 2020.\nAnd I'll give you the honest answer, which is that it's almost certainly some of both, and no one knows the precise answer.\nThat said, there's no doubt that supply chain bottlenecks should ease over time.\nHowever, beyond the supply chain, we're also facing product cost increases from some vendors driven by higher costs in their businesses.\nAnd while you heard from John that we're extremely well-positioned given our team investments over the last few years, the labor market remains very tight across the country.\nSo how do we think about the future.\nFrom a financial standpoint, we focus first on serving our guests and translating that focus into further growth, an area where we see a lot of runway.\nAs you've seen with the investments we've made and continue to make, we're earning deeper trust and engagement from our guests.\nThis trust leads to more trips and broader shopping across our merchandise assortment and fulfillment services.\nWith a skilled and agile team focused on driving guest engagement, further growth, and market share gains, we're confident that our durable model can continue to offer compelling value for our guests, accommodate continued investments in our team, and deliver outstanding financial performance, even in the face of a challenging external environment like we're facing today.\nThis is one more example of the Power of And.\nThe financial results I have the privilege of sharing quarter after quarter wouldn't be possible if Target didn't have the best team in retail.\nThis comes in part from a heightened focus on prioritization in which we ask our team to focus on a small list of key enterprisewide priorities with a goal of making much more rapid progress toward the goals that matter most.\nWith prioritization, we've also seen more alignment across the organization.\nRegardless of where specific team members might work, our enterprise priorities guide their decision-making, allowing them to take action and change course faster when facing rapidly changing external conditions.\nBeyond prioritization and alignment, we've also achieved a higher degree of collaboration.\nWhen tackling business problems, it becomes easier for everyone to communicate and partner cross-functionally to achieve our common goals together.\nPrioritization, alignment, collaboration, three important concepts that deliver compelling outcomes in a large organization like ours.\nAnd in our remarks today, you've heard us highlight some of those benefits which helped drive strong Q3 performance despite challenging macro conditions: a unified focus on serving our guests; collaboration between merchandising, marketing and operations teams as they optimize holiday promotions; joint efforts between our stores, supply chain, merchants, and vendors to address supply chain bottlenecks and find solutions in support of our inventory.\nTo say we're feeling the impact of those benefits already this holiday season would be an understatement.\nIn fact, I'd place some alongside our multi-category portfolio, our unmatched same-day services, and the skill of our extraordinary team as keys to our holiday readiness.\nThere's no question that, because of their dedication and connection to our guest, we stand ready for an exceptionally strong holiday season.\nThroughout the team, across every function, I've seen the energy and passion as they prepare for the busiest season of the year.\nAnd I'm confident that same energy and passion will ensure Target's consistent and sustainable growth over the longer term as well.\n", "role": "user" }, { "content": "compname reports ‍q3 gaap earnings per share $3.04 q3 adjusted earnings per share $3.03.\n‍q3 gaap earnings per share $3.04; q3 adjusted earnings per share $3.03.\n‍q3 comparable sales growth was driven entirely by traffic.\n‍q3 comparable sales grew 12.7%, on top of 20.7% growth last year.\nfor q4 2021, expects high-single digit to low-double digit growth in comparable sales.\nhave a strong inventory position heading into peak of holiday season.\ncontinues to expect fy operating income margin rate will be 8% or higher.\n‍q3 store comparable sales increased 9.7%, q3 digital comparable sales grew 29%.\n", "role": "assistant" } ]

[ { "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 pleased to have you join us for a discussion of Tenet's second quarter 2021 results as well as a discussion of our updated financial guidance for the year.\nTenet's senior management participating in today's call will be Ron Rittenmeyer, Executive Chairman and Chief Executive Officer; Dr. Saum Sutaria, President and Chief Operating Officer; and Dan Cancelmi, Executive Vice President and Chief Financial Officer.\nActual results and plans could differ materially.\nStarting with as we take a look at our results, I wanted to offer somewhat of a look back on where we are, particularly in the context of what we set out to do as part of our transformation a few years back and even how that transformation is pivoted considering COVID, other challenges we have managed through, and the opportunities we've captured as recently as second corner -- quarter.\nThe cornerstone of our strategy remains our commitment to our four pillars of compliance, quality, service, and safety, which drives consistent improvements resulted in the performance trajectory we have noted for the last several quarters.\nThe results thus far have provided a solid first half of this year and you can see how we are building a truly unique and diversified operation following the strategy we discussed the last few years.\nThe results are in line with the strategy, which we have closely followed, which have resulted in greater diversified EBITDA streams, targeted inflection points for growth, top quality environments for our patients, and the addition of highly skilled positions covering important and high-demand specialties.\nThe output is greater financial strength with greater cash flow generation and a more agile setting overall at every level of the enterprise.\nAnd importantly, we have incorporated community-based programs which have bolstered our ESG commitments, ensuring our sustainability has broad and a strong race going forward.\nThe second quarter in the first half of 2021 have been better than expected on many fronts.\nThis was largely driven by the continued commitment of our strategy, our extensive use of data and analysis which have allowed us to trace deviations quickly, take action as needed, and thus ensured a focus on execution at every level.\nWe've created an environment as COVID cases decreased in which doctors and patients are comfortable coming back to our hospitals and ASCs, and we continue to invest in our service lines and community relationships, which helped ensure a very accessible health system over the last year.\nWe certainly believe and the results support that this approach has been successful and we also believe we have more to accomplish to ensure the approach remains a solid part of our foundation going forward.\nPlease realize we're not claiming any victory and we're not relaxing, other than to recognize the trends remain strong and importantly consistent and underscore our commitment to continuing this development and ensure deeper roots are generated systemwide.\nI would like to take a moment to comment from our perspective on the current COVID situation.\nClearly, the variance, coupled with the unvaccinated individuals has resulted in an uptick in certain parts of the country.\nOur COVID inpatient numbers remain low, roughly 4% of our total cases as of now.\nAnd while we've seen increases in selective markets, given our experience, we're really able to manage through this like we did when we were hit with other waves earlier last year.\nWe have sufficient PPE on hand, we have sufficient capacity across every market and facility, and we remain vigilant to any changes that occur taking appropriate action to continue to process cases effectively based on current and anticipated conditions.\nVaccinations continue to play a crucial role in bringing down the number of COVID inpatients and the number of patients once infected who become seriously ill.\nWe continue to support the vaccination rollout on our own employees and the public at large, advocating for and communicating the significant benefits of vaccinations and other necessary precautions to everyone in our communities.\nIn addition, all of our COVID-safety protocols remain in place in our field locations and have been highly effective and continuing to ensure staff infection rates remain low.\nFocusing back now on the second quarter performance, there are several strategic and financial highlights, which deserve some discussion.\nAs you can see in the numbers, we are delivering a much stronger growth trajectory on the hospital side in terms of admissions, outpatient visits, ER volumes, and surgeries.\nIn particular, the higher acuity work that we have been focused on with general surgery, cardiovascular, ortho, neuro, etc.\n, have been steadily progressing in key markets across the country.\nFor example, last week in El Paso, we announced the expansion effort to increase capacity and serving growing needs along the Eastern regions of the city.\nThe new project to be carried out over the next year and a half will include the addition of 30 elementary units, a third cath lab equipped to provide a higher level of care for patients with stroke symptoms, enhanced capacity to the NICU, and continued efforts to expand trauma services and robotics.\nIn San Antonio, we will soon move forward on our plans to build a new medical campus as the city continues to expand.\nThis multi-phase project is slated to begin later this year and will include medical office buildings and ASC, an acute care hospital with the potential for additional medical and retail entities in the future development phases.\nWe plan to invest in critical services including cardiovascular, maternity, and surgical care at a scale that is commensurate with the needs of that area.\nOncology is another area of focus as we recently announced a new affiliation between Memphis-based Saint Francis Healthcare and world-class West Cancer Center & Research Institute, which is an independent Comprehensive Cancer Center.\nThe project will include a new cancer urgent care center at Saint Francis, the first of its kind in the area as well as a specialized hospital within a hospital with dedicated oncology beds and an investment in the latest treatments all staffed by professionals trained in cancer care.\nIn addition, Saint Francis has the largest number of surgical robots in one location in the mid-South, which the surgeons of West Cancer will use to perform minimally invasive surgeries that can lead to shorter hospital stays and faster recoveries.\nOur commitment to attracting and retaining quality physicians remains a critical element of our growth strategy.\nThat effort spans multiple service lines across our hospital portfolio and especially in USPI.\nFor example, in Palm Beach, we're completing the buildout of a large physician group, focused on general surgery with specialization of care and a team environment to best serve the larger community.\nIn Phoenix, we have a highly talented group of physicians in our Biltmore cardiology group and we've been working to significantly expand their in-market presence.\nIn Palm Springs, we're building a top-quality, multi-disciplinary orthopedics aimed for surgery, spine, and trauma group.\nAnd with USPI, we've added more than 570 physicians joining our medical staffs during this quarter, bringing the number now that have joined to 1,100 year-to-date.\nThese are only a couple of examples and there's more to come.\nTogether with the investments I mentioned earlier on expansions, these activities are actively supporting our current performance and we see a long runway in front of us.\nFinally, focusing on our hospital portfolio, as you know, we recently announced the sale of our Miami-based hospitals, which is compelling for several reasons.\nWe received an attractive multiple for the transaction from a credible and experienced buyer who will support continued development of these facilities.\nConifer remains the revenue cycle provider post sale.\nFlorida remains a very important part of our portfolio as our five Palm Beach hospitals, which continue to grow and improve, coupled with more than 40 Florida ambulatory assets ensures a very strong, viable network in our continued -- in this continually growing area.\nThis is supported by our successful physician recruitment efforts in the state and specifically in the Greater Palm Beach market.\nAs we focus investments on procedural care modernization, program ProMed progress managed service line development, market branding, and overall expansion to meet current and future community needs.\nStrategically, the Miami transaction also continues the objective of diversifying our EBITDA further to our Ambulatory segment, which we project to be approximately 43% or so by the end of the year.\nOur hospital portfolio is now positioned as the number one or two in 70% of our markets and with the Miami sale, that number will edge higher.\nAnother segment then will be USPI.\nUSPI had a very good quarter in line with our expectations and the mix of business continues to be weighted toward higher acuity cases in comparison to 2019.\nThe integration of SCD facilities has been going well and in terms of other development activity, we added four facilities to USPI in Q2.\nWe continue to presume the same type of opportunities we spoken about previously, and we have a healthy and strong pipeline that we're working to deploy.\nThat includes USPI's traditional three-way model as well as a greater two-way opportunities, both of which foster direct collaboration between USPI and local physicians.\nAnd we are continuing our historical strong efforts on developing de novos, in which we handle all aspects from syndication to first patient.\nOrganic growth opportunities continue to remain substantial throughout the balance of the year and beyond USPI.\nUSPI has in-house, a very advanced service line and development team, and in the second quarter, for example, we added 25 new starts for service lines across the range of specialties bringing that total to 45 year-to-date.\nWe also remain a leader in musculoskeletal surgery and the depth of our platform across other types of procedures keeps expanding, allowing our facilities continue to hit important milestones, servicing the needs of their respective communities.\nQuality remains a cornerstone of Tenet's overall mission as a company and USPI given its more intimate patient experience, continues to set a high bar in this area.\nUSPI's patient experience results have again earned important recognition in the last year.\nFor example, all but one of our eligible surgical hospitals are either four or five-star rating in the most recent age gaps survey.\nLet's take a minute and talk about Conifer.\nConifer continues to deliver strong margins, remain on track with our growth plans, and we've made some opportunistic hires at all levels as our pipeline has begun to expand.\nWe are in the middle of a more targeted and efficient tech transformation at Conifer as well as the Global Business Center, both defining and accelerating our innovation roadmap.\nTechnology as an offering has moved to the forefront and become one of our main strategic pillars.\nAnd we recently hired a new Chief Technology Officer at Conifer, who will advance these efforts significantly.\nOperationally, we continue to deliver strong cash collections on behalf of our clients at Conifer over the last year and we remain very pleased with that performance.\nSo in closing my remarks, the second quarter was a very tangible example of how clear and direct business fundamentals properly adjusted for the situations we face result in sustainable performance.\nWe are a data-driven, real-time analysis company who properly executes on a consistent trajectory and when you reflect on the last years, our results have been consistent and directionally aligned with our strategy and above all transparent.\nLet's begin on Slide 6.\nFollowing a strong first quarter, we produced another very good quarter as we generated adjusted EBITDA in the quarter of $834 million which was $109 million better than the midpoint of our expectations.\nConsistent with the themes in the first quarter, each of our three business units delivered solid results in the quarter.\nOur hospital and ambulatory volumes improved across the board, patient acuity remained strong, and cost continued to be well managed, all of which contributed to a sequential margin improvement in all three of our businesses.\nLooking back to the second quarter of 2019, our consolidated adjusted EBITDA this quarter represents a compounded annual growth rate of about 12% and our adjusted EBITDA margin increased 170 basis points, excluding grants.\nAs a result of another strong performance in the quarter and some additional grant income which was not forecasted, we increased our 2021 outlook for the second time this year, which I'll discuss further in a few minutes.\nI'll begin with our hospitals, which produced another very strong quarter.\nSubstantially, all of our 20 hospital markets exceeded our expectations for the quarter, including 14 markets that exceeded our internal EBITDA forecast by more than 10%.\nSurgical volumes, ER visits, and outpatient visit volumes during the quarter returned at a faster pace, and patient acuity remains at higher-than-normal levels, and pricing yield remains strong as well.\nOur case mix index in the quarter was about 10% higher than the second quarter of 2019.\nThese positive trends were further supported by our continuing cost control initiatives to yield further operating efficiencies to help mitigate the impact of incremental cost pressures as a result of the pandemic, such as elevated temporary contract labor and PPE costs.\nOur hospital adjusted EBITDA margin, excluding grants, was 10.9% in the second quarter, which was 50 basis points higher than in the first quarter of this year and 150 basis points higher than the margin we reported in the second quarter of 2019.\nAs a reminder, our hospital margins do not include the results of our very strong margin ambulatory business, which is reported separately.\nTurning to our ambulatory business, USPI continues to deliver on its value proposition on providing high-quality care and a consumer-friendly, low-cost environment while producing attractive financial results.\nUSPI generated EBITDA of $295 million in the quarter, which included $20 million of grant income.\nUSPI's EBITDA in the second quarter, excluding grants, represents a compounded annual growth rate of about 15% looking back to the second quarter of 2019.\nSurgical volumes this quarter recovered to 100% of pre-pandemic levels, patient acuity, and revenue yield remained strong, and cost continue to be well managed.\nUSPI's EBITDA margin, excluding grants, of 41.4% was 190 basis points higher than the second quarter of 2019.\nAlso, we anticipate approximately 43% of our consolidated adjusted EBITDA in the second half of 2021 will be from our USPI business, demonstrating further progression toward our goal of approximately 50% by 2023.\nTurning to our revenue cycle management business, Conifer generated $90 million of adjusted EBITDA and continue to deliver strong margins of 28.2%, which was 50 basis points higher than the first quarter.\nAlso, Conifer's cash collection performance for our hospitals continues to be an important contributor to our strong cash flow results so far this year.\nLet's now look at volume for the quarter on Slide 8.\nOur hospital and ambulatory volumes improved significantly in the quarter compared to last year due to the dramatic impact on volumes in Q2 last year due to the pandemic.\nAnd as I mentioned earlier, volumes rebounded stronger across the board compared to pre-pandemic levels in 2019.\nThese volume trends demonstrate notable improvement from the trends in the first quarter of this year.\nWe continue to be in a strong liquidity position.\nWe ended the quarter with about $2.2 billion of cash on hand and no borrowings outstanding on our $1.9 billion line of credit.\nWe generated $123 million of free cash flow in the quarter or about $275 million before the repayment of over $150 million of Medicare advances we received last year at the outset of the pandemic.\nYear-to-date, we've produced $536 million of free cash flow or about $688 million before the Medicare advance repayments.\nAs we previously discussed, we began to repay the advances as scheduled in April this year.\nOur leverage ratio at the end of the second quarter was 4.17 times adjusted EBITDA and 4.86 times adjusted EBITDA minus NCI expense.\nAlso, we refinanced $1.4 billion of notes during the quarter, which will result in $13 million of future annual cash interest savings and we realized over $100 million of cash proceeds during the quarter from the sale of our urgent care centers, a medical office building, and some other property.\nLet's now move to Slide 10, which highlights key cash flow sources and uses during the quarter.\nWe've provided this information since the beginning of the pandemic to illustrate that we're generating net positive cash flows when you exclude non-routine cash received or used related to stimulus funding and cash inflows and outflows from non-routine transactions, such as early retirement of debt, acquisitions or asset sales.\nTurning to Slide 11, let's review our updated 2021 guidance.\nThis slide shows the key factors that have contributed to us raising our 2021 adjusted EBITDA outlook twice this year.\nAs you can see on the slide, we raised our guidance, $100 million after the first quarter due to our strong performance and grain income that we were able to recognize, which was not assumed in our original guidance.\nSimilar to the first quarter raise, we are again increasing our 2021 guidance primarily as a result of our outperformance in the second quarter.\nThe other item to call out is that we are assuming the sale of our Miami-area hospitals will be completed during the third quarter which will result in about $55 million of earnings being removed from our previous guidance.\nOur adjusted EBITDA outlook for 2021 is now projected to be $3.200 billion at the midpoint, which is $200 million higher than our original outlook at the beginning of the year.\nSince we are assuming that the sale of our Miami hospitals will occur on August 1st this year, we removed approximately $22 million of Miami EBITDA from our Q3 EBITDA outlook and approximately $167 million of revenue.\nAfter normalizing for the Miami sale, the midpoint of our Q3 EBITDA is slightly above the current EBITDA consensus for Q3 and the midpoint of our revenue outlook for Q3 is also in line with the current consensus for Q3.\nFor the last five months of the year, we removed $55 million of EBITDA from our outlook due to the planned sale and we removed about $418 million of revenue from our outlook due to the planned sale.\nListen, that's a lot of numbers but we believe it's important to point out our Q3 guidance is in line with current Q3 consensus after you normalize for the planned sale of Miami hospitals.\nAnd to reiterate, we've raised our full-year 2021 guidance for the second time this year with our full-year EBITDA midpoint now $200 million higher than the start of the year.\nI want to point out that our updated outlook includes a pre-tax book gain of about $400 million for the anticipated sale of the Miami hospitals, but this gain is not -- it's not included in our adjusted EBITDA or adjusted earnings per share guidance.\nAs for cash flows for the year, at the midpoint, we anticipate generating free cash flow of about $1.275 billion and adjusted free cash flow of $1.400 billion this year at the midpoint before taking into consideration the repayments we anticipate making in 2021 of approximately $700 million for Medicare advances and the deferred payroll tax match.\nWhile we have -- we will have to repay the Medicare advances and the taxes this year, we have already sufficiently reserved for that amount in our balance sheet cash.\nFree cash flow for the year of $1.275 billion before the repayment of the advances and the taxes, less expected cash NCI payments of $470 million results in positive net cash flows of about $800 million this year.\nAlso, I wanted to mention our income tax payments for 2021 are anticipated to be approximately $150 million.\nThe increase in expected tax payments in the back half of the year is due in large part to the about $50 million of federal and state taxes related to the gain on sale of our Miami hospitals.\nI do want to remind you that utilization, net operating loss carry-forwards for -- from the two most recent years are limited to 80% of taxable income for 2021 tax filing purposes.\nThe underlying free cash flow generation of the company has significantly improved over the past several years and we continue to maintain sufficient liquidity to continue to invest in growth opportunities.\nOur strong second quarter results together with our ongoing enhanced operational execution increases our confidence that we are on the right strategic path in our ability to deliver consistent results.\nTheir teamwork and level of devotion continues to be exceptional.\nI really don't have any other closing comments.\nI think we've covered the waterfront here.\nSo I think we ought to just move to questions in the time remaining.\n", "role": "user" }, { "content": "tenet healthcare- fy 2021 adjusted ebitda outlook range now $3.150 billion to $3.250 billion (previously $3.000 billion to $3.200 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's discussion will also reference certain non-GAAP financial measures, such as operating income and accident share loss and combined ratios, excluding catastrophes, among others.\nI will begin by discussing our second quarter financial highlights in the context of the current business and economic environment.\nI'll then provide a strategic review of each of the segments during the quarter.\nJeff will review our financial results in more detail and provide some thoughts on the quarters ahead.\nWe are very pleased to report outstanding second quarter results, highlighted by strong growth with net written premium increases of 11.7% or 8.6% on an adjusted basis, excluding the impact of 2020 premium returns, driven by gains across all segments.\nOperating income of $104 million or $2.85 per share, operating return on equity of 14.7% and a combined ratio of 94.4%.\nOur strong underwriting results are a reflection of our ability to capitalize on evolving market opportunities while navigating the complexities of this dynamic underwriting environment.\nFrom my perspective, there are two key takeaways for the second quarter results.\nFirst, our growth has accelerated and exceeded pre-COVID-19 levels in all segments.\nAnd second, we continue to achieve broad-based profitability with strong underlying underwriting results in each of our businesses.\nI would like to briefly discuss each of these points in turn.\nWith respect to growth, we delivered a meaningful step-up in premium increases in each of our business segments compared to the first quarter of this year.\nAll of our major segments now are exceeding pre-COVID-19 growth levels as a result of our disciplined and consistent pricing strategy, strong retention and robust new business production metrics.\nStrong relationships with our agent partners provide an opportunity for solid growth potential going forward, as we capitalize on our most profitable market sectors and leverage our state-of-the-art technology platforms.\nAdditionally, we continue to enhance the level of sophistication within our claims data and analytics, including our real-time driving pattern and inflation monitoring tools.\nI've never been more confident in our ability to grow profitably.\nIn Personal Lines, we delivered growth of 11.6% in the quarter or 5% excluding the effect of premium returns in the prior year period.\nOur continued strong growth momentum in this business is a reflection of sustained agent and customer interest in our attractive account offerings, targeted pricing actions, the strength of our market position and our ability to successfully adapt and navigate a competitive marketplace.\nWe grew our Commercial Lines business by 11.7%, driven by the strong performance of our specialty portfolio as well as our small commercial business, which benefited from the economic recovery and is beginning to see the impact of the rollout of our new quote-and-issue platform, TAP sales.\nOverall, we are well positioned to continue driving growth in all segments, and we now expect to deliver mid- to high single-digit growth for the remainder of the year.\nRegarding loss trends, we are still experiencing some remaining lower auto loss frequency in the quarter, reflecting the fact that a meaningful portion of our customer base likely has the opportunity to utilize more flexible working arrangements.\nAdditionally, in many areas of the country, our data indicates reduced traffic and less congested rush hours as potentially lingering consequences of the pandemic.\nWe expect frequency will reach its new normal over the course of 2021, which may provide some persistent lower accident frequency in certain geographies, given our mix and customer profile.\nWe believe this benefit will be partially offset by near-term increased severity from materials inflation and more severe accidents, including elevated fatalities.\nWe delivered strong Commercial Lines profitability in the quarter, although we experienced some elevated property losses, including in other commercial, which we do not believe are necessarily recurring or indicative of a trend.\nWe've been watching the overall property large loss activity for several quarters, and we believe it is consistent with that of the market.\nThus, we think that there is room for additional rate increases in the property lines moving ahead.\nAnd as always, we remain very prudent on our loss selections.\nWe are mindful about the potential for increased social inflation, medical information and treatment delays and other inflationary trends.\nWe are watching the economic recovery and the acceleration of business activity closely, as well as the full reopening and catch-up of the court system in many jurisdictions.\nWhile the impact and duration of inflation on our book of business is yet to be determined, we believe our comparatively short reserve duration positions us well to manage through that potential exposure.\nWith that as background, I would now like to share some recent highlights by business beginning with Personal Lines.\nOur efforts to selectively apply rate adjustments where warranted have been very successful, as demonstrated by our sequential PIF growth of 1.8% in auto and 1.7% in home during the quarter.\nNew business growth came in ahead of expectations, and we are seeing significant sequential improvement and retention.\nOur preferred customer focus and our value-based approach represents significant competitive advantages, particularly as agents become even more strategic with their Personal Lines operating models and carrier placement decisions.\nAccount business represents over 85% of our overall book, leading to a high level of retention and business stability.\nOur Personal Lines retention improved by over two points in the second quarter compared to the first quarter, demonstrating the agility of our approach and the success of our business strategy even in this very dynamic environment.\nIn Personal Auto, we expect our claims auto frequency to gradually approach new normal levels as the year progresses.\nThough the pricing environment remains competitive, we are seeing clear indications that the rate deceleration has bottomed out and the industry is looking to increase rates.\nThis is to be expected given the nature of the Personal Lines pricing cycle, as historically, Personal Auto rates adjust to loss trends rather quickly.\nWe believe we are more favorably positioned for the future given our prudent pricing strategy throughout the pandemic.\nAs a result, we have much less of a need to significantly increase rates and create customer disruption in the near future.\nWe continue to gain momentum with Hanover Prestige, our full account offering for customers with higher value homes and autos and more complex insurance needs.\nThese customers represent a growing segment of the Personal Lines market, which further positions us as a strategic partner with agents.\nThe contribution of this offering to our overall growth is increasing every quarter with the second quarter benefiting new business growth by three points.\nTurning to Commercial Lines.\nWe executed extremely well on our strategic priorities, posting growth of 12% in Specialty and 11% in Core Commercial, driven by a pickup in new business, rate increases and exposure growth.\nStrong topline growth in our Core Commercial business is expected to continue through the year, driven by the reopening of the economy, continued rate increases and a successful launch of TAP Sales, our small commercial quoting platform, which is proving to be a great addition to our already strong small commercial offering.\nIn the second quarter, we launched this new platform in an additional nine states, bringing the total to 20 states, and we complete the implementation countrywide for our first product business owners advantage by year-end.\nAs a reminder, this multiyear significant investment delivers a comprehensive set of capabilities to the marketplace.\nIt includes a new user front end for our agents, new products and endorsements, new states, new sophisticated pricing algorithms, a new policy administration system and new self-service capabilities.\nIn those states where TAP sales was deployed in the first quarter of this year, submissions significantly increased and our hit ratio also improved.\nThe response to this offering has been incredibly positive with agents praising the product's ease of use and simplified quoting process, calling it best in market.\nThe efficiency gains are substantial, enabling the quoting and an issuance of a single location risk in 50% of the time it required before.\nThe investments we have made to modernize our infrastructure and enhance our capabilities across our business are being realized at a time when agents are consolidating and buying more agencies that have substantial small commercial books of business.\nThis is forcing them to become more strategic about the carriers with whom they do business.\nOur account focus, easy-to-use tools and product breadth are driving increased efficiencies for our agents and increasing our value proposition to them.\nWe are confident that our robust offering will provide further growth and agency penetration opportunities for us in the quarters ahead.\nIn Specialty, we also delivered significant growth.\nDuring the quarter, we achieved double digit growth in our Marine, E&S and management liability lines, which are among our most profitable businesses.\nWe continue to leverage our expanded products and capabilities in the financial institutions and retail E&S spaces as well.\nAnd we also advanced our total Hanover strategy, deepening the use of our specialty capabilities across our Commercial Lines customer base.\nAs agents continue to offer specialized products to more customers, we are confident that our Specialty business will continue to generate critical growth for us going forward.\nWe are pleased with the commercial rate environment and the exposure dynamics in our markets.\nWe achieved rate increases of 6.5% in Core Commercial and sustained strong retention at 84.9%.\nWe continued to implement double digit rate increases in Commercial Auto and upper single digits in property with granular pricing segmentation and a strong differentiation in price and retention by risk type.\nExposure growth exceeded historical levels in the quarter, which bodes well for our growth prospects going forward.\nWe achieved rate increases of 8.5% in Specialty, up from 7.5% in the first quarter.\nIn general, Specialty rates can fluctuate from quarter-to-quarter as a result of large account renewals and other unique items.\nBut overall, pricing in our Specialty markets has been very strong with price increases continuing to outpace loss trends.\nThere continue to be meaningful drivers that support the strength of the rate environment in Commercial Lines, including the potential of an increase in social inflation, property loss pressures from materials costs, increased reinsurance costs and low interest rates.\nWe believe our focus on smaller accounts and differentiated offerings will help to shield us from meaningful pricing deceleration, which can occur in larger-sized brokered accounts.\nIn summary, the exceptional growth we delivered during the quarter reflects the significant positive momentum we have established across our business and sets the stage for continued profitable growth.\nWe are performing exceedingly well in an uncertain environment, leveraging our unique distribution capability, distinctive agency and customer-centric strategies; disciplined approach to underwriting and pricing; and broad and specialized product offerings.\nAs we begin the second half of the year, we are encouraged by our performance year-to-date and confident in our ability to advance our strategy and capitalize on opportunities for profitable growth going forward.\nAs I have said many times, we are extraordinarily proud of the work our team has done over the course of this public health crisis, delivering on our promises, maintaining and even enhancing the levels of service we provide to those who depend on us.\nAs we continue to drive our business forward, positioning our company to deliver sustained profitable growth, we are being very thoughtful and opportunistic determined to emerge from this ordeal as a better insurance company, employer and corporate citizen.\nWe are closely monitoring the rapidly changing employment trends and practices as well as employee preferences, intent on strengthening a culture that for us has been an important competitive advantage, enabling us to attract and retain outstanding talent.\nWe have begun to invite employees back to work on a largely voluntary basis and expect to fully reopen our offices sometime during the fall, assuming the public health environment is conducive to do so.\nWe are planning to embrace a progressive hybrid model, one that will enable us to provide agents and customers the products and services they expect and deserve and to provide our employees a flexible engaging work environment where they can build rewarding careers.\nThese are truly exciting times for those that are up for the challenge.\nFor the second quarter, we reported net income of $128.5 million or $3.52 per diluted share compared with net income of $115.2 million or $3.01 per diluted share in the second quarter of 2020.\nAfter-tax operating income was $104 million or $2.85 per share compared with $62.7 million or $1.63 per share in the prior year quarter.\nThe difference between net and operating income is due to the increase in the fair value of equity securities.\nBook value per share increased 4.8% in the quarter driven by earnings and to a lesser extent, an increase in unrealized gains in our fixed income portfolio.\nWith the economy largely closed in most of the country placed under stay-at-home orders, many lines of business experienced historically low frequency of claims last year.\nIn response to the fewer miles driven, we returned some premiums to our auto policyholders which impacted our reported net written premiums and underwriting ratios.\nIn addition, business exposures, payrolls and receipts were exceptionally low in 2020.\nAs the economy continues to open up and individuals return to the roadways, we believe our more recent growth trajectory and loss experience, as well as our original expectations for 2021 are better barometers by which to assess our performance.\nWe are pleased with our overall combined ratio of 94.4% in the second quarter of 2021 compared to 96.2% in the prior year quarter, which, a year ago, reflected several large catastrophe events, including losses from social unrest.\nIn the second quarter 2021, we incurred catastrophe losses of $76.8 million or 6.5% of net earned premium, 40 basis points above our quarterly expectation, primarily reflecting severe wind, torrential rain and hail events throughout the Midwest in June on the heels of a very light April and May.\nMichigan, our largest Personal Lines state, was severely impacted by the rain and flooding events in mid- to late June, particularly in the homeowners line.\nMichigan is a very profitable state for us and historically runs at a low 90s combined ratio.\nHowever, when adverse weather events occur, as expected, we do see losses.\nWe also experienced some favorable catastrophe development in the quarter from prior years, which is a testament to our prudent reserving approach.\nPrior year reserve development, excluding catastrophes, was favorable in the quarter, adding $12.6 million to the bottom line, primarily reflecting continued favorability in workers' compensation, Personal Auto and several Specialty lines.\nWe continue to be prudent in our reserving in Commercial Auto, where extension of loss patterns and prior bodily injury development warrant a cautious approach.\nAdditionally, in light of the pandemics effect on loss patterns in 2020, we remain vigilant as we assess ultimate loss costs.\nWith the economy regaining momentum, we are also mindful of the potential for reserving uncertainties related to social and economic inflation, delayed medical procedures and information as well as ongoing court delays.\nOver the past several years, we have placed a considerable amount of emphasis on strengthening our balance sheet.\nIt is stronger than it has been in many years coming out of the second quarter, and we believe such prudence will serve us well.\nClaims activity related to COVID-19 exposures continues to be very manageable, and we are holding substantial IBNR in that area.\nOur expense ratio for the second quarter of 2021 was 31.2%.\nThis was in line with our expectations, consistent with the second quarter of 2020, an improvement from the first quarter of this year.\nWe are confident that we can deliver a 30 basis point expense ratio improvement for full year 2021.\nOverall, current accident year combined ratio ex-CAT was 89% in the quarter.\nThis very strong underwriting result is a reflection of our diversified book of business, our earning in of rate increases and some lingering frequency benefit in Auto Lines.\nLooking at our underlying underwriting results by segment.\nOur Commercial Lines combined ratio, excluding catastrophes, was 89.5%, up 2.7 points from the second quarter of last year, primarily reflecting a comparison to an extraordinarily low level of losses in the second quarter of last year.\nOur CMP current accident year loss ratio, excluding catastrophes, was 57.6%, in line with most recent trends but slightly elevated compared to our expectations, driven by a higher incidence of property large losses.\nWe believe that our experience is relatively consistent with that of the industry, adding to our continued expectation that there is room for additional property rate increases in the marketplace.\nWe achieved substantial CMP property rate increases in the second quarter, and we believe this trend will continue.\nIn other Commercial Lines, the current accident year loss ratio, excluding catastrophes, was 55.3%.\nThis result reflected the impact of a large loss and reinstatement premium triggered thereon in our highly profitable Hanover Specialty Industrial business.\nIn fact, this particular loss was offset by the overall favorability in our specialty business within the quarter to bring overall loss amounts generally in line with our expectations.\nOur specialty industrial business runs at a long-term combined ratio in the sub 80s.\nWe are confident in our underwriting capabilities and future strong performance in this business.\nOur Commercial Auto current accident year loss ratio, excluding catastrophes, remains relatively consistent with the recent quarter's results.\nWe are continuing to take substantial rate increases to address the industrywide multiyear liability issues affecting this line.\nTurning to workers' comp.\nCurrent accident year loss ratio was 61.5%, which was generally in line with recent historical results.\nOur second quarter 2020 ratio was unusually low due to stay-at-home mandates for much of the country.\nWhile the underlying trends in this line remained largely favorable, we continue to be very prudent with our loss picks in light of the rate environment and the potential for new risks posed by office reopenings for certain businesses.\nCommercial Lines net written premiums grew exceptionally well at 11.7% in the second quarter, powered by our small commercial and Specialty businesses.\nWe achieved strong operating metrics, including improved rate, meaningful increases in exposures, return to strong new business growth and a solid core commercial retention of 84.9%.\nOverall, despite some minor and expected variability in losses, we are very satisfied with Commercial Lines trends and underwriting returns in the quarter.\nTurning to Personal Lines.\nOur combined ratio, excluding catastrophes, was quite low at 85.3%, but up from 76.8% in the same period last year reflecting the benefit of COVID-19 related auto claims frequency declines.\nOur Personal Lines auto current accident year loss ratio, excluding catastrophes, was 62.2% below historical trends, but up slightly from 60% in the first quarter.\nWhile frequency trends industrywide are quickly moving toward historical norms, our business is still benefiting slightly from lower frequency.\nWe believe there may be a modest longer-term frequency benefit due to changing driving patterns from work from home flexibility of our customer base.\nSo we are observing these trends carefully, and we continue to do an excellent job managing the balance between growth, rate and profitability.\nCurrent accident year loss ratio in our homeowners line remained relatively consistent with prior results, but was slightly above our expectations.\nElevated property loss activity and higher material costs indicate the need for future rate increases.\nWe are seeing a significant push for rate in homeowners in the independent agency space.\nPersonal Lines net written premiums grew 11.6% in the quarter or 5% adjusted for last year's premium returns.\nThis strong result was driven by meaningful acceleration in new business.\nWe also reestablished momentum in our renewal premiums as a result of lower rate increases in certain areas and improve retention.\nThe strength of our data and analytics team and swift communication of market trends across our businesses positions us to opportunistically grow when market conditions allow and make well-informed adjustments when necessary.\nWe are pleased to see Personal Lines largely rebound to its pre-COVID-19 growth levels.\nWe have full confidence in Personal Lines strong growth and profitability prospects.\nMoving to investment performance.\nOur net investment income was $75.6 million for the quarter, up $17.9 million or 31% from the prior year period.\nThis is largely due to an unusual fluctuation in partnership income from period to period.\nNet investment income in the second quarter of 2020 was adversely affected by a $4.6 million loss on limited partnerships, while partnership income in the second quarter of 2021 was $16 million, exceeding our expectations by $9 million.\nOur partnership results through the first half of 2021 do not change our outlook for investment partnerships or overall net investment income for the balance of the year.\nNew money yields continue to put pressure on our overall net investment income.\nAlthough so far, we've been able to meaningfully offset it with robust cash flows from operations.\nWe expect cash generation from our underwriting operations to remain strong.\nCash and invested assets at the end of the second quarter were $9.1 billion, with fixed income securities and cash representing 85% of the total.\nOur fixed maturity investment portfolio has a duration of five years and is 96% investment grade.\nWe have a high-quality portfolio with a weighted average of A plus.\nNet unrealized gains on the fixed maturity portfolio at the end of the second quarter 2021 were $357.8 million before taxes.\nMoving on to our equity and capital position.\nOur book value per share of $88.23 reflects an increase of 4.8% in the quarter.\nWe continue to be thoughtful stewards of our shareholders' capital and deliver on our capital allocation strategy.\nThrough July 26, 2021, we repurchased approximately $10 million of stock, leaving about $395 million of capacity under our stock repurchase authorization that the Board expanded in May.\nIn addition, during the quarter, we paid a regular cash dividend of approximately $25 million.\nOur capital priorities remain unchanged.\nFirst, we strive to maintain our strong capitalization and liquidity; second, we continue to prioritize organic growth for which we generate plenty of capital; and third, we continue to maintain our policy of returning excess capital to shareholders through cash dividends and share repurchases.\nWe will continue to remain nimble and actively manage our capital with the best interest of shareholders in mind.\nLooking ahead, we now expect net written premium growth in the mid- to high single digits in the second half of the year.\nBased on our strong results in the first half of the year, we believe upper mid-single-digit growth for the full year is possible.\nWith two quarters of better-than-expected ex-CAT combined ratio performance, we are improving our full year 2021 ex-CAT combined ratio outlook from 90% to 91% to 89% to 90%.\nAs noted earlier, we remain on track to reduce our expense ratio by at least 30 basis points in 2021 to 31.3% and we expect our third quarter cat load to be 5.2%.\nWe are very pleased with our underlying performance and our ability to continue our positive momentum in the quarter.\nWe are well positioned to sustain our robust growth momentum and top quartile profitability, delivering value to our agents, customers and shareholders.\nIn addition, we are pleased to announce that we will be hosting a Virtual Investor Day on September 23, in which we will discuss the key aspects of our differentiated strategy, go-forward growth drivers and long-range financial targets.\nWe will be providing additional details in the coming weeks and look forward to seeing you there.\n", "role": "user" }, { "content": "compname reports second quarter net income and operating income of $3.52 and $2.85 per diluted share, respectively.\ncombined ratio of 94.4%.\nq2 operating earnings per share $2.85.\nq2 earnings per share $3.52.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's discussion will also reference certain non-GAAP financial measures such as operating income and accident year loss and combined ratios excluding catastrophes among others.\nI will begin by discussing our third quarter financial highlights in the context of the current business and economic environment.\nWe are pleased with our third quarter financial performance, especially given it was a particularly active catastrophe quarter across the industry.\nWe reported earnings per share of $2.46 and an operating return on equity of 13.8% for the quarter.\nOur results reflect strong execution on the strategic tenants that drive our business forward.\nOur company and earnings stream are well-diversified and position us well to withstand environmental challenges, including weather volatility and the ups and downs of the economy and market.\nWe remain steadfastly focused on the hallmarks of our company.\nOur unique distribution strategy and approach, broad-based profitability, disciplined underwriting, effective expense management and a thoughtful capital allocation strategy that includes returning excess capital to our shareholders.\nTurning to our third quarter highlights, first, we are very pleased with the trajectory of our growth and the consistent signs of building momentum in our top-line.\nWe achieved 2.1% growth in the third quarter, which represents a significant and expected recovery from the 2.3% premium decline we reported in the second quarter normalized for one-time premium returns.\nOur leading production indicators are quickly improving and we are encouraged by agency support and commitments, which once again validate the strength of our differentiated strategy and our broad and relevant product offering.\nLooking ahead, we are confident in our ability to drive growth across our portfolio and continue to build on the strong pre-pandemic momentum we had established.\nSecond, as noted in our pre-release on October 13th, our cat losses were slightly elevated in the quarter as a result of tropical storm systems, in particular, Hurricane Isaias and to a lesser extent, wildfires in California, and Oregon.\nOur ability to mitigate the impact of weather events in the quarter is a reflection of the concerted, proactive efforts we have made over the past decade to prudently refine our mix of business.\nTo this end, we have expanded our specialty capabilities and struck the right balance between property and liability risks, while continuing to diligently manage our geographic concentrations and proactively adjusting our business mix.\nWe counted the increasing frequency of weather losses, we reduced our exposures in vulnerable regions of the Southeast, Gulf Coast and West Coast, while reducing micro-concentrations and enhancing our reinsurance protections.\nThese and other actions have enabled us to address potentially increasing weather-related property risks as we grow.\nGoing forward, we are confident these actions along with our increasing use of advanced tools and analytics will position us to continue to deliver consistently strong results across our business.\nThird, we continue to benefit from lower claim frequency in the quarter, particularly in personal auto.\nWhile frequency declined year-over-year, it is beginning to trend toward pre-pandemic levels as the economy reopens.\nAt the same time, we also experienced several large property losses in commercial multi-peril, which occurred in our book of business from time-to-time.\nAfter carefully reviewing the causes of loss and related circumstances, we found no clear correlation between the losses themselves or the prevailing economic environment.\nGiven our strong underwriting guidelines and risk management practices, we have confidence in our ability to manage such risks while continuing to drive profitability through rate increases and prudent mix management.\nLastly, the third quarter was a very active one for us from a capital management perspective.\nAs announced last night, we entered into a $100 million accelerated share repurchase agreement, reflecting the strong excess capital we have generated so far this year from earnings.\nThis decision further demonstrates our commitment to deliver value to our shareholders and the confidence we have in our strong prospects moving forward.\nJeff will provide more details on these items shortly.\nMoving on to review our business highlights, starting with Personal Lines.\nWe delivered net written premium growth of 2.3% in the third quarter compared to a decline of 5.5% in the second quarter or flat excluding premium return.\nNew business submissions in the third quarter were consistent with the third quarter of last year across most territories.\nContributions from renewal premiums continued to fuel growth, although retention was somewhat impacted from the backlog created by the lifting of cancellation and non-renewal moratoriums over the summer.\nOur disciplined account strategy enabled us to effectively manage our business in a highly competitive environment and to drive profitability.\nOur performance reflects a focus on striking the right balance between rate and retention, while achieving price increases where we need them the most.\nOverall, Personal Lines rate increases of 4.7% in the quarter were fairly consistent with prior trends and we are satisfied with the underlying retention when adjusted for the temporary increase in cancellations and non-renewals, following the temporary second quarter increases.\nOur Personal Lines year-to-date retention of 82% is a more indicative measure of our persistency, and should move back to the mid-80s over time.\nAdditionally, we are encouraged by the continued success of our Prestige offering, which is adding 600 new accounts each month.\nBook consolidation activity also is continuing at an accelerated pace, with $71 million signed through the first nine months of the year, exceeding our expectations for the full year.\nThis level of activity further validates our unique approach to cultivating deep partnerships across the independent agency channel.\nWe continue to broaden and enhance those relationships by expanding our geographic reach and introducing product capabilities to address unmet customer needs across our footprint.\nFrom a strategic and operational standpoint, we made significant progress during the quarter.\nEarlier this week, we announced the expansion of our Personal Lines business in Maryland, further diversifying our book of business and expanding our Personal Lines presence to 20 states.\nWe also are expanding our product capabilities in Personal Lines.\nWe recently launched a new suite of products, home business solutions to cover home-based businesses.\nEntrepreneurs throughout the country are starting home-based businesses in record numbers, yet, nearly 60% of these businesses lack adequate insurance.\nTo address that gap, our product provides ala carte options that could be bundled with the existing homeowner policies, including our Prestige offering.\nAs importantly, our Personal Lines team continues to execute exceptionally well in a new regulatory environment in Michigan, following personal auto reform, which went into effect in July.\nAs a top insurer and an industry thought leader in Michigan with 12% of our overall premiums in Michigan personal auto, we advocated for auto reform for more than a decade and it was essential that we excel in our implementation.\nThe reform provides Michigan consumers with the ability to save money on premiums in exchange for a reduced personal injury protection limit.\nCost control measures such as fee schedules and utilization controls should substantially reduce the severity of claims and increase the efficiency of the system once implemented mid-next year.\nAt the beginning of last year, we laid the foundation for the transition with a proactive plan that included operational, educational and self-service tools for agents and consumers.\nOur third quarter Michigan auto premium grew approximately 4%, while average net premium per customer for us remain relatively consistent.\nIn summary, we remain confident that we will maintain our underwriting profitability in Michigan, while we gain share of the high-quality risks in the state outperforming the market over time.\nOverall, we are very pleased with our Personal Lines performance and how we are navigating the market.\nOur predominantly full account and more complex customer profile position us well in the competitive environment.\nWe are closely watching the competitiveness of our products and adjusting our rates to strike the right balance between growth and profit.\nWe are keeping an eye on frequency in anticipation of it returning to more normal levels.\nOur unique agency inside tool coupled with comparative rate monitoring provides great transparency within our distribution and allows us to navigate the market successfully.\nTurning to Commercial Lines.\nWe are very pleased with the growth momentum in our business.\nWe delivered net written premium growth of 1.9%, up from a decline of 4.6% in the second quarter.\nWe are encouraged by the accelerated pace in most production metrics, including renewal premiums, which are trending higher than historical averages and new business which has rebounded from a low point in the second quarter, but still remain subdued compared to pre-pandemic levels.\nIn Small Commercial, we are pleased with policy exposure levels, which turned positive for the quarter.\nAlthough still slightly negative, middle-market exposures have come back significantly from the second quarter.\nNotably, the growth momentum in our specialty businesses has almost returned to pre-pandemic levels.\nWe have rebounded to our 2020 direct written premium plan on a year-to-date basis with robust new business and renewals.\nOur management liability, healthcare, E&S and specialty property businesses have posted growth in the double-digits in the quarter, while Specialty overall growth was 5%.\nThe success of our Specialty business goes back to our value proposition of providing a broad set of relevant and distinctive products and capabilities that are delivered to customers exclusively through high-quality independent agents.\nRate continues to accelerate in our core Commercial Lines book, now standing at 5.7% while Specialty rates are meaningfully higher led by management and professional liability, healthcare and specialty property.\nIn Core Commercial, we are seeing significant rate firming in Property Lines, while we continue to push double-digit rate in commercial auto.\nOver the last several quarters, we and others have commented on the need for rate across the commercial insurance space.\nThe cumulative impact of rising social inflation, severe weather and continued lower interest rates should help continue to push commercial rates up in the near-term.\nWhile our social inflation was less obvious during the height of the pandemic with the backlog of court dockets and overall economic distress, we fully expect it to reemerge and perhaps even exceed previous levels.\nOn the basis of focusing on these long-term loss trends, we believe that the rate we are achieving currently is meaningfully in excess of loss trend.\nWe are very optimistic that Commercial Lines upward rate trajectory will continue.\nOn the technology and innovation front, our newer product launches continue to expand with E&S growth accelerating and growing double digits with our best agents in our target markets.\nWe continue to broadly leverage our core commercial infrastructure and relationships to drive Specialty growth.\nAs a logical and important step in this evolution, we've recently expanded our TAP sales online quote and issuance capability to include management liability and miscellaneous professional liability products, enabling our agent partners to easily quote, rate, buy and issue stand-alone Small Business Specialty policies.\nThe investments we are making in technology and innovation leverage our broad account base focus and drive meaningful efficiency solutions.\nMost importantly, with all of our businesses, we continue to execute on our differentiated agency centric strategy enabling our future growth.\nWe remain incredibly committed to staying connected with our distribution partners.\nTo that end, this quarter, for example, we conducted over 50 virtual CIAB executive meetings with many of the top 100 agents around the country, during which we discussed how we can enhance our capabilities to help all of us grow and better serve our customers.\nIn addition, we are in the process of holding virtual roadshows with our agents in our key markets across the country.\nTo-date, members of our senior management team have connected with over 500 of our agents, these engagements have been extremely fruitful.\nIn response to these distribution touchpoints, our efforts to enhance our digital marketing capabilities are front and center.\nAs is our next generation of our proprietary analytics tool, The Agency Insight.\nWe pride ourselves on having our finger on the pulse of the market and on bringing contemporary capabilities forward to meet the needs of our agents.\nOur agents are responding very favorably and we expect these efforts will contribute to our accelerated growth trajectory going forward.\nI am very proud of our team and our outstanding performance in the face of so much adversity this year.\nI am excited about the opportunities we have as we build on the solid foundation we have established to drive our company forward.\nOver the next several quarters, we will continue to invest heavily in digital capabilities, finalize new product launches and advance underwriting capabilities across the portfolio as we position our firm for long-term success.\nWe are better positioned today than ever to take our company to the next level, delivering for all of our stakeholders and achieving our goal to be the premier property and casualty franchise in the independent agency channel.\nI want to reiterate Jack's comments about the strength of our book of business, which is reflected in our terrific bottom-line performance.\nFor the third quarter, we reported net income of $118.9 million, or $3.13 per fully diluted share compared with net income of $118.9 million or $2.96 per fully diluted share for the same period last year.\nAfter-tax operating income was $93.5 million or $2.46 per diluted share compared with $93.0 million or $2.31 per diluted share in the prior-year quarter.\nWe recorded an all-in combined ratio of 94.2% compared with 94.4% a year earlier.\nOur ex-cat combined ratio was 88.4%, an excellent result compared to the 91.3% in the prior-year quarter.\nThe improvement reflects the continued benefit of favorable frequency primarily in personal auto.\nWhile frequency continues to be lower across several lines in our portfolio, we are seeing signs that it's returning to more normal levels as economic activity resumes.\nAt the same time, we continue to maintain a prudent reserving approach in longer-tail liability lines, given the continued uncertainty and the potential impact of increasing social inflation, as well as the potential for increased claim severity.\nWe believe our balance sheet has never been in better shape.\nCatastrophe losses at $65.9 million, or 5.8% of net earned premiums came in slightly above our expectation for the quarter, but we were much more benign than the industry experience.\nOur performance is a testament to proactive actions taken over the past decade to better manage our exposures by line of business and geography to maintain our disciplined approach to underwriting and to diversify our footprint.\nIn addition, in the quarter, we benefited from favorable prior year cat development of $9.6 million, which stems from a variety of events from recent accident years as well as to a much lesser extent, a small remaining favorable settlement from the 2018 wildfires.\nTurning to our ex-cat prior-year development, we reported net favorable development of $2.6 million with strong favorability in workers' compensation in other Commercial Lines, partially offset by additions in home, commercial auto and CMP.\nCommercial auto continues to be a focus area for us and a concern for the industry.\nOver the past couple of years, we have consistently achieved rate increases around 10% and executed on a variety of underwriting actions to better position our portfolio.\nWe will continue to stay firm on rate to overcome the effects of continuing social inflation in this line.\nOur CMP business experienced unusual adverse development related to three large losses from recent accident years.\nCoincidently, this quarter, we incurred about $6.5 million of favorable development from a few large CMP property claims that stemmed from prior-year catastrophe events.\nThere is a certain level of randomness we expect from property losses in our portfolio and this quarter results are a good example of this.\nI'm pleased to report that our loss activity related to the $19 million in COVID reserves we held at the end of the second quarter remains limited.\nWe continue to hold these reserves in the event they are needed to pay COVID-19 related claims, including those related to sub-limited business interruption endorsements and workers' comp resumption orders.\nWe continue to monitor the ongoing legislated and regulatory environment very closely.\nWe believe recent court activity and recent pronouncements in the U.S. have been favorable and supportive of the sanctity of contracts.\nTurning now to expenses.\nOur expenses ticked up 10 basis points in the quarter due to the timing of certain agent and employee incentive costs.\nYear-to-date, our expense ratio is consistent with our original budget of 31.5% and we have a clear line of sight to the expected 10 basis point expense ratio improvement for full-year 2020.\nIn a year of subdued growth, our deliberate business investment planning and expense discipline is serving us extremely well.\nWe expect to continue delivering a 20 basis point improvement in the expense ratio going forward.\nAdditionally, we recorded a non-ratio bad debt expense of approximately $3.6 million, which continues to gradually decline from the highs, we recorded in the first and second quarters.\nConsolidated net premiums written grew 2.1% in the third quarter, as we continue to see increasing momentum from the low point from the second quarter.\nOur trajectory was fueled by strong renewals and increasingly robust new business and agency book consolidation activity, all of this with a backdrop of continued lower economic activity.\nWe have confidence that this momentum will continue over the coming quarters.\nMoving to a review of underwriting performance by segment.\nIn Personal Lines, we delivered a combined ratio, excluding catastrophes of 83.5%, representing an improvement of 6.9 points from the prior-year quarter.\nThis improvement was almost entirely driven by the temporary frequency benefit in personal auto.\nWhile such frequency continues to be lower, it is trending back toward historical averages.\nWe continue to be especially prudent in reserving for potential liability exposures from delayed reporting, legal costs or social inflation.\nWe are also monitoring our book carefully, remaining vigilant for increased severity from accidents at higher speeds.\nHomeowners current accident year loss ratio, excluding cats was 48.2%, essentially flat from the prior-year period.\nTurning to Commercial Lines, we reported a combined ratio, excluding catastrophes of 91.8%, relatively consistent with the prior-year quarter.\nCommercial Lines ex-cat current accident year loss ratio was also in line with prior-year.\nThe temporary frequency benefit in certain property coverages was offset by elevated large property loss activity in CMP.\nCMP, current accident year loss ratio, ex-cat was 59.1%, up 2.7 points from the prior-year quarter, driven by several large property losses.\nWe reviewed our underwriting and causes of loss and did not find any correlation to the current challenging environment or underwriting issues.\nThese types of losses occur from time-to-time, we feel comfortable with our overall pricing as we continue to achieve rate above long-term loss trends in this line, including an increase in rate in the quarter.\nCommercial auto ex-cat loss ratio improved 3.2 points to 64.4%, reflecting temporary lower frequency in physical damage claims, although, not to the extent we reported in personal auto.\nGiven the trends we are seeing in prior accident years, we are particularly focused on ensuring that we have a more conservative approach for liability effects.\nWorkers' comp loss ratio was flat at 61.2% with some diminishing, but still favorable frequency of losses in the quarter.\nWhile underlying trends continue to be favorable, we remain prudent in our reserve decisions.\nOther commercial lines improved 1.4 percentage points to 54.1% due to slightly lower losses in short-tail property lines.\nOverall, we are very pleased with our underwriting performance and improved growth dynamics in the third quarter.\nNow moving on to investments.\nNet investment income of $67.6 million was down slightly from the same period of last year as we continued to experience pressure from lower new money yields.\nOur partnerships portfolio performed well, contributing $6 million to NII in the quarter.\nBarring any unusual market volatility moving forward, we expect partnership income to be consistent with pre-pandemic levels.\nWith that said, we will continue to see some impact of the low-interest rate environment earn in increasingly over time.\nCash and invested assets were $9 billion at the end of the third quarter, with fixed income securities and cash representing 86% of the total.\nOur fixed maturity investment portfolio has a duration of 4.7 years and is 96% investment grade.\nThe well-laddered and diversified portfolio remains high quality with a weighted average of A plus.\nTurning now to our equity and capital position.\nWe delivered a strong operating return on equity of 13.8% in the quarter and 12.1% on a year-to-date basis, despite elevated cash, particularly in the second quarter.\nOur book value per share of $84.32 increased 4% during the quarter, driven by operating income and both realized and unrealized gains in our investment portfolio, partially offset by the payment of our regular quarterly dividend.\nFrom a capital management perspective, this was a very active period.\nOne of the strategic strengths Jack talked about earlier, is our capital allocation strategy.\nThis year has highlighted the quality of our earnings as well as our ability to consistently generate excess capital.\nWith this in mind and considering current market levels, we have entered into a $100 million accelerated share repurchase agreement.\nWe expect to receive 80% of the total shares on October 29th and anticipate receiving the final delivery of the remaining shares no later than early February 2021.\nAfter the final delivery of all shares under the ASR agreement, we will have repurchased approximately 2.2 million shares or 6% of the outstanding shares from the beginning of 2020.\nWe will have approximately $122 million remaining under the existing share repurchase authorization.\nIn August, we issued a 10-year $300 million senior unsecured note at a very attractive annual coupon of 2.5%.\nWe used a portion of the proceeds to retire $175 million of subordinate debentures with a 6.35% coupon, improving our capital cost and overall capital structure.\nThe strong investor support we received for this issuance underscores the confidence they have in our strategy and future growth prospects.\nAs we move into 2021, this transaction further enhances our financial flexibility and will support organic growth opportunities across our business, as well as other capital uses.\nWe are confident in our earnings trajectory, growth prospects and earnings resilience going forward and we remain fully committed to our stated return on equity targets.\nWe generate ample capital to support future growth and believe that the best use of excess capital is often to return it to shareholders, especially at such valuations.\nWe take seriously our mandate to serve as stewards of our investors' capital and we're continuing to demonstrate that commitment, not only with words, but with actions that we believe are in the best interest of our shareholders.\nTurning to guidance, we expect full-year 2020 net premiums written growth to be slightly positive compared to 2019.\nWe are increasing our full-year 2020 net investment income target to $260 million to reflect performance in the third quarter.\nOur fourth quarter ex-cat combined ratio expectation has improved to around 91%.\nAs I mentioned earlier, we are maintaining our expectation of a 10 basis point expense ratio improvement in 2020 from full-year 2019 and then returning to 20 basis points improvement in 2021 forward.\nWe have a fourth quarter cat load of 3.8% of net premiums earned and assume an effective tax rate to roughly equal the statutory rate of 21%.\nGiven where we are in our corporate wide financial planning process, it is still too early to comment on most guidance items related to 2021, but we are confident in the improving top-line trajectory and our profitability moving forward, despite the many challenges and headwinds we have faced this year.\nIn closing, we are pleased with our performance in the third quarter.\nWhile the market always presents challenges, our team continues to successfully deliver on our strategic imperatives, remaining agile and opportunistic as we advance our goals and those of our agents and customers.\nWe enter the whole stretch of 2020 in a strong financial position with a unique and proven strategy, a strong and committed team more focused than ever on the opportunities that will enable us to continue growing profitability in the year ahead.\n", "role": "user" }, { "content": "compname reports third quarter net income and operating income of $3.13 and $2.46 per diluted share, respectively.\ncombined ratio of 94.2%.\ncombined ratio, excluding catastrophes, of 88.4%; enters into a $100 million accelerated share repurchase agreem.\nq3 operating earnings per share $2.46.\nq3 earnings per share $3.13.\nentered into a $100 million accelerated share repurchase agreement.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's discussion will also reference certain non-GAAP financial measures, such as operating income and accident year loss and combined ratios, excluding catastrophes among others.\nIt seems like only yesterday we spoke to you at our Investor Day.\nWe enjoyed the opportunity to update you on our businesses and share our vision for the future.\nI'll begin today's earnings call by discussing our third quarter financial highlights in the context of the current business and economic environment.\nI'll then provide a strategic review of each of our business segments.\nOverall, we are pleased with our financial performance for the quarter, especially in light of the severe weather and inflationary pressures that are broadly affecting the industry.\nWe posted net written premium growth of 8.4% and a combined ratio excluding catastrophes in line with our original expectations for this quarter.\nOur performance on both metrics underscores our ability to capitalize on market opportunities, while prudently managing the complexities of the current environment.\nIn particular, I want to call your attention to three highlights for the quarter.\nFirst, our continuing growth momentum.\nSecond, our overall business diversification, which was emphasized with some unevenness in our segment results in the quarter.\nAnd third, the effectiveness of the steps we are taking to position our company to manage the effects of changing weather patterns.\nOur net written premium growth again exceeded our expectations with strong contributions across all segments.\nYear-to-date through September, our growth rate of 8.4% was equally robust, driven by successful execution of our differentiated business strategy and disciplined capital allocation.\nOur balanced approach to personal lines pricing has proven to be quite effective and critical as loss trends continue to evolve.\nAt the same time, the overall Commercial Lines environment, including rate and exposure remains strong, fueling our robust premium momentum.\nDuring our recent Investor Day, we highlighted the growth levers that have and will continue to enable us to build competitive advantage in this dynamic market.\nSpecialized capabilities, a unique distribution approach and an extraordinarily talented team are among the many reasons why we are becoming a premier P&C franchise for the nation's top independent agents.\nAnd we continue to lean into our mission every day.\nOur distinctive strategy and our high-quality book of business inspire confidence in our ability to achieve our guidance of high single-digit growth for the full year.\nOverall, ex-CAT loss activity was in line with our expectations with many moving parts, which Jeff will review in more detail shortly.\nFrom a macro perspective, there is no doubt that the environment is changing rapidly.\nThe third quarter reflected that movement for us and the industry.\nOur Personal Auto and some other lines continue to benefit from lower loss frequency in the current uncertain environment.\nAt the same time, inflation, labor shortages, rising cost of materials and supply chain bottlenecks are adversely affecting certain lines albeit to different degrees.\nAs I noted during our Investor Day, in my more than 3.5 decades in this business, industry trends have never been as dynamic as they are today.\nBut as our results have demonstrated over time, our diversified book of business and broad-based profitability have enabled us to maintain a well-balanced portfolio and consistently deliver strong overall performance.\nThis result speaks directly to the quality of our underwriting integrated capabilities and the analytical tools we leverage to effectively manage the fluctuations inherent in our industry and we believe we will continue to win in this dynamic environment that presents both challenges and opportunities.\nThe third quarter marked an especially active catastrophe season across the industry.\nAt $153.5 million, our third quarter losses were in line with the preliminary estimate we shared with you in our September 22, pre-release.\nHurricane Ida represented approximately $75 million of the total with the balance comprised of rain, flood and tornado events.\nWe are looking carefully at the increase in the frequency and severity of weather events including non-modeled storms.\nThe changing weather patterns are an issue we and others in the industry will likely contend with going forward.\nWe have been monitoring and addressing this issue for several years using all the levers available to us, including exposure management, reinsurance and improvements in data and analytics.\nOur continued focus on exposure management has proven effective across our portfolio.\nAs you'll recall, we have withdrawn from the Personal Lines market entirely in Florida and have carefully managed our exposures in other Gulf states.\nWe have benefited from this strategy in the wake of Hurricane Ida, when we sustained lower cat losses proportional to the industry in general in the South.\nWe also restricted our capital allocation in wildfire exposed regions in the West and coastal exposures in the East.\nAnd we continue to emphasize growth in casualty lines to ensure good balance and enable continued property capacity in our most profitable territories.\nAdditionally, we bought a substantial amount of catastrophe and property per risk reinsurance with broad terms.\nFinally, we have augmented our cat management and aggregation tools including PML underwriting, dynamic cat pricing, single property cat load and micro concentration models.\nWhile these actions have served us well in the past and continue to do so, we believe pricing still requires additional focus.\nGiven the volatility the industry is seeing on cat and non-cat basis, we expect commercial property rates to remain firm going forward and even move higher.\nWe also expect industry participants to coalesce and partner more with the government to protect our customers through better infrastructure, stronger building codes and expanded risk-sharing pools among other things.\nOverall, our past and current actions combined with our commitment to sustainability position us to effectively navigate the ongoing effects of changing weather.\nI will now turn to a review of our business, beginning with Personal Lines, which generated net written premium growth of 8% in the quarter.\nPolicies in force continued on an upward trajectory with all lines contributing to the growth.\nBroad interest in our offerings combined with our measured and less reactive pricing strategy continues to drive increased retention and spur new business growth.\nAt 88.7%, our retention places us in the top quartile in the industry, supported by our account strategy and focus on being a market leader for customers with sophisticated insurance needs.\nNew agency partner appointments are on track and continue to supply a robust flow of new business as they work to achieve relevance with us.\nIn addition, we are also seeing a new business lift from continuing market and book consolidations among our strongest and most established agents.\nI also would mention that we are continuing to see terrific momentum with Hanover Prestige, our popular full account offering.\nThis solution has found a sweet spot between commodity players and high net worth carriers for customers in the $750,000 to $3 million homeowners coverage range with broader and more complex insurance needs, providing us a substantial competitive advantage and future growth opportunities.\nOverall, we are successfully navigating the dynamic Personal Lines market environment, while striking the right balance between growth and profitability.\nOur Personal Lines results are tracking in line with our expectations for the quarter.\nThat said, we are actively watching frequency and severity trends particularly given the industrywide increase in severity in 2021.\nThe loss frequency benefit in the third quarter was greater than we had originally anticipated at the start of the year, and is helping to counteract the increase in auto severity.\nThe pricing environment remains competitive, although, we are observing signs of auto rates increasing across the industry with a significant uptick in competitor rate filings.\nWe are carefully reviewing our pricing selections along with the competitive environment and have made necessary adjustments.\nTurning to Commercial Lines.\nStrong growth of 8.7% in the quarter was driven by positive exposure activity, rate increases, strong renewals in core Commercial Lines and continued momentum in specialty.\nExposures continue to meaningfully contribute to our premium increases, as businesses grew in a more favorable economic environment.\nWe are maintaining our strong agency position and continuing to capitalize on book consolidation opportunities.\nThe pricing environment continues to be robust in our markets within both core commercial and specialty.\nWe achieved core commercial rate increases of 6.9% in the third quarter consistent with the second quarter dynamics.\nSpecialty rate remained strong with robust pricing trends in most lines particularly in property including HSI and Marine.\nWe expect the firm market to continue, as the drivers of rate increases are not showing any signs of slowing down.\nWith such dynamic loss trends and a more uncertain risk environment than ever, marked by elevated weather, supply chain disruptions, materials inflation and a return of litigation trends and increased severity we will be seeking additional rate in many lines of business.\nThe rollout of our TAP Sales platform for small commercial is progressing very well.\nWe added 10 more states over the last three months, bringing the total number to 30, now covering the vast majority of our existing small commercial footprint.\nAs the deployment of this platform continues, it is supporting our transactional and new business flow, as well as providing additional growth and agency penetration opportunities.\nIn middle market, we continue to focus on pricing segmentation and mix management, emphasizing growth in our target states, product lines and industry classes.\nOver time, we see significant opportunity to further penetrate this segment and enhance our agency partnerships.\nHowever, we remain somewhat cautious in the near term particularly until loss trends become a bit more predictable.\nSpecialty continues to be a strong source of revenue expansion with underlying growth holding at near double digits for our most profitable businesses and continuing robust rate of 8% in the quarter.\nWe continue to make strides in E&S and professional and executive lines, as we advance our digital capabilities and market our broad capabilities more holistically.\nBook consolidations with many of our best agents continue to build and supplement our new business flow.\nWe are also excited to further drive our total Hanover strategy by expanding our distinctive Specialty offerings across more and more of our core commercial customers.\nEarlier this month, several members of our leadership team joined other industry leaders at the Council of Insurance Agents & Brokers' Leadership Forum, a gathering of many of the largest and most successful agents in our business.\nWe conducted over 40 executive meetings both in-person and virtually talking with many of the top 100 agents around the country.\nThese conversations allowed us to review our current and planned capabilities and discuss how we can help them more effectively serve their customers and expand their businesses.\nWe came away from these meetings extremely encouraged about our prospects and with several key takeaways.\nFirst Agency M&A is continuing at a rapid pace with new consolidators emerging and presenting new opportunities for small and midsized agents to join forces.\nSecond, Agency M&A trends combined with labor shortages are driving more agents to further explore various tech solutions and engage with carriers that have invested in state-of-the-art platforms and capabilities seeking to drive operating efficiencies and enhance EBITDA margins.\nOur commitment to innovate alongside and for the benefit of our agents and their customers is making our value proposition even more attractive as evidenced by the success of our Agency Insights engagement and market consolidation efforts.\nThird, differentiated Personal Lines and Small Commercial offerings continue to be in high demand among the best agents in the country as they acquire midsize and smaller agents, who have considerable amounts of this business.\nAgents are getting very serious about consolidating their flow of business with the right carriers to drive additional operational efficiencies and better serve their customers.\nThe combination of our Agency Insight work and our TAP Sales offering presents an unmatched competitive advantage.\nFourth, many agents continue to develop areas of specialization particularly among vertical industry segments and are deliberately pursuing growth in these areas very often including healthcare, manufacturing, human services, tech and life sciences among others areas where we are especially strong.\nOur industry specialization and our admitted and non-admitted product capabilities garnered substantial interest during these strategic conversations.\nUltimately, we came away from the conference with even greater conviction that our strategy is further resonating and we are well positioned going forward to drive strong, sustained and profitable growth and to deliver outstanding value for our shareholders and other stakeholders.\nWe are delighted by the continued growth momentum and strong underlying results we have generated year-to-date.\nOur differentiated agency and customer-centric strategy combined with our specialized capabilities are key to our continued success.\nSupported by our strong team and unique culture, I have immense confidence in our ability to monitor and adapt to changing market dynamics and capitalize on emerging opportunities for profitable growth.\nIn the third quarter we reported net income of $34 million or $0.94 per fully diluted share compared with net income of $118.9 million or $3.13 per fully diluted share in the same period last year.\nAfter-tax operating income was $30.8 million or $0.85 per diluted share compared with $93.5 million or $2.46 per diluted share in the prior year third quarter.\nBefore I review our quarterly performance in more detail, I would like to note that similar to our second quarter 2021 analysis prior year quarterly comparisons reflect unprecedented distortions the pandemic created in our results and industry results last year.\nGiven the unusual nature of the third quarter of 2020, we believe our more recent growth trajectory and loss experience, as well as our original expectations for 2021 are better parameters by which to assess our performance.\nWe recorded an all-in combined ratio of 102.3% which included catastrophe losses from Hurricane Ida.\nThird quarter catastrophe losses of $153.5 million before taxes which represented 12.9% of net earned premiums were at the lower end of the guidance we provided in our prerelease on September 22.\nIda added $75 million in losses to an already active cat season within our geographic footprint.\nThis hurricane caused significant and widespread damage in Louisiana, New Jersey, New York and Pennsylvania.\nTogether with our agent partners, we continue to help our customers and the affected communities recover from the storm.\nOur performance particularly in Southern states speaks to our prudent catastrophe management philosophy and the proactive steps, we have taken over the past decade to diversify our geographic footprint and reduce our exposure in cat-prone regions.\nAnd equally important it speaks to our use of sophisticated cat management and aggregation tools, data analytics and pricing to mitigate the effect of climate change on our business.\nOur ex-CAT combined ratio is 89.4%, reflecting the strong underlying performance of our diversified business.\nTurning to our reserves, we reported net favorable development of $20.9 million in the third quarter 2021, primarily due to continued favorability in Personal Auto and workers' compensation, in addition to some favorability in other commercial lines.\nPersonal Auto favorability of $10 million includes the benefit from revised fee schedules and loss control measures that came into effect in Michigan on July 1st, 2021, as part of the PIP insurance reform there.\nMindful of uncertainties surrounding inflation, court and medical delays and changing weather patterns, we continue to maintain and establish a prudent level of reserves.\nAnd we remain committed to maintaining a strong balance sheet and our overall conservative reserving philosophy.\nLooking at expenses, our expense ratio improved 0.7 points from the prior year third quarter to 31.1%, largely as expected.\nOur expense ratio year-to-date stands at 31.3%, a 20 basis point improvement from the first nine months of 2020.\nAnd we are confident in our ability to deliver on a 30 basis point improvement for the full year.\nNow let's review our underlying performance by segment, beginning with Personal Lines.\nWe delivered a combined ratio excluding catastrophes of 87.7%, better than our original quarterly expectations driven by favorable development.\nOur Personal Auto current accident year loss ratio was 68.9%, which is consistent with our plan and was contemplated in our guidance.\nHowever, it rose 8.8 points relative to the third quarter of 2020, and was up 6.7 points sequentially.\nSeverity pressures coming from increased prices for auto parts, used cars and supply chain disruptions were well covered by industry press.\nThey certainly affect our book of business as well.\nHowever, our book continued to benefit from lower frequency, albeit at a lesser degree than in the second quarter of 2021.\nWe believe the underlying causes for rising auto property loss costs are temporary, but they likely will persist over the next several quarters, putting continuing pressure on severity.\nLooking ahead, we expect the long-term persistency of the frequency benefit in our book of business to offset some industrywide severity trends.\nWe also believe, that the higher cost of vehicles countrywide in combination with unwinding frequency benefits will drive industry insurance pricing up.\nWe are seeing signs of it already.\nAnd believe the trend will continue for the near future.\nWith our balanced and prudent rate strategy throughout the pandemic and our granular pricing and competitiveness monitoring tools, we are successfully balancing our rate and growth to preserve pricing consistency and overall profitability of our book of business.\nOur Personal Lines strategy during the pandemic has been to focus on long-term value creation.\nThe unusual frequency benefits served to reduce the loss ratio, but also created a more competitive pricing environment.\nWe reacted by adjusting our pricing later in 2020 to protect our renewal book.\nAnd to obtain new business that we believe will create long-term value.\nBy temporarily moving pricing below long-term loss trend, we allowed the temporary frequency benefit, to fund profitable business growth.\nOur renewal rate always remained positive.\nAnd the current Personal Lines rate of 2.1% in the third quarter is the low watermark in our rate trajectory.\nWe knew that later in 2021 as frequency benefit waned, margins would reduce on some of this business.\nWe anticipated this in our plans.\nAs it turned out, some of the frequency benefit persisted, but was offset with the severity increase we are seeing now.\nWe are confident, that the business we are writing and the rate we will be getting will set us up for substantial value creation, even if the Personal Lines auto margins are reduced a bit for the next year or so.\nFortunately, we have a very, diversified book of business which will show itself in the potential margin expansion of the Commercial Lines businesses.\nMore on that shortly, our profits are broad-based with nearly all segments, delivering target long-term profitability and we have full confidence in our continuing trajectory including 2022.\nHomeowners current accident year loss ratio excluding cats was 51.9%, up 3.7 points from the prior year period, which was reduced last year during COVID.\nThis quarter's loss ratio was in line with most recent trends.\nOur homeowners rate including exposure is approximately 6% in the third quarter and it is moving to approximately 8% starting in 2022.\nInflationary pressures in this line combined with active weather continued to support the need and ability to achieve additional rate, which is substantially within our control.\nPremium growth of 8% in personal lines was driven by robust new business activity and increased retention.\nPolicies in force continued on an upward trajectory with all lines contributing to the growth.\nTurning to Commercial Lines, we reported a combined ratio excluding catastrophes of 90.5%, a decrease of 1.3 points from the prior year period helped by an improved expense ratio from growth and higher favorable development.\nOur current accident year loss ratio excluding catastrophes was relatively stable only slightly elevated.\nAn increase in large property loss activity in CMP was nearly offset by improvements in other commercial lines and to a lesser degree workers' compensation.\nOur CMP current accident year loss ratio ex-CAT was 64.2%, an increase from the third quarter of last year and above our expectations.\nAnd while there is always an element of randomness in large property losses, our team completes a thorough review of each loss during, which policies were determined to be generally consistent with our underwriting guidelines.\nOur loss experience primarily fire and water damage was spread across several industries and geographies with no obvious patterns.\nWe are seeing some potential correlation in the losses to the unevenness of the economic recovery post COVID.\nSome clients are having tremendous success in record sales and in turn are likely straining their facilities and equipment to keep up with demand.\nAs such there was a need for additional rate in property in response to materials cost inflation weather pattern changes and some labor disruption issues.\nOur CMP property rate is in the high single digits and we are consistently achieving double-digit rate increases in our specialty property coverages.\nWe expect to take additional rate going forward and we believe the market will support it.\nIn Commercial Auto, the ex-cat loss ratio was generally in line with the third quarter of 2020 at 65%.\nConsistent with our experience in personal lines, we are observing an increase in property severity, offset by some lingering frequency benefits.\nWe are taking rate increases to address that evolving dynamic and continue addressing the industrywide multiyear liability issues affecting this line.\nOur workers' comp ex-cat loss ratio improved 4.2 points to 57%, primarily due to positive audit premium adjustments for prior period policies.\nOur underlying loss picks remain in line with prior quarters.\nWorkers' compensation frequency is now level with our pre-COVID experience and we are watching for the unskilled or not fully trained labor phenomenon in this line.\nWhile we are confident that our favorable portfolio mix toward smaller accounts and skilled professional industries will continue to deliver favorable workers' comp results, we remain cautious in our reserving approach given the still anemic rate environment and further risks posed by offices and facilities reopening for more businesses.\nIn other Commercial Lines, the ex-cat loss ratio improved 2.4 points from Q3 2020 to 51.7%, which was also better than our expectations driven entirely by Marine and HSI, which both experienced lower than expected losses in the quarter.\nOur Commercial Lines segment generated premium growth of 8.7% in the quarter with solid contributions from both core and specialty.\nCore commercial is benefiting from strong retention and exposure as the economy strengthens.\nProfessional lines, as well as excess and surplus fueled the growth momentum in Specialty, which overall achieved rate increases of 8% in the quarter.\nWe remain focused on driving growth in our most profitable Core Commercial and Specialty segments.\nAnd rounding out our total Hanover value proposition, through which we offer our highly specialized capabilities to our Core Commercial Lines clients.\nQ3 was a strong quarter from an investment income perspective, as we delivered net investment income of $78.8 million up nearly 17% from the prior year quarter, on higher investment partnership income.\nPartnership income continued to contribute significantly to our investment income, adding approximately $19 million to our pre-tax income instead of an expected $7 million based on the strong equity returns and some meaningful underlying investment monetization.\nFixed maturities earned yields, continue to slowly drift lower, now standing at 2.96%, due to lower new money yields.\nWe do expect continuing strong cash flows to offset pressure from lower new money yields in the future.\nCash and invested assets were $9.3 billion at the end of the third quarter, with fixed income securities and cash representing 85% of the total.\nOur fixed maturity investment portfolio has duration of five years and is 96% investment grade.\nOur well-laddered and diversified portfolio remains high quality with a weighted average rating of A+.\nTurning now to our equity and capital position, our book value per share of 87.04 reflects a decline of 1.3% from the second quarter, due to the impact of rising interest rates on our fixed income portfolio and quarterly dividends.\nWe remain focused on our capital management priorities and committed to being strong stewards of our investors' capital.\nFor the third quarter and through October 27, we repurchased approximately $34 million of stock, slowing down the pace of repurchases a bit during the cat season.\nIn addition we paid a regular cash dividend of approximately $25 million during the quarter.\nOur priority is to maintain strong capitalization and adequate liquidity and to use internally generated capital to support profitable growth, which remains the most accretive use of our capital.\nReflecting the higher catastrophe losses during the quarter, our return on equity was 4.3% well below our historical trends and our long-term target.\nOur annualized year-to-date ROE was 9.3%.\nHowever, if we were to normalize the ROE for cats in the quarter and the year-to-date periods, such returns would be at or above our long-term targets.\nWe remain confident in our ability to deliver top quartile performance over the long-term.\nTurning to guidance and incorporating our third quarter results, we now expect to deliver high single-digit growth for the full year 2021.\nAdditionally, with three quarters of the year now in the books, we believe that we will end the year at the bottom of our 89% to 90%, ex-CAT combined ratio guidance.\nThis guidance includes a typical seasonal increase in the auto loss ratios and a decline in the home loss ratios, in addition to continuing inflationary trends, we will likely see during the quarter.\nWe're also on target to reduce our expense ratio by at least 30 basis points, in 2021 to 31.3%.\nAnd we expect our fourth quarter cat load to be 3.9%.\nWe have a well-diversified and profitable set of businesses.\nOur portfolio provides ample opportunities for us to make investments in the future value of our businesses.\nThe strong growth in Commercial Lines and the meaningful rate in excess of loss trend for both, Specialty and Core Commercial should be very helpful as we go forward.\nWe executed well in Q3 despite an exceptionally active cat season and industrywide inflationary pressures.\nWe are well positioned to sustain our profitable growth momentum and long-term top quartile profitability.\nWe begin the final quarter of the year in great financial shape.\nAnd we are excited about the opportunities ahead.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $0.94.\ncompname reports third quarter net income and operating income of $0.94 and $0.85 per diluted share, respectively.\ncombined ratio of 102.3%; combined ratio, excluding catastrophes, of 89.4%.\nq3 operating earnings per share $0.85.\nq3 earnings per share $0.94.\nqtrly net investment income of $78.8 million, up 16.6% from the prior-year quarter.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's discussion will also reference certain non-GAAP financial measures such as operating income and accident share loss and combined ratios, excluding catastrophes, among others.\nI will begin with some commentary on our full year financial highlights in the context of the business and economic environment.\nI will then provide a strategic view of our segments and our 2020 accomplishments.\nWe reported outstanding results in the quarter and for the year, delivering strong operating earnings and significant value for our shareholders.\nIn the face of unprecedented challenges, our 4,300 employees and our company rose to the occasion in 2020.\nWe quickly and effectively adapted to the rapidly changing market conditions and customer expectations, while flexing our agile operating model and driving innovation across our organization and the insurance value chain.\nIn a year defined by the coronavirus pandemic, social unrest, economic disruption and challenging weather, we relied on and even further strengthened our unique, collaborative and nimble culture.\nAnd made good on our promises to our agents, customers and communities.\nAnd we continue to create value for our shareholders, generating exceptional profitability and high-quality premium growth despite the prevailing economic conditions.\nUltimately, thriving in ways we believe position our company for even greater success in 2021 and the years ahead.\nFor the year, we reported operating earnings per share of $9.32, up 14% from 2019 and a strong operating return on equity of 13.1%, in line with our long-term target.\nOur performance on the year highlighted the overall effectiveness of our strategy, the resiliency of our business and our ability to drive sustainable, broad-based profitability.\nIn particular, I want to share the following financial observations: First, we managed well in spite of the changing market conditions, continuing to enhance our operating model and invest in our capabilities, positioning the company to deliver strong profitable growth going forward.\nDespite the many economic challenges related to widespread business limitations and restrictions, we delivered net written premiums of $4.6 billion for the year, up from 2019.\nAfter hitting a low mark in the second quarter, we delivered improved growth through the remainder of the year.\nWe expect exposure declines in 2020 will bounce back in 2021, as the economy continues to recover and distribution of the COVID-19 vaccines continues to ramp up.\nOur resiliency in 2020 highlights the efficacy of our unique distribution strategy, the strength and commitment of our agent partnerships and our ability to provide a diversified portfolio of products and services to our customers and agents.\nWe are also very encouraged by improvements in the leading growth indicators, ranging from Commercial Lines PIF growth to increased consolidation activity with our top agents, and a gradual pickup in Personal Lines retention.\nThe momentum we have reestablished in our business position us well to accelerate growth as the economy continues to strengthen throughout 2021.\nSecond, we delivered strong underwriting results with an all-in combined ratio of 94.4% for the year and 88.1%, excluding catastrophes.\nOur robust underwriting performance in 2020 went beyond the temporary frequency benefits we realized in personal auto.\nIn fact, we delivered returns at or above target in all three major business units while continuing to build our earnings consistency.\nThough 2020 was an active catastrophe year for the P&C industry overall, the impact of cat on our business was considerably more modest.\nOur strong performance relative to the industry is a reflection of the many prudent underwriting actions we have taken over several years as well as our continuing discipline with respect to property aggregation.\nOur ability to outgrow the market, going forward, requires we consistently generate top quartile returns.\nTo that end, once again, we generated excellent returns in 2020, enabling us to take a more aggressive and opportunistic approach to growth in 2021 and beyond as the market provides opportunities.\nThird, we continue to be prudent and responsible stewards of our shareholders' capital.\n2020 marked the 15th consecutive year, in which the Hanover increased its ordinary dividend.\nIn addition, during the year, we repurchased approximately 2.2 million shares of our company's common stock, deploying $212 million in underscoring the confidence we have in our company's financial earnings and growth prospects.\n2020 was a very strong year for us, and we begin 2021 feeling optimistic and confident.\nWe are well capitalized with a very strong balance sheet, a proven business strategy, unique and targeted distribution approach and responsive and innovative products and services.\nWe are intently focused on delivering value and outperforming the industry over the long term.\nTurning now to our key strategic accomplishments for the year.\nWe successfully advanced our strategic imperatives and made important progress toward our vision to be the premier P&C franchise in the independent agency channel.\nA franchise that delivers relevant and innovative risk management solutions while helping our agents transform the way customers experience and value insurance.\nOur Personal Lines team delivered exceptionally strong earnings during the year, continuing to effectively manage its book of business, finding the right balance between rate and retention on our renewal book and maintaining our commitment to sustainable profitable growth.\nAs an account writer, we take a disciplined and long-term approach to renewal price across our home and auto policies, so as not to cause excessive disruption for customers and agents.\nThat said, we took pricing actions in the second half of 2020 to protect our profitable renewal book, and we'll continue to do so as market conditions warrant.\nThose actions started to have a positive impact in the fourth quarter and in January.\nAnd we should see retention improving throughout the year, eventually getting back to historical levels.\nWith respect to aggressive new business price competition, we believe some competitors in the Personal Lines auto sector are being shortsighted.\nPandemic related frequency benefits are temporary in nature, and we want to be responsive in our pricing without setting the stage for significant increases in the not-too-distant future.\nAs auto frequency returns to near-normal levels, we want to be positioned for growth and not have to drive outsized increases in recently acquired customers.\nAdditionally, we remain mindful of increased severity in the current environment due to higher intensity incidents and the reemergence of social inflation as the nation transitions out of the pandemic.\nOur recent new business indicators are beginning to suggest a return to positive growth momentum.\nWe signed a record number of consolidation agreements with our partners in 2020, which we expect will provide a new business tailwind in 2021.\nDuring 2020, we expanded our first lines product offerings with the introduction of Home Business Solutions, a suite of business insurance products for homeowners who manage home-based businesses.\nIn addition, we gained further momentum with our Hanover Prestige offering, which caters to customers with more complex insurance needs.\nWe added more than 7,000 new Hanover Prestige customer accounts during the year and exceeded our full year 2020 new business target, with new business growth nearly 30% higher than in the prior year.\nWe also expanded our Personal Lines footprint to 20 states in 2020, beginning to write business in Maryland on the heels of adding Vermont and Pennsylvania over the last couple of years.\nWe start 2021 with enormous optimism and believe that our agency relationships, consolidation commitments, customer centricity and expanded footprint will enable us to reestablish our prepandemic growth momentum in Personal lines.\nWe are also very pleased with the performance of our commercial businesses in 2020.\nOur Commercial Lines team successfully navigated an especially difficult economic environment, while continuing to focus on growth in our most profitable segments.\nOur diversified industry mix in Core Commercial enabled us to deliver solid growth in the most vibrant and growing industries, such as technology, life sciences, light manufacturing, financial services and educational institutions, while also enabling us to continue to manage profitability in select Property Lines.\nIn Specialty, we are achieving double-digit growth in management liability and Hanover Specialty property, which are among our most profitable businesses.\nWe continue to expand our products and capabilities, strengthening our offerings for financial institutions, retail E&S and cyber customers.\nWe also advanced our total Hanover strategy, leveraging our specialized capabilities across our Commercial Lines customer base.\nCommercial Lines net written premiums were up both for the year and the quarter, as we capitalize on the hardening market to obtain rate, with fourth quarter Core Commercial rate increases of 6.4% and Specialty increases of 8.9%, up sequentially from 5.7% and 7.2% in the third quarter, respectively.\nAt the same time, we are seeing a tightening of new business versus renewal pricing, which indicates further market discipline and solid execution.\nWe believe there is more opportunity ahead to achieve additional rate increases with the continuation of many market catalysts, including low interest rates, ongoing pressure in larger liability account size segments and social inflation.\nAcross our commercial book, we are seeing rate meaningfully exceed loss trends.\nPolicy exposures and endorsements coming back and our policy counts continuing to grow.\nThese and other factors support our belief that our growth will accelerate throughout the year as the economy continues to recover and through continued market share gains with our agent partners.\nOur broad industry offering and specialty expertise, combined with deep business insights and agency partnerships, positions us to drive growth in an improving economic climate and in a firm commercial rate environment in 2021.\nOne of the most profound takeaways for us coming out of 2020 was how quickly things can change.\nMore than ever before, our company flexed its agility and its innovative spirit, giving us even more confidence in our ability to continue to do so going forward.\nWe recognized, as never before, the opportunity that exists in becoming even more customer-centric.\nIdentifying ways to be more efficient and easier to work with in all aspects of customer and agency interaction, including policy acquisition, quoting and underwriting, customer service and claims settlement.\nAs an organization, we were well prepared to meet the demands of 2020, having invested significantly over the past several years to enhance our major underwriting and quoting platforms.\nIn fact, almost every area of our technology stack had been upgraded or replaced over the last five years to enable our business solutions with a more open environment.\nOur Personal Lines TAP Sales platform now has been deployed in all of our Personal Lines markets, and we have started the rollout of our new small commercial underwriting and agent interface platform.\nThis new Commercial Lines TAP Sales platform will be deployed across the country by the end of 2021.\nAdditionally, prior upgrades to our major claims and billing systems allowed us to move to a virtual environment overnight, providing our agent partners and customers with a high level of service.\nWe are also bringing our customer and agent connectivity to the forefront of our digital road map.\nThrough multiple agency management systems and InsureTech solutions, we have and are committed to further enhance the overall effectiveness of data sharing between agents, customers and underwriters.\nIn 2020, we expanded customer online inquiry and self-service to commercial lines, while also driving efficiencies with e-billing and e-delivery in Personal Lines.\nInnovation also is playing a key role in claims, as we increasingly use digitization and technology platforms to virtually complete auto estimates and reinspections using Hanover staff.\nThe same is true on the property side of the business.\nGlobal 360, our downloadable self-service application with virtual interactive inspection capabilities, now processes more than half of the losses that previously would have been adjusted in person.\nThe ability to innovate in an agile and thoughtful way is becoming one of the most crucial competitive advantages for insurance companies, and we believe we have what it takes to continue to innovate efficiently.\nWe're proud of the accomplishments we've made to date, but it's our growth mindset and innovative culture that will enable us to embrace the opportunities ahead.\nIn a year defined by rapid change, economic and social strain and new customer expectations, we elevated our focus in inclusion and diversity and are committed to making ours an even more inclusive and diverse organization.\nDuring the year, we made important strides, including the further development of our employee-led business resource groups, continued unconscious bias and inclusive leadership training in the publication of our inaugural inclusion and diversity report, which is available on our website.\nThese important initiatives have been central to our business success over the last few years and will enable us to prosper well into the future.\nIn parallel, we are advancing our sustainability goals by further incorporating environmental, social and governance factors as we manage our company's investment portfolio, addressing environmental risks and implementing practices that promote and encourage environmentally responsible behavior.\nThese steps are essential in helping us continue to attract and retain outstanding talent, sustain our competitive advantage and maintain top quartile performance in our rapidly changing world.\nI am extremely proud of our 2020 performance, which reflects the inherent strength of our company, the effectiveness of our strategy and the versatility of our business model.\nWe begin 2021 in a position of strength, both operationally and financially and look to the year ahead with great optimism.\nWe have a proven and unique business strategy, deep partnerships with the best independent agents in our industry and the talent and drive needed to deliver superior value for all of our stakeholders.\nFor the quarter, we reported net income of $164.6 million or $4.43 per diluted share compared with $109.8 million or $2.76 per diluted share in 2019.\nAfter-tax operating income for the quarter was $112 million, or $3.02 per diluted share compared with $80.2 million or $2.01 per diluted share in the prior year quarter.\nFor the year, net income was $358.7 million or $9.42 per diluted share compared with $425.1 million or $10.46 per diluted share in 2019.\nOperating income for the year was $355 million or $9.32 per diluted share compared with $331.6 million or $8.16 per diluted share in 2019.\nOur fourth quarter earnings reflected a combined ratio of 92.4%, an improvement from 96.2% in the fourth quarter of 2019 due to prior underwriting and rate actions, favorable loss frequency and favorable prior year development.\nOur combined ratio for the full year improved to 94.4% from 95.6% in 2019, again, reflecting mix improvements and favorable loss frequency, partially offset by higher cats.\nFourth quarter 2020 catastrophes totaled $35.1 million or 3% of earned premium, which was below our catastrophe load assumption of 3.6%.\nFull year catastrophes totaled $286.7 million or 6.3% of earned premium.\nWhile full year cat losses were above our expectations due to a particularly active Q2 and Q3, our overall cat loss experience compared favorably with the industry as a whole.\nIn fact, more than half of our cats above our expectations stem from losses associated with social unrest.\nThis underscores the effectiveness of our prior aggregation management initiatives.\nOur diversified business mix and prudent risk management practices should continue to serve us well over the long term.\nThat being said and considering changes in weather patterns in certain geographies in the U.S., we believe it is prudent to increase our catastrophe load for 2021 from 4.6% to 4.9%.\nEven though our PMLs and 10-year averages remain relatively stable.\nWe believe it is thoughtful to assume higher weather-related catastrophe losses going forward, which should appropriately impact our pricing targets and return expectations in cat prone lines.\nExcluding catastrophes, we delivered a full year combined ratio of 88.1%, well below our original guidance of 91% to 92%.\nOur full year 2020 expense ratio of 31.6% was flat with 2019, short of our original expectations due to higher variable agent and employee compensation costs from better-than-expected profits.\nWe expect to achieve a 30 basis point expense ratio improvement for full year 2021, which puts us right on track with our long-term expense ratio savings target of 20 basis points per year.\nWe executed well on our original cost management and efficiency targets for 2020.\nWe also achieved additional savings to address the lower premiums earned during the year due to lack of growth and premium returns.\nFor the most part, these savings are permanent in nature, giving us confidence in our expected 31.3% expense ratio in 2021.\nFor the year, we recorded favorable prior year reserve development of $15.5 million or 0.3 points of the combined ratio.\nThis was driven primarily by continued favorability in Workers' Comp, partially offset by pressure in auto bodily injury and commercial multi-peril.\nOur conservative approach to reserves reinforces our commitment to react quickly to trends in order to mitigate the potential for issues down the road.\nFrom that standpoint, we concluded 2020 with a very strong balance sheet.\nThis is a direct result of our reserving consistency and discipline.\nSeveral years of prudent underwriting and pricing actions in certain specialty lines and in commercial auto, in addition to other initiatives to enhance profitability.\nWe continue to prudently hold COVID reserves, although loss activity has been limited.\nOur mix of business, specifically not writing travel, trade credit or event cancellations, and our use of ISO based forms has served us well during the pandemic.\nTurning to underwriting results in each of our businesses.\nWith the full year now behind us, I will focus my comments on our full year 2020 results, but will mention quarterly movements where relevant.\nPersonal Lines reported a full year combined ratio, excluding catastrophes, of 84%, down from 91.6% in 2019.\nThis improvement was driven primarily by personal auto.\nOur personal auto ex-cat accident year loss ratio was 61.3% in 2020, an improvement of 10.3 points from the prior year, as a result of the claims frequency benefit associated with the pandemic.\nWhile frequency has declined across our footprint, we benefited less in the second half of the year than in the second quarter, as stay-at-home orders and business restrictions eased to varying degrees.\nGoing forward, we expect frequency will gradually return to historical norms and anticipate ending 2021 with fourth quarter frequency relatively in line with levels before the pandemic.\nOverall, we expect our Personal Lines loss ratio in 2021 will, of course, increase from 2020, but should remain a little lower than 2019, primarily due to the timing of remaining loss frequency benefits diminishing throughout the year.\nIn homeowners, our 2020 ex-cat current accident year loss ratio was 49.1%, up 1.2 points from 2019 due to some elevated fire and property losses.\nWe continue to take strong rate of 5% in homeowners, not including the inflation adjustment in the year, and we expect profitability in 2021 to be relatively in line with ex-cat results in 2020.\nPersonal Lines net premiums written declined 0.5% for the full year, including the impact of the premium refunds issued in the second quarter.\nWe believe our customer-centric strategy and high level of engagement with agents will continue to drive growth once the benefit of frequency subsides.\nDuring the year, we appointed 170 new agents and achieved record consolidation signings.\nTurning to Commercial Lines.\nOur full year combined ratio, excluding catastrophes, improved 1.2 points to 90.9%, primarily reflecting a decrease in our current accident year loss ratio due to meaningful underlying improvement in other Commercial Lines and temporary frequency benefits in commercial auto.\nThe loss ratio in our commercial auto book improved 5.8 points to 63.8%.\nWe have generally only reacted to the favorable results in the auto property coverages, while maintaining our prudent approach to liability reserving and pricing.\nOur commercial multi-payroll loss ratio increased 1.5 points to 57.7% due to some elevated large property loss activity in the first and third quarters of 2020 and to a lesser extent, in the fourth quarter.\nOur review of the portfolio does not suggest any major systemic concerns.\nHowever, we continue to actively monitor our business mix and take rate where appropriate.\nOur workers' comp loss ratio remained essentially flat at 60.9%.\nWhile underlying loss trends remain favorable, we are maintaining our conservative approach to reserves, given the current rate environment and uncertainty about future claims.\nOther Commercial Lines loss ratio improved 2.9 points to 53.6%, which underscores the success of prior year profit improvement actions in our Specialty property and programs businesses.\nOur Specialty portfolio is now delivering above target returns and growing the fastest.\nCommercial lines net premiums written grew 1% in 2020, driven by solid momentum in our Specialty Lines, where rates remained on a strong upward trajectory with sequential increases each quarter of the year.\nNew business submissions continued their steady upward trend off of their March lows.\nCore Commercial retention remains at historical highs at 86.2%, while cancellation and endorsement activity moderated.\nSmall commercial submissions and consolidations are trending positively, and we continue to achieve pricing above long-term loss trends.\nPremium growth in Core Commercial ticked slightly lower in the fourth quarter compared to the third quarter, in part due to exceptionally robust new business performance in the fourth quarter of 2019.\nLooking ahead, we expect our underlying commercial lines loss trends to remain relatively stable.\nSimilar to personal auto, we anticipate commercial auto frequency will return to historical norms by the end of 2021.\nWhile overall rate will likely exceed loss trend, we remain very prudent with our liability selections, given the continued risk of social inflation and uncertainty around workers' comp profitability, in light of the many years of rate decline in that line.\nWe expect the overall Commercial Lines loss ratio in 2021 to be fairly consistent with 2020.\nWe believe growth will continue to accelerate in this business going forward, aided by strong rate trends and continued economic recovery.\nTurning to our investment performance.\nWe generated net investment income of $70.2 million for the fourth quarter and approximately $265 million for the year.\nThis was ahead of our midyear guidance for 2020 and reflective of better-than-expected investment partnership performance.\nLower yields continue to pressure our portfolio, and we expect that trend to continue into 2021.\nCash and invested assets at year-end were $9 billion, with fixed income securities and cash representing 85% of the total.\nOur fixed maturity investment portfolio has a duration of 4.8 years and is 96% investment grade.\nWe have a high-quality, well-laddered and diversified portfolio with a weighted average rating of A+.\nMoving on to equity and capital position.\nWe thoughtfully managed our capital throughout 2020, even with the broader market uncertainty and economic volatility.\nIn October, we executed $100 million accelerated share repurchase agreement, which closed last week, underlining our commitment to be responsible and prudent managers of capital.\nCombined with activity earlier in the year, we returned approximately $212 million to shareholders in 2020 through share repurchases, including the final delivery of all shares.\nUnder the ASR agreement, we repurchased 2.2 million shares or 6% of the outstanding shares since the beginning of 2020.\nUnderscoring the confidence that we have in our strategy and growth prospects, we paid $99.5 million in dividends to our shareholders throughout the year and increased our recurring dividend payment in December 2020 by 7.7%.\nWith broad-based profitability, expense discipline and an effective capital allocation strategy, we continue to target a return on equity of 13% or higher over the longer term.\nOur book value per share of $87.96 increased 4.3% during the quarter, and 15.8% from December 31, 2019, driven by operating income and both realized and unrealized gains in our investment portfolio, partially offset by the payment of our regular quarterly dividends.\nOverall, I am very pleased with our full year performance, which reflects the clear execution of our strategic goals, financial discipline and commitment to delivering top quartile returns.\nI'm incredibly confident in the trajectory of our company and our ability to continue building on the strong momentum we have established.\nWe expect overall net written premium growth in the mid-single digits, driven by growth in our most profitable businesses.\nWe anticipate acceleration in premium growth throughout the year.\nHowever, first quarter 2021 maybe a little lower than full year, impacted by inherent difficulties with a direct comparison to the pre-pandemic first quarter of 2020 and the timing of the economic recovery.\nWhile the second quarter comparison will benefit from customer premium returns in the second quarter of 2020.\nWe expect net investment income to remain flat compared to 2020, as the impact of lower new money yields will be offset by higher operational cash flows.\nOur expense ratio should decrease by approximately 30 basis points in 2021 to 31.3%.\nThe combined ratio, excluding catastrophes, should be in the range of 90% to 91%.\nWe've set our cat load for the year at 4.9%, as I mentioned earlier.\nAnd we expect an effective tax rate to approximate the statutory rate, which is 21%.\nOur first quarter cat load is expected to be 4.7%, slightly below our full year ratio.\n", "role": "user" }, { "content": "compname reports q4 earnings per share $4.43.\ncompname reports fourth quarter net income and operating income of $4.43 and $3.02 per diluted share, respectively.\nfull year net income and operating income of $9.42 and $9.32 per diluted share, respectively.\nfull year combined ratio of 94.4%.\nq4 operating earnings per share $3.02.\nq4 earnings per share $4.43.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, we will discuss some items that do not conform to generally accepted accounting principles.\nThese non-GAAP measures should be considered in addition to and not as a substitute for measures of financial performance reported in accordance with GAAP.\nWe hope everyone listening is staying safe and in good health.\nWe appreciate you joining our conference call and for your interest in Thermon.\nJay Peterson, our CFO, is with me and will provide additional information on our Q2 financial performance following my remarks.\nSince our Q1 call, the Thermon team has remained focused on the safety and security of our employees, customers, suppliers and the communities in which we live.\nAs a supplier to critical infrastructure, we remain open for business and have focused on supporting our customers around the globe.\nAs we look across the world, our teams and our customers are adapting to the new normal.\nIn many locations, we continue to suspend business travel, work-from-home where possible, and follow the applicable local health protocols.\nOur employees are incredibly resilient and have quickly adapted to this new way of working.\nTheir commitment to our core values of care, commitment and collaboration as well as our industry-leading safety performance is both admirable and appreciated.\nWith the uncertainties surrounding this pandemic, our team has remained focused on value preservation and cash management.\nIn Q1, the team took decisive action to reduce SG&A by $16 million in the fiscal year and just over $17 million on an annualized basis.\nDuring the second quarter, the team has further reduced expected SG&A spending by an additional $9 million in the fiscal year.\nAnd we expect this reduction to continue on an annualized basis going forward.\nIn addition, we have reduced manufacturing overhead by an additional $6 million, including a rooftop consolidation that will improve absorption on lower volume in Q4 and beyond.\nMany of these savings are the result of the work this team has done over the last four years to improve the systems, processes and tools to generate efficiencies and unlock scale from engineering to back office processes.\nWe also believe we are well on track to deliver the $3.9 million in continuous improvement cost savings through our manufacturing operations.\nWe believe these changes have fundamentally repositioned the business to be more profitable during the downturn and generate meaningful operating leverage during the recovery.\nIt is important to note that these cost reductions were made while preserving investments in key areas that will help drive future growth, such as front line sales, resources to drive globalization of the process and environmental heating product lines, and new product development.\nI'd like to turn now to our Q2 results.\nOverall, we were pleased with the improvements we're seeing in the business during Q2.\nWe believe our Q1 represented a quarterly bottom in terms of both revenue and EBITDA.\nOur second quarter showed sequential improvement in many areas with revenue of $66.4 million.\nWhile down 35% from a record prior-year quarter, revenue grew 17% sequentially.\nWe did see shipment delays due to logistics and supply chain shortages in some key electrical components that negatively impacted the top line during the quarter.\nAdjusted EBITDA of $10.5 million was down 50% from prior year, but up 661% or $9.1 million from Q1 on improved volume and cost reduction actions.\nGross margins for the quarter were 43.6%, down 57 basis points from prior year, but up 120 basis points sequentially.\nWe continue to benefit from the receipt of the Canadian Emergency Wage subsidies, which have been excluded from the adjusted numbers.\nGAAP and adjusted earnings per share were $0.06 a share and $0.12 a share, respectively, during the quarter, showing positive momentum on the sequential volume growth and cost reduction efforts.\nWe were pleased with bookings for the quarter at $75.7 million, which were down 18% from prior year, but up 25% sequentially relative to the Q1 27% shortfall to prior year.\nThis represented a sequential double-digit improvement even when adjusted for seasonality.\nOur book-to-bill of 1.14 was positive for the third consecutive quarter with backlog growing by 8% sequentially and 16% year-over-year.\nIn addition, margins in backlog improved by 420 basis points during the quarter on a positive mix of business.\nWe continue to see weakness in our MRO business due to safety measures our customers have implemented in an effort to prevent the spread of the virus.\nMany have suspended project-based maintenance activities to limit the number of contractors on site and manage cash.\nWe did see sequential improvement in our Q2 quick turn business of 14% when compared to Q1 on a relative basis to prior year quarters.\nWhile we do expect to see further sequential improvement in Q3, we believe the deferral of maintenance is building pent-up demand that will create incremental opportunities for MRO/UE as COVID-19 restrictions ease.\nWe anticipate capital spending to be weaker in the second half of the year, particularly in the US and Latin America, representing a headwind in the near term.\nWe continue to generate positive cash flows from our operations of $9.3 million during the second quarter, which enabled $4.4 million in debt repayment.\nWe see further opportunities to free up an additional $10 million in cash from the balance sheet by year-end.\nTurning now to a discussion of our end markets.\nThe oversupply of oil resulting from the Saudi-Russia dispute combined with the unprecedented decline in demand due to COVID-19 lockdowns has had a profound impact on our customer and end markets.\nHowever, we are seeing that some customers are better positioned to weather the storm.\nUpstream, which represents approximately 14% of our revenues and integrated oil companies have been the hardest hit.\nChemical companies and customers with more exposure to natural gas has seen much less decline in demand, and commodity pricing has been more resilient.\nWe also see strength in agro-chemicals as well with capital investments in nitrogen and ammonia processing plants for fertilizers.\nAs we look forward, there are a number of fundamental shifts under way.\nThermon is well positioned to capitalize on the transition to natural gas as a bridge fuel with LNG projects moving forward.\nThe shift to renewables also creates opportunities for our business in bio gas and biofuels.\nWe are currently executing a sizable biodiesel project in the US with many more projects in various stages of planning in the US and across Europe.\nWe also see numerous oil to chemical projects creating future opportunities where producers and refiners are seeking growth markets for their capacity as demand for transportation fuels stagnates.\nGrowing demand for power across Asia and other emerging markets will also create additional opportunities for our business going forward.\nFinally, tightening environmental regulations that require lower sulfur fuels and higher CAFE standards drives demand for a wide range of Thermon solutions as well.\nTurning now to transportation.\nTransportation represents around 3% of our revenues in fiscal year 2020 and is a growing segment of our business that offers an opportunity to diversify our end markets.\nAfter securing two large orders in light rail in the last two quarters, we continue to see large transit opportunities that will expand the installed base in the US and Canada to generate stable recurring revenues.\nWe also see additional opportunities to grow our presence in less cyclical end markets, such as food and beverage, to further diversify our revenue streams going forward.\nTurning now to our investments in research and development.\nWe continue to invest in new product development that creates value for our customers and differentiates Thermon solutions in the marketplace.\nKey areas of investment include connected and smart control solutions, advanced heating technologies and material science.\nWe were excited to recently announce the new Genesis Network, which extends our leadership position in smart connected control solutions.\nThis introduction builds upon the technology platform of our Genesis Controller by creating a plantwide ecosystem, employing a self-healing mesh network with an IIoT gateway and browser-based supervisory software.\nThe combined system, which is backwards compatible, enable operators to have real-time operational awareness to improve the safety, reliability and efficiency of their processes.\nThe mesh network also lowers total installed cost while enabling brownfield locations to be cost effectively upgraded to the newest technology.\nThe Genesis server represents Thermon first subscription-based operational software platform that will create opportunities for future product and service revenue streams from the installed base.\nWhile visibility is improving, we continue to experience near-term uncertainty due to the number of variables influencing our end markets.\nAs a result, we remain focused on managing the five key priorities communicated last quarter.\nThey are: First, the safety of our employees and customers; second, aligning cost structure to the level of incoming business; third, driving continuous improvement programs to achieve the targeted $3.9 million in savings during the fiscal year; fourth, cash management; and fifth, investing for future growth.\nExecuting on these five priorities will position the business to perform during this downturn and more importantly, profitably grow as our end markets recover.\nLooking forward, given the current level of uncertainty, we do not intend to provide formal guidance for fiscal 2021 at this time.\nWe do believe that Q1 represented the quarterly bottom in terms of revenue and earnings due to COVID-19 restrictions that were in place combined with the normal seasonality of our business.\nWith Q2 revenues down 35% from prior year and bookings down 18%, we expect the revenue shortfall to prior year to begin to moderate in Q3 and Q4.\nWe also expect the cost reductions to begin to have a meaningful impact to bottom line performance in the back half of the year with decremental margins in the 25% to 30% range.\nAs a result, we anticipate a small step down in trailing 12-month EBITDA in Q3, representing a bottom with trailing 12-month EBITDA expansion in Q4 on lower volume.\nThe actions we have taken this year have positioned the business to deliver 100 basis points or more of EBITDA margin expansion during a downturn, and the team is hard at work to build a path to deliver similar or greater margin expansion in the subsequent year.\nWe continue to actively manage the business while remaining focused on executing on our strategic, operational and financial plans.\nAs we look ahead, I want to emphasize the strength and resilience of our business model and our ability to drive EBITDA and generate cash through the cycle.\nWe have a talented team that remains committed to serving our customers and creating value for our shareholders.\nBy focusing on the priorities outlined, Thermon is well positioned to emerge a stronger, more profitable business as our customers and end markets adapt to the next normal.\nWith that, I'd like to pause here and hand it over to Jay for more detailed review of the financials.\nIn light of the protracted depressed capital spend environment, our focus continues to be on value preservation in addition to funding specific strategic investments.\nDuring the quarter, we recorded $2 million of restructuring cost related to the Q2 cost out actions.\nAnd we expect these cost out actions, including the Q1 reduction in force, to reduce SG&A to approximately $34 million to $35 million for the second half of this fiscal year.\nAnd we believe approximately 80% of these reductions are structural in nature and will provide incremental operating leverage when growth returns.\nAnd since May of this year, we have reduced our SG&A by approximately 24% from $100 million down to $76 million to $77 million.\nAlso during Q2, our Canadian subsidiaries qualified for and received a $1.4 million benefit from the Canadian Emergency Wage Subsidy program.\nAnd $400,000 of this benefit was recorded under cost of sales, while the remainder impacted SG&A.\nAnd While we have faced significant challenges in our P&L-related to COVID-19 and the sustained decline in oil prices, our balance sheet remained strong and our cash and investments balance at the end of September improved by $51.4 million.\nAnd we also paid down $4.4 million in debt and generated $7.2 million in free cash flow.\nAnd that marks our ninth consecutive quarter of positive free cash flow.\nOur capex spend for the second quarter totaled $2 million, and that's inclusive of both growth and maintenance capital.\nAnd we expect fiscal '21 capex to be approximately $4.6 million and that's a year-on-year reduction of 54%.\nOur net debt to EBITDA ratio was 2.9 times at the end of Q2.\nAnd lastly, our capital allocation priority is to continue to reduce our debt through continued optional debt repayment.\nAnd we remain confident in our current liquidity and ability to generate cash during this fiscal year and we plan to pay down additional debt in the second half of this year.\nAnd regarding M&A, our pipeline remained strong.\nHowever, due to our current leverage position, we do not anticipate any acquisitions in the near term.\nNow turning to revenue and orders.\nOur revenue this past quarter totaled $66.4 million and that's up sequentially by 17% and down by 35% against the prior year quarter, and was in line with our expectations for Q2.\nOur legacy revenue mix between MRO/UE and Greenfield was 64% and 36%, respectively, versus a 53% and 47% in Q2 of fiscal year '20.\nAnd FX decreased total revenue by $1.1 million in the quarter.\nAnd in constant currency, our revenue declined by 34%.\nOrders for the quarter totaled $75.7 million, up sequentially by 25%.\nAnd relative to the prior year quarter, our orders declined by 18%, and that's an improvement from the Q1 decrease of 27%.\nAnd our backlog of orders ended September at $118.7 million, and that's the highest level in the last 18 months, albeit under depressed revenues.\nAnd due to cost out actions and higher margin projects, we have seen our backlog margins improved to 33.4%, and that's a 420 basis point improvement on a sequential basis.\nOur book-to-bill for the quarter was positive at 1.14, and that marks the third consecutive quarter of a positive book-to-bill.\nIn terms of gross margins, margins were 43.6%.\nAnd although they were down by 57 basis points versus the prior-year comp period, they were up sequentially by 114 basis points.\nAnd gross margins were positively impacted by 63 bps due to the Canadian Emergency Wage Subsidy program.\nGross profit in the quarter declined by $16.5 million and that's attributable to the volume and revenue decline of 35%.\nAnd looking forward to the second half of this fiscal year, we expect gross margins to improve by 100 basis points or more due to the benefits of cost reductions, even in light of the anticipated reduction in year-on-year volumes and an increase in the mix of our high margin on both a gross and net construct maintenance business.\nMoving on to OpEx.\nOperating expenses for the quarter, that is SG&A and this excludes depreciation and amortization of intangibles, totaled $21 million versus $25.4 million in the prior year.\nAnd SG&A expenses included $2 million of restructuring cost.\nNormalized for the Canadian Wage Subsidy program and the restructuring charge, our SG&A on a pro forma basis totaled $19.9 million.\nAnd as mentioned earlier, we expect our second half SG&A to be in the $34 million to $35 million range, inclusive of the recent spending reduction actions.\nAnd going forward, we would anticipate incremental spending in travel and other expenses to grow as volume returns.\nGAAP earnings per share for the quarter totaled $0.06 a share compared to the prior year quarter of $0.21, and that's a decline of $0.15 a share.\nAdjusted EPS, as defined by GAAP earnings per share less amortization expenses and any one-time charges, totaled $0.12 a share relative to $0.29 a share in the prior year quarter.\nAnd versus the prior year comparison period, adjusted EBITDA declined by 50% and adjusted EBITDA as a percent of revenue improved to 16%, and that's an increase of 1,300 basis points versus the prior sequential quarter.\nAnd adjusted EBITDA totaled $10.5 million this past quarter.\nFree cash flow was positive for the quarter by $7.2 million.\nAnd as I said before, our ninth consecutive quarter of positive free cash flow.\nAnd we remain confident in our ability to generate cash and service debt going forward.\nFor Q2 of '21, we generated pre-tax income of $1.2 million and recorded a tax benefit of $627,000.\nAnd this benefit was due to U.S. Treasury regulations that provided updated guidance to the tax reform law of 2017 and the associated GILTI tax rules.\nAnd as a result, we reversed $1.4 million of previously recorded GILTI tax.\nAnd for the remainder of fiscal year '21 and the out years, we expect our tax rate to be 26% on a consolidated basis.\nIn the quarter, cash grew by $3.1 million to $51.4 million, and we generated $9.2 million from working capital.\nAnd over the last 12 months, we have paid down $30.3 million in debt.\nAnd finally, given the continued impact of COVID-19 to our end markets, we will not be providing formal topline guidance at this time.\nAnd I would like to reiterate that we will continue to manage what we have control over, including our operating expenses, cost reduction efforts, continuous improvement initiatives and the continued management of our working capital.\n", "role": "user" }, { "content": "compname posts quarterly non-gaap adjusted earnings per share of $0.12.\nthermon group holdings inc qtrly revenue of $66.4 million, a decrease of 35% compared to $102.9 million.\nthermon group holdings inc qtrly backlog of $118.7 million , up 16% over prior year.\nthermon group holdings inc qtrly fully diluted gaap earnings per-fully diluted common share of $0.06.\nthermon group holdings inc qtrly non-gaap adjusted earnings per share of $0.12.\nthermon group holdings inc - q2 2021 total orders were $75.7 million versus $92.6 million in q2 2020.\n", "role": "assistant" } ]

