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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the past year, Nick has helped advance our Investor Relations focus including adding Olga to the team.\nI've enjoyed working with Nick and I look forward to continuing to enhance our external communications under Julie's leadership.\nWe reported very strong results for the first quarter of fiscal 2021 with continued momentum across our professional and residential businesses.\nDouble-digit growth in this dynamic environment is a testament to our focus on innovation, operational execution, and the perseverance of our team and channel partners.\nTo share highlights of the quarter, net sales were up 14% year-over-year and up 11% organically.\nProfessional segment net sales were up 9%, a continuation of the growth trend for this segment.\nHigher shipments of landscape contractor zero-turn riding mowers led the growth along with incremental sales from Venture Products.\nResidential segment net sales were up 31%, setting another record.\nWe saw broad-based demand across our segment with snow equipment driving significant growth due to favorable weather and enhanced mass retail placement.\nMomentum also continued for our all-season Flex-Force 60-volt lithium ion products and demand remained strong for walk power mowers.\nThe introduction of our innovative new products coupled with effective marketing and expanded mass retail channels has further strengthened our brand during this recent period of heightened residential growth.\nFrom a segment earnings perspective, Professional segment grew 14% and Residential increased 49%.\nWe generated strong free cash flow in the quarter, which allowed us to pay down $90 million in debt and resume share repurchases.\nWe also continued to make investments in key technology areas like alternative power, smart connected and autonomous to drive sustained long-term growth.\nNotably, we recently acquired TURFLYNX and Left Hand Robotics, both of which are technology accelerators.\nFinally, we believe the critical path forward and emerging from the pandemic involves worldwide vaccinations.\nWe have developed specific plans for each of our sites to take full advantage of vaccination opportunities.\nIn addition, we launched our new [Indecipherable] campaign to provide education and encourage employees to get vaccinated against COVID-19 as soon as they are able.\nAs we prepare for the broader distribution of vaccines, our team has remained diligent in navigating the continued pandemic environment.\nThey're keeping health and safety in the forefront while meeting surging demand from our retailers and end customers.\nThree underlying elements stand out this quarter as we delivered favorable results in a dynamic environment.\nThe first is the strength of our Residential segment.\nComing off a record setting year, the team delivered another record quarter.\nThese results were driven by expanded distribution and new products complemented by stay-at-home trends and favorable weather.\nThe second element is the productivity story in our business.\nWe continue to drive productivity and synergy benefits enterprisewide.\nThis has helped to mitigate factors such as inflation and COVID-related manufacturing inefficiencies.\nThe third element is our unwavering commitment to innovation.\nThe success of new products across our businesses in the first quarter highlights the strong return on innovation investments.\nFor example, battery-powered products now represent a growing and important part of our business.\nThis commitment to innovation reflects our dedication to constantly provide new solutions for customers' ever evolving needs regardless of the market environments or macro economy.\nOur enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people productivity and operational excellence, and empowering people guided our strong execution in the quarter.\nI'm optimistic about our momentum as we head further into 2021 given our continued investments in technology and new products, excellent relationships with our channel partners, strong financial position, and effective operational and capital deployment capabilities.\nWe reported a very strong first quarter as our professional businesses continue to recover in a meaningful way and we continued to capitalize on robust residential demand.\nWe grew net sales by 13.7% to $873 million.\nReported earnings per share was $1.02 and adjusted earnings per share was $0.85 per diluted share.\nThis compares with reported earnings per share of $0.65 and adjusted earnings per share of $0.64 for the comparable quarter last year.\nNow to the segment results, Professional segment net sales for the quarter were up 9.3% to $650.2 million.\nThis increase was primarily due to higher shipments of landscape contractor zero-turn riding mowers and incremental sales from the Venture Products acquisition, partially offset by decreased sales of underground construction equipment to oil-and-gas markets and the timing of international shipments of golf and grounds equipment.\nProfessional segment earnings for the quarter were up 14% to $116.8 million.\nWhen expressed as a percent of net sales, segment earnings increased 80 basis points to 18%.\nThis increase was primarily due to sales volume leverage, productivity, synergy initiatives and net price realization, partially offset by manufacturing cost pressures and product mix.\nResidential segment net sales for the quarter were up 31.3% to $217.7 million.\nThe increase was primarily due to strong retail demand for snow products driven by favorable weather and expanded mass retail placement, Flex-Force battery-powered products and shipments of walk power mowers ahead of the key selling season.\nResidential segment earnings for the quarter were up 48.9% to a record $32.1 million.\nThis reflects a 170 basis point year-over-year increase to 14.7% when expressed as a percent of net sales.\nThe same drivers that offsets that effective Professional segment earnings also affected Residential segment earnings.\nTurning to our operating results.\nWe reported gross margin for the quarter of 36.1%, a decrease of 140 basis points from the prior year.\nAdjusted gross margin was also 36.1%, down to 150 basis points.\nThe decreases in gross margin and adjusted gross margin were primarily due to manufacturing costs pressures and product mix partially offset by productivity, synergy initiatives and net price realization.\nSG&A expense as a percent of net sales decreased 570 basis points to 19.9% for the quarter.\nThis decrease was primarily due to sales volume leverage, a favorable onetime legal settlement and lower indirect marketing expenses.\nOperating earnings as a percent of net sales for the quarter increased 430 basis points to 16.2%.\nAdjusted operating earnings as a percent of net sales increased 210 basis points to 14.2%.\nInterest expense of $7.5 million was down approximately $600,000 compared with a year ago, driven by lower interest rates.\nThe reported effective tax rate was 18.1% for the first quarter and adjusted effective tax rate was 21.5%.\nTurning to the balance sheet and cash flow, at the end of the quarter, our liquidity was just over $1 billion.\nThis included cash and cash equivalents of $433 million and full availability under our $600 million revolving credit facility.\nWe have no significant debt maturities until April of 2022.\nAccounts receivable totaled $306.9 million, down 4.5% from a year ago due to channel mix and the timing of other and receivables.\nInventory was down 8.6% from a year ago to $675.3 million.\nThis decrease was due to lower inventory in certain Professional segment businesses, as well as the result of increased demand for our products.\nAccounts payable increased 4.7% to $364.4 million from a year ago.\nThis was due to increased purchases of component inventories, as well as incremental payables from the Venture Products acquisition.\nFirst quarter free cash flow was $84.5 million with a reported net earnings conversion ratio of 76%.\nThis positive performance was primarily the result of higher earnings, the favorable onetime legal settlement, and lower working capital mainly due to reduced inventories as compared with the first quarter of last year.\nOur disciplined capital allocation strategy includes investing in organic and M&A growth opportunities, maintaining an effective capital structure, and returning cash to shareholders.\nOur capital priorities remain the same and include reinvesting in our businesses to support sustainable long-term growth both organically and through acquisitions, returning cash to shareholders through dividends and share repurchases, and repaying debt to maintain our leverage goals.\nDuring the first quarter we paid down $90 million in debt and returned $59.8 million to shareholders, $28.7 million in regular dividends and $31.4 million in share repurchases.\nWe are reaffirming our full year fiscal 2021 guidance.\nAdditionally, we are actively managing a dynamic supply chain and cost inflation environment.\nI'll share the guidance highlights and Rick cover the macro trends and key factors we'll be watching throughout the remainder of the year.\nFor fiscal 2021 we continue to expect net sales growth in the range of 6% to 8%.\nThis includes four months of incremental sales from the Venture Products acquisition.\nWe expect continued recovery in Professional segment end markets.\nThe strongest growth in the Professional segment will be in the second quarter and third quarters as well as comparable periods last year were most impacted by the pandemic.\nWe expect full year Residential segment net sales growth to be in the low to mid-single-digits, following an exceptionally strong fiscal 2020 and first quarter 2021.\nWe anticipate strong retail demand to continue throughout the year.\nGiven the comparisons of record setting performance last year, and potential supply chain constraints, we expect year-over-year Residential segment net sales growth to moderate for the remainder of the year.\nLooking at overall profitability, we expect moderate improvement in fiscal 2021, adjusted operating earnings as a percent of net sales compared with fiscal 2020.\nThis assumes continued productivity and synergy benefits, net price realization and lower COVID-related manufacturing inefficiencies, partially offset by potential supply chain constraints and an expected inflationary environment.\nIn the Professional segment, we expect earnings as a percent of net sales to improve versus fiscal 2020, due to better volume leverage.\nIn the Residential segment, we expect earnings as a percent of net sales to be similar to fiscal 2020.\nWe expect full year adjusted earnings per share in the range of $3.35 to $3.45 per diluted share.\nThis estimate includes the effects of recently announced acquisitions.\nIt excludes the benefit of the excess tax deduction for share-based compensation and the favorable onetime legal settlement.\nBased on current visibility, we anticipate adjusted earnings per share to be higher in the first half of fiscal 2021 versus the prior-year period.\nFor the second half of fiscal 2021, we expect adjusted earnings per share to be comparable with the same period of fiscal 2020.\nLooking to the rest of the year, we're excited about the robust near-term demand environment as we continue to execute on our long-term strategic priorities and invest in innovation to capitalize on future growth opportunities.\nLooking ahead, we'll be watching several macro trends to provide us with additional insights into the remainder of the year.\nThese include the ongoing effects of COVID-19 including its impact on manufacturing efficiencies and potential global supply chain disruptions, weather patterns, including the timing of spring in northern climates, and global economic recovery factors driving general consumer and business confidence, as well as the related commodity and inflationary effects.\nFrom an end market perspective, demand trends are positive and we're well-positioned for further growth.\nRecent strong retail demand has reduced field inventory and many of our channel partners are seeking to replenish given the improved outlook.\nWe're watching a number of key market drivers for our residential and certain professional businesses continuing customer interest in home investments for landscape contractors, improved business confidence leading to the resumption of capital investments, along with catch-up purchases of prior deferrals.\nFor golf, a strong start to the season in northern markets, an increase in international course reopenings and the expected return of travel and resort golf all leading to another great year for leading to another great year for rounds played.\nFor grounds equipment, increased spending on outdoor space maintenance and improvement projects by municipal and other tax-supported entities.\nFor Underground, increased funding for 5G and broadband build-out and critical-need infrastructure rehab and replacement.\nFor rental and specialty construction, continued upgrades and replacement of fleets by independent rental companies and national accounts.\nAnd for snow and ice management, channel response to lower end-of-season inventory levels as a result of recent snow events.\nWe continue to be excited about our innovative suite of products that are well-positioned to capitalize on these market opportunities, and these products directly address customer trends.\nFor the focus on home improvement, a complete line of residential products from walk and Z mowers to irrigation and lighting solutions including the zero-emission all-season Flex-Force 60-volt lithium-ion suite of products; additionally, our professional line of maintenance and renovation products.\nFor the growing interest in professional battery electric solutions, the Greensmaster eTriFlex and hybrid riding Greensmowers; the Toro e-Dingo compact utility loader and the expanding line of lithium-ion workman GTX utility vehicles.\nFor increased productivity solutions, the Toro Dingo TXL 2000 and Ditch Witch SK 3000 stand on skid steers; Toro Exmark and Ventrac high-capacity mowers, a new line of Ditch Witch horizontal directional drills, the BOSS DRAG PRO rear-mounted truck plow and BOSS and Ventrac sidewalk snow and ice management equipment.\nIt's because of our deep commitment to innovation, strong customer relationships, exceptional sales and service through our channel partners and stellar product lineup that we are seeing significant momentum across our businesses with world-class partners.\nTwo exciting examples in golf are our new partnerships with PGA Frisco and Pebble Beach Resorts.\nWe're honored that every 2021 major championship tournament will be played on a course serviced by Toro-branded turf equipment.\nAnd we are the official Ryder Cup turf equipment and irrigation provider for the remainder of the decade.\nIn closing, we are optimistic as we head into our peak selling season.\nWhile the environment remains dynamic as we manage through COVID-related manufacturing and supply chain challenges, we have a number of factors working in our favor, a diverse portfolio of businesses and strong customer relationships, productivity initiatives to drive increased profitability and operational excellence, continued investments in innovative products and emerging technologies, and as always our team is the key to the Toro Company's continued success.\n",
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"content": "compname reports q1 earnings per share $1.02.\nq1 adjusted earnings per share $0.85.\nq1 earnings per share $1.02.\nq1 sales $873 million versus refinitiv ibes estimate of $848.9 million.\nsees fy sales up 6 to 8 percent.\nsees fy fiscal 2021 adjusted earnings per share in range of $3.35 to $3.45 per diluted share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We begin in fiscal 2022 by delivering solid first quarter results in what remains a very dynamic operating environment.\nWe achieved 6.8% top-line net sales growth for the quarter over a strong first quarter comparison last year.\nOur team's intensely managed the supply chain and our manufacturing operations, working to achieve the best possible outcomes.\nWe actively manage production in partnership with our suppliers and aligned our manufacturing schedules based on material availability.\nThe supply chain challenges, along with the surge of the Omicron variant impacted our volume and mix within the quarter.\nHowever, as the quarter progressed, we did start to see some improvements in manufacturing efficiencies.\nWe do expect the current supply chain dynamics to resolve over time and are beginning to see some signs of improvement.\nOn our last earnings call, we communicated profitability expectations for Q1 in reference to sequential improvements over Q4 of last year.\nAs a reminder, in Q1 of last year, we experienced an acceleration of demand without the current magnitude of inflationary pressures and product availability constraints.\nWith that in mind, we performed in line with our expectations by delivering sequential improvement in gross margin this quarter over Q4 of last year.\nOur team executed well operationally achieving productivity benefits and increased net price realization.\nImportantly, demand for our innovative products has remained robust across our businesses.\nWe have strengthened our market leadership by remaining steadfast in our commitment to serving our customers well.\nI now like to highlight some key advances in two major areas of strategic priority.\nFirst, we continue to bring our technology advancements to market to accelerate profitable growth over the long term.\nWe introduced new products in each of our key technology areas of battery-electric, smart, connected, and autonomous solutions.\nStarting with batteries, we have a growing suite of electric products for both residential and professional customers.\nThese products are carefully designed to meet the promise of our brands by offering superior performance and durability supported by an extensive customer care network.\nThe latest edition is our new all-electric Ultra Buggy for material handling in our special construction business, which was unveiled at the world of the concrete show in January.\nThe Ultra Buggy delivers eight hours of continuous run time by leveraging the same hyper cell battery system as our Revolution series commercial-grade mowers.\nAlong with our e-Dingo compact utility loader, the Ultra Buggy also provides a zero-emission solution for indoor construction and renovation applications.\nSpeaking of the Revolution series, initial reservations for these new battery-powered commercial-grade stand-on and zero-turn riding mowers have exceeded our expectations.\nThe revolution product line brings together the best of both worlds with the productivity, durability, and expansion to support network to customers expect from us, along with the next-generation benefits of zero emissions, noise reduction, and all-day runtime on a single charge.\nMoving to smart solutions, we just launched our new Workman UTX line of commercial-grade utility vehicles.\nThese all-season vehicles have a broad range of applications across our markets and feature a proprietary ground speed governing system.\nThis patented system allows for the perfect amounts of power for any job, no matter the desired speed.\nThis feature also enables lower fuel consumption and noise levels.\nThe UTX line was designed with versatility and durability in mind.\nIt offers 2,000 pounds of towing capacity, 25% more cargo capacity than the competition, and leverages our broad product offerings with an integrated BOSS snowplow amount.\nAnother advancement in smart solutions that drive productivity and help with skilled labor challenges is our new ProCore 648s.\nThis machine is the gold standard for the green generation.\nIt features an innovative electronic drive control, which can maintain more consistent hole spacing on sloping terrain and allows for increased speed on turnarounds.\nThis machine can also minimize turf disruption, reducing the need to make manual repairs.\nIn the area of autonomous, we have showcased several prototypes over the past few years and have invested in technology-accelerating acquisitions.\nWe intend to be a market leader in providing autonomous solutions, as evidenced by the introduction of our first autonomous fairway mower at the recent GCSAA golf industry show.\nThis product addresses the issue of labor shortages for our golf course customers while enabling increased productivity and more consistent results.\nAs technology evolves, we intend to leverage our battery, smart connected, and autonomous product offerings across our broad portfolio.\nWe are excited about the positive reactions to our new and innovative applications as we further advance our technology leadership.\nThe second strategic area I'd like to highlight is our effective capital allocation.\nWe continue to prudently deploy capital this quarter with the acquisition of the Intimidator Group in January.\nThis acquisition positions us to be an even stronger player in the large and rapidly growing zero trends mower market enhancing customer reach and geographic strength.\nWe're excited about the addition of a complementary line of Spartan mowers, which are known for their exceptional performance, features, durability, and distinctive styling.\nThe acquisition also provides us with a larger footprint to further leverage our technology investments as well as procurement and manufacturing efficiencies.\nWe are confident the combined efforts of our teams will enhance our long-term growth by providing unparalleled products, technologies, and services to our customers.\nWe made great strides in advancing key strategic areas this quarter, our entire organization continued to demonstrate creativity, perseverance, and sound judgment as we navigated the challenges and opportunities in the current global environment.\nAs a result, we continue to build our business for sustainable and profitable long-term growth and drove value for all stakeholders.\nAs Rick said, we delivered solid results in the first quarter and drove sequential gross margin improvement over Q4 of last year in what continues to be an extremely dynamic operating environment.\nWe grew overall consolidated net sales to $932.7 million, an increase of 6.8% compared to the first quarter of last year.\nReported and adjusted earnings per share were about $0.66 per diluted share, down from $1.02 and $0.85, respectively in the first quarter a year ago.\nProfessional segment net sales for the quarter were up 3.5% to $672.9 million.\nThis increase was driven by net price realization partially offset by lower volume in certain key product categories, due to product availability constraints.\nProfessional segment earnings for the first quarter were $93.3 million and one expressed as a percent of net sales 13.9%.\nThis was down from 18% in the first quarter last year.\nThe year-over-year decrease was primarily due to higher material, freight, and manufacturing costs, partially offset by net price realization.\nResidential segment net sales for the first quarter were $255.4 million, up 17.3% over last year.\nThe growth was primarily driven by increased net price realization and higher shipments of our zero-turn riding and walk power mowers.\nResidential segment earnings for the quarter were $31.8 million, and when expressed as a percent of net sales 12.4%.\nThis was down from 14.7% in the first quarter last year.\nThe year-over-year decrease was primarily driven by higher material and freight costs partially offset by increased net price realization and productivity improvements.\nTurning to our operating results.\nWe reported a gross margin of 32.2% for the quarter, compared to 36.1% in the same period last year.\nThe year-over-year decrease was primarily due to higher material and freight costs, partially offset by an increased net price realization.\nAs expected, we did see a sequential improvement compared to the fourth quarter of fiscal 2021.\nWe intend to restore and improve margins over the long term and continue to adjust pricing to market conditions and drive productivity and synergy benefits.\nSG&A expense as a percent of net sales for the quarter was 22.4%, compared to 19.9% in the same period last year.\nThis increase was primarily driven by the favorable impact of a one-time legal settlement in the prior year that did not reoccur, as well as increased investment in research, engineering, and marketing.\nOperating earnings as a percent of net sales for the first quarter were 9.8%, compared to 16.2% in the same period last year.\nAdjusted operating earnings as a percent of net sales for the quarter were 9.9%, compared to 14.2% in the same period a year ago.\nInterest expense for the quarter was $7 million down slightly from the same period last year.\nThis was due to lower average debt levels and decreased interest rates.\nThe reported adjusted effective tax rates for the first quarter were 20.2% and 20.9%, respectively, compared to 18.1% and 21.5% in the same period a year ago.\nTurning to our balance sheet and cash flows.\nAccounts receivable were $366 million, up 19% from a year ago, primarily driven by higher sales and customer mix.\nInventory was $832 million, up 23% compared to last year.\nThis increase was due to higher work in process and parts.\nAccounts payable increased 30% from last year to $474 million.\nThis was primarily driven by higher purchase activity and inflation.\nFree cash flow in the quarter was a $102 million use of cash.\nThis was driven by additional working capital needs to support higher material and service parts levels, given the current supply chain environment.\nWe continue to follow a disciplined approach to capital allocation demonstrated by our actions in the quarter and fueled by our strong balance sheet.\nOur priorities remain the same and include making strategic investments in our business to support long-term growth, both organically and through acquisitions, returning cash to shareholders through dividends, and share repurchases, and maintaining a levered school to support financial flexibility.\nThese priorities are highlighted by our actions including our plan to deploy $150 million to $175 million in capital expenditures this year to fund capacity, productivity, and new product investments.\nIn our acquisition of Intimidator Group in January, our return of $106 million to shareholders this quarter was 75 million in share repurchases and 31 million in regular dividends.\nOur gross leverage to EBITDA target remains the same in the range of 1 to 2 times.\nWe are benefiting from strong demand momentum across our diverse portfolio of businesses.\nIn the current global operating environment, our biggest challenge remains meeting this heightened demand.\nBased on our current visibility, the progress we are making on margin recovery, and the recent acquisition of Intimidator Group, we are updating our full year fiscal 2022 guidance.\nThis guidance also considers the current geopolitical events which continue to develop.\nWe will monitor the situation very closely and take appropriate actions.\nWe now expect net sales growth in the range of 12% to 14%, which reflects the partial year addition of the Intimidator Group, pro-rata over the remaining three quarters.\nAlong with the continued expectation for 8% to 10% growth for the remainder of our business.\nThe acquired business is reported under the professional segment, and as a result, we expect professional net sales growth at the upper end of the 12% to 14% range for the full year.\nFor the second quarter, we anticipate total company as well as professional and residential segment net sales growth to be moderately below our full year expectations.\nWe continue to expect our quarterly sales cadence to be driven more by our ability to produce than historical demand patterns.\nThis is expected to result in less seasonal variation than typical between the quarters this year.\nLooking at profitability for the full year, we now expect similar overall adjusted operating earnings as a percent of net sales compared to fiscal 2021 for the total company.\nAnd in the professional and residential segments.\nThis reflects the operational improvements we are realizing as well as our acquisition.\nWith the addition of Intimidator at a lower initial gross margin relative to our company average, we now expect gross margin in Q2 to be similar to Q1 but improve in the second half of the year compared to the first half of the year.\nFor the full year, we expect the gross margin to be similar to slightly below fiscal 2021 driven by the acquisition.\nIn light of the recent geopolitical events, we are holding our full year-adjusted diluted earnings per share guidance in the range of $3.90 to $4.10.\nOur adjusted diluted earnings per share guidance excludes the benefit of the excess tax deduction for stock compensation, as well as one-time acquisition-related costs.\nFor the second quarter, we expect our adjusted diluted earnings per share to approach the record results we achieved in Q2 of fiscal 2021.\nAdditionally, for the full year with the acquisition included, we now expect interest expense to be about $35 million.\nDepreciation and amortization to be about $120 million and free cash flow conversion in the range of 80% to 90% of reported net earnings.\nWe continue to estimate an adjusted effective tax rate of about 21%.\nWe remain well-positioned to capitalize on this period of profitable growth as we continue to execute on our long-term strategic priorities.\nOur entire team remains sharply focused on serving our customers as we are committed to building our business for long-term sustainability and profitability.\nThe foundation for our future success is our world-class innovation capabilities and enterprisewide operational excellence.\nThe combination of which we believe will drive sales momentum and margin expansion going forward and create value for all stakeholders.\nAs we head into the remainder of fiscal 2022 demand remains strong across the markets we serve, the ongoing replacement cycles for our products provide a steady foundation and we are keeping an eye on the following areas, consumer and business confidence, together with inflation, geopolitical developments, and COVID-19 variants, customer prioritization of investments to maintain and improve outdoor environments, regulations, on reduced emissions, and customer preference for sustainable products, the continuation of strong momentum in golf markets and government support and funding of infrastructure projects, including the $1 trillion US infrastructure legislation.\nOur innovative products and best-in-class distribution networks position us well to capitalize on current and future demand trends in the growing markets we serve.\nI would now like, sure, a few comments on our golf market.\nWe continue to see courses in their healthiest financial positions in years.\nAround the world, golf participation engagement remains on the rise.\nIn the Us golf rounds played were up 5.5% in 2021.\nOn top of a 13.9% increase in 2020.\nWe're also seeing an improvement in supply and demand balance and even saw an increase in the number of municipal and private courses in the US during 2021.\nAs the market leader in turf and irrigation solutions and the only provider of both, we have distinct competitive advantages in the space.\nThis was evident last month at the GCSAA golf industry show in San Diego.\nThe traffic in our booth reflected strong interest in our array of innovative new products.\nIt was a great experience to be at the show again after the pandemic-driven hiatus spend time with so many of our customers.\nNot far from the golf show was Super Bowl 56 SoFi Stadium in Inglewood, California.\nOur teams and equipment have a long and storied history of helping Super Bowl groundskeepers maintain pristine field conditions, and this year was no exception.\nBefore and after the game, our Workman GTX and UTX vehicles were used to help the SOFi grounds crew move field preparation materials.\nIn addition, our GTX vehicles and real master products were instrumental in preparing the Bengals UCLA practice fields.\nOur commitment to innovation has served us well.\nOur strength in this area, combined with our deep customer relationships, effective capital deployment, superior distribution, and customer care networks has driven consistent financial performance.\nWe believe these strengths will continue to generate tremendous value and position us to deliver compelling growth and shareholder returns for the long term.\nAs always, our extended team is the key to the Toro Company's long-term success.\n",
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"content": "compname reports q1 adjusted earnings per share of $0.66.\nq1 earnings per share $0.66.\nq1 sales rose 6.8 percent to $932.7 million.\nq1 adjusted earnings per share $0.66.\nnow expects fiscal 2022 total net sales growth in range of 12% to 14%.\ncompany is holding its fiscal 2022 adjusted earnings per share guidance in range of $3.90 to $4.10 per diluted share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The Toro Company delivered very strong results for the second quarter of fiscal 2021, driven by robust broad-based demand across our Professional and Residential segments.\nOur team continued to execute well in this dynamic environment, managing the supply chain challenges affecting our industry and the global economy and working together with our channel partners to serve customers and fulfill retail demand.\nAs a result, net sales for the second quarter were up 24% year-over-year.\nProfessional segment net sales increased 25%, continuing the growth trend for this segment and setting a new record.\nThe increase was primarily driven by a strong demand for golf, landscape contractor, irrigation and rental and specialty construction products.\nOur lineup of innovative products combined with increasing business confidence in the economic recovery helped fuel exceptional demand.\nResidential segment net sales for the second quarter were up 20% year-over-year, setting another record.\nThis growth was led by a strong demand for zero-turn riding mowers and our all-season Flex-Force 60-volt home solutions products.\nIn addition, enhanced retail placement boosted sales of our snow equipment and late-season snowstorms helped clear the channel.\nThe introduction of innovative new Residential products coupled with the refreshed marketing and expanded mass retail distribution continue to strengthen our brand and drive growth for this segment.\nWe also set records for earnings in both segments this quarter, as we drove productivity and operational synergies enterprise wide.\nProfessional earnings were up 57%, and Residential earnings grew 24%.\nReflecting on the outstanding results this quarter, we note three prevailing themes.\nFirst, demand has been exceptionally strong.\nWe see this continuing for the foreseeable future, albeit with year-over-year growth rate comparisons that will ultimately stabilize off a higher base.\nThis demand is driven by improving consumer and business confidence coupled with public and private investment priorities and current lifestyle trends.\nWe expect to capitalize on these drivers with our commitment to new product development, best-in-class distribution channel, and a strong balance sheet that provides the financial flexibility to invest in the future.\nSecond, along with the exceptionally strong demand, we've seen escalating supply chain and inflation challenges.\nThese challenges are not unique to The Toro Company and are having a global impact.\nOur teams have worked effectively to keep up with increased demand while navigating the current supply chain environment.\nWe've also focused on mitigating material, freight and wage inflationary pressures through productivity and synergy initiatives, disciplined expense control and market-aligned pricing actions.\nWe'll continue to prioritize important investments to support growth.\nThird, we're leveraging our strong balance sheet to position the Company for future growth.\nAs we continue to generate strong free cash flow, we are allocating capital to best drive value for all stakeholders.\nThis year, we've made strategic investments in technology accelerators through the acquisitions of TURFLYNX and Left Hand Robotics.\nThese teams have immediately helped us advance our innovation roadmap.\nAt the same time, we've continued to invest organically in key technologies, including alternative power, smart connected and autonomous.\nAs an example, our expanding line of Flex-Force 60-volt products will soon include a battery-powered two-stage snow thrower, which is ready to launch and is generating a lot of excitement in the field.\nOur healthy cash flow also allows us to return capital to shareholders, while maintaining ample liquidity.\nYear-to-date, we've paid down $100 million of debt, invested $107 million in share repurchases, and paid out $57 million in dividends.\nWhile we work to capitalize on this period of great growth, we remain committed to our employees and channel partners, and continued to diligently manage and mitigate COVID-related risks.\nWe're keeping the health and safety of our team in the forefront, while executing operationally to get the right products to the right places at the right.\nThrough the SoWeCan [Phonetic] campaign we're incenting our employees to get vaccinated.\nLooking ahead, we remain focused on our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people.\nWe will continue to execute against these priorities to position the Company for long-term sustainable growth.\nI'll discuss our outlook further following Renee's more detailed review of our financial results.\nOur record second quarter was driven by robust demand across our Professional and Residential segments, coupled with strong operating performance.\nWe grew net sales by 23.6% to $1.15 billion.\nReported earnings per share was $1.31 per diluted share, up from $0.91 last year.\nAdjusted earnings per share was $1.29 per diluted share, up from $0.92 in the prior year.\nMoving to our segment results for the quarter.\nProfessional segment net sales were up 25.3% to $828.4 million.\nThis increase was primarily due to strong demand for golf, landscape contractor, irrigation, and rental and specialty construction products, slightly offset by lower sales of underground construction equipment driven by supply chain disruptions that impacted product availability, and continued softness in oil and gas market.\nProfessional segment earnings were up 57.3% to $167.1 million; and when expressed as a percent of net sales, increased 410 basis points to 20.2%.\nThis increase was primarily due to productivity improvements, including COVID-related manufacturing inefficiencies in the second quarter of last year that did not repeat, net price realization and volume leverage, partially offset by higher commodity costs.\nResidential segment net sales were up 20.2% to $315 million.\nThis increase was primarily driven by strong retail demand for zero-turn riding mowers due to new and enhanced products, higher sales of Flex-Force battery electric products mainly driven by successful new product introductions, and higher shipments of snow equipment as a result of late-season storms and expanded retail placements.\nResidential segment earnings were up 23.9% to $46 million; and when expressed as a percent of net sales, up 40 basis points to 14.6%.\nThe increase was primarily driven by productivity improvements, including COVID-related manufacturing inefficiencies in the second quarter of last year that did not repeat, net price realization and product mix, partially offset by higher commodity costs.\nTurning to our operating results for the second quarter.\nWe reported gross margin of 35.1%, an increase of 210 basis points from the prior year.\nAdjusted gross margin was 35.1%, up 170 basis points.\nThese increases were primarily due to productivity improvements, net price realization and favorable mix, partially offset by higher commodity costs.\nSG&A expense as a percent of net sales decreased 10 basis points to 19.4%.\nThis favorable performance was primarily driven by volume leverage and lower indirect marketing expenses, partially offset by higher incentives due to improved performance and the reinstatement of certain costs that had been part of the Company's fiscal 2020 pandemic-driven expense reductions.\nOperating earnings as a percent of net sales increased 220 basis points to 15.7%.\nAnd adjusted operating earnings as a percent of net sales increased 170 basis points, also to 15.7%.\nInterest expense was down $1.5 million to $7.1 million, driven by reduced debt and lower interest rates.\nThe reported effective tax rate was 19.8%, and the adjusted effective tax rate was 20.9%.\nNow, turning to the balance sheet and cash flow.\nAt the end of the second quarter, our liquidity remained consistent at $1.1 billion.\nThis included cash and cash equivalents of $500 million and full availability under our $600 million revolving credit facility.\nWe have no significant debt maturities until April of 2022.\nAccounts receivable totaled $391.2 million, down 2.3% from a year ago, primarily driven by channel mix.\nInventory was down 12% from a year ago to $628.8 million, primarily as a result of increased demand.\nAccounts payable increased 28.8% from last year to $421.7 million.\nThis was primarily due to increased purchases of components, as well as more normalized expenses.\nYear-to-date free cash flow was $292.4 million, with the conversion ratio of 115%.\nThis positive performance was largely the result of higher earnings and lower working capital, driven by higher payables and reduced inventory levels.\nOur disciplined capital allocation strategy fueled by our strong balance sheet includes investing in organic and M&A growth opportunities, maintaining an effective capital structure and returning cash to shareholders.\nOur capital priorities remain the same, and include: reinvesting in our businesses to support sustainable long-term growth, both organically and through acquisitions; returning cash to shareholders through dividends and share repurchases; and maintaining our leverage goals to support financial flexibility.\nAt the midpoint of the fiscal year, demand momentum is strong, and our leadership position in the markets we serve is solid.\nLike many other companies, we are continually adjusting through these dynamic times.\nThe economy is experiencing a surge in demand, while suppliers struggling to keep pace.\nIn the long run, we expect the positives from the heightened demand trends across our markets to endure and outweigh the near-term pressures.\nWhile we continue to drive productivity and synergies and take appropriate market-based pricing actions, our operating margins in the second half of our fiscal year will be pressured.\nThis is driven by the escalation in supply chain challenges, as well as material, freight and wage inflation, which we expect will result in manufacturing inefficiencies and higher input costs relative to our prior guidance.\nWith that backdrop, we are updating our full year fiscal 2021 guidance.\nWe now expect net sales growth in the range of 12% to 15%, up from 6% to 8% previously.\nWe expect Professional and Residential segments net sales growth rates to be similar to the overall Company, with Residential trending slightly ahead of Professional.\nThis is due to the strong demand we continue to see across our businesses.\nLooking at overall profitability, we continue to expect adjusted operating earnings as a percent of net sales for the full year to be slightly higher than fiscal 2020.\nThis reflects a strong performance in the first half coupled with a more challenging supply chain and inflationary environment in the second half.\nGiven our strong balance sheet and future growth expectation, we are increasing our estimated capital expenditures for the year to $130 million, up from $115 million.\nThis aligns with our priorities of investing in key technology areas and ensuring we have the capacity to meet future growth.\nBased on current visibility, we now expect full year adjusted earnings per share in the range of $3.45 to $3.55 per diluted share.\nThis increase reflects the robust demand environment, while also taking into account the near-term supply chain and inflationary pressures.\nWe anticipate the impact of these pressures to be the most pronounced in the third quarter before our mitigating actions are more fully realized.\nWe expect adjusted earnings per share per diluted share in the fourth quarter to be similar to fiscal 2020 against a very strong Q4 of last year.\nLooking to the rest of the fiscal year, we remain excited about the broad-based demand for our product.\nWe are well positioned as we continue to execute on our long-term strategic priorities and invest in innovation to capitalize on future growth opportunities.\nAs we look ahead to the remainder of the year, we're watching a number of key drivers in our end markets: for Residential and certain Professional businesses, continuing consumer interest in home investments; for landscape contractors, capital investments, including catch up purchases of prior deferrals, driven by improved business confidence; for golf, continued strong momentum, in general, the reopening of international courses and the return of resort golf; for grounds equipment, the prioritization of outdoor space maintenance and improvement by municipal and other tax-supported entities; for underground, increased government support and funding for infrastructure spending, this includes broadband build out, alternative energy investments and critical need infrastructure rehab and replacement; for rental and specialty construction, strong demand by both professional contractors and homeowners; for snow and ice management, channel demand, given lower end of season inventory levels.\nIn short, these end market drivers should continue to support robust demand.\nOur biggest challenge for the remainder of the year will be our ability to produce at the desired rate, given the supply chain constraints we are facing.\nWe believe the constraints will improve as key commodity availability normalizes, global vaccination rates improve, COVID restrictions ease, and logistical capacity finds a balance.\nWe anticipate demand will remain strong even after supply chain constraints ease.\nAt that point, we expect to be in a position to rebuild field inventory levels across our channels.\nOur operations team remains committed to doing everything possible to meet the increased production demands.\nWith our team's dedication, our innovative suite of products, and our market leadership, as well as our consistently strong cash flow to support growth investments, we are well positioned to capitalize on this demand opportunity.\nWe're also well positioned to capitalize on the electrification trends, given our expertise and leadership across our markets.\nWe are committed to developing electric products that offer both power and durability with no compromise on performance.\nFor example, in March, our 60-volt Personal Pace Recycler Mower was named Editor's Choice by Popular Mechanics in its evaluation of electric lawn mowers; build quality and cut quality were cited as the two reasons.\nToro mowers have received more Editor's Choice awards than any other brand.\nIn addition to the Residential Flex-Force line, we have an increasing number of Professional battery-powered products, including our all-electric Greens Mowers and lithium-ion Workman utility vehicle.\nSustainability is fundamental to our enterprise strategic priorities, and our focus on alternative power, smart connected and autonomous technologies is embedded as part of our sustainability into our strategy.\nIt's the right thing to do and provides the opportunity for our Company to create value for all stakeholders while helping our customers achieve their sustainability goals.\nA recent win highlights this focus.\nOne of our European channel partners, Jean Heybroek of Reesink group, was awarded a four-year preferred supplier agreement and fleet management partnership with the City of Amsterdam.\nThe city has an objective of zero emissions by 2030, and we are excited to partner with them in achieving this goal.\nAnother example is our new 20-year partnership with the National Links Trust in Washington, DC.\nTheir mission is to protect and promote accessible and affordable municipal golf courses to positively impact communities.\nWe are honored to support this mission together with our distributor Turf Equipment and Supply Company, as well as our longtime partner Troon, the world's largest golf management company.\nInvolvement in this project exemplifies who The Toro Company is, a team focused on long-term carrying relationships, our communities and the environment.\nIn closing, we are optimistic as we begin the second half of our fiscal year.\nWe believe our updated guidance appropriately reflects the risks we face in the current operating environment, while also accounting for the robust demand we expect.\nWe have strong momentum across our businesses and are positioned to capitalize on future growth drivers.\n",