[ { "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 hope everyone is staying safe and healthy during the global pandemic and appreciate your interest in Thermon.\nDuring the call, we will also discuss some items that do not conform to generally accepted accounting principles.\nThese non-GAAP measures should be considered in addition to and not as a substitute for measures of financial performance reported in accordance with GAAP.\nWe hope everyone listening is staying safe and in good health.\nWe appreciate you joining our conference call and for your continued interest in Thermon.\nJay Peterson, our CFO is with me and will provide additional information on our financial performance after my remarks.\nSince our last update in February, a lot has changed, but the safety and security of our employees, customers, suppliers and the communities in which we work and live remains a top priority.\nAs a supplier to critical infrastructure, we remained open for business and to continue to support our global customers.\nOur crisis response team has been operating since February, leading our global response in coordination with local site management to ensure that we are able to safely operate our manufacturing locations, while being responsive to our customers' needs.\nLike many others, we have suspended business travel, adopted work from home policies, where possible and implemented staggered shifts, additional PPE, frequent sanitation of common areas and enhanced our health and safety communications for all employees.\nIn the early stages of the COVID-19 pandemic, our focus has been on value preservation.\nWe took steps to ensure access to cash if needed and have an active broad-based cost reduction to align our cost structure to the level of incoming business.\nThese cost-out actions will reduce SG&A by $16 million in the fiscal year and just over $17 million on an annualized basis.\nIn addition, we have cut capital budgets by over 50% to $4 million in fiscal year 2021.\nWe've also modeled a range of scenarios that give us confidence.\nWe have the cash and financial strength to weather this contraction while positioning the business for growth in the recovery.\nWhile the COVID-19 crisis has had an acute near-term impact to our business in late Q4 of 2020 and now in Q1 of fiscal year 2021, the supply demand imbalance in the old markets and reduced capital and operating budgets will have a lasting impact over the next 18 months to 24 months.\nDespite the uncertainty in our current operating environment, it's important to remind the investment community that the long-term strengths of Thermon's business model remain intact.\nWe are leading global brand and the breadth of our solutions are well-positioned within the high value niche of industrial process heating.\nAs an example, we've recently launched our USX heat trace and ultra-high temperature self regulating trace heater, which extends our industry leading performance and quality standards, in addition to three other new product introductions in our fourth quarter.\nOver the 65 plus years of our existence, we have built a global installed base and have long lasting relationships with loyal customers around the world.\nIn order to ensure we maintain and grow our installed base, we have initiated key account management programs as well as established global sales councils to facilitate the collaboration across our regions and product lines for both our Greenfield and MRO/UE revenue streams.\nFor the process heating business, we continue to invest in both our people and our product offerings and we are starting to see the impact of those investments bear fruit with positive revenue growth year-over-year and sequentially in the fourth quarter.\nThe combination of our recent investments in research and development and the expertise of our engineering team results in mission critical technology with high barriers to entry, especially in hazardous locations.\nWhile operating and maintenance budgets maybe challenged by the current COVID-19 restrictions and commodity pricing, our customers supply the world with the transportation, energy and chemicals, just to mention a few that are the foundation for modern life.\nAs the world begins to reopen and maintenance activity resumes, so too will our MRO/UE business.\nThis business combined with low capital intensity is the key to the resilience of our business model that has enabled us to generate cash during prior downturns and will allow us to continue to generate positive cash flows over the next 12 months.\nOur current net debt to adjusted EBITDA ratio of 2.1 times means we are entering this difficult period from a position of strength.\nIn FY 2020, we generated $61 million in free cash flow, paid down $38 million in debt and finished the year with $43 million in cash, with an additional $60 million in revolving credit.\nWhile we observed weaker discretionary spending beginning in our fiscal Q3, the unprecedented impact of COVID-19 on the global economy as well as the dislocation in oil and gas markets starting in March has combined to reduce our customers' capital and operating budgets for at least the next 12 months.\nWe anticipate challenging market conditions until oil supply and demand reach equilibrium and commodity prices recover.\nI would like to turn now to our Q4 results.\nAs a reminder, before COVID-19, we began to see a slowdown in discretionary spending, combined with lower capital spending that began in our -- late in our second quarter.\nWe anticipated a weak Q4 relative to a historical revenue quarter in our fiscal year 2019, but expected this to be a short-term slowdown that would begin to reverse and gain momentum late in the first half of fiscal year '21.\nThermon's revenue of $88 million in fiscal Q4 was down 23% and at the lower end of our forecasted rage due to the impact of COVID-19 in the Western Hemisphere in Mach.\nWhile our gross margins were up 90 basis points year-over-year, they were negatively impacted by 390 basis points by one-time adjustment associated with operational execution in the quarter.\nAdjusted EBITDA of $9 million was down significantly due to lower volume and a cost base that does not yet reflect actions we have taken to address the lower volume environment we see moving forward.\nEurope's Q4 was largely responsible for the revenue decline, which was down 38% from prior year.\nThe combination of adjustments to our cost base, including a new leader in the region and a stronger starting backlog, shift result and modest growth in Europe, Middle East, Africa in fiscal 2021.\nAsia-Pacific was down 16% in our Q4 due to the early impact of the coronavirus in the region, but was able to show growth in fiscal 2020 despite the Q4 decline.\nTurning now to discussion of our end markets.\nOur end markets are bifurcated into those related to transportation fuels and other industrial markets.\nWe see upstream and downstream refining most greatly impacted by COVID-19 and the price of oil.\nWe anticipate the recovery of demand for transportation fuels to be protracted and the oil supply overhang will take 18 months to 24 months to rebalance with many factors impacting the timing.\nWe have repositioned the business such that upstream is a smaller percentage of the portfolio that during the last downturn, representing approximately 14% of fiscal 2020 revenues, with capital budgets being cut by 20% to 30% or more in certain markets or geographies, the bulk of those cuts by international oil companies have been focused on upstream capital budgets.\nThe downstream capital budgets have been less impacted, but we foresee numerous projects that have not yet passed FID being delayed or cancelled.\nDownstream refining and petrochemical is our largest end market exposure and where we have grown our business since the downturn primarily in the petrochemical sector.\nHere we are seeing a sharp contraction in the first quarter spending due to the inability to access facilities from maintenance due to COVID-19 restrictions and decline in demand for transportation fuels.\nAs restrictions are lifted and demand recovers, we expect budgets to be released and deferred spending to follow with maintenance budges recovering first and capital spending emerging later.\nWe anticipate the petrochemical markets to recover more quickly as the overall economy rebounds.\nThe midstream sector is better positioned to weather the current economic environment with a number of LNG projects in various stages of planning and execution.\nThe chemical market maintenance spending has slowed due to COVID-19 restrictions.\nHowever, there are number of new projects that remain more than a year away from reaching our backlog, especially given current dynamics within their end markets.\nThese end markets are wide ranging and include agriculture, paint, polymers, etc.\n, which stand to recover more quickly as restrictions are lifted.\nPower and renewable markets have suffered a short-term impact and should continue to offer step -- steady opportunities in the mid-term.\nTransportation and nuclear continue to offer an opportunity to diversify our revenue, especially in the global process heating markets.\nThe large order in light rail we mentioned last call was booked in our fourth quarter and demonstrates a multiyear opportunity we have to expand the installed base in the US and Canada.\nWe do expect mass transit projects to be negatively impacted in the short-term.\nGiven the backdrop of the external markets, I wanted to provide an update on our operations.\nWe have taken the following proactive actions to right-size our cost profile with current market conditions while continuing to invest in the future of our business.\nWith a focus on operating expenses, executive salary and director fee reductions were implemented effective April 1.\nOther discretionary expenses like travel contractor and other third-party services were significantly reduced or eliminated.\nWhile we continue to invest approximately 2.5% of our revenues in research and development and expect to release three to five new products in fiscal 2021.\nWe delayed spending on lower priority projects in the pipeline.\nAnd unfortunately after other levers were exhausted, we made the difficult decision to execute a reduction in force in North American in May, which follows a similar decision made in Europe, Middle East Africa in our fiscal Q4.\nWe believe the above actions will reduce expenses for fiscal 2021 by over $16 million and helped us right-size the business for the demand environment that we see over the next 18 months to 24 months.\nIn addition to these cost actions around operating expenses, variable costs have been reduced to align capacity with the level of our incoming business.\nWe have set goals for continuous improvement initiatives to deliver an annual incremental 100 basis point improvement in gross margins.\nWhile we don't intend to provide formal guidance for fiscal 2021 at this time, I did want to provide an update on our first quarter.\nOur primary customers in the broader oil and gas, chemical and power sectors have significantly reduced capital and operating budgets in the last 90 days, which in turn limits the demand for both our Greenfield and maintenance solutions.\nSince the pandemic took hold in early March, Thermon has not seen any significant cancellations from our backlog.\nOrders in the first fiscal quarter to-date are down approximately 40% to 45% with our Greenfield business less impacted than our MRO/UE business.\nThe quick turn business has been particularly impacted due to the current health and safety precautions in place at many of our customer sites with only a minimum amount of work being conducted at this time.\nAs those health restrictions are loosened and local economies get back to work, we expect deferred or delayed maintenance repair and upgrade spending will return and be completed on site.\nOur plan for fiscal 2021 assumes a weak first quarter in line with the lower incoming order rate.\nWe expect the cost out actions we have executed will begin to moderate the impact of lower volume on adjusted EBITDA margins and our reduced capex budget will contribute to a positive free cash flow for the year.\nAs the year progresses, we will reevaluate market conditions versus our internal plans and continue to update you as appropriate.\nI firmly believe that despite the current external pressures, Thermon is well-positioned to control cost, generate cash and manage liquidity in the near-term and we will emerge a stronger, more profitable business as commodity markets adjust to the next normal.\nWe have a great team that is committed to delivering for our customers and shareholders and are hard at work executing those plans, while continuing to meet the high standards of health and safety that our current environment demands.\nI will pause there and hand it over to Jay for the financials.\nFirst off, given the backdrop caused by the unprecedented times with the impact of COVID-19 and the dislocation in oil and gas markets.\nI would like to start by addressing our liquidity, cost management and provide some color around scenario planning.\nThis last quarter, we were able to both grow our cash and pay down debt.\nOur cash and investments balance at the end of March improved to $43.2 million and we generated $14.4 million in free cash flow in the quarter and we are able to pay down $5.6 million in debt.\nAnd year-to-date, we have generated $60.7 million in free cash flow and paid down $38 million in debt.\nAnd we have access to a $60 million revolver line of credit subject to a consolidated leverage ratio of 4.5 to 1, that steps down to 3.75 to 1 in December of this year.\nThe debt pay down will reduce our interest expense next fiscal year by $0.04 a share, that's after tax and the reduction in amortization expense due to the previous private equity transaction, coupled with the interest expense savings will be accretive to our fiscal year '21 earnings per share by $0.23 a share and that's after tax with potential additional interest expense savings forthcoming.\nOur gross debt amount at 3/31 was $176 million and net debt of $133 million with a net debt to EBITDA ratio of 2.1 times.\nAnd as Bruce just mentioned, we have executed cost reduction actions in Europe in January to better align our expenses with our incoming European order rate.\nIn addition, last month, we took actions to reduce our run-rate spending by $17 million by reducing personnel costs, discretionary spending and consultant and contractor costs.\nAnd before we get to the quarter's results, I would like to provide some context on the scenario planning we have recently completed and would emphasize that this does not reflect our current expectations for the business.\nAfter accounting for the impact of the cost out actions that we have already executed, we believe our annualized breakeven revenue by which we mean the revenue levels where free cash flow is breakeven is between 35% and 40% lower than our fiscal year 2020 results.\nAnd again, we do not believe this to be representative how our results for the next 12 months and we will continue to stay close to our customers and monitor leading indicators for any changes to our plan.\nAnd we are continuing to manage discretionary spending, but at this point, we do not believe further cost-out actions are necessary.\nTurning to revenue and orders, our revenue this past quarter totaled $88.4 million and that's a decline of 22.6% against the prior year quarter.\nThe decline was driven by our exceptional revenues in Q4 of '19, the weaker demand we had previously forecasted and the decline in oil prices that began six months ago.\nThe legacy revenue mix between MRO/UE and Greenfield was 60% and 40% respectively versus a 50:50 mix in Q4 of fiscal year '19.\nAnd FX nominally decreased total revenue by $1.3 million and in constant currency, our revenue declined by 21%.\nOrders for the quarter totaled $90.5 million versus $105.7 million in the prior year quarter for a decline of 14%, again two factors previously mentioned.\nOur backlog of orders ended March at $105.7 million versus $120 million as of March of '19 and that's a decrease of 12%.\nAnd gross margins in our backlog improved to 33% versus 32% at the end of March '19.\nAnd our book-to-bill for the quarter was slightly positive at 1.02.\nMoving on to gross margins.\nMargins were 40.3% and that's a 90 basis point improvement versus the comp period and that was mainly driven by a favorable Greenfield MRO mix.\nAnd our gross profit declined by 9.4% due to the double-digit revenue decline or by 20.9% versus the record comp period and gross margins were impacted in the quarter by 390 basis points due to a one-time charge related to operational execution.\nOperating expenses for the quarter, that is SG&A and this excludes depreciation and amortization of intangibles totaled $26.4 million versus $24.3 million in the prior quarter, which includes $1 million of expenses relating to the restructuring in EMEA.\nOur opex as a percent of revenue was 29.9%, again excluding depreciation and amortization and that's an increase of 860 basis points from the prior year level of 21.3%.\nAnd we expect to take a one-time charge of approximately $2.8 million for cost reductions that occurred during May in our Q1 income statement.\nMoving on to earnings.\nGAAP earnings per share for the quarter totaled a negative $0.09 compared to the prior year quarter of $0.20 and that's a decline of $0.29 per share.\nAdjusted earnings per share as defined by GAAP earnings per share less amortization expense and any-one time charges totaled $0.01 a share relative to $0.32 a share in the prior year quarter.\nAdjusted EBITDA declined by 57.6% versus the comparison quarter and adjusted EBITDA as a percent of revenue was 10.2% and that's a decline of 880 basis points versus the comp period and adjusted EBITDA totaled $9.2 million this past quarter.\nAnd our EBITDA conversion ratio and that's defined as EBITDA less capex divided by EBITDA for the last 12 months was 84.4%.\nOur capex spend for the fourth quarter totaled $3.9 million and that is inclusive of both growth and maintenance capital with fiscal year 2020 capex totaling $10 million.\nAnd we expect fiscal year '21 capex to be reduced by 60% to $4.0 million.\nFree cash flow per share for fiscal year '20 was $1.83 and that's a non-GAAP measure, but it reinforces our ability to generate cash.\nTaxes, the tax rate for the year was 30% and was impacted due to the non-deductibility of interest expense due to the GILTI tax provision.\nMoving on to full year highlights.\nRevenue for the year totaled $383.5 million and that's a decline of 7.1% over the prior year driven mainly by our EMEA, where we have taken significant measures to adjust our cost structure and position the region for modest growth in fiscal year '21.\nGross profit for the year was $161.6 million, a decline of 81% over the prior year.\nGross margins were 42.1% and that's a 50 basis point decline over the prior year.\nAnd SG&A was $100.8 million and that's a 3.4% increase over the prior year and that excludes the cost of our cost-out actions throughout this year.\nAdjusted EBITDA for the year was $64.3 million and that's a decline of 22.9% over the prior year and 16.8% as a percent of sales.\nGAAP earnings per share for the year was $0.36 and that's a decline of $0.33 and adjusted earnings per share was $0.75 or a decline of $0.44.\nAnd in closing due to the current global economy and the uncertainty in our end markets, we are not providing any formal guidance at this time.\nWe will continue to evaluate this as the year unfolds and provide you with an update on our next call.\nAnd lastly, our capital allocation priority is to continue to reduce our debt through continued optional debt repayment.\nOur balance sheet is strong and we remain confident in our current liquidity and ability to generate cash this fiscal year, which we expect will provide valuable flexibility in the future.\n", "role": "user" }, { "content": "compname posts quarterly loss per share of $0.09.\nthermon group holdings inc qtrly revenue of $88.4 million, a decrease of 23% compared to $114.2 million.\nthermon group holdings inc qtrly loss per share $0.09.\nthermon group holdings inc qtrly adjusted earnings per share $0.01.\nthermon group holdings - q4 2020 total orders were $90.5 million versus $105.7 million in q4 2019.\nthermon group holdings - q4 2020 backlog of $105.7 million represents $14.3 million, or 12%, decrease versus q4 2019 backlog of $120.0 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll come back at the end to talk more about the progress we're making toward building a company with long-term sustainable growth.\nOn Slide 3, we've shared the key points that we hope you'll take away from today's call.\nIn short, we are pleased with our results and our progress.\nWe were up against a tough comp given the unprecedented pantry loading we saw a year ago as we entered the shelter-in-place.\nAgainst all of that, we delivered a solid first quarter and we drove improved EBITDA margins while keeping adjusted earnings per share roughly flat despite the inflationary headwinds that we're seeing across the industry.\nSince I joined TreeHouse roughly three years ago, we have meaningfully improved our operations and strengthened our performance.\nI'm really proud of what we've accomplished and how we continue to evolve and position ourselves for the future.\nOur investments over the last several years have stabilized our foundation, allowing us to support retailers through the pandemic and differentiate us from private label competition.\nWe have optimized operations, improved service levels, built a strong centralized commercial organization and realigned our portfolio into two divisions, better aligning our categories with how our customers think about their roles in their stores.\nOur move last year to a 2-division structure was timely, and we continue to benefit from having aligned ourselves to how our customers operate.\nThe new structure has streamlined decision-making, enabled us to compete more effectively and to better serve our retail customers, which has, in turn, deepened our customer partnerships.\nAll of those changes were important in enabling us to generate strong first quarter results.\nAnd with that strong foundation, we are well positioned to address the macro environment.\nAs evidence of that, we are maintaining our guidance for the full year.\nBill will talk about how our expectations around the cadence of our results by quarter has changed, but we remain confident in our outlook for the top and bottom line.\nAs we take actions to navigate the current environment, we are continuing to invest to drive excellence in areas that our customers value most: cost, quality and service.\nWe are focused on building commercial capabilities to drive organic growth as well as operational capabilities to improve manufacturing cost, efficiency, agility and margins.\nWe also see opportunities to add depth in advantaged categories through M&A with a primary focus on our growth engine categories to accelerate our top line.\nWe are confident that we have a number of good options to profitably grow our business.\nTurning to Slide 4.\nIn addition the changes we made to enhance performance, our results reflect the hard work and effort of our teams.\nOur first quarter revenue of $1.06 billion declined only 2.5% from last year's sales.\nWe estimate that last year's first quarter benefited by $66 million as consumers navigated the early days of the pandemic.\nIn the first quarter, we made solid progress in expanding adjusted EBITDA margins, which improved 20 basis points versus last year.\nAdjusted earnings per share of $0.36 was also strong and just shy of last year's first quarter.\nAs we look to the rest of the year and beyond, let me take a few minutes to talk about our strategy and the environment in the near term.\nTurning to Slide 5.\nAs I shared with you on our last call and at CAGNY, with the benefit of our stronger foundation, we have taken our learnings from our strategy and the pandemic and are focusing on building depth in our growth engine categories.\nThese categories represent about 40% of our portfolio and are characterized by strong consumer trends, defined pockets of growth and existing depth where we have meaningful opportunities to go further.\nWe also have a set of cash engine businesses, where our goal is to generate cash that we can reinvest and fuel our high-growth businesses.\nThe cash engine categories comprised another 40% of our portfolio.\nThe remaining 20% consists of categories where we are reviewing our opportunities to either revitalize the businesses or to deploy that capital elsewhere.\nLater, I'll talk more about the progress we're making in these areas.\nBut before I get to that, let me address the macro environment as it is shaping how we see the balance of the year unfolds.\nTurning to Slide 6.\nWe provided a look at both at-home and away-from-home consumption.\nThere are two important takeaways here.\nFirst, the year-over-year comparisons for retail consumption are uneven as consumers started navigating the pandemic last spring.\nWhen you compare March of 2021 to two years ago, or 2019, total edibles grew 14%, and private label grew 13% in measured channels.\nIf you then consider private label strength in unmeasured channels, we think this demonstrates that takeaway remains healthy.\nSecond, you can see on the right that the away-from-home sector is recovering as restrictions across geographies begin to ease, which has positive implications for our foodservice business.\nWhile the pandemic is not yet over, the availability and acceptance of vaccines in the U.S. has been supportive of reopening efforts across much of the country.\nBeyond the pandemic, Slide seven captures several of the headwinds across the food and beverage landscape, specifically, upward pressure on commodities and, in particular, soybean oil has continued.\nOn top of that, freight costs are escalating across the entire landscape due to increased demand and the limited availability of drivers.\nTo a lesser degree, but worth noting, weather headwinds in the first quarter presented challenges.\nIn our case, several plants were affected, with some, like our San Antonio, Texas plant where we make red sauces and salsa, impacted more extensively than others.\nDespite the headwinds that were affecting the entire food and beverage industry, we remain confident in our outlook.\nAnd as I mentioned, we are reaffirming our full year guidance for 2021 today, as seen on Slide 8.\nSeveral factors give me confidence that we can continue to deliver the year.\nFirst, we are a much healthier business today with stronger customer relationships and a pipeline of opportunities.\nWe've also restored service levels back to the pre-pandemic levels in the 98% range.\nSecond, while the top line will face tough comparisons in the near term, we are taking actions to address those issues within our control, specifically, additional pricing to offset the incremental commodity inflation that I spoke to earlier.\nAnd third, our retail customers continue to express support for private label.\nIn recent weeks and months, we've heard several customers publicly address their attentions to further expand their private label programs.\nWe remain confident that the long-term opportunities for private label remain intact and that we're in a strong position to benefit, particularly as the environment normalizes.\nI'll start on Slide nine with our Q1 scorecard.\nSteve already hit on the first quarter highlights versus the prior year period.\nHowever, since many of you are interested in a comparison to pre-pandemic results, we've included the change versus 2019 on this chart so that you also have the 2-year comparison.\nI think it's worth noting on this slide that our profit improvement over the 2-year period further demonstrates that we are a much healthier company today.\nSlide 10 provides our revenue drivers by division.\nMeal Prep net sales grew 0.7% versus the first quarter of 2020.\nRiviana contributed approximately $40 million, more than offsetting the comparison to last year's COVID-related food demand surge and continued weakness in food-away-from-home consumption.\nThe away-from-home sector whose business mostly falls in the Meal Prep began a rebound in March, which is encouraging.\nSnacking & Beverages declined 7.9% driven by the comparison to the initial wave of pantry stocking in the last few weeks of March and our sale of two in-store bakery plants.\nExcluding that impact of that divestiture, which will be behind us in April, revenue declined 3.9%.\nSlide 11 walks you through the revenue drivers by channel.\nI'll point out a couple of things on this slide.\nAfter excluding the sales associated with the two in-store bakery plants, total sales in the retail channel declined $18 million versus last year.\nWe also estimate that the net revenue headwind in the quarter related to weather totaled about $4 million, which we do not expect to recover, we are encouraged by the progress as Riviana acquisition and base business growth nearly offset the $66 million related to pantry stocking last year.\nFinally, as you can see, our retail sales in unmeasured channels, which include some key club, value and online retailers, continue its trend of outpacing ourselves within measured channels.\nBuilding on Steve's comments around our performance within our growth categories, Slide 12 gives you a look at our results versus private label.\nAlthough the comparisons are unfavorable due to the pantry stocking lap, you can see that we continue to outpace overall private label in Q1.\nAs we move down the P&L, Slide 13 takes you through our earnings drivers.\nVolume and mix, including absorption, were negative $0.15.\nPricing net of commodities, or PNOC, was a $0.28 drag on the quarter as we faced significant inflation across commodity and freight complex.\nWhile our pricing actions are in flight, our expectation is that we won't see the offsetting impact of our P&L to the second half of the year.\nOperations added $0.27 in the quarter due primarily to planned performance as well as the benefit of the Riviana Pasta business in the quarter.\nAs we consider the middle of the P&L, I would note that our COVID expenses in the first quarter did come in below our original expectations as our teams continue to demonstrate agility and flexibility as we adapted this environment and keep our employees safe.\nSG&A contributed $0.09 year-over-year due to the timing of lower expenses.\nOther income added $0.06 driven by investment gains as we lap the market volatility from last year.\nTurning to Slide 14.\nAs I noted on our February earnings call, we have begun the redemption process of our 2024 notes, calling $200 million.\nFollowing that, we successfully upsized and extended the maturity of our term loans and used the proceeds to redeem the remaining $403 million of our 2024s.\nWe've included our updated debt structure on the right-hand side of the page, and as you can see, we've been able to lock in some very favorable rates.\nFor those of you that track our financial leverage ratio, we finished the quarter at 3.6 times.\nI will point out, that represents a more straightforward net debt to last 12 months adjusted EBITDA calculation versus our bank covenant leverage ratio, which is more complex.\nWe continue to target our financial leverage ratio in the range of three to 3.5 times.\nBefore we move on to guidance, I want to build on Steve's earlier comments on the macro environment on Slide 15.\nLike everyone across the packaged food landscape, we are seeing inflation accelerate across nearly all commodities.\nIn our guidance for the year, we estimated agricultural commodity inflation of between $100 million and $110 million as well as higher freight and labor costs.\nAs we sit here in May, we are now facing commodity inflation of about $60 million: $40 million which relates to ingredients and another $20 million in freight.\nWe are working with our customers and we are proceeding with additional pricing actions to offset the more recent increases in soybean oil and freight.\nWe will also look to our Lean initiatives and drive efficiencies from increased utilization.\nWhile pricing discussions are never easy, our relationships today with our customers are stronger than we last addressed inflation in 2018.\nNot only are the teams better equipped and mobilized to engage with our customers, but also today, we're having a much healthier dialogue as customers focus on surety of supply and service levels.\nOn Slide 16, we shared our detailed full year guidance, reaffirming our ranges of $4.4 billion to $4.6 billion of revenue, $2.80 to $3.20 for adjusted earnings per share and free cash flow of approximately $300 million.\nIt's important to note that the free cash flow guidance includes investments that we are making in the business, which I'll cover in more detail in a moment.\nOur second quarter guidance is laid out on Slide 17, along with several considerations.\nFirst, while our expectation for how the remainder of the year will play out has changed due to the rising commodity and freight costs, we have begun implementing our plans to address the incremental inflation.\nAs we consider the higher cost environment and the timing for pricing recovery, we have revised our expectations and now anticipate about 20% of our earnings to come in the first half with the remaining 80% in the second half.\nThis compares to our original expectation for 30-70 first half, second half split.\nWhile this does put a bit more pressure in our second half earnings delivery, I will point out that our 20-80 cadence is not dissimilar to 2018 when we took similar actions to offset inflationary headwinds.\nAs well, in 2021, we will benefit from the contribution of Riviana and related synergies in the back half, consistent with our original expectations.\nSecond, we do have higher cost inventory currently on the balance sheet that was produced in the first quarter and will be sold in Q2.\nAs that inventory is sold, it will pressure gross margins.\nThis higher cost inventory is a result of not only the inflation I mentioned but also the weather disruptions from the first quarter that caused several temporary plant closures.\nOur guidance ranges for the second quarter on the right.\nWe're anticipating $1.02 billion to $1.07 billion of revenue and $0.20 to $0.30 in adjusted earnings per share as inflationary pressure will not yet be offset by our pricing actions.\nI want to close with a few words that build on Steve's comments earlier about investments in our future.\nWe continue to feel very good about our business and our long-term opportunities ahead.\nWe've proven the resilience of our business model, our balance sheet is solid and we have financial flexibility.\nWe also have a unique opportunity to further enable our strategy to build depth in our growth businesses through investments in our commercial and operational capabilities for the future.\nIn the first quarter, we invested $16 million, and we anticipate these investments to total $75 million in 2021 as we enhance our commercial capabilities and advance our supply chain so that customers view us as their partner of choice.\nAnd we are better positioned to accelerate our top line, grow profits and drive shareholder value.\nBill gave me a nice segue to close today and share our thinking around how we build on our accomplishments to date and continue to invest in our future.\nAs I mentioned earlier, the learnings we have accumulated from our strategy and the pandemic are shaping how we'll position ourselves for the future, including how we'll invest in the 40% of our portfolio that represents our growth engine businesses and leverage the cash that we generate from our cash engine categories.\nOur growth engine businesses include categories like broth, pretzels, crackers, single-serve and powdered beverages and pasta.\nThese are categories where we have deep market penetration, and we're working to enhance our customer relationships as well as build a pipeline of opportunities to fuel growth.\nOur accomplishments around operational and commercial excellence, portfolio optimization and people and talent have laid the foundation for this greater focus on growth and for building depth in categories where we are advantaged.\n2021 presents a new chapter for our strategic evolution, supported by the strength of our balance sheet and our financial flexibility, enabling us to deploy capital in a number of value-creating ways.\nM&A represents one avenue, and Riviana is a great example of how we build depth in an important category.\nWe're pleased so far with the impact of Riviana, and our transition team is doing a great job managing the integration.\nWe'll continue to seek these kinds of accretive and value-creating opportunities that leverage our core strengths and build on our capabilities.\nBill quantified the investments that we're already making behind our commercial organization, business services and supply chain.\nThese investments will include several work streams.\nOn the commercial side, we are investing in capabilities to optimize assortment, market digitally and optimize our pricing architecture.\nWe will also look to further our e-commerce strategy and capabilities.\nIn addition, on the supply chain side, automation, value engineering and indirect sourcing will be key areas of focus.\nAnd finally, even as we're making these investments for long-term shareholder value creation, we will also return capital to shareholders.\nOur plan in 2021 is to continue to buy back shares to offset dilution from stock issuance.\nI'll close by reiterating that I'm pleased with our start to the year and our ability to navigate the challenges in front of us.\nMore importantly, I'm excited about the investments we're making for our future.\nAs we move forward, we will continue to strive toward having our stock price appropriately reflect the strength of our earnings and the confidence in our outlook.\nWe remain focused on building a company that delivers long-term sustainable growth and drives shareholder value.\nI look forward to continuing to update you along our strategic journey.\n", "role": "user" }, { "content": "compname says q1 sales fell 2.5% to $1.057 billion.\nq1 adjusted earnings per share $0.36 from continuing operations.\nsees fy sales $4.4 billion to $4.6 billion.\nq1 sales fell 2.5 percent to $1.057 billion.\nreaffirmed fy guidance of $2.80 - $3.20 for adjusted earnings per share from continuing operations and $4.40 to $4.60 billion of reported net sales.\nsees q2 sales $1.02 billion to $1.07 billion.\nsees q2 adjusted earnings per share from continuing operations of $0.20 to $0.30.\n", "role": "assistant" } ]