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"content": "compname posts q2 earnings per share $1.31.\nq2 adjusted earnings per share $1.29.\nq2 earnings per share $1.31.\nq2 sales $1.15 billion versus refinitiv ibes estimate of $1.13 billion.\nsees full-year fiscal 2021 adjusted earnings per share in range of $3.45 to $3.55.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our third quarter was a strong and dynamic one given the circumstances.\nSince COVID-19 began to spread across the globe, the macroeconomic environment went from robust growth to recession almost overnight.\nNow, we are seeing more positive economic and market trends, but the rates of the recovery and the status of the virus remain highly variable.\nIn short, the environment in which we conduct business remains uncertain.\nFor the third quarter, we were pleased to have achieved top line growth on the strength of our residential segment as favorable weather, our new product lineup and stay-at-home trends drove robust demand in the mass and dealer channels.\nIncremental sales from our successful Venture Products acquisition also contributed to third quarter growth.\nI'm deeply grateful for the extraordinary efforts and the commitments of our team during these challenging times.\nThe health and safety of our people remains our top priority, as we support and deliver value to our customers.\nOur talented global team of more than 9,000 remained resilient and solution-oriented.\nAmong other things, we modified production lines and workflow to accommodate social distancing in manufacturing, continued to work effectively, while adhering to local safety guidelines, developed methods to move production and inventories to meet customer requirements and managed the demands of home, child care and personal wellness.\nOur teams did all of this, while delivering a solid quarter of financial results.\nTurning to the demand environment during the quarter.\nIn May, as the residential segment remained strong, we saw an improvement in our professional segment, and those trends continued throughout the quarter and into the month of August.\nAs customers gained more confidence, demand started to return.\nThe market continues to be dynamic given the variability of the economic recovery and the status of the virus around the world.\nWe are fully prepared to respond to potential market changes.\nOur long-standing ability to adapt to different business environments was evident in the quarter, and our team is well positioned to continue to succeed even in challenging market conditions.\nLooking at the results for the quarter, our residential segment continued to excel with 38% year-over-year net sales growth and strong margins.\nThe movement outdoors we have seen during the past several months contributed to record sales of zero-turn mowers, which doubled in the quarter.\nWe also saw strong contributions from walk power mower sales.\nProfessional segment net sales for the quarter declined 8% year-over-year, which was better than expected.\nSales included incremental revenue from the Venture Products acquisition.\nWe are encouraged by improved demand for our professional segment products, particularly in the landscape contractor, rental, specialty construction and irrigation markets.\nWe're seeing demand driven by greater business confidence and increased home investments.\nImproved retail demand within the quarter reduced field inventory, which is in good shape and more than prior year, setting us up well for pre-season shipments.\nWith robust performance in our residential segment and improved demand in our professional segment, we demonstrated the strength of our diverse portfolio of businesses and our ability to be agile, while focusing on customer needs.\nThis positions us to drive growth forward as our end markets normalize.\nThere are two additional highlights in the quarter that I would like to recognize.\nFirst, we launched our Sustainability Endures platform, which furthers and enhances our long-standing dedication to make a positive global impact socially, environmentally and financially.\nAnd second, we were named Innovative Partner of the Year by the Tractor Supply Company.\nThis reflects our commitment to innovation as well as the effectiveness of our partnership to deliver great products during these difficult times.\nThe successes we experienced this quarter were due to the dedication of our team, our innovative product lineup, strong demand through mass and dealer channels and the contribution from our first full quarter of the Venture Products acquisition.\nWe are enthusiastic about our future given our balanced and flexible business model that allows us to adapt quickly to change, enduring values that focus on the success of customers, innovative new products aligned to customer trends, a strong financial position and the proven ability of our people to adapt and perform successfully in these dynamic times.\nDuring the third quarter, we once again demonstrated the ability of our adaptable business model and resilient culture to manage near-term headwinds and position us for long-term growth.\nWe continued to capitalize on our strong balance sheet to invest in growth, while executing well operationally.\nWe remain flexible in order to drive financial results, while keeping our people safe and delivering on our brand promise to our customers.\nIn this environment, we grew third quarter net sales by 0.3% to $841 million.\nReported and adjusted earnings per share was $0.82 for the quarter, compared to reported earnings per share of $0.56 and adjusted earnings per share of $0.83 last year.\nFor the first nine months, net sales increased by 0.6% to $2.54 billion.\nDiluted earnings per share was $2.37, compared to $2.18 in the first nine months of fiscal 2019.\nYear-to-date adjusted diluted earnings per share was $2.38, compared to $2.52 a year ago.\nBefore I review segment results, I'll cover liquidity.\nAt the end of the third quarter, our liquidity was $992 million.\nThis included cash and cash equivalents of $394 million and availability under our revolving credit facility of $598 million.\nWe have no significant debt maturities until April of 2022.\nWe are in a strong position today and in the event of an extended period of macroeconomic uncertainty.\nNow, to the segment results, residential segment net sales for the third quarter were up 38.3% to $205 million, mainly driven by strong retail demand for zero-turn riding and walk power mowers, and our expanded mass channel.\nYear-to-date fiscal 2020 net sales increased 20.4% compared to the same period of fiscal 2019.\nResidential segment operating earnings for the quarter were up 76.7% to $28.5 million.\nThis reflects a 300 basis point year-over-year increase to 13.9% when expressed as a percent of net sales.\nThis improvement was largely driven by productivity and synergy initiatives, and SG&A expense reduction and leverage on higher sales volume.\nThis was partially offset by COVID-related manufacturing inefficiencies and unfavorable product mix.\nYear-to-date, residential segment operating earnings increased 70.2% to $87.2 million.\nOn a percent of sales basis, segment operating earnings increased 400 basis points to 13.8%.\nFor the third quarter, professional segment net sales decreased 7.9% to $623.6 million.\nThis was due to reduced channel demand as a result of COVID-19-related impact.\nThis included fewer shipments of golf and grounds equipment, reduced sales of rental, specialty and underground construction equipment, and fewer shipments of landscape contractor zero-turn riding mowers.\nThis was partially offset by incremental Venture Products sales.\nFor the year-to-date period, professional segment net sales increased 1.3% compared to the same period of fiscal 2019.\nProfessional segment operating earnings for the third quarter were up 39.3% to $113.7 million, and when expressed as a percentage of net sales, increased 610 basis points to 18.2%.\nThis increase was primarily due to lower non-recurring acquisition-related expenses versus the prior year period, favorable net price realization and decreased commodity costs.\nThis increase was partially offset by unfavorable product mix and COVID-related manufacturing inefficiencies.\nYear-to-date professional segment operating earnings increased 0.8% compared to the same period in the prior fiscal year.\nWhen expressed as a percentage of net sales, operating earnings remained constant, 17.2% year-over-year for both fiscal periods.\nMoving to our operating results.\nWe reported gross margin for the third quarter of 35%, an increase of 330 basis points over the prior year period.\nExcluding acquisition-related costs, adjusted gross margin decreased 70 basis points to 35.2%.\nThe decrease in adjusted gross margin was primarily driven by COVID-19-related manufacturing inefficiencies, unfavorable mix due to the higher sales of residential products, and an increased inventory reserve in one of our professional businesses.\nThis was partially offset by favorable net price realization in the professional segment and productivity and synergy initiatives.\nFor the first nine months, reported gross margin was 35%, up 160 basis points compared with 33.4% in the prior year period.\nAdjusted gross margin was 35.2%, compared with 35.3% in the first nine months of fiscal 2019.\nSG&A expense, as a percent of sales, decreased 170 basis points to 21.2% for the quarter, primarily due to lower travel and meeting expenses, acquisition-related charges and employee salaries.\nFor the first nine months of fiscal 2020, SG&A expense, as a percent of sales, was 21.9%, up 20 basis points from the prior year period.\nOperating earnings, as a percent of net sales, increased 500 basis points to 13.8% for the third quarter.\nAdjusted operating earnings, as a percent of net sales, increased 50 basis points to 13.9%.\nFor the first nine months of fiscal 2020, operating earnings, as a percent of net sales, were 13.1%, compared with 11.7% a year ago.\nAdjusted operating earnings, as a percent of net sales, for the first nine months were 13.4%, compared with 14.2% a year ago.\nInterest expense decreased $700,000 for the third quarter compared to a year ago, due to lower interest rates.\nInterest expense increased $4.7 million for the year-to-date period compared to a year ago.\nThis was due to increased borrowings as a result of our professional segment acquisitions.\nFor the full year, we continue to expect interest expense of about $33 million.\nThe effective tax rate was 19.8% for the third quarter, and adjusted effective tax rate was 20.9%.\nFor the first nine months of fiscal 2020, the effective tax rate was 19.2% and the adjusted effective tax rate was 20.6%.\nFor the full year, we continue to expect an adjusted effective tax rate of about 20.5%.\nTurning to the balance sheet and cash flow.\nAccounts receivable totaled $294.7 million, down 5.6% from a year ago.\nInventory was up by 5.7% to $656.2 million, and accounts payable decreased 11.8% to $268.7 million.\nYear-to-date free cash flow was $259.3 million with the net income conversion of 100.7%.\nThis positive performance was due to the increase in net earnings, favorable net working capital change and reduced capital expenditures.\nOur disciplined capital allocation strategy includes investing in organic and M&A growth opportunities, maintaining an effective capital structure and returning cash to shareholders.\nOur sharp focus on near-term liquidity has reaffirmed our capital allocation priorities for the year.\nThese include prioritizing debt repayment to maintain our leverage target, curtailing share repurchases and considering strategically compelling acquisition.\nWe increased our cash dividend for the third quarter of fiscal 2020 by 11.1% to $0.25 per share as compared to the prior year period.\nBased on our current outlook and strong financial position, we expect to maintain our dividend.\nAs Rick discussed, there remains uncertainty as a result of COVID-19-related factors.\nWe withdrew our guidance in March, and we will not be providing a specific full-year guidance on [Technical Issues].\nSimilar to past practice, we will provide full year fiscal 2021 guidance on our fourth quarter call, if we have sufficient visibility and confidence to do so.\nHowever, based on current visibility and with an understanding of the uncertain nature of the economic environment, we would like to provide you with our current thinking about the fourth quarter.\nWe anticipate continued year-over-year growth in the residential market.\nProfessional market should benefit from the gradual return to more normal buying patterns as customers' confidence in the economy increases.\nThese positive trends will likely be somewhat offset by remaining COVID-19 headwinds, such as budget constraints, the effect of social distancing restrictions and regional variations in economic recovery.\nAs you know, precision is difficult in this environment, but if these assumptions hold through, we anticipate that fiscal 2020 fourth quarter net sales will be higher than that of the prior year quarter.\nAdjusted earnings per share will be similar to that of the fiscal 2019 fourth quarter.\nWe expect net other income to be lower in the fourth quarter of fiscal 2020 than in the prior year period, as a result of a favorable pension and post-retirement plan benefit in fiscal 2019 that will not be repeated.\nWe continue to expect total net other income for fiscal 2020 to be about $13 million.\nWe continue to expect depreciation and amortization for fiscal 2020 of about $95 million and capital expenditures of about $80 million.\nWe anticipate that fiscal 2020 free cash flow conversion rate to be similar to fiscal 2019.\nWe plan to build inventory in the fourth quarter to mitigate any potential supply chain and manufacturing constraints, due to social distancing restrictions.\nIn summary, we executed well in the third fiscal quarter in a challenging environment as our team demonstrated their resiliency, commitment and determination.\nWe are in a strong financial position and continue to invest in technology and innovation to drive long-term growth.\nAs a result, we are confident in our ability to navigate through any near-term challenges and capitalize on growth opportunities.\nWe're optimistic about our future.\nOur diverse portfolio of businesses and strong customer relationships position us to drive growth as our end markets normalize.\nOur productivity initiatives continue to enable operational improvements, and our focus on innovative products and our recent acquisitions are aligned with changing global market dynamics.\nWe had several new products introduced during the year that demonstrate our ability to innovate and satisfy our customers' evolving needs.\nFor example, the new chainsaw and power shovel that are part of the Toro 60-volt lithium-ion Flex-Force platform, the e-Dingo compact utility loader, electric and hybrid greensmowers, the Ditch Witch JT24 horizontal directional drill and SK3000 stand-on skid steer and Aqua-Traxx Azul drip tape.\nOur recent acquisitions also continued to deliver with both Charles Machine Works and Venture Products aligned with key market trends, such as 5G and broadband build-out, infrastructure improvements and product versatility for our professional and homeowners with acreage customers.\nWe are encouraged by the continued strong residential demand and the improvements in our professional markets.\nAs we look forward, we'll be watching a number of macro trends, such as the trajectory and duration of COVID-related impacts, including social distancing restrictions and global supply chain disruptions, global economic recovery factors driving general consumer and business confidence and commodity trends, and weather patterns for the fall and winter seasons.\nMore specifically, we're tracking certain key factors for individual markets as we end the year and look ahead to fiscal 2021: for the residential segment and certain professional segment businesses, continued customer interest and home investments driven by stay-at-home trends; for golf, continued strength in rounds played, coupled with improved food and beverage revenue; for grounds equipment, the help of municipal and other tax supported budgets constrained by COVID-related factors; for landscape contractors, business confidence and favorable mowing conditions; for underground, 5G and broadband buildout, critical need infrastructure rehab and replacement and increased oil and gas projects; for rental and specialty construction, homeowner-related projects and the resumption of construction activity; and for snow and ice management, the timing of the winter season and continued demand within our new product categories.\nIn closing, we are enthusiastic about our future given our new product pipeline and the proven ability of our people to drive growth and productivity in these dynamic times.\n",