[ { "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 careful consideration, including engagement with many of our shareholders, the TreeHouse Board has approved a plan to explore strategic alternatives.\nAs we undertake this exploration of alternatives, which may include the sale of the company of the transaction to allow us to focus on our higher growth snacking and beverage businesses by divesting a significant portion of the meal prep business, we will remain focused on supporting our customers and on the actions that we are taking to gain share, optimize our portfolio and grow our top line.\nOur Board and management team are steadfast in our belief that the secular headwinds we are facing are episodic and they will pass.\nThe long-term consumer demand trends and fundamentals of the underlying business remains strong.\nWe are not speculating on potential outcomes or timing of the review and we do not intend to comment further unless and until the Board has approved a specific course of action or has determined that further disclosure is appropriate.\nSo, let me put all of this in the context.\nAt Treehouse, we are essentially the supply chain for our customers private label products, placing us squarely in the middle of the macro disruptions across our industry today.\nAs you have heard me say many times, private label plays a vital role for our customers.\nAnd given our size and scale, we have an obligation to do all we can to provide food and beverages, both for our customers and for their consumers.\nWe are making a conscious decision to support the customer during this difficult time.\nThe changes we have made to our business over the last several years have enhanced our ability to deliver on our customers' critical needs by providing better service.\nAs a result, we have strengthened our customer relationships, which have been a critical factor in implementing multiple price increases this year to recover inflation.\nWe've made important progress.\nIn fact, this has been one of the most collaborative pricing environments that I've ever seen.\nOur teams are rising to the challenge in a historically difficult operating environment and I'm confident that our pricing will catch up over the cycle.\nBill will talk about pricing more in a few minutes, but I'm proud of how our teams are working closely in partnership with our customers to navigate these unprecedented headwinds.\nOur strong relationship and improved ability to serve the customers is reflected in our third quarter performance, in seven of our 10 largest categories we outperformed private label, a trend that we've seen over the last year.\nWe are also seeing demand strengthened in the second half of the year.\nAs we navigate the pandemic, we have invested significantly to support our customers, bearing the rising costs to secure ingredients and transportation and to maintain labor in our plants.\nWhile that has enabled us to maintain strong customer relationships and to expand our topline as you saw in the revised outlook for the fourth quarter, it comes a significant near-term impact on our profitability.\nWe believe these costs are temporary and will impact our performance in the near term, but are the right thing to do for the long-term success of our customers and TreeHouse.\nAs the Board embarks on a strategic review, we as a management team are committed to maintaining our focus on the things that we can control, including the pricing actions we have underway and supporting our customers.\nWith that as our framework, let's turn to the specifics of the quarter on Slide 4.\nThird quarter revenue of $1.1 billion grew 5.3% versus last year.\nOn an organic basis, revenue grew 1.7% and was driven by pricing of 3%.\nDemand for private label products has strengthened in recent months, to the point that today we have more demand than the supply chain challenges allow us to fulfill.\nThird quarter adjusted EBITDA was $109 million.\nAdjusted EBITDA margin of 9.9% declined 320 basis points, driven by inflation, labor and supply chain disruption.\nWe delivered adjusted diluted earnings per share in the third quarter of $0.46, within the range of our guidance that we communicated in August.\nSlide 5 outlines the impact of inflation, labor and supply chain disruptions we've seen across the manufacturing landscape.\nI want to talk for a moment about how these factors are impacting our business.\nInflation across the entire complex continues.\nOur commercial organization is working diligently on pricing recovery efforts.\nWhile the escalation and duration continue to be unprecedented, I'll say it again, I'm very encouraged by the level of collaboration that we are experiencing with our customers.\nLabor across all manufacturing has not only become more costly, but today's shrinking labor participation and the numerous opportunities for all types of manufacturing labor require a more progressive strategy to staff our plants effectively.\nTo address this, our HR organization is working with our teams to pivot our labor strategy, being creative and looking holistically at the issues.\nAlthough very early in, we are deploying new strategies and are just beginning to see some of the positive effect as a result.\nThis was compounded by the supply chain disruption, materials either not showing up on time or not enough of the necessary inputs arriving at our facilities.\nOur service levels overall are still in the '90s, but certain categories have been under more pressure and the inherent complexity of private label will continue to pressure our service levels.\nNearly all of our meal prep categories are currently on allocation, a clear sign that orders are outpacing our disrupted capacity.\nDemand has strengthened since we last spoke and that's very encouraging.\nAs certain federal stimulus programs expire, we are seeing signs of private label recovery.\nWhile at the same time, we are winning new business with existing customers.\nTurning to Slide 6, you may have seen similar data from us before.\nThe top green line represents the change in private label dollar sales as compared to two years ago among those states that opted out of enhanced unemployment benefits early in June and July.\nThe orange line represents the same data, but among those states where these benefits expired in the fall.\nAs you can see, dollar sales increased meaningfully among those states where the benefits recently expired, approaching the growth rate levels of the states that expired in the summer.\nThis aligns with our expectations that as things normalize, consumers will return to purchasing private label and share will continue to recover.\nBill will get into this more, but we estimate that in the third quarter we had roughly $40 million in unmet demand due to constraints across the network, either not being able to run lines to the lack of labor or because we didn't have the appropriate supplies.\nLooking forward, our near-term priorities are very clear.\nFirst, labor, we are addressing how to best improve staffing and attendance across our plants.\nMore broadly, we are creating an environment that not only empowers our employees to be efficient and productive, but also was fulfilling for them individually and professionally.\nSecond, we must continue pricing to offset inflation.\nOur pricing is in the market.\nAnd while there is a lag, we will need to continue pricing to cover higher commodity costs.\nWe'll also focus on cost control and lean across the organization and we'll work with our customers to identify inefficiencies and opportunities for value engineering across the product mix.\nAnd third, we will continue to focus on the customer.\nOur teams will continue to work diligently to mitigate disruptions and manage through this uncertainty to fill every order that we can, supplying our customers with food and beverage for their consumers.\nAs we continue to take actions to support our customers in the current environment, our results will be affected in the near term.\nSlide 7 shows our guidance revisions and updates for our outlook for the balance of the year, including the impact of the investments we are making to support our customers.\nWhile we expect demand for our products to continue to strengthen, there will certainly be some limits on how much of that demand we will be able to service given that we now expect our top line to finish the year in the lower half of our current guidance range.\nWe are looking across the supply chain to address today's disruptions.\nIt will be costly in the near-term as we invest to serve the customer.\nHowever, as I noted earlier, we will continue to price proactively to offset inflation.\nWe are a complex supply chain business with 29 categories and 40 plants as we are organized today.\nWe've done a lot over the last several years to focus on continuous improvement and lean to make ourselves more efficient.\nIn this environment of supply chain disruption, however, we are making a conscious decision to invest in the customer, bearing significant cost to ensure that our products reach our retailer shelves for their consumers.\nIt is our belief that investing to serve the customer is the right decision and will serve to strengthen our relationship and the business for the long term.\nThis also provides the best backdrop for the strategic alternatives that we will consider.\nOn Slide 8, you see that third quarter revenue was $1.1 billion, up 5.3% versus last year, of which 3 points was pricing related and we've been able to service a $40 million of revenue as Steve mentioned earlier, we would have delivered the top end of our revenue guidance in the quarter.\nWe are taking creative and dramatic steps to address our service challenges in these very difficult times.\nOn Slides 9 and 10, we have provided revenue by division and by channel.\nMeal prep net sales grew 7.4%, elevated by 5.2 points from the past the pasta acquisition.\nOrganic sales were nearly 2%, of which 4.6 points was pricing.\nAs noted on our prior calls, the rapid escalation of soybean oil, a meaningful input for our dressings business was one of the first commodities for which we price earlier this year.\nVolume and mix declined 2.8 points, driven by supply chain constraints and partially offset by the continued improvement in the food-away-from-home channel.\nFood-away-from-home is expected to return to 2019 levels in early '22.\nSnacking & beverage revenue grew 2%, of which 1.1% was driven by volume and mix and in particular, new product introductions.\nThe balance of the growth was split between pricing and FX.\nSild 10 details our topline by channel.\nThe unmeasured retail channel, which includes key retailers in the value club and online space continue to drive growth of 6% this quarter.\nThis compares to a decline of 2% in the measured channels, a sequential improvement over the second quarter.\nLooking forward, we expect unmeasured channel growth continue to outpace measured channels.\nSlide 11 provides our earnings drivers.\nVolume and mix, including absorption were a negative $0.26 of impact.\nMoving to the right, I want to spend some time on PNOC, pricing net of commodities and give you a sense for both our pricing progress as well as the cost impact of rising inputs.\nI want to be sure to recognize our commercial teams and a very fine job they've done coordinating and communicating with our customers and implementing multiple price increases this year.\nAs Steve noted and I'll reiterate, we would describe the pricing environment as very constructive.\nOur intense focus on service and strong communication with the customer is enabling us to have a very good dialog around pricing.\nThis gives me confident that we will be able to continue to price and recover the continued input cost escalation over the cycle.\nThe pricing actions we took early in the year and now being reflected in our P&L as expected.\nIn the third quarter, pricing contributed $0.43, partially offsetting inflation we incurred in the first half of the year.\nThe continued cost escalation in commodities, packaging, freight and labor is outpacing our pricing recovery.\nIn the third quarter, the higher input cost was a negative $0.88.\nTotal PNOC or the net of these two is negative $0.45.\nAlso in the third quarter operations contributed $0.22 in total versus last year.\nWhile the comparison to the prior year is positive, the COVID related disruption impacting labor and the supply chain cost the company by about $0.07 in the quarter.\nAcross our 29 categories and 40 plants, we have been working hard to mitigate the impact.\nThe balance of the operations largely represents the higher cost inventory produced in the third quarter that will impact us negatively in the fourth quarter as we sell that product.\nSG&A was a benefit of $0.16.\nThis was due to the reversal of variable compensation plan accruals and continued cost management of discretionary spending.\nFinally, interest expense favorability contributed $0.08 in the quarter versus last year.\nTurning to Slide 12, I'd like to make a few points on our balance sheet.\nIn the last 12 months, we paid down more than $300 million in debt, reducing total debt from $2.2 billion dollars to $1.9 billion.\nThis is our lowest debt level since 2015.\nWe've also reduced our weighted average cost of debt by 100 basis points with the refinancing completed earlier this year.\nThis action lowered our annual interest cost by approximately $20 million.\nOur revolver is largely undrawn.\nSo between cash on hand and the revolver, we have strong liquidity of nearly $800 million.\nAs anticipated, we generated cash in the third quarter and will do so again in the fourth quarter.\nFinancial leverage in the third quarter was 3.9 times as we build inventory to prepare and anticipate continued supply chain interruption.\nTurning now to slide 13.\nOur revised guidance for the remainder of the year takes into account the following.\nSimilar to Q3, we anticipate we'll have some limitations on our ability to meet all demand indicated by our customer orders and we think revenue in 2021 will be in the $4.20 [Phonetic] to $4.325 billion.\nWe do not see signs of inflation subsiding, although we are on track to affect our next sort of pricing actions, we will now fully recover all of this year's inflation in the calendar year due to the timing lag.\nWhile we are exploring many avenues to mitigate the lack of labor availability and supply chain dynamics, in the near-term our cost of service to customer will be significantly higher as a result of these factors, we are reducing our EBIT guidance $155 million to $175 million, which compares to $230 million to $260 million previously.\nWe anticipate that most of our investments to serve the customer will impact us on the COGS line, resulting in a sequential and year-over-year erosion in gross margin in the fourth quarter.\nThis translates into full year adjusted earnings per share of $1.08 to $1.28, down from our revised August guidance of $2 and $2.50 per share.\nWe are disappointed to be sharing a second guidance revision, but I'll echo Steve's earlier comment.\nWe believe these near-term investments to support our customers will serve to strengthen our relationships and the business for the long-term.\nWe are reducing our 2021 free cash flow guidance to at least $100 million.\nI'll point out here that as we manage our working capital and focus on serving our customers, we are making conscious decisions to build inventory, which due to inflation is more costly.\nAs a result, the working capital contribution from inventory this year will be lower.\nOur debt repayment and liquidity is largely unaffected.\nSlide 14 covers our fourth quarter guidance and our expectation for adjusted earnings per share between $0.00 and $0.20.\nBefore turning it back over, I think it's important to give you a way to think about normalized profitability and the large moving parts of disruption this year, specifically in three areas.\nFirst, private label demand and changing consumption patterns.\nSecond, inflation and pricing.\nAnd third, labor at supply chain disruption.\nWe do not believe these factors represent structural changes to the business, so I want to try and quantify their impact on '21, and our underlying profitability in broad strokes.\nOn Slide 15, we started with our February EBIT guidance of approximately $300 million because we believe that this is a much closer and normalized annual level of profitability for the company.\nAs you move from left to right, we have layered on our estimates for the full year impact of the macro disruptions.\nFirst, on demand and private label consumption.\nRecall that in the first half of the year, we signed a software private label consumption trend due to the macro environment, such as branded promotional activity in certain categories and government stimulus supporting consumers trading up to brands.\nWe've talked in August about this impacting revenue in both the quarter and the year and we estimate this to be a $40 million impact to EBIT this year.\nOur original guidance contemplated input cost headwinds of approximately $100 million to $110 million.\nThe additional inflationary headwind is another $125 million, more than double our original estimate.\nOur pricing actions to recover this inflation are in the market and confirmed by customers.\nI showed you earlier how pricing is starting to be reflected in our third quarter results.\nOur realized Q3 price increase of 3% is expected to accelerate to 4% to 5% in Q4, building to low-double digits in 2022.\nWe estimate that the timing lag in calendar '21 is approximately $75 million.\nIt is important to understand that over the course of the cycle, we are confident we have the initiatives in place we cover the entirety of the inflation headwinds.\nFinally, because trends related to labor and supply chain disruption is affecting our ability to meet strengthening demand.\nthese challenges are especially acute across our 40 plant network.\nDespite the near-term costs, we believe the right thing to do for our business over the long-term is to continue to serve the customer to the best of our ability.\nWe estimate that the incremental cost this year is approximately $60 million.\nWe've also captured the benefit of the reversal of the variable compensation accrual of $35 million.\nThe net of these factors represent the near-term impact that has driven our 2020 EBIT guidance to $165 million at the midpoint.\nWhile the magnitude and the velocity of change across the landscape continues to be unprecedented, we strongly believe that these disruptions will at some point normalize.\nIt will take some time, it could be a few quarters or more.\nWhat I do know where I do have confidence is around our teams and the initiatives we have put in place to mitigate the disruption.\nPrivate label demand is strengthening.\nOur pricing is confirmed and we are mobilized to effectively address further inflation with additional pricing.\nWe're getting creative around how we staff and schedule our plants, thinking holistically about how we extend [Phonetic] our people, so that we can improve attendance.\nWe're getting opportunities across the entire supply chain spectrum.\nOn the production side, this includes ensuring we have backup suppliers to prioritizing our customers most important SKUs.\nOn the transportation side, we completed additional freight RFPs and in some cases we'll utilize the spot market to ensure that we can get inputs and finish product to the right place at the right time, and we will further leverage lean and continuous improvement learnings throughout the network.\nWhen we come back to you in February on our year end earnings call, we will give you more specific direction on 2022.\nI'll keep my closing remarks short today and leave you with three thoughts.\nFirst, we're encouraged by the strengthening demand.\nToday, we have more orders than we can fill.\nAs our customers focus on surety of supply, we are winning business and outperforming an environment where we've been taking a great deal of pricing.\nWe have pricing that's in effect in the month of December, which is unprecedented for as long as I've been in the food business.\nThis is a difficult environment for everyone, but customers have been appreciative of the level of detail, transparency, and communication we are providing.\nThis cements my belief that we're making the right decision to invest in the customer.\nWe are making a clear choice to bear in the near-term cost of servicing our customers to help keep their shelf stock.\nAs a result, we are outperforming in our largest categories.\nWhen things normalize and they will, we will be a stronger business and benefit from having served the customer during this time of unprecedented disruption.\nThe alternative would have been to spend less and choose not to service as much demand.\nWhile that might have been a near-term solution for our earnings, I don't believe it's the right long-term decision for the business.\nAnd finally, we'll stay focused on running the business as the Board conducts its review.\nAs I mentioned earlier, we won't be speculating on potential outcomes or timing of the review.\nWhen we have something definitive to report, we will do so in a timely manner.\n", "role": "user" }, { "content": "q3 adjusted earnings per share $0.46 from continuing operations.\nq3 sales rose 5.3 percent to $1.101 billion.\nq3 adjusted earnings per share $0.46.\nsees fy sales $4.2 billion to $4.325 billion.\nsees 2021 adjusted earnings per diluted share of $1.08 to $1.28.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I hope everyone is well as we start the new year.\nI'd like to again begin my remarks today by expressing my gratitude to our TreeHouse employees, especially the roughly 9,500 frontline workers in our supply chain.\nMen and women that throughout the pandemic have shown up at work in our factories and our warehouses to serve our customers.\nI'm incredibly proud of how well we have managed the challenges of 2020 and continue to do so through this COVID environment.\nOur strong performance to close out the year was really a product of the entire team's effort and commitment.\nNow there are a few key takeaways that I want to cover in my remarks today.\nFirst, in a tough operating environment, we have made substantial progress executing our strategy and have delivered on our commitments.\nWe've simplified the portfolio, improved our operations and customer service, and transformed the company to position TreeHouse for continued success.\nAll of our efforts were critical to enabling TreeHouse to successfully face pandemic-related challenges and will drive future growth and value.\nOur results for both the fourth quarter and the full year reflect this progress.\nWe drove meaningful top line growth and are also generating substantial cash flows that will enable us to not only deliver on our strategic growth algorithm but drive additional growth through disciplined investment and a balanced capital allocation approach.\nThird, we are pleased with the strong progress we are making on integrating our Riviana acquisition, which is on track to deliver significant accretion, synergies and value.\nFinally, all of this is really just the beginning.\nAfter Bill walks you through the details of the quarter and the year, I'll come back and share some details around how we plan to continue to leverage our position as a leader in private label and to evolve our strategy to further drive growth.\nWhen I joined TreeHouse in March of 2018, nearly three years ago, our work at that time was focused on stabilizing the business.\nWe set forth a clear set of priorities and worked hard to execute against them.\nOur first priority was becoming operationally excellent.\nAs part of that effort, we reduced roughly 11,000 SKUs, exited 11 manufacturing facilities and meaningfully reduced the number of warehouse shippoints.\nImportantly, we've also instilled a culture of continuous improvement.\nWe also turned our attention to simplifying our systems by consolidating finance and IT platforms, going from 13 ERPs to 3 and 100% order to cash on SAP.\nAnother critical aspect of our work focused on reshaping the portfolio, divesting the snack nut business, working towards the sale of our ready-to-eat cereal business and selling two in-store bakery facilities.\nWith the exception of RTE, which continues to move forward, we have accomplished every divestiture we targeted.\nThe proof point in 2019 was our service levels, which were solidly above our target the entirety of the year.\nThis led us to pivot our focus to TMOS, lean and driving continuous improvement mindset across our supply chain, key to our long-term competitiveness.\nThe stabilization of our operations allowed us to take the next step and build a commercial organization to increase customer intimacy and drive top line growth and also invest in our people and talent focusing on our culture.\nIn total, we delivered on each of our commitments our efforts resulted in meaningful financial impact including delivering approximately $400 million in run rate cost savings, offsetting a roughly similar amount of headwinds due to inflation and lost volume.\nWith that strong foundational progress made, we fast forward to early 2020, pre-pandemic.\nWe entered 2020 focused on unlocking the potential of our businesses.\nWe reorganized to a two-division structure, snacking and beverages and meal preparation.\nDoing so allowed us to better align categories and businesses with how our customers think about the categories rules enabling each business to focus on their unique strategies and tactics that would best position them for success.\nIn the simplest of terms, snacking and beverages, our growth engine, is about profitable revenue growth through innovation and distribution expansion while meal prep, our cash engine, focused on improving profitability and generating cash through value engineering and simplification.\nAs the pandemic took hold, the unprecedented pantry stocking in March and April was like nothing any of us had ever seen.\nAnd as we all know, 2020 was a different year than anyone had imagined.\nAs we adapted to keep our people safe and service our customers, what quickly became clear is that TreeHouse was well positioned heading into the pandemic, and that all of our hard work over the last several years had prepared us to successfully service the changes in demand, proving the strength of our business model.\nOur operations ran much harder to fill orders.\nOur commercial organization engaged with customers more closely than before.\nOur values guided how we address the pandemic by prioritizing the health, safety, and welfare of our employees.\nThe heightened volume improved our efficiencies and profitability and our ability to keep our customer shelves stocked further differentiated us as a supplier, one uniquely equipped to support our customers through last year's very volatile period of demand.\nAs we service the pandemic demand, the financial results for TreeHouse, a significant profit improvement and strong cash flow.\nThe pandemic allowed us to accelerate the timing for deleveraging our balance sheet and pulled forward our discussions on how we can best deploy capital to create long-term shareholder value.\nThe progress over the last few years has dramatically reshaped our business, our capabilities and our expectations moving forward.\nToday, we have a very different platform than when I arrived.\nWe are a company with a stronger balance sheet and greater financial flexibility.\nWe are more capable culturally, operationally and commercially and I believe the proof is in the results that we delivered for the fourth quarter and the year.\nTurning to slide 6, our results reflect that progress.\nIn the fourth quarter, we delivered organic revenue of $1.17 billion with Riviana contributing another $12 million.\nOur results were just over the high end of our guidance range, representing 3.3% growth or 4% on an organic basis.\nThis was driven by strong organic growth of 8.1% in our snacking and beverage business and steady 1.3% organic growth in our meal preparation business.\nFor the year, we delivered 2.7% organic net sales growth, driven by outsized growth trends in unmeasured channels, increasingly composed of some of the fastest growing food retailers in the country.\nMany of them also have heavy exposure to private label.\nOn slide 7, we summarize the tremendous progress we've made in generating free cash flow of nearly $300 million for the year, allowing us to more quickly achieve our leverage target range.\nOur strong cash flow and balance sheet enabled us to pursue the attractive and highly accretive acquisition of Riviana.\nAfter the acquisition, we finished the year with leverage of 3.1 times.\nTurning next to Slide 8, as you remember, we announced the acquisition of Ebro's Riviana regional pasta business in Q3 and completed it in December.\nOur integration plan is on track.\nAnd we're even more exciting about the significant value creation opportunity.\nRiviana will enable us to build real depth in the pasta category, improve our efficiencies from an operating perspective and enhance our service of national and regional customers for a mix of private label and regional brand.\nFinancially, deal will have an immediate impact as we expect to add $170 million to $180 million in revenue on a normalized basis and in 2021 generate $25 million to $30 million in EBITDA and accretion of $0.20 to $0.30 per share.\nFundamentally, we are confident that private label continues to present meaningful opportunities for TreeHouse.\nAs the retail landscape and consumers have adapted to the current environment, we're seeing signs that our customers desire to strengthen their own brands as returning.\nThis foundational demand is something that we are in a unique position to deliver.\nWe like our position in the market to meet this opportunity as the company with the deepest capabilities and reach today in private label.\nOn slide 9, we shared some recent commentary from several large retailers around their desire to refocus on their private label programs.\nTo be clear, increasing private label penetration doesn't happen overnight.\nIt takes time to develop new products, reset shelves and support their introduction.\nMy point is that the commentary is very encouraging.\nAnd we have a unique opportunity to participate in that growth in a meaningful way.\nWe are undeniably a leader in private label and our customers count on us to deliver.\nIt's increasingly clear that we are best able to meet their needs and drive growth and value for TreeHouse in categories where we have built real depth in terms of both scale and operating capabilities.\nSlide 10 shows how that has reflected in our results.\nAs you can see in Q4, we delivered above market growth in a number of categories where we have significant scale and depth.\nApproximately 35% of our revenue is generated from categories like these, which we are outperforming private label.\nWe've developed a formula for winning that's focused on depth in the category where we have a strong foundation and efficient supply chain and deep customer relationships.\nLooking ahead, these are the type of categories where we believe we can continue to leverage our position and build momentum through our advantaged depth.\nI'll then come back and talk to you about how we are planning to capitalize on our strength and deliver future growth and value creation.\nI'm so impressed with how well we manage through the year.\nAnd I am very proud of our strong fourth quarter results.\nLet me start by recapping the quarter with our scorecard on slide 11.\nWe delivered against all of our key metrics and outperformed on the top line at $1.18 billion, which includes Riviana.\nFourth quarter adjusted EBITDA was $154 million and adjusted earnings per share totaled $1.07.\nTurning now to slide 12 and our revenue drivers.\nMeal prep organic growth of 1.3% was driven by a combination of volume, mix and pricing.\nThe addition of the Riviana pasta business in December added 1.7% growth on top.\nAs Steve mentioned, we closed the acquisition of the majority of Ebro's Riviana brands in mid-December, which added about $12 million in revenue to the fourth quarter.\nWe've been pleased with Riviana's performance thus far.\nWe continue to be very excited about the near and long-term value creation opportunities ahead as we add their strong regional brands to our portfolio, we will leverage the increased utilization efficiency of our combined operations.\nMoving on to snacking and beverages, we posted strong growth of 8.1% on an organic basis in the fourth quarter, nearly all due to improved volume and mix.\nOn slide 13, we’ve given you a more granular look at revenue by channel.\nAs a reminder, the bars represent net sales dollars and we provided the percentage change versus the fourth quarter of last year, so that you can better understand our top line performance.\nAs we walk from left to right, the $19 million impact of the sale of the two ISP facilities is represented by the first orange bar.\nThe second orange bar is the remainder of the carryover loss business and pricing adjustments, which totaled approximately $36 million in Q4.\nAfter taking these two items into account, our total retail channel sales as seen within the green box grew 8%.\nMoving further across the walk, the first green bar represents TreeHouse revenue within retail measured channels.\nAnd if you subscribe to the syndicated data, we are captured within private label.\nHere we grew 5% in the fourth quarter.\nThe second green bar is TreeHouse's net sales on unmeasured channels.\nAnd similar to the third quarter, we meaningfully outpaced our measured channel performance with growth of 14%.\nWe believe this is a key metric because it catches our sales to a number of value, club, specialty and e-commerce retailers in North America, many of which have a significant private label presence in their stores.\nImportantly, growth here demonstrates our alignment with many of these fast growing, rapidly expanding customers.\nFinally, industrial and other grew 23% in the fourth quarter, while weakness in the food-away-from-home channel continued and was down 27%.\nOn slide 14, you see our walk across of our key drivers to fourth quarter adjusted earnings per share of $1.07.\nVolume and mix was very strong, particularly in snacking and beverage.\nPricing, net of commodity costs or PNOC added $0.07, which was more than offset by $0.17 of COVID-19 related expenses that we absorbed in our adjusted P&L.\nThings like additional labor and overtime and efficiencies related to reduced schedules and lower throughput due to COVID-related absenteeism.\nThe remaining operations impact of $0.14 was primarily driven by higher year-over-year operational costs from unfavorable manufacturing variances and expenses that were delayed from early in the year due to the COVID surge.\nFourth quarter SG&A was unfavorable by $0.07 in the quarter due to higher variable incentive compensation related to our strong performance in 2020.\nFinally, the combined impact of interest and taxes was about a penny worse than the prior year.\nAs you think about the divisions in the context of their strategic objectives, you can see on slide 15 that growth within snacking and beverages, was driven by beverages and drink mixes, up 24%.\nBroth is a good example on this group as it contains the benefit from today's at-home cooking environment and we are very pleased by the addition of some new business.\nWe're also encouraged by wins within our ready-to-drink beverage portfolio.\nNew distribution on cookies, as well as retailer promotions around candy were the main drivers of 3% growth in sweet and savory in the quarter.\nOn slide 16, we provided a look at our balance sheet and cash flow.\nNet debt finished the year at $1.9 billion and we delivered very strong free cash flow of $298 million in 2020 at the top of our guidance range.\nOur leverage at the end of the fourth quarter, net debt-to-EBITDA based on our bank covenant definition ended the year at 3.1 times.\nThis includes the pro forma impact of the purchase of the Riviana pasta business.\nWith regard to our capital structure so far this year, we have called $200 million of our 2024 notes.\nThe total balance is $603 million and our intent is to address the remaining amount this year.\nWe're evaluating several attractive options.\nRates continue to be very favorable.\nWe think we have a number of paths to consider while maintaining our flexibility.\nBefore I discuss our 2021 guidance, I want to touch on a number of macro headwinds this year and our action plan for navigating them.\nIn 2021, we are anticipating $100 million to $110 million in headwinds due to increased ingredient costs.\nThis headwind is already gone to impact our results and will continue through the balance of the year.\nThat's an addition to increased employee cost driven by tight labor markets and rising freight costs.\nWe've been working hard to mitigate the impact of these inflationary pressures.\nWe are confident in our ability to offset these costs through a combination of pricing actions and ongoing lean manufacturing efforts to offset labor increases.\nWe will also realize greater utilization efficiencies from our Riviana integration efforts.\nOn pricing specifically, we expect to start seeing the impact as we enter the second half of the year.\nTurning now to our 2021 guidance on slide 18, our revenue guidance for the year is $4.4 billion to $4.6 billion.\nI'll give you a bit more color on the cadence in a minute.\nOur expectation for adjusted EBIT in 2021 is $290 million to $320 million.\nWe anticipate adjusted EBITDA of $525 million to $570 million.\nWe will be including an adjustment for non-cash stock-based compensation in our adjusted EBITDA guidance for 2021.\nThat amount was approximately $26 million in 2020 to give you an idea of magnitude.\nOur interest expense guidance of $84 million to $90 million assumes that we refinanced at least $200 million of our 2024 notes this year and successfully lower our rate.\nOur adjusted effective tax rate is expected to be in the 24% to 25% range, which translate into adjusted earnings per share for the full year of $2.80 to $3.20.\nWe anticipate free cash flow in 2021 to be approximately $300 million.\nAs you think about the cadence for the year, there are a number of moving pieces to consider, not to mention ongoing COVID-related uncertainties.\nTo help you understand that cadence we thought it would be most useful to share our point of view on several key issues.\nI'll give you a sense for how we see the year unfolding, first half versus the second half.\nAs a general rule, our profits are weighted to the back half of the year.\nHistorically, this winning has been approximately 30% in the first half and 70% in the second half.\nWe anticipate a similar cadence in 2021.\nAs you all know, the COVID pantry stocking in March and April of last year was extraordinary.\nWe estimate that the revenue lift from pantry stocking in the first half of 2020 was $140 million to $150 million.\nWe assume that the COVID expenses that we have been absorbing in the P&L each quarter will continue throughout 2021 in the range of $10 million to $12 million per quarter.\nLast year, we closed on the sale of the two in-store bakery facilities in April of 2020.\nSo from a comparability standpoint, it's worth pointing out that the business contributed $22 million of 2020 first half revenue.\nOn a more macro level, we've assumed that the food-away-from-home environment continues to be weak throughout much of the year.\nFinally, we expect this latest round of government stimulus could likely mute to some degree consumers trading to private label as typically seen in prior recessions.\nI'll wrap up by saying that the top end of our full year guidance of $2.80 to $3.20 assumes the following.\nFirst, at-home food demand remains elevated for most of the year and our service continues to return to target levels.\nSecond, commodity cost at current levels hold and we are able to successfully implement pricing to offset inflation within the time frame outlined.\nAnd third, we continue to run our plants efficiently and do not experience significant plant disruptions or shutdowns.\nThe bottom end of our guidance range captures risks related to our ability to offset commodity cost of pricing, plant disruption and additional COVID-related challenges.\nTurning to slide 19, as we have adapted and embraced the challenges of the pandemic, the overall increase in volume, accelerated our ability to achieve our profit, cash flow and financial leverage targets, a good six months to a year earlier than we anticipated, positioning us to pull forward the next phase of our strategic journey.\n2020 wasn't easy, but we were agile where we've had strong success, we've identified key learnings that shape our path forward.\nWe continue to have incredible conviction around the dual engines of our business.\nRetailers expect excellence across every category we participate in.\nOur customer’s top 3 priorities are quality, cost and service and while breadth can be important in certain instances, we have seen that category depth is what customers truly value.\nAs such, we compete and win consistently in those categories where we have depth and advantaged capabilities.\nWe view categories representing 40% of our net sales as growth engines with strong consumer demand defined pockets of growth and existing debts with opportunities to go even further.\nThese categories typically have the potential to drive low to mid single-digit top-line growth, with improved margins.\nLet's take broth for an example, in 2020 private label broth grew 27% and we gained almost 200 basis points of share.\nThis is a great category and we win in broth because, one, it's on trend with strong consumer demand given its health conscious and protein rich attributes; two, private label share is high, nearly 40%; and three, we have strong capabilities, particularly around assortment, seasonal pricing and promotion and price gap management.\nThese capabilities, open the door to strong customer partnerships.\nFinally, we have depth and a comprehensive offering from bone broth to vegetable broth.\nBroth is just one example, but as we look across the portfolio, there are similar success stories across several of our categories, for the same reasons depth, strength of capabilities and relevance to the consumer.\nAnother 40% of our sales are in cash engines.\nThese are stable, resilient and attractive categories to deliver strong consistent cash flow.\nThese categories represent opportunities for us to harvest cash for reinvestment, balance sheet strength and capital return.\nWe'll continue to look for ways to add pieces to make us deeper in these growth engine categories by utilizing the strong cash flow from our cash engine businesses to fuel that strategy.\nAs we continue to optimize, we will also focus on renewing and/or revitalizing certain categories where we believe there is an opportunity to run these businesses better and position them for growth.\nIf we can't do that in our system, we may exit the category and redeploy that capital to fuel growth.\nThis is about maintaining a discipline that leverages the learnings I spoke about earlier.\nI believe we have clear opportunities to build on our successes, becoming a more focused category leader is a natural evolution of our portfolio strategy and will allow us to further advance our customer relationships, creating an opportunity to unlock greater profit potential and generate improved returns for our shareholders.\nTurning next to Slide 20.\nOur financial flexibility enables us to deploy capital in a number of value creating ways.\nGoing forward, we plan to deploy a balanced capital allocation program while preserving our balance sheet strength.\nWe will look to invest our free cash flow for growth through disciplined and accretive M&A.\nThe Riviana pasta business acquisition is a great example of the type of bolt-on opportunities that we are considering and we continue to explore other additions that are highly accretive, aligned with our existing categories and leverage our core capabilities.\nDepending on the availability of accretive and value creating M&A opportunities, we plan to return our remaining cash flow to shareholders while maintaining the strength of our balance sheet and leverage targets.\nIn that vein, we bought back $25 million of stock in the fourth quarter or approximately 650,000 shares.\nOur plan in 2021 is to continue to buy back shares to return capital to shareholders and offset dilution from stock issuance.\nWe expect that our efficient capital allocation supported by strong cash flow will enable us to not only achieve our strategic growth algorithm we've outlined on slide 21 but potentially exceed those targets.\nIn addition to delivering 1% to 2% of organic growth on the top line, we will pursue opportunities to drive additional growth through accretive M&A in focused categories.\nFrom a cash flow perspective, a combination of operating leverage, opex improvements from ongoing initiatives and synergies from acquisitions will fuel our continued strength and our ability to generate approximately $300 million in cash.\nAnd finally, we will ensure that translates into profitability, driving at least 10% adjusted earnings per share growth each year through a combination of acquisitions and enhanced for productivity synergies and share repurchase.\nI look forward to discussing our strategic evolution further at the CAGNY Conference next week.\nWe see tremendous potential in our business and are driving towards very attractive financial targets that we believe are achievable through continued execution of our focused plan.\nAs we said, we have held multiple discussions with channel partners in the spirit of maintaining constructive dialog.\nToday, we are focused on our fourth quarter and fiscal 2020 results and 2021 guidance as well as the compelling opportunity that we believe we have to create value going forward.\nWe will not be commenting further on the JANA filing.\nLet me close by saying that I'm very pleased with our strong finish to the year and although 2021 is far from an ordinary environment, we have proven that our business model is resilient and adaptable and we can deliver extraordinary results.\n", "role": "user" }, { "content": "compname posts q4 adjusted earnings per share $1.07 from continuing operations.\nq4 adjusted earnings per share $1.07 from continuing operations.\nq4 sales $1.18 billion versus refinitiv ibes estimate of $1.15 billion.\nissued 2021 guidance range for adjusted earnings per diluted share from continuing operations of $2.80 to $3.20.\nbelieves overall food and beverage industry is facing significant inflation across several agricultural commodities.\ntreehouse foods - is in process of implementing pricing across several categories, & other cost saving measures in order to offset impact of inflation.\nanticipates impact of pricing actions to be evident in second half of 2021.\n", "role": "assistant" } ]

[ { "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 Neil Frohnapple, Director of Investor Relations for The Timken Company.\nWe appreciate you joining us today.\nToday's call is copyrighted by The Timken Company.\nAnd without express written consent, we prohibit any use, recording or transmission of any portion of the call.\nI'm very pleased to report that we delivered both record revenue and earnings in the first quarter.\nThe revenue results reflect broad strengthening across most of our end markets, excellent execution by Timken in managing our supply chains and our operations, the diversity and strength of our portfolio, and our outgrowth initiatives.\nRevenue of $1.025 billion was up 11% from last year.\nThe strengthening in our markets that began mid last year accelerated in the quarter, and despite a wide variety of supply chain challenges, we responded to the increase and delivered revenue that was up 15% from the fourth quarter.\nThe sequential strengthening from Q4 was broad, as most of our end markets were up double digits sequentially.\nThe year-on-year growth was again led by renewable energy, as Timken continues to increase penetration in global wind and solar markets.\nOff-highway, heavy truck, automotive and general industrial markets were also up double digits year-on-year.\nGeographically Asia, at plus 30%, drove much of the year-on-year growth.\nBut more importantly, we are now seeing sequential growth across all major geographies.\nThe sharp increase in demand, combined with the lingering impacts from the pandemic, stressed many of our supply chains and operations.\nWe experienced labor challenges, freight delays, supplier delays and unanticipated changes in customer demand.\nWe were impacted negatively by both the Suez Canal as well as chip shortages in the quarter.\nAnd while these two issues grabbed a lot of the headlines, they were just two of the many issues across our global supply network that we successfully managed our way through.\nWe continue to experience some inflationary pressures, primarily in freight and raw material, but they continue to be very manageable.\nPricing was slightly positive in the quarter as material surcharges kicked in.\nDespite the inefficiencies and cost pressures, we were able to ramp up to meet the increased demand, and in the process of doing so, deliver record earnings per share of $1.38 and EBITDA margins just shy of 20%.\nCash flow was seasonally low and impacted by the significant increase in accounts receivable from the sequential sales growth.\nCash flow the remainder of the year is expected to be strong.\nWe continue to advance our strategic initiatives in the quarter.\nWe delivered strong year-on-year growth in renewable energy of over 30%, while continuing to advance our announced $75 million investment plan.\nMany of our smaller outgrowth initiatives across multiple end markets also contributed to the record Q1 revenue results.\nAurora Bearing had an excellent first full quarter as part of Timken, and we are rapidly moving to integrate the business.\nOur Groeneveld BEKA transformation into an integrated and globally leading automatic lubrication systems business is also on track and is already accretive to company margins.\nWe continue to advance our footprint.\nOur New Mexico plant is in production and will be ramping up through the course of the year, and we are completing several footprint consolidation initiatives, including the relocation of our Diamond Chain plant and the expansion and modernization of our solar operations in China.\nWe also plan to convert two more operations to our primary ERP and digital platforms in the second half of the year, which will facilitate both revenue and cost synergies.\nOverall, an excellent quarter from Timken and delivering results in a dynamic environment while advancing the company for long-term success.\nAnd while the pandemic has improved in many parts of the world, it has hit new peaks in others, and I want to reinforce that we continue to place employee safety at the forefront of all of our operating decisions.\nAs we look forward to the rest of 2021, market demand remains very strong, and Timken remains in an excellent position to capitalize on the markets.\nWe are now estimating full year revenue to be up 18% over last year, to a record $4.1 billion.\nWe're planning for normal seasonality with a slightly weaker second half than first half.\nOn the bottom line, we are guiding to a record $5.30 of earnings per share at the midpoint, which would be almost 30% higher than last year and 15% higher than 2019's record of $4.60.\nIn support of our top line and bottom line estimates, orders and customer demand are very strong.\nCustomer sentiment on the second half of 2021 and into 2022 is bullish.\nWe continue to win in the marketplace with our outgrowth initiatives, and we are focused on creating shareholder value and driving future growth through capital allocation.\nI would like to caution that there is more uncertainty than normal in our estimates.\nWe are currently facing daily supply chain and cost challenges, which continue to elevate the level of uncertainty in our business.\nIn both the revenue and earnings estimates, we have assumed continued supply challenges at our customers, our operations and our suppliers' operations.\nWe expect the issues to continue at roughly the first quarter pace through the second quarter, and then to improve through the second half.\nBut these issues have not been predictable, and the range of possibilities remains wider than normal.\nOver the last several years, including in this first quarter, we have consistently and reliably demonstrated the ability to successfully navigate highly dynamic markets and macroeconomic forces, and we're confident in our ability to continue to do so in today's environment.\nWe delivered strong EBITDA margins in the first quarter, which we expect to translate to solid margins for the full year.\nAnd we remain committed to our long-term target of 20%.\nThe price/cost situation remains a modest headwind but a manageable one, and it is being more than offset by volume and other cost improvements.\nWe expect a good year for cash flow and expect to continue to generate value through capital allocation with a bias to M&A.\nThe impact of all three of our strategic pillars, of outgrowth, operational excellence and capital allocation are evident in our first quarter results as well as our outlook for the year, and we will continue to build our pipeline and advance our initiatives.\nWhile short-term there remains a high level of anxiety around the pandemic and the associated supply chain challenges, customers and global capital equipment markets are very optimistic about the future.\nWe are well positioned to continue to grow in renewables, but the Timken story is bigger and broader than just renewables.\nAcross our markets, there is an enormous amount of new equipment design work taking place at our customers, with a particular emphasis on improving sustainability.\nAnd Timken's value proposition in contributing to the efficiency of future generation equipment designs is a core strength and competitive differentiator for the company.\nThe renewed interest in increased infrastructure spending will also favorably ripple through many of our markets in the coming years.\nTimken is well positioned to continue to grow and win in the marketplace.\nIn summary, we achieved outstanding results in the quarter and are on track to deliver a record year.\nTimken delivered strong performance across the board in the first quarter, and you can see a summary of our results on this slide.\nRevenue for the first quarter was a record $1.03 billion, up 11% from last year and up 15% sequentially from the fourth quarter.\nWe delivered an adjusted EBITDA margin of 19.9%, up 70 basis points from last year's strong first quarter.\nWe also delivered record adjusted earnings per share of $1.38, up 24% from last year.\nTurning to slide 11, let's take a closer look at our first quarter sales performance.\nOrganically, sales were up 7.5%.\nBoth of our segments saw higher sales volumes versus the year-ago period, and pricing was slightly positive as well.\nCurrency added 2.7% to the top line in the quarter, while the Aurora Bearing acquisition contributed just under 1%.\nOn the right-hand side of the slide, we show year-on-year organic growth by region, so excluding both currency and acquisitions.\nLet me comment briefly on each region.\nIn Asia, we delivered strong growth again in the quarter, up 30%.\nOur sales were up broadly across most sectors in the region, with renewable energy, distribution, off-highway and heavy truck posting the strongest gain.\nIn Latin America, we were up 25%, led by higher revenue in distribution in the on-highway auto and truck sectors.\nIn Europe, we were up 6% as growth returned in several sectors, led by off-highway and distribution.\nAnd finally, in North America, our largest region, we were down slightly versus last year, driven mainly by lower aerospace, rail and marine revenue, which more than offset growth in other sectors like off-highway.\nHowever, we were up double digits from the fourth quarter, and we were up year-on-year in March.\nWe expect North America to be up for the full year.\nTurning to slide 12.\nAdjusted EBITDA was $204 million or 19.9% of sales in the first quarter, compared to $177 million or 19.2% of sales last year.\nThis represents an incremental margin of roughly 26% all in, or 33% on an organic basis.\nThe increase in adjusted EBITDA reflects the impact of higher volume, favorable manufacturing performance and lower SG&A expenses, which more than offset higher material and logistics costs and unfavorable mix.\nThe unfavorable mix was driven by the relatively higher OEM revenue growth in the quarter as compared to distribution.\nCurrency had a slight positive impact on EBITDA in the quarter, and Aurora Bearing contributed about $1 million, with margins running ahead of our expectations.\nLet me comment a little further on our manufacturing and operating expense performance.\nOn the manufacturing line, our team responded well during the quarter to the significant step-up in customer demand.\nWe benefited from higher production volume versus last year, which enabled us to more than offset some cost headwinds related to ramping up production.\nWe also continued to benefit from ongoing cost reduction actions and other productivity initiatives across our footprint.\nAnd as expected, we did experience higher material and logistics costs versus last year, some of which was driven by the higher volumes.\nAs Rich mentioned, we're in a challenging and volatile supply chain environment right now.\nAnd while our team is managing through it very well, we expect these conditions to persist through at least the second quarter.\nAnd finally, on the SG&A line, we saw a reduction in expense versus last year as we continued to benefit from cost reduction initiatives and lower discretionary spending, which more than offset the impact of higher incentive compensation expense.\nSo overall, we delivered solid adjusted EBITDA margin expansion in the first quarter, driven by solid execution on higher volumes and despite supply chain and other challenges.\nOn slide 13, you'll see that we posted net income of $113 million, or $1.47 per diluted share for the quarter on a GAAP basis.\nThis includes $0.09 of net income from special items, driven by discrete tax benefits in the period.\nOn an adjusted basis, we earned $1.38 per share, up 24% from last year and a new quarterly record for the company.\nOur first quarter adjusted tax rate was 25.5%, in line with our expectations and slightly lower than last year.\nThe current period rate reflects our geographic mix of earnings and other structural benefits.\nNext, let's take a look at our business segment results, starting with Process Industries on slide 14.\nFor the first quarter, Process Industries sales were $521 million, up 14% from last year.\nOrganically, sales were up nearly 10%, driven by strong growth in renewable energy, distribution and general industrial sectors, offset partially by lower marine revenue.\nThe favorable impact of currency translation added roughly 3.5% to the top line in the quarter, while the impact of the Aurora Bearing acquisition added nearly 1%.\nProcess Industries' adjusted EBITDA in the first quarter was $136 million or 26% of sales, compared to $112 million or 24.4% of sales last year, with margins up 160 basis points.\nThe increase in adjusted EBITDA reflects the impact of higher volume, favorable manufacturing performance, lower SG&A expenses and the benefit of currency, offset partially by unfavorable mix and higher material and logistics costs.\nNow let's turn to Mobile Industries on slide 15.\nIn the first quarter, Mobile Industries sales were $505 million, up about 8% from last year.\nOrganically, sales increased 5.2%, reflecting higher revenue in the off-highway, heavy-truck and automotive sectors, offset partially by lower shipments in rail and aerospace.\nCurrency translation added 2% to the top line in the quarter, while Aurora Bearing contributed nearly 1%.\nMobile Industries' adjusted EBITDA for the first quarter was $80 million or 15.9% of sales compared to $76 million or 16.3% of sales last year.\nThe increase in adjusted EBITDA versus last year reflects the impact of higher volume and lower SG&A expenses, offset partially by unfavorable mix and higher material and logistics costs.\nTurning to slide 16.\nYou'll see we generated operating cash flow of $32 million in the first quarter.\nAfter capex spending of $29 million, free cash flow was $2 million in the period, which was in line with our expectations.\nThe drop from last year reflects the impact of higher working capital to support our sales growth, which more than offset the impact of higher earnings in the period.\nIn particular, we saw a large increase in accounts receivable during the quarter, driven mainly by March sales being significantly higher than December.\nNote that the first quarter is normally the lowest quarter for free cash flow generation.\nGiven seasonal working capital needs and our annual incentive compensation payouts that occur in March, we expect a significant step-up in free cash flow over the remainder of the year, but it will be more back-half loaded.\nFrom a capital allocation standpoint, in the first quarter, we returned $50 million to shareholders, with the payment of our 395th consecutive quarterly dividend and the repurchase of 350,000 shares of company stock.\nTaking a closer look at our capital structure, we ended the quarter with a strong balance sheet and strong liquidity.\nOur leverage, as measured by net debt to adjusted EBITDA, was 1.9 times at March 31, unchanged from the end of 2020.\nThis puts us in a great position to continue to drive our growth and capital allocation strategy.\nNow let's turn to the outlook on slide 17.\nWe now expect sales to be up around 18% in total at the midpoint of our guidance versus 2020, which is up from our prior outlook of 12% growth.\nOrganically, we're now planning for sales to be up around 15% at the midpoint, up from the previous outlook of 9% growth.\nThe higher outlook reflects our strong first quarter performance and improving market conditions.\nWe expect both segments to be up double digits organically, but with higher growth in Mobile Industries than Process Industries.\nOur assumptions for currency and acquisitions are unchanged from our prior outlook.\nCurrency is still expected to contribute about 2% to the top line, while Aurora Bearing is expected to contribute close to 1%.\nOn the bottom line, we now expect adjusted earnings per share in the range of $5.15 to $5.45 per share, which is also up from our prior outlook.\nAt the midpoint, our current outlook represents nearly 30% earnings growth versus last year.\nThe midpoint of our earnings outlook implies that consolidated adjusted EBITDA margins will be up slightly from 2020, despite unfavorable mix and the nonrecurrence of the significant temporary cost actions we took last year in response to the pandemic.\nFor 2021, we now estimate that we'll generate free cash flow in the range of $325 million to $350 million, which represents just over 80% conversion on adjusted net income at the midpoint.\nThis assumes capex spending at around $150 million, or just over 3.5% of sales, which includes ongoing growth investments in areas like renewable energy.\nFor the full year, we anticipate net interest expense of around $60 million, and estimate that our adjusted tax rate will be about 25.5%, consistent with the first quarter, and both of which are unchanged from our prior outlook.\nSo to summarize, we delivered record first quarter performance and are raising the outlook for the rest of the year.\nThe global Timken team is executing well in this environment, and we're confident in our ability to deliver record performance in 2021 and beyond.\n", "role": "user" }, { "content": "q1 adjusted earnings per share $1.38.\nq1 gaap earnings per share $1.47.\nq1 sales rose 11 percent to $1.03 billion.\nsees fy adjusted earnings per share $5.15 to $5.45 excluding items.\nsees fy gaap earnings per share $5.00 to $5.30.\nsees fy revenue up about 18 percent.\n", "role": "assistant" } ]