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"content": "q3 adjusted earnings per share $0.82.\nq3 earnings per share $0.82.\nq3 sales $841 million versus refinitiv ibes estimate of $772.6 million.\nnot reinstating financial guidance at this time.\nfor q4, continued year-over-year growth in residential market is expected at a more moderate level.\nsees 2020 fourth-quarter adjusted earnings per share to be similar to that of fiscal 2019 q4, on higher net sales.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The Toro Company delivered record third quarter results.\nWe continue to benefit from robust demand in both our Professional and Residential segments and our operations team went above and beyond to execute even as global supply chain challenges affected availability.\nOur employees together with our channel partners, kept a sharp focus on serving the needs of our customers.\nAs a result, total net sales for the third quarter were up 16% year-over-year.\nProfessional segment net sales increased 15%, marking the second quarter in a row of double-digit growth for this segment.\nWe saw continued strength in landscape contractor and golf markets worldwide.\nHigher pre-season shipments of BOSS snow and ice management products, and strong demand for our rental and specialty construction equipment and Ventrac products.\nOur lineup of innovative products, combined with strong business confidence fueled robust demand.\nResidential segment net sales were up 23% and that comparison is on top of a 38% growth rate in the third quarter of last year.\nGrowth in the quarter was driven by strong retail demand for our zero-turn and walk power mowers.\nCustomers also continued to respond favorably to our all-season Flex-Force 60-volt product lineup, which offers power and durability with no compromise on performance.\nThe recent actions we've taken to introduce innovative new products, refresh marketing, and expand mass retail distribution continue to strengthen the Toro brand and drive positive results.\nAs noted last quarter, we expected supply chain constraints and inflationary pressures to escalate at a rate faster than could be fully offset in the near term, through pricing and other mitigating actions.\nDespite these challenges, both segments delivered solid earnings growth in the third quarter, Professional earnings up 7.6% and Residential earnings up 10.5%.\nI'll now touch on some of the key themes for the quarter.\nFirst is the robust and broad-based demand, we continue to see across our markets worldwide.\nThis has been driven by consumer and business confidence as well as customer investment priorities focused on outdoor environments.\nWe continue to capitalize on these drivers with our commitment to investing in new product development, our best-in-class distribution, and our talented teams.\nSecond, the continued escalation of global supply chain and inflationary challenges.\nThis included component availability constraints as well as material freight and wage related cost headwinds.\nOur operations team took extraordinary steps to enable us to source and produce as effectively as possible in this incredibly dynamic environment.\nWe also continue to execute on our productivity and synergy initiatives, demonstrated disciplined expense control and implemented market align pricing actions.\nRegardless of how long these pressures persist, we remain focused on managing the factors within our control.\nThird, in line with general economic trends we saw an increasingly challenging labor market, including wage pressures and workforce availability limitations in some of our manufacturing location.\nAcross the enterprise, we have talented and dedicated teams committed to serving our customers.\nWe're focused on having workforce and other resources in place to put ourselves in the best position to meet demand and deliver our products to the right places at the right time.\nOur innovative product portfolio, outstanding team, and deep relationships with our channel partners and end customers set us apart and position us well for the long term growth.\nWe have the financial capacity to invest in the future and we continue to allocate capital to best drive value for all stakeholders.\nThis fiscal year, we've made strategic investments in key technologies, both organically and through acquisitions to advance our priority areas of alternative power, smart, connected, and autonomous.\nOur healthy cash flow also has allowed us to return capital to shareholders while maintaining ample liquidity.\nLooking ahead, we will continue to execute against our enterprise strategic priorities of accelerating profitable growth, driving productivity, and operational excellence and empowering people.\nI'll discuss our outlook further following Renee's more detailed review of our financial results.\nAs Rick said, our record results for the third quarter were driven by robust demand in both our professional and residential segments.\nAgainst the backdrop of increasing supply chain, inflation and labor pressures.\nWe grew net sales for the quarter by 16.2% to $976.8 million.\nReported earnings per share was $0.89 per diluted share, up from $0.82 last year and adjusted earnings per share was $0.92 per diluted share, up 12.2% from $0.82 in the prior year.\nBoth of our segments delivered record top and bottom line third quarter results.\nProfessional segment net sales were up 15.2% to $718.5 million.\nThis increase was driven by broad-based demand in landscape contractor, golf, snow and ice management, rental and specialty construction, and Ventrac products.\nThis was slightly offset by lower sales of underground construction equipment due to supply chain disruptions that impacted product availability.\nProfessional segment earnings for the third quarter were up 7.6% to $122.3 million.\nAnd when expressed as a percent of net sales, decreased 120 basis points to 17%.\nThis decrease was largely due to higher material and freight cost, partially offset by net price realization and productivity improvements.\nResidential segment net sales for the third quarter were up 23% to $252.1 million.\nThis increase was primarily driven by strong retail demand for zero-turn and walk power mowers.\nResidential segment earnings for the quarter were up 10.5% to $31.5 million and when expressed as a percent of net sales, down 140 basis points to 12.5%.\nThis decrease was primarily driven by the same factors as in the Professional segment.\nTurning to our operating results for the quarter.\nWe reported gross margin of 33.9%, a decrease of 110 basis points compared to the same period in the prior year.\nAdjusted gross margin was 33.9%, down 130 basis points on a comparative basis.\nThese decreases were largely due to the same factors that affected Professional and Residential earnings.\nSG&A expense as a percent of net sales for the quarter increased 20 basis points to 21.4%.\nThis increase was primarily driven by more normalized spending compared to the third quarter of last year and a legal settlement in the third quarter this year.\nOperating earnings as a percent of net sales for the third quarter decreased 130 basis points to 12.5%.\nAdjusted operating earnings as a percent of net sales decreased 80 basis points to 13.1%.\nInterest expense was down $1.3 million for the quarter to $7 million, driven by lower debt levels and decreased interest rate.\nThe reported effective tax rate for the third quarter was 18% and the adjusted effective tax rate was 19.3%.\nTurning to the balance sheet and cash flow.\nAccounts receivable totaled $301.2 million, down 2.2% from a year ago, primarily driven by channel mix.\nInventory was essentially flat to last year at $665.6 million.\nHowever, finished goods were significantly lower, driven by strong retail demand while working process was higher.\nThis was a reflection of the supply chain variability and our efforts to procure higher levels of key components when available.\nAccounts payable increased 53% from last year to $411.4 million.\nThis was primarily due to the timing of purchases as well as more normalized spending compared to last year.\nYear-to-date free cash flow was $429 million with the conversion ratio of 123%.\nThis positive performance was largely the result of higher earnings and lower working capital, primarily driven by higher payables.\nAt the end of the quarter, our liquidity remained at $1.1 million.\nThis included cash and cash equivalents of $535 million and full availability under our $600 million revolving credit facility.\nOur cash balances are elevated from pre-pandemic levels, largely driven by our desire to ensure adequate liquidity at the onset of pandemic.\nAnd our cash was further strengthened by the accelerated demand we're experiencing along with the related working capital impacts.\nOver the past nine months, we deployed the majority of cash generated year-to-date, including the funding of our Turflynx and Left Hand Robotics acquisition, an increase in our regular dividend with $85 million paid out so far this year, the resumption of share repurchases with $177 million through the third quarter and $100 million in debt pay down.\nWe also increased our capital expenditure budget reflecting our commitment to invest in key technologies and ensure we have the capacity to meet future demand.\nWe remain disciplined in our capital allocation strategy fueled by our strong balance sheet.\nOur priorities have not changed and include reinvesting in our businesses to support sustainable long-term growth both organically and through acquisition, returning cash to shareholders through dividends and share repurchases and maintaining our leverage goals to support financial flexibility.\nAs we enter the final quarter of our fiscal year, we're benefiting from strong demand momentum and our leadership position in the markets we serve.\nAt the same time customer demand continues to outpace supply and production.\nWe're not immune to the challenges facing companies worldwide and we remain focused on serving our customers, winning in our markets and managing the factors within our control.\nWe previously indicated that operational headwinds would be most pronounced in the third quarter.\nAs a result of collective work of our team to fulfill additional demand, we were able to deliver a stronger third quarter than we had anticipated.\nThis resulted in lower finished goods heading into the fourth quarter.\nWe remain focused on procuring materials, components and other resources to accelerate the pace of production in the face of supply chain, inflation, and labor pressures.\nWith this backdrop, we are updating our full year fiscal 2021 guidance.\nWe now expect net sales growth of about 17%, up from 12% to 15% previously.\nWe anticipate the Professional segment growth rate will be similar to the company average, with the Residential segment exceeding the company growth rate.\nLooking at profitability, we now expect overall adjusted operating earnings as a percent of net sales for the full year to be similar to fiscal 2020.\nWe expect professional segment operating margins to be similar to last year.\nAnd we expect Residential margins to be down compared to last year, but still well above historical levels.\nThis reflects our volume leverage and strong operational performance year-to-date offset by increasing supply chain, inflation, and labor pressures.\nWe continue to take actions to counteract these market dynamics.\nBased on current visibility, we now expect full-year adjusted earnings per share in the range of $3.53 to $3.57 per diluted share, up from our previous range of $3.45 to $3.55.\nThis higher earnings per share guidance reflects our strong year-to-date performance, the robust demand environment, and continued solid business execution while also taking into account the headwinds previously discussed.\nAll in, we remain well positioned to capitalize on this period of profitable growth as we continue to execute on our strategic long-term priorities.\nThe guidance Renee just discussed reflects continuing strong demand across our end markets as well as our current operational outlook.\nLooking at global key demand drivers for the remainder of the fiscal year and into fiscal 2022, we are watching consumer and business confidence levels along with developments related to COVID-19, customer prioritization of investments to maintain and improve outdoor environments, a continuation of strong momentum in golf and government support and funding of infrastructure investments.\nThese end market factors should continue to drive strong demand in the fourth quarter and into next year.\nOur biggest challenge remains our ability to produce, to meet retail demand across all of our markets given the current operating environment.\nWe believe constraints will begin to ease as we see improvements in key material and component availability, logistic channels and other COVID related factors.\nOur operations team remains committed to doing everything reasonably possible to meet increased production requirements and grow market share in this challenging environment.\nWhen operating constraints begin to ease, we expect to be in a better position to build field inventory from our current historically low levels.\nWe remain focused on driving productivity and synergies prudently managing expenses and implementing market based pricing actions as appropriate.\nWe are well positioned to capitalize on long-term growth opportunities with our strong cash flow, market leadership, investments in innovation and trusted relationships.\nA few recent examples that highlight our commitment to innovation and relationships include for the second year in a row, a Partner of the Year Award from Tractor Supply Company, this time as omnichannel partner.\nFrom Green Industry Pros, the selection of three of our products for their 2021 Editor's Choice Award citing innovation and utility has factors.\nThe three products include the Exmark 96-inch Lazer Z Diesel, the Toro Z Master 4000, and Z-Spray LTS spreader sprayer.\nIn August, two of our rental and specialty construction offerings received Editor's Choice Award from Rental magazine, including the Ditch Witch SK3000 full size stand-on skid steer, which offers the most power in its class and the Toro Swivel Mud Buggy with superior traction and maneuverability.\nAnd finally, the International Sustainable Irrigation Expo recently recognized our Aqua-Traxx Azul micro-irrigation solution as new products of the year.\nIn addition to awards, our innovative products have been showcased at recent marquee events.\nEarlier this summer, our Perrot Irrigation Systems helps keep the playing fields in top condition at many of the Euro Cup Championship sites.\nIn July, our irrigation and turf equipment supported Paul Larsen and his team at Royal St George's Golf Club as their expert work was on full display at the Open Championship.\nAnd more recently, our turf and irrigation solutions helped Tokyo's Japan National Stadium and Kasumigaseki Country Club maintain pristine conditions for this summer's high-profile events.\nOur mission to deliver superior innovation and customer care is deeply rooted in our purpose of helping our customers enrich the beauty, productivity and sustainability of the land.\nThis long-standing focus on sustainability extends to our communities where we have a strong legacy of giving back.\nA few recent examples highlight this legacy.\nFirst, close to our worldwide headquarters, we partnered with Better Futures, an organization that works to transform the lives of men post incarceration and supports Minnesota's environment.\nOur donations of equipment and training resources helped further the organization's mission.\nSecond, on a national level, we've partnered with the American Rental Association Foundation on a new community impact project.\nThis initiative is improving communities across the US by rebuilding green spaces.\nThese are just a couple of examples of the many ways our company employees are giving back and promoting sustainability, supporting our customers, and communities as an important part of our culture and core to who we are as a company.\nIn closing, we are optimistic as we finished fiscal 2021 and head into 2022 while also acknowledging the continuing dynamic environment.\nWe believe our updated guidance appropriately reflects both the risks and the opportunities we face.\nWe have strong fundamentals and momentum across our businesses and are well positioned to capitalize on future growth.\n",
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"content": "compname reports q3 adjusted earnings per share of $0.92.\nq3 adjusted earnings per share $0.92.\nq3 earnings per share $0.89.\nraises full-year fiscal 2021 net sales and *adjusted diluted earnings per share guidance.\nsees fy 2021 adjusted earnings per share in range of $3.53 to $3.57 per diluted share.\nexpects fy 2021 net sales growth of about 17%, up from a range of 12% to 15% previously.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We are pleased to report robust results for fiscal 2020, highlighted by professional segment growth, primarily from incremental contribution from Charles Machine Works and Venture Products, a record performance from our Residential segment.\nWe owe our successful performance to our team, which demonstrated perseverance and ingenuity in this challenging year.\nWe navigated COVID-induced manufacturing inefficiencies, including social distancing and workforce fluctuations.\nAt the same time, we provided innovative solutions to meet demand from our retailers and customers.\nOur employees managed these changes admirably, while working in significantly modified production environments or at home, as they balanced personal challenges resulting from the pandemic.\nI am beyond proud of our team and will remember this year as one that highlighted the way we lived our values, while caring for one another and serving our customers with determination.\nAnd to our channel partners, as essential businesses, you served our customers with dedication and passion.\nTogether, we persevered to maintain and gain market share in key product categories with existing and new customers.\nExecution in this challenging year continued to be guided by our enterprise strategic priorities of accelerating profitable growth, driving productivity and operational excellence, and empowering people.\nIn addition, we enhanced our commitment to the well-being of our employees, service to our customers and support for our community.\nUltimately, staying true to our values enabled us to deliver for our stakeholders.\nFor fiscal 2020, highlights include record growth in the Residential segment, successful introduction of new battery-powered products for residential and professional applications, increased investments in research and development in key technology areas, strong free cash flow; the continued return of value to shareholders via dividends and the launch of our Sustainability Endures Platform that documents our progress, aligned with long-held values and objectives, and profiles our continued efforts to address environmental, social and governance priorities.\nI'll now provide some commentary regarding key results by segment for the full year and fourth quarter, and Renee will go into more detail.\nFor fiscal 2020, Professional segment net sales were up 3% year over year and earnings were up 12%.\nResidential sales were up 24%, and earnings were up 75%.\nFor the fourth quarter, Professional segment net sales were up 10% versus the same prior year period, and earnings were up 70%.\nResidential net sales were up 39% and earnings were up 90%.\nI'll now provide some insight into the demand environment for the quarter.\nIn the Residential segment, we experienced a continuation of trends seen throughout much of fiscal 2020.\nStay-at-home directives and the expansion and strength of our channel were key contributors to high demand for walk power mowers and zero-turn riding mowers.\nInnovative features, refreshed brand presence, and extended season sales provided additional momentum.\nIn the Professional segment, we drove growth with increased demand for our landscape contractor, snow and ice management, golf irrigation, rental and specialty construction, and ag irrigation products.\nStrong product offerings, favorable weather and stay-at-home trends drove retail demand throughout the quarter and provided momentum going into fiscal 2021.\nThe Toro Company is sustainably strong.\nThe pandemic year of 2020 proved that by focusing on our enterprise strategic priorities and living our enduring values, we are able to deliver strong results.\nOur performance this year was only possible because of the resilience and flexibility of our team, the manner in which our operations and businesses resourcefully responded to customer demands, and the dedication of our channel partners.\nAs a result, I'm optimistic about our momentum going into the new fiscal year.\nDuring the fourth quarter, we continued to build on our sales momentum in both the Residential and Professional segments, while executing well operationally and investing in innovation to position The Toro Company for long-term growth.\nWe did sell in a challenging and unpredictable environment.\nWe grew fourth quarter net sales by 14.5% to $841 million.\nReported earnings per share was $0.66 and adjusted earnings per share was $0.64 per diluted share.\nThis compares with reported earnings per share of $0.35 and adjusted earnings per share of $0.48 per diluted share for the comparable quarter of last year.\nFor the full year, net sales increased 7.7% to $3.38 billion.\nReported earnings per share was $3.03 per diluted share, up from $2.53 last year.\nFull year adjusted earnings per share was $3.02 per diluted share, up from $3 a year ago.\nNow, to the segment results.\nResidential segment net sales for the fourth quarter were up 38.5% to $187.9 million, mainly driven by strong retail demand for walk power and zero-turn riding mowers.\nFull year fiscal 2020 net sales for the Residential segment increased 24.1% to $820.7 million.\nThe increase was mainly driven by incremental shipments of zero-turn riding and walk power mowers as a result of our expanded mass channel, as well as strong retail demand for these products due to new and enhanced product features, favorable weather and stay-at-home trends.\nResidential segment earnings for the quarter were up 90.2% to a record $26.4 million.\nThis reflects a 390-basis point year-over-year increase to 14.1% when expressed as a percentage of net sales.\nThis improvement was largely driven by productivity and synergy initiatives and SG&A expense reduction and leverage on higher sales volume.\nFor the year, Residential segment earnings increased 74.5% to a record $113.7 million.\nOn a percent of net sales basis, segment earnings increased 390 basis points to 13.8%.\nThis was a record setting year for the Residential segment and the team deserves well-earned recognition.\nProfessional segment net sales for the fourth quarter were up 9.5% to $644 million.\nThis increase was primarily due to growth in shipments of landscape contractor, zero-turn riding mowers and snow and ice management equipment, annual pricing adjustments and lower floor plan costs, as well as incremental sales from the Venture Products acquisition.\nFor the full year, Professional segment net sales increased 3.3% to $2.52 billion.\nProfessional segment earnings for the fourth quarter were up 70.2% to $104.2 million, and when expressed as a percent of net sales, increased 580 basis points to 15.2%.\nThis increase was primarily due to annual pricing adjustments and lower floor plan costs, lower acquisition-related charges, and benefits from productivity and synergy initiatives.\nThis was partially offset by product mix.\nFor the full year, Professional segment earnings increased 12% compared to fiscal 2019.\nWhen expressed as a percent of net sales, segment earnings increased 130 basis points to 15.9% from last year.\nTurning to our operating results.\nWe reported gross margin for the fourth quarter of 35.7%, an increase of 230 basis points over the prior year period.\nAdjusted gross margin was 35.7%, up 120 basis points over the prior year.\nThe increases in gross margin and adjusted gross margins were primarily due to the benefits from productivity and synergy initiatives and net price realizations, mainly within the Professional segment.\nThis was partially offset by product mix.\nReported gross margin was positively affected by lower acquisition-related charges compared with the prior year period.\nFor the full year, reported gross margin was 35.2%, up 180 basis points compared with 33.4% in fiscal 2019.\nAdjusted gross margin was 35.4%, up from 35.1% in fiscal 2019.\nSG&A expense as a percent of net sales decreased 290 basis points to 24.6% for the quarter.\nThis decrease was primarily due to restructuring costs in the prior year period that did not repeat, and cost reduction measures, including decreased salaries and indirect marketing expense.\nThis was partially offset by increased warranty costs in certain Professional segment businesses.\nFor the full year, SG&A expense as a percent of net sales was 22.6%, down 40 basis points from fiscal 2019.\nOperating earnings as a percent of net sales for the fourth quarter increased 520 basis point to 11.1%.\nAdjusted operating earnings as a percent of net sales increased 270 basis points to 11.1%.\nFor fiscal 2020, operating earnings as a percent of net sales were 12.6%, up 220 basis points compared with 10.4% last year.