[ { "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 all participants to our website at www.\nI hope that you and your families are all safe and healthy.\nOn the call today, I'm joined by Vince Lok, Teekay's Group CFO.\nWhile COVID-19 is having an unprecedented impact on the world and is clearly a major focus for us, we're truly proud of how our seafarers and onshore colleagues have responded to COVID-19, implementing new standards which focus on the health and well-being of everyone involved in our organization, especially our colleagues at sea, while maintaining consistently safe and efficient operations for our customers.\nWe're also fortunate to be in a position where our operational results are strong so far in 2020 and we have had minimal impacts on our operations due to the pandemic.\nThe first quarter of 2020 marked the second consecutive quarterly adjusted profit for Teekay as we recorded consolidated adjusted net income of $25 million or $0.25 per share compared to an adjusted net loss of $13 million or $0.13 per share in the same period last year.\nWe also generated total adjusted EBITDA of $342 million, an increase of $128 million or 59% from the same period in the prior year.\nAs a reminder, the Q1 2019 results included the contribution from the 14% ownership stake in Altera Infrastructure, formerly Teekay Offshore, which was sold in May 2019.\nIt is also important to note that these figures only include $11 million of the $67 million upfront payment received for the Foinaven FPSO contract we entered into in late March.\nOur strong results in the first quarter can be attributed to higher earnings in our main businesses.\nTeekay Tankers experienced significantly stronger spot tanker rates, reaching its highest first quarter levels in over a decade, which strengthened into the second quarter while Teekay LNG have robust earnings from a complete quarter contribution from its fully delivered LNG fleet.\nTeekay Parent generated positive adjusted EBITDA of $5 million, which includes EBITDA from our directly owned assets and cash distributions from our publicly traded daughter entities.\nHowever, based on US GAAP and our definition of the adjusted EBITDA, only $11 million of the $67 million upfront payment from the new Foinaven FPSO contract was included in our Q1 revenues.\nHowever, the remaining $56 million has been included in Teekay Parent's free cash flow.\nAs a result, Teekay Parent's free cash flow increased to $53 million, a significant improvement from negative $14 million in the same period of the prior year.\nThe increase was also a result of lower interest expense due to bond repurchases over the past year and our bond refinancing completed in May 2019; a 32% increase in Teekay LNG's quarterly cash distribution; and lower G&A expenses.\nOverall, we are expecting another strong quarter in Q2, supported by our stable LNG cash flows and the strong crude spot tanker rates secured so far in the second quarter.\nSince reporting back in February, we have been busy executing on our strategic priorities, which included the new bareboat contract for the Foinaven FPSO that covers the vessel all the way through to its eventual retirement and the monetization of our TGP incentive distribution rights or IDRs in exchange for 10.75 million newly issued TGP common units.\nTurning to slide 4.\nI want to provide an update on our current operations across the Group during this unprecedented global pandemic.\nThe health and safety of our crew and shore staff is paramount for the Teekay Group.\nWe have implemented strict measures on all of our assets to protect our seafarers while the vast majority of our shore staff are working remotely from home.\nCrew changes on our gas and tanker fleets remain a major challenge for the industry as most countries have placed restrictions on travel, visa applications and crews disembarking from vessels.\nWe're working with the industry and intergovernmental organizations to tackle this challenge while remaining in close continuous contact and supporting our colleagues at sea through this period.\nI'm pleased to report that the team's dedication to health and safety and their professionalism during this time has resulted in no COVID cases on board our gas and tanker vessels and no negative impact on available vessel base.\nHowever, on the FPSO side, we unfortunately did experience two COVID cases on the Hummingbird FPSO.\nBut after a deep clean and a full crew change, we were able to fully restart operations and have had uninterrupted operation since.\nWe were well prepared to manage potential spare parts shortages as the teams identified critical items and made advanced purchases early in the outbreak in anticipation of delivery challenges with respect to both manufacturing and logistics.\nIn addition, the teams have also been able to obtain class and flag extensions for our vessels which were due to dry-dock in the first half of this year.\nOverall, our assets have performed well in the first quarter and second quarter-to-date, and we expect this to continue.\nSo we will of course remain vigilant in ensuring that we are taking all actions and precautions in line with prevailing best practices.\nTurning to slide 5.\nAt our Investor Day in November last year, we highlighted two themes for Teekay Corporation that would not be themes at our next Investor Day.\nThese included the elimination of TGP's IDRs and the divestment and reduction of our exposure to the offshore business to further simplify and focus the Group.\nStarting with the IDRs.\nWe eliminated the TGP IDRs in exchange for 10.75 million newly issued TGP common units, which we believe is beneficial to both parties.\nThis important transaction creates greater alignment between Teekay Parent and the rest of TGP's unitholders, simplifies the corporate structure and we believe that it removes one of the primary uncertainties for investors in Teekay and TGP.\nThe transaction also increases our economic interest in TGP from 34% to approximately 42%, including our GP stake, and increases Teekay Parent's free cash flows by almost $11 million per annum based on the current TGP distribution level.\nOn the offshore side of things, we're significantly reducing our exposure to this segment with a new Foinaven contract and the upcoming decommissioning of the Banff FPSO and eventual green recycling of this unit starting in June.\nIn late March, we secured a new up to 10 year bareboat contract on the Foinaven FPSO that effectively covers the remaining life and the eventual green recycling of the unit.\nThe new contract includes an upfront payment of $67 million, which was received in early April; a nominal per day fee for the contract life that effectively covers any ancillary costs; and a lump sum payment at the end of the contract term that is expected to cover any cleanup and green recycling costs of the unit.\nImportantly, this new contract eliminates our operational exposure to the previous loss-making contract.\nLastly, the Hummingbird FPSO continues to operate on its fixed rate contract and is currently producing between 7,500 barrels and 8,500 barrels per day.\nProduction on the unit has increased recently following a successful drilling campaign on the field by our customer.\nThese transactions have also further strengthened our balance sheet and improves our profitability going forward.\nOver the next two slides, I'll briefly touch on the results and highlights of our daughter companies.\nOn slide 6, we have summarized Teekay LNG's recent results and highlights.\nTeekay LNG Partners reported record high adjusted net income during the quarter, generating total adjusted EBITDA of $188 million and adjusted net income of $52 million or $0.58 per unit, up significantly compared to the same period of the prior year as a result of a complete quarter contribution in Q1 from its fully delivered LNG fleet.\nTGP has also reaffirmed its 2020 adjusted EBITDA and adjusted net income guidance, with adjusted net income expected to increase by 36% to 60% in 2020 versus 2019.\nSince reporting in February, TGP has secured new time charter contracts on three 52% owned LNG carriers and is now 100% fixed in 2020 and 94% fixed in 2021, and TGP has also repaid its NOK bond this week using existing cash.\nTGP now has no remaining debt maturities in 2020.\nAdditionally, TGP continues to execute on its balanced capital allocation strategy, which includes prioritizing balance sheet delevering for now, alongside a second consecutive year of over 30% increase in quarterly cash distributions with a 32% increase in May 2020.\nAs highlighted on the graph on this slide, TGP continues to delever its balance sheet and has also opportunistically bought back approximately $44 million of stock since the program was announced in December 2018 at an average price of $12.16 per unit.\nWe take a long-term view on TGP's business and prospects.\nWith a strengthening financial foundation and deleveraging that is expected to provide financial flexibility, market-leading positions and a very compelling valuation at a 4 times PE ratio based on the midpoint of its 2020 financial guidance, we believe TGP has significant long-term value potential which benefits Teekay, given our full alignment of interest and position as the largest common unitholder.\nFor every $1 per unit increase in TGP's unit price, Teekay's equity interest would increase by $0.37 per share or 12% based on yesterday's closing price of $3.11 per share.\nTurning to slide 7.\nTeekay Tankers reported the highest quarterly adjusted profit, generating total adjusted EBITDA of $155 million, up from $63 million in the same period of the prior year, and adjusted net income of $110 million or $3.27 per share in the first quarter, an improvement from $15 million or $0.44 per share in the same period of the prior year.\nTNK's results were driven by stronger spot tanker rates, with rates reaching the highest Q1 levels in the past decade.\nWe also expect TNK's Q2 results to be strong based on the spot rates secured so far in Q2, with 69% of Q2 Suezmax days fixed that $52,100 per day and 62% of our Q2 Aframax size vessels fixed at $33,600 per day compared to $49,100 per day and $34,500 per day in the first quarter, respectively.\nDuring the quarter, TNK continued to bolster its balance sheet from its strong operating cash flows and proceeds from asset sales.\nTNK reduced its net debt by approximately $200 million or over 20% since the beginning of the year, and increased its total liquidity to $368 million and have subsequently continued to make meaningful progress on both fronts.\nTNK also took advantage of the market strength and fixed up another nine vessels on fixed rate contracts ranging between six months and two years, but most of which are for one year, at very attractive rates.\nIn total, TNK has now fixed up 13 vessels on fixed rate contracts totaling approximately $170 million of forward fixed rate revenues.\nThese new contracts also reduce TNK's free cash flow breakeven to approximately $10,500 per day, which is expected to enable TNK to create shareholder value in almost any tanker market.\nLooking ahead, while Teekay has lowered its breakeven through his time charter coverage, it continues to maintain meaningful operating leverage as highlighted in the graph on the bottom right-hand side of the slide.\nWe also take a long-term view on TNK's business and prospects TNK has significantly grown its net asset value, earning over $240 million of free cash flow in just two quarters, which is compelling relative to its market cap of $540 million and its net debt balance of $730 million, and it has an industry-leading 20% earnings per share yield in Q1 2020 based on its closing share price yesterday or 80% on an annualized basis.\nFor every $1 per unit increase in TNK's unit price, Teekay's equity interest would increase by $0.10 per share or 3% based on yesterday's closing price of $3.11 per share.\nIn summary, for every $1 increase in TGP and TNK's share prices, Teekay's equity interest would increase by $0.47 per share or 15% based on yesterday's closing price of $3.11 per share.\nTurning to slide 8.\nOver the past several years, we have focused on derisking our businesses and strengthening our foundation across the Group.\nThis included divesting and reducing our offshore exposure with the sale of our remaining interest in Teekay Offshore last year and the new bareboat contract structure for the Foinaven FPSO which Kenneth touched on earlier and completing key financings, including Teekay Parent's bond last year and, more recently, Teekay LNG's unsecured revolver and a majority of Teekay Tankers' debt facilities at attractive all-in pricing.\nLooking at the graph on the slide, Teekay Corporation has reduced its pro forma consolidated net debt by $830 [Phonetic] million or 19% since the beginning of 2019 and reduced its pro forma net debt to EBITDA from a peak of 9 times to 4.5 times, while increasing our pro forma consolidated liquidity to over $900 million.\nWe have also reduced Teekay Parent's pro forma net debt by approximately $100 million or 25% since the beginning of 2019 and reduced our daughter debt guarantees to under $90 million as of March 31, which we expect will be completely eliminated by the end of 2020, while also holding a healthy pro forma liquidity position of $150 million.\nIn short, we have made great progress in reducing our debt, eliminating near-term maturities, reducing remaining exposure to the offshore segment and significantly improving our financial position all around.\nAs you have heard, it was a very busy quarter, with record TGP and TNK earnings and executing on our strategic priorities, which included completing various asset sales securing new charter contracts across the Group and eliminating TGP IDRs in exchange for new TGP common units.\nIn addition, in mid-April, we also published our 2019 Sustainability Report, which is our 10th consecutive annual Sustainability Report.\nAs a leading oil and gas transportation company, Teekay cannot separate ourselves from the longer-term challenges that the world is facing.\nWe have built our Company on a deep commitment to responsible safety and environmental practices.\nOver the past decade, we have worked with industry to pioneer and invest in increasingly more energy efficient vessels.\nFor instance, our latest LNG carrier newbuildings produce about 50% less CO2 emissions per cubic meter of LNG transported.\nAs our industry has set itself the challenge of progressively becoming carbon-neutral by 2050, we have an enormous task ahead of us.\nWe are embarking on new industry partnerships to drive necessary technological developments and we will, in 2020, reassess our reporting framework so that we have the best possible foundation for the important work ahead of us.\nIn closing, with our balance sheet continuing to strengthen, total pro forma liquidity of over $900 million for the Teekay Group, extensive contracted revenue from Teekay LNG and higher contracted revenue and strong spot rates to date at Teekay Tankers and with no committed growth capex or significant upcoming debt maturities, we believe that the Teekay Group is financially well-positioned for both any potential market volatility in the near term and the longer-term future of marine energy transportation.\nWith that, operator, we are now available to take questions.\n", "role": "user" }, { "content": "compname reports qtrly adjusted net income per share of $0.25.\nqtrly adjusted net income per share $0.25.\n", "role": "assistant" } ]

[ { "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: So before we begin, let me briefly cover our safe harbor statement.\nVarious remarks that we may make about the company's future expectations, plans, and prospects constitute premium statements for purposes of the safe harbor provisions under the Private Security Securities Litigation Reform Act of 1995.\nWe delivered another quarter of very strong results, and as I reflect on the year, three things stand out to me.\nOur proven growth strategy, powered by our PPI business system, continues to drive outstanding financial performance.\nCustomer demand is strong.\nOur core business is performing very well.\nWe're gaining market share and we continue to play a leading role in the societal response to COVID 19.\nAnd finally, we continue to build on our trusted partner status with our customers.\nAll of this gives me great confidence in a very bright future as we continue to create sustainable value for all of our stakeholders.\nI'll get into more detail in my remarks later.\nBut first, let me recap the financials.\nStarting with the quarter, our revenue was $10.7 billion.\nAdjusted operating income was $3.16 billion and our adjusted operating margin was 29.5%.\nAdjusted earnings per share was $6.54 per share.\nTurning to our results for the full year, we grew revenue by 22% to $39.21 billion in 2021.\nAdjusted operating income increased 27% to $12.14 billion.\nWe expanded our adjusted operating margin by 130 basis points to 31%, and we delivered a 28% increase in adjusted earnings per share to $25.13 per share.\nBuilding on the tremendous success that we had in 2020.\nI'm incredibly proud of our team's stellar performance in 2021.\nIt's really a testament to the strength of our global team and our proven growth strategy, resulting in another year of exceptional financial results and share gains.\nLet me now give you color on the results for the quarter and the year, starting with pharma and biotech, with the outstanding performance delivered growth over 20% in the fourth quarter and over 25% for the full year.\nIn addition to strong market dynamics, these results were driven by a unique customer value proposition and our leading role in supporting our customers across a wide range of exciting therapeutic areas, including our role in supporting COVID 19 vaccines and therapies.\nDuring the year, we saw broad-based strength across our businesses in this end market, including our bioproduction, pharma services, bioscience, chromatography, and mass spectrometry businesses as well as in the research and safety market channel.\nIn academic and government, we declined in the low single digits during in the quarter against strong demand in the year-ago period and grew in the low double digits for the full year.\nDuring the year, we saw very good growth across a range of our businesses, particularly biosciences, electron microscopy, and our research and safety market channel.\nTurning to industrial and applied, we grew in the low teens during the quarter and we grew in the high teens for the full year.\nDuring the year, we saw strong growth in our electron microscopy and chromatography, and mass spectrometry businesses, as well as in the research and safety market channel.\nFinally, in diagnostics and healthcare, Q4 revenue was 30% lower than the prior-year quarter, and revenue grew in the high single digits for the full year.\nThroughout the year, the team executed really well to support customers testing needs, and in the base business, we had strong growth in our immunodiagnostics and transplant diagnostic businesses.\nBefore we move to our growth strategy, let me provide a few comments on a role in the pandemic response.\nIn the quarter, we generated $2.45 billion in COVID 19 response-related revenue.\nThis was driven by the emergence of the Omicron variant, which led to strong testing demand as well as our significant role in enabling vaccine and therapy production.\nThroughout 2021, we continue to operate with speed at scale to meet our customers' needs related to COVID-19 and generated total response revenue of over $9 billion, of which $2 billion were from vaccines and therapies.\nI'm very proud of the role that we continue to play around the world to enable our customers and governments to fight the pandemic.\nAt the same time, we're executing our core business strategy incredibly well.\nLet me provide an update on the progress we made in 2021 executing our proven growth strategy, which consists of three elements, as you know.\nDeveloping high-impact, innovative new products, leveraging our scale and the high growth in emerging markets, and delivering a unique value proposition to our customers.\nWe made outstanding progress in 2021.\nLet me share a few of the highlights, starting with the first pillar.\nIt was a fantastic year of high-impact innovation.\nIn 2021, we launched a number of new products across our businesses, strengthening our industry leadership and enabling our customers to advance their important work.\nIn our bioproduction business, we launched a high-performer DynaDrive Single-Use Bioreactor.\nAvailable in sizes up to 5,000 liters, this latest advancement in our DynaDrive single-use bioreactor technology brings the benefits of single-use technologies to unprecedented volumes and performance and ensures consistent scalability from pilot-scale studies through commercial production.\nIn chromatography and mass spectrometry, we continue to innovate across life sciences research and biopharmaceutical development.\nDuring the year, we extended the impact of our industry-leading Orbitrap platform to bring high-resolution analysis to a range of applications, including toxicology and metabolomics.\nAnd during the fourth quarter, we launched the Thermo Scientific Orbitrap Exploris MX, a mass detector, providing high-throughput analysis to improve the development and production of biopharmaceuticals.\nIn electron microscopy, we introduced the Thermo Scientific Helios 5EXL wafer dual-beam scanning electron microscope to support the development of increasingly smaller and more complex semiconductors.\nAnd in genetic sciences, our new Applied Biosystems' QuantStudio 7 Pro Dx real-time PCR system, launched in Q4, enables clinical testing laboratories to accelerate molecular diagnostics.\nThe second pillar of our growth strategy is leveraging our scale and the high growth in emerging markets to create a differentiated experience for our customers.\nWe continue to strengthen our capabilities serving these markets that will highlight a few examples.\nTo increase our capacity for single-use technology, we open new manufacturing sites in China and Singapore to serve both local and global demand from biopharma customers.\nIn South Korea, we continue to enhance our local capabilities with customer-focused innovation centers for both the semiconductor industry and our biopharma customers.\nThese additional capabilities position us really well to support our customers' needs.\nThe third pillar of our growth strategy is our unique customer value proposition.\nWe've continued to significantly accelerate organic investments in our capabilities and added capacity to be an even better partner for our customers.\nIn 2021, we invested $2.5 billion in capital to meet short and long-term customer demand.\nHighlights included expansion of our sterile fill/finish network, bioproduction, enzymes, nucleotide, plasmids, and lab products capacity As always, our PPI Business System and our mission-driven culture were major factors in our success during the year.\nThey enable the rapid execution of our capital investments and help us find a better way every day so we can continue to bring innovative new solutions to our customers, work more efficiently and effectively, and operate with speed at scale to create even greater value for all of our stakeholders.\nTurning to capital deployment, we were very active again this year, which further strengthened our customer value proposition.\nWe continue to successfully execute our disciplined capital deployment strategy, which is a combination of strategic M&A and returning capital to our shareholders.\nIn 2021, we were very active, investing $24 billion in M&A and completing 10 transactions to further strengthen our customer value proposition.\nThis was highlighted by the addition of PPD, which we closed in December.\nWe're super excited to have our PPD colleagues as part of the company and share their expertise as we work together to enhance innovation and productivity for our pharma and biotech customers.\nPPD is performing at a very high level.\nThe business delivered great results in 2021 and is entering 2022, with outstanding momentum significantly ahead of our original expectations at the time of the deal announcement.\nThe customer feedback has been extremely positive and we're excited by the pipeline of opportunities that we're building.\nWe're executing our proven integration methodology, which is a key element of our PPI business system to create value for all of our stakeholders.\nWe're well-positioned to deliver year three cost synergies of $75 million and $50 million in operating income from revenue synergies, and we're on track to deliver $40 million in cost synergies in 2022.\nAt the end of the year, we completed the acquisition of PeproTech, a leading provider of recombinant proteins, which is an excellent complement to our industry-leading bioscience business.\nIn 2021, we also returned $2.4 billion of capital to our shareholders through stock buybacks and dividends.\nTurning to a brief update on the progress of our ESG priorities.\nI'm very proud that over the past year, we have significantly advanced our environmental, social, and governance initiatives.\nOur mission to enable our customers to make the world healthier, cleaner and safer has never been more relevant.\nHighlights this year include our commitment to achieve carbon neutrality by 2050.\nThis builds on our earlier goal to reduce greenhouse gas emissions by 30% across our operations by 2030.\nEnhancing the reporting and transparency to our expanded corporate social responsibility report and alignment of multiple ESG reporting frameworks.\nAnd we're actively engaging in our community.\nOur foundation for science, which more than 100,000 students globally to our STEM education programs.\nOur goal is to make a very positive impact in the communities in which we live and work.\nWith that, I'd like to now review our 2022 guidance at a high level.\nAnd then, Stephen will take you through the details.\nWe're significantly raising both our revenue and earnings guidance.\nThis increase is a result of both the strong performance of our core business and an increase in the assumption for COVID 19 testing-related revenue.\nWe're raising our 2022 full-year revenue guidance by $1.5 billion to $42 billion, which would result in 7% revenue growth over 2021.\nAnd we're increasing our 2022 adjusted earnings per share guidance by $1.07 to $22.43 per share.\nSo to summarize our key takeaways from 2021, we executed very well to continue our growth momentum and deliver outstanding financial performance.\nOur business is performing very well and we're gaining market share.\nOur exceptional performance in 2021 and momentum entering 2022 enables us to raise our outlook for 2022, and we're incredibly well-positioned for the future.\nOur proven growth strategy positions us to deliver long-term core organic revenue growth of 7% to 9%.\nWith that, I now hand the call over to our CFO, Stephen Williamson.\nFor the full year 2021, we delivered 17% organic growth that included 14% organic base business growth and $9.2 billion in COVID 19 response revenue.\nWe delivered 28% growth in adjusted earnings per share in 2021 and over $7 billion of free cash flow.\nAll while significantly investing in our company to enable a really bright future.\nI'm very proud of what the team accomplished this year.\nThese results are significantly ahead of our prior guidance.\nSo let me walk you through the key elements of the beat.\nWe delivered $2.1 billion more revenue than included in our prior guide.\nThis included $1.5 billion higher COVID 19 response revenue, $375 million of revenue from the PPD acquisition, and $200 million higher based business revenue.\nOn our last earnings call, we de-risk testing response revenue in our guidance.\nAnd we said that if any additional opportunities to support customers testing needs, we'll be ready to do so and follow the benefits through our P&L, and that's exactly what we did in Q4.\nThen in terms of the base business, in Q4, we delivered 8% base business organic growth, which was 3% points higher than assumed in the prior guide.\nThis is very good performance, particularly given the four fewer selling days in the quarter.\nSo excellent momentum on the top line.\nOur core business is on a great growth trajectory and we continue to step up and meet our customers' testing needs.\nOur PPI business system enable us to generate a great pull through on the very strong revenue performance in Q4, leading to excellent adjusted earnings per share performance.\nWe delivered $6.54 of adjusted earnings per share in the quarter and $25.13 for the full year.\nThis is $1.76 ahead of our prior guide to a broad base beat to round out an outstanding year.\nLet me now provide you with some more details on our performance.\nBeginning with our earnings results.\nAnd as I mentioned, we delivered $6.54 of adjusted earnings per share in the quarter.\nAnd for the full-year adjusted earnings per share was $25.13, up 28% compared to last year.\nGAAP earnings per share in the quarter was $4.17.\nAnd for the full year, 2021 GAAP earnings per share was $19.46, up 22% versus the prior year.\nOn the top line, our Q4 reported revenue grew 1% year over year.\nThe components of our Q4 revenue increase included a 4% organic revenue decrease, a 6% contribution from acquisitions, and a headwind of 1% from foreign exchange.\nAnd as I mentioned, the base business organic revenue growth in the quarter was 8%.\nFor the full year, 2021 reported revenue increased 22%.\nThis includes 17% organic growth, a 3% contribution from acquisitions, and a 2% tailwind from foreign exchange.\nThe full-year base business organic growth was 14%.\nAnd in 2021, we delivered $9.23 billion of COVID-19 response revenue, which includes $2 billion of vaccines and therapy support revenue.\nTurning to our performance by geography.\nThe organic growth rates by region are skewed by the response revenue in the current and prior year as well as four fewer selling days in Q4 '21 versus the prior-year quarter.\nFor Q4, North America declined in the low teens.\nEurope grew high in the single digits.\nAsia Pacific and China grew in the high single digits and the rest of the world grew mid-single digits.\nFor the full year, North America grew low double digits.\nEurope grew over 25%.\nAsia-Pacific grew over 20%, including just under 20% growth in China and the rest of the world grew mid-teens.\nTend to our operational performance, Q4 adjusted operating income decreased 10% and the adjusted operating margin was 29.5%, 380 basis points lower than Q4 last year.\nFor the full year, adjusted operating income increased 27% and adjusted operating margin was 31%, which is 130 basis points higher than 2020.\nIn the quarter, our PPI business system enables deliver strong volume leverage on the base business and strong productivity.\nThis is more than offset by the impact of lower testing response revenue and our ongoing strategic investments across our business to support our near and long-term growth.\nFor the full year, we drove positive volume leverage, and productivity.\nWe also have a favorable business mix.\nThis is partially offset by our strategic investments.\nMoving on to the details of the P&L.\nTotal company adjusted gross margin in the quarter came in at 50.5%, 340 basis points lower than Q4 last year.\nAnd for the full year, the adjusted gross margin was 51.6%, up 40 basis points versus the prior year.\nFor both the fourth quarter and full year, the change in gross margin was due to the same drivers as those for our adjusted operating margin.\nAdjusted SG&A in Q4, with 17.3% of revenue for the full year adjusted SG&A was 17.1% of revenue.\nAn improvement of 80 basis points compared to 2020.\nTotal R&D expense was approximately $390 million in Q4 and for the full-year R&D expenses $1.4 billion, representing growth of 19% over the prior year, reflecting our ongoing investments in high impact innovation to fuel future growth.\nLooking at results below the line for the quarter and net interest expense was $150 million, $16 million higher than Q4 last year, largely due to the PPD financing activities.\nNet interest expense for the full year was $493 million, an increase of $5 million from 2020.\nAdjusted other income and expense was a net income in the quarter of $7 million, $8 million higher than Q4 2020, mainly due to changes in non-operating FX.\nFor the full-year adjusted other income and expense was a net income of $38 million, which was $8 million lower than the prior year.\nOur adjusted tax rate in the quarter was 13.8%.\nThis is 220 basis points lower than Q4 last year, mainly due to the different levels of pre-tax profitability year over year.\nFor the full year, the adjusted tax rate was 14.6%, or 30 basis points higher than 2020.\nAverage diluted shares were 398 million in Q4, approximately two million lower year over year, driven by share repurchases, net of option dilution and for the full year, the average Dillard's shares were 397 million.\nTurning to cash flow in the balance sheet.\nCash flow was another great highlight for the year.\nCash flow from operating activities in 2021 was $9.5 billion, up 15% over the prior year, and free cash flow for the year was $7 billion after investing %2.5 billion of net capital expenditure.\nThis reflects the strong returns we're generating in the short term and the investments that we're making for the long term.\nDuring the year, we returned approximately $2.4 billion of capital to shareholders through stock buybacks and dividends, and we ended Q4 with $4.5 billion in cash.\nOur total debt at the end of Q4 was $34.9 billion, up $13.2 billion sequentially from Q3, largely as a result of the financing activities related to the PPD acquisition.\nOur leverage ratio at the end of the quarter with 2.7 times gross debt to adjusted EBITDA and 2.3 times on a net debt basis, and concluding my comments that total company performance adjusted ROIC was 19.8%, up 180 basis points from Q4 last year as we continue to generate exceptional returns.\nSo now provide some color on the performance of our four business segments.\nAnd let me start with a few framing comments.\nThe scale and margin profile of our COVID 19 response revenue varies by segment, but it's been consistent throughout the year.\nWe continue to make strategic investments across all of our businesses.\nThe size of those investments does not necessarily align with the response revenue in each segment does skew some of the reporters' segment margins.\nAnd during Q4, we had four fewer selling days than the year-ago quarter.\nAnd finally, we recently renamed the Laboratory Products segment to reflect the inclusion of the PPD acquisition.\nIt's now Laboratory Products in the Biopharma Services segment.\nAnd also going forward, we'll refer to PPD as our clinical research business within this segment.\nMoving on to the segment details, starting with Life Sciences Solutions.\nQ4 reported revenue in the segment decreased 5% and organic revenue was 8% lower than the prior-year quarter.\nIn the quarter, we delivered very strong growth in our bioproduction and biosciences businesses.\nThis was offset by lower revenue in the genetic sciences business driven by lower testing revenue versus the year-ago quarter.\nFor the full year, reported revenue in the segment increased 28% and organic revenue increased 23%.\nQ4 adjusted operating income in Life Science Solutions decreased 14%.\nAnd adjusted operating margin was 48.2%, down 490 basis points year-over-year.\nIn the quarter, we delivered strong productivity, which is more than offset by unfavorable business mix and strategic investments.\nAnd for the full year, adjusted operating income increased 28%, and adjusted operating margin was 50%, a decrease of 20 basis points versus 2020.\nIn the analytical instrument segment, reported revenue increased 5% in Q4 and organic growth by 6%.\nGrowth in the segment this quarter was driven by electron microscopy and chromatography and mass spectrometry businesses.\nFor the full-year reported revenue in the segment increased 18% and organic revenue increased 17%.\nQ4 adjusted operating income in the segment increased 15%, and adjusted operating margin was 22.1%, up 190 basis points year over year.\nDuring the quarter, we saw a favorable business mix and delivered strong volume pull through and productivity enabled by our PPI business system.\nThat was partially offset by the strategic investments we're making across the segment.\nFor the full year, adjusted operating income increased 48%, and adjusted operating margin was 19.7%, an increase of 390 basis points versus 2020.\nTurning to specialty diagnostics.\nIn Q4, reported revenue and organic revenue were both 26% lower than the year-ago quarter.\nIn the quarter, we saw a strong growth in our transplant diagnostics and immunodiagnostics businesses, which was offset by lower COVID-19 testing revenue versus the year-ago quarter.\nFor the full year, reported revenue in this segment increased 6% and organic revenue increased 5%.\nQ4 adjusted operating income decreased 43% in the quarter and adjusted operating margin was 20.5%, down 590 basis points from the prior year.\nIn Q4, we drove positive productivity enabled by our PPI Business System.\nThis is more than offset by unfavorable volume mix and strategic investments in the segment.\nFor the full year, adjusted operating income decreased 6% and adjusted operating margin was 22.6%, a decrease of 300 basis points versus 2020.\nThen finally, Laboratory Products and Biopharma Services segment.\nIn Q4, reported revenue in this segment increased 16% and organic revenue growth was 5%.\nDuring Q4, we saw strong growth in the Pharma Services and Laboratory Products businesses.\nAnd we recognized $375 million of revenue for PPG to clinical research business.\nFor the full year, reported revenue in this segment increased 21% and organic revenue increased 15%.\nQ4 adjusted operating income in the segment increased 42% and adjusted operating margin was 11.5%, which is 210 basis points higher than the prior year.\nIn the quarter, we drove strong productivity by our PPI Business System and saw a favorable business mix, partially offset by strategic investments.\nFor the full year, adjusted operating income increased 45%, and adjusted operating margin was 12.4%, an increase of 200 basis points versus 2020.\nLet me now turn to our updated 2022 guidance.\nBefore we get into the details, I'd like to begin with a quick reminder about our definition of the core business, which we introduced at our Investor Day last year and noted we transitioned to it in 2022.\nThe core includes our base business, the vaccines and therapies response revenue, and the PPD acquisition.\nGiven the scale of the PPD acquisition at the core, organic growth calculation will include PPD on a full-year basis.\nIf you think that gives you the best view of how to have a look at the total company business and how it's performing.\nFor full transparency will also continue to provide total company organic growth when reporting our actual performance in '22.\nSo moving on to our guidance, as Marc mentioned, we're significantly increasing our full-year 2022 revenue and adjusted earnings per share outlook.\nWe're raising our full-year '22 revenue guidance by $1.5 billion to $42 billion.\nAnd we're raising our adjusted earnings per share guidance by $1.07 to $22.43.\nThis very strong raise reflects the excellent strength of the business, and we continue to expect 8% core organic revenue growth in 2022.\nLet me now provide you with additional details on the updated guidance, starting with revenue whether four elements drive the $1.5 billion raise.\n$1 billion increase in the COVID 19 testing assumption, a $900 million increase for the core business, a $500 million decrease due to the change in FX rates, and a $100 million increase to reflect the PeproTech acquisition, which closed just before the year-end.\nIn terms of our COVID 19 testing revenue assumption, we're continuing the same de-risked approach to guidance, as is a range of outcomes for the year.\nGuidance now assumes $1.75 billion in testing revenue in 2022.\nThere are scenarios where testing demand could be higher than this level, and should that be the case, we're well-positioned to support customer needs.\nAnd as we did in 2021, we'll follow the benefits of that through our P&L.\nBut for now, we thought it was prudent to continue to take a de-risk approach to the outlook.\nIn terms of the core revenue raise, $600 million relates to PPD and reflects the excellent strength of that business and to a lesser extent, the recent gap changes around deferred revenue measurement for acquisitions.\nWe now expect PPD, a new clinical research business, to deliver $6.5 billion in revenue for the full year of 2022.\nThis represents 8% organic growth on a full-year basis on top of the 30% growth it delivered in 2021.\nAnd the remaining $300 million of the core revenue raise is to reflect the strong finish to 2021 by the rest of the core business.\nOur core business is in great shape.\nIt ended 2021 with even more scale.\nAs I mentioned earlier, we continue to expect that it will grow 8% organically in 2022.\nTo a very strong raise overall for our revenue guidance, and we will use our PPI business system to generate a strong pull through on that revenue.\nAnd we now expect the adjusted operating margin to be 25.4% in 2022 as 20 basis points higher than what we assumed in our prior guidance.\nIn terms of adjusted EPS, a stronger business outlook is enabling us to raise 2022 adjusted earnings per share guidance from $21.36 to $22.43, further building on an already very strong outlook for the year.\nSo let me now provide you with a couple of other details in 2022 to help you with your models.\nAs I mentioned PPD is expected to deliver $6.5 billion of revenue and $1 billion of adjusted operating income in 2022.\nThis acquisition is now expected to contribute $1.90 to adjusted earnings per share in the year.\nPeproTech is expected to deliver revenue of just over $100 million in 2022 and $0.5 of adjusted EPS.\nFX is now expected to be a year-over-year headwind of $500 million in revenue of 1.3% and $0.31 from adjusted EPS.\nWe continue to assume an adjusted income tax rate of 13% in 2022.\nWe now expect the full-year net interest cost to be approximately $490 million and other income to be $10 million.\nWe continue to assume net capital expenditures of approximately 2.5 to $2.7 billion and free cash flow of approximately $7 billion.\nOur guidance still assumes $2.5 billion of capital deployment, which is $2 billion a share, buybacks that we already completed in January, and $475 million of capital return to shareholders through dividends.\nWe now estimate that the full-year average diluted share count will be between 395 million and 396 million shares.\nAnd finally, a couple of comments on phasing to help you with the modeling.\nIn terms of revenue dollars, the assumption in the guide is the revenue dollars are fairly linear for the year, with Q1 and Q4 being slightly higher in Q2 and Q3.\nThe de-risk assumption for COVID 19 testing used in this guidance assumes that this revenue is very front end loaded in the first half of the year, and then it's an assumed pandemic run-rate level of $100 million of revenue per quarter in the second half of the year.\nOrganic growth of the core business is expected to be fairly consistent throughout the year.\nAnd in terms of adjusted earnings per share phasing this guidance assumes slightly more weighting toward the first half of the year than the phasing we had last year, with Q1 being about the same percentage of the full year as we had in 2021.\nTo conclude, we delivered another outstanding year and went great position to achieve our 2022 goals.\nWe're ready to take questions.\n", "role": "user" }, { "content": "compname posts q4 earnings per share of $4.17.\nq4 adjusted earnings per share $6.54.\nq4 gaap earnings per share $4.17.\nq4 revenue rose 1 percent to $10.7 billion.\ncompname says q4 revenue rose 1% to $10.7 billion.\n", "role": "assistant" } ]

[ { "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 William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations.\nDave will brief you on our operations and enterprise strategy and Fay will cover the financials.\nAfter their remarks, we will open the call to questions.\nSuch statements are subject to risk and uncertainties and our actual results may differ materially from those contained in the statements.\nThese risk and uncertainties are described in today's news release and the documents we file with the Securities and Exchange Commission.\nWe encourage you to review those documents, particularly our Safe Harbor statement, for a description of the risk and uncertainties that may affect our results.\nAdditionally, on this conference call, we will discuss non-GAAP measures that include or exclude certain items.\nWe hope that you and your loved ones are continuing to stay safe.\nToday, we are pleased to report a strong first quarter.\nOne that exceeded our expectations due to increased customer demand and highlighted by the organic revenue growth we achieved in all regions.\nSpecifically, we've remained committed to resourcing and investing in our enterprise strategy, while staying focused on serving our customers.\nThis approach preserved our ability to ramp up quickly as global markets began showing signs of recovery.\nI am especially proud of the way our team worked to overcome the unprecedented operational challenges of the past year.\nAlso, our prudent expense management and ongoing commitment to our long-term strategy continues to yield solid bottom line results.\nWhile the pandemic will continue to pose market uncertainty, the Q1 growth and strong order demand are certainly encouraging and give us optimism that the positive overall sales trends we saw in the second half of last year represents the beginning of a market recovery, which we have taken into account in raising our full-year guidance.\nOur strong Q1 was not a simple or inevitable result.\nIt required significant effort from everyone at Tennant.\nFor example, in the past year, our operations and supply chain teams have faced significant challenges from commodity inflation, transportation-related issues, parts shortages, and supply base disruption.\nBut they have worked tirelessly to mitigate the impact of these challenges, while also driving aggressive cost reduction programs and delivering productivity leverage that allowed us to offset what could have been a much larger financial impact.\n2020 was not the year any of us planned for, but it did not stop us from influencing the long-term strategy we unveiled at the end of 2019.\nKey improvements to our operating model include value engineering, plant optimization, improved discounting, and adjusting our go-to-market approach in specific regions.\nAt the same time, we strive to win where we have competitive advantage and the recent sale of our Coatings business is an example of redirecting resources toward more strategic and profitable activities.\nAll of these actions have combined to yield an expansion in gross margins that is now beginning to readout.\nIn 2020, we also maintained investments and resourcing across a broad number of initiatives, including product development, operations and simplifying our product offering, all of which were designed to better meet the needs of our customers.\nAs a result, we're now well positioned with a full portfolio of new products, including our autonomous cleaning solutions to launch into a recovering market.\nInitial customer feedback regarding the launches of our T16AMR industrial robotic floor scrubber, new standard product offerings, and new commercial mid-tier offerings have been positive.\nWhile we have not yet reached pre-pandemic sales levels across all regions, we remain optimistic for the year ahead.\nGoing forward, we will continue to execute against our enterprise strategy and will serve our customers with an aim of maintaining our industry leadership in quality, service, and innovation.\nRegarding the future of industrial and commercial cleaning, one of the questions we hear most often is, how the pandemic has impacted our customers?\nCertainly, the importance of cleaning has been elevated with the new desires turned cleaning from something invisible to a visible and tangible benefit for their customers and employees.\nAt the same time, labor challenges have grown all the more acute, which places greater emphasis on the importance of technology in the products and services we offer.\nThe pandemic has accelerated market trends and taught us new ways of working, which we believe will ultimately be beneficial for Tennant and the cleaning industry.\nWe think the long-term benefits are less about COVID and more about how we continue to be a trusted partner for our customers in meeting their needs.\nLastly, I'd like to say a word about our leadership transition.\nThe first quarter saw a number of senior level changes, including Rusty Zay's promotion to Chief Commercial Officer, Kristin Stokes promotion to General Counsel, and Barb Balinski's promotion to Senior Vice President of Innovation and Technology.\nFay is an accomplished Finance Executive.\nShe is the former Senior Vice President and CFO of SunCoke Energy and has held numerous positions, including leadership positions at United Airlines, PepsiAmericas and GATX Corporation.\nAs CEO, I am thrilled to be working with such a talented group of executives.\nCollectively, their managerial expertise, industry knowledge, and appreciation of Tennant's legacy and corporate culture will ensure a seamless transition as we continue to execute on the enterprise strategy that everyone at the Company has worked so hard to put in place.\nI'm excited to be here, particularly at this point in Tennant's journey and I look forward to the opportunities we have ahead.\nFor the first quarter of 2021, Tennant reported net sales of $263.3 million, up 4.4% year-over-year, which included a favorable foreign currency effect of 3% and a divestiture impact of negative 1.7%.\nOrganic sales, which exclude the impact of currency and divestitures increased 3.1%.\nTennant group sales into three geographies: the Americas, which includes all of North America and Latin America; EMEA, which covers Europe, the Middle East and Africa; and Asia Pacific, which includes China, Japan, Australia and other Asian market.\nIn the first quarter, sales in the Americas declined 3%, reflecting the divestiture of the Coatings business earlier this year, which impacted results by negative 2.6%, along with a foreign currency effect of negative 0.8%.\nOrganically, the region grew 0.4%, reflecting the limited impact that the pandemic had on the prior year period, as well as solid growth in the direct and distribution channels in North America, along with growth in Brazil.\nSales for strategic accounts were down from the prior year period due to the lapping of some large orders in Q1 of last year.\nSales in the EMEA region increased 12.4% or 2.3% organically, driven by performance in France, Italy and Germany and also benefited from a foreign currency effect of 10.1%.\nHowever, pandemic-related restrictions did continue to have an impact in some markets, particularly in the United Kingdom, Central and Eastern Europe, the Middle East and Africa.\nSales in the Asia Pacific region rose 40.6% with a foreign currency effect of positive 8.8%.\nOn an organic basis, sales in the region rose 31.8%.\nTennant reported organic growth across all APAC countries, product categories and channels as the region rebounded strongly from the pandemic-related slowdown of last year.\nGross margin in the first quarter of 2021 was 43%, compared to 40.8% in the prior year period.\nAdjusted gross margin was 43%, compared to 41.5% in Q1 of last year.\nThis increase was attributed to increased productivity, product mix and actions related to the Company's enterprise strategy, including pricing and cost reduction initiatives.\nThis more than offset commodity and freight cost pressures we experienced in the quarter.\nAs far as expenses, during the first quarter, our adjusted S&A expenses were 30.2% of net sales, compared to 31.8% in the year-ago period.\nIn addition to careful expense management, this improvement included some temporary savings related to the suspension of most business travel and in-person trade shows and customer events.\nNet income increased to $25.7 million, or $1.37 per diluted share, compared to $5.2 million, or $0.28 per diluted share in the year-ago period.\nAdjusted EPS, which excluded non-operational items and amortization expense was a $1.17 per share, compared to $0.57 per share in the year-ago period.\nAdjusted results in the quarter excluded the gain on sale from the divestiture of the Coatings business.\nAdjusted EBITDA in the first quarter of 2021 increased to $40.7 million, or 15.5% of sales, compared to $26.1 million, or 10.4% of sales in the first quarter of 2020.\nAs for our tax rate, in the first quarter, Tennant had an adjusted effective tax rate, excluding the amortization expense adjustment of 21.4%, compared to 20.5% in the year-ago period, which increased primarily due to the mix in full-year taxable earnings by country, and a decrease in certain discrete tax benefit items.\nTurning to cash flow and balance sheet items, Tennant generated $18.4 million in cash flow from operations in the first quarter of 2021, mainly due to strong business performance.\nAs of March 31, 2021, the Company had $175.2 million in cash and cash equivalents.\nIn April, after the close of the first quarter, the Company restructured its credit agreement to optimize its debt structure.\nThis restructure allowed for enhanced flexibility with minimal covenants and no prepayment penalties, while also reducing future interest expense by approximately $1 million per month.\nLastly, turning to guidance.\nAs Dave mentioned, our raised guidance reflects our optimism regarding the pace of a continued and broad economic recovery and in Tennant's ability to implement its long-term growth strategy.\nAs included in today's earning announcement, our guidance for full-year 2021 is as follows: net sales of $1.09 billion to $1.11 billion with organic sales rising 9% to 11%; GAAP earnings per share of $3.45 to $3.85 per share; adjusted earnings per share of $4.10 to $4.50 per share, which excludes certain non-operational items and amortization expense; adjusted EBITDA in the range of $140million to $150 million; capital expenditures of $20 million to $25 million; and an adjusted effective tax rate of approximately 20%, which excludes the amortization expense adjustment.\nWith that, we will open the call to questions.\n", "role": "user" }, { "content": "compname reports q1 earnings per share of $1.37.\nq1 adjusted earnings per share $1.17.\nq1 earnings per share $1.37.\nq1 sales rose 3.1 percent to $263.3 million.\nsees net sales of $1.090 billion to $1.110 billion, reflecting organic sales growth of 9 to 11 percent for 2021.\nsees full-year reported gaap earnings in range of $3.45 to $3.85 per diluted share.\nsees adjusted earnings per share of $4.10 to $4.50 per diluted share for 2021, which excludes certain non-operational items and amortization expense.\nqtrly consolidated net sales up 4.4% on non-organic basis.\n", "role": "assistant" } ]

[ { "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 William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations.\nDave will brief you on our operations and enterprise strategy, and Fay will cover the financials.\nAfter their remarks, we will open the call to questions.\nThese risks and uncertainties are described in today's news release and the documents we filed with the Securities and Exchange Commission.\nWe encourage you to review those documents, particularly our Safe Harbor statement, for a description of the risks and uncertainties that may affect our results.\nAdditionally, on this conference call, we will discuss non-GAAP measures that include or exclude certain items.\nOur second quarter results reflected the overall business recovery we saw across our geographic markets despite widespread global supply chain constraints and commodity inflation that cut across a number of industries and which impacted our ability to fully meet the Q2 increase in customer demand.\nWhile the demand increase exceeded our initial expectations for Q2, the impact of macro-level headwinds such as parts availability, material inflation, freight costs, and labor shortages was also greater than we had expected.\nIn response, we've taken steps wherever possible to help minimize the effects of these challenges to our customers.\nIn most cases, these actions build upon or otherwise benefit from the strategic improvements we have made to our operating model as part of our enterprise strategy.\nI will now walk you through some of the actions our teams have and will continue to take to mitigate some of the macro challenges in the current environment while serving the needs of our customers.\nTo address the issue of parts availability, which is the result of our suppliers managing their own production, labor, and logistical challenges our supply chain teams are leveraging our strategic partnerships to manage component and material availability.\nWe are also developing design alternatives and identifying additional sources to keep our manufacturing lines running, all while maintaining strict product quality controls.\nTo ensure a smoother process in securing parts in the second half of the year, our teams have developed more robust sales and inventory operations plans to better align our supply and demand.\nThese plans not only help our manufacturing plants develop smarter strategies to meet increased customer demand but also allow us to provide longer-term demand forecast to our suppliers to secure the parts fully.\nTo address material inflation, our teams are working diligently to find additional partners and, where possible, consolidating vendors to drive leverage and scale.\nAt the same time, we continue to use value engineering to help reduce the parts and material that go into each machine.\nOur R&D and operations teams are regularly finding ways to help address material inflation while maintaining our value proposition of quality and innovation.\nToday's pressures in the steel, resin, and lead markets represent a significant challenge that is felt by industrial manufacturers around the world and one that we expect will persist for the foreseeable future.\nTo minimize the impact of higher freight costs, we are fortunate that as part of our enterprise strategy, we had already started to prioritize local-for-local supply chain and region-for-region manufacturing.\nThis allows us to manufacture our products closer to our customers, which helps to reduce freight costs.\nThis does not entirely offset current headwinds given the constrained transportation market, but we are making every effort to ensure that our manufacturing lines remain up and running and that we can deliver products with appropriate lead times.\nRegarding labor shortages, specifically in our manufacturing areas, we are staying competitive in the market by adjusting wages and making every effort to attract new talent by providing a safe, rewarding and fulfilling work environment.\nWe are also investing in our equipment, processes, and systems to drive the increased productivity.\nWith respect to the overall challenges we're facing in our cost of goods sold, we are also carefully and thoughtfully managing our S&A to a level that allows us to invest in the business, serve the needs of our customers, and deliver on our enterprise strategy while also maintaining our ability to meet our full year financial targets.\nAt the same time, we are implementing price increases where appropriate that will benefit the fourth quarter of this year and help offset some of the costs that we're not able to absorb internally.\nWhile a price increase at this time of the year is not a normal practice for Tennant, we are compelled to take this action in response to the current macro market challenges.\nThe key improvements we've made internally as part of our enterprise strategy have helped facilitate our response to current market dynamics.\nThese improvements include value engineering, plant optimization, simplifying our product portfolio, divesting non-core businesses, and adjusting our go-to-market approach in specific regions.\nI continue to be extremely proud of our global teams for their efforts in addressing these various operational challenges as countries and markets navigate their post-pandemic recoveries.\nWe are taking decisive actions to safeguard the customer experience and deliver on our financial commitments while remaining focused on our longer-term business objectives.\nAs Fay will discuss, our full year guidance assumes our continued effective management of a challenging supply chain and operations environment and reflects our growing confidence that the long-term global recovery for commercial and industrial cleaning will continue.\nWhile we remain vigilant in our overall cost management in the face of material inflation, parts availability issues, and higher freight costs, we will continue to execute against our enterprise strategy and stay focused on delivering the best possible customer experience.\nFor the second quarter of 2021, Tennant reported net sales of $279.1 million, up 30.4% year-over-year, including a favorable foreign currency effect of 5.4% and a divestiture impact related to the sale of the company's coatings business of negative 2.5%.\nOrganic sales, which exclude the impact of currency effects and divestitures, increased 27.5%.\nTennant Group sales into the three geographies: the Americas, which includes all of North American and Latin America; EMEA, which covers Europe, the Middle East, and Africa; and Asia-Pacific, which includes China, Japan, Australia, and other Asian markets.\nIn the first quarter, sales in the Americas increased 22.7% year-over-year with organic growth of 25.4%, including a foreign exchange effect of 1.1% and a divestiture impact of negative 3.8%.\nSales were strong, both in North America and Latin America, with growth across all channels and product categories despite a decline in the company's AMR robotics business, which lapped a large order in the year ago period.\nStrong customer orders resulted in higher than normal backlog levels at the end of the quarter as the company managed parts availability related to global supply chain constraints and labor shortages.\nSales in EMEA increased 55.5% or 40.2% organically, including a foreign exchange effect of 15.3%, with growth across all countries and across all product categories as pandemic-related restrictions eased.\nSales in the Asia-Pacific region rose 16.6% or 9.6% organically, including a foreign exchange effect of 7%.\nThe results were driven primarily by strength in Australia across all product categories.\nDuring the quarter, organic results in China were flat year-over-year, which was due to limited parts availability.\nReported and adjusted gross margin were both 41.2% compared with 41.8% in the year ago period, which included the impact of government credits received and cost-saving measures taken in response to the pandemic.\nAs previously discussed, the decline also reflects increased costs related to freight, materials, and labor, which were partially offset by favorable pricing and cost savings initiatives.\nThese headwinds are expected to continue for the foreseeable future, with added pressure in the third quarter.\nEntering the fourth quarter of the year, we expect pricing and other actions to start driving a meaningful impact.\nAs for expenses during the second quarter, our adjusted S&A expenses were 30.3% of net sales compared with 28% in the year ago period.\nThe year-over-year deleverage is a direct result of the cost-saving actions taken in the second quarter of last year in response to the pandemic.\nThese actions include furloughs, reduced work schedules, adjusted to management incentives, government credits, and tighter project and travel spending.\nNet income was $9.8 million or $0.51 per diluted share compared with $14.3 million or $0.77 per diluted share in the year ago period.\nAdjusted diluted EPS, excluding non-operational items and amortization expense was $1.18 per share compared with $0.96 per share in the year ago period, which was primarily driven by lower interest expense.\nAdjusted EBITDA in the second quarter of 2021 decreased slightly to $35.1 million or 12.6% of sales compared with $35.3 million or 16.5% of sales in the second quarter of 2020.\nAs mentioned in our Q2 2020 earnings call, we estimated that $15 million of savings occurred within the second quarter of 2020 due to the cost-saving measures and actions taken in response to the pandemic.\nAs for our tax rate in the second quarter, Tennant had an adjusted effective tax rate, excluding the amortization expense of 4% compared with 20.4% in the year ago period.\nThe decrease was primarily related to a discrete tax benefit for a valuation allowance release as a result of a recent law change impacting Dutch tax loss carryovers.\nTurning to cash flow and balance sheet items.\nTennant generated $19.4 million in cash flow from operations in the second quarter of 2021, mainly due to strong business performance.\nAs of June 30, 2021, the company had $135.1 million in cash and cash equivalents while managing our leverage within the stated guidance of 1.5 to 2.5 times times.\nIn April, the company restructured its credit agreement to optimize the debt structure.\nThis change allows for greater flexibility with minimal covenants and no pre-payment penalties, while also reducing future interest expense by approximately $1 million per month, which was already reflected in our prior guidance.\nLastly, turning to guidance.\nAs Dave mentioned, our guidance reflects management's confidence in a broadening economic recovery, our ability to implement our long-term growth strategy, and our effective management of the current supply chain and operational challenges.\nIt also assumes there will be no significant pandemic-related restrictions in our major markets.\nAs included in today's earnings announcement, Tennant affirms its guidance for the full year 2021 as follows: net sales of $1.09 billion to $1.11 billion, with organic sales rising at 9% to 11%; GAAP earnings of $3.45 per share to $3.85 per share, adjusted earnings per share of $4.10 per share to $4.50 per diluted share, which excludes certain non-operational items and amortization expense, adjusted EBITDA in the range of $140 million to $150 million, capital expenditures of approximately $20 million and an adjusted effective tax rate of approximately 20%, which excludes the amortization expense adjustment.\nWith that, we will open the call to questions.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $1.18.\nq2 earnings per share $0.51.\nq2 sales $279.1 million versus refinitiv ibes estimate of $271.8 million.\naffirms guidance for full-year 2021.\n", "role": "assistant" } ]

[ { "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 William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations.\nChris will brief you on our operations, Dave will provide an update regarding our enterprise strategy and Tom will cover the financials.\nAfter their remarks, we will open the call to questions.\nThese risks and uncertainties are described in today's news release and the documents we file with the Securities and Exchange Commission.\nWe encourage you to review those documents, particularly our Safe Harbor statement, for a description of the risks and uncertainties that may affect our results.\nAdditionally, on this conference call, we will discuss non-GAAP measures that include or exclude certain items.\nWe hope that you and your loved ones are continuing to stay safe.\n2020 tested us all.\nAnd I'm extremely proud of the way the Tennant team rose to the challenge.\nWe did so by remaining true to our guiding principles while continuing to provide the solutions and service that our customers have always expected from Tennant.\nOur full year 2020 results reflect our speed and effectiveness in responding to the pandemic, specifically in how we prioritized the health and safety of our employees, the measures we took to manage costs and ensure liquidity, and above all, the determination and dedication that our employees showed in meeting the needs of our customers.\nTheir hard work helped minimize the overall operational and financial impact of the pandemic.\nWhile the business impact of the pandemic significant across most of our markets, it had little effect on our strategic initiatives within the company.\nA year ago, I shared with you our enterprise growth strategy, which is based on three pillars.\nTo win where we have competitive advantage.\nTo reduce complexity and build scalable processes.\nAnd to innovate for profitable growth.\nWe follow through with our plan in spite of the pandemic.\nIn fact, our strategy was integral to everything we accomplished in 2020.\nFor example, our recent launch of a range of new floor scrubbers reflects Tennant commitment to innovation and our focus on winning where we have competitive advantage.\nWe've also made meaningful improvements to our operating model as illustrated by our adjusted EBITDA as a percentage of sales, for which full year 2020 was in line with that of 2019 despite the decline in organic sales.\nAs part of the ongoing implementation of our enterprise strategy, which Dave will speak to in greater detail in a moment, we've made the strategic investments needed to allow us to exit the pandemic in a strong position as markets continue to recover.\nWe recognized that now more than ever our customers are relying on us to help them maintain the safety and appearance of their facilities, while at the same time reducing their overall cost to clean.\nAlso, I cannot overstate how important our strategy has been in channeling those team efforts to ensure the best possible results.\nI will walk you through some of our key achievements of the past year in that regard and provide a look at where we are headed.\nAs Chris mentioned, our enterprise strategy is based on three pillars in support of our value creation objectives.\nOne, winning where we have competitive advantage.\nTwo, reducing complexity and building scalable processes.\nAnd three, innovating for profitable growth.\nIn 2020, the first pillar, winning where we have a competitive advantage, began with a thorough evaluation of all aspects of our business, including products, market geographies, channels and customers in order to identify where we have the strongest competitive advantage.\nThe findings of that comprehensive review have led to meaningful changes within Tennant.\nFor example, as we announced earlier this month, we completed the sale of our coatings business.\nAlthough the business represented approximately 2% of our total sales, it was not central to our core strength in professional, industrial and commercial floor cleaning.\nBy divesting it, we can redirect resources toward more strategic and profitable activities.\nOur strategy implementation has been truly global, expanding across our operations worldwide.\nIn Japan, for example, after a thorough review of our direct sales go-to-market strategy in that market, we have made the decision and begun to shift to a distributor-only model, which offers compelling S&A savings, while delivering a superior customer experience.\nOn the product side, we continued to simplify.\nAnd in 2020, managed a 35% reduction in our core Tennant legacy product portfolio along with a 20% reduction in product options.\nThese changes have far reaching benefits in terms of manufacturing, supply chain and sales efficiency.\nFurthermore, after rigorously assessing our product lines, we have created a standard offerings across our legacy Tennant products.\nThis helps customers by eliminating guesswork from the buying process.\nWhere customers used to have to pick from literally dozens of options and features, they can now rely on Tennant's expertise to identify the solutions and features that best suit their needs.\nIn addition to enhancing our sales funnel, this change improves our manufacturing process as well.\nWe will continue to provide customized solutions when needed, but we will do so while prioritizing manufacturing efficiency.\nThe second pillar of our strategy, reducing complexity and building scalable processes goes to the level of product design and subsystem architecture.\n2020 initiatives in this area targeted cost reductions along with customer facing quality and performance improvements.\nA great example of this is an industrial tire project review we completed last year.\nThrough an engineering redesign effort across our large scrubbers and sweepers, we introduced new tires that reduced our cost, improved traction and performance for our customers and reduced our tire SKUs by over 50%.\nAnother example of reducing complexity is the plant optimization work we completed in China last year.\nOur acquisition of Gaomei included a number of benefits, including a skilled workforce based in Hefei, China where we have now centralized our China manufacturing.\nThese optimization efforts allowed us to close our facility in Qingpu and will enable greater manufacturing flexibility and improved profitability.\nAs Chris noted, the implementation of our enterprise strategy is a continuous process, particularly with respect to our third pillar, innovating for profitable growth.\nThat means using a process of innovation to unlock value for our customers and for Tennant.\nA great example of how we executed against this pillar in 2020 is the advances in our robotic floor cleaning product category.\nIn November of last year, we introduced our T380AMR robotic floor scrubber.\nIts smaller size enhances maneuverability and navigation in tight areas, leading to maximum productivity and is ideal for customers with narrow spaces or layouts that may have been too challenging for our other robotic machine.\nOur customer-centric approach in identifying and solving real world problems is the reason our customers see us as the market leader.\nLooking ahead, the continued execution of our enterprise strategy will be central to our success, and is what will enable us to deliver on our annual and longer term goals.\nThis year, we will be diligent in following through on the projects we started in 2020 and we will selectively activate specific initiatives that will further our ability to improve our operating model.\nIncluded in our plans are improvements to our service infrastructure, specifically in North America.\nBy investing in new tools to better leverage our teams of service technicians, we are creating additional capacity within our current workforce, improving the way they work and also increasing our ability to meet our customers' needs.\nOn the product side, we will continue to innovate across our portfolio such as with the introduction of our new commercial products and the recent launch of our new T16AMR. The T16AMR is an important addition to our product category because it makes our autonomous cleaning technology available to our industrial customers.\nWith this machine, along with the previously introduced T7AMR and T380AMR, we believe Tennant has the broadest robotics offering available that covers the widest range of autonomous cleaning applications.\nFurthermore, the commercial products we introduced at the beginning of February, demonstrate how seamlessly the three pillars of our strategy can work together in practice.\nIn addition to leveraging the benefits of our IPC platform from a value engineering perspective, we are offering versions of these products as Tennant-branded machines with the full complement of Tennant brand sales and support benefits.\nThe result is a superior value proposition for budget-minded customers backed by Tennant's reputation for quality and service.\nOn a personal note, I am thrilled with the progress we've made and the plans we have in place to continue executing our enterprise strategy.\nWhile we are cautiously optimistic about the pace of a global recovery, I look forward to working with our team to seize the opportunities that lie ahead.\nWith that, I will hand the call over to Tom who will discuss our financials.\nPlease note that in my comments today any references to earnings per share or earnings per share both GAAP and non-GAAP are on a fully diluted basis.\nFor the fourth quarter of 2020, Tennant reported net sales of $273 million, down 7.4% year-over-year as a result of the pandemic-related slowdown, while our organic sales, which exclude the impact of currency effects, declined 8.9%.\nShifting to our fourth quarter results by geography.\nAs a reminder, we group sales in the three geographies.\nThe Americas, which includes all North America and Latin America.\nEMEA, which covers Europe, the Middle East and Africa.\nAnd Asia Pacific, which includes China, Japan, Australia and other Asian markets.\nSales in the Americas declined by 11.6% year-over-year and were down 10.5% organically.\nOur results in the region were impacted by continued market weakness driven by the pandemic-related slowdown, which impacted both our direct and distribution sales channels.\nThe region is also lapping an unusually large AMR order in the previous year ago period, which offsets the organic growth we experienced in Brazil in the fourth quarter of 2020.\nSales in the EMEA region increased by 3.7% year-over-year due to currency effects, but were down 3.4% organically, primarily due to pandemic-related restrictions in the U.K., the Netherlands and the Iberian Peninsula.\nDespite the negative organic growth, it's worth highlighting the region did deliver positive organic growth in Italy and Germany in the fourth quarter of 2020 with strong year-over-year growth in the parts and consumables and service businesses.\nSales in the Asia Pacific region declined by 10.4% year-over-year and were down 13.9% organically.\nThe year-over-year decline in fourth quarter sales was primarily due to Korea, which was significantly impacted by the pandemic along with declines in Australia.\nThese results offset organic growth in China from distribution and strategic accounts as well as growth in service across the region.\nNow on to margins.\nAdjusted gross margin in the fourth quarter of 2020 was 41.3% compared with 40.5% in the year ago period, increasing due to the positive effect of pricing actions and cost out initiatives driven by our enterprise strategy, which more than offset regional mix and strategic investments we made during the quarter related to our employees.\nDuring the fourth quarter, our adjusted S&A expenses were 33.9% of net sales compared with 30.4% in the year ago period.\nAs we discussed last quarter, we made a number of strategic investments to enable us to exit the pandemic in a strong position as the markets continue to recover as well as investments in our employees to recognize our efforts through the pandemic.\nOur S&A expenses also include additional planned expenses related to our new corporate headquarters.\nAs for the profitability, we reported net earnings of $2.5 million or $0.13 per share, down from $10.9 million or $0.59 per share in the prior year.\nAdjusted EPS, which excludes non-operational items memorization expense totaled $0.48 compared with $0.86 in the prior year.\nIn terms of adjusted EBITDA, our results decreased to $25.4 million or 9.3% of sales compared with $34 million or 11% of sales in the year ago period, driven by our lower year-over-year revenue and the incremental investments in the quarter mentioned a moment ago.\nAs for our tax rate, in the fourth quarter, Tennant had an adjusted effective tax rate excluding the amortization expense adjustment of 32.3% compared to 23.3% in the year ago period.\nThe increase was mainly due to the mix of taxable earnings by country and a decrease in discrete favorable tax items compared to the prior year.\nTurning to cash flow, capital allocation and balance sheet items.\nIn the fourth quarter, Tennant generated $36.3 million in cash flow from operations, primarily driven by business performance and improved working capital levels.\nWe also reduced outstanding debt by $15.2 million and paid $4.2 million in cash dividends to shareholders.\nTurning now to our full year performance.\nIn 2020, net sales totaled $1 billion compared to $1.14 billion in 2019, reflecting a decline of 11.8% on an organic basis driven by market weakness due to the global pandemic.\nAs Chris mentioned, our ability to quickly respond to the pandemic and manage costs and ensure liquidity allowed us to deliver an adjusted EBITDA for full year 2020 of $119.4 million or 11.9% of sales compared with $136.9 million or 12% of sales in 2019.\nThese actions also allowed Tennant to generate cash flow from operations of $133.8 million, reduce outstanding debt by $31.1 million and pay $16.3 million in cash dividends to the shareholders.\nWhile the macroeconomic outlook remains uncertain, we are ready to ramp up quickly as the anticipated recovery continues to gain pace.\nIn addition to improving market conditions, we expect we'll benefit from our strategic investments in the improvements to our operating model that began last year as part of our enterprise strategy.\nAs included in today's earnings announcement, our guidance for full year 2021 is as follows.\nNet sales of $1.05 billion to $1.08 billion with organic sales rising 5% to 8%.\nGAAP earnings of $3.30 to $3.75 per share.\nAdjusted earnings per share of $3.50 to $3.95 per share, which excludes certain non-operational items and the amortization expense.\nAdjusted EBITDA in the range of $130 million to $140 million.\nCapital expenditures of $20 million to $25 million.\nAnd an effective tax rate of 20%.\nWe are cautiously optimistic about the overall pace of recovery and expect to deliver on our full year guidance assuming no further pandemic-related issues in 2021.\nBased on our anticipated pace of recovery in 2021 and our actions to manage costs during the pandemic in 2020, we expect that EBITDA and adjusted earnings per share will improve sequentially each quarter this year with Q1 likely being the lowest quarter for EBITDA and adjusted earnings per share as Q1 2020 was least impacted by COVID last year.\nOur guidance also incorporates the divestiture of our coatings business, which we estimate having $20 million to $25 million impact to sales.\nBefore we start the Q&A, I want to take a moment to discuss our leadership transition.\nAs you know, Dave Huml will become CEO on March 1 and I will serve as a strategic advisor until the end of this year.\nI have been at Tennant for almost 18 years, including 15 years as President and CEO.\nThis has been, without a doubt, the most wonderful and fulfilling experience of my professional career.\nBut this is definitely an opportune time for a change in leadership.\nOne of the most important things a CEO can do is ensure a smooth and seamless transition to new leadership.\nI am proud to say that we have accomplished that with the succession plan we have in place, which is the culmination of more than two years of work in cooperation with our board of directors.\nI hired Dave a little over six years ago, and we have a very close working relationship.\nIt's been such a great pleasure to see him grow as a leader and become an important contributor to Tennant's success.\nDave loves the company and has a deep understanding of our business.\nHe has led our global marketing group.\nHe has been responsible for Asia Pacific and EMEA.\nHe was the executive sponsor of our IPC integration.\nAnd he even had us then running our global operations group.\nDave has exceptional leadership abilities as well as the vision to take Tennant to new levels of success.\nHis industry knowledge, global experience and foundational understanding of our company have been powerful attributes in working with our senior leadership team to develop and now implement our enterprise strategy.\nDave has a keen understanding of where we need to go as an organization to serve all of our stakeholders.\nAnd I am excited to see where he takes us.\nIn closing, I would like to say that what has touched my heart most profoundly through all my years with the company are the people.\nThe thousands of wonderful, talented, dedicated and caring people of the Tennant family.\nThey are the lifeblood of this great organization and the reason it has thrive for 150 years and will continue to flourish for the next 150.\nWith that, we will now open the call to questions.\n", "role": "user" }, { "content": "tennant co q4 earnings per share $0.13 (feb. 25).\ntennant co sees 2021 net sales $1.050 billion to $1.080 billion; fy reported gaap earnings $2.50 to $2.95 per share; fy adjusted earnings per share $3.50 to $3.95.\nq4 earnings per share $0.13.\nq4 sales $273 million versus refinitiv ibes estimate of $271.9 million.\n", "role": "assistant" } ]