\nAdjusted operating earnings as a percent of net sales for the full year were 12.8% compared with 12.9% a year ago.\nInterest expense of $8 million for the fourth quarter was flat compared with a year ago.\nInterest expense for the full year was $33.2 million, up $4.3 million over last year, driven by increased borrowings as a result of our Professional segment acquisitions.\nThe reported effective tax rate was 18.5% for the fourth quarter, and the adjusted effective tax rate was 21.9%.\nFor the full year, the reported effective tax rate was 19% and the adjusted effective tax rate was 20.9%.\nTurning to the balance sheet and cash flow.\nAt the end of the year, our liquidity was $1.1 billion.\nThis included cash and cash equivalents of $480 million and full availability under our $600 million revolving credit facility.\nWe have no significant debt maturities until April of 2022.\nAccounts receivable totaled $261.1 million, down 2.8% from a year ago.\nInventory was flat with a year ago at $652.4 million.\nWe have plans to build inventory in the fourth quarter to partially mitigate potential supply chain and manufacturing constraints.\nInstead, the additional production allowed us to fulfill stronger than expected retail demand and satisfy customer needs.\nAccounts payable increased 14% to $364 million from a year ago.\nFull year free cash flow was $461.3 million with a reported net earnings conversion ratio of 140%.\nThis positive performance was primarily due to favorable net working capital, the increase in reported net earnings and reduced capital expenditures.\nGiven our strong cash generation in fiscal 2020, we have already paid down $50 million of debt in November.\nWe also expect to resume share repurchases in fiscal 2021.\nIn fiscal 2020, our disciplined capital allocation strategy continued to include investing in organic and M&A growth opportunities, maintaining an effective capital structure and returning cash to shareholders.\nWe also focus on near-term liquidity.\nFor fiscal 2021, our capital priorities remain the same and include reinvesting in our businesses to support sustainable long-term growth -- both organically and through acquisitions -- returning cash to shareholders through dividends and share repurchases and repaying debt to maintain our leverage goals.\nIn addition to the $50 million debt pay down in November, we also recently increased our quarterly cash dividend by 5%.\nWe are providing full-year fiscal 2021 guidance at this time based on current visibility.\nNote that there continues to be considerable uncertainty given the potential effects of COVID-19.\nThis includes potential effects on demand levels and timings, our supply chain and the broader economy.\nI will share the guidance highlights and Rick will cover the macro trends and key factors that we will be watching throughout the fiscal year.\nFor fiscal 2021, we expect net sales growth in the range of 6% to 8%.\nThis includes four months of incremental sales from the Venture Products acquisition.\nWe expect continued recovery in Professional segment end market.\nThe strongest growth will be in the second and third quarter, as those comparable periods last year were most impacted by the pandemic.\nWe expect Residential segment end markets to return to low single-digit growth, following an exceptionally strong fiscal 2020.\nWe anticipate a stronger first half than second, given our fiscal 2020 performance.\nLooking at profitability, we expect moderate improvement in fiscal 2021 adjusted operating earnings as a percent of net sales compared with fiscal 2020.\nThis assumes continued productivity and synergy benefits and lower COVID-related manufacturing inefficiencies.\nWe expect these benefits to be partially offset by material, wage and freight inflation as well as the reinstatement of salaries, incentive and discretionary employee-related costs that were reduced or eliminated in fiscal 2020.\nIn the Professional segment, we expect earnings as a percent of net sales to improve versus fiscal 2020 due to better volume leverage.\nIn the Residential segment, we expect earnings as a percent of net sales to be similar to fiscal 2020 on comparable volumes.\nWe expect full year adjusted earnings per share in the range of $3.35 to $3.45 per diluted share.\nThis adjusted earnings per share estimate excludes the benefit of the excess tax deduction for share-based compensation.\nBased on current visibility, we anticipate adjusted earnings per share to be higher in the first half of fiscal 2020 versus the year ago period.\nThe majority of the increase will be in the second quarter.\nFor the second half of fiscal 2021, we expect adjusted earnings per share to be comparable with the same period of fiscal 2020.\nWe expect depreciation and amortization for fiscal 2021 of about $95 million.\nWe anticipate capital expenditures of about $115 million, as we continue to invest in projects that support our enterprise strategic priorities.\nWe anticipate fiscal 2021 free cash flow conversion in the range of 90% to 100% of reported net earnings.\nIn fiscal '21, we'll continue to execute and adapt to changing environments as we maintain a balance of focusing on the short-term while never losing sight of our long-term strategic priorities.\nWe look forward to capitalizing on many exciting growth opportunities in fiscal '21 and beyond.\nLooking ahead, we'll be watching a number of macro trends, such as the trajectory and duration of COVID-related impacts, including potential global supply chain disruptions and continuing social distancing restrictions impacting production, global economic recovery factors driving general consumer and business confidence and commodity trends and weather patterns for the winter and spring season.\nAs these trends evolve, we are well positioned for growth within our specific market categories and are closely watching a number of key drivers.\nFor our Residential and certain Professional businesses, customer interest in home investments; for landscape contractors, improvement in business confidence; for snow and ice management, demand within our new and refreshed product categories; for golf, the anticipation of another strong year for rounds played and the return of food and beverage and event revenue; for grounds equipment, the budgets of municipal and other tax supported entities and their impact on capital equipment purchases; for underground, the funding of 5G and broadband build out and critical need infrastructure rehab and replacement; and for rental and specialty construction, the resumption of fleet upgrades and replacements.\nWe have a strong and innovative portfolio of products to address these market opportunities.\nSome recently introduced products that will continue to drive our business, include TITAN, Z Master, and TimeCutter zero-turn riding mowers for homeowners and contractors; the Flex-Force 60-volt lithium-ion suite of products, including our walk power mower, snow thrower, hedge trimmer, chainsaw and power shovel; the BOSS Snowrator and Ventrac Sidewalk Snow Vehicle; the Greensmaster eTriFlex all electric and hybrid riding Greensmowers; the Ditch Witch JT24 Horizontal Directional Drill; the Toro e-Dingo electric and Dingo TXL 2000 stand-on skid steers, and the Ditch Witch SK3000 stand-on skid steer.\nThe enthusiastic customer response to these products demonstrates the success of our innovation efforts and we will continue to focus on key technologies like, alternative power, smart connected and autonomous products.\nLastly, we have concluded our three-year Vision 2020 employee initiative.\nFor fiscal 2021, we have implemented a new one-year employee initiative.\nOur stretch enterprisewide performance goals include net sales of $3.7 billion and adjusted operating earnings of at least $485 million.\nIn closing, for fiscal 2021 and beyond, we believe our diverse portfolio of businesses and strong customer relationships, position us to grow.\nOur productivity and synergy initiatives will drive profitability and fund investments.\nOur investments in innovative products and emerging technologies will enable us to meet the evolving needs of our customers and, more than ever, our team is the key to The Toro Company's continued success.\n",
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"content": "q4 adjusted earnings per share $0.64.\nq4 earnings per share $0.66.\nq4 sales $841 million versus refinitiv ibes estimate of $772.1 million.\nsees fy 2021 sales up 6 to 8 percent.\nsees fy 2021 adjusted earnings per share $3.35 to $3.45.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'd like to start by first recognizing all the TETRA and CSI Compressco employees and management teams for delivering another solid quarter in a very challenging environment.\nDespite the sequential 36% decline in US onshore rig count, two hurricane storms that came through the Gulf of Mexico and the continued overhang from COVID-19, our team's focus on execution of our strategies resulted in positive EBITDA for each of our segments and sequential improved EBITDA margins.\nI could not be more pleased with the way our management team and employees have responded to the most challenging eight months our industry has likely ever faced.\nOn a consolidated basis, we achieved $30 million of adjusted EBITDA in the third quarter with the related margin improving 150 basis points sequentially as a result of our focus on cost management and maximizing the value of our latest technology.\nCompared to the third quarter of last year, we've reduced our cost by $345 million on an annualized basis or 41% as it impacts EBITDA.\nThis compares to an annualized decline of revenue of $373 million, reducing cost by $0.92 for every $1 decline in revenue.\nOur positive EBITDA in the past two quarters is reflective of the successful strategy we've executed and the diversity of our business with a short cycle North America market, longer cycle deepwater and offshore segments and the steady consistent industrial chemicals market.\nTETRA only generated $7.7 million of free cash flow from continuing operations in the quarter and ended the quarter with $59 million of cash at the TETRA level.\nYear-to-date September, we've generated $43.5 million of TETRA-only cash from continued operations, an improvement of $66.6 million from last year.\nAnd products third-quarter revenue decreased 27% sequentially, reflecting the seasonal second-quarter peak from our industrial European business and also due to project delays in the Gulf of Mexico as we experienced two major hurricanes in the third quarter.\nDespite the lower revenue and sudden impact from the hurricanes, we achieved higher adjusted EBITDA margins by 110 basis points sequentially.\nThe third-quarter adjusted EBITDA margin of 26.8% was also 310 basis points better than a year ago.\nInternational sales for completion fluids, excluding the industrial business, increased sequentially by 84%, led by some large sales for some major national oil companies in the Middle East.\nDelivery for these customers is continuing into the fourth quarter.\nOur industrial chemicals business continues to perform well and made up approximately 36% of the total revenue for this segment.\nIn the third quarter, we secured three new calcium chloride road maintenance contracts to add to already industry-leading portfolio in this industrial subsector.\nWater and flowback third-quarter adjusted EBITDA remained positive despite revenue decreasing sequentially 13%.\nWe continue to see price erosion in the early part of the third quarter, but believe that in most of the basins, pricing has now stabilized as activity has improved in September, again in October.\nDuring the quarter, we added a third recycling project with a super major operator in the Permian Basin.\nBut similar to our other recycle projects, we expect this project to operate for an extended period of time.\nBased on our market knowledge and with this award, we believe, on a daily basis, we are cycling more produced water for frac reuse than any other service provider in the Permian Basin.\nIntegrated projects increased from 16 with 14 different customers at the end of the second quarter to 17 with 10 different customers at the end of the third quarter.\nIn September, 63% of our water management work was associated with integrated projects with multiple services provided by our BlueLinx automation system.\nWe expect this trend to continue with more integrated projects as North America activity recovers.\nFor the quarter, our TETRA SandStorm Advanced Cyclone Technology achieved maximum utilization while being continuously introduced to new customers.\nOur SandStorm technology was able to achieve 99.4% sand filtration.\nWe far exceeded the current solution the customer was using, with zero wash downstream and at a peak flow rate of 40 million standard cubic feet per day.\nAs a result of this successful trial, which also showcased our SandStorm works equally well in high-pressure gas wells as it does in liquid plays, we are now working with this customer to replace our competitor's sand separation equipment.\nProviding some perspective on the fourth quarter, we've seen a recovery in number of active frac crews and well completion activity.\nOur September and October revenue was meaningfully better than July and August.\nAs we previously stated during our earnings call, our objective remains to keep the segment EBITDA-positive, while leveraging automation and deploying new technology, along with best-in-class services.\nBased on what we know today, we are cautiously optimistic that the third quarter was the bottom of activity in this segment.\nOur compression business continues to perform well despite the decline in North America activity.\nExcluding new equipment sales, which we have now exited, revenue decreased 1% sequentially to $72 million.\nThird-quarter adjusted EBITDA of $22.9 million was down $3.4 million from the second quarter.\nAdjusted EBITDA margins improved 170 basis points sequentially.\nCompression services revenue decreased 5% sequentially, and gross margins decreased 200 basis points to 52.9%.\nUtilization declined from 82.1% in the second quarter to 80.3% in the third quarter.\nWe believe that our strategy to invest in high horsepower equipment will allow us to maintain utilization above the low point of 75.2% that was seen during the last downturn.\nIn the third quarter, horsepower was on standby decreased from a peak of 20% back in May to approximately 8% at the end of September as our key customers started bringing production and units back online.\nAs natural gas pricing outlook improves, we believe that production enhancement strategies on existing wells will become a greater priority for producers as they look to maximize cash flow.\nWe should see the benefit of this focus as compression is a low operating cost solution, which allows producers to increase liquids and gas production when integrated with our artificial lift strategies.\nThis allows the use of big data to improve performance, reliability and predictive maintenance of our compressors.\nWe're excited to be the only oilfield service company to have partnered with Houston's Rice University D2K program as a partnership specifically designed to analyze big data and develop machine learning modules that enhance our current predictive maintenance programs.\nWe've completed 25% of the hardware upgrade rollouts and expect to be fully deployed by the end of 2021.\nAftermarket services revenue declined 12% from the second quarter, while gross margins improved 200 basis points sequentially.\nWe expect aftermarket services to gain momentum in '21 -- 2021 as customers catch up on different maintenance -- deferred maintenance from 2020.\nWe're pleased to announce that we've secured a master services agreement with a large midstream provider for the provision of parts and services, representing an immediate revenue-generating opportunities to expand into 2021 and beyond.\nIn closing, I will mention that using all safety protocols, I and our management teams have been traveling again to visit our field locations and meet with our customers, getting direct feedback from our customers and getting in front of our field leaders is critical for our continued understanding of the rapidly changing environment.\nOverall, we had another solid quarter, where margins improved, EBITDA was positive, we generated free cash flow and improved our liquidity.\nDespite the uncertainty remaining in the market, we feel that our strategies, technologies and industry diversity will allow us to stay EBITDA profitable and come through this in a very strong position.\nBrady mentioned that we generated $43.5 million of free cash flow year to date on a TETRA-only basis, which is an improvement of $67 million from the same time a year ago.\nThis was achieved despite the incurrence of severance and other restructuring related costs.\nTETRA-only adjusted EBITDA was $7 million in the third quarter.\nTETRA-only capital expenditures in the third quarter were $1.6 million.\nMany of the service companies are generating free cash flow this year from monetizing working capital.\nAnd as business rebounds, working capital will increase and consume cash.\nWe believe that a true metric for measuring the performance of the oilfield services sector during difficult times is to measure their ability to generate free cash flow during the bottom of the cycle as earnings decline and without the benefit of monetizing working capital.\nIn every quarter this year, TETRA, without CSI Compressco, has generated positive free cash flow without the benefit of monetizing working capital.\nEssentially, every quarter this year, cash earnings, debt -- growth in capital expenditures, less interest expense and the certain tax payments has been positive.\nOf the $43.5 million of free cash flow that we generated so far this year, $11.4 million is year-to-date earnings less capex, less interest expense and less taxes.\nThe other $32 million has been from monetizing working capital, and monetizing receivables in this environment is not easy given the financial struggles by many of our customers.\nOur ability to generate $11 million in free cash flow this year without the benefit of working capital talks to the aggressive cost management we have implemented, the benefit of deploying technology to the US onshore market, and a very flexible, vertically integrated business model on the fluids side.\nIn the third quarter, we were slightly over $0.5 million positive free cash flow without the benefit of monetizing working capital.\nFor the full year of 2020, we expect TETRA-only capital expenditures to be between 9 and $12.5 million, slightly lower than the prior guidance.\nWe will continue to monitor and adjust our capital spending based on market conditions.\nWe expect total capital expenditures to be mainly for maintenance capital, and to accelerate the introduction of our new technologies such as SandStorm and our monitoring BlueLinx technologies.\nTETRA-only liquidity ended the third quarter improved approximately $22 million in the same period a year ago, positioning us to be able to continue to manage through this downturn as activity begins to slowly recover.\nTETRA-only liquidity is defined as unrestricted cash on hand plus availability under our revolving credit facility.\nTETRA-only net debt at the end of September was $148 million with cash on hand of $59 million.\nOur $221 million term loan is not due until August 2025, and our $100 million asset-based revolver does not mature until September 2023.\nThe only significant maintenance covenant we have to comply with is a onetime interest coverage ratio on the term loan.\nAt the end of September, our interest coverage was three and a half times.\nAnnual interest expense on this term loan is approximately 15.5 to $17 million.\nAnd as always, I'd like to again remind everyone that TETRA's and CSI Compressco's debt are distinct and separate.\nThere are no cross-defaults, no cross-guarantees on the debt between TETRA and CSI Compressco.\nNow, let me spend a couple of minutes on CSI Compressco.\nCSI Compressco's cash on hand at the end of September was $16.7 million, up from $2.4 million at the beginning of the year.\nAt the end of September, there were no amounts outstanding on the revolver compared to $2.6 million that was outstanding at the beginning of the year.\nThe reduction in the outstanding amount of revolver plus the increasing cash represents almost a $17 million improvement from the beginning of the year despite very challenging market conditions.\nAnd this is how CSI Compressco paid almost $5 million of legal and advisor fees to complete the debt swap in June of this year, which resulted in a net reduction of $9 million and pushed $215 million of maturities into 2025 and 2026.\nCSI Compressco sold our Midland fabrication facility and related real estate and have targeted the sale of $13 million in compressor assets in the second half of this year.\nThey are pruning the fleet by selling older, idle smaller units to generate cash to either reduce debt, invest in technology that we believe will generate higher operating margins or invest in larger commercial units.\nTheir objective is to generate between $15 million and $25 million of free cash flow by early in the third quarter of 2021 to partially pay down the maturing $81 million of unsecured notes and to refinance the remaining amount.\nFor the full-year 2020, CSI Compressco expects capital expenditures of between 6 and $7 million, and maintenance capital expenditures of between 20 and $21 million.\nLike TETRA, CSI Compressco continues to invest in technology to drive greater margins and enhance returns.\nAnd this year, they expect to spend between 5 and $6 million.\nOther than the $81 million of unsecured notes that are due August of 2022 for CSI Compressco, the $555 million of first and second lien bonds are not due until 2025 and 2026.\nCSI Compressco's net leverage ratio at the end of September was 5.4 times.\nThis compares to over seven times during the prior downturn.\nAnd as I've mentioned before, CSI Compressco does not have any maintenance covenants that they need to comply with.\nAnd also, as mentioned earlier, CSI Compressco does not have any amounts drawn on the revolver.\nCSI Compressco generated $14 million of free cash flow in the quarter.\nAnd year-to-date, free cash flow is $24.7 million.\nDistributable cash flow was $10.5 million in the third quarter, which increased by 25% as they benefited from the sale of used assets.\nThrough September, distributable cash flow was $27 million.\nOn an annualized basis, distributable cash flow will be $36.5 million or approximately $0.77 per common unit.\nThis compares to CSI Compressco's unit price at the close of business last week of $0.85, which is not a bad cash flow yield.\nTETRA and CSI Compressco continued to perform well given the macro environment.\nIf all our segments remain EBITDA positive, both TETRA and CSI Compressco are generating free cash flow even without the benefit of monetizing working capital.\nAnd other than $81 million of unsecured debt that is due August of 2022 for CSI Compressco, there are no near-term maturities.\nAdditionally, both TETRA and CSI Compressco have already filed their 10-Qs with the SEC.\n",