[ { "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 Kevin begins, I'd like to direct all participants to our website at www.\nAnd I hope that you and your families are all safe and healthy.\nJoining me on the call today are Stewart Andrade, Teekay Tankers' CFO and Christian Waldegrave, Director of Research for Teekay Tankers.\nWhile COVID-19 is having an unprecedented impact on the world and is clearly a major focus for us, we are truly proud of how our seafarers and onshore colleagues have responded to COVID-19, implementing new standards, which focus on the health and well-being of everyone involved in our organization, especially our colleagues at sea, while maintaining consistently safe and efficient operations for our customers.\nAdditionally, we are fortunate that the tanker market and our financial results have been strong so far in 2020, and we have had minimal impact on our operations related to COVID-19.\nWe reported adjusted net income of $110 million or $3.27 per share in the first quarter, up from an adjusted net income of $83 million or $2.47 per share in the fourth quarter of 2019 and $15 million or $0.44 per share in the first quarter of 2019.\nTeekay Tankers' first quarter earnings per share was the highest in more than 10 years, resulting in an industry-leading 20% earnings per share yield for the quarter based on our closing share price yesterday at an annualized earnings per share yield of 80%, clearly demonstrating the earnings power of our business.\nWe have continued to strengthen our balance sheet with strong free cash flow from operations of $140 million and the completion of three vessel sales totaling $60 million during the first quarter.\nThis allowed Teekay Tankers to reduce its net debt by $200 million or over 20% and increased our liquidity position to $368 million during the quarter.\nOur net debt-to-total capitalization declined to 40% at the end of March compared to 48% at the end of the fourth quarter of 2019 and it remains our intention to continue reducing this leverage and increasing our long-term financial flexibility and resilience.\nSubsequent to the first quarter, we are continuing to generate significant free cash flow and also closed the $27 million sale of the non-US portion of our ship-to-ship transfer business.\nApproximately $14 million of cash payment was received on closing with the balance due in August.\nCrude tanker spot rates were the highest in more than 10 years during the first quarter and second quarter rates are also expected to be very positive based on firm quarter-to-date bookings.\nTurning to Slide 4, I want to provide an update on our current operations during this unprecedented global pandemic.\nThe health and safety of our crew and shore staff is paramount for Teekay Tankers.\nWe have implemented strict measures on all of our ships to protect our seafarers while the vast majority of our shore staff are working remotely from home.\nCrude changes remain a major challenge for the industry as most countries have placed restrictions on travel, visa applications and crews disembarking from ships.\nWe are working hard with both the industry and intergovernmental organizations to tackle this challenge.\nWe remain in close continuous communication with our colleagues at sea to provide support during a challenging period in which they have truly stepped up to that challenge.\nI'm pleased to report that as a result of the team's dedication to health and safety and their professionalism during this time, there are no COVID cases on board any of our vessels.\nFurther, our vessel availability remained unaffected with no impact on our vessel days.\nWe were well prepared to manage any potential spares shortages as the team identified critical items and made advance purchases early in the outbreak where given our experiences from 2003 SARS epidemic, we anticipated challenges related toward manufacturing and logistics.\nIn addition, the team has obtained class and flag expansions for two vessels that were due to drydock in the second quarter, ensuring minimal interruption to our fleet operations.\nOverall, the fleet has performed exceptionally well in the first quarter and second quarter-to-date and we expect this to continue.\nTurning to Slide 5, we look at recent developments in the spot tanker market.\nThe crude spot tanker market started the year on a relatively firm note as strong supply and demand fundamentals seen in the fourth quarter of 2019 carried over into the first quarter of this year.\nHowever, rates gradually softened during the course of January and February due to lower demand over the Chinese New Year period and as the COVID-19 outbreak began to impact Asian crude oil inventories.\nThe tanker market improved quickly during March with the collapse of the OPEC plus agreement and short-lived oil price war in March between Saudi Arabia and Russia.\nBy April, Saudi Arabia pushed its oil production to a record high of just under 12 million barrels per day, creating significant additional tanker demand.\nAt the same time, global oil demand plummeted from March onwards as a large proportion of the world's population became subject to lockdown orders in an effort to slow the spread of COVID-19.\nAccording to the IEA, global oil demand declined by around 25 million barrels per day year-on-year in April as demand for transportation fuel collapsed.\nThis led to a huge mismatch between global oil supply and demand and a historic build in global oil inventories.\nThe rapid build in inventories drove oil prices to multi-year lows and pushed the crude oil futures curve into steep contango which encouraged oil companies and traders to put ships for floating storage.\nWe've also seen a large number of ships idled due to delays at port, which is further tying up available fleet supply.\nAs shown by the chart on the slide, around 100 crude tankers are currently being used for floating storage, which we define as being in storage for at least 30 days with over 100 additional ships sitting in ports on demurrage for periods of between seven days to 30 days.\nAll told, around 10% of the crude tanker fleet is currently being used for some form of floating storage, thereby reducing the number of ships available for transporting cargo.\nThis tightening of available fleet supply, combined with healthy cargo supply caused a significant increase in tanker utilization during the first quarter.\nAs a result, mid-size tanker spot rates during the first quarter were the highest in over 10 years.\nIn the near term, we expect the ongoing storage demand and port delays will continue to tie up tonnage and provide support to crude tanker spot rates even as cargo volumes start to decline due to oil supply cuts, albeit though at lower rate levels than the exceptional rates we saw during March and April.\nTurning to Slide 6, we give a summary of our spot fixtures in the second quarter of 2020 to date.\nBased on approximately 69% and 64% of spot revenue days booked, Teekay Tankers' second quarter-to-date Suezmax and Aframax bookings have averaged approximately $52,100 and $33,200 per day, respectively.\nFor our LR2 segment with approximately 58% spot revenue days booked, second quarter-to-date bookings have averaged approximately $34,300 per day.\nAs discussed in the previous slide, while the freight market is still relatively firm, rates have come off from the exceptional highs seen during April.\nWe expect spot rates during the balance of Q2 to be at lower levels than those booked in the quarter-to-date.\nTurning to Slide 7, we outline our recent tanker time chartering activity.\nOver the past eight months, Teekay Tankers has taken advantage of strong spot tanker market spikes and opportunistically secured fixed time charter coverage for 10 Suezmaxes and three Aframax size vessels at attractive rates.\nOne Suezmax is chartered for six months with the remaining nine Suezmaxes being chartered for one year.\nThe three Aframaxes were fixed out for periods of between one and two years.\nAs can be seen on the chart, we timed these deals with spikes in the time charter market during October, December and more recently in March and April in order to lock in rates and forward revenue well above the average spot market levels seen over the last several years.\nTurning to Slide 8, we discuss some of the factors which we anticipate will impact tanker market over the medium term.\nGiven the unprecedented impact of COVID-19 on the world economy, it is extremely difficult to predict with any certainty how oil fundamentals will develop in the medium term and how exactly this will impact tanker demand in the coming months.\nHowever, on the positive side, it is important to highlight that unlike past cycles, the order book this time around is very small and owners have for the most part held off from ordering despite strong earnings in recent quarters.\nThe current tanker order book, when measured as a proportion of the existing fleet, is the lowest we have seen it in 23 years, at just under 8%.\nThis is significantly lower than the almost 50% of the fleet size in 2008 and 20% seen in 2015, proportions which meaningfully weighed on the ability of the tanker market to recover the demand return.\nIt's also important to keep in mind, the main reasons for lower ordering during the current cycle have been a lack of available finance and uncertainty over which propulsion and fuel systems to order given new technology development and upcoming environmental legislation, neither of which is currently anticipated to be resolved in the near term.\nGiven this, we expect contracting for new tankers to remain low in the months ahead.\nIn addition to a small order book and given the world tanker fleet age profile, a large number of ships face the likelihood of scrapping in the coming years.\nLooking at the mid-size tanker fleet specifically, around 370 vessels are aged between 15 years and 20 years old compared to our current order book of just 140 ships.\nAs such, we anticipate very low fleet growth for at least the next two years, particularly during periods of weaker tanker rates as this may provide impetus for owners to scrap these older vessels.\nIn summary, the tanker market faces uncertainty over the second half of the year, but a positive tanker supply outlook may lead to a faster rebalancing than in previous market cycles.\nFor Teekay Tankers, I'm confident that our focus on debt reduction and strengthening of our balance sheet, puts us in a strong position to weather any periods of market softness while looking for opportunities to further increase long-term shareholder value.\nTurning to Slide 9, we highlight our continued focus on increasing financial strength.\nSince the end of Q3 2019, utilizing very strong cash flows from operations and proceeds from asset sales, we have transformed our balance sheet, reducing net debt by approximately $270 million or 27% and increasing our liquidity position by almost four times to $368 million.\nIn fact, in Q1 alone, we reduced our debt by approximately $200 million or over 20% and more than doubled our liquidity position.\nI'm pleased to report that the strong cash flows achieved in April, further reduced our net debt by approximately $60 million and increased our liquidity position to $420 million.\nIn addition, the 13 fixed rate contracts that Kevin touched on earlier, have lowered our cash breakeven by over $4,000 per day for the next 12 months, further increasing our resilience to potential medium-term market weakness.\nTurning to Slide 10, we discuss how Teekay Tankers continues to create value for shareholders by generating significant free cash flow.\nStarting with the graph on the left side of the page 10, TNK's free cash flow increased from a very high $102 million in Q4 2019 to $141 million in the first quarter of 2020 for total of over $240 million in just two quarters.\nTo put TNK's free cash flow during the first quarter into perspective, on an annualized basis, it equates to a free cash flow yield of approximately 100%, based on our closing share price yesterday of $16.05.\nReferring to the graph on the right side, TNK continues to maintain significant operating leverage with approximately 80% of spot exposure over the next 12 months, while reducing its free cash flow breakeven by locking in time charters at significantly higher rates.\nTNK is expected to generate strong free cash flow in the second quarter and generate positive free cash flow at average midsize tanker spot rates above approximately $10,500 per day.\nTherefore, we expect to continue creating shareholder value through positive free cash flow in almost any tanker market.\nTurning to Slide 11, this is a familiar slide which summarizes our strategic priorities for 2020 that we laid out at our Investor Day last November.\nI'm proud of our team for continuing to execute on these priorities, despite the unprecedented global events we are currently experiencing.\nWe capitalized on the strong market with majority of our fleet trading spot while opportunistically fixing our 13 vessels on time charter at the peaks of the time charter market.\nFinancially, we have bolstered our balance sheet with significant delevering and building a robust liquidity position.\nDespite majority of our employees working from home and facing logistical challenges related to crew changes, we were able to complete three vessel sales and the sale of the non-US ship-to-ship transfer business.\nLastly, we believe Teekay Tankers made the right choice in switching to low-sulfur fuels, which was a seamless low cost transition compared to others that invested in scrubbers or speculated on fuel spreads incurring additional capex, debt or losses.\nOur focus on debt reduction creates shareholder value directly through increased net asset value and also increases financial flexibility and resilience which is important in all tanker markets.\nWith the low free cash flow breakeven, a strong liquidity position, lower balance sheet leverage, no significant debt maturities until 2024 and our mid-size fleet profile, we believe that Teekay Tankers continues to be one of the best-positioned companies in our sector to continue creating shareholder value over the long term.\n", "role": "user" }, { "content": "compname reports qtrly adjusted earnings per share of $3.27.\nq1 adjusted earnings per share $3.27 excluding items.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I hope you, your families and your colleagues are doing well.\nWe are very pleased with our first quarter results.\nWe achieved record first quarter order growth and exceeded our guidance on nearly every metric as we continue to benefit from a market that is playing to our strengths.\nOur business is performing at a very high level.\nPre-tax income rose 93% and earnings per share rose 85% in the quarter compared to one year ago.\nWe are increasing gross margin, leveraging SG&A with higher revenues and greater cost controls and improving our return on equity.\nWe are raising full fiscal year guidance across nearly all of our key metrics and expect to deliver the most homes in our history in fiscal 2021.\nDemand for new homes remains incredibly strong, and we are enjoying pricing power in nearly all of our markets.\nIn our first quarter, net signed contracts rose 68% in dollars and 69% in units against a tough comparison in fiscal year 2020's first quarter when orders grew 31% over Q1 of fiscal 2019.\nThree weeks into our second quarter, our non-binding reservation deposits are up approximately 34% overall and 38% same store over another difficult comp to last year and despite the cold and snowy weather impacting about one-third of our markets over the past few weeks.\nOur backlog, which is up 37% in dollars and 38% in units, provides visibility into the significant gross margin expansion we project this year, especially in our third and fourth quarters as we deliver homes sold after last May.\nAs a reminder, most of our homes take nine to 12 months to deliver.\nBased on this backlog and the current market dynamics where we continue to experience strong pricing power, we expect further gross margin expansion in the fiscal year 2022.\nOur results reflect a robust housing market that continues to benefit from favorable demographic trends, a very tight supply for sale homes stemming from a decade of under production, low mortgage rates and a renewed appreciation for the importance of home.\nHome the supply remains tight.\nAccording to data released by the National Association of Realtors last week, there is just 1.9 month supply of homes on the market, a record low.\nAccording to Redfin, nearly half of all retail loans on the market are placed under contract in less than two weeks with one-third of all resales selling above asking price.\nLow mortgage rates continue to support the housing market and are driving affordability for more upscale homes and more upgrades.\nInterest rates have remained low for an extended period of time.\nThe new administration and the Fed are both signaling a continuation of accommodative policy.\nThese trends clearly favor us for the following reasons.\nApproximately three quarters of our buyers have a home to sell.\nRising home prices and limited supply means our buyers can sell their existing homes quickly and at appreciated values.\nThe limited supply of existing homes is also pushing buyers frustrated with the unpredictability and frantic pace of the resale market to the more systematic process of new home sales.\nIn addition, at Toll Brothers, our build-to-order model offers buyers the opportunity to design their homes from the ground up, allowing them to customize their homes to match their evolving lifestyle.\nThis is the number one Toll Brothers advantage, choice, and it has never been more important to our homebuyers.\nOur customers increasingly want the ability to personalize their homes, and they have the means to do it.\nThey tend to enjoy greater job stability, have more flexibility to work from home and have wealth accumulated from rising home prices and the stock market.\nThis quarter, our buyers added on average $170,000 or approximately 26% of the base price in lot premiums, options and upgrades.\nThis is up from about 22% in the first quarter of fiscal year 2020 and our long time average of 21%.\nOur customers are spending more as they customize their homes, which is generally accretive to our gross margin.\nWe are also seeing a positive impact from demographic and migration trend.\nOver the past several years, we have expanded our geographic footprint and home offering.\nWe now operate in over 50 markets in 24 states and have communities in both high growth and a high barrier to entry markets where a tremendous brand and wide range of price points enables us to serve a broad spectrum of buyers.\nAs the 72 million millennials transition to homeownership, our growing affordable luxury product lines are designed to appeal to these buyers.\nThis quarter, approximately 25% of our customers were first time buyers.\nWhile we are eagerly looking forward to the end of this pandemic, we believe it has cemented the value of homeownership in the minds of a large portion of the U.S. population.\nThe pandemic has made the consumer appreciate the home more and has made work from home a more widespread and permanent option, especially among our consumer base.\nThese trends combined with the significant under supply of homes for sale support long-term sustained growth in the new home market, and we are well positioned for this growth.\nOur deep land position provides the foundation to grow our business.\nAt the end of our first fiscal year, we owned or controlled approximately 67,700 lots and were selling from 309 communities.\nEven though we are selling out of communities faster than anticipated, we expect to grow community count to approximately 320 at the end of Q2 and 340 by fiscal year end, which is an 8% full year increase from the end of fiscal year 2020.\nBased on the land we already own or control, we are confident that we can continue to grow community count at a similar pace in fiscal year 2022.\nWe continue to pursue profitable and sustainable growth, while remaining laser-focused on improving capital efficiency and return on equity.\nOver the past year, we have completely revamped our land underwriting standards and are beginning to reap the benefits of this focus on capital-efficient returns.\nWe are structuring land acquisitions much more efficiently, laying out less cash upfront by negotiating deferred payment terms with sellers and using more third-party land banking, joint venture and option arrangements.\nIn short, we are controlling more land with fewer dollars, which we expect to lead to higher returns.\nOur increased focus on more affordable luxury homes should also result in shorten building cycle times, improved inventory turns, lower building costs and higher margins over time.\nOur expansion in the geographies and price points with lower upfront land cost should also benefit return on equity long-term.\nWe believe the combination of these positive market conditions and our relentless focus on return on equity and internal operational efficiencies will pay off in the short and long-term with sustainable improved results.\nIn summary, we expect fiscal year 2021 to be a tremendous year for Toll Brothers.\nAnd we are laying the foundation for an even better 2022.\nOur business is really firing on all cylinders.\nSales are strong and margins are expanding.\nSG&A is well controlled and being leveraged.\nWe are generating significant cash flow.\nAnd this quarter, we bought back stock, paid down debt and grew our land holdings.\nAnd we are improving our return on equity.\nIt is our number one priority.\nWe expect to grow our return on beginning equity by approximately 425 basis points in fiscal year 2021 and we see further improvement in fiscal year 2022.\nTo improve our ROE, we are buying land more efficiently, expanding our affordable luxury offerings, controlling costs and driving toward higher gross margins.\nWe have streamlined and optimized much of our product offerings, which should allow us to reduce costs and cycle times without sacrificing the high quality customization process that distinguishes our homebuying experience.\nOur efforts in this area continue as we seek to further refine and streamline our products and processes.\nIn addition to these operational initiatives to improve our capital efficiency, we are taking steps to improve our balance sheet and reduce interest expense.\nIn fiscal year 2020, we generated over $1 billion in net cash from operating activities, a record.\nIn fiscal 2021, we are forecasting approximately $750 million of operating cash flow.\nOur strong cash generation in fiscal 2020 enabled us to balance land and builder acquisitions with returning cash to our stockholders, while prudently managing our debt.\nThat will continue in fiscal year 2021.\nIn our first quarter of fiscal year 2021, we repurchased $179.4 million of our stock or roughly 3% of outstanding shares at an average price of approximately $44.54 per share.\nSince fiscal 2016, we have bought back nearly a third of our outstanding shares.\nThis quarter, we also repaid approximately $190 million of debt by paying down $150 million of our floating-rate bank term loan and reducing purchase money mortgages on some of our owned land by about $30 million, among some other things.\nWe also just announced the redemption of the $250 million of 5.625% notes that were due in 2024.\nThese notes will be retired in early March, and we expect to incur a charge for the early extinguishment of debt of approximately $33 million in our second fiscal quarter.\nPlease remember this charge as you model our second quarter.\nAs a result, we expect to have retired approximately $440 million of outstanding debt in our first two quarters of fiscal year 2021 and for our net debt to capital ratio to be in the mid-30% range at the end of the second quarter.\nAt fiscal year end, we expect this ratio to be in the mid-to-high 20% range.\nCoupled with the planned retirement of our $410 million of 5.875% notes scheduled to mature in February 2022, we expect to reduce our capitalized interest incurred by approximately $40 million annually.\nThis should result in lower interest expense released to our income statement over time.\nThese adjustments and spend on our balance sheet have not impacted our ability to acquire land.\nIn fact, we took these steps, while simultaneously expanding our land position from approximately 63,200 lots at fiscal year end 2020 to approximately 67,700 at the end of our first quarter.\nWe are acquiring land through more capital-efficient structures.\nAs part of this focus, we have continued to shift more of our land buys to optioned versus owned.\nOptioned land was up to 46% of the total land at the end of our first quarter versus 43% at fiscal year end and 40% one year ago.\nAlthough this ratio may fluctuate from quarter-to-quarter, we are targeting a ratio of 50-50 in the near-term.\nIt is important to note that approximately 11,000 of our 36,400 owned lots as of January 31 were already contracted for and in our backlog or have model or unsold spec homes on them.\nTaking this into account, our optioned land moves from 46% to 56% of total and our supply of owned land moves from 3.6 down on the 2.6 years.\nAs Doug mentioned, most of our homes take nine to 12 months to deliver.\nSo we have strong visibility into the first half of fiscal year 2022.\nThe pricing power we have experienced over the past six months is continuing.\nOur backlog now stands at its highest ever in both units and dollars.\nThis adds to our confidence that we can significantly expand margins in the back half of fiscal year 2021 and into the first half of fiscal year 2022.\nAnd that backlog is solid.\nOur cancellation rate in the first quarter was 1.4% of backlog and 3.7% of this quarter's contracts.\nThe units in backlog are supported by an average non-refundable deposit of approximately $66,000.\nAs Doug mentioned, we are also increasing our guidance on nearly all of our key metrics for the full fiscal year.\nWe now expect full year deliveries of between 10,000 and 10,400 units, our highest total ever with approximately 2,175 in the second quarter.\nDelivery guidance for the second quarter reflects the slower COVID-impacted sales environment of mid-March through May 2020.\nThis second quarter delivery guidance is consistent with guidance on our fourth quarter earnings call in December where we guided to 40% of deliveries in the first half of fiscal year '21 and 60% in the second half.\nOur average delivered price for the full year is estimated to be between $790,000 and $810,000 per home.\nAverage delivered price for the second quarter is expected to be between $785,000 and $805,000.\nWe have increased our projected adjusted gross margin for the full fiscal year by 20 basis points to 24.3%.\nWe expect adjusted gross margin to be approximately 23.4% in the second quarter.\nThis implies a 25% gross margin in the second half of fiscal year 2021.\nAnd we expect even higher gross margin in the first half of fiscal year 2022.\nWe expect full year interest in cost of sales to be approximately 2.4%.\nIt is also what we expect in the second quarter versus 2.5% in fiscal 2020.\nAs a result, of the debt reductions I discussed earlier, we expect this interest expense to continue to decline in fiscal 2022 and beyond.\nWe have improved our SG&A guidance as a percentage of revenue for the full year by 30 basis points to approximately 11.9%.\nOur estimate for the second fiscal quarter is 13%.\nWe continue to look for ways to optimize our cost structure to achieve permanent cost savings, including more effective marketing spend, while increasing buyer engagement.\nWe have also reviewed our broker commission structure across all our markets and lowered overall cost.\nIn total, we are projecting our full year operating margin before impairments to improve by 60 basis points compared to prior guidance with further improvement expected in fiscal year 2022.\nWe expect community count to be 320 at the end of our second quarter and 340 at fiscal year end with similar growth in fiscal year 2022.\nTurning to other sources of income and cash flow.\nDuring the first quarter, we were able to close sales of a parking garage and two sets of retail shops associated with our Hoboken, New Jersey condo projects sooner than originally expected, which generated cash of $79 million and a pre-tax gain of approximately $38 million.\nOur guidance a quarter ago anticipated one of these sales to close in Q1 and the others later in the year.\nIn addition, during the quarter, we generated $75 million of cash by selling land we owned into two newly formed Toll Brothers Apartment Living joint ventures, partnerships in which we retain 25% of the equity.\nWe have now seen the market for stabilized apartment strengthened.\nAnd we expect we will be able to complete additional asset sales this year.\nAs a result, our full year guidance for other income, income from unconsolidated entities and land sales moves up $15 million to approximately $80 million for the full year with approximately $7 million projected for the second quarter.\nSimply put, this is our time.\nThe actions we've taken to diversify our business over the past several years have positioned us to meet the incredible demand we are seeing in every segment of the market.\nThe growing importance of home and the desire for choice are clearly aligned with our strengths as a homebuilder.\nAnd we are working hard to take additional actions to ensure continued growth for the future.\nBefore we open it up to questions.\n", "role": "user" }, { "content": "backlog value was $7.47 billion at q1 end, up 37% compared to fy 2020's q1; homes in backlog were 8,888, up 38%.\nsees q2 deliveries of about 2,175 homes with an average price of between $785,000 and $805,000.\nsees fy 2021 deliveries of between 10,000 and 10,400 homes with an average price of between $790,000 and $810,000.\n", "role": "assistant" } ]

[ { "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 very pleased with our second quarter results as we beat our guidance on nearly every metric.\nWe delivered 2,271 homes for record second quarter homebuilding revenue of $1.84 billion.\nOur adjusted gross margin of 24.4% increased 150 basis points year-over-year and was 100 basis points above our guidance.\nSG&A as a percentage of homebuilding revenue was 11.9%, an improvement of 190 basis points year-over-year and 110 basis points better than guidance.\nPre-tax income of $169.8 million and earnings per share of $1.01 per share increased 66% and 71% respectively compared to the prior year period.\nContracts and backlog in both dollars and units were all-time records.\nOur backlog at quarter end was valued at $8.7 billion on 10,104 units, up 58% in dollars and 57% in units compared to last year.\nWe signed 3,487 net new contracts for $3.1 billion in the quarter.\nOn a year-over-year basis, our net signed contracts in the second quarter were up 85% in units and 97% in dollars.\nAs a result of our excellent results in the quarter and based on the significant visibility our backlog provides, we are raising our full year guidance on nearly all key metrics.\nWe are increasing our full-year 2021 projected home deliveries by 100 units to 10,300 at the midpoint, and we now project return on beginning equity of 14.5% for fiscal year 2021, representing a 570 basis point improvement over 2020.\nOur strong order growth coupled with significant and consistent price increases sets the stage for meaningful, revenue earnings margin and ROE growth in fiscal year 2022.\nWhile we are not providing formal guidance for 2022 at this point, we believe our 2022 return on beginning equity is expected to exceed 20%, and that our gross margin for 2022 will significantly exceed fiscal year 2021's gross margin.\nDemand remains very strong.\nWe continue to raise prices in nearly all of our communities during the second quarter and into the start of our third quarter.\nWe also continue to strategically moderate sales paces by limiting monthly lot releases to two lots to four lots per community.\nWe have steadily expanded this allocation strategy to now cover about two-thirds of our communities, up from about one-third in January 2021.\nFor communities that are on allocation, we raised prices as we release lots to a priority list of high interest buyers or through a competitive sealed bid process.\nThis allows us to maximize price and therefore margins and align our sales pace to a manageable level of production.\nWe are very pleased with the effectiveness of this strategy.\nFor the three weeks ended May 23, non-binding reservation deposits were up 19% over the comparable period last year.\nThe market did not dictate this 19% deposit growth, we did.\nWe will continue to evaluate the number of communities on allocation to balance profitability and growth.\nWe believe the housing market is positioned for sustained strength, driven by the long-term supply, demand imbalance resulting from the past decade of under production of new homes, low interest rates, a tight resale market, favorable demographics, especially as millennials enter their homebuying years, migration from higher cost metropolitan markets into attractive, more affordable markets enabled by the remote work trend and the greater overall appreciation of one's home that has emerged over the past year and an improving economy.\nAll of these tailwinds should be here for some time and sustain the strong housing market.\nToll Brothers' customers specifically are also benefiting from the strong stock market and rising existing home prices.\nOur buyers who have a home to sell are confident they can sell it quickly and at an appreciated value.\nWe are seeing an increase in demand in markets like Boise, Reno, Vegas, Austin, Phoenix, Denver and all of Florida from buyers who are migrating at a higher cost coastal markets.\nThese relocating buyers are not experiencing affordability issues as we raise prices.\nThe shift to more permanent work from home arrangements means our customers increasingly want to personalize their homes to fit their evolving lifestyles.\nThe design choices we offer is a distinct competitive advantage.\nThis quarter our buyers added on average $162,000 or approximately 24% of the base price in lot premiums options and upgrades.\nThis is up from our long-term average of about 21%.\nThese features and upgrades are generally accretive to gross margin.\nWhile the strength in the housing market has been well-documented, so too [Phoentic] are cost increases for materials such as lumber and copper.\nTo date we have been able to more than offset these cost pressures with price increases and our gross margin projections for this year and next reflect our confidence in our ability to continue managing costs.\nAt quarter-end, we owned or optioned approximately 74,500 lots.\nOur strong land position provides a firm foundation for outsized growth over the next several years, and we are currently benefiting from the significant percentage of our land that was put under control at pre-pandemic prices.\nNotwithstanding our 85% order growth this quarter, we met our Q2 guidance of 320 communities at quarter end.\nAnd while we project community count to drop to 310 at the end of our third quarter due simply to the timing of certain community sellouts and openings, we continue to project 340 communities at fiscal year-end.\nWe also reaffirm our guidance for 10% community count growth in fiscal '22 and this guidance is based solely on the land that we already control today.\nOur strategic expansion into new markets and products, especially the affordable luxury niche has positioned us well for growth.\nWe now operate in over 50 markets in 24 states with communities in both high growth and the high barrier to entry markets.\nWe offer the widest variety of homes in the industry appealing to growing families and affluent customers with our luxury move up homes as well as to millennials and first time buyers with our expanding affordable luxury business and for baby boomers, our active adult communities.\nThis product and market expansion has helped fuel the increase in our backlog to record levels.\nFor example, in the 12 months ended April 30, 2021, nearly 16% of contracts were from markets where we had no presence five years ago.\nThis is up from approximately 6% in the comparable period last year.\nFirst-time homebuyers who are primary buyers in our affordable luxury market accounted for 30% of our deliveries this quarter compared to 25% one year ago.\nWe have also seen our active adult segment strengthen with the rollout of vaccines.\nOrders in our active adult segment were up 135% compared to the second quarter of last year.\nWith our increased focus on capital efficiency, a record backlog and expanding gross margins, we are projecting ROE growth this year and next with fiscal year 2022 ROE expected to exceed 20%.\nWe believe this growth is sustainable due to actions we have taken in many aspects of our business.\nIt starts with the structural and permanent changes we have made to how we acquire and develop land.\nAs we have discussed over the past 18 months, we have totally revamped our land underwriting standards to inquire [Phonetic] higher, risk-adjusted returns.\nWe have also increased the amount of land that we acquired through more capital efficient structures like land banks, joint ventures, seller financing and other strategies that allow us to option more land.\nAt second quarter end, the percentage of lots that we optioned versus owned grew to 49% from 46% at the end of the first quarter and 40% one year ago.\nSince we have just about met our previously announced 50-50 target, we are now updating our target to 60% optioned land, and 40% owned.\nOur focus on ROE also includes our expansion into more affordable luxury homes, which can be built more quickly and efficiently on less expensive land.\nAdditionally, we are improving ROE by returning capital to shareholders through share repurchases and dividends.\nSince fiscal 2016, we have bought back approximately one-third of the outstanding shares at an average price of $37.20, and in April, we increased our quarterly dividend by 55% to $0.17 per share.\nThese actions reflect our confidence in the sustainability of our substantial cash flows moving forward.\nWe project approximately $750 million in cash generated from operating activities this year.\nOur highest priority for capital allocation continues to be investment in the growth of our business, whether through disciplined land buying or strategic homebuilder acquisitions followed by returning capital to shareholders and reducing our leverage.\nAs we enter the second half of our fiscal year, which historically has been when we generate the majority of our excess cash flow, we expect to be more programmatic in our stock repurchases.\nWe are also committed to improving the capital efficiency and earnings consistency of our City Living and Apartment Living businesses.\nWith respect to our city living urban condo business, we are very pleased with the renewed demand coming out of New York City where we signed 44 contracts in our second quarter, including 27 at 77 Charlton in West Soho, up from 33 totaled for all of the City Living business in the first quarter of 2021.\nGoing forward, we intend to develop most of our City Living buildings off balance sheet in joint ventures with project level financing.\nWe expect this to significantly reduce the amount of capital committed to the City Living business and improve return on equity.\nOur Apartment Living platform is performing very well.\nWe recorded a $10.7 million gain on sale this quarter and expect more through the balance of the year, but we recognize that this business can also be an inconsistent contributor to earnings and thus ROE.\nAs we have mentioned before, we are monetizing some of our land in this business through joint venture formations.\nAnd going forward, we intend to defer closing on any new land for the apartment business until third-party equity and debt capital is committed.\nAdditionally, we are likely to increase the number of projects that we sell at stabilization versus holding longer term.\nThese new strategies should make earnings more consistent and improve ROE.\nWe had a terrific quarter.\nOur business continues to fire on all cylinders, especially our production teams out in the field.\nWe delivered 2,271 homes at an average price of approximately $809,000 generating record second quarter homebuilding revenue of $1.84 billion.\nDeliveries were up 18% in units and 21% in dollars, compared to one year ago.\nOur second quarter pre-tax income was $169.8 million compared to $102.1 million in the second quarter of 2020.\nNet income was $127.9 million or $1.01 per share diluted compared to $75.7 million and $0.59 per share diluted one year ago.\nIt's important to note that our second quarter pre-tax and net income included a $34.2 million pre-tax charge or $0.20 per share after tax related to the early redemption of debt.\nWithout this one-time charge, earnings per share would have been $1.21.\nSecond quarter adjusted gross margin was 24.4% compared to 22.9% in fiscal year 2020 second quarter, and 100 basis points better than projected.\nThe outperformance was due primarily to pricing power, higher margin option sales, favorable mix, operational efficiencies and cost controls.\nLooking forward, we are now projecting adjusted gross margin for full year 2021 of 24.6%, up 30 basis points from prior guidance.\nDespite recent increases in material and labor costs led by lumber prices, we are confident in our adjusted gross margin projection for the second half of fiscal year 2021 and our ability to further expand it in fiscal year 2022.\nWith new home demand far outstripping supply, we have been able to push prices, which has more than offset cost increases.\nWe are intensely focused on our construction budgets and managing building costs.\nBefore we've build any of our homes, we have contracts in place for substantially all of our components and trades and we developed conservative budgets that include a significant contingency on top of our contracted cost.\nWhen input costs rise, and our trades request price increases, our first priority is to protect the margin of the homes in our backlog where sales prices have already been set, and to postpone negotiating those cost increases to the next home sold.\nWe have generally been successful with this strategy due to our strong relationships with our trades and our operating scale.\nWe'd also point out that our expansion into affordable luxury has made us a better, more efficient builder at all price points.\nThe efficiency required to compete at lower price points has driven us to optimize the designs of our homes and adopt more streamlined construction processes.\nWe've taken these practices and lessons learned to all of our product lines, which has made us a leaner, more efficient production focused builder.\nImportantly, as we have optimized our plans and refined choice for our customers, we have improved their customer experience.\nIn addition, we have been fine-tuning our strategy related to our spec homes.\nOn average, 15% to 20% of our deliveries each year are build on spec.\nOur strategy is now to delay selling these homes until we reach at least 50% completion, allowing us to maximize the price at which we sell these homes.\nAll of these factors give us confidence in the gross margin in our backlog and our projections for the remainder of this year and into next.\nTurning back to our second quarter results, as Doug mentioned, SG&A as a percentage of revenue in the quarter was 11.9% of revenues, 190 basis point improvement over the prior year period and 110 basis points better than our guidance.\nWe attribute this primarily to leverage resulting from higher revenue, the continuing impact of the cost savings initiatives taken in 2020, reductions in advertising spend and our relentless focus on controlling overhead.\nJoint venture, land sales and other income was $21.5 million in the second quarter compared to $16 million in the same quarter last year and our projection of $7 million.\nThe better than expected performance here was due to the sale of an apartment building in suburban Atlanta that had been projected for our third quarter.\nIn addition, our mortgage entitled operations were more profitable than projected.\nOur balance sheet remains strong.\nWe ended our second quarter with approximately $2.5 billion of liquidity including $715 million of cash and $1.79 billion available under our $1.9 billion revolving bank credit facility.\nIn the second quarter, we invested approximately $430 million in land and acquisition and development.\nWe also redeemed $250 million of our 5.625% notes due in 2024 in the quarter, which resulted in the $34 million charge I noted earlier.\nIn total, in the first half of fiscal year '21, we retired approximately $440 million of debt and have reduced our debt to capital ratio at quarter-end to 42.2% on a gross basis and 35.6% on a net basis, compared to 43.8% and 35.8% respectively at the end of the first quarter of fiscal year 2021.\nWe continue to target a net debt to capital ratio in the high 20% range by fiscal year-end.\nWe also continue to project approximately $750 million in cash generation from operating activities in fiscal year '21.\nAs Doug noted, we will continue to use our cash to invest in the growth of our business with excess cash returned to shareholders and used to further reduce our financial leverage, including repaying $410 million of our 5.875% public notes that are due in February 2022, when they become callable at par in mid-November '21.\nAs we look forward to the second half of fiscal '21, we are increasing our guidance for nearly all key metrics.\nWe now expect full-year deliveries of between 10,200 and 10,400 units with approximately 2,675 to be delivered in the third quarter.\nOur third quarter deliveries guidance reflects the slow COVID impacted sales environment from mid-March to the end of May in 2020.\nWe estimate an average delivered price for the full year of between $805,000 and $825,000 per home.\nThis is up $15,000 at the midpoint, compared to previous guidance.\nAverage delivered price for the third quarter is expected to be between $820,000 ad $840,000.\nAs I mentioned earlier, we project adjusted gross margin of 24.6% for the full fiscal year, up from our previous projection of 24.3%.\nWe expect adjusted gross margin to be approximately 24.8% in the third quarter, which implies a fourth quarter margin of 25.4%.\nWe expect our gross margin to grow further from Q4 in fiscal year 2022.\nAs Doug said, we have increased our projected return on beginning equity for fiscal year '21 by 570 basis points to 14.5% and we expect it to exceed 20% in fiscal year '22.\nWe expect full year interest in cost of sales to be approximately 2.4%, which is also what we expect in the third quarter versus 2.5% in fiscal 2020.\nAs a result of the debt reductions I discussed earlier, we expect this interest expense to continue to decline in fiscal 2022 and beyond.\nWe expect SG&A as a percentage of revenues to be approximately 11.8% for the full year and 11.6% in the third quarter.\nIn addition to revenue leverage and the ongoing benefit of past cost saving actions, we expect to benefit from lower sales commissions that we are now paying to outside brokers.\nWe expect community count to be 310 at the end of our third quarter and 340 at fiscal year-end with an additional 10% growth in community count by fiscal year-end '22.\nOur full year guide for other income, income from unconsolidated entities and land sales gross margin is now $110 million for the full year, up $30 million from our prior guidance with approximately $20 million projected for the third quarter.\nThe increase is primarily due to greater profitability in our mortgage and title operations along with gains we are projecting from the sale of an additional Apartment Living project this year.\nTo wrap it up, we continue to believe that with our strong land position, our plans to grow community count this year and next, and the wide variety of homes that we offer in 24 states and 50 markets, we are very well positioned to capitalize on the extraordinary demand we are seeing in the housing market.\nAnd with the structural changes we have made and continue to make in how we operate including our relentless focus on capital efficiency, returns and internal operating efficiencies.\nWe believe that our results will continue to improve in both the short and long term.\nBefore I open it up to questions, I want to remind all of you of our upcoming Virtual Analyst and Investor Day that we will be hosting next Wednesday, June 2nd starting at 11:00 AM Eastern Time.\nWe will showcase many of our team members, products and our communities, and you will become much more familiar with our operations and our culture and we hope you will come to understand what makes Toll Brothers such a special Company, and how much we have evolved in the past decade.\nI'm really looking forward to it and I hope you'll be able to join us on Wednesday.\nI'd also like to encourage you to take a look at our recently released ESG report, which is now available on our website.\nThis is our first report and it includes important information regarding the many initiatives we have taken with respect to ESG.\nWe couldn't have achieved these results without your hard work, dedication and commitment to providing our customers an experience unmatched in the homebuilding industry.\n", "role": "user" }, { "content": "home sales revenues were a q2 record $1.84 billion, up 21%.\nqtrly earnings per share $1.01.\nexpect continued margin improvement through second half of fiscal 2021 as well as in 2022.\nsees fy deliveries 10,200 - 10,400 units.\nsees q3 deliveries 2,675 units.\n", "role": "assistant" } ]

[ { "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 very pleased with our performance in the third quarter.\nDemand continues to be very strong.\nWe are benefiting from our strategy of expanding our product lines, price points and geographies as we continue to grow the business, drive price, expand margins and improve our capital efficiency.\nHome sales revenues of $2.23 billion were up 37% compared to the prior year period.\nAdjusted gross margin of 25.6% was up 170 basis points compared to last year.\nBoth our pre-tax income of $303.4 million and our earnings per share of $1.87 more than doubled compared to last year.\nWe signed 3,154 net contracts for approximately $2.98 billion, up 11% in units and 35% in dollars compared to the prior year period.\nThese were third quarter records in both units and dollars.\nIn addition, our contracts per community at 10.2 were 20% above last year and our highest third quarter ever.\nOur average selling price in the quarter was approximately $945,000, up $70,000 compared to the second quarter and up $163,000 year-over-year.\nThis increase in ASP shows the pricing power of our luxury business.\nThis strong demand has continued into our fourth quarter.\nWe've averaged over 300 non-binding deposits per week in the first three weeks of August, a pace that is consistent with May through July.\nNot surprisingly, our deposits were down 15% compared to the same three weeks last August when demand surged following the lifting of COVID lockdowns.\nHowever, compared to the same three weeks of August 2019, deposits were up 29%.\nIn some markets, demand still far outpaces supply, and we are limiting lot releases.\nIn other markets, we are seeing demand return to seasonal patterns.\nI want to remind you that in summer and fall of 2020, we, along with the rest of the industry, experienced a historic surge in demand and sales.\nFrom August 1 to September 15, 2020, the first half of our fiscal 2020 fourth quarter, net signed contracts were up 110% in units, and for the full quarter, they were up 68%.\nWe knew these growth rates would be unsustainable, and as a result, we expect our fourth quarter contracts to be down compared to last year.\nWhile year-over-year order declines may make headlines, they don't reflect the current state of this housing market, which remains very strong.\nIn the near term, our biggest challenge is managing industrywide supply and labor constraints that are extending delivery times.\nIn our third quarter, cycle times grew by about two weeks, pushing some anticipated third quarter deliveries into our fourth quarter.\nThis same pressure will apply to our fourth quarter.\nDuring the third quarter and into the start of our fourth quarter, we raised prices in most of our communities.\nJust this past Monday, we rolled out another nationwide price increase.\nThese increases have more than offset cost pressures we've experienced this year.\nIn light of the pricing embedded in our backlog and our focus on managing costs, we are confident that our gross margin in fiscal 2022 will significantly exceed the 25.6% margin we project for fiscal 2021's fourth quarter.\nIt is important to note that our customers are generally better positioned to absorb price increases due to their higher incomes, investment portfolios and the benefit of increased values in their existing homes.\nIn terms of demand across our markets, strength in the quarter was broad based across both geography and product type, with especially strong demand in our affordable luxury and active adult communities.\nWith our strategic expansion in the Sunbelt and Mountain states, we continue to benefit from migration out of higher-cost markets into more affordable markets, lessening the impact of affordability as prices have risen.\nOur backlog at quarter-end was a record in both units and dollars.\nBacklog was $9.4 billion on 10,661 units, up 55% in dollars and 40% in units compared to last year.\nAs we noted last quarter, we expect meaningful growth in revenue, gross margins, earnings and ROE in fiscal year 2022.\nWe reaffirm these expectations, including a return on beginning equity for fiscal 2022, well above 20%.\nThese expectations are driven not just by the strength of the housing market and our backlog, but also by the structural and permanent changes we have made to many aspects of our business, especially to how we acquire and develop land in a more capital-efficient manner.\nWe remain bullish on the long-term prospects for the housing market, which is supported by many factors, including the significant imbalance between the supply and demand of homes.\nOn the supply side, this imbalance is the result of a decade of underproduction of new homes.\nOn the demand side, millennials, who make up the largest generation of Americans, are forming families and entering their prime homebuying years.\nWe have also seen baby boomers and other active adults reenter the market.\nMany older workers are accelerating their plans, moving now and working virtually in places they might have planned to move to a few years later.\nInterest rates remain low, the resale market is tight, Americans have a much greater appreciation of home and the overall economy is improving.\nWe believe that all these factors will continue to contribute to strong and sustained demand for new homes in the years to come.\nAnd we are well positioned to capitalize on the opportunities this market presents.\nAt quarter-end, we owned or optioned approximately 79,500 lots.\nOur option lots represented 53% of our total lots controlled at third quarter end compared to 49% one quarter earlier and 43% one year ago.\nWe have already made significant progress in moving toward the 60% optioned and 40% owned goal we set last quarter.\nThis shift to more optioned land is a key part of our capital efficiency initiatives.\nThis land position provides the foundation for growth over the next several years, and we are currently benefiting from the significant percentage of our land that we acquired at lower pre-pandemic prices.\nAt quarter-end, we were selling from 314 active communities.\nWe continue to project growth to 340 communities at fiscal year-end and an additional 10% community count growth in fiscal 2022.\nThis guidance is based solely on land we already control today.\nWe also have the land under control today for meaningful further community count growth in fiscal year 2023.\nOur strategic expansion into new markets, new product lines, new price points and especially the affordable luxury niche has positioned us well for growth and is contributing to improvements in both our gross margin and our ROE.\nIn fact, our affordable luxury homes are generating gross margins that are comparable to our luxury homes.\nAffordable luxury comprised 44% of deliveries in the quarter ended July 31, up from 40% last year.\nFirst-time homebuyers who are the primary buyers in our affordable luxury segment accounted for 29% of our deliveries this quarter compared to 27% one year ago.\nOur affordable luxury product enables us to move into new markets and expand our presence in markets where we are already established.\nThese homes appeal to many millennials who are making their first home purchase and can be built up more quickly and efficiently and on less expensive land.\nJust last week we announced the acquisition of StoryBook Homes in Las Vegas.\nWith about 550 owned and controlled lots, this acquisition allows us to quickly expand our affordable luxury offerings in the Las Vegas market.\nStoryBook is a remarkably efficient builder, and we look forward to sharing lessons learned from its operations throughout the rest of our organization.\nWe continue to focus on additional ways to improve capital efficiency to bolster ROE.\nYesterday, we announced a new strategic partnership with Equity Residential, a world-class S&P 500 company focused on luxury apartment rentals to jointly acquire and develop sites into new rental apartment communities in key US markets of metro Boston, Atlanta, Austin, Denver, Orange County, Seattle and Dallas.\nOver the next three years, we expect Equity Residential to invest 75% of the equity for each selected project with our apartment living unit investing the remaining 25%.\nWe expect these projects to be financed with approximately 60% leverage.\nWe are targeting an initial minimum co-investment of approximately $750 million in combined equity between the companies or nearly $1.9 billion in total capacity, assuming the 60% leverage.\nWe will act as managing member of each project, overseeing approvals, design and construction and will receive development, construction management and financing fees as well as a promoted interest upon the sale of each property.\nEquity Residential receive fees for property management, leasing and marketing services, as well as construction oversight.\nWe've identified three land parcels that we already own to jump-start the venture.\nThe total anticipated cost of these three projects is approximately $242 million.\nThe ventures should allow us to develop more apartments with less capital, improving the capital efficiency of the apartment living business.\nWe also expect this venture to produce a more predictable stream of earnings from our apartment living business as we expect to sell each developed property at stabilization, in most cases to EQR.\nWe are very excited about this partnership with EQR and we hope we can expand on this relationship.\nWe are also looking at forming one or more additional programmatic relationships in markets and for products that are not covered by our agreement with EQR.\nWe expect that such a partnership would provide a similar capital efficient platform for the balance of the apartment living business.\nOperationally, we had another great quarter.\nOur production teams continued their solid performance as we managed through the labor and supply chain issues that have impacted homebuilders this year.\nWe delivered 2,597 homes at an average price of approximately $860,000, generating third quarter homebuilding revenue of $2.23 billion.\nDeliveries were up 28% in units and 37% in dollars compared to one year ago.\nWe met our revenue projections due to a higher average price of deliveries than anticipated.\nOur third quarter pre-tax income was $303.4 million compared to $151.9 million in the third quarter of 2020.\nNet income was $234.9 million or $1.87 per share diluted compared to $114.8 million and $0.90 per share diluted one year ago.\nThird quarter adjusted gross margin was 25.6% of revenues compared to 23.9% in fiscal year 2020's third quarter and 80 basis points better than projected.\nThe outperformance was due primarily to improved pricing power and favorable mix.\nSG&A as a percentage of home sales revenue in the quarter was 10.5% or 110 basis points better than our guidance.\nWe attribute this primarily to lower than expected selling and marketing expenses as well as continuing and permanent overhead cost controls.\nJoint venture, land sales and other income was $29 million in the third quarter compared to $3.6 million in the same quarter last year.\nOur projection was approximately $20 million.\nThe outperformance was driven by better than expected results from our mortgage operations and our apartment living operations.\nOur balance sheet remains strong.\nWe ended our third quarter with approximately $2.7 billion of liquidity, including $946 million of cash and approximately $1.8 billion available under our $1.9 billion revolving bank credit facility.\nIn the third quarter, we invested approximately $200 million in land acquisition and another $230 million in land development.\nDue primarily to our focus on acquiring land more efficiently, our land and development spend is projected to be slightly lower in fiscal 2021 than what we spent two years ago in fiscal 2019 despite our significant growth since then.\nThese structural changes in how we acquire land are also permanent and are contributing to a significant increase in return on equity in 2022 and beyond.\nWe expect to generate $750 million in cash from operating activities in fiscal year 2021.\nWe will continue to use our cash to invest in the growth of our business, return cash to shareholders and further reduce our debt, including retiring $410 million of our 5.875% public notes that are due in February 2022.\nWe intend to call these bonds in our fourth quarter and retire them at par in mid-November 2021.\nOur net debt to capital ratio stands at 33.1 at third quarter end, and we expect it to drop to the mid to upper 20% range at fiscal year-end.\nDuring the quarter, we continued our program of returning capital to shareholders through share repurchases and dividends.\nIn our third quarter, we repurchased approximately 1.7 million shares at an average price of $57.66 for an aggregate amount of $95.4 million.\nWe expect to repurchase a similar amount in our fiscal fourth quarter.\nIn April we increased our quarterly dividend by 55% to $0.17 per share.\nThese actions reflect our confidence in our business and in the sustainability of our substantial cash flows moving forward.\nTurning to fourth quarter and full year guidance.\nDue to the production delays impacting our industry, we now we expect full year deliveries of approximately 10,100 homes compared to the midpoint of our previous guide of 10,300 homes.\nThese 200 deliveries, which are sold and have substantial deposits from our buyers, are now projected to settle in the first quarter of fiscal 2022.\nSo we now project our fourth quarter deliveries to be approximately 3,450 homes.\nWe estimate an average delivered price for the fourth quarter of approximately $840,000 per home and approximately $830,000 for the full year.\nThis is an increase of $15,000 per home compared to our previous fiscal year guidance.\nWe are projecting a fourth quarter adjusted gross margin of 25.6% of revenues and a full fiscal year 2021 adjusted gross margin of 24.9%.\nThis is an increase of 30 basis points compared to our previous full year guidance.\nBased on the composition of our backlog, we are confident that our full year fiscal 2022 adjusted gross margin will significantly exceed the 25.6% margin we are projecting for the fourth quarter of fiscal 2021.\nOur confidence is based on several factors, the most significant of which is the higher prices that are embedded in our backlog, which is the result of the steady and significant price increases we've achieved over the year.\nDemand is allowing us to continue to push price in most of our markets.\nIn addition, we are intensely focused on our construction budgets and managing building costs.\nLike the entire industry, we are seeing cost pressures on material and labor.\nWe enjoy stronger relationships with our trade partners and have tremendous operating scale, which helps us to manage these costs.\nWe also continue to benefit from our long land position.\nThe land for most of the communities that we'll be delivering homes in fiscal 2022 was put under control prior to the pandemic at lower prices.\nTurning back to guidance.\nWe expect interest and cost of sales to be approximately 2.3% of home sales revenues for the fourth quarter and full year.\nThis full year guidance is 20 basis points better year-over-year and reflects the impact of debt reductions made earlier this year.\nWe expect our interest expense to continue to decline in fiscal 2022 as we further reduce our leverage.\nWe expect SG&A as a percentage of revenue to be approximately 9.8% in the fourth quarter and 11.3% for the full year.\nThis full year guidance is 50 basis points better than previously projected.\nAs Doug mentioned, we expect community count to be 340 at fiscal year-end, with 10% growth from there by fiscal year 2022.\nOur full year guidance for fiscal year 2021 other income, income from unconsolidated entities and land sales is now $140 million for the full year, with approximately $40 million projected for the fourth quarter.\nThis is a $30 million increase from our projection last quarter and is driven by more sales projected in our apartment living division.\nOur third quarter tax rate was 22.6%, which includes approximately $12 million in energy tax credits.\nOur fourth quarter effective tax rate is projected to be approximately 26% and our full year guidance is 24.6%, 90 basis points better than our previous full year guidance.\nTaking this all into account, we have increased our projected return on beginning equity for fiscal year 2021 to 15.9%, over 700 basis points better than fiscal 2020.\nAs Doug noted, we expected to exceed 20% in fiscal year 2022 and we believe our capital efficiency initiatives and the structural changes in our land acquisition strategy will keep it above 20% long-term.\nThey continue to demonstrate their dedication to taking care of each other and our customers, and for that, I am very grateful.\nNow let me open it up to questions.\nAndrea, ready to go.\n", "role": "user" }, { "content": "qtrly earnings per share $1.87.\nbacklog value was $9.44 billion at q3 end, up 55% compared to fy 2020's q3.\nsees deliveries of 3,450 units in q4.\n", "role": "assistant" } ]

[ { "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 includes projections for our business in the current or future quarters or fiscal years.\nIn addition as we continue to anniversary the onset of the COVID-19 pandemic, we will be providing financial information compared to FY '20, or pre-pandemic and FY '21 where applicable.\nFor a full reconciliation to corresponding GAAP financial information, please visit our website www.\nNow, let me outline the speakers and topics for this conference call.\nJoanne will begin with first quarter highlights for Tapestry and our brands, along with an update on our strategies for the holiday season.\nScott will continue with our financial results, capital allocation priorities and outlook going forward.\nFollowing that, we will hold a question-and-answer session where we will be joined by Todd Kahn, CEO and Brand President of Coach.\nAfter Q&A, Joanne will conclude with brief closing remarks.\nI'm pleased to report that the strong momentum we saw throughout last year has accelerated further in the first quarter with our sales now 9% above pre-pandemic levels.\nOur operating margin has improved 8.5 points compared to fiscal year '20 even as we've reinvested in key growth drivers for our business.\nThe fundamental changes we've made to the Acceleration Program to transform Tapestry and our brands have enabled our teams to act with agility to drive highly effective customer engagement and support increasing demand.\nThis performance also reaffirms our confidence in our differentiated platform.\nOur three unique brands are enabled by our talented teams, technology infrastructure, globally diversified supply chain and a 90% direct to consumer model.\nThese assets coupled with our growing data and consumer insights capabilities have fueled more targeted product development, more efficient pricing and more effective marketing, all of which support accelerating revenue higher gross margin, improving profitability and most importantly, stronger connections with our customers.\nNow turning to the highlights from the first quarter.\nWe continue to make meaningful progress against the Acceleration Program by sharpening our focus on the consumer leveraging data to lead with a digital first mindset and transforming Tapestry into a more responsive organization.\nFirst, we kept the consumer at the forefront of our strategy which drove further increases in customer recruitment.\nIn fact, we acquired approximately 1.6 million new customers across our direct channels in North America, an increase of 20% with growth in both stores and online.\nSecond, we leveraged our unique data and analytics capabilities to enhance engagement with our consumers.\nAs a result, retention improved year-over-year at each brand, including strong reengagement with the 4 million customers acquired last year in our North America digital channels.\nIn addition, we drove a higher number of repeat transactions and reactivated lapsed customers at an increasing rate.\nThese examples highlight the advancements we've made to utilize customer insight to increase engagement with our brands and drive higher lifetime value.\nThird, we enhanced our expertise in the digital channel, a margin accretive business across brands.\nWe've made significant investments including in talent to improve the customer experience and drive conversion.\nAs a result, we realized a sequential acceleration in e-commerce revenue trends in the quarter, a meaningful achievement as we lap difficult online comparisons from last year.\nSales rose close to 50% with digital penetration now nearly 4 times pre-pandemic levels.\nAt the same time, trends across our global store fleet again improved with operating margins that continue to exceed pre-pandemic levels.\nFourth, we further strengthened our positioning in China, a region that represent significant long-term opportunity supported by the rising middle class.\nWhile I'll cover resurgences during the quarter, impacted traffic across the industry, we delivered sales growth of over 25%.\nCompared to pre-pandemic levels, sales increased roughly 65% accelerating versus the prior quarter.\nAnd importantly, we grew on both the Mainland and with Chinese consumers globally, which increased at a low double-digit rate versus fiscal year '20.\nAnd fifth, we increased global AUR at each of our brands, reflecting traction with our customer base and the deliberate structural changes we've made to reduce promotional activity and improve assortment productivity.\nNow, let me touch on the first quarter highlights for each of our brands.\nCoach delivered another exceptional quarter, accelerating further often already strong base.\nRevenue rose 27% representing an increase of 15% compared to pre-pandemic levels or a 13 point sequential improvement.\nOperating margin expanded fueled by gross margin, which reached nearly 75%, the highest rate in any quarter in the last 10 years.\nThese results are a testament to the increasing brand heat and strong customer demand and engagement we're seeing at Coach, highlighting progress against the brand's fiscal year '22 growth strategies.\nFirst, we drove another quarter of AUR gains as we benefited from strengthening pricing power and our deliberate actions to improve SKU productivity and lower promotional activity.\nGlobally, Coach's handbag AUR increased high-single digits in both the retail and outlet channels.\nIn addition, we achieved the 10th consecutive quarter of AUR improvements in North America, which rose low double digits.\nThis continued improvement reflects our pricing power and strong engagement with consumers as we focus on enhancing customer lifetime value.\nIn the quarter, we acquired over 900,000 new customers across our North America channels, a high-teens increase compared to the prior year.\nAt the same time, purchase frequency rose versus last year.\nSecond, we continue to develop our iconic families to create a foundation for our product pipeline in future seasons with notable strength in key families such as Tabby and Rogue.\nIn addition, we are led by Stuart Vevers creative vision who is building on 80 years of iconic Coach codes, notably the Signature C and Horse and Carriage, both of which have supported increasing sales across all channels.\nThird, we increased investments and drove stronger returns in marketing, leveraging our data capabilities to drive outsized growth in our digital business.\nIn the first quarter, e-commerce increased over 60% representing a sequential improvement on both a one and two-year basis underscoring the significant opportunity that this channel represents.\nFourth, we again drove growth in China.\nSales rose over 25% compared to last year with improvements across stores and e-commerce as we diversify our approach to meet the customer where they want to shop.\nThis includes better leveraging existing platforms and establishing relationships with new online forums.\nAs we build on the strength of our brand and our positioning with the emerging middle class, we continue to see tremendous long-term potential in China.\nAnd fifth, we outperformed in the men's business, in keeping with our ambition to deliver $1 billion in sales in the category over our planning horizon.\nIn the quarter, we reinvigorated some of our iconic leather good silhouettes infusing camo print in retail and a basquiat collaboration in outlet.\nIn summary, Coach continues to stand out even amid external pressures.\nCustomers are engaging with the brand at an increasing rate given the traction of our product and marketing.\nWe're driving continued momentum as we enter the important holiday quarter.\nThe brand has proven that the foundational changes we've made are working and our results are sustainable.\nWe are increasingly confident in our ability to drive both revenue and profit gains for fiscal '22 and beyond.\nNow moving to Kate Spade.\nThe brand continued to make steady progress against the strategic priorities and outperformed internal expectations across the P&L.\nWe built on the increasing traction we're seeing with consumers which drove top line improvement during the quarter.\nImportantly, direct sales excluding wholesale increased mid-single digits versus pre-pandemic levels, a sequential improvement compared to the fourth quarter.\nThese results confirm that the growth strategies we're executing to return Kate Spade to its roots and improve the underlying foundation of the brand are taking hold.\nIn the quarter, we maintained a consumer-centric approach in our execution acquiring over 650,000 new customers across channels in North America, a significant increase over last year.\nAt the same time, we reactivated lapsed customers with outsized growth among those customers left over three years reflecting a renewed connection with our core customers and confirming the efforts to clarify the brand's positioning are gaining traction.\nSecond, we continue to build out our core product offering by amplifying key platforms.\nMost notably, the Knot and Spade Flower again outperformed expectations and act as strong foundations for future growth.\nThe strength of these recent introductions coupled with deliberate actions to improve full price selling and pull back on promotional activity fueled another quarter of global handbag AUR growth, which rose low double digits.\nThe progress we've made has increased our confidence in Kate Spade's pricing power as we deepen our connection with consumers and execute on our strategic agenda.\nThird, we drove brand heat by deploying marketing centered on our Kate Spade community and leaning into our DNA as a best-in-class storytelling brand.\nWe employed new ways of reaching our customers including a variety of social media platforms and reimagined an uniquely Kate Spade approach to New York Fashion Week, which featured a pop up Apple Orchard in downtown Manhattan incorporating our iHeart New York collection.\nFourth, we maximized our lifestyle positioning by continuing to strengthen the foundation of ready-to-wear, footwear and jewelry, all of which outperformed our expectations.\nOverall, the brand's differentiated and broad offering supports our goal to increase lifetime value as those customers buying lifestyle products tend to purchase more frequently and spend more.\nAnd fifth, we utilized our already strong digital platform to continue to grow e-commerce sales, which rose over 15% in the quarter as we test, learn and scale innovative and new ways to engage the consumer online.\nIn closing, we're leading with our values to strengthen the emotional connection with our passionate Kate Spade community.\nWe are excited by the brand's progress and our solid performance underscores that we have the right strategy in place.\nWe have significant [Technical Issues] in our ability to achieve $2 billion in revenue at high teens operating margins over the planning horizon.\nTurning now to Stuart Weitzman.\nThe brand has made continued progress toward achieving our overarching goal of restoring profitability in the current fiscal year.\nTo achieve this, we advanced our growth strategies in the quarter.\nFirst, we improved operating margin compared to prior year further increasing our confidence in a return to profitability this year.\nThis was driven by continued outperformance in high growth areas including digital and China.\nOur e-commerce channels rose over 30% globally driven by customer experience upgrade to improve conversion.\nAnd in China, a market that remains a significant opportunity for the brand, revenue increased over 25%.\nSecond, we recruited an increasing number of new customers compared to last year and drove higher retention rates overall.\nThe consumer remains at the forefront of our strategy as we capitalize on shifting market trends.\nMost notably, the return to in-person socialization and the growing need for occasion and dressy footwear.\nAt the same time our iconic collections continued to resonate.\nNotably, the Nudist [Phonetic] family, which brought an increasing number of new and younger customers to the brand.\nThird, we drove brand heat through a tailored offering supported by marketing actions to engage the consumer.\nStuart Weitzman's momentum was evidenced by a return to AUR growth which rose low double digits compared to prior year reflecting deliberate actions to lower promotional activity as well as select price increases, which we intend to continue on a strategic basis.\nThis was a key driver of the gross margin expansion of over 250 basis points.\nFourth, we strengthened our wholesale partnerships, specifically with key domestic full price partners resulting in high-teens growth in the channel.\nOverall, our solid execution is evidenced by our improving financial performance.\nWe're laser focused on the consumer by offering compelling product and marketing to enhance customer engagement and increase our productivity in key regions and channels.\nThis in turn will support our goal to restore profitability in fiscal '22.\nNow turning to the overarching strategies for the holiday quarter.\nThe consumer backdrop is healthy and our recent internal survey work in North America highlights for the handbag and footwear categories remained strong.\nWe're remaining nimble on keeping the customer at the center of our priorities.\nFirst, we are controlling the factors within our control and playing offense.\nWe've moved quickly and taken bold and deliberate actions to mitigate industry wide inventory constraints.\nWe're also messaging to customers earlier in the holiday season to elongate the shopping period and capture demand early.\nImportantly, we will be maintaining our disciplined around discounting and selectively increasing prices as we lead with messaging on innovation and value over price.\nSeparately, we are creating engaging omnichannel customer experiences as in-store traffic continues to improve and online engagement increases.\nAcross brands, we're employing exciting initiatives to surprise and delight consumers during this important shopping period.\nAt Coach, we've kicked off the holiday season in a truly iconic fashion with our recreation of Jennifer Lopez's All I have video, nearly two decades after the original, featuring our signature code.\nAt Kate Spade, we're creating magical holiday moment with our, To All a Sparkly Night collection which captures the sense that the little things can be life's biggest indulgences.\nAnd at Stuart Weitzman, our recently launched campaign featuring, Kate Hudson arrives just in time for the start of the holiday season as well as celebrations for our 35th anniversary.\nOverall, our first quarter results in the momentum we're delivering are evidence that our strategy, led by the acceleration program is working.\nWe've radically transformed our Company realizing material operating margin improvement while fueling investments in key growth areas of our business.\nWe're largely a direct-to-consumer business with a digital first mindset building a deeper understanding of our customers.\nWe're utilizing these capabilities, along with the additional benefits of our multi-brand platform to drive even further growth at Coach and accelerate the trajectory of both Kate Spade and Stuart Weitzman over our planning horizon.\nI'm encouraged by the growing vibrancy of each of our brands and the strengthening engagement with consumers, backed by the work of our talented and passionate teams.\nOur confidence is underscored by the stronger outlook for fiscal year '22 and additional shareholder return plans announced today.\nWe've entered the second quarter with momentum and have proactively put in place plans to deliver for our customers, this holiday season and into the New Year.\nWe are well positioned to capture market share at structurally higher operating margin in the years to come, creating significant value for all our stakeholders.\nWe delivered another quarter of high quality earnings results outpacing last year pre-pandemic levels and expectations.\nWe continue to execute against the strategies of our acceleration program building upon the foundational changes made in fiscal year '21 against a difficult backdrop.\nWe drove continued topline momentum and improved operating margin meaningfully fueled by gross margin expansion.\nTurning to the details of the first quarter.\nTotal sales increased 26% versus prior year and outperformed expectations.\nCompared to pre-pandemic levels, revenue rose 19% representing an 8 point acceleration compared to the prior quarter fueled by improvements across all channels, stores, digital and wholesale.\nBy region, revenue rose double digits versus last year in Mainland China, North America and Europe.\nImportantly, these regions improved on a two-year basis including relative outperformance of North America, which rose at a high-teens percentage compared to pre-pandemic levels.\nIn Mainland China, while there were pockets of COVID increases, overall momentum continued and in Europe, we realized improving trends as lockdown measures were lifted.\nMoving down the P&L, we expanded gross margin at each brand during the quarter.\nThese results reflect the continuation of the successful execution of our strategy as we maintain price discipline, improve SKU productivity and leverage our data analytics capabilities to more effectively tailor our product assortment and marketing messaging to the consumer.\nSG&A rose relatively in line with sales given the reinvestment of cost savings into the organic business, the prior year's atypical comparison due to COVID-19 and the impact from higher sales.\nTaken together, we achieved operating income growth and margin expansion in both Companywide and at each individual brand.\nEarnings per diluted share for the quarter was $0.82, an increase of 42% compared to the prior year and more than doubling pre-pandemic levels.\nNow turning to our balance sheet and cash flow as well as an update to our capital deployment plans, we ended the quarter in a strong position with $1.7 billion in cash and investments and total borrowings of $1.6 billion.\nAs such, we now expect to return approximately $1.25 billion to shareholders in the fiscal year, a meaningful increase compared to our previous outlook to return $750 million to shareholders in fiscal '22.\nThis return reflects approximately $1 billion of share repurchases in the fiscal year which consist of $600 million to complete our existing program inclusive of the 250 million of shares already repurchased in the first quarter and we expect to utilize approximately $400 million under our new program in fiscal '22.\nIn addition, our shareholder return plans continue to forecast approximately $250 million returned through our dividend program.\nOverall, the organic business momentum and the actions announced today underscore our commitment to capital allocation priorities.\nFirst, investing in the business to drive long term profitable growth.\nAnd second, returning capital to shareholders through dividends and share repurchases.\nIn addition, we still intend to repay our July 2022 bonds totaling $400 million by the end of the fiscal year.\nThese actions highlight our confidence in the strength of our brands, our ability to drive sustainable growth and our commitment to returning capital to shareholders.\nNow moving to our fiscal year '22 outlook.\nBefore turning to the specific details, I want to touch on the current state of the industry.\nThe external environment continues to be dynamic as consumer demand remained solid with supply chain headwinds are constricting inventory availability.\nWe certainly see the same dynamic within our business as demand for our brands remains robust.\nAs Joanne mentioned we've acted early and boldly to maintain the momentum we're seeing across each of our brands, while we're not immune to external factors nor can we predict future challenges that may come, the bold actions we're taking to secure supply along with our experience at reacting with agility to a constantly changing landscape over the last 18 months or so, it gives us confidence to increase our annual guidance.\nPlease note that all growth rates compared to prior year are on a comparable 52-week basis, excluding the impact of our 53rd week last year.\nSo let's unpack this increase in outlook.\nWe now expect revenue to approach $6.6 billion which would mark a record for the Company.\nThis represents a mid-teens increase compared to fiscal '21.\nOur outlook for operating income is now expected to grow at the high end of our previous growth expectation for a mid-teens increase compared to prior year resulting in modest operating margin expansion.\nThis contemplates modest gross margin pressure due entirely to the incremental freight investments in order to maintain product flow to meet strong consumer demand.\nThis pressure is expected to be most acute in Q2 and Q3.\nExcluding this additional freight impact of approximately 200 basis points, we are driving continued underlying gross margin expansion through lower discounting, improved SKU productivity along with price increases that will be implemented for the balance of the year across brands.\nIn addition, we now expect modest SG&A leverage for the fiscal year.\nWe continue to expect about $300 million in structural gross run rate expense savings as a result of the acceleration program.\nAs previously shared, we are reinvesting these benefits to fuel growth including $90 million in higher marketing spend or approximately 3 percentage points higher than fiscal '19.\nWe're also investing further in our digital talent and capabilities.\nNet interest expense for the year is expected to be $65 million and the tax rate is estimated at 18.5% assuming a continuation of current tax laws.\nWe're now forecasting weighted average diluted share count to be in the area of 278 million shares incorporating a planned $1 billion in share repurchases.\nSo taken together, we now expect earnings per share to be in the range of $3.45 to $3.50 incorporating the first quarter's outperformance and an approximate $0.05 benefit from additional share repurchases.\nWe continue to expect capex to be about $220 million for the year.\nOf this spend, we anticipate approximately 45% of it related to store development primarily in China, with the balance dedicated to our digital and IT initiatives.\nThis also includes initial investments related to the build-out of our new fulfillment center to support both growth and speed to market.\nFinally, we expect inventory levels to be up meaningfully during the balance of this year as we pulled forward receipts to match strong demand and face elongated lead times from supply chain pressures due to COVID disruptions.\nAs mentioned, we're taking deliberate steps to accelerate inventory growth and we feel comfortable in our inventory positioning to meet demand.\nGiven the dynamic environment and last year's atypical comparisons, we expect variability by quarter.\nTo provide some guardrails on Q2 specifically, revenue is forecasted to grow high teens, reflecting continued momentum on a two-year basis.\nOperating income is projected to be in the area of prior-year levels, which contemplates incremental airfreight of approximately $70 million in the quarter or roughly 350 basis points.\nIn addition, we have shifted the benefit from the reinstatement of GST into the second half of the fiscal year.\nAs a reminder, GST is expected to benefit the full year by almost 50 basis points.\nSo taken together while margin pressure is anticipated in the second quarter, our full year operating margin outlook remains unchanged as our underlying business momentum and price increases are estimated to offset cost and inflationary pressures.\nAs a result, earnings per share in Q2 is expected to be relatively in line with prior year.\nIn closing, we entered the fiscal year with strong momentum reflecting the benefits of the deliberate and decisive actions we've made under our Acceleration Program.\nWe're continuing to focus on what's in our control as we navigate a dynamic operating environment and we're taking bold steps to ensure that we can meet robust underlying demand for our brands without compromising our long-term operating margins that are already up significantly.\nWe're increasing both our fiscal year revenue and earnings per share guidance as well as our expected return of cash to shareholders.\nOverall, our strategy is working.\nI'm confident that we're in a position to create significant value for all our stakeholders in the years to come.\n", "role": "user" }, { "content": "q1 sales rose 26 percent to $1.48 billion.\nq1 non-gaap earnings per share $0.82.\ncompname announces board of director's approval of new $1 billion share buyback authorization.\n", "role": "assistant" } ]