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"content": "q3 revenue fell 21 percent to $153 million.\ntetra technologies - q3 activity continued to decline from impacts of covid-19 while hurricanes in gulf of mexico added to this challenging environment.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Actual results may differ materially from such statements.\nPlease note that any reference to net sales today is being made on a constant-currency basis, which reflects the application of the current period foreign exchange rates to any prior period results enabling comparisons, excluding the impact of foreign exchange rate fluctuations.\nThis is our sixth quarter of consistent successful execution against our three-year turnaround plan.\nWe're now at the midway point and are building a solid foundation for sustained growth and expansion.\nLet me summarize our strategy for those of you who are new to the Tupperware turnaround story.\nOur strategy includes fixing our core direct selling business while building an omnichannel consumer product company.\nWe're doing that by creating sub-brands that will enable us to strategically merchandise and price our products to minimize channel content.\nThe idea is to increase consumer access to our iconic products wherever they choose to buy.\n2020 was a year of stabilization.\nThis year, 2021 is the foundation year where we continue to fix our core business and build the foundation to invest in the omnichannel opportunity.\nWe'll talk more about this opportunity today.\nNext year, 2022, will be the year of expansion where we really begin to enter new channels and product categories.\nAnd in 2023 and beyond, we will accelerate those efforts for long-term sustained growth.\nDuring the quarter, we executed on several high-priority strategic initiatives that will improve our capital structure and position us well for the future.\nWe will get into more detail on each of these later in the call, but at a high level, include, progressing on divesting our noncore assets, including our beauty businesses and excess property holdings, enabling us to focus more time and resources on growing our core Tupperware brands and utilizing the recently authorized share repurchase facility to buy back 1 million shares during the third quarter, accelerating returns to shareholders.\nThese actions support our turnaround plan and are important components that will enable us to grow, expand and ultimately achieve our long-term strategic goals.\nAs a result, our net sales of $377 million reflects our core Tupperware business, which declined 13%, primarily reflecting difficult comparisons from 2020, along with COVID-related market closures in 2021 and disruption in our US and Canada business due to the implementation of a new technology platform.\nFrom an earnings standpoint, our adjusted earnings per share of $1.19 reflects our improved cost structure and new tax strategy that Sandra will describe later on the call.\nAnd during the quarter, we knew we were up against tough year-over-year comps.\nRemember, we grew 21% in Q3 of 2020, yet our team executed well.\nThe prior year period benefited from an increase in demand from shift in consumer behavior as most of us were under lockdown and adjusting to working, learning, and eating from home.\nNow that several markets have begun to open up mostly the US and Europe, we've seen a reversal of that trend as consumers are excited to get out and go places again and shopping at more traditional retail channels.\nAnd we believe this trend will continue.\nWhile some of the markets have begun to open up, others have gone into strict or mandatory lockdown in response to COVID resurgence in many regions, especially in Asia Pacific and Latin America.\nThis has had a significant impact on recurring efforts and overall productivity given the restrictions of personal gatherings and opportunities to directly connect with the brand.\nThat said, we believe these headwinds are transitory in nature and will begin to normalize in the near to medium term.\nAs I will talk about later, we are working to reconnect with our sales force and give them tools and support they need to be successful in any market environment.\nAnd because these headwinds had the most impact on our direct selling business in the third quarter, we believe that our strategy to diversify into multiple channels as we roll our business is being directly validated.\nWe believe that our turnaround will not produce linear results as evidenced by the third quarter but that over time, both top and bottom line will improve as we implement our growth plans.\nNow that we are six quarters into our third year turnaround plan, this midway point feels like an appropriate time to summarize the progress we have made over the last 18 months.\nIn short, the company was in a very different place in April of 2020.\nQuite frankly, the business was not doing well, and we needed to make major changes to keep this iconic brand afloat.\nThe solution was to execute a full turnaround of entire business.\nWe did this by rightsizing our cost structure, delivering $192 million in savings in 2020.\nWe've created a global business services group to generate operational efficiencies, centralizing and optimizing many of our back-office functions with a mandate to improve service and reduce costs, refinancing our debt and improving liquidity.\nIn fact, our leverage ratio is a third of previous levels.\nOn capital structure, we made significant progress.\nAfter selling our Avroy Shlain Beauty business earlier this year, we're working diligently to sell our remaining beauty business and excess land on holdings.\nLastly, we repurchased shares of our common stock.\nAnd I should mention that this was the first time we bought back shares since 2018, reflecting our belief in a positive outlook of our share appreciation as we execute our turnaround plan, and restructuring the company from systems and processes to strategy and personnel.\nWe've made detailed investments to improve sales force productivity.\nWe implemented a new sales force system in the US during the second quarter.\nGiven that the legacy system was customized to the needs of our sales force for the last 20 years, the new technology solution caused disruption to our sales force in the past few months.\nWe've begun working closely with our sales force over the past several weeks and believe once fixed, the technology will be enabler for our sales force to grow their business.\nWe've increased our use of data to make better and smarter business decisions.\nWe've begun using more data-driven approach designed to identify best practices, improve our marketing communication, upgrade our business intelligence to make better decisions and ensure competitive service and costs.\nWe're also using data-driven approach to segment how we look at our sales force and customers to personalize the experience they have with Tupperware.\nThat means providing differentiated support, service and incentives to all of our sales force, our customers, ensuring we are adding value as a result, improving retention.\nTo that end, we've introduced preferred customer loyalty programs in some of our biggest markets such as Mexico and plan to roll out additional markets including the US soon.\nWe've continued to innovate and expand product lines, soon-be, sub-brands, and product categories beyond the kitchen.\nThis strategy will enable us not only to compete on price more effectively, but also to segregate which products are sold through which channels, helping us minimize channel conflict.\nOne of our first sub-brands is called Tupperware Essentials.\nAnd we've recently begun testing consumers' response in Europe through selected retailers.\nWe're also continuing the work of expanding our product line beyond the kitchen.\nFinally, we recently received a recognition from fast company for our product innovation and specifically for our Echo-plus to go coffee cup, which is made of our revolutionary Ecoplasmaterial and our solution for eliminating single-use coffee cups.\nWe're also working to improve our service level.\nService means serving both our sales force and the end consumer better, giving our sales force the tools they need to be successful and ensuring the end customer has a good experience.\nSo service is much more than just delivery of customer service.\nIt is the entire customer and sales force journey.\nThis effort is a true cultural shift for our company, but one that is necessary to compete in an omnichannel business.\nIn hindsight, that's a lot.\nWe're not even close to the same company that we were 18 months ago, and we're proud of the progress we've made.\nLastly, we have to recognize that the pandemic induced an inability to gather people and connecting person has been less than ideal.\nFor six quarters, the entire time, the new leadership team has been in place, we have not been able to meet face to face with our sales leaders around the world.\nAnd we think that that has a cumulative effect.\nNow with vaccination rates increasing in many regions, the executive team finally has the opportunity to get back to meeting sales leaders in person.\nWe also intend to resume incentive trips and events that were put on hold in the past 18 months due to travel restrictions.\nThis was a portion of our total cost savings we said we anticipate coming back when we return to more normal activity.\nNext on business expansion, which is essentially channel expansion and includes B2B loyalty programs selling to retailers and studios and selling through an important move.\nWe continue to make good progress.\nFor the year-to-date period through September, business expansion represented 21% of total sales, which is an increase compared to where we were in Quarter 2.\nAlso, last quarter, we mentioned that we were looking to enter into the UK.\nSo I'm excited to announce that we just signed an agreement with a large UK distributor who distributes products of international brands in many of the major retailers in the UK.\nThe UK market is sizable and represents a large opportunity for us.\nAnd we think this approach will enable us to gain faster traction in this key market.\nExpanding into new channels is a key component of our strategic plan that will enable us to meaningfully increase the consumer aspect of Tupperware product.\nIt also reduces the reliance of single channel and therefore, is expected to minimize the volatility of our performance during any given period.\nNext on our ESG efforts.\nDuring the fourth quarter, we launched a power project with TerraCycle Loop in Canada where we will be providing sandwich keepers for five Tim Hortons locations.\nA customer can opt to pay a small premium basically a deposit for the sandwich keeper.\nAnd if they return it to Tim Hortons when they're done, they will receive their deposit back.\nLoop then cleans and returns it to the restaurant for future use.\nWe were recognized in the Fast Company's first annual list of brands that matter, which honors spreads to do more than just selling products or provide services.\nBrands achieving relevance through cultural impact, social engagement, and authentic communication of their mission and ideas.\nIt is especially gratifying to be recognized for our purpose and it is indicative of the progress we're making to chart a new path for this iconic brand.\nLastly, we will soon be publishing our new sustainability report, which include clear ESG goals and targets intended to further demonstrate and realize our commitment to our purpose.\nLooking ahead, it is our goal to be a very different and even stronger company 18 months from now.\nOur near-term priorities continue to be strengthening our direct selling business through structural service improvement, detail and property investment, use of data to optimize practices and expanding into new channels and product categories.\nWe're running a long-term strategic plan.\nOur path won't necessarily be linear.\nAnd therefore, investors should naturally expect near term ebbs and inflows.\nBut longer term, we're confident we will achieve our goals given the power of our brand, coupled with our improved liquidity and capital structure.\nI will now turn the time over to Sandra, our CFO and COO, to provide a full report on the quarter.\nIt was indeed a significant quarter for the company and continuing to establish the foundation while investing in the business to prepare for the next six quarters of our turnaround plan.\nBefore I begin the detailed financial discussion for the quarter, I want to address a reporting change that will be evident in the release of our 10-Q.\nBecause we've either sold or are actively working to sell several of our beauty brands, the necessary criteria have been met to classify these businesses as held-for-sale assets and discontinued operations as of the third quarter of 2021 and have also been restated as such in the prior-year period.\nWe believe this is also very aligned with our strategy to focus on the performance of our core business.\nDetails of the results from discontinued operations will be presented separately in our financial statement footnotes found in our Form 10-Q.\nI will note that we did record an approximate $148 million noncash loss within discontinued operations, primarily driven by accumulated currency translations, which is standard GAAP accounting practice.\nNow I will discuss the results of continuing operations in the quarter.\nNet sales of $377 million in the quarter represents a decrease of 13% compared to last year.\nThe year-over-year decline was driven by lockdowns caused by the persisting pandemic, disruptions caused by the implementation of a new independent sales force solution in the US and lower productivity caused by higher levels of vacationing, especially in Europe.\nWe believe many of these headwinds are transitory in nature.\nBut nevertheless, we have reprioritized certain initiatives to ensure we're providing full support to our sales force across the globe.\nIn the quarter, total business expansion or nondirect selling business, which includes B2B, importers, EU markets, and other business expansion efforts represented 24% of total sales.\nFor the year-to-date period, total business expansion was 21% of total sales, up 100 basis points compared to the same year-to-date period through June.\nB2B partnership sales in the quarter were $16 million or 4% of total sales.\nHistorically, our annual B2B sales have been between $30 million to $35 million.\nAnd for this fiscal year, our goal is to reach $50 million.\nYear-to-date through September, we've already achieved $35 million.\nOur B2B relationship with portfolio of new programs of major retailers, while at the same time, increasing our brand awareness.\nI'll reiterate that expanding into new channels represents a significant growth opportunity for Tupperware.\nTurning now to sales performance by regions.\nIn Asia Pacific, sales decreased by 15%.\nThe slowdown in China was driven by COVID lockdowns related to resurgence challenges, ineffective and low vaccination rates as well as by studio closings and a slower pace of new openings.\nI should note that we recently made an important leadership change in this market.\nWe believe China continues to hold significant potential for the Tupperware brand long term.\nOther areas within the region were down 12% in the quarter, severely impacted by COVID, including by mandatory or strict lockdowns in Malaysia, Indonesia, and the Philippines, which significantly impacted sales efforts, particularly as digital adoption is low in many of these regions.\nWe think there is a significant opportunity to improve performance within the region as we focus on increasing digital adoption.\nIn Europe, sales decreased by 20%.\nExcluding B2B, sales decreased by 17%, mainly due to the timing of a B2B deal in Italy in the prior year that was not repeated this year.\nEuropean developed markets were significantly impacted by elevated levels of summer vacationing, which is customary in Europe and likely exasperated this year, given a full year of travel restrictions.\nWe also eliminated certain unprofitable promotions this year to continue to improve the profitability of the region.\nEuropean emerging markets were impacted by COVID lockdown and civil unrest, resulting in lower productivity and recruitment, which are a natural side effect of such challenging conditions.\nIn North America, sales decreased by 15% in the quarter, while US and Canada decreased by 20%.\nThe decrease in the US and Canada were driven primarily by disruption caused by the implementation of our new sales force solutions.\nWe are taking actions to address change management challenges related to the salesforce system including talking with the vendor and working to migrate personal sales force ordering sites to a more consumer-friendly solution.\nAs Miguel previously mentioned, we've also begun to take action to reconnect with our sales leaders face to face to understand how to serve them and our end customers better.\nThose efforts are yielding valuable insight that will help us to improve.\nSales in Mexico decreased by 6%, driven by a significant sales force reduction stemming from service issues during the second quarter as well as lower-than-expected recruitment due to primarily COVID restrictions.\nWe already have a campaign underway to recruit and reengage the sales force in this region.\nIn South America, sales increased by 9%.\nSales in Brazil were flat, which we view as positive given its cumulative recruitment issues due to COVID.\nWe attribute the relative strength to significant recruiting efforts and the simplification of our onboarding and training processes.\nArgentina was a bright spot this quarter, which we attribute to the rollout of digital training platforms and expansion of e-commerce on a national level.\nOverall, we are pleased with our sales performance despite challenging market conditions and of our ability to continue executing against our strategic initiatives and delivering tangible results.\nMoving now to profit.\nGross profit in the third quarter was $248 million or 65.8% of net sales, a decrease of approximately 300 basis points compared to last year.\nThis was driven primarily by 240 basis points related to higher resin and manufacturing costs and 60 basis points related to country mix.\nAs we mentioned last quarter, we had anticipated higher resin costs, but we're optimistic that the favorability in manufacturing would continue to help offset it.\nHowever, this was not the case in the third quarter due to lower volumes and higher inventory.\nAs we look forward to 2022, we will look for opportunities to reduce cost, increase efficiencies and opportunistically raise prices where appropriate.\nI should also note that we intentionally built up inventory levels during the first half of 2021 in order to improve service and meet increasing demand.\nHowever, with the higher inventory levels and lower demand in the quarter, we will be focused on sell-through of inventory and taking downtime where needed in the future.\nWe do believe that our ability to manufacture locally continues to be an advantage during the pandemic.\nSG&A as a percentage of sales in the third quarter was 50.6% versus 48.5% last year, an increase of 210 basis points, primarily reflecting higher logistics costs and the investments we plan to make in the second half of the year.\nIn regard to logistics costs, we have been working to minimize the impact through efforts to improve contract pricing and sourcing, optimize container utilization, and strategically planned shipments.\nI'll note that carrier costs remained elevated, FedEx surcharges are still in effect and we're seeing a shift in our business model in the US where we're increasingly shipping direct to the end consumer versus using the sales force for fulfillment and distribution.\nWe do recoup a majority of this cost as we charge for shipping, which is reflected in revenue.\nAs we continue to shift to a more omnichannel approach, we expect this trend to continue.\nTherefore, we're working to improve efficiencies in fulfillment, packaging and shipping.\nAdjusted operating profit in the third quarter was $52 million, and as a percentage of sales, it was 14%.\nDespite softer-than-expected sales, our operating margin remained in the mid-teens, reflecting the renewed focus on tighter cost controls and a more disciplined approach to investments.\nNow to adjusted EBITDA, which is an important metric and an indicator of progress toward rightsizing our cost structure and evolving our capital structure.\nAdjusted EBITDA for the third quarter was $69 million versus $100 million in the prior year.\nTrailing 12-month adjusted EBITDA through September was $328 million.\nOur operating tax rate was a negative 20.4% versus the same quarter in 2020 of 28.3%.\nThis quarter's tax rate benefited from an election we made when filing the 2020 tax return in October to change our capitalization policy, which allows us to utilize previously valued tax credits in the third quarter that would have otherwise expired and which resulted in the release of valuation allowances.\nWhile nonrecurring in nature, this valuation allowance release is part of our strategic tax initiative that we were executing as part of our turnaround plan to help us effectively utilize our existing tax assets and achieve our overall tax rate of below 30%.\nNow to earnings per share.\nAdjusted earnings per share of $1.19 for Q3 versus $1.12 last year is better by $0.07 per share.\nThe favorable tax item just discussed contributed $0.52 of the variance and was offset by $0.41 due to lower volumes, higher resin costs and incremental investments, and $0.05 of higher inventory reserves.\nWe also bought back shares in the quarter, which Miguel mentioned, and I will discuss more in a minute, that contributed $0.01 per share.\nYear to date, operating cash flow net of investing was a negative $7 million, compared to $108 million last year.\nAs we've mentioned before, higher cash flow last year was driven by aggressive cost-saving actions, including COVID-specific actions like furloughs and significant lower spending on inventory and higher payables in order to preserve cash.\nThis year, we've invested in inventory in order to improve service levels given the current landscape of the global supply chain issues while also reverting to a more normalized level of capital spending.\nAs I mentioned earlier, the investment in inventory was to improve service while mitigating global supply chain conditions.\nI should note that our full year free cash flow target may be less than $200 million and is largely dependent on the timing of cash proceeds from the sale of our noncore assets.\nMoving on to the balance sheet.\nWe ended the quarter with a healthy cash balance of $124 million, which compares to $134 million last year.\nAnd we ended the quarter with a total debt balance of $678 million.\nOur debt to adjusted EBITDA ratio for debt covenant purposes was $2.28 million versus 3.72% last year and well below the required covenant of 3.75%.\nWe will look to favorable market conditions to present opportunities to further improve our capital structure.\nAs Miguel and I also mentioned, we utilized our newly approved share repurchase facility.\nOf the $250 million that was recently authorized by our board, we repurchased 1 million shares of common stock during the third quarter at an acquisition cost of $25 million.\nThis was the maximum we could do within our credit facility covenants.\nWith each quarter of the turnaround behind us, our optimism increases regarding our future growth trajectory.\nAnd going forward, we'll continue to be opportunistic regarding repurchasing shares, seeking to deploy capital as effectively and efficiently as possible.\nAlthough we focused on the continuing operations for the third quarter, net sales from discontinued operations were $45 million or 11% of total net sales and adjusted earnings per share, excluding the cumulative translation adjustments from discontinued operations was $0.03 or 3% of our total adjusted earnings per share.\nFor the year-to-date period through September, net sales from discontinued operations were $140 million or 10% of total net sales and adjusted earnings per share, excluding the CTA from discontinued operations was $0.11 or 4% of total adjusted earnings per share.\nAs we continue to make progress and get further along in our turnaround plan, we want to be sure to share some of our strategies and early successes that are driving our long-term plan.\nTo that end, we are planning to host an Investor Day during the first half of 2022, during which we will provide a more comprehensive view into the business, strategy, and tangible examples of the progress against our strategic initiatives and turnaround efforts as well as provide a longer-term framework and outlook.\nLook for more details in the coming months.\nWe continue to make progress on stabilizing our core business while increasing investments in our business expansion efforts and executing on several strategic initiatives that strengthened our capital structure and have positioned us well for future growth.\nAll components of our turnaround plan and indicative of progress.\nLooking ahead to the remainder of 2021, we'll continue to build on our foundation and invest in initiatives that will improve the business and drive penetration into new channels.\nWe believe our consistent execution will result in a stronger more resilient, competitive, and durable company long term.\nWith that, let's take some questions.\n",
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"content": "compname reports q3 adjusted non-gaap earnings per share $1.19.\nq3 adjusted non-gaap earnings per share $1.19.\ntupperware brands qtrly net sales down 11% to $376.9 mln.\ntupperware brands corp - qtrly net sales were $376.9 million, a decrease of 11% year over year.\ntupperware brands corp - qtrly adjusted diluted earnings per share (non-gaap) was $1.19.\ntupperware brands corp - qtrly net sales in asia pacific were $112.9 million, a decrease of 13%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Titan definitely had a good quarter as our results exceeded expectations as we posted our strongest third quarter for revenue and profitability since 2013.\nWe had adjusted EBITDA of $35.1 million this quarter on sales that were up 48% to $450 million.\nThis quarter's adjusted EBITDA has been exceeded only twice in any quarter since 2014, and one of those occurred just last period when we posted $37 million of adjusted EBITDA.\nWe are now expecting to see our full year adjusted EBITDA coming in above $130 million, which is our highest annual total since 2013.\nOur global team has been working very hard to produce these results and increase production levels to meet growing customer demand as we continue to drive forward to grow our production capabilities further in coming quarters.\nSo looking at our segments, Titan, again, this quarter experienced strong sales growth in each of our segments, with agriculture leading the way with a 60% increase compared to last year.\nOur order books continue to strengthen, especially on the ag side, where commodity prices remained at good levels with corn above $5, soybean above $12 and cotton at record highs, thus ensuring another year of farmer incomes, strong farmer incomes for 2022.\nYes, I realize that commodity prices have dipped from their peak levels earlier this year.\nAnd farmer sentiment has dipped as well.\nBut let's not get caught in the trees and miss the abundant forest around us.\nFarmer incomes are still at high levels again this year.\nThere is pent-up demand sitting on order decks.\nThere is an aged large ag fleet.\nThere's historically low inventory levels at all our dealers, whether it's small ag, large ag or an aftermarket dealer and also throw into that equation that current sales levels in large ag are still well below historical average.\nAnd do not forget that large ag is Titan's long-term sweet spot.\nWe believe this all adds up to a good tailwind for business that we see continuing throughout 2022.\nSo moving from Ag over to Earthmoving and Construction.\nWe have seen demand continue to be above our expectations that we had at the start of the year with sales growth of this quarter of 36% on a year-over-year basis.\nOur EMC segment continues to look increasingly promising as we round the corner to next year just like Ag, our order books are strong, but we also see those infrastructure investments coming into place -- coming into many places.\nAnd as we've stated before, we are a global business in our EMC segment and a large part of our business from that segment does come from our undercarriage division, ITM.\nITM is a business that has a good global footprint.\nIt has a strong OEM and aftermarket channel for distribution.\nAnd then we have a market-leading and almost unique; I think, I'm pretty sure it's unique.\nI'm going to use that word today.\nA foundry in Spain, and I mean unique for our undercarriage type operations, where we have our own foundry in Spain, that enables us to customize cast products that meet the specific needs of our customers.\nAgain, just a strong business for us and a large part of where we get our EMC growth and performance from.\nDavid will spend some more time today talking about our financial results, but I do want to offer a couple of thoughts.\nFirst, while our business operates in many different global geographies and produces three primary products, wheel, tires and undercarriage, which end up touching various end markets.\nWe, again, this quarter, saw growth and improved financial performance in all of our business units; so good, solid, consistent growth.\nSecond, we have and continue to operate with a disciplined mindset to control our costs in SG&A and within our overall operational structure, and you see that reflected in our results.\nNext, we have invested our capex wisely and strategically in recent years to continue driving our innovative products into the marketplace and to increase capacity in our core businesses where the market needs it.\nWe've also made the necessary investments into safety, environmental and maintenance, and we will continue to ensure that happens in the future.\nMy point with all that is, while Titan has reduced our capex over the prior few years to ensure we protect our balance sheet, we have invested properly into our company and have not underinvested in recent years.\nLastly, we will continue to make the investments, incur the expenses into expanding our production capabilities and increasing our headcount in areas to meet demand.\nWe are not simply going to sell our existing production capacity into the market, but rather take advantage of this existing opportunity to get more of our market-leading products into the hands of our customers.\nSo let me conclude by saying something that we all know.\nI mean, this is without a doubt, one of our most dynamic business environments, all of us in business have faced.\nTitan, in addition to our solid operation results again this quarter and really for all of 2021 for that matter, Titan has strengthened our financial position this year by refinancing our $400 million bonds.\nWe've also, this year, further improved our liquidity with our recently announced ABL extension and upsizing.\nWe believe that Titan is in a position of strength within our industries with our global production footprint that is second to none in our business and our plants that are well suited geographically, excuse me -- for our customers.\nWe also have an expansive and innovative product portfolio with an arsenal of highly engineered tooling.\nThese attributes enable us to deliver a strong value proposition to our customers.\nAnd as a result, for Titan to continue to benefit from the current trends that are in today's markets.\nWith that being said, our order books are strong, as we've seen really in years.\nThere are continuing positive signs in our end markets, which puts Titan in a good position, as I stated earlier, to post adjusted 2021 adjusted EBITDA of over $130 million.\nAnd on top of that, we see a path to further growth for next year.\nAgain, Titan is in a good position at this time to capitalize on our reinvigorated strength, which makes me think about a comment this week that I heard from our Audit Committee Chair, who happens to be a leader in the private equity space.\nThe comment he made during our meeting this week was that Titan has reported strong results throughout 2021.\nWe have fortified our balance sheet this year.\nAnd has all this positive going on, yet our stock is trading at only around 6.5 times current year adjusted EBITDA.\nHe's a pretty smart guy, by the way.\nSo with that, let's jump into the financials.\nI appreciate everyone joining us today.\nWell, the third quarter was just another significant step in the right direction for the company, and we were able to deliver a very strong result and build on the momentum that we've started more than a year ago.\nOur global management team has managed this concurrent environment very well, and we believe we have solid plans in place to continue to do that moving forward.\nWell, let's start with some highlights for the quarter, and then I'll get into more details.\nSales grew at a very nice clip at 48% this quarter.\nAgain, a very, very strong results for our Q3.\nOur growth was led by the Ag segment with a 60% increase from Q3 last year.\nAnd at the same time, the EMC segment was also very strong at a growth of 37%, and our growth in the consumer segment was nothing to sneeze at, with an increase of 32%.\nOur gross profit increased by 93% in the quarter, and our margin improved to 13.4% compared to only 10.3% last year.\nAdjusted EBITDA for the quarter was $35 million, representing the strongest third quarter performance since 2013 that bears repeating.\nOn a trailing 12-month basis, our adjusted EBITDA stands at $116 million as of this quarter, and we expect Q4 performance to be strong, improving that run rate to over $130 million for fiscal 2021.\nOur cash position remained stable again this quarter at $95 million despite some growth in working capital.\nWe continue to do a very good job managing our inventory levels as well.\nWith our improvement in profitability and our strong management of the balance sheet, our debt -- our net debt leverage as of the end of Q3 stands at 3.3 times our trailing 12-month adjusted EBITDA.\nThis is obviously a dramatic improvement from a year ago.\nNow let's get into the more detail for the Q3 performance.\nAgain, our sales levels for the third quarter were strong, and we saw another sequential increase of 2.5%, notwithstanding the normal seasonal variation from holidays and plant maintenance that reduces our production days.\nSales increased relative to last year by $146 million and $104 million or 30% from the third quarter of 2019, a more normal third quarter period.\nVolume was up over 25% with all of our business units, except Australia, seeing significant double-digit percentage growth year-over-year.\nGross profit for Q3 was $60 million versus only $31 million in adjusted gross profit in the third quarter of last year.\nOur gross profit margin in the third quarter, again, was very strong at 13.4%.\nWe believe our visibility is solid in terms of being able to know where our costs are and where we continue to see challenges that we -- in supply, and we intend to manage it in a very strong way, just as we've proven over and over again, and our track record is strong.\nNow on to segment performance.\nOur Ag segment net sales were $244 million, an increase of $91 million or 60% from third quarter last year, which makes it the strongest quarter for the segment in the last eight years, beating last quarter sales by 5.5%, reflecting strength in North America and Latin America.\nVolume in the segment was up 30% -- 36% just like Q2.\nAgain, this quarter, the principal driver of the volume increases related to the OE sales across the business, while aftermarket sales remained very solid.\nEvery one of our business units saw increases year-over-year in the Ag segment, and our order decks reflects strength across the globe for the ag demand for the foreseeable future.\nOur agricultural segment gross profit in the third quarter was $33 million, up from only $16 million last year, representing a 105% improvement.\nOur gross margins in Ag were 13.6%, which is another significant improvement from the margin produced last year of 10.6%.\nThis is reflective of the increased volume and of the effect on efficiencies across our plants, along with continued strong cost control actions we have taken over the last couple of years.\nThese are timing -- there are timing impacts related to pricing actions and alignment with our costs as they flow through production, as we know.\nAgain, we've done a great job at this, a very effective job getting in front of these increases.\nAnd I expect that we can remain in very strong territory overall on our margins in the segment and as a whole.\nOur Earthmoving and Construction segment experienced another strong quarter as well.\nOverall net sales for the EMC segment grew by $45 million or 37% from last year as well.\nThe third quarter is traditionally the lowest as we experienced normal summer slowdowns with holidays across Europe and our customer schedules.\nThis year was no different, and we saw a small sequential drop from Q2.\nThis is not a statement on the overall demand in the sector, just the normal seasonal cycle that we have.\nAll of the major geographies experienced year-over-year growth during the quarter with the largest growth coming from ITM, our undercarriage business, which grew 38% from third quarter last year.\nITM's primary growth came from Latin America and Europe.\nGross profit within our Earthmoving and Construction segment for the third quarter was $21 million, which represents an improvement of $9 million or 71% from gross profit last year.\nGross profit margin in the EMC segment was 12.7% versus only 10.1% last year, a very healthy increase.\nAgain, the largest driver of our increased profitability came from the increase in sales in ITM, while growth occurred across all of our businesses and geographies across the globe year-over-year.\nThe Consumer segment's Q3 net sales were up 32% or nine million compared to last year.\nThe volume was up very nicely in the quarter, and currency was also a positive tailwind.\nAs we discussed, our primary priorities -- production priorities have been with our Ag and the EMC segments and our customers, but we did see healthy increases related to our Latin American utility truck tire business and increased mixed stock rubber sales in the U.S. The segment's gross profit for the third quarter was 5.8%, a very healthy improvement from last year as well.\nGross margins were at 15%, which was an improvement from 9.5% last year, reflecting some positive mix and pricing improvements with our products.\nThis is the best margin performance in this segment since Q2 2018.\nOur SG&A and R&D expenses for the third quarter were $34.6 million, down about $0.5 million sequentially from the second quarter.\nMost importantly, SG&A and R&D expense was 7.7% of third quarter sales, a very nice improvement from a year ago.\nThird quarter SG&A and R&D increased from the prior year by about four million.\nAs a reminder, we've taken strong spending control measures over the last few years.\nThis year's expenses included some variable spending and compensation levels, reflecting the increase in sales and our profitability during the period.\nDuring the third quarter, we recorded tax expense of $5.3 million, somewhat higher than in the quarter than originally expected, but reflective of increased profitability in certain high tax jurisdictions for Titan, including Latin America, Turkey, Germany and parts of Asia.\nObviously, this is higher than what we stated in our guidance earlier in the year.\nAnd again, this is entirely due to increased profitability expected for the full year.\nI now expect taxes on the income to be about approximately $15 million for the year.\nAnd again, this approximates our expected cash tax payments for the year as well.\nNow let's move over to cash flow.\nOur overall cash balances remained solid in the quarter at $95 million.\nAgain, this is despite the sequential growth in sales and necessary continued investments in inventory to support and sustain our sales levels moving forward.\nOur operating cash flow for the quarter was positive at $15 million, and we generated positive free cash flow of over $5 million in the quarter.\nWith strong growth in sales throughout 2021, we remain in slightly negative territory on cash flow overall.\nBut when you look at all of our key metrics, including cash conversion cycle and working capital, as a percent of sales, we've made healthy improvements from a year ago through focus and control.\nDuring the third quarter, inventory grew by approximately $28 million sequentially from Q2.\nMuch like the rest of the year, almost half of this increase came on higher raw material costs and the other coming from volume, mix and other currency changes.\nAs a percentage of the most recent quarterly sales, inventory stands at 20.7%.\nThis compares favorably to 23% -- over 23% from a year ago at this time.\nAgain, this is, again, a very strong focus across the business from our management team.\nOur overall DSOs in the business improved sequentially from Q2 by two days and now stands at 53 days compared to 55 in Q2 and 58 from this very time last year.\nI continue to believe that we will maintain and improve our cash flow and working capital metrics as we head toward year-end.\nTraditionally, this is the time of the year where we build cash, particularly in the back half of Q4.\nWe will not likely get back to breakeven free cash flow for the full year.\nI do expect Q4 to be in positive territory like Q3, which brings us much closer to that goal.\nAnd our teams are very focused on driving a strong balance between production efficiency and working capital management.\ncapex for the quarter was up sequentially at $9.6 million as expected.\nWe have been making strategic decisions as to the investments to increase capacity, reduce costs and improve plant efficiency, along with putting tooling in place to drive production related to new product innovations.\nAs of the first nine months, we -- capex stands at $24 million.\nBased on our latest forecast, I expect full year 2021 capital investments of around $35 million at the low end of the previous estimate for the year.\nAs Paul discussed earlier, we are targeted and measured in the investments we're making in the business for the long term.\nAs we disclosed last Thursday, we took another positive step for the business in renewing our domestic ABL credit line.\nThe credit facility was increased to $125 million and is extended until October of 2026.\nIt still has the option to expand by another $50 million through -- in an accordion provision.\nThe amended agreement is substantially similar to the previous agreement, while we attained improved terms surrounding pricing and other enhancements to improve the availability within the borrowing base.\nI'm very pleased to be able to get this in place for the next five years and to provide stability for our liquidity on top of our healthy cash position across the globe.\nOur overall debt level at quarter end decreased by five million from June.\nAll of the decrease came on paydowns on the international borrowings.\nOur borrowings on the ABL stands at $30 million, roughly in line with last quarter.\nI continue to expect there won't be any significant cash requirements related to debt in the near term, and it remains substantially at our discretion to pay down.\nOverall, net debt decreased in the quarter about -- to $387 million, down $4 million from last quarter.\nAgain, I expect to trim that number over time as cash flow increases, and we are able to pay down on the revolving credit loans.\nI stated it earlier, but it bears repeating that our debt leverage at the end of September based on 12 -- trailing 12 months adjusted EBITDA has decreased to 3.3 times, which is right in the target range that we have been discussing.\nOur balance sheet is in solid position now, which allows us much more flexibility to manage the business for growth.\nNow let me wrap up with a few thoughts on the remainder of the year and some concluding remarks.\nAs everyone should know, the fourth quarter of our year brings with it a number of normal disruptions due to holidays and year-end maintenance in order to be prepared for the first quarter, which is expected to be strong.\nOur fourth quarter performance is expected to be at a continued high level and steady with what we've been experiencing so far in 2021 in terms of customer demand.\nWe've come a long way in the last year with the business.\nAnd because of the effective decisions we made during tougher times and our ability to improve our liquidity, our situation has normalized and strengthened.\nEven in the dynamic environment that we are in, we continue to fight hard every day, and it is making a difference in the trajectory for our business performance.\nThe future is bright for us.\nAnd we are, as a leadership team, remain highly focused on managing the opportunities in front of us.\nThat's our story for now.\n",