[ { "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: tempursealy.com and filed with the SEC.\nI'll begin with a few highlights of our record third quarter financial performance.\nBhaskar then will review our financial performance in more detail.\nFinally, I will conclude with some comments on our building blocks for future growth.\nWe're pleased to report robust third quarter results.\nThe team continues to deliver strong results all around the world.\nIn the third quarter of 2021, sales grew 20% year-over-year, with strong performances across North America and the International segments and with growth across all brands, channels and price points.\nOur strong sales performance was driven by our company initiatives, strong demand for Tempur-Pedic products in the U.S. and a solid bedding industry backdrop worldwide.\nAdjusted earnings per share for the third quarter was $0.88, an increase of 19% versus the same period last year.\nI should also note that we've grown sales and adjusted earnings per share double digits for nine out of the last 10 quarters.\nI'd now like to highlight a couple of items from the quarter.\nThe addition of Dreams furthers our vertical integration and omnichannel growth strategies.\nWe are successfully integrating the business, and it is performing well.\nIt's ahead of its initial expectations, both from a top line and bottom line perspective.\nWe expect over time to leverage our combined track record of operational excellence to realize unbudgeted synergies, which will further drive profitability.\nSecond, consistent with our legacy of launching innovative products, we're excited to highlight some of our new products in North America and around the world.\nStarting with North America.\nWe plan to launch a Sealy mattress with a best-in-class pressure-relieving gel grid layer at a consumer-appealing mid-market price point designed to target the niche market of consumers looking for a nontraditional feel at a non-premium price point.\nWe're also planning to launch a Sealy branded eco-friendly mattress collection made with responsible sourced material.\nFurthermore, in early 2022, in addition to the emerging niche markets we plan to address, we are launching a new line of premium Sealy products targeted to a wide variety of customers, which includes a new lineup of industry-leading hybrids.\nThis new Sealy lineup is intended to extend the brand's leadership in the industry by offering superior support and new proprietary material.\nLooking ahead to late 2022, the team is also working on the next line of Stearns & Foster products.\nThese products are designed to further distinguish our high-end traditional Innerspring brand from the competition, and appeal to consumers that prefer a traditional Innerspring mattress.\nWhile Stearns & Foster is on track to have record sales this year, supported by a record amount of advertising dollars, we see ample opportunity to further expand consumers' awareness of this segment through the introduction of new products and continuing advertising.\nAs we've previously announced, we are launching a new line of Tempur products in our European and Asia-Pacific markets next year.\nThese new products will feature the innovative Tempur-Pedic technologies that experienced great success in the U.S. and will be sold at a wider price range compared to legacy Tempur International offerings.\nNext, I'd like to highlight our recent capital allocation activities.\nDuring the last 12 months, we've allocated over $1 billion in capital acquiring Dreams, repurchasing shares, paying dividends and investing in our ongoing operations.\nAt the same time, our robust earnings drove a reduction in our leverage ratio.\nIn the third quarter, we opportunistically repurchased $190 million of our shares, bringing our total share repurchase over the last 12 months to approximately $700 million at an average price of $36 per share.\nRegarding recent investments in the business, over the last 12 months, we've opened three new manufacturing facilities.\nAdditionally, we recently broke ground on our third domestic foam-pouring plant in Crawfordsville, Indiana, which is planned to be operational in 2023.\nAnd we're also expanding our manufacturing footprint within existing facilities and overall warehousing space in several locations.\nWe're investing to dramatically reduce our exposure to future supply chain disruptions by expanding our capacity to hold key chemical inputs and expand safety stock of certain products.\nThe operational investments we are making today are part of a broader strategy to expand our North American manufacturing capacity, which will allow us to service the long-term demand outlook that we see for our industry's leading brands and products.\nAs you know, Sealy and Tempur brands are currently ranked as number one and number two best-selling mattresses in the United States.\nThe next highlight is our worldwide wholesale business, which grew a robust 11% this quarter as compared to the same period last year.\nWe're pleased with these performances, especially given the strong prior year sales comp and the fact that we were unable to ship all of the market demand in the quarter.\nAs expected, our customers continue to be on allocation, and we exited the quarter with a record backlog.\nPost quarter end, the normal market seasonality has allowed us to make significant progress on working down our Sealy backlog.\nThus, we recently took customers off of allocation.\nUnfortunately, due to the tremendous demand for Tempur-Pedic products in North America and domestic supply chain issues, the backlog for Tempur-Pedic expanded in the third quarter.\nWe expect to work down this backlog in the fourth quarter and enter 2022 better positioned to fully meet consumers' demand.\nAcross both brands, our total backlog has increased from the end of the second quarter by about $100 million as of September 30, 2021.\nTurning to the final item I'd like to highlight.\nOur direct-to-consumer business had another record quarter, growing 79% over the third quarter of 2020 and growing 17% excluding the Dreams acquisition.\nWith this quarter's strong performance, our third quarter direct-to-consumer sales has grown a compound annual growth rate of 45% over the last five years.\nOn an annual run rate basis, our direct channel is now on track to generate over $1 billion of sales.\nOur companywide retail stores had a standout performance this quarter.\nThe Dreams stores and our legacy company-owned stores both drove double-digit same-store sales growth year-over-year.\nOur e-commerce operation also performed very well this quarter.\nWe continue to see robust sales growth driven by double-digit improvement in conversion and average order value.\nOur commitment to investing in the online presence of Tempur-Pedic brands is paying off.\nWhile we are pleased with our results, I should once again remind you that both our wholesale and direct sales in North America have been constrained in the quarter.\nThe supply chain constraints once again forced us to turn away business this quarter.\nWe estimate that it was about $100 million.\nConsidering this and the unrealized sales from our increased backlog, our sales could have been higher by over $200 million this period.\nTurning to our growth outlook and drivers.\nI'm pleased to reaffirm our expectations that 2021 sales will grow approximately 60% over 2019, a period not impacted by COVID.\nOur sales and earnings growth over the two-year period has significantly outpaced the overall industry.\nSo I'd like to take a moment to remind you what we said last quarter about the components of this growth.\nWe estimate about half of our two-year growth is attributable to our new retail partnerships.\nAnother 35% of our growth is derived from our M&A activities and share gains from previously untapped addressable markets.\nWe estimate only about 15% of our expected two-year growth comes from the broader industry.\nWe attribute our performance to our commitment to driving our four key initiatives: first, to develop the highest-quality bedding products in all the markets that we serve; second, promote worldwide brands with compelling marketing; third, optimize our powerful omnichannel distribution platform; and fourth, drive increased EBITDA and prudently deploy capital.\nOur clear long-term initiatives, robust free cash flow and solid balance sheet have supported the explosive growth that we've generated over the last two years.\nWe expect to drive future double-digit sales and earnings per share growth in 2022 and beyond.\nI would like to highlight a few items as compared to the prior year.\nSales increased 20% to over $1.3 billion.\nAdjusted EBITDA increased seven percent to $298 million.\nAnd adjusted earnings per share increased 19% to $0.88.\nAs expected, there were a few transitory items impacting this quarter's margins compared to the records in the same period last year.\nThese included: price increases to customers without margin benefit; operational inefficiencies to provide the best possible service to our customers while dealing with supply chain issues; and unfavorable brand mix, again, driven by supply chain issues.\nAs expected, we have been neutralizing the dollar impact to commodities through our pricing actions.\nOur gross margin was impacted as sales increased with no change in gross profit dollars.\nThis accounts for 350 basis points of the year-on-year change in consolidated gross margins for the quarter.\nThis rate dilution was expected, and the underlying margins for the business remain strong.\nI also want to reiterate our belief that driving incremental bottom line profitability is the best way of returning value to shareholders.\nNow turning to North America.\nNet sales increased 13% in the third quarter.\nOn a reported basis, the wholesale channel increased 12% and the direct channel increased 20%.\nNorth American adjusted gross profit margin declined 490 basis points to 39.9%.\nThis decline was driven by the previously mentioned items.\nWe have implemented several pricing actions over the last 12 months to offset rising input costs.\nWhile we have been neutralizing the dollar impact, commodity prices have increased beyond our prior forecast.\nWe expect additional pricing actions to offset these headwinds in 2022, although we will feel a bit of cost pressure in the fourth quarter.\nNorth America third quarter adjusted operating margin was 21.2%, a decline of 260 basis points as compared to the prior year.\nThis is driven by the decline in gross margin I previously discussed, partially offset by operating expense leverage.\nNow turning to International.\nNet sales increased 73% on a reported basis, inclusive of the acquisition of Dreams.\nOn a constant currency basis, International sales increased 72%.\nAs compared to the prior year, our International gross margin declined to 54.6%.\nThis decline was driven primarily by the acquisition of Dreams and pricing benefit without change in gross profit.\nOur International operating margin declined to 22.1%.\nThis decline, again, was driven by the acquisition of Dreams, the decline in gross margin and operating expense deleverage as costs in the current year have returned to a more normalized level.\nAs a multi-branded retailer, Dreams sells a variety of products across a range of price points.\nTheir margin profile is lower than our historical International margins, which is driving the major change in year-over-year margins internationally.\nExcluding Dreams, the underlying sales and margin performance internationally was in line with our expectations across both Europe and Asia Pacific.\nNow moving on to the balance sheet and cash flow items.\nWe generated strong third quarter operating cash flows of $285 million.\nWe are running very light on inventory, and we would expect that our inventory days would increase by the end of the year to support our expected sales growth in 2022.\nAt the end of the third quarter, consolidated debt less cash was $1.9 billion, and our leverage ratio under our credit facility was 1.7 times.\nOur strong financial performance and balance sheet resulted in positive signals from the capital markets.\nFirst, we received multiple rating agency upgrades during the quarter, resulting in the strongest credit ratings in the company's history.\nSecond, we issued an $800 million three 7/8% 10-year bond, which was significantly oversubscribed by the market.\nThis bond secures our long-term flexibility at historically low rates and resulted in record liquidity of $1.2 billion at the end of the third quarter.\nThis transaction will have the near-term impact of an incremental $7 million of interest in Q4 2021.\nWe are temporarily holding excess cash.\nAnd over time, these funds will be invested to drive incremental EPS.\nNow turning to our 2021 guidance.\nWe have updated our full-year guidance to reflect our third quarter performance, the expectations to reduce our elevated backlog and incremental costs we expect to incur to service our customers through the balance of the year.\nWe currently expect 2021 sales growth to exceed 35% and adjusted earnings per share to be between $3.20 and $3.30, for a growth rate of 70% at the midpoint.\nI want to note that this expectation on adjusted earnings per share includes a headwind of $0.03 from the increase in interest expense I noted before.\nConsistent with our prior quarter's commentary, we expect the fourth quarter will be unusually strong as we work off the large backlog we carried over from the third quarter and remove customers off allocations.\nWe expect this to result in sales and profits being higher in the fourth quarter than in the third quarter.\nAt the midpoint of our guidance, this implies EBITDA to grow over 30% in the fourth quarter versus the prior year Lastly, I'd like to flag a few modeling items.\nFor the full year 2021, we currently expect total capex to be between $140 million and $150 million, D&A of about $180 million, interest expense of about $62 million, a tax rate of 25% and a diluted share count of 204 million shares.\nI want to provide some additional details about our plans for future growth.\nWe have complementary building blocks in place that we believe will drive growth in our business for next year and beyond.\nThe first major building block is the launch of our new line of Tempur products in our European and Asia-Pacific markets.\nThe new products will have a wider price range with the super premium ASP ceiling maintained and the ASP floor expanding into the premium category.\nThis will allow us to reach a new segment of customers, substantially increasing our total addressable market internationally.\nWe will launch and invest in these new products across our international markets in 2022.\nSecond key building block is the continuation of our initiative to expand into the domestic OEM market.\nIn 2020, we recognized whitespace opportunity for Tempur Sealy in the OEM market and successfully generated $150 million in sales in our first year.\nWe believe that we can grow our sales by 400% to $600 million by 2025 due to continuing -- continuation of utilizing our best-in-class manufacturing and logistics capabilities to manufacture non-branded product.\nThis will allow us to earn our fair share of approximately 20% of the bedding market we believe is serviced by OEM.\nThis also is expected to decrease our cost per unit for our branded product as we spread fixed costs and drive more advantageous supply agreements.\nThe third building block of future growth is our expectation that we'll be able to service the entirety with a robust demand for our brands and products through the wholesale channel.\nThroughout 2021, because of supply chain issues, we've had to turn away new North American customers opportunities and have had our existing customers, including our e-commerce and retail operations, on allocation.\nBeginning in 2022, we anticipate being able to fully service demand and reengage with those new customers who approached us in the past about bringing on our brands and non-branded products.\nWe also expect to return to a normalized brand mix dynamics as supply chain improves for both Tempur and Sealy operations.\nThe fourth building block is continued expansion through our direct channel.\nAs I've said before, we believe that we have one of the fastest growing, most profitable direct-to-consumer bedding businesses in the world.\nWe expect both our e-commerce and company-owned stores to have robust growth opportunities going forward.\nOur e-commerce will continue to focus on converting customers interested in purchasing online directly from a brand, while our retail operations are driving both same-store sales growth and expansion of new store counts.\nWe currently operate over 600 retail stores worldwide and see opportunities to further increase our store count organically, about double digits annually for the next several years.\nThe fifth building block that will drive our future growth is continued investment in innovation.\nConsumers are growing -- consumers have a growing appreciation for the importance of sleep to overall health and wellness and, as a result, are increasingly searching for new solutions and technology to help improve their sleep.\nWe have a strong legacy of delivering award-winning products that provide breakthrough sleep solutions to consumers, backed by over a century of knowledge and industry-leading R&D capabilities.\nOur planned 2022 product launch simplifies how we will relentlessly drive innovation to continue to bring consumer-centric solutions to market.\nLastly, we expect to continue to execute on our capital allocation strategy.\nWe run a balanced capital allocation plan, which contemplates supporting the business, returning value to shareholders via share repurchase and dividend and, on opportunistic basis, acquiring businesses that enhance our global competitiveness.\nWe believe that our execution across these key building blocks will sustain double-digit sales and earnings per share growth in 2022 and position the company very well for sustainable long-term growth.\nIn closing, I briefly want to touch on ESG.\nWe've embedded environmental, social and government factors into our core strategy to help deliver long-term value.\nFor example, our new eco-friendly mattress collection I discussed a moment ago.\nWe made a responsibly sourced material.\nWe also expect our new U.S. foam-pouring facility to allow us to hire approximately 300 local employees.\nOur average annual salary for our U.S. manufacturing employees is above the national average, and it's about $42,000 a year.\nThis facility will also include state-of-the-art equipment, which is expected to improve energy efficiency on a per product basis.\n", "role": "user" }, { "content": "compname reports q3 adjusted earnings per share $0.88.\nq3 adjusted earnings per share $0.88.\nq3 sales rose 20 percent to $1.358 billion.\nsees fy adjusted earnings per share $3.20 to $3.30.\ntempur sealy - for full year, company currently expects net sales growth to exceed 35% over prior year.\n", "role": "assistant" } ]

[ { "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 believe this provides the best basis to measure the underlying performance of the business.\nActual results may differ materially due to a number of risks and uncertainties related to the COVID-19 pandemic and other risks discussed in reports and filings that we provide from time to time to regulatory agencies.\nYou may access these documents on our website or by contacting our investor relations department.\nDanish was tragically killed while on assignment in Afghanistan last month.\nThe impact of his loss has been significant for all of us, especially his Reuters News colleagues, and we will continue to honor his memory.\nNow we'll move to our financial performance for the second quarter.\nI'm pleased to report the momentum we saw in the first quarter accelerated in the second quarter.\nOur strong performance was above our expectations and positions us well for the second half of the year.\nThis strong performance reflects several things: First, the solidity of our franchises, our must-have products and our market positions.\nSecond, the strength of the information services market itself, which is presenting us with opportunities to expand our positions and further accelerate growth.\nThird, the realization and conviction by our customers that they need to reapportion their spend toward our products and solutions that can fit their workflow and drive growth and productivity.\nAnd finally, customers have growing confidence in both an improving economic environment and their own future prospects.\nSo we're pleased with our first half performance, which increases our confidence in our prospects for the second half of the year and for 2022.\nNow to the results.\nPrevailing tailwinds are playing to our strengths and contributing to strong revenue and sales growth.\nThe second quarter's total company organic revenue growth of 7% was the highest in over a decade, and the big three businesses also grew at 7%.\nThis revenue growth was mirrored by strong sales growth across the company as customers position themselves to meet expected demand.\nWe also continued to execute aggressively on our Change Program and achieved run rate savings of $90 million as of June 30th.\nThe program is on track and we will continue to ramp it up in the second half.\nGiven this strong first-half performance, we are raising our full-year guidance.\nWe now forecast total company organic revenue growth between 4% and 4.5% and organic revenue growth for the big three of between 5.5% and 6%.\nTotal company EBITDA margin is forecast to range between 31% and 32%.\nAnd the big three EBITDA margin is now forecast to be approximately 39%.\nAnd free cash flow is now expected to range between 1.1 and $1.2 billion.\nLastly, today, we announced a new $1.2 billion share buyback program.\nIf we are able to complete the buyback program this year, we will have returned over $2 billion to shareholders in 2021, including dividends.\nSecond quarter reported revenues were up 9% with organic revenues up 7%.\nRevenue growth was solid for each business segment, including strong growth from our Latin American and Asia and emerging markets businesses, which grew organically more than 20% and 10%, respectively.\nAdjusted EBITDA increased 5% and to $502 million, reflecting a margin of 32.7%.\nExcluding costs related to the Change Program, the adjusted EBITDA margin was 35.4%.\nThis strong performance resulted in adjusted earnings per share of $0.48 compared to $0.44 per share in the prior-year period.\nTurning to the results for the segments.\nAs I mentioned, the big three achieved organic revenue growth of 7% for the quarter, a very strong performance.\nLegal second-quarter performance was impressive with organic revenue growth of 6%, the highest quarterly growth since 2008, and building on 5% growth for the first quarter.\nThe U.S. legal market is quite healthy, particularly in small law, where sentiment continues to be strong as attorneys anticipate solid demand over the next 12 months.\nBut this strong growth isn't isolated to small law, it's across the business: small, mid, and large firms, government and across our product lines and geographies.\nFirst, Westlaw Edge continues to achieve strong sales growth and ended the quarter at 57% ACV penetration compared to 52% at year-end 2020.\nWe continue to forecast an ACV penetration rate between 50% -- between 60% and 65% by year end.\nSecond, Practical Law, as reported in the legal segment, continued its strong performance, growing double digit.\nWe forecast similar growth going forward, and we continue to invest in this key growth initiative.\nThird, our government business, which is managed within our legal segment, continues to see good momentum and grew 8% organically.\nWe forecast government's growth to accelerate in the second half of the year.\nAnd fourth, FindLaw and our businesses in Canada, Europe, and Asia all grew mid to upper single digit in the quarter.\nFinally, legal also achieved very strong sales for both the quarter and half year, recording double-digit recurring sales growth, reflecting the strength and health of the legal market and our customers' willingness to spend.\nTurning to the corporates business.\nOrganic revenues grew 4%.\nWe forecast revenues will accelerate in the second half of the year with healthy growth expected from our direct and indirect tax businesses, risk, the legal products sold into corporates and from Europe, Latin America, and Asia and emerging markets.\nTax and accounting's organic revenues grew 15%, benefiting from a 43% increase in transactional revenues, primarily driven by the year-over-year timing of individual tax filing deadlines.\nRecurring revenue growth was also strong at 9%.\nReuters News' organic revenues grew 6% in the quarter, a very good performance, driven by the professionals business, including strong Reuters events growth as it begins to recover from the negative impact from COVID-19 in 2020.\nAnd Global Print organic revenues also grew 6%, partly due to an easier prior-year comparable, but also attributable to a gradual return to office by our customers and higher third-party revenues.\nIn summary, it was a very strong quarter and our businesses are in a solid position.\nBut we take nothing for granted, and we still have much hard work to do in executing our Change Program.\nWith this in mind, I would like to express my gratitude to our employees, our colleagues for a strong first-half performance, which will allow us to intensify our investments in the health and growth of our businesses, enabling us to further support our customers in the second half and into next year.\nThe increase in our full-year 2021 organic revenue guidance puts us on a path to exceed our pre-COVID 2019 organic revenue growth rates for both total company and the big three.\nAnd it also increases our confidence to achieve our 2023 revenue growth target of 5 to 6%.\nOur confidence is also increasing as our legal business is now achieving 5%-plus organic growth.\nWe believe legal has multiple levers to pull to drive organic growth to between 5 and 6% by 2023.\nAnd the corporates segment is expected to build on its first-half 2021 results over the balance of this year.\nWe continue to forecast organic growth for corporates between 7% and 9% by 2023.\nAnd we forecast Tax & Accounting will achieve solid organic revenue growth this year and be able to achieve a growth of 6% to 8% by 2023.\nSo in closing, we're working to transform Thomson Reuters into a leading content-driven technology company.\nWe're making good progress, but we still have much to accomplish.\nWe're off to a strong start, and we're confident that 2021 is setting the foundation to position us to be able to consistently and sustainably drive strong operating and financial performance that builds value for our customers, colleagues, and shareholders for the long term.\nLet me now hand it off to Mike, who will discuss the second quarter's results in detail.\nAs a reminder, I will talk to revenue growth before currency and on an organic basis.\nLet me start by discussing the second-quarter revenue performance of our big three segments.\nOrganic revenues and revenues at constant currency were both up 7% for the quarter.\nThis marks the fourth consecutive quarter our big three segments have grown at least 5% and represents the highest growth for our big three segments in over a decade.\nLegal professionals revenues increased 7%, and organic revenues were up 6%.\nRecurring organic revenue grew 6%, and transaction revenues increased 14% due to our Westlaw, Practical Law, and government businesses.\nPlease note, 60% of Practical Law's revenues are recorded in the legal professionals segment and 40% is recorded in the corporates segment.\nWestlaw Edge continued to contribute about 100 basis points to legal's organic revenue growth while continuing to maintain a healthy premium.\nAnd Edge has now been adopted by all U.S. federal government courts, and by courts, in 44 states.\nOur government business, which is reported within Legal and includes much of our risk, fraud, and compliance offerings, had a strong quarter with total revenue growth of 10% and organic growth of 8%.\nIn our corporates segment, total and organic revenues increased 4%, led by recurring organic revenue growth of 5%.\nTransactions organic revenue grew 1% due to a difficult prior-year comparison when 4 million of onetime CLEAR revenue was recorded and did not reoccur this year.\nWe forecast corporates revenue to accelerate in the second half of the year.\nAnd finally, tax and accounting's total and organic revenues grew 15%.\nGrowth was driven by the Latin American businesses, audit solutions, which includes confirmation, and a 43% increase in transaction revenues resulting from the year-over-year timing of individual tax filing deadlines.\nI will remind you, last year, pay-per-return revenue shifted from the second quarter to the third quarter.\nNormalizing for this timing, organic revenues for tax and accounting were up 10% in Q2.\nMoving to Reuters news.\nTotal and organic revenues increased 6% primarily due to our professional business, which includes Reuters events.\nThis performance was slightly better than we had anticipated.\nAnd Global Print total and organic revenues increased 6% in the quarter.\nThis performance was better than expected, driven by higher third-party revenues for printing services and a gradual return to office by our customers.\nDespite this higher performance, we still forecast full-year revenues to decline between 4% and 7%.\nOn a consolidated basis, second-quarter total and organic revenues each increased 7%.\nBefore turning to profitability, let's look closer at recurring and transaction revenue results for the second quarter.\nStarting on the left side, total company organic revenue for the second quarter of 2021 was up 7% compared to a 2% decline in the second quarter of 2020 due to the impact of COVID-19.\nIf we look at Q2 2021 performance for the big three, you will see organic revenues increased 7%, a strong performance and well above the 2% performance in Q2 2020.\nTotal company recurring organic revenues grew 5% in Q2, 210 basis points above Q2 2020.\nAnd the big three recurring organic revenues grew 6%, which was above last year's second quarter growth of 4%.\nTurning to the graph on the bottom right of the slide, transaction revenues were up significantly year over year as the second quarter of 2020 was impacted by COVID-19, which affected our implementation services and the Reuters events business.\nWe continue to remain encouraged by the momentum in 2021, especially for recurring revenues, giving us confidence in the trajectory of the business and the sustainability of higher revenue growth beyond 2021.\nWe are also providing guidance for the third quarter given the various impacts related to COVID-19.\nStarting with the total TR chart on the top left, we estimate third-quarter total and organic revenues will grow between 3.5% and 4%.\nThe big three total and organic revenues are forecast to grow between 5% and 5.5% in the third quarter.\nBig three growth will be slightly depressed due to the timing of tax and accounting's pay-per-return revenues in 2020 that shifted 6 million from Q2 to Q3 due to the delay in the tax filing deadline.\nWe forecast third-quarter revenue growth of low-single digit for tax and accounting.\nOn a normalized basis, we expect revenue growth of mid-single digits for tax and accounting.\nMoving to Reuters news.\nWe forecast third-quarter total and organic revenues to grow between 2% and 3%, driven by all Reuters news business lines.\nFinally, Global Print third-quarter revenues are expected to decline between 5% and 8%, and we forecast full-year revenues to decline between 4% and 7%.\nTurning to our profitability performance in the second quarter.\nAdjusted EBITDA for the big three segments was 487 million, up 14% from the prior-year period, and the related margin increased 180 basis points due to strong margin improvement across each of the segments.\nThe strong EBITDA margin improvement for each of the three businesses was driven by higher revenue growth and a benefit from 2020 cost savings initiatives.\nI will remind you the Change Program operating costs are recorded at the corporate level.\nMoving to Reuters news.\nAdjusted EBITDA was 35 million, 10 million more than prior-year period, driven by revenue growth, 2020 cost savings initiatives, and timing.\nGlobal Print's adjusted EBITDA was 56 million with a margin of 37.9%, a decline of about 260 basis points due to higher costs and the dilutive impact of lower-margin third-party print revenue.\nSo in aggregate, total company adjusted EBITDA was 502 million, a 5% increase versus Q2 2020.\nThe increase resulted in higher revenues partially offset by Change Program costs, which I will address in a moment.\nThe second quarter's adjusted-EBITDA margin was 32.7% and was 35.4% on an underlying basis, excluding costs related to the Change Program.\nThis slide provides more granularity regarding our expectations for our reported adjusted-EBITDA margin for the full-year 2021.\nFor the first six months, total company adjusted-EBITDA margin was 34.1%, and the big three segment's adjusted-EBITDA margin was 40.5%.\nOn an underlying basis, excluding Change Program cost, total company adjusted-EBITDA margin was 35.7%.\nAnd as Steve mentioned, we are increasing our full-year total company guidance for adjusted-EBITDA margin to a range of 31% to 32%, and for the big three segments to approximately 39%.\nAnd while first-half performance is impressive, we continue to recommend you assess our adjusted-EBITDA margin on a full-year basis as we expect the margin to decline in the second half for several reasons.\nFirst, we expect to increase our investment in the Change Program, which will have a negative impact of between 150 to 200 basis points for the total company.\nSecond, we forecast additional business-as-usual investments outside of the Change Program in advance of 2022.\nFor example, we will invest more in go-to-market initiatives, enterprise technology, and data and analytics capabilities.\nThis will dilute the margin between 150 and 200 basis points for the total company and between 200 and 250 basis points for the big three segments.\nAnd finally, savings from the Change Program are forecast to provide a benefit to total company and big three adjusted-EBITDA margin of 100 to 150 basis points.\nWe believe we have good visibility into the levers at our disposal to achieve our updated full-year margin guidance and are confident in our ability to achieve our target of 31% to 32%.\nNow let me turn to our earnings per share, free cash flow performance, and Change Program cost.\nStarting with earnings per share.\nAdjusted earnings per share was $0.48 per share versus $0.44 per share in the prior-year period, a 9% increase.\nThe increase was mainly driven by higher adjusted EBITDA.\nCurrency had no impact on adjusted earnings per share in the quarter.\nLet me now turn to our free cash flow performance for the first half.\nOur reported free cash flow was 618 million versus 340 million in the prior-year period, an improvement of 278 million.\nConsistent with previous quarters, this slide removes the distorting factors impacting free cash flow performance.\nWorking from the bottom of the page upwards, the cash outflows from discontinued operations component of our free cash flow was 36 million more than the prior-year period.\nThis was primarily due to payments to the U.K. tax authority related to the operations of our former Refinitiv business.\nAlso in the first half, we made 28 million of Change Program payments, as compared to Refinitiv-related separation cost of 76 million in the prior-year period.\nSo if you adjust for these items, comparable free cash flow from continuing operations was 692 million, 311 million better than the prior-year period.\nThis increase is primarily due to higher EBITDA, favorable working capital movements, and dividends from our interest in LSEG.\nNow an update on our Change Program costs for the second quarter and the rest of 2021.\nLet me start by saying none of the annual estimates have changed from what we provided last quarter for the full year.\nSpend during the second quarter was within the range provided last quarter at 71 million, including 41 million of opex plus $29 million of capex.\nThis brings the first-half total spend to 91 million.\nWe now anticipate spending between 210 and 260 million in the second half, opex plus capex.\nSpend is forecast to step up related to cloud migration, streamlining internal systems, third-party contractors to support the Change Program, and higher capital expenditures.\nFor the full year, we expect Change Program spend, opex plus capex to be at the lower end of the range of 300 million to 350 million.\nAnd there is no change in the anticipated split of about 60% opex and 40% capex.\nWe will continue to provide quarterly updates on our Change Program spend as we move through the year.\nNow an update on our run-rate Change Program savings for the second quarter.\nIn the second quarter, we achieved 71 million of annual run-rate operating expense savings.\nThis brings the total annual run-rate operating expense savings up to 90 million for the Change Program.\nWe are currently on track with our run-rate savings expectations.\nAs a reminder, we anticipate operating expense savings of 600 million by 2023 while reinvesting 200 million back into the business for a net savings of 400 million.\nWe will continue to provide quarterly updates on our annual run-rate Change Program savings as we move through the year.\nAnd as Steve outlined, today, we increased our full-year outlook for revenue growth, margin, and free cash flow, which is reflected on the slide.\nLastly, we reaffirmed the balance of our full-year 2021 guidance, as well as our 2022 and 2023 guidance previously provided and we remain confident in achieving the targets for all metrics.\nSo, Sue, if we can have the first question please.\n", "role": "user" }, { "content": "compname reports q2 adjusted earnings $0.48/share.\nnew $1.2 billion buyback program announced.\nquarterly adjusted earnings per share $0.48.\nraised full-year 2021 total company and big 3 guidance for revenue growth, adjusted ebitda margin and free cash flow.\nreaffirmed its outlook for 2022 and 2023.\nchange program on track, achieved $90 million of run-rate operating expense savings through june 30.\nquarterly legal professionals revenues increased 7% (6% organic) to $673 million at constant currency.\nquarterly corporates revenues increased 4% (all organic) to $348 million at constant currency.\nquarterly tax & accounting professionals revenues increased 15% (all organic) to $197 million at constant currency.\nquarterly reuters news revenues of $168 million increased 6%, all organic at constant currency.\nquarterly global print revenues increased 6% to $147 million at constant currency.\nreuters events continues to hold all events virtually and continues to assess when in-person events can resume.\nglobal print's full-year 2021 revenues are forecast to decline between 4% and 7%.\nquarterly corporate costs at adjusted ebitda level were $76 million, including $41 million of change program costs.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined today by our CEO, Steve Hasker, and our CFO, Mike Eastwood.\nWe believe this provides the best basis to measure the underlying performance of the business.\nActual results may differ materially due to a number of risks and uncertainties related to the COVID pandemic and other risks discussed in reports and filings that we provide from time to time to regulatory agencies.\nYou may access these documents on our website or by contacting our investor relations department.\nI'm pleased to report the momentum we saw in the first half of the year continued in the third quarter.\nOur revenue and sales performance was strong, exceeded our expectations and position us well for Q4 and 2022.\nWe expect to close out the year on a strong footing and appreciate the efforts of our sales and our go-to-market teams.\nThis strong performance demonstrates our markets remain healthy and growing.\nAnd our products across legal, tax, corporates and risk, fraud, and compliance fit the needs of our customers.\nOur products enable them to effectively equip their professionals to better serve their clients.\nWe're also seeing improving customer engagement, including 8,000 registrations for our annual Legal, Tax and Corporates SYNERGY conferences around the world.\nThese conferences are our premier events for professionals who want to understand the future of their professions, learn the latest trends, and experience how tools and data-driven technology can transform their firms, organizations, agencies, and roles.\nOur leadership team, including the president of our Corporates business, Sunil Pandita; and the president of our Tax & Accounting Professionals business, Elizabeth Beastrom, will be joining nearly 2,000 of our customers for the upcoming SYNERGY conferences in November in Nashville.\nAnd as I mentioned last quarter, our customers continue to exhibit confidence in both an improving economic environment and in their own prospects.\nThis potent ecosystem plays to our advantage, and we will continue to capitalize on the opportunities we are seeing to drive growth and expand our positions.\nNow to the results.\nOur third quarter results reflected a standout performance.\nFour of our five business segments recorded organic revenue growth of 6%.\nThat performance resulted in total company organic revenue growth of 5%, putting us well above the 3.5% to 4% third quarter guidance provided in August.\nOur healthy markets are providing us with a tailwind.\nThat tailwind, coupled with our nine-month results, give us confidence in our prospects for the fourth quarter.\nAs a result, we've once again raised our full year revenue and free cash flow guidance.\nFull year total company organic revenue growth is now forecast to be between 4.5% and 5% and approximately 6% for the Big 3 businesses.\nFree cash flow for the year is now forecast to be approximately $1.2 billion.\nTurning to our Change Program.\nWe're making consistent progress as we work through -- as we work toward becoming an integrated operating company.\nAs of September 30, we recorded run rate savings of about $130 million, putting us on a path to achieve $200 million by year end.\nI'll remind you, our aggregate savings target is $600 million by the end of 2023, $200 million of which we plan to reinvest in the business.\nFinally, we were active during the quarter executing on the $1.2 billion share buyback program we announced in August.\nWe've already bought back $1.1 billion of stock, and we expect to complete the program before year end.\nSo given the progress we're making, we also reaffirmed our guidance for 2022 and 2023.\nNow to the results for the quarter.\nContributing to this performance was strong organic growth of more than 20% from our Latin American businesses and nearly 10% growth from our Asia and emerging markets businesses.\nAdjusted EBITDA declined 7% to $458 million due to costs related to the Change Program, resulting in a margin of 30%.\nExcluding Change Program costs, adjusted EBITDA margin was 33.5%.\nAdjusted earnings per share for the quarter was $0.46, compared to $0.39 per share in the prior-year period.\nTurning to the results by segment.\nThe Big 3 businesses achieved organic revenue growth of 6% for the quarter.\nLegal's third quarter performance was again strong with organic revenue growth of 6%.\nThis was Legal's second consecutive quarter of 6% growth, its highest quarterly growth rate in over a decade.\nThe U.S. legal market continues to be very healthy across the board for small, mid, and large-sized firms, as well as for government and across geographies.\nFor example, Westlaw Edge continues to achieve strong sales growth and ended the quarter with an annual contract value or ACV penetration of 60%, achieving our full year ACV penetration guidance.\nSecond, Practical Law, as reported in the Legal segment, continues its strong performance, again growing double digits.\nWe forecast similar growth in 2022 and continue to invest in this key legal workflow initiative.\nThird, our Government business, which is managed within our Legal segment, continues to perform and grew 10% organically.\nAnd fourth, FindLaw grew over 10%, and our Legal businesses in Canada, Europe and Asia all grew mid-single-digit in the quarter.\nLegal again achieved strong sales for both the quarter and nine-month periods, recording double-digit recurring sales growth, reflecting customers' willingness and ability to invest in productivity-enhancing products.\nTurning to the Corporates business.\nOrganic revenue growth increased to 6% from 4% in the first half of the year.\nThis improvement came from increasing demand from customers for our legal, tax, and risk products.\nReuters News organic revenues also increased 6%, the second consecutive quarter of 6% growth.\nThis was driven by the Professional business, which includes Reuters Events, which grew over 60% and continues to recover from the negative impact of COVID-19 in 2020.\nFinally, Global Print organic revenues declined 5%, less than expected, due to a continued gradual return to office by our customers and higher third-party print revenues.\nIn summary, it was another strong quarter, but we're taking nothing for granted.\nWe continue to invest in the businesses to enable us to further support our customers and properly position us for 2022 and beyond.\nWe still have much work to do in executing our Change Program, and we've assembled a talented team over the past 18 months who are working well together and clearly understand our goals and our timelines.\nI'm very pleased with our progress to date.\nOne additional comment regarding growth.\nAs you can see on this slide, momentum has been building for our Big 3 businesses over the past 11 quarters, which we believe will continue in the fourth quarter and into next year.\nI know many investors have historically viewed our markets as slower growing and have perceived our Legal and Tax businesses in particular as low single-digit growers.\nWe firmly believe that's not the case and, in fact, think that with successful execution of the Change Program, combined with appropriate investments, we can improve growth on a sustainable basis.\nOur markets are broad and dynamic and we have strong positions in the right subsegments.\nAlso, we have numerous levers to pull across our businesses.\nAnd we're investing in our strategic seven initiatives, which are performing well, and we expect they will continue to do so.\nThis confluence of factors places us in a position where we believe we can grow mid-single digit on a consistent basis over the cycle.\nThese factors position us well to achieve the upper end of the range of our 2022 revenue guidance of 4% to 5%.\nWe'll discuss our 2022 guidance further when we report our fourth quarter and full year results in February.\nLet me share an example of products that we believe will contribute to sustainable mid-single-digit revenue growth that I just referred to.\nFirst, you'll recall at our investor day, I discussed our goal of becoming a content-driven technology company, which includes excelling at product innovation and successfully integrating our products to provide customers with a seamless offering while delivering an excellent customer experience.\nWe expect this will further improve the customer loyalty and increase retention as we continually enhance our products, adding to organic growth.\nAnd at investor day, I highlighted seven strategic priorities reflected on this slide.\nThose include several of our legal workflow solutions: HighQ, Practical Law and Contract Express.\nLast month, we released the latest version of HighQ.\nThis release features key integrations with Practical Law, Contract Express, Elite 3E and Microsoft Teams and includes more than 50 enhancements and upgrades.\nIt's an example of an integrated workflow solution that customers are asking for.\nIt helps legal professionals and other corporate professionals working with the legal team to identify their work and improve client satisfaction.\nThis leverages Contract Express to automate and improve documents.\nIt enables lawyers to structure matters with Practical Law.\nAnd it integrates Elite 3E data with HighQ visualization tools to provide greater transparency around client spend and work in progress.\nThis is truly an integrated legal workflow solution and an example of content-driven technology.\nToday, these four legal products are growing double digit, comprising over 10% of total company revenue and are contributing to the improving growth in both our Legal and Corporates segments.\nHighQ is just one example of how we're building holistic solutions for our customers through greater product innovation and integration.\nI expect to share more such examples of product innovation with you in the coming quarters.\nTwo weeks ago, we announced the establishment of a $100 million corporate venture capital fund focused on the future of professionals.\nThomson Reuters Ventures will continue -- will concentrate on investments and portfolio support for companies building breakthrough innovations that will allow professionals to operate more productively and with greater insights.\nIt will focus across the legal, tax and accounting, risk, fraud, and compliance, and news and media markets to identify and support innovative companies to help our customers deliver more to their clients.\nThe fund will be overseen by our chief strategy officer, Pat Wilburn.\nIt's an example of how we're thinking about driving more innovation across the company and seeking new opportunities to further strengthen our businesses.\nAs a reminder, I will talk to revenue growth before currency and on an organic basis.\nLet me start by discussing the third quarter revenue performance of our Big 3 segments.\nOrganic revenues and revenues at constant currency were both up 6% for the quarter.\nThis marks the fifth consecutive quarter our Big 3 segments have grown at least 5%.\nLegal Professionals total and organic revenues increased 6% in the third quarter.\nRecurring organic revenue grew 6%.\nAnd transaction revenues increased 10% related to our Elite, FindLaw and Government businesses.\nWestlaw Edge added about 100 basis points to Legal's organic growth rate, is maintaining a healthy premium and is expected to continue to contribute at a similar level going forward.\nOur Government business, which is reported within Legal and includes much of our risk, fraud, and compliance businesses, had a strong quarter, with total revenue growth of 11% and organic growth of 10%.\nIn our Corporates segment, total and organic revenues increased 6% due to recurring organic revenue growth of 7% and transactions organic revenue growth of 2%.\nRecurring revenue was driven by Practical Law, Indirect Tax and CLEAR, as well as our businesses in Latin America and Asia and emerging markets.\nAnd finally, Tax & Accounting's total and organic revenues grew 6%, driven by 10% recurring organic revenue growth.\nGrowth was driven by the Latin America businesses and audit solutions, which includes Confirmation.\nTransactions organic revenue declined 9%, resulting from the year-over-year timing of individual tax filing deadlines.\nI will remind you, last year, paper return revenue shifted from the second quarter to the third quarter.\nNormalizing for this timing, organic revenues for Tax & Accounting were up 11% in Q3.\nMoving to Reuters News.\nThird quarter performance was strong, achieving total and organic revenue growth of 6%, primarily due to the Agency business and Professional business, which includes Reuters Events.\nIn Global Print, total and organic revenues declined 5%, at the lower end of the range we had forecast of minus 5% to minus 8%.\nWe expect full year Global Print revenue to decline between 4% and 6%.\nOn a consolidated basis, third quarter total and organic revenues each increased 5%.\nBefore turning to profitability, let's look closer at recurring and transaction revenue results for the third quarter.\nStarting on the left side, total company organic revenue for the third quarter of 2021 was up 5% compared to 2% in the third quarter of 2020 due to the impact of COVID.\nIf we look at Q3 2021 performance for the Big 3, you will see organic revenues increased 6% compared to 5% in the same period last year.\nTotal company recurring organic revenues grew 6% in Q3, 230 basis points above Q3 2020.\nAnd the Big 3 recurring organic revenues grew 7%, which was above last year's third quarter growth of 5%.\nTurning to the graph in the bottom right of the slide.\nTransaction revenues were up 8%, as the third quarter of 2020 was impacted by COVID, which affected our implementation services and the Reuters Events business.\nWe continue to remain encouraged by our momentum in 2021, especially for recurring revenues.\nThis gives us confidence in the trajectory of the business and sustainability beyond 2021.\nAs previously stated by Steve, we have increased our full year revenue guidance.\nStarting with the total TR chart on the top left, we now estimate full year total and organic revenues will grow between 4.5% and 5%.\nThis is an increase from the previous guidance of 4% to 4.5%.\nThe Big 3 total and organic revenues are now forecast to grow approximately 6% for the full year, up from the previous guidance of 5.5% to 6%.\nMoving to Reuters News.\nWe forecast full year total and organic revenues to grow between 3% and 5%, driven mainly by our Reuters Professional business.\nThis is an increase from the previous guidance of 2% to 3%.\nFinally, Global Print full year revenues are expected to decline between 4% and 6%, an improvement from our previous guidance of a 4% to 7% decline.\nTurning to our profitability performance in the third quarter.\nAdjusted EBITDA for the Big 3 segments was $468 million, up 7% from the prior-year period.\nThe strong EBITDA growth for each of the three businesses was driven by higher revenue growth and a benefit from 2020 cost-savings initiatives, offset by incremental business-as-usual investments in advance of 2022.\nAs discussed in the second quarter, we are investing more in go-to-market initiatives, enterprise technology, and data and analytics capabilities in the second half of 2021, with a greater concentration of spend in Q4.\nI will remind you, the Change Program operating costs are recorded at the corporate level.\nMoving to Reuters News.\nAdjusted EBITDA was $25 million, $2 million more than the prior-year period, driven by revenue growth.\nGlobal Print adjusted EBITDA was $52 million with a margin of 35%, a decline of about 600 basis points due to the decrease in revenues and the dilutive impact of lower margin third-party print revenue.\nSo in aggregate, total company adjusted EBITDA was $458 million, a 7% decrease versus Q3 2020.\nExcluding costs related to the Change Program, adjusted EBITDA increased 4%.\nThe third quarter's adjusted EBITDA margin was 30% and was 33.5% on an underlying basis, excluding costs related to the Change Program.\nNow let me turn to our earnings per share, free cash flow performance, and Change Program cost.\nStarting with earnings per share, adjusted earnings per share was $0.46 per share versus $0.39 per share in the prior-year period, an 18% increase.\nThe increase was primarily driven by a decrease in depreciation and amortization and lower income taxes, partially offset by lower adjusted EBITDA.\nFor the full year, we have decreased our tax rate guidance to between 14% and 16% due to favorable results from the settlement of prior tax years in various jurisdictions.\nCurrency had a $0.01 positive impact on adjusted earnings per share in the quarter.\nLet me now turn to our free cash flow performance for the first nine months.\nOur reported free cash flow was $1 billion versus $881 million in the prior-year period, an improvement of $120 million.\nConsistent with previous quarters, this slide removes the distorting factors impacting free cash flow performance.\nWorking from the bottom of the slide upwards, the cash outflows from the discontinued operations component of our free cash flow was $59 million more than the prior-year period.\ntax authority related to our former Refinitiv business.\nIn the first nine months, we made $94 million of Change Program payments as compared to Refinitiv-related separation cost of $87 million in the prior-year period.\nSo if you adjust for these items, comparable free cash flow from continuing operations was just shy of $1.2 billion, $327 million better than the prior-year period.\nThis increase was primarily due to higher EBITDA, favorable working capital movements, and dividends from our interest in LSEG.\nNow an update on our Change Program run rate savings.\nIn the third quarter, we achieved $42 million of annual run rate operating expense savings.\nThis brings the cumulative annual run rate operating expense savings up to $132 million for the Change Program.\nWe are forecasting to achieve $200 million of cumulative annual run rate operating expense savings by the end of this year.\nAs a reminder, we anticipate operating expense savings of $600 million by 2023 while reinvesting $200 million back into the business or net savings of $400 million.\nAchieving $200 million of operating expense savings by the end of 2021 would put us a third of the way toward our goal of $600 million of gross savings by 2023.\nWe will continue to provide quarterly updates on run rate Change Program savings.\nNow an update on our Change Program cost for the third quarter and the rest of 2021.\nSpend during the third quarter was $79 million, which included $53 million of opex and $26 million of capex.\nTotal spend in the first nine months of the year was $170 million.\nWe now anticipate opex and capex spending between $120 million and $150 million in the fourth quarter.\nSpend is forecast to step up related to cloud migration, streamlining internal systems, third-party contractors to support the Change Program and higher capital expenditures.\nFor the full year, we now expect Change Program opex and capex spend to be between $290 million and $320 million.\nThis is slightly lower than the previous guidance range of $300 million to $350 million.\nWe expect the lower spend in 2021 to carry over into 2022 as we are still expecting to incur approximately $600 million over the course of the program.\nWe will provide formal guidance on Change Program spend for 2022 when we report our fourth quarter results in February.\nThere is no change in the anticipated split of about 60% opex and 40% capex.\nWe will continue to provide quarterly updates on our Change Program spend.\nAnd as Steve outlined, today, we increased our full year outlook for total TR and Big 3 revenue growth.\nWe also increased our full year free cash flow guidance to approximately $1.2 billion.\nAdditionally, we have slightly lowered our guidance on Change Program spend for both opex and capex for 2021 and carry that underspend over to 2022.\nWe have also decreased our effective tax rate outlook, both of which are reflected on this slide.\nLastly, we reaffirm the balance of our full year 2021 guidance as well as our 2022 and 2023 guidance previously provided.\nAnd we remain confident in achieving the targets for all metrics.\nThat concludes our formal remarks on our third quarter results.\nSo if we could have the first question, operator, please?\n", "role": "user" }, { "content": "compname reports q3 adjusted earnings of $0.46/share.\nquarterly adjusted earnings per share $0.46.\nrepurchased $1.1 billion of company shares under $1.2 billion buyback program through october 31%.\nquarterly legal professionals revenues increased 6% (all organic) to $682 million at constant currency.\nquarterly tax & accounting professionals revenues increased 6% (all organic) to $175 million at constant currency.\nquarterly corporates revenues increased 6% (all organic) to $356 million at constant currency.\nquarterly reuters news revenues of $164 million increased 6%, all organic, at constant currency.\nquarterly global print revenues decreased 5% to $149 million, as expected, at constant currency.\nraised full-year 2021 revenue guidance.\nraised full-year 2021 free cash flow guidance to approximately $1.2 billion from $1.1 - $1.2 billion.\nreaffirmed full-year 2022 and 2023 guidance, with minor adjustments to 2022 change program spend.\nreaffirmed and increased part of its full-year outlook for 2021.\nsees fy 2021 total revenue growth of 4.5% - 5.0.\n", "role": "assistant" } ]

[ { "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 marks my final earnings call as head of investor relations for Thomson Reuters.\nI'm pleased to announce that we're also joined by Gary Bisbee, who will assume the role of head of investor relations for Thomson Reuters on March 1, in advance of my retirement in July.\nI couldn't be more pleased to place the baton in the very capable hands of Gary, who many of you already know.\nGary has covered Thomson Reuters on the sell side of Bank of America Securities for the past three years, and I know will do a very terrific job.\nAfter 18 years at Thomson Reuters, including 71 earnings calls and eight investor days, it's time for my next adventure and to spend more time with my wife and family.\nI truly enjoyed my time at TR, having worked with four CEOs, three CFOs and hundreds of very talented colleagues over that time.\nI also will miss speaking with many of you.\nYou challenged me, informed me and even entertained me a bit of times, and helped me do this job better.\nAnd for that, I am grateful.\nLastly, I've watched Thomson Reuters evolve to become one of the preeminent business information services companies in the world.\nAnd under Steve and Mike's leadership, I'm confident TR will continue to build on its progress, further strengthening its position for the benefit of our investors, customers and employees.\nAnd now, to the results.\nA lot to share today, so to enable us to get to as many questions as possible, we'd appreciate if you would limit yourselves to one question each and one follow-up when we open the phone lines.\nWe believe this provides the best basis to measure the underlying performance of the business.\nFor comparability, we will revise our 2021 results and during when we report our first quarter 2022 results in May.\nThese changes will not have any impact on our consolidated results.\nFirst, we will record intercompany revenues for Reuters News for content-related services that it provides to our legal professionals, corporates and tax and accounting professionals businesses.\nPreviously, these services have been reported as a transfer of expense from Reuters to these businesses.\nSo there is no impact on any segment's adjusted EBITDA.\nTwo, we will transfer $9 million of revenue from the corporates business to our tax and accounting business, where it will be managed and where it fits better.\nI'd like to direct you to the investor relations section of our website, where we posted a schedule that reflects our revised full year 2019, 2020 and 2021 results, as well as our revised 2021 quarterly results in the manner we will begin reporting in 2022.\nActual results may differ materially due to a number of risks and uncertainties related to the COVID impact and other risks discussed in reports and filings that we provide from time to time to regulatory agencies.\nYou may access these documents on our website or by contacting our investor relations department.\nI'm pleased to report the momentum we saw in the first nine months of the year continued in the fourth quarter.\nRevenue and sales growth were again strong, exceeded our expectations, and we closed out the year on a solid footing.\nThis performance has created momentum as we started 2022.\nAnd it has helped build our confidence as we work to achieve our 2022 and 2023 targets.\nWe are increasingly in a position of strength.\nSince March 2020, when COVID began to negatively impact the global economy, professional markets have remained resilient and continued to grow, helped by a significant global shift by our customers to upgrade legal, tax, and risk, fraud, and compliance products.\nCustomers also continued to exhibit more confidence in their own future prospects.\nAnd our products are proving well suited to enable our customers to effectively serve their clients, targeting investment in products that are driving faster growth and where we have strong positions in growing markets.\nThis dynamic enabled us to achieve 5% organic revenue growth for the full year 2021, the highest growth rate in over a decade, while also improving our underlying profitability and free cash flow.\nOur fourth quarter results reflect an improving performance.\nFour of our five business segments again recorded organic revenue growth of 6% or greater and total company organic revenues grew 6%.\nWe continue to make steady progress with our Change program as we transform to a content-driven technology company.\nAnd we have achieved over $200 million in savings thus far, one-third of our $600 million target.\nWe also achieved all of our 2021 guidance targets that we increased throughout the year.\nGiven the momentum in the business and our growing confidence, today, we increased our 2022 and 2023 guidance from what we provided at this time last year.\nNow, for the results for the quarter.\nFourth quarter reported and organic revenues were up 6%, attributable to strong results from the Big 3 businesses in Reuters.\nAnd similar to the last quarter, this performance included strong organic growth of more than 20% from our Latin American businesses and nearly 10% growth from our Asia and emerging markets businesses.\nAdjusted EBITDA declined 14% to $452 million due to cost related to the Change program, higher performance bonus expense and a discretionary investment of $25 million to better position the business for 2022, which Mike will discuss.\nThis resulted in a margin of 26.4%.\nExcluding Change program, Costs, adjusted EBITDA margin was 31.1%.\nAdjusted earnings per share for the quarter was $0.43 compared to $0.54 per share in the prior year period.\nThe additional $25 million we invested in the quarter lowered adjusted earnings per share by $0.04.\nTurning to fourth quarter results by segment.\nThe Big 3 businesses achieved organic revenue growth of 7%, reflecting strength across each of the businesses.\nU.S. legal market was very healthy throughout 2021.\nAnd our performance benefited from that dynamic.\nLegal's fourth quarter performance was again impressive with organic revenue growth of 6%, the third consecutive quarter of 6% growth.\nFull year revenue growth was also 6%, the highest annual growth rate since 2008.\nSales was strong throughout the year, including Q4.\nWe exited the year in a good position, recording double-digit recurring sales growth in Q4, reflecting customers' willingness to invest in productivity-enhancing product.\nFor example, Westlaw Edge continued to achieve strong sales growth in the end of the quarter with an annual contract value, or ACV, penetration of 65%, achieving the top end of our guidance with more opportunity in 2022 with a target of 70% to 75% penetration and the expected launch of Edge 2.0.\nSecond, practical law, as reported in the Legal segment, had a terrific quarter and year, growing mid-teens in both periods.\nWe forecast another strong performance in 2022 for practical law as we continue to invest in this key legal workflow initiative.\nThird, our government business, which is managed within our Legal segment, grew 7% organically in Q4 and 9% for the year and achieved strong sales in Q4, setting it up well for strong growth in 2022.\nAnd fourth, our Legal businesses in Canada and Asia grew double digits in the quarter while Europe grew mid-single digits.\nTurning to the corporates business.\nOrganic revenue growth continued to accelerate and was up 7% from 6% in Q3 and 4% in the first half of the year.\nThis improvement came from increasing demand for customers for our legal, tax and risk products.\nAnd tax and accounting had a terrific quarter and year with organic revenue growth of 9% for both periods and strong Q4 sales.\nReuters News organic revenues increased 12% in Q4 with growth across all of the business lines, particularly the professional business, which includes digital advertising, custom content and Reuters Events, which continues to recover from the negative impact of COVID-19 in 2020.\nAnd finally, global print organic revenues declined 4%, more than expected due to a continued gradual return to office by our customers and higher third-party print revenues.\nSo in summary, we're very pleased with our results, and we're very excited about the momentum we're building.\nWe expect further improvement to our performance this year as we invest to further strengthen our positions across the business segments.\nAdjusted EBITDA declined slightly and was just shy of $2 billion due to cost related to the Change program and higher performance bonus expense, resulting in a margin of 31%.\nExcluding Change program costs, adjusted EBITDA margin was 33.9%, about 100 basis points higher than 2020.\nAdjusted earnings per share for the year was $1.95 compared with $1.85 per share in the prior year.\nNow, let me discuss several of the key contributors to our accelerating growth and improving prospects.\nDuring our investor day in March last year, I shared with you that we're investing in seven strategic growth priorities with the Big 3 segments.\nThese businesses grew 6.5% on a combined basis in 2021 with several growing double-digit and our foundational Westlaw product up 4%.\nWe continue to believe that our opportunity is about powering the world's most important professionals.\nAnd we're helping forge their future through digital automation, augmentation and collaboration, powered by a combination of unique content, world-class AI and machine learning and best-of-breed workflow software, and these products do precisely that.\nAgainst this frame, we'll continue in investing heavily in these strategic priorities, and we'll continue to shift the proportion of capital investment allocated to these initiatives.\nThese investments are expected to continue to help accelerate organic growth and enable us to achieve our revenue growth target of 5.5% to 6% in 2023.\nM&A is also expected to play an important role in accelerating our organic growth and priorities.\nAnd we have an active pipeline of potential future acquisitions across our core segments.\nAdditionally, we recently launched our new Thomson Reuters venture fund, which will invest up to $100 million of seed funding to start-up companies to cultivate innovation and expand our M&A pipeline.\nLet me finish on the financials for full year by noting that we met or exceeded each of our 2021 guidance metrics, which reflects the resilience of the business and the visibility we have in our businesses and markets.\nI would now like to update you on the progress related to our Change program, including highlighting the progress from our product and innovation teams.\nYou will recall, I presented this slide at our investor day last year.\nAnd it's as relevant today as it was then.\nWe continue to benefit from fundamental and prevailing tailwinds due to increasing legal, tax and regulatory complexity, which favors business information services markets and providers.\nAnd as we enter the third year of the pandemic, its lasting impact on the market segments we serve is becoming clearer.\nDigital transformation has accelerated, driven by virtual working and client demands to engage digitally with the firms and departments that serve them.\nIt's unlikely to be a passing fad.\nHybrid and virtual working is here to stay, which is increasing customer expectations of digital experiences.\nAnd demand for content-enabled, cloud-based, AI-powered solutions that drive professional efficiency and effectiveness continues to grow.\nHesitation to embrace new technologies in our core -- in our more traditional customer segments is giving way to an appreciation of the benefits to be gained from doing so.\nAnd our goal of becoming a content-driven technology company includes excelling at product innovation and successfully integrating our products to provide customers with a seamless offering while delivering an excellent customer experience.\nWe believe this approach will further improve customer loyalty and increase retention as we continually enhance our products, adding to organic growth.\nOur Change program is targeted at achieving these objectives.\nAnd we're making good progress.\nLet me share several examples of that progress.\nI won't take you through each of the items on this slide.\nRather, I want to highlight the progress we've made last year in transforming to a more integrated, simple, agile company.\nWe are reducing complexity in our operations and technology group, which is critical for us to achieve the Change program goals and margin targets.\nWe've made significant progress, which you can see on this slide, including 37% of our revenue is now on a cloud solution, and we're on track to achieve our target of 90% of our revenue available in the cloud by the end of 2023.\nSMB digital sales increased to 29% as a percentage of total sales.\nImproving our internal process within order-to-cash has reduced customer-facing incidents, invoice rework and have brought together our product, content and editorial strategies to improve customer delivery and drive efficiencies.\nEach of these achievements are critical if we are to simplify and improve the customer experience we provide.\nWe also reduced our global footprint of office locations from 102 to 46 and our call centers from 99 to 77.\nAnd one additional point here.\nTalent is key to completing our initiatives.\nAnd our goal is to build the best team in business information services by developing and attracting top global talent and delivering a differentiated employee experience.\nOver the past two years, we have brought in new key talent into our organization within product, engineering, marketing, data and analytics, design, operations and technology, among other key areas, adding talent with different perspectives and approaches, which have complemented the skills and experiences of existing leadership.\nI'm very, very pleased with the progress we're making.\nA few additional points regarding the Change program.\nWe made progress toward shifting customers to a more digital, automated experience with the launch of self-serve capabilities and automated tools for support.\nDelivery of the customer experience of the future is underway.\nAnd our goal remains to create fast, frictionless, connected, transparent and personalized customer experiences.\nOur key areas of focus continue to be: First, a digital-first approach for small customers.\nSecond, a 360-degree view of the customer.\nThird, simplified and standardized commercial terms, billing processes, and customer support.\nFourth, seamless digital product trials and digital purchasing.\nAnd fifth, data-driven and AI-powered sales and marketing.\nWe expect these changes to redefine our customer experience to match their expectations by the end of 2023, by which time a large portion of customer-facing sales, sales operations and support could be digitized and automated.\nThe impact of this should be twofold.\nFirst, we believe delighting our customers will translate to improved Net Promoter Score, leading to improved retention and new sales opportunities.\nAnd second, decreasing the cost to serve customers enables us to reallocate funds to pursue new organic growth opportunities, improving our agility to test new product ideas quickly with customers, which we believe would lead to further improvements in the top and bottom lines.\nSo let me now turn to product innovation.\nLast year, we ramped up our focus and our investments in product innovation, and we will continue to do so.\nWe expect new products and product enhancements will be a key lever to accelerate revenue going forward.\nAnd our product development teams are making good progress.\nEntering 2022, the product organization is prioritizing resources where we can build and maintain leadership positions and support fewer products, a shift from our historical approach of making small investments in many products.\nThe organizational design model enables us to work as a better integrated, more effective team, moving from an organization with data to a data-driven organization.\nOur content is a significant competitive advantage and differentiates us against our key competitors.\nThe new product organizational structure we formed last year positions us to achieve greater success by leveraging that valuable content, enriching it with world-class AI and machine learning and best-of-breed software and delivering it in the cloud.\nInvesting in an improved user experience across our products is another important priority so that our customers can interact with our content with minimal points of friction.\nAnd we're increasing investments in our people, as well as our technology and product organizations to expand and accelerate innovation and speed to market.\nWe believe this will enable us to continue to be leaders within our core market segments and allow us to expand into adjacent market opportunities.\nAnd lastly, here are some examples of products and initiatives in which we're investing that are contributing to higher organic growth.\nPractical law and indirect tax, two of our strategic seven initiatives, released new and enhanced product modules last year, which were well received by customers.\nAnd we expect they will again contribute to higher organic revenue growth in 2022 and beyond.\nWe also made good progress last year forming a centralized partnership team, led by our corporates group, which we are seeing good traction having signed partnership agreements with Oracle, SAP, AWS, and Alteryx.\nAnd in 2021, we accelerated the work we're doing to provide our content and workforce solutions to customers via our APIs.\nFor 2022, we'll accelerate and expand our API ecosystem, where we can improve the experience for both existing and new customers.\nWe're confident this will open up new channels, new business models and new product offerings and will help grow our partner ecosystem.\nAnd as our capabilities surrounding APIs continue to grow, it will enable us to further integrate our best-in-class content and solutions into our customers' workflows, contributing to our growth.\nI am very pleased to report that given the positive trajectory of the business, we're increasing our revenue, adjusted EBITDA margin and free cash flow guidance from that which we provided at investor day in March 2021.\nWe now forecast total company organic revenue growth of approximately 5% for 2022 and 5.5% to 6% for 2023.\nLet me remind you that 2021's organic revenue growth of 5% included about 100 basis point benefit from easier year-over-year comps related to COVID-19 items in 2020.\nBig 3 organic revenue growth is forecast between 6% and 6.5% in 2022 and 6.5% to 7% in 2023.\nWe forecast an adjusted EBITDA margin of 35% for 2022 and between 39% and 40% for 2023.\nAnd free cash flow is now forecast at about $1.3 billion for 2022 and between $1.9 billion to $2 billion with free cash flow per share between $3.90 and $4.10 for 2023.\nI'm confident we'll achieve these higher targets.\nAs a reminder, I will talk to revenue growth before currency and on an organic basis.\nLet me start by discussing the fourth quarter revenue performance of our Big 3 segments.\nRevenues were up 7% organically and at constant currency for the quarter.\nThis marks the sixth consecutive quarter our Big 3 segments have grown at least 5%.\nLegal professionals' total revenues increased 5% and organic revenues increased 6% in the fourth quarter.\nRecurring organic revenue grew 6% and transaction revenues increased 6%.\nFourth quarter organic revenue growth was driven by practical law, Elite, FindLaw and our government business.\nWestlaw Edge added about 100 basis points to Legal's organic growth rate, is maintaining a healthy premium and is expected to continue to contribute at a similar level going forward, supported by the planned release of Edge 2.0 during the second half of this year.\nOur government business, which is reported within legal and includes much of our risk and compliance businesses, grew 7% for the quarter and 9% for the year and exited Q4 with strong sales and good momentum entering 2022.\nQuarter-to-quarter performance can vary for this business, given the government contracting process, project work, and fiscal year funding from the various agencies.\nWe believe 2022 will be another year of healthy revenue growth, supported by strong Q4 2021 sales.\nIn our corporates segment, total and organic revenues increased 7% for the quarter due to recurring organic revenue growth of 7% and transactions organic revenue growth of 4%.\nRecurring revenue was driven by clear, practical law, indirect tax and legal software, as well as our businesses in Latin America.\nAnd transactions organic revenue increased 10%.\nMoving to Reuters News.\nFourth quarter performance was very strong with total and organic revenue growth of 12%.\nReuters achieved growth across all business lines, including the bounce-back in the Events business as it continues to recover from the negative impact from COVID in 2020.\nIn global print, total and organic revenues declined 4%, better than expected.\nOn a consolidated basis, fourth quarter total and organic revenues each increased 6%.\nBefore turning to profitability, let's look closer at recurring and transaction revenue results for the fourth quarter.\nStarting on the left side, total company organic revenue for the fourth quarter 2021 was up 6% compared to 2% in the prior year period, which was impacted by COVID.\nFourth quarter 2021 performance for the Big 3 was strong with organic revenues up 7% compared to 5% in the same period last year.\nThis was partly driven by strong performance in the corporates segment, which grew 7% organically compared to 3% in Q4 2020.\nTotal company recurring organic revenues grew 6% in Q4, 110 basis points above Q4 2020 with Big 3 recurring organic revenues up 7%, above last year's fourth quarter growth of 6%.\nTurning to the graph on the bottom right of this slide.\nTransaction revenues in Q4 were up 16% compared to the prior year period, when COVID affected our implementation services and the Reuters Events business.\nWe continue to remain encouraged by our momentum in 2021, especially for recurring revenues.\nThis gives us confidence in the trajectory of the business and our ability to achieve our 2022 growth targets.\nTurning to our profitability performance in the fourth quarter.\nAdjusted EBITDA for the Big 3 segments was $488 million, down 2% from the prior year period, driven by higher performance bonus expense.\nFourth quarter costs also included a discretionary investment of $25 million related to go-to-market initiatives, product development initiatives and data and analytics tools to support the customer experience to better position us for 2022.\nI will remind you the Change program operating costs are recorded at the corporate level.\nMoving to Reuters News.\nAdjusted EBITDA was $15 million, $9 million more than the prior year period, driven by revenue growth.\nGlobal print's adjusted EBITDA was flat at $61 million with a margin of 35.9%, 130 basis points higher than Q4 2020.\nSo in aggregate, total company adjusted EBITDA for the quarter was $452 million, a 14% decrease versus Q4 2020.\nExcluding costs related to the Change program, adjusted EBITDA increased 1%.\nFourth quarter's adjusted EBITDA margin was 26.4% and was 31.1% on an underlying basis, excluding costs related to the Change program.\nFor the full year, total company adjusted EBITDA margin was 31%.\nExcluding costs related to the Change program, full year adjusted EBITDA margin was 33.9%.\nNow, let me turn to our earnings per share and free cash flow performance.\nStarting with earnings per share, adjusted earnings per share was $0.43 per share versus $0.54 per share in the prior year period.\nOf note, fourth quarter adjusted earnings per share was reduced by approximately $0.04 due to the additional $25 million investment in Q4.\nLet me now turn to our free cash flow performance for the full year 2021.\nThis performance reflects the momentum of our businesses as we transition into 2022 and continue to execute on the Change program initiatives.\nReported free cash flow was $1.3 billion, $74 million lower than in 2020.\nConsistent with previous quarters, this slide removes the distorting factors impacting free cash flow performance.\nWorking from the bottom of the slide upwards, the cash outflows from the discontinued operations component of our free cash flow was $51 million more than the prior year.\ntax authority related to our former Refinitiv business.\nFor the full year, we made $166 million of Change program payments as compared to Refinitiv-related separation cost of $95 million in the prior year.\nSo if you adjust for these items, comparable free cash flow from continuing operations was just shy of $1.5 billion, $189 million better than the prior year.\nThis increase was primarily due to higher adjusted EBITDA and dividends from our interest in LSEG.\nWe'll now provide an update on our Change program progress.\nIn the fourth quarter, we achieved $85 million of annual run rate operating expense savings.\nThis brings the cumulative annual run rate operating expense savings to $217 million for the Change; program, which exceeds our target of $200 million.\nThis puts us more than a third of the way toward achieving our goal of $600 million of gross savings by 2023.\nAs a reminder, we anticipate reinvesting $200 million of the projected $600 million savings back into the business for a net savings of $400 million.\nNow, an update on our Change program costs for the fourth quarter and full year 2021.\nSpend during the fourth quarter was $125 million, comprised of $78 million of opex and $47 million of capex.\nFor the full year, Change program opex and capex spend totaled $295 million, at the lower end of the range of $290 million to $320 million we have forecast last year.\nSpend is forecast to step up in 2022 related to cloud migration, streamlining internal systems and product engineering.\nWe are still expecting to incur approximately $600 million over the course of the program.\nAnd there is no change in the anticipated split of about 60% opex and 40% capex.\nI'll now provide an update on our capital structure at year-end.\nAs you can see, our capital structure and liquidity position remained strong as we exited 2021.\nWe generated $1.3 billion of free cash flow last year.\nWe had $0.8 billion of cash on hand at December 31.\nWe have an undrawn $1.8 billion revolving credit facility.\nAnd we also have a $1.8 billion commercial paper program.\nFrom a liquidity and capital structure standpoint, we entered 2022 in a very strong position.\nAnd we would like to put that capital to work to further accelerate our growth.\nWe continue to evaluate potential acquisitions within our core markets and have the ability and desire to move quickly if an opportunity presents itself this year.\nWe received notices from the U.K. tax authorities requiring us to pay about $80 million in March related to an ongoing tax matter.\nWhile we believe we will prevail on these issues and be refunded substantially all the payments, including those made last year, we are required to pay the amount upfront while contesting them.\nAny payment would not reflect our view of the merits of the case as we believe our position is supported by the weight of law.\nRegarding our investment in the London Stock Exchange Group.\nThe pre-tax value of our 72.4 million shares is currently $7 billion, or an estimated $14 per share in TR stock price.\nIn March 2021, we sold 10.1 million shares to pay taxes related to the transaction.\nWe expect to receive dividends from LSEG of more than $75 million in 2022 based on LSEG's current annual dividend payout.\nI will remind you, dividends from the investment are part of our free cash flow.\nWe remain subject to a lockup for our LSEG shares until January 30, 2023.\nAt which time, we can sell approximately one-third of the shares.\nThe remaining two tranches can be sold in January 2024 and 2025.\nWe view our equity interest in LSEG as a store value, which we expect to continue to monetize over time, which provides us with a significant level of financial flexibility related to the use of proceeds.\nAnd finally, today, we announced a 10% annualized dividend increase, the largest percentage increase since 2008, taking our annual dividend to $1.78 per share, up $0.16 per share from $1.62.\nThis also marks the 29th consecutive year of annual dividend increases for the company.\nThe increase will be effective with our Q1 dividend payable next month.\nThese annual dividend increases speak to the solidity of our business and consistent and growing free cash flow generation.\nWe'll now turn to our outlook for 2022 and 2023.\nAs Steve mentioned, we are increasing our guidance for both years since we expect to continue the positive trajectory for all key metrics.\nOrganic revenue is expected to continue its upward trajectory as we work to become a consistent and sustainable mid-single-digit grower.\nWe forecast organic revenue growth of about 5% in 2022 and 5.5% to 6% in 2023.\nKey drivers include continued investment in our seven strategic priorities and delivering on our digital and sales effectiveness work streams and the Change program.\nWe forecast the Big 3 organic revenues to grow between 6% and 6.5% in 2022 and between 6.5% and 7% in 2023.\nWe also believe our legal business can grow 5% to 7% over the cycle versus the 5% to 6% we mentioned at investor day last year with continued margin expansion.\nTurning to adjusted EBITDA margin and free cash flow.\nOur guidance in 2022 reflects the dilutive impact of the Change program investments.\nWe forecast adjusted EBITDA margin in 2022 will increase to about 35% with an underlying margin of over 37%, putting us on a path to achieve our 2023 margin target of 39% to 40%.\nFree cash flow is expected to be approximately $1.3 billion in 2022 and includes Change program spend of over $300 million.\nFree cash flow is expected to increase to between $1.9 billion and $2 billion in 2023, driven by higher revenue growth and savings and efficiencies from the Change program.\nLet me conclude with our updated and detailed guidance for 2022 and 2023.\nThis slide includes the guidance we provided in February 2021, enabling you to compare the changes and raised guidance.\nI will also note, we expect our first quarter revenue growth rate and adjusted EBITDA margin to be comparable to our full year 2022 guidance targets.\nNow, the guidance metrics on the slide are self-explanatory.\nBut I would like to address the outlook for our effective or book tax rate and our cash tax rate for 2022 and 2023 based on current tax law.\nIn 2021, our effective or book tax rate was 14% and included a 200-basis-point benefit from the reversal of reserves for prior tax year.\nThis benefit will not reoccur in 2022.\nWe also forecast in 2022 minimum taxes this year, which bumps the expected ETR up to between 19% and 21%.\nLooking to 2023, we expect our ETR to decline to the upper-teens.\nAnd as a rule of thumb, our cash tax rate is forecast to be approximately 5% below our book or effective tax rate.\nThis is fully reflected in our 2023 free cash flow guidance of $1.9 billion to $2 billion.\nTo conclude, our confidence in achieving our 2022 and 2023 guidance has only increased from one year ago.\nWe continue to believe we can achieve faster revenue growth, higher profitability, lower capital intensity, and significantly higher free cash flow as we benefit from transitioning to a content-enabled technology company.\nI will conclude by saying that we're very pleased with our 2021 performance, but we still have much more work ahead.\nOur confidence is strengthened by our 2021 organic revenue, and we have good momentum entering 2022.\nThe Change program is progressing well.\nAnd we're confident in achieving our $600 million savings target and our $100 million incremental revenue target.\nWe have numerous levers to pull that should help us accelerate our growth.\nAnd we're building a strong leadership team with new talent that's brought different perspectives, which complemented the skills of existing leadership and has energized our teams.\nAnd lastly, to elevate our ambition, we kicked off the year with confidence by announcing our new company purpose, which is to inform the way forward.\nThis unites our commercial strengths, the critical role we play in society.\nCustomers and employees have responded very positively to this, redoubled commitment to serve professionals, advance critical institutions and to build trust through our products and with our actions.\n", "role": "user" }, { "content": "compname reports q4 adjusted earnings of $0.43 per share.\nq4 adjusted earnings per share $0.43.\nq4 revenue $1,710 million, up 6% on constant currency basis.\nchange program on track - $217 million run-rate operating expense savings at year-end.\nincreased annualized dividend per share by 10%.\nboard approved a $0.16 per share annualized increase in the dividend to $1.78 per common share.\nquarterly adjusted ebitda margin 26.4% versus 32.5% last year.\nq4 adjusted earnings per share decreased from prior-year period primarily due to lower adjusted ebitda.\nq4 adjusted ebitda declined 14% as higher revenues were more than offset by higher costs.\nquarterly legal professionals revenues increased 5% at constant currency.\nquarterly reuters news revenues of $182 million increased 12%, at constant currency.\nquarterly corporates revenues increased 7% (all organic) to $361 million, at constant currency.\nquarterly global print revenues decreased 4% to $170 million, at constant currency.\nquarterly tax & accounting professionals revenues increased 9% (all organic) to $309 million, at constant currency.\nsees q1 2022 revenue growth rate and adjusted ebitda margin will be comparable to its full-year 2022 outlook targets.\nsees fy 2022 total revenue growth of about 5%.\n", "role": "assistant" } ]

[ { "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 for the company's second quarter 2021 financial results conference call.\nDuring the call today, we will reference slides highlighting key points of discussion as well as certain non-GAAP financial metrics.\nThe reconciliations of the non-GAAP metrics to comparable GAAP measures are provided in the appendix of our supplemental slides.\nThe supplemental materials are accessible on our IR website at www.\nI hope everyone is enjoying summer so far, especially as the world continues to get back to normal.\nAs you can see from our results, we are very pleased to see the market continue to recover as well.\nAnd when combined with the great progress we continue to make on our internal effort to enhance returns, we're excited for the years ahead at Trinity.\nAs we discussed at our Investor Day last call, we see significant opportunity to drive returns through the optimization of our fleet, our operations and our balance sheet.\nIn the second quarter, we made meaningful strides across each initiative, keeping us on track to achieve our three-year strategic goals.\nLet me now summarize the key themes from our second quarter.\nWhile we're still recovering from the lower order volumes and weaker demand of 2020, you can see improvement across most of the indicators for our industry.\nFirst, railcar loads continue to ramp up from the lows of last year.\nAs a result, we saw improving asset demand and steady Trinity fleet utilization and rising orders.\nWhile we are only in July, from our perspective, we expect each of these industry trends to continue to improve into 2022 based on what we see in our business and the overall economy.\nFirst, our second quarter revenue of $372 million was down 27% from a year ago, which was in line to slightly better than my expectations.\nOur GAAP earnings per share for the quarter was $0.12 compared to an adjusted earnings per share for the quarter of $0.15, which includes a $0.03 adjustment primarily from the loss on extinguishment of our partially owned subsidiaries debt.\nOur results were positively impacted by our Rail Products Group operations which achieved breakeven margins from our ongoing optimization efforts.\nThe last time we're at these -- excuse me, the last time we were at these low production levels was in 2010 and we lost money.\nWe are encouraged that we achieved breakeven margins despite the near-term headwinds of input cost inflation and low volumes.\nAs in previous quarters, Trinity's Rail platform continues to drive solid cash flow relative to our earnings.\nIn the quarter, cash flow from operations totaled $265 million, and free cash flow or excess cash after all investments and dividends was $269 million.\nEric will go into more details on our cash flow results in a moment.\nTo recap, we're very pleased to report that our operational performance and railcar inquiries continue to turn the corner, and we are increasingly optimistic about the year ahead.\nFirst, as you know, consumer confidence is very strong, and that activity has begun to ripple into our markets as we are seeing increasing railcar loads which are now running roughly 8% above 2020.\nHowever, carload volumes have been below 2019 levels so far this year.\nSo more recovery is required to reach the pre-pandemic levels.\nThe year-over-year carload trends continue to benefit each of the other metrics on Slide five.\nRailcars and storage declined 5% compared to a quarter ago, which has also been aided by strong scrapping market I mentioned.\nOur utilization rate remained relatively flat compared to last quarter.\nAs a result, our future lease rate differential or FLRD metric, which is the average of the rates transacted in the current quarter as compared to the average of the next 12 months expiring rates improved to a minus 2.5% compared to last quarter's minus 14.8%, continuing the recovery that we believe began in the third quarter of last year.\nThis marks a significant inflection point and demonstrates that higher new car pricing is beginning to feed into the overall lease market.\nWhile different markets will have different trajectories, this is a very encouraging trend.\nLastly, the demand is beginning to show up in orders, which were up 224% compared to last quarter.\nAs we mentioned at our Investor Day, we continue to anticipate that industry deliveries will improve in the coming quarters and settle in line with replacement levels in 2022 and 2023.\nBefore I move on to our segment results, let me give a quick update on steel prices and inflation in general.\nAt a high level, as I mentioned, we and other railcar manufacturers will face a headwind on the production side of our business.\nAlthough we are experiencing an increase in new car orders, some of our customers are still hesitant to place orders.\nMarkets demonstrating the most strength are chemical, construction and intermodal.\nBut we are seeing improving trends across many segments of the fleet.\nWhile it is important to realize, it is -- excuse me, what is important to realize though is historical inflation driven by expanding economic growth is a long-term positive for fixed asset businesses like ours.\nAs an example, inflation has already impacted the underlying economics for many of our end customers in markets like agriculture, construction, chemical and energy.\nInflation supports fixed asset prices in two key ways.\nFirst, asset replacement costs grow with rising prices for input materials like steel.\nSecond, increasing commodity prices for asset users make higher lease rates and prices for equipment more acceptable.\nTurning to Slide six.\nLet's walk through Trinity segment results for the quarter.\nFor the leasing business, Trinity's lease revenue improved compared to last year as we experienced higher per diem asset usage and lease fleet growth.\nThis was somewhat offset by slightly lower utilization, primarily attributable to softness in energy-related markets and the corresponding effects on remarketing rates.\nMost notably, there are clear signs of a strengthening recovery as renewal success rates continue to improve to a level not seen in recent history.\nAnd renewal rates, while in total still slightly down for the quarter, moved into positive territory compared to expiring rates as the quarter progressed.\nFurther supporting this improvement and momentum is a recovery to our FLRD rate that I mentioned previously.\nWith respect to our cost, as noted on prior calls, we continue to maintain a strong discipline.\nIt is expected that maintenance and other operational expenses required to position the lease fleet for increasing demand will be a headwind to the leasing segment margin for the year.\nAs part of our strategic initiatives, we continue to work toward increasing the percentages of maintenance and compliance events handled internally within our shops.\nOver the last few years, our service capacity has increased from roughly 1/3 to over half of our maintenance events, achieving a target we set out at the end of 2018.\nWith our current footprint, we have the ability to get to 70%, which will continue to reduce the effective maintenance cost of our fleet and improve our railcar serviceability for our customers.\nAs a good indicator of our progress, year-to-date 2021, over 60% of our fleet maintenance spend was internal.\nTurning to our Rail Products segment, as I noted, we are pleased to have achieved breakeven margins despite a challenging near-term headwind from higher steel costs and the lowest quarterly production volume since 2010.\nThe incremental margin progress we've made over the past six months is almost entirely attributable to our operational efficiencies, cost initiatives and internal supply chain initiatives.\nWe are optimistic that we will see improving margins in the segment as railcar pricing potentially increases given tighter supply and rising demand.\nIn our maintenance facilities, we're expecting continued headwinds in ramping up our new Midwest facility as we are experiencing difficulties in filling open positions at that location.\nWhat is most exciting is what we are seeing in our orders, which totaled 4,570 in the quarter, up 224% compared to last quarter.\nAs you'll recall from the past few quarters, we had an increasing level of interest and inquiries, and it's now great to see those materialize in orders.\nThis is the highest order quarter since the fourth quarter of 2018 and approximately half of our backlog value is expected to deliver in 2021, resulting in declining year-over-year deliveries, although we do expect our delivery rate to build through the year to meet demand from new orders.\nLet me wrap up our remarks on Slide seven, with an update on our return optimization initiatives.\nSimilar to last quarter, Trinity was busy and executed against both our costs and our balance sheet goals.\nFirst, on our balance sheet, Eric will give more detail here, but we made the most of the low interest rate environment and have added significant value as a result.\nIn total, Trinity has issued and refinanced approximately $2.3 billion of debt since the onset of the pandemic, including our partially owned subsidiaries.\nIn aggregate, we have lowered the company's borrowing cost by 100 basis points over that time.\nOn top of that, we have continued our disciplined commitment to return capital to shareholders.\nIn the quarter, Trinity repurchased $68 million of stock in the open market and also completed a $223 million block purchase from ValueAct as they monetized a portion of their investment.\nThese repurchases accounted for just under 10% of the company's shares.\nTurning to our enterprise and manufacturing costs, we continue to make progress on both fronts, which is contributing to our goal to enhance returns.\nAnd we continue to optimize our fleet, as you saw by our transaction activity in the quarter.\nOver the quarter, trading was active in the secondary markets and booked gains on lease portfolio sales of $11 million.\nThat said, we expect as railcar demand improves, Trinity will have opportunities to both buy and sell in the secondary markets, which continue to open and broaden.\nFinally, to update on our new product initiatives, we're proud to report that Trinsight continues to see strong uptake.\nAlthough the product is still in its early growth stage, we are ahead of plan and interest continues to build.\nWe're also seeing strong demand for our new covered hopper project, which is hitting the market in the ag market at an opportune time.\nAlso, our redesigned intermodal products are being well received by customers and are driving some of the order activity we touched on earlier.\nTo summarize, the whole Trinity team is executing very well against our near- and long-term plans to drive returns and add value for shareholders.\nWe feel confident in the three-year plan we outlined at our Investor Day last fall, and we look forward to updating you on the progress in the quarters to come.\nWith that, let me hand the call over to Eric for more detail on our results.\nI will start on Slide eight with some summary headlines.\nAs Jean noted, Trinity's second quarter was driven in part by the improving market dynamics for both our leasing and manufacturing segments.\nAdditionally, our improving manufacturing margin and consolidated returns benefited from our progress on optimization initiatives.\nOur second quarter consolidated revenue totaled $372 million, which was down 27% compared to a year ago.\nThis was driven by the combination of lower deliveries from our Rail segment, combined with a higher proportion of deliveries to our leasing customers, which are eliminated from our consolidated results.\nSpecifically, over 64% of deliveries in the quarter were for our lease portfolio compared to 41% in Q2 2020.\nOverall, our adjusted earnings improved sequentially to $0.15 from $0.07, driven by a combination of better fundamentals, gains on lease portfolio sales and our share repurchase activity.\nOur second quarter earnings and included an $11 million gain on lease portfolio sales, consistent with our ongoing lease fleet optimization efforts aided by the broadening secondary market.\nWe did incur an expense of $11.7 million related to the early extinguishment of debt in our partially owned leasing entities.\nWe've removed this expense from our adjusted results.\nThat said, our segment results continue to improve, consistent with our expectation for higher earnings in the back half of the year.\nIn regards to cash flow, year-to-date cash flow from operations totaled $335 million.\nCash flow from operations in the second quarter was $265 million, which reflects the collection of $207 million of our income tax receivable during the second quarter.\nNet of this impact, cash from operations was down slightly compared to the first quarter as our inventory grew, reflecting higher steel prices and a modest ramp-up in expected deliveries in the second half of the year.\nAs a result of these factors, we are revising our cash flow from operations range to $600 million to $650 million, which was previously $625 million to $675 million.\nOur net investment for leasing in the quarter was approximately $72 million, consisting of $144 million of additions and betterments, reduced by portfolio sales of $72 million.\nOur manufacturing capex was $9 million for the second quarter.\nFor the year, our expectations for net leasing and manufacturing capex is $200 million to $250 million and $45 million to $55 million, respectively.\nOur range for net leasing capex for the year was reduced $100 million, primarily to a shift in deliveries from the lease portfolio to direct sale.\nTotal free cash flow after investments and dividends totaled $269 million in the second quarter.\nThe improvement in cash flow from operations is a result of the timing of the tax receivable.\nAdditionally, free cash flow was aided by the debt financing accomplished in the quarter, which increased the loan to value on our wholly owned lease fleet to 62.5%.\nTurning to Slide nine.\nTrinity remains in a strong financial position and our liquidity at the end of the second quarter was $918 million.\nWe have discussed our ongoing work to optimize the balance sheet, and we certainly took advantage of the low interest rate environment.\nOver the past quarter, Trinity access to debt markets for approximately $1.6 billion, which included refinancing over $1.25 billion of debt for our partially owned leasing entities and issuance of $325 million of green asset-backed securities at a rate of 2.31% and anticipated seven-year life.\nThe aggregate effect of our financing activities over the past 12 months has lowered trades borrowing costs approximately 100 basis points.\nAdditionally, the secondary market for railcars has improved.\nIn the second quarter, Trinity was an active buyer and seller of railcars.\nWe sold 700 railcars, yielding the gain I mentioned earlier.\nWe also purchased 155 railcars, which we were able to deploy at attractive returns immediately.\nThe takeaway is that Trinity has the ability to improve our returns with our platform in various ways, and we expect to increasingly pursue these options.\nI'll end by reemphasizing that we continue to take a disciplined approach to capital deployment that drives shareholder value.\nAs a reminder, our capital allocation priorities remain largely unchanged.\nWe expect to make investments in our lease fleet for growth, especially in markets where we can meet increasing demand.\nAs we see opportunities in the secondary market, we expect to be a buyer and seller to drive further optimization of our fleet and improved returns.\nAs highlighted in our release, Trinity purchased 10.5 million shares at a cost of $291 million in the quarter, which includes a direct purchase from our largest shareholder.\nAdditionally, our dividend in the quarter totaled $24 million, bringing the total year-to-date capital return to shareholders to $375 million.\nIn closing, our strategic plan is taking hold.\nAnd I'm proud that Trinity continues to deliver on the commitments we made at our Investor Day last fall.\nWe are focused on executing upon internal initiatives and the resulting value creation.\nAdditionally, I'm excited about the improving market backdrop and how our platform can perform in this environment.\nRocco, you may now take us to questions from our participants.\n", "role": "user" }, { "content": "compname posts quarterly income from continuing operations per share of $0.12.\nq2 revenue $372 million versus refinitiv ibes estimate of $440.6 million.\nqtrly income from continuing operations per common diluted share of $0.12 and quarterly adjusted earnings per share of $0.15.\n", "role": "assistant" } ]

[ { "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: All of these materials can be found on our website at travelers.com under the Investors section.\nSpeaking today will be Alan Schnitzer, Chairman and CEO; Dan Frey, Chief Financial Officer; and our three segment presidents: Greg Toczydlowski of Business Insurance; Tom Kunkel of Bond & Specialty Insurance; and Michael Klein of Personal Insurance.\nThey will discuss the financial results of our business and the current market environment.\nAlso in our remarks or responses to questions we may mention some non-GAAP financial measures.\nWe are very pleased to report first quarter core income $699 million or $2.73 per diluted share, both up from the prior-year quarter, despite our highest ever level of first quarter catastrophe losses.\nThe higher level of core income for the quarter was driven by very strong underlying underwriting income as well as higher levels of favorable prior year reserve development and net investment income, all of which more than offset the record level of catastrophe losses.\nUnderlying underwriting income of $735 million pre-tax was nearly 25% higher than in the prior-year quarter driven by an increase in net earned premiums to $7.4 billion and an underlying combined ratio, which improved almost 2 points to an excellent 89.5%.\nWe are particularly pleased with the strong underlying fundamentals in all three of our business segments.\nIn Business Insurance, the underlying combined ratio improved by more than three points, which again included the benefit of earned pricing that exceeded loss cost trends.\nOn Specialty Insurance and Personal Insurance, both benefited from higher earned premiums with continued strong margins.\nTurning to investments, our high-quality investment portfolio continued to perform well, generating net investment income of $590 million after-tax for the quarter, up 14% from the prior-year quarter.\nThese results together with our strong balance sheet enabled us to grow adjusted book value per share by 9% over the past year after making important investments in our business and returning excess capital to shareholders.\nDuring the quarter we returned $613 million of excess capital to shareholders, including $397 million through share repurchases.\nIn recognition of our strong financial position and confidence in our business, I'm pleased to share that our board of directors declared a 4% increase in our quarterly cash dividend to $0.88 per share, marking 17 consecutive years of dividend increases, with a compound annual growth rate of 9% over that period.\nOur board also authorized an additional $5 billion of share repurchases.\nWe remain pleased with the execution of our marketplace strategies.\nDuring the quarter, we grew net written premiums by 2% to $7.5 billion.\nOur premium growth once again reflects strong renewal premium change and retention in each of our three segments.\nIn Business Insurance, renewal premium change increased to 9.2%; its highest level since 2013 and 4 points higher than the prior year quarter, while retention remained strong.\nIn workers' compensation, pure renewal rate change was slightly negative, but continued on an improving trend.\nWorkers' comp renewal premium change, which includes exposure, was positive for the first time in a number of quarters.\nBoth renewal rate change, annual premium change in every other product line were near or above recent record highs.\nNet written premiums in Business Insurance were down a little bit year over year, driven overwhelmingly by the workers' comp product line, primarily reflecting the impact of the pandemic on payrolls, as we're comparing a pandemic-impacted quarter in the current year to a largely pre-pandemic quarter in the prior year.\nBond & Specialty Insurance, net written premiums increased by 9%, driven by a renewal premium change of nearly 11% in our management liability business, while retention remained strong.\nAcross our commercial businesses, the pricing environment continues to be rational and favorable with written pricing well above estimated loss cost trends.\nOverall pricing levels continue to be near record levels, and while margins have improved, given the continued headwinds impacting returns for the industry, we expect pricing to continue to outpace loss trend for some time.\nTurning to Personal Insurance, production was excellent in the quarter.\nNet written premiums increased by nearly 7%, driven by renewal premium change of almost 8% in our homeowners business and strong retention and new business in both auto and home.\nNew business for both auto and home combined was up 17% compared to the prior year quarter, which is the ninth consecutive quarter of double-digit growth in new business, demonstrating the ongoing success of our product, distribution, and customer initiatives.\nSome number of years ago and consistent with our approach generally of recognizing, assessing, and addressing trends rapidly, we took decisive action in anticipation of continued weather volatility.\nOur efforts started with talent.\nWe added experts in data science, meteorology, geophysics, and environmental engineering, among others, to our cat management organization.\nWe also established dedicated teams for each catastrophe peril with the goal of developing industry-leading scientific and underwriting expertise.\nWe have incorporated the results into our product development, risk selection, pricing, capital allocation, and claim response.\nThe insights we have developed have enabled us to supplement standard vendor cat models with our own sophisticated peril by peril view.\nThis gives us a refined granular view of cat risk, incorporating proprietary variables, such as complex roof characteristics, tree and brush [Phonetic] density and location intelligence down to the parcel level.\nThese variables are incorporated into our product development enhancing segmentation.\nThey are also integrated into proprietary algorithms that we use at the point of sale to inform risk selection and decisions about terms and conditions.\nIn terms of our claim response, our data scientists and other experts have developed geospatial tools, artificial intelligence, and analytic models to facilitate a more effective tailored deployment of claim resources.\nThis has resulted in a more satisfying experience for our customers and a more efficient outcome for us.\nTaken together, these efforts have enabled us to more effectively manage our exposure to catastrophes.\nWhile there is always the potential for us to have outsized exposure to an event, over the past five years, our share of property catastrophe losses relative to total property catastrophe losses for the domestic P&C industry have declined significantly compared to the five years prior to that.\nOur property cat losses over the past five years have also been meaningfully lower than our corresponding market share.\nAdvancing our understanding of the risk and reward of catastrophe underwriting is an ongoing effort for us.\nAs a footnote but importantly, we've made these and other strategic investments in our business while we improved our expense ratio.\nTo sum up, the strength of our underwriting and investment expertise enabled us to deliver strong profitability this quarter, notwithstanding the severe winter weather.\nAs a result, we're off to a terrific start for the year.\nWe are particularly pleased with the strong underlying fundamentals in all three of our business segments.\nOur proven strategy, strong track record of execution, leading analytics, talent advantage give us confidence that we are well positioned to capitalize on opportunities as the economy recovers.\nCore income for the first quarter was $699 million, up from $676 million in the prior year quarter, and core return on equity was 11.1%.\nThe increase in core income resulted primarily from a higher level of net favorable prior year reserve development, improved underlying underwriting results, and increased net investment income, largely offset by a much higher level of catastrophe losses.\nOur first quarter results include $835 million of pre-tax cat losses, an all-time high for our first quarter cats and an increase of $502 million compared to last year's first quarter.\nThis quarter's cats include $703 million from the February winter storms which impacted Texas and a number of other states.\nPrior year reserve development, for which I'll provide more detail shortly, was net favorable $317 million pre-tax in the quarter.\nOur pre-tax underlying underwriting gain of $735 million was 24% higher than in the prior year quarter, reflecting higher levels of earned premium and an underlying combined ratio, which improved by 1.8 points from a year ago to 89.5%.\nThe improvement in the underlying combined ratio resulted largely from the continued impacts of earned pricing exceeding loss cost trends in our commercial businesses and continued favorable loss conditions in personal auto.\nThese improvements were partially offset by the comparison of more typical non-cat weather this year to relatively benign non-cat weather in last year's first quarter.\nAfter-tax net investment income increased by 14% from the prior year quarter to $590 million as higher returns in our non-fixed income portfolio were partially offset by the impact of the expected decline in fixed income yields.\nConsistent with our comments on the fourth quarter earnings call and in our 10-K, we continue to expect that for the remainder of 2021, fixed income NII, including earnings from short-term securities, will be between $420 million and $430 million per quarter after-tax.\nTurning to prior year reserve development.\nTotal net favorability of $317 million pre-tax in the quarter included a $72 million benefit from a subrogation settlement with Southern California Edison related to the Woolsey fire of 2018.\n$62 million of that benefit was recorded in Personal Insurance with the remainder recorded in Business Insurance.\nBeyond that subrogation benefit, net favorable PYD in Personal Insurance reflected both auto and property losses coming in better than expected for recent accident years.\nIn Bond & Specialty, net favorable PYD was driven by better-than-expected results in the surety book.\nIn Business Insurance, net favorable PYD was driven by better-than-expected loss experience in workers' comp, partially offset by some adverse development on losses for environmental exposures in our runoff book.\nRegarding reinsurance, as discussed during our fourth quarter results call, we renewed our underlying property aggregate catastrophe XOL Treaty for 2021 providing aggregate coverage of $350 million, part of $500 million of losses [Indecipherable] an aggregate retention of $1.9 billion.\nThrough March 31st, we have accumulated $915 million of qualifying losses toward the aggregate retention.\nTurning to capital management.\nOperating cash flows for the quarter of $1.2 billion were again very strong.\nAll our capital ratios were at or better than target levels, and we ended the quarter with holding company liquidity of approximately $1.8 billion.\nOur net unrealized investment gain decreased from $4.1 billion after-tax at year end to $2.8 billion after-tax at March 31st as interest rates rose during the quarter.\nAdjusted book value per share, which excludes unrealized investment gains and losses, was $101.21 at quarter end, up 2% from year end and up 9% from a year ago.\nWe returned $613 million of capital to our shareholders this quarter comprising share repurchases of $397 million and dividends of $216 million.\nFollowing this quarter's share repurchase activity, we had a little more than $800 million remaining under the previously authorized repurchase program.\nIn order to provide the appropriate capital management flexibility and reflecting its confidence in our business, the board authorized an additional $5 billion for share repurchases.\nAnd as Alan also mentioned, our board authorized an increase in the quarterly dividend to $0.88 per share.\nBusiness Insurance produced $317 million of segment income for the first quarter, a 10 increase over the first quarter of 2020 driven by higher levels of underlying underwriting income, net favorable prior year reserve development, and net investment income, which more than offset higher catastrophe losses.\nWe're particularly pleased with the underlying combined ratio of 93.7%, which improved by 3.6 points.\nA little less than 2 points of that resulted from earned pricing that exceeded loss cost trends.\nThe improvement also reflects the comparison to the net charge we took in the prior year quarter related to the pandemic.\nTurning to the top line, net written premiums were down 2% primarily due to lower net written premiums in the workers' compensation product line as a result of the impact of the pandemic on payrolls.\nNet written premium benefited from strong retention, higher renewal rate change, and a return to positive exposure growth, reflecting an improving trend in our customers' outlook for their businesses.\nTurning to domestic production.\nRenewal rate change remained strong at 8.4%, up 2.5 points from the first quarter of last year, while retention remained high at 83%.\nWritten pricing for some time now has been exceeding loss trend and is significantly improving the margins of our book.\nImportantly, we believe we have a high quality book of business and seek to maintain high retention.\nWith that in mind, we continue to execute deliberately and granularly on an account-by-account and class-by-class basis.\nWe remain exceptionally pleased with our execution.\nAs for the individual businesses, in select, renewal rate change increased to 4.5%, up almost 3 points from the first quarter of 2020.\nRetention of 78% reflects deliberate execution as we pursue improved returns in certain segments of this business.\nAs I mentioned above, we're pleased with the segmented execution underneath the aggregate result.\nNew business of $95 million was down $24 million from the prior year quarter, also driven by our focus on improving profitability as we remain disciplined around risk selection, underwriting, and pricing.\nImportantly, we have not slowed down our commitment to invest in product development and ease of doing business, which position us well for the long-term profitable growth in this business.\nAs an example, in previous quarters, we've highlighted our completely redesigned BOP 2.0 small commercial product, which includes industry-leading segmentation and a fast, easy quoting experience.\nDuring the last three months, we rolled out the new product in an additional seven states, bringing the cumulative total to 30 states, representing approximately 60% of our CMP new business premium.\nWe're encouraged with our agent's adoption of the new product as both flow in new business premium are meaningfully improved as compared to the legacy BOP product.\nIn middle market renewal rate change was strong at 9.1%, up almost 3 points from the first quarter of 2020, while retention remained high at 86%.\nAdditionally, we achieved positive rate of more than 80% of our accounts this quarter, a 10-point increase from the first quarter of last year.\nNew business was down $12 million driven by certain business units and geographies where returns are not meeting our thresholds.\nTo sum up, we're pleased with our execution and further improving the underlying margins in the book,and we continue to invest in the business for long-term profitable growth.\nBond & Specialty posted strong returns and solid growth in the quarter despite the ongoing headwinds of COVID-19.\nSegment income was $137 million, an increase of 12% from the prior year quarter driven by an improved underlying underwriting margin and higher business volumes.\nElevated cat losses related to the Texas weather event were largely offset by favorable prior year reserve development.\nThe underlying combined ratio of 84.2% improved by a 1.5 due to an improved expense ratio, primarily reflecting higher earned premiums.\nEarned pricing that exceeded loss cost trends was largely offset by the impact of COVID-19 and other loss activity.\nTurning to the top line.\nNet written premiums grew 9% in the quarter, primarily reflecting strong management liability production.\nDecreased demand for new construction surety bonds due to the economic impacts of COVID-19 were largely offset by strong commercial surety production.\nIn our management liability business, we are pleased that the renewal premium change remained near historic highs of nearly 11% while retention was a strong 87%.\nManagement liability new business for the quarter decreased $8 million, primarily reflecting our disciplined underwriting in this elevated risk environment.\nConsistent with recent quarters, submissions were up while quote activity was down.\nThese production results demonstrate the successful execution of our strategies to maintain underwriting discipline and pursue rate where needed while maintaining strong retention levels in our high-quality portfolio.\nSo Bond & Specialty results were again strong despite the challenges in the current environment.\nPersonal Insurance began 2021 with strong profitability and growth.\nSegment income was $314 million and net written premiums grew 7%.\nThe combined ratio of 90.3% rose about 2 points from the prior year quarter primarily due to higher levels of catastrophe losses, partially offset by higher net favorable prior year reserve development.\nOn an underlying basis, the combined ratio was a strong 85.4%.\nAutomobile delivered another very strong quarter with a combined ratio of 81.8%, an improvement of more than 9 points compared to the first quarter of 2020.\nThe improvement comprises 5 points of higher net prior year reserve development and an underlying combined ratio that is 4 points better than the prior year quarter.\nThese results reflect the ongoing effects of the pandemic, namely lower claim frequency due to fewer miles driven.\nThat said, we have begun to see miles driven moving back toward pre-pandemic levels as restrictions have eased and economic activity is picking up.\nWe're actively monitoring current trends and incorporating them into our state-specific pricing decisions as we continue to balance business volumes and profitability.\nIn homeowners and other, the first quarter combined ratio of 99.4% increased by 15 points relative to the prior year quarter, driven by catastrophe losses of 22 points, up over 11 points, with most coming from the February winter storm and freeze events, and an 8 point increase in the underlying combined ratio primarily due to a comparison to unusually mild winter weather in the prior year quarter, along with about 2 points of elevated fire losses, many of which relate to extreme winter weather often resulting from the use of alternative heating sources.\nThe increases were partially offset by 5 points of higher net favorable prior reserve development, which included the subrogation benefits of the Woolsey wildfire that Dan mentioned.\nTurning to domestic production.\nAutomobile net written premiums grew 3% with 14% growth in new business while retention remained strong at 84%.\nRenewal premium change was about flat, consistent with our plan to align pricing with our loss experience in auto.\nWe are very pleased with our ongoing balanced execution in this line which has resulted in 4% year-over-year policies in-force growth at attractive returns.\nHomeowners and others delivered another strong quarter with net written premium growth of 12%.\nNew business was up 21% from the prior year quarter, retention remained strong at 85%, and renewal premium change was 7.7%.\nAs Alan mentioned, we have achieved double-digit new business growth across auto and home for each of the past nine quarters.\nOur ongoing new business success is driven by a combination of strategic investments and initiatives, including Quantum Home 2.0, IntelliDrive, and new and expanded partnerships and distribution relationships.\nIn addition to delivering strong results for the quarter, we continue to roll out new and expanded capabilities to deliver value in the eyes of our customers.\nRecent examples include closing on the acquisition of InsuraMatch, our digital independent agency that expands our capabilities to serve customers and distribution partners, improving our customer self-service capabilities with the rollout of our new MyTravelers mobile application, continuing the rollout of our digital quote proposal to further enhance our agents' digital capabilities, further expanding our new version of IntelliDrive into Canada and eight additional states, and adding digital auto discount in nine more states for customers who leverage paperless, telematics, and mobile applications.\nIn summary, we're off to a great start to the year and are well positioned to continue to deliver profitable growth.\nWe're ready to open up for Q&A.\n", "role": "user" }, { "content": "compname reports qtrly core earnings per share of $2.73.\ntravelers companies inc - ‍​qtrly core earnings per share $2.73 ; qtrly earnings per share $2.87.\ntravelers companies inc - ‍​qtrly total revenue $8.31 billion, up 5%.\ntravelers companies - declares 4% increase in regular quarterly cash dividend to $0.88 per share.\ntravelers companies - qtrly catastrophe losses of $835 million pre-tax compared to $333 million pre-tax in prior year quarter.\ntravelers companies - qtrly net written premiums of $7.505 billion, up 2%.\ntravelers - qtrly core income increased primarily due to higher net favorable prior year reserve development, higher underlying underwriting gain.\n", "role": "assistant" } ]

[ { "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: All of these materials can be found on our website at travelers.com, under the Investors section.\nSpeaking today will be Alan Schnitzer, Chairman and CEO; Dan Frey, Chief Financial Officer; and our three segment Presidents, Greg Toczydlowski of Business Insurance; Tom Kunkel of Bond & Specialty Insurance; and Michael Klein of Personal Insurance.\nThey will discuss the financial results of our business and the current market environment.\nDan will have more to say about both shortly.\nOur underlying underwriting income of $572 million pre-tax was up $254 million over the prior-year quarter, benefiting from solid net earned premium and a 3.5 point improvement in the underlying combined ratio to a strong 91.4%.\nThe pandemic and related economic conditions had only a modest net impact on our underwriting results.\nFor us in the quarter, $114 million of direct losses and $63 million of audit premium adjustments were about offset by initial estimates of favorable loss activity, most of which is in short-tail lines.\nGiven the continued uncertainty, we've taken a cautious approach to recognizing the net impact of COVID-19 related loss activity.\nSome industry observers have speculated about the aggregate level of insured and investment losses arising out of the pandemic.\nWe don't talk the losses will be significant but they won't be borne evenly across insurers.\nOur manageable COVID related insurance losses so far this year are a reflection of our disciplined approach to risk selection as well terms of conditions.\nAnd as we shared with you in some detail last quarter, we manage our investment portfolio with a similar regard to balancing risk and reward.\nLast quarter, I commented on the potential future impacts the pandemic might have on each of our key lines of business.\nI'll review that again with the quarter's worth of experience.\nIn personal auto, we've seen a meaningful drop off in auto frequency, although that is moderating as economic activity picks up.\nThe same time, we've taken into consideration, the potential for some offsetting impact in terms of auto severity due to factors such as collisions occurring at higher speeds and driver distraction.\nIn workers compensation, COVID related claims most of relate to health-care workers and first responders, which do not represent a significant part of our book of business.\nAlso, the frequency of those claims stabilized during the quarter, which might be attributed to an improved supply of PPE and the healthcare community having the benefit of more experience with managing COVID patients.\nMore probably beyond the healthcare sector, data from some of the state workers' comp systems suggest that the COVID related claim rate is low relative to the infection rate.\nThat's likely partly attributable to the fact that the population most seriously affected by COVID-19 skews older and is not the workforce.\nNonetheless, in developing our loss estimates, we've taken into consideration, the potential for the delayed reporting of claims and additional claim activity associated with the recent spikes in infection rates, as well as uncertainty related to the longer term implications from the disease.\nAs we anticipated, some states have effectively expanded the scope workers comp coverage by creating presumptions of compensability.\nIn most cases, states have taken a thoughtful approach protecting workers appropriately but not unreasonably burdening the workers' compensation system, where states have acted to expand compensability we've adjusted our loss estimates accordingly.\nIn terms of non-COVID workers' comp losses, we've seen the lower volume of workers' comp claims as workers have stayed home.\nThis will update as people get back to the workplace.\nIn addition to taking that into account, we have contemplated that severity could be adversely affected by injured workers' delaying treatment due to the stay-at-home work environment.\nHaving said all that, our experience is that there is a lower level of workers' comp claim activity associated with economic recessions.\nDuring periods of elevated unemployment, workers tend to be more motivated the stay at their jobs and the workforce tends to be more seasoned.\nIn management liability, as we expected, we are seeing the elevated level of claim activity, typically associated with stock market volatility and workforce reductions.\nThe underlying combined ratio of this quarter of Bond & Specialty reflects that, as well as other loss activity.\nAnd we expect the underlying combined ratio will continue to be elevated at this level or somewhat higher over the near term.\nThis is not like the experience we had in the aftermath of the financial crisis a decade ago.\nNonetheless, we expect to return from this segment will continue to be healthy.\nTurning to the Surety business, we've been pleased to see that work is continuing on the vast majority of construction projects.\nHowever, the depth and duration of stress in the economy continues to be risk factors of the surety business.\nThe line will also be impacted by other factors, such as the financial strength in the bonded firms.\nAs I shared last quarter, our high quality surety book was effectively stress tested in the 2008 financial crisis and performed well.\nAnd our underwriting approaches remain disciplined since that time.\nIn that regard, so far, we haven't seen anything that has caused us to change our surety loss estimate.\nIn terms of business interruption coverages under commercial property policies, there is a fair amount of litigation challenging coverage.\nAs a reminder, our commercial property insurance policies that include business interruption, including as a result of similar authority require losses to be caused by direct physical damage to property from a covered cause of loss.\nIn addition, our standard policy forms specifically excludes loss or damage caused by or resulting from a virus.\nIf you quote decisions we've seen so far, one in New York and one in Michigan, have both upheld the physical damage requirement in the context of COVID-19.\nOn the legislative front, efforts to retroactively expand coverage for business interruptions seem to be diminishing.\nFinally, with respect to liability coverages, as people shelter in place, we are seeing fewer commercial-auto accidents and slip and fall type claims.\nAnecdotally, we are also seeing some movement by the plaintiff's bar to settle claims faster, but it's too soon to know how significant that benefit might be.\nWe are also encouraged by states that have adopted COVID related liability protection and similar efforts that are under way in other states and at the Federal level.\nWe shouldn't let frivolous lawsuits undermine the nation's recovery.\nNonetheless, we expect the plaintiffs' bar to continue to be active.\nTurning to the quarter on the top line.\nWe're very pleased with our production results, excluding the other premium refunds we provided to our customers, net written premiums grew by 2% as the impact of COVID-19 on insurance exposures was more than offset by strong renewal rate change in all three segments.\nIn Business Insurance, we achieved renewal rate change of 7.4%, the highest level since 2013 and close to the record level we achieved that year.\nExcluding workers' comp, renewal rate change was double-digits.\nImportantly, retention levels remained strong.\nIn Bond & Specialty Insurance, net written premiums increased by 3%, as our domestic management liability business achieved a record renewal rate change while maintaining strong retention.\nIn Personal Insurance, excluding the auto premium refund, net written premiums increased by 6% driven by strong retention and new business in both Agency Auto and Agency Homeowners.\nIn our Agency Homeowners business, renewal premium change remained strong at 7.7% and we hit a record for new business.\nLet me take a minute to comment on the commercial rate environment.\nBefore the pandemic struck, there were a number of industrywide factors putting upward pressure on prices, namely increased volatility of weather-related losses, interest rates at historical lows and a growing recognition of higher loss trend in the liability lines.\nAll of those conditions persist and now, at another quarter, with a very high level of weather-related losses, interest rates that are likely to be lower for longer and while it hasn't been a significant factor for us, but reinsurance market that has hardened.\nAnd on top of that, the pandemic and related economic fallout, added sense of incremental uncertainty making this feel like one of those times, not unlike in the wake of 9/11 and Hurricane Katrina when the market recalibrates risk.\nWith that as the background, we'll continue to seek rate gains and manage other leverage of profitability to improve the outlook for return.\nI'll close by saying that I couldn't be more grateful to my Travelers colleagues for their grit and commitment to taking care of our customers, our business partners, our communities and each other.\nAlso, the work they've done in recent years to advance our innovation agenda has equipped us with state-of-the-art digital tools and other capabilities that make all the difference in this environment.\nWe were well prepare and from here, we're well positioned.\nFrequent financial and operational distractions will continue uninterrupted, managing our business and investing for long-term success.\nIn short, we're confident in our ability to continue to succeed in these uncertain times, and to benefit from the strength of our franchise as the economy recovers.\nOur core loss for the second quarter was $50 million compared to core income of $537 million in the prior year quarter.\nThe change resulted primarily from a higher level of catastrophe losses and as expected, lower net investment income.\nFor the quarter, the net impact related to COVID-19 is included in our underlying results, not as part of our cat figure and was modest, more on that in a minute.\nOur second quarter results include $854 million of pre-tax cat losses compared to only $367 million in last year second quarter.\nThis quarter's cat's includes severe storms in several regions of the United States as well as $91 million of losses related to civil unrest.\nRegarding our property aggregate catastrophe XOL treaty for 2020, as of June 30th, we have accumulated about $1.4 billion of qualifying losses toward the aggregate retention of $1.55 billion.\nThe treaty provides aggregate coverage of $280 million out of $500 million of losses, above that $1.55 billion retention.\nThe underlying combined ratio was 91.4%, which excludes the impacts of cats and PYD improved by 3.5 points compared to 94.9% in last year's second quarter.\nThe underlying loss ratio improved by more than 4 points and benefited from a lower level of non-cat weather losses, favorable frequency in personal auto from the shelter-in-place environment, net of related premium refunds and the impact of earned pricing in excess of loss trend.\nThe expense ratio of 31% is 0.8 of a point higher than the prior year quarter and above our recent run rate.\nThis change was as expected due to the reduction in premiums associated with the pandemics impact on the economy, along with the premium refunds to our personal auto customers.\nThe net impact of COVID-19 and its related effects on the economy were modest in terms of our overall second quarter underwriting result.\nOur top-line was resilient, excluding the premium refunds in Personal Insurance, net written premiums increased by 2% driven by strong renewal rate change in all three segments that more than offset lower insured exposures.\nIn terms of operating expenses, results were adversely impacted by modest increases in the allowance for bad debt and the accrual for supplemental commissions.\nThose expense increases, however, were roughly offset by lower expenses in other categories, for example, travel costs were down, as our employees continue to work primarily from home.\nThe economic impacts related to COVID-19 also affected our underlying losses.\nFor example, losses directly related to COVID-19 totaled $114 million, primarily workers' comp in Business Insurance and management liability losses in our Bond & Specialty business.\nOn the other hand, we experienced significant reductions in auto claims as there were fewer cars on the road during the second quarter and to a lesser degree, recognized the benefit reflecting fewer traditional workers' comp claims as more people work from home.\nAs you heard from Alan, given the uncertainty in the current environment, we took a cautious approach in estimating the net impact of COVID-related losses.\nWe have recorded the estimated cost for all losses incurred through June 30th, including incurred losses for which claims have not yet been reported.\nAll losses have been recorded at our estimate of ultimate and the majority of the COVID-19 related insurance losses, we have both in the first and second quarters, are still sitting in our IBNR reserves.\nWe have not recognized losses or benefits from COVID-19 related insured events that we anticipate will occur subsequent to the end of the quarter.\nTaking a step back, on a year-to-date basis, the impact on our results excluding net investment income from COVID-19 and its related effects is a net charge of about $50 million pre-tax.\nTurning to prior year reserve development, in Personal Insurance, both auto and property losses came in better than expected for multiple accident years.\nIn Bond & Specialty Insurance, we saw larger losses than expected in management liability, resulting in prior year strengthening of $33 million, largely offsetting the favorable development in Personal Insurance.\nIn Business Insurance, there was no net prior year reserve development, as better-than-expected loss experienced in workers' comp and commercial property was largely offset by unfavorable results in our other casualty lines.\nEach of the movements this quarter was relatively small compared to the reserve base.\nAs a reminder, third quarter PYD will also include the results of our annual asbestos review.\nAfter-tax net investment income decreased by 54% from the prior year quarter to $251 million, somewhat better result than we had previewed in our call last quarter.\nThe decrease was driven by a non-fixed income returns, where results for our private equity, hedge fund and real estate partnerships are generally reported to us on a one quarter lag.\nAccordingly, the impact of the disruption in global financial markets that occurred in the latter half of the first quarter impacted our second quarter results.\nAs the broader markets have recovered in the second quarter, that should, at least to some extent, benefit our non-fixed income results in the third quarter.\nIt's worth mentioning here that recoveries may not be reflected in the private equity and hedge fund results as quickly as the downturns were.\nGiven continued economic uncertainty, fund managers who report their results to us may take a more measured approach and not be as quick to write-back up the valuations they just marked down, particularly in light of what may be continued challenging prospects for the earnings and cash flows of the funds underlying investments.\nFixed income returns decreased by $24 million after tax as the benefit from higher levels of invested assets was more than offset by the decline in interest rates and the mix change, as we chose to maintain a somewhat higher level of liquidity and held more short-term investments than in prior quarters.\nFor the remainder of 2020, we expect that fixed income NII will decrease by approximately $35 million to $40 million after-tax per quarter compared to the corresponding periods of 2019.\nTurning to capital management, Operating cash flows for the quarter of $1.7 billion were again, very strong.\nAll our capital ratios were at or better than target levels and we ended the quarter with holding company liquidity of slightly more than $2 billion, well above our target level.\nRecall that in April, we pre-funded as we normally do, $500 million of debt coming due in November, with the new 30-year $500 million debt issuance at 2.55%.\nSo our holding company liquidity is temporarily elevated by that amount.\nInvestment yields decreased as credit spreads tightened during the second quarter and accordingly, our net unrealized investment gains increased from $1.8 billion after tax as of March 31st, to $3.6 billion after tax at June 30th.\nAdjusted book value per share, which excludes net unrealized investment gains and losses was $92.01 at quarter end, down less than 1% from year-end and up 2% year-over-year.\nWe returned $218 million of capital to our shareholders this quarter via dividends.\nWe did not repurchase any shares during the quarter.\nAs we indicated in our first quarter earnings call, our capital management strategy remains unchanged.\nWith the ongoing economic uncertainty and with hurricane season upon us, it's still feels to us like holding on to a little more capital is preferable to holding on to a little less.\nUntil there is more clarity on the state of the economy, we may buy back some shares in the coming quarters or we may continue to choose to buy none.\nThe structure of our main cat reinsurance program is generally consistent with the prior year.\nWe renewed our Northeast Cat Treaty effective July 1st on substantially similar terms and pricing that was up only slightly on an exposure adjusted basis.\nOur cat bond Long Point Re III is now in the third year of its full-year term.\nIn the annual reset for the 2020 hurricane season the attachment point was adjusted from $1.79 billion to $1.87 billion, while the total cost of the program was flat year-over-year.\nA more complete description of our cat reinsurance coverage, including our general cat aggregate XOL treaty that covers an accumulation of certain property losses arising through multiple occurrences is included in our 10-Q, which we filed earlier today and in our 2019 Form 10-K.\nLastly, let me take a minute to address thoughts on our top line going forward.\nLooking at premium volume, we expect to experience the impacts of economic disruption.\nHow much of an impact we feel and for how long, will depend on the extent and duration of the negative economic impacts related to the pandemic.\nBecause earned premium typically lags written premium, we expect to feel the effects on an earned basis beyond the end of the year.\nAs Alan said last quarter, we do not intend to take disruptive -- expense actions in response to what may prove to be a short-term impact on premium volumes.\nAccordingly, in coming quarters, the expense ratio will likely remain somewhat elevated compared to the corresponding periods of 2019 due to the expected impact on earned premiums.\nLet me start by expressing my deep appreciation to all my Travelers' colleagues as well as our agent and broker partners for continuing to provide exceptional service to our customers during these unprecedented times.\nAs for the quarter's results, business Insurance had a loss for the quarter of $58 million due to lower net investment income and higher catastrophe losses, as both Alan and Dan discussed.\nThe combined ratio of 107.1% included more than 10 points of catastrophes, impacted by both weather related losses and civil unrest.\nThe underlying combined ratio of 97% improved by 0.4 points, reflecting a 0.2 point improvement in each of the underlying loss ratio and expense ratio.\nThe net impact of COVID-19 and related economic conditions was modest.\nTurning to the top line, net written premiums were 3% lower than the prior-year quarter due to the impact of the economic disruption on insured exposures.\nTurning to domestic production, we achieved strong renewal rate change of 7.4% while retention remained high at 83%.\nThe renewal rate change of 7.4% was up almost 4 points from the second quarter of last year and more than a point from the first quarter of this year, not withstanding the persistent downward pressure in workers' compensation pricing.\nWe continue to achieve higher rate levels broadly across our book as rate increases in all lines other than workers' compensation were meaningfully higher during the quarter as compared to the second quarter of last year.\nWe achieved positive rate at about 80% of our middle market accounts this quarter, which was up from about two-third in the second quarter of last year.\nImportantly, we've achieved this progress in the highly segmented manner and with retention remaining strong.\nAt these rate levels, our rate change continues to exceed loss trend even after about a 0.5 point increase toward loss trend assumption.\nNew business of $473 million was down 10% from the prior-year quarter.\nNew business flow was down, which we attribute largely to disruptions caused by the pandemic.\nNew business was also impacted by our continued focus and disciplined risk selection, underwriting and pricing.\nThese production results reflect superior execution by our field organization in a very challenging environment.\nAs for the individual businesses, in Select, renewal rate change was up to 2.1% making the sixth consecutive quarter where renewal rate was higher than the corresponding prior-year quarter while retention was strong at 82%.\nThe headwind from workers' compensation pricing is most pronounced in the Select business.\nNew business was down significantly, driven by the economic disruption caused by the pandemic.\nWhile the current environment is challenging, we are confident that we're well positioned and investing in the right strategic capabilities to profitably grow this business over time.\nIn Middle Market renewal rate change was up to 7.9% while retention remained strong at 86%.\nThe 7.9% was up almost 4.5 points from the second quarter of 2019 and 1.5 points from the first quarter of 2020.\nNew business of $255 million was down from the prior-year quarter, driven by both economic disruption and our continued focus on disciplined risk selection underwriting and pricing.\nTo sum up, we believe our meaningful competitive advantages, including our strong distribution relationships and our talent and expertise position us well to navigate through these uncertain times and continue to serve our customers and agent and broker partners.\nBond & Specialty delivered solid returns and growth in the quarter despite the impacts of COVID-19 and related economic conditions.\nSegment income was $72 million, a decrease of $102 million from the prior-year quarter.\nAs Dan mentioned, the combined ratio of 93.8% reflects unfavorable prior-year reserve development in the quarter as compared to favorable PYD in the prior-year quarter and a higher underlying combined ratios.\nThe underlying combined ratio of 88.1% increased 7.1 points from the prior-year quarter, primarily driven by the impacts of higher loss estimates for management liability coverages, about half of which was due to COVID-19 and related economic conditions.\nRemaining half of the increase is due to a few smaller drivers such as elevated claim activity under employment practices liability coverages and ransomware losses under cyber policies.\nTurning to the top line, net written premiums grew 3% for the quarter, reflecting strong growth in our management liability and international businesses, partially offset by lower surety production.\nIn our domestic management liability business, we are pleased that renewal premium change increased to 7.8%.\nThis marks the seventh consecutive quarter where RPC is higher than the corresponding prior-year quarter.\nAs Alan noted, renewal rate change was a record for the quarter, while retention remained at a historically high 89%.\nSimilar to business insurance, RPC in the quarter was also impacted by lower insured exposures.\nThese production results demonstrate the effective of execution of our strategy to pursue rate where needed while maintaining strong retention of our high quality portfolio.\nWe will continue to pursue rate increases where warranted.\nDomestic management liability new business for the quarter decreased $13 million reflecting a disruption associated with COVID-19 and our thoughtful underwriting in this elevated risk environment.\nDomestic surety net premium, net written premium was down $24 million in the quarter, reflecting the impact of COVID-19, which slowed public project procurement and related bond demand.\nInternational BSI posted strong growth in the quarter, with record rate in our U.K. management liability businesses.\nSo Bond & Specialty results remain resilient despite the challenges brought on by COVID-19.\nThese results reflect the excellent work of our agents, brokers and employees who have adapted to operating in new ways to continue to provide leading products and services to our customers.\nWe feel confident about our ability to navigate through this challenging environment and continue to deliver strong returns over time.\nPersonal Insurance segment income for the second quarter of 2020 was $10 million down from $88 million in the prior year quarter, driven by a higher level of catastrophe losses and lower net investment income.\nThese impacts were partially offset by an improvement in the underlying underwriting gain.\nOur combined ratio for the quarter was 101.3%, an increase of 1.1 points, and a 12.5 point increase in catastrophe losses was largely offset by a 10.6 point improvement in the underlying combined ratio.\nThe underlying combined ratio benefited from lower non-catastrophe weather-related losses and lower automobile losses net of premium refunds.\nThe increase of 2.6 points on the underwriting expense ratio was primarily driven by the reduction in net earned premiums resulting from the auto premium refunds.\nTurning to the top-line.\nExcluding the impact of premium refunds of $216 million, net written premiums grew 6%.\nAgency homeowners and other net written premiums were up an impressive 13% and agency automobile net written premiums were up 3% excluding premium refunds.\nAgency automobile delivered strong results with a combined ratio of 85.7% for the quarter.\nThe loss ratio improved over 12 points while the underwriting expense ratio increased by about 4 points.\nThe increase in the underwriting expense ratio was primarily driven by the impact of the premium refunds I described earlier.\nThe underlying combined ratio of 84.2% improved 9.6 points relative to the prior year quarter, continuing to reflect improvements in frequency, primarily due to fewer miles driven as a result of the pandemic.\nData from our IntelliDrive auto telematics program indicate miles driven were down significantly from pre-COVID-19 levels during the second quarter, reaching a weekly low point in early April and partially rebounding as the economy has started to reopen.\nIn response to our improved auto loss experience, we implemented a stay-at-home auto premium credit program for personal automobile customers.\nIn the U.S., the program provided a 15% premium refund on April, May and June premiums.\nIn agency homeowners and other, the second quarter combined ratio was 113.9%, 9.4 points higher than the prior year quarter due primarily to higher catastrophes, partially offset by a lower underlying combined ratio.\nHistorically, the second quarter is our highest catastrophe quarter.\nThis quarter, we experienced significant storm activity, resulting in 34 points of catastrophe losses, an increase of 21 points compared to the prior year quarter where catastrophes were relatively low.\nThe underlying combined ratio for the quarter was 81.4%, down over 11 points from the prior year quarter, driven primarily by lower non-catastrophe weather-related losses.\nThe majority of the improvement is due to elevated non-cat weather in the prior year quarter.\nNon-catastrophe weather-related losses this quarter were also better than our assumptions.\nTurning to quarterly production.\nOur domestic agency results were solid, despite the challenging environment resulting from COVID-19 and its related economic impacts.\nOur retentions remained strong, closed and new business were up versus the prior year quarter, and we remain pleased with our policies in force growth.\nAgency automobile retention was 85% and new business increased 7% from the prior year quarter.\nRenewal premium change was 1.5% as we continue to moderate pricing given the improved performance in our book over the past few years.\nAgency homeowners and other delivered another very strong quarter, with retention of 87%, renewal premium change of 7.7% and a 17% increase in new business as we continue to seek to improve returns while growing the business.\nHigher new business levels again benefited from the successful roll out of our Quantum Home 2.0 product, now available in over 40 markets.\nDuring the quarter, we continued to deliver new capabilities and products to our customers and distribution partners.\nWe introduced Quantum Home 2.0 in four new states including California.\nIn addition, we launched IntelliDrive 2.0 which add distracted driving monitoring to our auto telematics product and delivers significant improvements to the user experience.\nAnd after reaching our goal of planting one million trees for customer enrollment in paperless billing, we extended our partnership with American Forests to plant another 500,000 trees by Earth Day 2021.\nTo recap, Personal Insurance is off to a strong start in the first half of the year, particularly in light of a challenging environment.\nI'm proud of our team's efforts to continue to work together to meet the needs of those we're privileged to serve while investing in the business for the future.\nBefore we begin Q&A, there's one topic that we expect might be on people's mind.\nSo we thought we would kick off Q&A by addressing it.\nThere's been some discussion by industry observers about the timing of the recognition of COVID-related losses.\nSo, let me reiterate, that our reserves reflect our best estimate of ultimate losses incurred as of the balance sheet date.\nAnd applying accounting principles, we would not record a reserve for a loss that has not yet occurred as of the balance sheet date.\nUsing auto claims as an example.\nAt the beginning of the year, we have an assumption as for the volume of claims, we will see over the course of the year and what the average cost of those claims will be.\nThose would be fourth quarter events and accordingly, they will be recognized in our fourth quarter results.\nThis same principle applies when we consider losses related to COVID-19.\nWhile only some losses have been reported to us so far, the losses we booked in both the first and second quarter reflect our estimates of the ultimate amounts that we'll pay for all losses and related costs that have been incurred as of June 30th, including those for which we have not yet received a claim.\nIn fact, as I said earlier, the majority of the COVID-related insurance losses we have booked through June 30th are still sitting in our IBNR reserves.\nThat said, the pandemic is clearly not over and tens of thousands of new infections are being confirmed in the United States each day.\nIt is foreseeable that a healthcare worker, for example, who to this point, has not contracted COVID-19 will become ill from COVID-19 as a result of their job duties in December, but again, that loss activity will be included in our fourth quarter results.\nWe similarly would not advance the recognition of any continued favorability from lower frequency in non-COVID workers' comp claims.\nFinally, I'll remind you that on a year-to-date basis, setting aside net investment income, the impact on our results from COVID-19 and its related effects is a net charge of about $50 million pre-tax.\nAnd with that, operator, we're ready to take questions.\n", "role": "user" }, { "content": "travelers companies - qtrly catastrophe losses of $854 million pre-tax versus $367 million pre-tax in prior year quarter.\ntravelers companies - qtrly net written premiums of $7.35 billion, down 1%.\ntravelers companies - as of june 30, 2020 book value per share $106.42 versus $101.55 as of dec, 31, 2019.\ntravelers companies - qtrly underlying combined ratio 91.4% versus 94.9%.\ntravelers companies - covid-19 & related economic conditions had a modest net impact on the underwriting result in quarter.\n", "role": "assistant" } ]

[ { "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: All of these materials can be found on our website at travelers.com under the Investors section.\nSpeaking today will be Alan Schnitzer, Chairman and CEO; Dan Frey, Chief Financial Officer; and our three segment presidents: Greg Toczydlowski of Business Insurance; Tom Kunkel of Bond & Specialty Insurance; and Michael Klein of Personal Insurance.\nThey will discuss the financial results of our business and the current market environment.\nAlso in our remarks or responses to questions we may mention some non-GAAP financial measures.\nWe're very pleased to report excellent underwriting and investment results for the second quarter and first half of the year.\nCore income for the quarter was $879 million or $3.45 per diluted share, generating a core return on equity of 13.7%.\nIn terms of underwriting results, higher underlying underwriting income and net favorable prior year reserve development, as well as a lower level of catastrophe losses, all contributed to higher core income.\nUnderlying underwriting income was 8% higher than in the prior year quarter, driven by record net earned premiums of $7.6 billion and an excellent underlying combined ratio of 91.4%.\nWe are particularly pleased with the continued strong underlying fundamentals in each of our three business segments.\nIn Business Insurance, net earned premiums were higher and the underlying combined ratio improved by 3.7 points.\nOn the Specialty Insurance and Personal Insurance, both delivered meaningful increases in net earned premiums and continued strong margins.\nOur high-quality investment portfolio generated net investment income of $682 million after tax, reflecting very strong returns in our non-fixed income portfolio.\nThese excellent results, together with our strong balance sheet, enabled us to grow adjusted book value per share by 13% over the past year after making important investments for the future and returning significant excess capital to our shareholders.\nDuring the quarter, we returned $625 million of excess capital to shareholders, including $401 million of share repurchases.\nTurning to the top-line.\nThe combination of the strong franchise value we offer to our customers and distribution partners, together with excellent execution by our field organization, produced terrific results.\nDuring the quarter, we grew net written premiums to $8.1 billion, an increase of 11% or 8% after adjusting for the auto premium refunds in the prior year quarter.\nEach of our three segments contributed meaningfully to the top-line growth.\nIn Business Insurance, net written premiums grew by 5%, driven by retention, which ticked up almost 1 point; renewal premium change at a near record high of 9.5%; and 9% growth in new business.\nCombination of strong pricing and higher retention reflects continuing strength in the pricing environment.\nInside renewal premium change, pure renewal rate change was a strong 7.1%.\nGreg will share more detail about the texture underneath renewal rate change in a few minutes.\nRenewal premium change also included the highest exposure growth we've seen in nine quarters, an encouraging sign of improvement in U.S. economic activity.\nIn Bond & Specialty Insurance, net written premiums increased by 16%, driven by record renewal premium change of 12.7% in our management liability business, while retention remained strong.\nIn our commercial businesses, written pricing continues to comfortably outpace estimated loss trends, which will continue to benefit margins as it earns in.\nContinuing strong pricing and retentions reflect the industry's clear-eyed view of the ongoing headwinds impacting returns for the industry, including weather volatility, low interest rates and social inflation.\nWe expect pricing to continue to outpace loss trends for some time.\nTurning to Personal Insurance.\nProduction was again excellent this quarter.\nNet written premiums increased 8% after adjusting for the auto premium refunds in the prior year quarter.\nPolicies in force in both Auto and Homeowners are at record levels, driven by continuing strong retention and growth in new business.\nWhile the impact of the pandemic on claim frequency seems to be attracting a lot of attention when it comes to personal auto, we've been equally focused on applying our companywide perform and transform mandate to this business.\nWe are very pleased with the results.\nWe've accelerated our domestic auto policies in force growth from 1% to 4% over the last six quarters, bringing PIF count to a record high.\nThis demonstrates the ongoing success of our three-pronged strategy in Personal Insurance to meet customers where they are, serve them how they want, and get them what they need.\nGoing forward, we will continue to invest in advanced segmentation, multi-channel distribution and providing great experiences to continue to deliver profitable growth.\nMichael will share more detail in a few minutes.\nOur excellent top and bottom-line results this quarter and for the first half of the year demonstrate the continued successful execution of our strategy to grow the top-line at attractive returns, as well as the effectiveness of our well-defined and consistent investment philosophy.\nOur focus and well-executed innovation agenda has been an important contributor to the growth and profitability we have achieved.\nWe will continue to relentlessly pursue our priorities of extending our lead in risk expertise, providing great experiences for our customers, distribution partners and employees and improving productivity and efficiency.\nWith the momentum we have, and the best talent in the industry, we are well-positioned to continue to create meaningful shareholder value over time.\nCore income for the second quarter was $879 million compared to a core loss of $50 million in the prior year quarter.\nThe significant improvement was the result of positive factors across the business, including a lower level of catastrophe losses; improved results in our non-fixed income investment portfolio; more favorable prior year reserve development; and increased underlying underwriting income.\nOur second quarter results include $475 million of pre-tax cat losses compared to $854 million in last year's second quarter.\nThis quarter's cats were somewhat below what we would have assumed for a typical second quarter, but year-to-date cat losses are still above what we would have assumed, given the high level of losses in the first quarter.\nOn a year-to-date basis, we have accumulated about $1.5 billion of qualifying losses toward the aggregate retention of $1.9 billion on our property aggregate catastrophe XOL Treaty.\nThe Treaty provides $350 million of coverage on the first $500 million of losses above the aggregate retention amount.\nUnderlying underwriting income increased 8% to $617 million pre-tax, reflecting a higher level of earned premium in each of our segments and a strong underlying combined ratio of 91.4%, consistent with the prior year.\nAs you'll hear from Greg, Tom and Michael, improvements in the underlying combined ratio in both Business Insurance and Bond & Specialty were offset by an increase in the underlying combined ratio in Personal Insurance.\nSome of the increase in Personal Insurance was expected, given that last year's quarter benefited from unusually low auto losses as a result of the pandemic.\nThe underlying loss ratio came in at 61.7%, up 1.3 points from last year's second quarter as the beneficial impact of earned pricing in excess of loss trend was more than offset by the comparison to a very low pandemic-related personal auto loss ratio in the year ago quarter.\nExpense ratio of 29.7% is 1.3 points lower than the prior year quarter as last year's result was elevated primarily due to the premium refunds we provided to our personal auto customers.\nTurning to prior year reserve development.\nIn Personal Insurance, both auto and property losses came in better than expected for recent accident years, resulting in $65 million pre-tax net favorable PYD.\nIn Bond & Specialty Insurance, $44 million of pre-tax, net favorable PYD was driven by favorable loss experience in surety and fidelity related to recent accident years.\nIn Business Insurance, net favorable prior year reserve development of $73 million was driven by better-than-expected loss experience in workers' comp across multiple accident years, partially offset by reserve strengthening in our run-off book.\nNet investment income improved to $682 million after tax this quarter.\nOur non-fixed income portfolio turned in particularly strong results this quarter, reflecting performance in the equity markets, contributing $265 million after tax.\nConsistent with our expectations, fixed income returns were down slightly from the prior year quarter as the benefit from higher levels of invested assets was more than offset by a decline in yields.\nFor the remainder of 2021, we expect fixed income NII, including earnings from short-term securities, of between $425 million and $435 million after tax per quarter.\nTurning to capital management.\nOperating cash flows for the quarter of $1.8 billion were again very strong.\nAll our capital ratios were at or better than target levels and we ended the quarter with holding company liquidity of approximately $2.4 billion.\nDuring the second quarter, we took advantage of favorable market conditions and raised $750 million to help fund the future growth with a 30-year debt issuance at 3.05%, representing our second lowest 30-year coupon ever and achieving one of the tightest spreads ever for a 30-year note issued by an insurance company.\nThe market value of the bonds in our portfolio generally rose as U.S. treasury yields declined and credit spreads tightened during the second quarter.\nAnd accordingly, our after tax net unrealized investment gain increased from $2.8 billion as of March 31 to $3.2 billion at June 30.\nAdjusted book value per share, which excludes net unrealized investment gains and losses, was $103.88 at quarter end, up 4% since year-end and up 13% year-over-year.\nWe returned $625 million of capital to our shareholders during the second quarter with $224 million of dividends and $401 million in share repurchases.\nComing back to reinsurance for a moment.\nThe structure of our main cat reinsurance program is generally consistent with the prior year.\nWe renewed our Northeast cat treaty effective July 1 with substantially similar terms and pricing that was up only slightly on an exposure adjusted basis.\nOur cat bond, Long Point Re III, is now in the final year of its four-year term.\nIn the annual reset for the 2021 hurricane season, the attachment point was adjusted from $1.87 billion to $1.98 billion while the total cost of the program was flat year-over-year.\nA more complete description of our cat reinsurance coverage, including our general cat aggregate XOL Treaty that covers an accumulation of certain property losses arising from multiple currencies, is included in our 10-Q, which we filed earlier today and in our 2020 Form 10-K.\nBefore turning the call over to Greg, I'd like to make a few comments about inflation as the consumer price index has gotten a lot of attention lately.\nWe are relatively less leveraged to overall CPI-type inflation as compared to, say, medical inflation and social inflation.\nOne place a CPI-type inflation can impact us is in our short tail lines.\nNotwithstanding our strong profitability in PI, as you'll hear from Michael, we are experiencing a degree of elevated severity.\nHowever, relatively short payout periods in short tail lines limit the impact of that exposure.\nAnd although it takes time to earn in over the policy period, we can price for those increases reasonably quickly.\nAdditionally, it's important to remember that we have some natural hedges in our business that mitigate the effects of inflation.\nFirst, higher inflation is often associated with stronger economic activity, as well as higher wages and asset values, all of which contributed to higher insured exposures.\nAnd as we've discussed before, higher exposure contributes to improved margins.\nSecond, although we're not seeing it at the moment, to the extent interest rates are correlated to inflation, we would benefit from higher returns in our investment portfolio as inflation increases.\nFinally, let me reiterate that we are conscious of the inflation environment and the uncertainties surrounding it when we established our loss picks and our balance sheet reserves.\nBusiness Insurance had a great quarter with strong financial results and terrific execution in the marketplace.\nSegment income was $643 million for the quarter compared to a loss of $58 million in the prior year quarter.\nHigher net investment income, lower catastrophe losses, higher underlying underwriting income, and favorable prior year reserve development, all contributed to the year-over-year improvement.\nWe're particularly pleased with the underlying combined ratio of 93.3%, which improved by 3.7 points from the second quarter of 2020, primarily attributable to three things.\nFirst, about 2 points of the improvement resulted from earned pricing exceeding loss cost trends.\nAnother 0.5 point or so resulted from lower non-cat weather.\nAnd third, the improvement also reflects the comparison to the modest net charge we took in the prior year quarter related to the pandemic.\nIn terms of non-cat weather, while the year-over-year improvement was about a 0.5 point favorable, as I just mentioned, this quarter's result was about 1.5 point better than what we assumed for the quarter.\nTurning to the top-line.\nNet written premiums were up 5%, benefiting from strong renewal premium change, including both strong renewal rate and exposure levels that are trending back to pre-pandemic levels and higher year-over-year new business volumes.\nAs for domestic production, renewal premium change was 9.5%, a historically high result and up almost 4 points from the second quarter of last year.\nUnderlying the RPC, we achieved strong renewal rate change of 7.1% and healthy exposure growth that reflects improving trends in our customers' outlook for their businesses.\nAs Alan said, our ability to continue to achieve historically high pricing with improved retention speaks to the stability of pricing in the market.\nNew business was up more than 9% with both select and middle-market contributing.\nI'll discuss those results in more detail in a moment when I get to the individual businesses.\nWe are very pleased with these aggregate production results and our marketplace execution.\nWe've generated written pricing that has been in excess of estimated loss trend for some time now, resulting in significant improvement in the profitability of our book.\nWhile this quarter's renewal rate change of 7.1% remains well in excess of loss trends, it was a little lower sequentially.\nLet me provide a little more context around that.\nA substantial majority of the decrease is attributable to a rational moderating of rate in our two specialty business units; excess casualty, which is inside middle market; and national property.\n[Indecipherable] comes after three years of very strong compounding rate increases in these two businesses.\nSo the tempering of rate is appropriate considering the improved return profile.\nAlso, while renewal rate change was down sequentially for those businesses, rate increases were still in double-digits.\nMore broadly, the rate increases we are seeing across Business Insurance continue to be stable and widespread across both our lines of business and our distribution of accounts.\nAs illustrated on Slide 12, in our middle market and national property businesses, we achieved rate increases in 84% of the accounts that renewed in the second quarter, up from 81% in last year's second quarter.\nGiven persistent loss pressures and low fixed income yields, we will continue to see grade [Phonetic] to further improve our margins.\nWe will also continue to focus on all the non-rate levers to improve the risk profile and profitability across our portfolio.\nFor example, in our national property business, our underwriters continue to focus on improving terms and conditions, transaction-by-transaction.\nChanges in terms like increased deductibles, management of sub-limits and reinsurance optimization are meaningful tools in enhancing our profitability and our underwriters continue to be active in utilizing all those levers.\nAs for the individual businesses, in Select, renewal rate change was 4.3%, more than 2 points higher than the second quarter of 2020, while retention was 80%.\nThese results reflect deliberate execution as we pursue improved returns in certain segments of the business.\nAnd we're pleased with the progress we're making in this regard.\nExposure growth was up over 4% for the quarter, which is an encouraging sign as the economy reopens.\nLastly, new business was up 6% over the prior year quarter, driven by the continued success of our new BOP 2.0 product, which is now live in 31 states.\nThis state-of-the-art product includes industry-leading segmentation and a fast easy quoting experience.\nWe are encouraged with our agent's adoption of the new product as both submissions and new policies are up.\nIn middle market, renewal premium change of over 9% and retention of 87% were both historically high.\nRenewal rate change at 7.4% remained strong and well in excess of loss trends.\nFinally, new business was up 16% over the prior year quarter, driven by the success with larger accounts, as well as some improvement in the quality of the flow in the market.\nAs always, we remain disciplined around risk selection and underwriting.\nTo sum up, Business Insurance had a terrific quarter by all measures.\nWe're pleased with our execution in further improving the underlying margins in the book, and we continue to invest in the business for long-term profitable growth.\nBond & Specialty posted excellent returns and growth in the quarter.\nSegment income was $187 million, considerably more than double the prior year quarter, driven by favorable prior year reserve development, a significantly improved underlying underwriting margin and higher business volumes.\nThe underlying combined ratio of 83.4% improved by over 4.5 points from the prior year quarter as pricing that exceeded loss cost trends drove a lower underlying loss ratio.\nTurning to the top-line.\nNet written premiums grew an exceptional 16% in the quarter with solid contributions from all our businesses.\nIn management liability renewal premium change was a record 12.7%, driven by near record rate.\nRetention remained strong at 86%.\nNew business increased 6% from the second quarter of last year; our first quarterly increase since the beginning of the pandemic with strong new business pricing.\nSurety also grew for the first time since the beginning of the pandemic and international again posted meaningful growth, including strong retention and rate.\nSo Bond & Specialty results were excellent and reflects our ability to successfully manage this business through a variety of business and economic cycles.\nWe're very pleased with our second quarter Personal Insurance results.\nSegment income of $121 million was up $111 million from the prior year quarter, benefiting from lower catastrophes, higher net investment income and higher net favorable prior year reserve development.\nPartially offsetting these improvements was a lower underlying underwriting gain, which I will discuss in more detail in a moment.\nOur second quarter combined ratio improved from the prior year quarter by about 1.5 points to 99.7%.\nNet written premiums grew 16%.\nRecall that in the prior year quarter, we provided $216 million of premium refunds to automobile customers in response to the impact of the pandemic.\nAdjusting for these premium refunds, net written premiums grew a very strong 8% with Domestic Homeowners up 12% and Domestic Automobile up 4%.\nAutomobile delivered another excellent quarter with a combined ratio of 91.6%.\nThe underlying combined ratio was an impressive 92%, although up 6 points from the prior year quarter, which reflected lower loss activity during the initial months of the pandemic.\nThe current quarter results reflect the benefits of modestly lower claim frequency compared to pre-pandemic levels.\nAs we exited the quarter, claim frequency was closer to pre-pandemic levels and we would expect that trend to continue into the third quarter.\nOur strong current quarter profitability also reflect increased severity, particularly in collision and third-party physical damage claims, driven primarily by higher costs of used vehicles and parts.\nAs auto loss experience approaches pre-pandemic levels, we plan to begin filing for rate increases in selected states later this year as we continue to balance business volumes and profitability.\nWhile it will take some time for future rate actions to earn into our results, we are well-positioned to continue to be -- profitably grow in auto.\nIn Homeowners and Other, the second quarter combined ratio of 108.3% was 6 points lower than the prior year quarter, driven by a 13.5 point reduction in catastrophe losses.\nPartially offsetting the catastrophe favorability was an 8 point increase in the underlying combined ratio.\nApproximately one-third of this increase reflects non-catastrophe weather losses which were in line with our expectations, but elevated over a less active prior-year quarter.\nThe remainder of the increase reflects continued elevated frequency and severity of fire and non-weather water losses.\nThe increased severity we saw in the second quarter includes higher repair costs due to a combination of labor and material increases.\nWe continue to see grade increases in response to these trends and we'll continue to actively monitor inflation and loss cost trend changes and factor them into our pricing and underwriting decisions.\nTurning to quarterly production.\nDomestic Automobile retention was up slightly to a strong 85%.\nNew business increased by 19% and policies in force grew 4%.\nDomestic Homeowners and Other delivered another excellent quarter with retention remaining strong at 85%, renewal premium change increasing to 8.2%, and new business growth of 28%, reflective of increased quote activity and increase in average premium, along with the ongoing successful rollout of Quantum Home 2.0.\nPolicies in force grew 7%.\nAs Alan mentioned, our policies in force growth across both Auto and Homeowners are at record levels.\nActually, our policies in force across both Auto and Homeowners are at record levels, reflecting our ongoing effort to perform and transform in Personal Insurance.\nWhen we launched Quantum Auto 2.0, we designed it with a modular product structure to give customers what they need and to deliver long-term performance.\nThis has enabled us to seamlessly introduce new rating variables, such as vehicle history, prior insurance history, and telematics, allowing us to continually improve our pricing segmentations.\nRegarding telematics, we've seen take-up rates for IntelliDrive increase by 30% since the launch of our second-generation offering, which features a fully redesigned mobile experience, monitors distracted driving and improves our ability to match price to driving behavior.\nOur momentum in Auto aligns very well with our goal of providing total account solutions for customers.\nThe Quantum Home 2.0 product is now available in over 40 states, generating consistent growth in policies in force.\nBoth distributors and customers continue to see value in our combined auto and property offerings.\nOur multi-channel PI distribution strategy allows us to meet our customers where they are.\nAs a result of the success of our new products, our existing relationships continue to perform well.\nAdditionally, we've seen more demand for agent appointments, which is contributing meaningfully to our growth.\nIn order to serve customers how they want to be served, we are also investing in our digital capabilities.\nWith advancements in our MyTravelers mobile app, we continue to digitize the customer journey with over 600,000 customers already downloading the app since its launch earlier this year.\nGoing forward, we will continue to invest in solutions that meet customers where they are, give them what they need and serve them how they want, while working with our distribution partners to deliver profitable growth.\nTom's impact as the leader of our very successful surety and management liability businesses has been profound.\nIn addition to delivering exceptional financial results over many years, Tom and his leadership team fostered a culture of care, community and excellence that extends throughout our Bond & Specialty organization and throughout Travelers.\nIt's one of the many reasons why I'm so pleased that Jeff Klenk, currently a member of Tom's leadership team and head of our management liability business, will succeed Tom.\nJeff has been at Travelers for more than 20 years.\nHe's a proven leader and the perfect candidate to take the reins from Tom.\nYou'll hear from Jeff in October on our third quarter earnings call.\nTom, we're all going to miss you personally and professionally.\n", "role": "user" }, { "content": "compname reports ‍​qtrly core earnings per share $3.45.\njuly 20 (reuters) - travelers companies inc: :‍​qtrly core earnings per share $3.45 ; qtrly earnings per share $3.66.\nqtrly catastrophe losses, net of reinsurance, $475 million pre-tax versus loss of $854 million pre-tax.\nqtrly net written premiums $8.14 billion, up 11%.\nhigher underwriting income, net favorable prior year reserve development, lower level of catastrophe losses, led to higher core income in quarter.\n", "role": "assistant" } ]

[ { "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: All of these materials can be found on our website at travelers.com under the Investors section.\nSpeaking today will be Alan Schnitzer, Chairman and CEO; Dan Frey, CFO; and our three segment Presidents, Greg Toczydlowski of Business Insurance; Tom Kunkel of Bond & Specialty Insurance; and Michael Klein of Personal Insurance.\nThey will discuss the financial results of our business and the current market environment.\nAlso, in our remarks or responses to questions, we may mention some non-GAAP financial measures.\nWe are very pleased to report third quarter core income of $798 million or $3.12 per diluted share, and core return on equity of 13.5%.\nOur bottom-line result this quarter reflects strong underlying underwriting income resulting from record net earned premium of $7.4 billion and an underlying combined ratio that improved 2.6 points to a strong 91.5%.\nWe're pleased with the underwriting results in all three segments with improved underlying profitability in both Business Insurance and Personal Insurance.\nIn Business Insurance, the underlying result improved due to margin expansion as earned rate exceeded loss trend.\nIn Personal Insurance, the benefits from lower frequency in the auto business more than offset higher levels of non-catastrophe weather and wildfire losses.\nIn Bond & Specialty Insurance, the underlying combined ratio was elevated, consistent with the outlook we shared on the call last quarter.\nI'll note that the combined and underlying combined ratios were still under 90% generating a solid return in a challenging environment.\nProfitability in all three segments continues to reflect the benefit of our strategic focus on productivity and efficiency, resulting in a sub-30% consolidated expense ratio.\nCore income for the quarter also included catastrophe losses of $397 million pre-tax, which were meaningfully above the 10-year average per quarter.\nWe hope for a quick recovery for all those who have been impacted.\nI also want to express my gratitude to our dedicated claim team for taking care of our customers during these extraordinary times.\nOf the 100,000 or so claim notices we received so far this year, arising out of the record number of PCS catastrophes in the US, our claims team has met our objective of closing over the 90% of the claims within 30 days.\nA quick resolution results in a better experience for our customers and a more efficient outcome for us.\nIn addition to the Property Cat Aggregate Treaty which has mitigated our losses, recent actions to improve the balance sheet and risk reward meaningfully reduced our exposure to wildfires.\nTo illustrate the point, in the areas impacted by the five costliest California wildfires this season, our exposure is about a third lower than it was two years ago.\nTurning to our investment portfolio.\nThis quarter, we again benefited from our well-defined and consistent investment philosophy with our high-quality investment portfolio generating net investment income of $566 million after tax.\nLastly, before I turn to the top-line, I'll share that the uncertainty surrounding business interruption claims continues to resolve favorably and consistent with our expectations.\nSo we remain confident on that front.\nIn terms of the top-line and production, we continue to generate strong results.\nNet written premiums in the quarter grew by 3% driven by strong renewal rate change and retention in all three segments.\nIn our commercial businesses, exposure change on renewed accounts was only modestly negative for both the quarter and year-to-date compared to a much more significant reduction in economic activity.\nWe believe that in addition to generating a better underwriting result, our high-quality portfolio of accounts is more resilient to economic hardship.\nIn Business Insurance, we achieved record renewal rate change of 8.2%, 4 points higher than the prior year quarter, while retention remained strong.\nWe achieved higher renewal rate change year-over-year and sequentially in each of our lines of business other than workers' compensation.\nIn Bond & Specialty Insurance, net written premiums increased by 4% as renewal premium change in our domestic management liability business rose to 8.1%, including record renewal rate change while retention remained at an historical high.\nIn Personal Insurance, net written premiums increased by 8%, driven by strong retention and new business in both Agency Auto and Agency Homeowners.\nIn our Agency Homeowners business, we achieved renewal premium change of 8.2%, its highest level since 2014.\nAcross all of our businesses, we've made good progress achieving rate gains and managing other levers of profitability to improve the outlook for returns in those lines that need it, and we'll continue to execute to meet our return objectives.\nFor all the reasons we've discussed previously, from the loss environment to the interest rate environment, we expect continued momentum in the marketplace.\nNotwithstanding our focus on successfully managing through the pandemic and addressing other headwinds impacting the industry, it's important to note that we haven't been distracted from pursuing our strategic agenda.\nWe remain focused on leveraging our scale and resources to continue to invest and innovate.\nAs we said before, we believe the winners in our industry will be those with deep domain expertise that can deliver industry-leading results, while innovating successfully on top of a foundation of excellence.\nFrom a position of strength, we continue to focus our efforts on extending our advantage in risk expertise, providing great experiences and improving productivity and efficiency.\nIn our commercial businesses, we continue to make progress in digitizing virtually every aspect of the value chain, while at the same time, enhancing our advanced analytics.\nJust as one example, our BOP 2.0 small commercial product, which we launched in 2019 benefits from both.\nIn the states in which we rolled it out, we've seen about a 15% increase in both submissions and new business premiums.\nThis product uses AI and third-party data to improve underwriting segmentation, operational efficiency and the agent experience.\nThat point, the artificial intelligence eases the burden on the agent and has resulted in a substantial improvement in classification accuracy.\nIn Personal Insurance, we're balancing sophisticated total account solutions that streamline the agent and customer experiences.\nFor example, we completely redesigned the experience of our IntelliDrive auto-telematics offering and introduced a distraction reading.\nWe rolled this out in nine states during the second and third quarters and have plans to launch in an additional 10 states in the fourth quarter.\nWe're observing a nearly 30% increase in the rate of adoption for IntelliDrive and have received strong agent feedbacks.\nAlso, in the fourth quarter, we're rolling out an enhanced customer self-service tool in a new mobile app.\nIn our Claim organization, we're advancing the rollout of virtual end-to-end claim service tools, embracing the pandemic-driven trends at accelerated digital adoption by individuals and businesses.\nCustomer and agent satisfaction are up, while payout discipline remains strong.\nTo sum it up, we see [Phonetic] better performance in the face of a pandemic and a challenging underwriting environment.\nIt reflects the importance of the strong underwriting culture, the benefit of data and analytics and the franchise value we offer to our customers and distribution partners.\nAll of that, together with our highly engaged and talented workforce, we're confident that we're well-positioned to capitalize on opportunities as the economy continues to reopen.\nOur core income for the third quarter was $798 million, generating core ROE of 13.5%, both up significantly from core income of $378 million and core ROE of 6.5% that we reported in the prior year quarter.\nThese increases resulted primarily from this year's favorable third quarter QID compared to net unfavorable QID in last year's thrid quarter, as well as a significant increase in underlying underwriting profit.\nMore on both of those items in a minute.\nOur third quarter results include $397 million of pre-tax cat losses compared to $241 million in last year's third quarter.\nThis quarter's cats included Hurricane Laura, Tropical Storm Isaias, the severe straight line winds that impacted the Midwest in August, and several large wildfires in the Western United States.\nThe increase in the level of cat activity was even more pronounced than those numbers suggest as our net cat results in the quarter was tempered by recoveries under the Aggregate Catastrophe XoL Treaty.\nWe have recognized a full recovery under that treaty in our third quarter results with $233 million pre-tax benefit in the cat line and $47 million pre-tax benefiting non-cat weather in our underlying results.\nRecall that last year, we did not have any recoveries under the treaty until the fourth quarter.\nOf course the full recovery in this year's third quarter means that there is no coverage remaining from this treaty as we enter the fourth quarter.\nThe underlying combined ratio of 91.5%, which excludes the impacts of cats and QID improved by 2.6 points from 94.1% in last year's third quarter.\nThe underlying loss ratio improved by 2.4 points, and benefited from favorable auto frequency related to COVID-19 and the impact of earned pricing in excess of loss trends, partially offset by an increase in non-cat weather losses including wildfires.\nThe expense ratio of 29.3% is two-tenths of a point favorable to last year's third quarter results, and reflects our strategic focus over a number of years on improving productivity and efficiency.\nSetting aside quarter-to-quarter variability, our year-to-date expense ratio of approximately 30% is a figure we're comfortable with.\nOur top-line proved to be resilient with a 3% increase in net written premium, as continued strong renewal rate change and retention, in all three segments, more than offset modestly lower insured exposures in the commercial businesses.\nFor the quarter, losses directly related to COVID-19 totaled $133 million pre-tax with $92 million in Business Insurance driven primarily by workers' comp and $41 million in our Bond & Specialty business predominantly driven by management liability.\nMore than offsetting those losses were lower levels of auto claims and to a lesser extent, fewer non-COVID workers' comp NGL claims due to lower levels of economic activity.\nThe net impact of the COVID environment on the consolidated underlying combined ratio amounted to a benefit of about 2 points, mostly in Personal Insurance.\nGiven the ongoing uncertainty in this environment, we continue to take a cautious approach in estimating the net impact of COVID-19-related losses.\nConsistent with my commentary last quarter, the majority of direct COVID losses that we booked year-to-date through September is still sitting in IBNR.\nLooking at the year-to-date impact of direct COVID losses, net of related frequency benefits and other underwriting items, our underwriting results have benefited by a little more than $100 million pre-tax or about 0.5 point on a consolidated underlying combined ratio, including the impact of premium refunds to policyholders.\nHowever, year-to-date net investment income reflects the significant adverse impact on our non-fixed income portfolio.\nTurning to prior year reserve development.\nAs previously disclosed, third quarter includes approximately $400 million of pre-tax benefit from the PG&E subrogation.\nAbout 80% of that benefit is reflected in Personal Insurance, with the remainder reflected in Business Insurance.\nSetting PG&E to the side, QID results in the quarter were as follows.\nIn Personal Insurance, net favorable development of $40 million pre-tax was driven by auto results coming in better than expected for recent accident years.\nIn Bond & Specialty Insurance, there was no net impact from QID.\nIn Business Insurance, we recognized unfavorable development of $295 million pre-tax as a result of our annual asbestos review.\nWhile there was some slight improvement in several of our asbestos indicators, the overall level of paid losses and general claim activity has persisted at levels higher than we had anticipated.\nThis year, as we do every few years, we reviewed certain macro assumptions underlying our actuarial analysis.\nOur updated view of ultimate asbestos-related losses resulted in an increase in the low end of the actuarial range.\nThis year's asbestos charge is greater than last year's charge as a result of our updated view of the range for ultimate losses, not as a result of increases in paid losses or severity.\nThere are some indications that the environment is improving in terms of the emergence of new asbestos claims going forward.\nOf note, as you can see on the bottom two lines of the table, the decline in mesothelioma deaths was much more pronounced in all of the younger age groups.\nThis trend is directionally consistent with our expectation that over time, the high risk group of people actually exposed to asbestos in the workplace prior to the late 1970s will get smaller and will not be replaced by younger people as those who entered the workforce sometime in the 1980s should not have been exposed to asbestos to nearly the same degree as their predecessors.\nExcluding the impacts of the PG&E settlement and the annual asbestos review, there was virtually no net prior year reserve development in Business Insurance.\nFavorable development in workers' comp was offset by an increase to the reserves from legacy liabilities in our run-off book, related to a single insured arising out of policies issued more than 20 years ago.\nAfter-tax net investment income increased by 7% from the prior year quarter to $566 million.\nThe increase was driven by our non-fixed income returns where results for our private equity, hedge funds and real estate partnerships are generally reported to us on a one quarter lag.\nBecause of that reporting lag, the recovery experienced in the broader markets during the second quarter benefited our non-fixed income results in the third quarter.\nFixed income returns decreased by $31 million after tax as the benefit from higher levels of invested assets was more than offset by the decline in interest rates, consistent with our comments on last quarter's call.\nAlso consistent with our prior commentary, we expect after-tax fixed income NII in the fourth quarter to be down $35 million to $40 million compared to a year ago.\nLooking ahead to 2021, our current expectation is for after-tax fixed income NII to be between $420 million and $430 million per quarter.\nTurning to capital management.\nOperating cash flows for the quarter of $2.3 billion were again very strong, all our capital ratios were at or better than target levels and we ended the quarter with holding company liquidity of approximately $2.3 billion, well above our target level.\nRecall that in April we pre-funded the $500 million of debt coming due in November with a new 30-year $500 million debt issuance.\nSo our holding company liquidity at September 30 is temporarily elevated by that amount [Phonetic].\nInvestment yields decreased as credit spreads tightened during the third quarter, and accordingly, our net unrealized investment gain increased from $3.6 billion after tax as of June 30 to $3.8 billion after tax at September 30.\nAdjusted book value per share, which excludes net unrealized investment gains and losses was $94.89 at quarter end, up 2% from year-end of 2019 and up 5% year-over-year.\nWe returned $218 million of capital to our shareholders this quarter via dividends.\nWe did not repurchase any shares during the quarter.\nLooking ahead, there is no change in our approach to capital management.\nUntil there is more clarity on the state of the economy, we may buy back some shares in the coming quarters or we may continue to choose to buy none.\nBusiness Insurance produced $365 million of segment income for the quarter, a significant increase over the prior year quarter with prior year development, underlying underwriting income and net investment income, all contributing to the year-over-year increase.\nThe underlying combined ratio of 94% improved by almost 2 points, driven by more than 1 point of earned rate in excess of loss trend.\nA modest favorable net impact from the pandemic contributed about 0.5 point to the improvement.\nAs for the top-line, net written premiums were 1% lower than the prior year quarter, with strong rate and high retentions mostly offsetting modestly lower insured exposures and lower levels of new business.\nAs Alan mentioned, we are very pleased with the resilience of our top-line in the face of the ongoing macroeconomic challenges.\nTurning to the domestic production.\nWe achieved record renewal rate change of 8.2%, up 4 points from the third quarter of last year and almost 1 point from the second quarter of this year, while retention remained high at 83%.\nWe feel very good about the headline numbers, but as we've shared before, the quality of the execution and segmentation underneath the headline numbers are just as important.\nTo that point, while we achieved meaningful rate increases in all product lines, set workers' comp, our underwriters are making deliberate and granular decisions with respect to rate and retention and account-by-account or class-by-class basis.\nNew business of $505 million was 9% lower than the prior year quarter.\nWe attribute the decline to lower levels of economic activity, as well as careful risk selection by our underwriters.\nIn our core middle market business, for example, while submissions are up, our quote ratio is lower as we are taking a disciplined approach, given our view of quality of new business in the market.\nAs for the individual businesses, in select, renewal rate change increased to 2.9%, marking the seventh consecutive quarter in which renewal rate change was higher than the corresponding prior-year quarter.\nRetention of 80% was down a couple of points from recent periods, largely driven by policy cancellations that were deferred to the second quarter due to our pandemic-related billing relief program.\nIn middle market, renewal rate change increased to 8.3%, while retention remained strong at 85%.\nThe 8.3% was up by more than 4.5 points from the third quarter of 2019, and we achieved positive rate of more than 80% of our accounts this quarter, up from about two-thirds in the third quarter of last year.\nTo sum up, we feel terrific about our results and execution in a challenging underwriting environment.\nWe also feel very good about the investments we're making for the future and the benefits we're seeing from those investments.\nThose investments include enhancing the experiences for our customers and distribution partners, digitizing the underwriting transaction, and creating efficiencies.\nFor example, we've recently launched multiple pilots to automatically incorporate data from our distribution partners' agency management systems directly into our systems, substantially reducing the time and friction in the process, while also improving data quality.\nWe're as confident as ever, there are meaningful competitive advantages to position us well for long-term profitable growth.\nBond & Specialty delivered solid returns and growth in the quarter despite the ongoing headwinds of COVID-19.\nSegment income was $115 million, a $24 million decrease from the prior year quarter as the benefit of higher volumes was more than offset by a higher underlying combined ratio.\nThe underlying combined ratio of 89% increased 5.4 points, primarily driven by estimated losses from COVID-19 and related economic conditions.\nGiven the products that we write, we expect the results of the segment to be impacted in times of severe economic downturn.\nWe experienced that during the financial crisis and we're seeing elevated loss activity in the current environment.\nWe contemplate economic volatility in our underwriting and in our pricing, and as Alan said, in these circumstances, we feel good about the returns we generated in the quarter.\nWe expect that the underlying combined ratio will continue to be elevated at around this level over the near term.\nNet written premiums grew 4% for the quarter, reflecting strong growth, driven by improved pricing in our management liability business, partially offset by lower surety production due to the continued economic impact of COVID-19 on public project procurement and related bond demand.\nIn our domestic management liability business, we are pleased that the renewal premium increased to 8.1%, driven by record rate.\nThis marks the eighth consecutive quarter in which RPC is higher than the corresponding prior-year quarter.\nRetention remained at a historically high 90%.\nThese production results demonstrate the successful execution of our strategy to pursue rate where needed, while maintaining strong retention of our high quality portfolio.\nWe will continue to pursue rate increases where warranted.\nDomestic management liability new business for the quarter decreased $14 million, primarily reflecting our thoughtful underwriting in this elevated risk environment.\nSimilar to what you heard from Greg in Business Insurance, submissions are up, while quote activity is down.\nSo Bond & Specialty results remained resilient despite the challenges brought on by COVID-19.\nWe continue to be pleased with our strong execution and feel confident about our ability to navigate through this challenging environment and continue to deliver strong returns over time.\nIn Personal Insurance, this quarter, we are very pleased with our continued execution in the marketplace as we delivered excellent profitability and grew net written premiums by 8%, achieving record levels of domestic policies in force.\nPersonal Insurance segment income for the third quarter was $392 million, up $261 million from the prior year quarter, driven by the pre-tax impacts of an improvement of $163 million in the underlying underwriting gain, and $343 million of higher net favorable prior year reserve development, partially offset by $174 million of higher catastrophe losses, net of reinsurance.\nOur combined ratio for the quarter was 86.4%, an improvement of 11.6 points from the prior year quarter, driven primarily by the increase in net favorable prior year reserve development.\nHigher catastrophe loss experienced in the quarter was largely offset by improvement in the underlying combined ratio.\nThe improved underlying combined ratio reflects the continuation of favorable auto loss experience in the quarter, partially offset by higher non-catastrophe weather-related losses.\nI'll discuss both of these dynamics in a bit more detail next.\nAgency Automobile profitability was very strong with a combined ratio of approximately 80% for the quarter.\nThe underlying combined ratio of 81% improved nearly 12 points, continuing to reflect favorable frequency levels.\nApproximately 8 of the 12 points of improvement relate to current quarter favorability.\nThe remainder results from favorable reestimates of activity in the first half of 2020.\nWe continue to observe lower claim frequency as a result of fewer miles driven in light of the COVID-19 pandemic.\nFor the third quarter, data from our IntelliDrive program indicates that miles driven increased relative to last quarter, but continue to be down from pre-COVID- 19 levels.\nIn response to this continued favorable loss experience, we filed modest rate reductions in a handful of states during the third quarter.\nWe will continue to analyze and incorporate current trends into our underwriting and pricing decisions as we balance business volumes and profitability.\nIn Agency Homeowners and Other, the third quarter combined ratio was 92.8%, an improvement of 9.2 points from the prior year quarter, resulting from 26 points of higher net favorable prior year reserve development, mostly from the PG&E subrogation recoveries, partially offset by elevated levels of catastrophe losses and an increase in the underlying combined ratio, driven by higher non-catastrophe weather-related losses.\nOur catastrophe and non-catastrophe experience reflects a very active quarter with a record 31 PCS events.\nWest Coast wildfires represented almost half of the total PCS events in the quarter.\nConsistent with Dan's comments earlier, the quarter's catastrophe losses for Personal Insurance were also impacted by the Midwest Derecho, Tropical Storm Isaias, and to a lesser extent, Hurricane Laura.\nIn addition to pursuing rate increases in property, as we have been for some time, we continue to review and modify terms and conditions and implement loss mitigation actions in response to the elevated loss activity.\nOur actions to date have enabled us to reduce or avoid losses we would have otherwise incurred and improved returns as we continue to grow the line.\nTurning to quarterly production.\nOur domestic Agency results were again very strong.\nOur retentions remained high, quotes in new business were up versus the prior year quarter, and we remain pleased with our policies-in-force growth.\nAgency Automobile retention was 84% and new business increased 9% from the prior year quarter, both contributing to accelerating growth in policies-in-force.\nRenewal premium change was again lower as we continued to moderate pricing in response to favorable loss activity.\nAgency Homeowners and Other delivered another very strong quarter with retention of 86% and a 22% increase in new business.\nRenewal premium change increased to 8.2% as we remain focused on improving returns and property while growing the business.\nDuring the quarter, we continued to respond to the needs of our customers and distribution partners.\nAt the same time, we continue to deliver new capabilities in the marketplace.\nAlan already mentioned both IntelliDrive and our new MyT [Phonetic] mobile app, both of which are key tools in helping us attract and retain customers.\nWe also expanded the availability of our digital quote proposal that gives agents and brokers the ability to send a Travelers Insurance quote for their clients mobile phone and interact with them digitally about the terms of the proposal, making the transaction more seamless for both the agent and the customer.\nAnd after reaching our goal of planting 1 million trees for customer enrollment and paperless billing, we extended our partnership with American Forests to plant an additional 500,000 trees by Earth Day 2021.\nWe have already achieved that milestone well ahead of schedule, providing our customers the digital experience they seek, while benefiting the environment.\nThese examples and others, illustrate our ability to develop and deliver the capabilities our partners and customers value.\nOperator, we're ready to start Q&A.\n", "role": "user" }, { "content": "travelers companies qtrly core earnings per share $3.12.\ntravelers companies - qtrly core earnings per share $3.12; qtrly earnings per share $3.23.\ntravelers companies - qtrly catastrophe losses, net of reinsurance, $397 million versus $241 million.\n", "role": "assistant" } ]

[ { "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: Additionally, David Bray, Group President, Poultry; Noelle O'Mara, Group President, Prepared Foods; and Shane Miller, Group President, Fresh Meats will join the live Q&A session.\nI'll start by saying that the safety of our team members continue to be our top priority and I'm very pleased that we now have a team in the US that is fully vaccinated.\nAs we focus on meeting the needs of our customers and consumers, vaccination is the best way that we can protect our team members from the impacts related to COVID-19 and ensure business continuity.\nEarlier today, we reported strong fourth quarter and fiscal year 2021 results.\nWe delivered double-digit sales and earnings growth in a challenging year.\nOur performance was supported by continued strength in consumer demand for protein.\nOur retail core business lines which include our iconic brands Tyson, Jimmy Dean, Hillshire Farm and Ball Park have driven strong share growth in the retail channel delivering 13 quarters of consecutive growth.\nContinued recovery in the foodservice channel led by QSRs also supported our strong results.\nOverall, we saw our volume recovery in the second half from the pandemic lows to finish the fiscal year only slightly down.\nWe are taking several deliberate actions by segment to improve our volumes including investing behind capacities, brand and product innovation and our team members.\nOur investments in team members include our successful vaccination mandate as well as automation and technology initiatives that I'll discuss in a moment.\nThe construction of the 12 new plants that we've mentioned previously are progressing well and once complete will enable Tyson to address capacity constraints and growing global demand for protein.\nThese new capacities include nine chicken plants, two case-ready beef and pork plants and one new bacon plant.\nIn parallel to our actions to improve volume, we have also work to recover inflation through pricing, achieving a 13% price improvement for the fiscal year and a 24% increase for the fourth quarter.\nIn this dynamic environment, we will be aggressive in monitoring inflation and driving price recovery activities.\nAnd the diversity of our portfolio showed its value again this quarter as demonstrated by earnings, performance in our beef segment supported the delivery of a strong fiscal year earnings results.\nOur performance has allowed us to build financial strength.\nOur balance sheet is strong, resilient and provides Tyson the optionality needed to pursue strategic growth priorities.\nAnd to that point, our investment in future growth across our portfolio continue.\nWe demonstrated resilience in fiscal year 2021 and we are entering fiscal 2022 with tremendous momentum.\nOur results demonstrate the dedication of our global team, the importance of our diverse portfolio strategy and our ability to meet consumer demand across proteins, channels and meal occasions.\nNow turning to financial results, let me give you some highlights overall.\nI was pleased with both a strong quarter and full year.\nSales improved 20% in the fourth quarter and 11% during the full year.\nOur sales gains were largely driven by higher average sales price.\nAverage sales price trends reflect successful pricing strategies during the ongoing inflationary environment, but we still have opportunities specifically in prepared foods where we delivered softer results than anticipated.\nLike many other companies, we were faced with a range of higher levels of inflation notably higher grains, labor, meat and transportation cost.\nOur teams have worked together with our customers to pass along that inflation through price increases.\nOn volume, we saw improvement in the second half relative to the same period last year.\nVolumes were up 3% for the second half or nearly 350 million pounds.\nAlthough we are working diligently to achieve optimal throughput across our segments, labor challenges are still impacting our volumes and ability to achieve optimal mix across our processing footprint.\nHaving said that, we're taking aggressive active actions as a team to address labor constraints and we're seeing improvements.\nWe delivered solid operating income performance, up 26% during the fourth quarter and 42% for the full year.\nThis performance was largely due to strength in our beef segment where continued strong consumer demand and ample cattle supply have driven higher earnings.\nOverall, our operating income performance translated to earnings per share of $2.30 for the fourth quarter, up 35% and $8.28 for the full year, up 53%.\nLooking at our results on volume, we are taking aggressive actions to optimize our existing footprint, add new capacity, adjust our product mix by plant and match our portfolio more closely with customer and consumer needs.\nFor the fiscal year, our volume was down slightly.\nCustomer demand during the fiscal '21 outpaced our ability to supply products, but we're working aggressively to fill that void.\nWe recognize how important service levels are to our customers and we're committed to improving our fill rates and reliability of supply.\nWith respect to supply, we have focused on ensuring our ability to maintain business continuity and our team has been resilient in the face of numerous supply chain challenges.\nAs we look toward fiscal '22, improving volumes will be key to delivering against our commitments.\nWe expect to grow our total Company volumes by 2% to 3% next year, outpacing overall protein consumption growth.\nA large percentage of that growth will come from the chicken segment and across our business we're working to optimize our product portfolio, remove complexities, enhance capacities and pursue operational improvement initiatives to deliver against these volume growth objectives.\nWe fully understand that this starts with an unrelenting focus on safety, every minute, every shift, every day.\nThe health, safety and wellness of our team members has been and will continue to be our top priority.\nSo I'd like to take a minute to stop and commend our team members and our leadership team for doing their part to keep themselves, their colleagues, their families and their community safe, which has helped us reach our vaccination goals.\nThe vaccines and investments in COVID-19 protection measures are certainly not the only actions that we've taken to become the most sought after place to work.\nTo ensure that every Tyson team member feels as though they can bring their true and complete self to work each day, we've invested behind diversity, equity and inclusion efforts and we also understand the importance of a strong compensation offering and we believe that we hold a leadership position in this space.\nWe have raised wages and across our business today, we pay an average of $24 per hour, which includes full medical, vision, dental and other benefits like access to retirement plan and sick pay, and we will continue to explore other innovative benefit offerings that remove barriers and make our team members lives easier.\nWe're also accelerating investments in automation and advanced technologies to make existing roll safer and easier while reducing cost.\nWe're confident that our actions will increase Tyson staffing levels and position us for volume growth.\nRelating to operational excellence and market competitiveness, today we are announcing the launch of the new productivity program designed to drive a better, faster and more agile organization that is supported by culture of continuous improvement and faster decision-making.\nThe program is targeted to deliver $1 billion in recurring productivity savings by the end of fiscal '24 relative to fiscal '21 cost baseline.\nThese savings are included in the guidance expectations that Stewart will share in a moment.\nExecution of the effort will be supported by our program management office that will ensure delivery of key project milestones and report on savings achievements connected to three imperatives.\nThe first is operational and functional excellence and is targeted to deliver greater than $300 million in recurring savings.\nThis includes functional efficiency efforts in finance, HR and procurement that are focused on applying best practices to reduce cost.\nThe second is digital solutions, which is targeted to deliver more than $250 million in recurring savings.\nWe'll achieve this goal by leveraging new digital solutions like artificial intelligence and predictive analytics to drive efficiency and operations, supply chain, planning, logistics and warehousing.\nFor example, we're using technology to ensure that our shipments are optimally loaded to say freight cost and enhance customer service levels.\nIn many ways the pandemic has already accelerated our push to more digital footing and our commitment in this space will continue that focus.\nThe third is automation.\nWe will leverage automation and robotics technologies to automate difficult and higher turnover positions.\nFor example, we have substantial opportunity to automate the debone process within our poultry harvest facilities using the combination of both third-party and proprietary technologies.\nChicken remains the top priority for me personally and for our Company.\nWe continue to execute against our roadmap to bring operating income margin to at least the 5% to 7% range on a run rate basis by mid fiscal '22.\nOur goal has not changed and we remain committed to restoring top-tier performance.\nThe first imperative is to be the most sought after place to work.\nI've outlined the investments we're making to enhance our team member experience in my earlier comments.\nThis will ensure that we have the right levels of staffing to fulfill our customer orders on time and in full.\nThe second imperative is to improve operational performance.\nCritical to improving operational performance is maximizing our fixed cost leverage, which means having enough birds in our internal networks to run our plants full.\nBy reconfiguring and optimizing our existing footprint, we can increase our harvest capacity by more than 10% without building another plant.\nIn addition, we have clear initiatives to remove complexity from our plant, reduce transportation and handling and minimize waste.\nOur operational improvements will unlock significant unused capacity in our network and take advantage of the fixed cost leverage.\nEach of these initiatives will support leading operational performance from our chicken business in the future.\nHatch rates have impacted our ability to do this and we've shared the initiatives underway to correct this.\nOur new male rollout is progressing as planned and we believe we've hit the inflection point that will lead to sequential improvements through the entirety of fiscal 2022.\nThe new male rollout at our pellet [Phonetic] farms is nearly complete and we continue to observe improved hatch rates associated with these new males.\nWe've also mentioned how strengthened spot prices for commodity chicken products throughout the fiscal year has put our buy versus grow program at a relative disadvantage versus history.\nFrom Q3 to Q4, we again reduced our rate of outside purchases this time by nearly 30%.\nThe final imperative is to service our customers on time and in full.\nTyson's branded value-added product offerings have continue to gain share during both the fourth quarter in the latest 52 weeks and new capacity expansions will help us maintain momentum.\nInflation has clearly had an impact on the business.\nOur commercial teams have successfully pursued inflation justified pricing delivering top line growth for the business to offset the cost increases.\nAs rates of inflation continue, so with our pricing actions with an equivalent level of instances [Phonetic] on disciplined operational execution and volume throughput.\nWe will staff our plants, service our customers, grow volumes and be the best chicken business.\nThe plan we have in place is still the right plan and our level of confidence, conviction and excitement as a team continue to grow.\nLooking forward to fiscal year 2022, I feel confident in our ability to drive value creation.\nWe have strong consumer demand, a powerful and diverse portfolio across geographies and channels and the team that is positioned to take advantage of the opportunities in front of us.\nOur priorities are clear, winning with customers and consumers, winning with team members and winning with excellence in execution.\nWith these priorities as our guide, we are taking aggressive actions to accelerate our growth relative to the overall market, improve operating margins and drive strong returns on invested capital.\nWe are committed to our team members with a focus on ensuring their health, safety and well-being as well as ensuring an inclusive and equitable work environment, every shift, every day, every location with no exceptions.\nWe have shown that we are willing to take bold actions in support of this commitment.\nSecond, we are working to enhance our portfolio and capacity to better serve demand.\nThis includes increasing the contribution of branded and value-added sales by focusing our product portfolio and by adding capacity to meet demand.\nWe expect our volume to outpace the market in the intermediate term.\nThird, we are aggressively restoring competitiveness in our chicken segment.\nThis starts by returning our operating margin to the 5% to 7% level by the middle of fiscal 2022.\nFourth, we are driving operational and functional excellence and investing in digital and automation initiatives.\nThis is at the heart of our new productivity program.\nWe are working diligently to drive out waste, minimize bureaucracy, enhance decision making speed across the organization.\nFinally, to address expected demand growth over the next decade, we're using our financial strength to invest in our business through both organic investments and strategic M&A.\nOn capital loan, we expect to invest $2 billion in fiscal year '22 with a disproportionate share focused on new capacity and automation objectives.\nTyson has the right portfolio, the consumer-driven insight and the scale and the capabilities to win in the marketplace across proteins, channels and meal occasions.\nWe also have the financial strength to invest behind our business to accelerate growth and to maintain our momentum.\nI look forward to sharing with you our progress as we work through the year and I'll be sharing more details with you at our Investor Day in a few weeks.\nLet me turn first to a summary of our total Company financial results.\nWe're pleased to report a strong overall finish to the year.\nSales were up approximately 20% in the fourth quarter largely a function of our successful pricing initiatives that we've pursued to offset inflationary pressures.\nVolumes were down 4% during the fourth quarter primarily due to labor challenges hampering our efforts to fully benefit from strong retail demand and recovery in foodservice.\nFourth quarter operating income of nearly $1.2 billion was up 26% due to continued strong performance in our beef business.\nFor the full year, operating income improved to nearly $4.3 billion up 42%.\nDriven by the strength in operating income, fourth quarter earnings per share grew 35% to $2.30 with the full year up 53% to $8.28.\nSlide 11 bridges our total Company sales for fiscal year '21.\nSales dollars were up across all segments as you can see the most substantial sales dollars benefit came from the beef segment which saw market conditions that led to a wider than historical cut out margin.\nAt the same time, we sought price increases across the business to offset the high levels of inflation we faced.\nLooking at our channel result, sales of retail drove over $1 billion of top line improvement versus last year even after exceptionally strong volumes in the comparable period.\nImprovements in sales through the foodservice channel drove an increase of $1.6 billion and our fiscal year export sales were nearly $1 billion stronger than the prior year as we leveraged our global scale to grow our business.\nSlide 12, bridges year-to-date operating income which was about $1.3 billion higher than fiscal 2020.\nAs I mentioned previously, volumes were down slightly during the year primarily result of a challenging labor environment.\nOur pricing actions and strength in the beef segment led to approximately $5.6 billion of sales price mix benefit, which more than offset the higher COGS price-mix of $4.6 billion.\nWe saw inflation across the business, notable areas where in wages, grain cost, live animal costs and pork, meat cost and prepared foods and freight costs across the enterprise.\nIncremental direct COVID-19 costs were favorable by approximately $200 million during the year although our total spending at $335 million was still substantial.\nThe decrease was driven primarily by cycling one time bonuses that were paid last year and a large portion of that was reinvested in permanent wage increases for our team members this year.\nLower one-time bonus costs were partially offset by higher testing and vaccination cost incurred during fiscal 2021.\nWhile these costs are expected to reduce in fiscal '22, we will continue to spend against initiatives to keep our team members safe.\nAnd finally, SG&A was over $100 million favorable to prior year, which was largely a result of a net benefit associated with the beef supplier fraud [Phonetic].\nNow moving to the beef segment.\nSegment sales were over $5 billion for the quarter, up 26% versus the same period last year.\nKey sales drivers included strong domestic and export demand for beef products.\nOffsetting higher sales prices were higher cattle costs, up more than 20% during the fourth quarter.\nWe had ample livestock available in the quarter driven by strong front-end supplies and we have good visibility into cattle availability through fiscal '22 and currently believe it will also be sufficient to support our customer needs.\nSales volume for the quarter was up year-over-year due to continued strong demand in contrast to a soft comparable period a year ago driven by lower production volumes.\nWe delivered segment operating income of $1.1 billion or 22.9% for the fourth quarter.\nThis improvement was driven by strong global demand for beef products and a higher cut-out which were partially offset by higher operating costs.\nWhile our beef segment experienced strong results during the quarter and fiscal year, we are still not at optimal levels of capacity throughput due to labor challenges, which we expect to normalize over the course of fiscal '22.\nNow, let's move on to the pork segment on slide 14.\nSegment sales were over $1.6 billion for the quarter, up 30% versus the same period last year.\nKey sales drivers for the segment included higher average sales price due to strong demand and increased hog costs, partially offset by a challenging labor environment.\nAverage sales price increased more than 40%, our volumes were down relative to the same period last year.\nSegment operating income was $78 million for the quarter down 52% versus the comparable period.\nOverall, operating margins for the segment declined to 4.7% for the quarter.\nThe operating income decline was driven by higher hog costs and increased labor and freight costs.\nMoving now to prepared foods.\nSales were $2.3 billion for the quarter, up 7% relative to the same period last year.\nTotal volume was down 5.7% in the quarter with strength in the retail channel and continued recovery in food service more than offset by labor challenges.\nSales growth outpaced volume growth driven by inflation justified pricing and better sales mix.\nDuring the fourth quarter, retail core business lines experienced their 13th straight quarter of volume share growth driven by consumer demand for our brands and continued strong brand execution by our team.\nOperating margins for the segment were 1.7% or $39 million for the fourth quarter.\nA slowdown in segment operating margins versus the same quarter last year was driven by significant increases in raw material input costs that we were not able to fully recover through price during the quarter.\nFor the full year, operating income margin was 7.6% or $672 million.\nAs we mentioned last quarter, the ongoing inflationary environment created a meaningful headwind for prepared foods during the fourth quarter.\nRaw material cost, logistics, ingredients, packaging, labor have increased our cost of production.\nWe've executed pricing, revenue management and commercial spend optimization initiatives while ensuring the continued development of brand equity through marketing and trade support.\nWe expect to take continued pricing actions to ensure that any inflationary cost increases that our business incurs are passed along.\nPricing has lagged inflation, but we expect to recover those cost increases during fiscal '22.\nMoving into the chicken segment's results.\nSales of $3.9 billion for the fourth quarter, up 21%.\nVolumes improved 1.3% in the quarter as strong consumer demand offset both labor challenges and the detrimental impact of a fire at our Hanceville rendering facility.\nOur teams have been focused on streamlining our plans to deliver higher volumes and we expect to deliver substantial volume improvements in fiscal '22 as the hatch rate recovers and we operate our plants more efficiently.\nAverage sales price improved over 20% in the fourth quarter and 11.4% for the fiscal year, compared to the same periods last year.\nThis increase is due to favorable product mix and price recovery to offset cost inflation.\nOur pricing has admittedly lagged our realization of cost inflation, but we made tremendous progress in the last few months to close that gap and are now seeing those benefits.\nWe have restructured our pricing strategies given our experience in fiscal '21 to ensure that we have the flexibility to better respond to market and inflationary conditions.\nChicken experienced an operating loss of $113 million in the fourth quarter.\nThe segment earned $24 million representing an operating margin of 0.2% for the fiscal year 2021.\nOperating income was negatively impacted by $945 million of higher feed ingredient cost, grow-out expenses and outside meat purchases.\nFor the fourth quarter, feed ingredients were $325 million higher than the same period last year.\nSegment performance also reflects net derivative losses of $75 million during the fourth quarter, which was $120 million worse than the same period last year.\nTurning to slide 17.\nIn pursuit of our priority to build financial strength and flexibility, we have substantially de-levered our business over the past 12 months, reducing leverage to 1.2 times net debt to adjusted EBITDA as we paid down $2 billion of debt while growing our earnings and cash flow.\nInvesting organically in our business will continue to be an important priority and will help Tyson increase production capacity and market capability.\nEach of these levers will support strong return generation for our shareholders.\nWe will also continue to explore positive -- optimize our portfolio through M&A through the lenses of value creation and shareholder return.\nFinally, as our track record has demonstrated, we are committed to returning cash to shareholders through both dividends and share buybacks.\nWe're pleased to announce that last week our Board approved $0.06 increase to our annual dividend payment now totaling $1.84 per Class A share.\nLet's now discuss the fiscal '22 financial outlook.\nWe currently anticipate total Company sales between $49 billion and $51 billion which translates to sales growth of between 5% and 7%.\nWe expect 2% to 3% volume growth on a year-over-year basis as we work to optimize our existing footprint and run our plants full.\nOur new productivity initiative is expected to deliver $300 million to $400 million of savings during fiscal '22 driven by operational and functional excellence initiatives, the rollout of digital solutions across the enterprise and extensive automation projects that are currently underway.\nNow as we look at the organic growth opportunities ahead for our business, we expect a meaningful increase in capex spending to pursue a healthy pipeline of projects with strong return profiles.\nWe currently anticipate capex spending of approximately $2 billion during fiscal '22, an increase of roughly $800 million.\nThis investment will support our initiatives to meet global protein demand growth into the future, allow us to gain share and will deliver strong financial returns for our shareholders.\nExcluding the impact of changes from potential tax legislation, we currently expect our adjusted tax rate to be around 23%.\nWe anticipate net interest expense of approximately $380 million because of intentional deleveraging during fiscal '21.\nLiquidity is expected to significantly exceed our target, while net leverage is expected to remain well below 2 times net debt to adjusted EBITDA.\nIt is important to note though that over the last two years, working capital has been a source of cash.\nWe don't expect this to be the case in fiscal '22.\nMoving forward, our business growth will require increased working capital, which combined with deferred tax payments under the CARES Act taxes on the gain of the pet treats divestiture, litigation settlements and other discrete items will lead to a substantial use of cash during fiscal 2022.\nNow let's look at how each of our segments will contribute to that total Company performance.\nPrepared Foods is expected to deliver margins during fiscal '22 of between 7% and 9%.\nWe will remain disciplined and agile in our pricing initiatives to ensure that any additional inflationary pressures are passed along to customers, while also working diligently to deliver productivity savings to reduce costs.\nWe expect the beef segment to continue to show strength due to prolonged industry dynamics leading to segment margins of between 9% and 11%.\nWe expect the front half of the year to be meaningfully stronger than the back half as industry and labor conditions are expected to normalize part way through the year.\nIn chicken, our operational turnaround is working and we still expect to achieve run rate profitability of 5% to 7% by the middle of the year.\nWe expect this will be achieved through sequential quarterly margin improvements during the first half of the year resulting in full year margins that fall between 5% to 7% although expected at the lower end of that range.\nIn pork, we expect similar performance during fiscal '22 to what we accomplished during fiscal '21 equating to a margin of between 5% and 7%.\nIn International and other, we expect margins of 2% to 3% as capacity expansions and strong global demand support volume growth and improved profitability.\nOur segments individually and in aggregate have clear and compelling role within Tyson's portfolio strategy.\nThey deliver diverse counter cyclical performance that supports the Company's long-term earnings objectives and delivers strong value for shareholders.\nOperator, please provide the Q&A instructions.\n", "role": "user" }, { "content": "compname reports q4 adjusted earnings per share $2.30.\nq4 adjusted earnings per share $2.30 .\ndelivered double digit sales and earnings growth during q4 and fy.\nexpect sales to approximate $49 billion to $51 billion in fiscal 2022.\ntargeting $1 billion in productivity savings by end of fiscal 2024 and $300 million to $400 million in fiscal 2022.\nexpect capital expenditures of approximately $2 billion for fiscal 2022.\nexpect capital expenditures of about $2 billion for fiscal 2022.\nq4 adjusted earnings per share $8.28.\n", "role": "assistant" } ]