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"content": "compname reports strongest third quarter results since 2013 with net sales up 48 percent yoy.\nfull-year adjusted ebitda is estimated to finish over $130 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We're only at March 4th and this year is already looking like a completely different story, compared to 2020.\nLate in the fourth quarter, we started to see demands trend in a positive direction, and that's really evidenced in our Q4 results that exceeded expectations.\nAnd 2021 has really kept on roll and as we've seen, the U.S. farmers' sentiment and farmers' capital investment index levels spiked to all time highs already.\nThe $25 billion of government payments late in 2020 certainly helped move these indexes in a favorable manner combined with of course strong commodity prices with corn hovering around $550 and soybeans up above $14.\nAnother significant positive indicator for 2021 is the low levels of inventory that exists in most channels, especially in the dealer networks.\nTherefore our market uptick at the retail level should get that additional boost from inventory replenishment.\nIt's definitely great to see ag moving in a positive direction in 2021 and it seems that the market upturn shared [Phonetic] some pretty good legs on it as well.\nLooking back a year ago, I don't think there is many people who thought that coronavirus would turn into a global pandemic that impacted really every country, in every facet of society.\nI do want to take a second and reiterate our Titan team did an excellent job working hard to continually safely operating our businesses during the pandemic and our 2020 performance positively reflects those efforts of our team around the world.\nIt also demonstrates the strength and resiliency of our people and our products.\nDuring times like that, those items really show, and again, it's our people and our products that make Titan unique in our industries.\nHowever, I think it's important to go a step further with those comments to give credit for how well Titan remained focused on our imperative that we really had at the beginning of the year to improve our financial position.\nIt was clear, we didn't enter the pandemic in a position that allowed us much room for error.\nOur 2020 results clearly illustrate that Titan has strengthened our financial position and we were able to make those improvements while dealing with the onslaught of the challenges from the pandemic.\nI think the success of that is seen in our 2023 bonds, which have been trading around par at recent months.\nIt also gives us an opportunity to explore the potential of a refinancing.\nNow let's take a step back and look at the fourth quarter.\nWe finished the year with a significant turnaround, especially in ag as demand for many of our customers continued to strengthen as the quarter progressed.\nDuring the quarter, our adjusted gross margin of 11.8% was the strongest margin achieved over the previous ten quarters.\nAlso, our adjusted EBITDA over $17 million was our highest since the first quarter of 2019.\nA lot of these gains and financial performance, our continuing efforts and focus to improve our financial position, resulted in a strengthening cash position along with net debt.\nWe delivered our sixth consecutive quarter with positive operating and free cash flow and reached levels of cash and net debt that haven't been achieved since the end of 2017.\nNow as we look deeper into the business going forward, the positive trends in ag that we saw in late 2020 especially in North and South America have only increased during the first couple of months of 2021.\nIn North America, the growth in small ag, in our small ag customer base continues at a rapid pace as we've seen our customers increase orders to address the need to restock inventory on top of their already expected growth this year.\nLarge ag is historically a strength of Titans, as our plants and tooling are well equipped to handle the volume and complexity of SKUs related to that business.\nThe size are forming [Phonetic] that suggest large ag is beginning to move in a favorable direction as well.\nThe challenge for us, which is similar to many manufacturers these days is that coming off the lower production levels of the pandemic, the surge in demand has created a high degree of volatility for our customer base and for Titan as well.\nWe are dealing with the constraints in labor as we are hiring rapidly, we're dealing with raw material issues pretty much all over the map, and we're dealing with logistical challenges that pertain to shipping containers and trucking that have sprung up as of late.\nTitan has, and I will make this clear, Titan has a long history of being flexible to adjust to market volatility.\nAnd we have the robust production capabilities, that can meet the needs of our customers.\nIn order to do that, we are hiring aggressively at all of our ag and wheel and tire plants in the U.S., along with South America, and we will continue to do that throughout this year.\nHowever, there is a training curve to onboarding people into our operations.\nTherefore, we need to hire systematically during the ramp-up process to mitigate our training liability as our positions do require a vigorous training program.\nThe flexibility and scalability in Titan's production base is a core strength, and we do expect to earn a good return on providing this to our customers during the times that we are in and currently entering deeper into.\nAnyone who has seen our plants, especially our real -- our tooling for our real business would understand what I'm saying.\nWe are currently in discussions with major OEMs on long-term supply agreements that would be a win-win for both sides in today's changing world.\nSo now turning over to South America, we've seen the market really jump to life in Q4 and then really proceed to keep on running into 2021.\nSince we acquired Titan Brazil in 2010, we've consistently invested in large radio ag and OTR capacity that at the time of the acquisition was really only a small part of the portfolio.\nWe see the rewards from those investments through the years as we've significantly grown our output in both those areas along with expanding our market share.\nThe reality is that this rapid increase in orders coming off the back of the pandemic means that we do have to allocate our production across our customer base.\nWe will continue to invest in capacity and we are investing in capacity, I should say in 2021, and we'll do that through both hiring, but as capital investments as well as we do believe the favorable volume trends that we are seeing will continue.\nNow looking over at earthmoving and construction.\nThe full year 2020 results show a drop in sales, driven by the pandemic, but I do want to state that we finished the year with fourth quarter sales really moving in a positive direction, and we continue to see those trends in the first quarter as sales in our undercarriage business have exceeded budget by over double-digits.\nThis is really good to see early in 2021 as our thoughts were more for growth that come later in the second half of the year when the pandemic effects on this sector start to fade away and you start to see infrastructure and development spending kick into gear.\nSo these early gains in construction, mining for undercarriage really only point to an even stronger year as it progresses.\nNow coming back to Ag, over the past five to six years, we've been in a softer Ag market that has put pressure on our pricing and margins.\nNow, when I say pricing, I'm looking at it from three angles.\nFirst, recovering your raw material cost; second, recovering other production related costs; and then third, pricing leverage.\nWe do have some raw material agreements with key OEMs that automatically modify pricing based upon raw materials.\nHowever, I don't think I have found anyone that can recall a time when we've see steel go from $445 a ton to $1,200 in such a short duration and then also be in short supply as well.\nSo the challenge for us is that our raw material agreements don't always protect us in these rapidly changing moments, and we will work to ensure we get raw material cost recovery throughout 2021.\nOur agreements in North and South America -- excuse me, in North America and Europe typically only pertain to raw material fluctuations.\nSo the next piece of our pricing strategy focuses on the recovery of other production costs related to over time shipping energy, etc.\nAgain, we believe this market provides us an opportunity to tack [Phonetic] pricing beyond just raw materials to address areas of production that are also facing cost increases.\nThe third piece of pricing that we look at is related to leverage as demand improves.\nWe certainly feel that Titan produces valuable products and with strong production capabilities that are quite unique in our space, and we believe as the market continues to progressively improve, we should see an opportunity to approach pricing with more leverage than we've seen in recent years.\nNow looking at the market again, the market is really moving in a positive direction.\nThere is no doubt about that, but it has shifted quickly in such a short time period that it is difficult to provide a reasonable full year 2021 forecast for sales and EBITDA like we've done in prior years.\nBased on our strong finish in the fourth quarter and what we're seeing already in 2021, we are targeting good growth in sales, EBITDA, along with margin expansion.\nWe intend, and we will remain diligently focused on protecting our balance sheet and realize that cash is going to be needed to fund inventory.\nAs noted in the pricing discussion that I referenced, the market landscape gives us opportunity to do things differently than we have in prior years, and we intend to set production schedules using payment terms as a criteria, therefore we'll be looking for customers to adjust their payment terms.\nAnd most importantly, support our customers throughout the pandemic and now beyond.\nThese efforts have enabled Titan to be in a really good position for 2021 as the markets are moving in a very positive direction.\nI appreciate all of those who are participating in the call and those that are following Titan's progress.\nWell, my whole plans are changing in flash.\nWhile we're still very much in an uncertain times and while the pandemic and other global volatility and economic uncertainty continues, Titan's world is changing rapidly.\nOur response to the crisis last year was critical as we now head into the recovery of that [Indecipherable].\nI'll focus most of my discussion today on the fourth quarter performance, but what is important and what we accomplished in the quarter and for the year, puts us in a stronger position as we manage 2021 and beyond.\nFirst, our cash position was [Phonetic] $117 million for the year, up $51 million from last year-end and we accomplished this through strong operating cash flow in Q4 and for the full year, along with our efforts to secure liquidity through non-core asset sales and related transaction.\nOperating cash flow for the fourth quarter was $10 million, which pushed full-year operating cash flow to $57 million.\nAs anticipated, we completed further transactions in non-core -- of non-core assets of $16 million in Q4 and for the full year, it's up $53 million.\nSecond, related to the cash improvement, our net debt position at the end of the year was $347 million, down from $366 million at the end of last quarter and $433 million at the end of last year.\nAs we stated in the release, we haven't seen this level since 2017.\nThird, we took another important step forward last week with the extension of our domestic ABL facility.\nThis facility now has [Indecipherable] for two more years and are now closer to maturity on our overall debt structure.\nSo there are several other takeaways from our P&L performance for the fourth quarter that I want to pay attention to.\nAnd normally our fourth quarter is traditionally or seasonally a low quarter, but this year was not normal.\nWe had quarter-over-quarter and sequential sales growth in both Ag and EMC.\nSecond, we also continued our strong adjusted gross margin trend with 11.8% for the quarter, best margin performance, we've seen in ten quarters.\nBefore I head into this normal review of sales, gross profit and SG&A, I want to get into some of the non-operating items that occurred in the fourth quarter.\nDuring Q4, we recorded impairments related to two sets [Phonetic] of long-term asset categories for a portion of our smaller operations.\nFirst, we broke down certain equipment to fair value related to our entire recycling operations in Canada and this resulted in a charge of $11.2 million.\nSecondly, we wrote off intangible assets related to our customer relationships from our acquisition of the Australian operation many years ago and it resulted in a charge of $6 million.\nBoth of these resulted from recent trends and market conditions, triggering a review of our fair value of our long-term assets, specifically into these businesses.\nIn October, we sold our facility in Brownsville, Texas garnering net proceeds of approximately $11 million and a gain on sale of $4.9 million.\nAnd finally, in November we received further recovery related to an insurance claim from the fire in our Canadian Tire recycling operation from 2017 of $3.6 million.\nFrom here forward, I will review the results of the fourth quarter and for the full year excluding these items, and the other unusual and non-operational transaction that occurred during the year.\nNet sales for the fourth quarter were up over 8% from Q4 2019 representing a nice turnaround in a year where we saw an overall decrease in sales of 13%.\nAs the fourth quarter progressed, the stronger operations became -- particularly as our OE customers began increasing production and demand for our product.\nWhat is even more impressive is on a constant currency basis, total sales was up nearly 15% from Q4 last year or $45 million.\nThe negative currency impact was approximately $19 million or 6% with most of the impact coming in Latin America and Russia, as we saw throughout 2020.\nOur overall sales volume on a consolidated basis was up over 20% from last year and price and mix in the fourth quarter was down about 6%, mostly reflecting lower raw material costs and related material pricing mechanisms with our OE customers.\nConsolidated net sales in the agriculture segment improved by 15% in the fourth quarter, with growth coming from all parts of the world.\nOn a constant currency basis, agricultural sales were -- would have been up 25% in Q4, led by North America, Latin America and Europe.\nFor the full year, the agricultural segment experienced growth on a constant currency basis of 4% on the healthy turnaround in the second half of the year.\nThese trends are accelerating as we progress into 2021.\nThe EMC segment saw a nice turnaround in the quarter, in what was a soft year for the market.\nDuring Q4, the EMC segment showed growth of 4.5% on a reported basis and on a constant currency basis, it grew by over 6%.\nThe largest driver of the rebound came from ITM, our undercarriage business as construction markets in Asia and parts of Europe began to wake up from the effects of the pandemic.\nTo say that we're seeing a recovery in the global construction markets may be premature, but our order decks for the businesses are stronger than they were three, six and even nine months ago across the global business.\nOur overall North American sales were up over 6% relative to last year, all of this growth coming from agriculture, while the EMC segment was down slightly reflecting a slower recovery.\nOur aftermarket tire sales in North America in Q4 were up relative to the prior year and for the full year was slightly better than full year 2019 levels.\nOur Latin America operations have seen a sharp turn upward in the market in recent months.\nOur aftermarket business was resilient throughout the pandemic but our [Indecipherable] sales rebounded sharply in Q4.\nReported sales for Latin America in Q4 were up almost 16% while on a constant currency basis, sales would have increased by over 41%.\nOur gross margin performance in the segment continue to be important driver overall, I should say for our financial improvement and our stability in 2020.\nAdjusted gross profit for the fourth quarter was $38 million versus $18 million in the fourth quarter of 2019, representing a 110% improvement.\nOur adjusted gross profit margin in the fourth quarter was 11.8% versus only 6% last year.\nAnd this performance was the best of any quarters since Q2 2018.\nWe continue to manage our factory overhead costs aggressively during the fourth quarter as sales have trended more strongly, we have necessarily calibrated our labor force to meet rising demand.\nWhile it has been more challenging given certain marketplace constraints and the surge of demand that we've seen in recent months.\nWe have plans in place to grow our production levels up to meet with what we see from our customer forecast and our current order deck.\nIt is important to note that in recent months, raw materials have risen sharply across all market sectors from the more favorable cost that we saw in 2020, and as Paul indicated earlier, we're putting through corresponding price increases to customers to reflect these increases along with other rising costs including labor and shipping costs.\nWe are responding to the significant forces in the market that are moving very rapidly and we're working carefully to calibrate all our actions.\nNow, let's go through segment performance.\nOur agricultural segment net sales were up $21.5 million or 15.3% from Q4 2019.\nCurrency translation was significant in the fourth quarter and affected sales by 9.4%, particularly in Latin America and to a lesser extent the Russia.\nVolume in this segment was up 32% while we had a decline in pricing of 7.6%, relating primarily to lower raw material costs.\nOur aftermarket sales have continued to be strong, while the big driver was the turnaround in OE sales during the Q4, particularly late in the period.\nOverall Ag sales in North America were up 16%, our Russia ag sales were up somewhat [Phonetic] from a year ago, and on a constant currency basis.\nAnd our European Ag sales were up almost 30% from Q4 2019.\nReported Ag sales in Latin America were up 22% from last year, and while on a constant currency basis they were up 47%.\nOnce again, the rate [Indecipherable] distorts the real contribution of our Latin American business, again the Ag markets have shown resilience in throughout 2020 through the challenging times earlier in the year and now we're in totally different volume with solid tailwinds across the markets.\nThe agricultural segment's adjusted gross profit for the fourth quarter was $21 million, up from $9.2 million years ago -- a year ago, representing a 127% increase.\nThe gross profit margins in Q4 were 13% for Ag, which was a significant improvement from the margin we saw in Q4 2019 of 6.6%.\nThis was the strongest margin quarter since Q3 of 2018 for our Ag segment.\nWe discussed it last quarter as well, but we have seen improvements in plant efficiencies from our strong internal actions along with raw material cost and [Indecipherable] improvement, a key component of this improvement came from our North America wheel operations as we continue to improve performance after significant headwinds that existed in 2019 surrounding raw material and inventory management.\nThe trends have been increasingly stronger throughout 2020 as the new management team's actions and operational strategy began to take hold.\nSimilar to Q3 2020 performance, each of our geographic businesses experienced expansion of gross profit and margins in the fourth quarter compared to the prior year.\nOur Earthmoving and Construction segment rebounded in the fourth quarter after seeing the most impact earlier in the year from the economic downturns and the construction market volatility.\nOverall, the EMC segment experienced an increase in net sales in Q4 of $6 million or 4.5% from last year, and on currency -- constant currency basis, net sales was an increase by 6.3% versus a year ago.\nWhich meant that currency was only a minor impact of 1.8% for the quarter.\nVolume was up in the EMC segment by a 11% while the impact of price and mix was negative at 4.6%.\nNorth America experienced a small decline in Q4, reflecting a slower market recovery than other parts of the world.\nITM's undercarriage business saw an increase in EMC sales by almost 12% from the fourth quarter of last year.\nNow, on a constant currency basis, the increase was almost 14%.\nAgain, global construction markets are only beginning to wake up, and while the order backs are steadily improving, we believe that there will be a stronger recovery in the latter part of 2021 and beyond.\nAdjusted gross profit within the EMC segment for the fourth quarter was $14 million representing an improvement of $6.9 million or 109% from Q4 2019.\nThe entirety of the TTRC impairment of $11.2 million was recorded in this segment in the fourth quarter.\nThe adjusted gross profit margin in the EMC segment was 10.4% versus 5.2% of last year.\nAnd this was the best quarterly performance in over a year.\nAgain, the largest driver of the increased profitability came on the increase in sales in the ITM undercarriage business, while there were also increases seen in Australia and Latin America.\nConsumer segments, Q4 sales were down 7.7% from last year.\nThe negative impact from currency translation was 13%.\nSo volume increased by 8% and price and mix was down by almost 3%.\nThe rebound in the business in the fourth quarter, primarily related to the Latin America utility truck segment as the markets began to fall out after the pandemic effects.\nThis recent rebound is expected to continue in 2021.\nThe segments gross profit for the fourth quarter was $3.2 million, a healthy improvement from Q4 2019 and gross margins were 11.5%, which was an improvement from 7.6% in the fourth quarter of last year, reflecting improved production efficiencies from the increased volume.\nSelling, General and Administrative and R&D expenses for the fourth quarter were $39.3 million, but this includes $6 million in impairment charges related to the Australian customer relationships I described earlier.\nExcluding this, we spent about $33 million in the quarter, which was a bit higher than our Q3 level.\nCosts related to investments improving our supply chain and logistics processes totaled approximately $1.3 million in the quarter.\nWe will have approximately the same amount of investment in Q1 '21 and we anticipate that this will drive savings in future quarters on a sustainable basis, well in excess of these investments.\nFor the full year, excluding the unusual charges in 2020 of $11 million, our SG&A and R&D costs were $129 million coming in below the low end of our range of expectation about $130 million to $135 million.\nForeign currency revaluation was less of a factor on the results in Q4 and a $1.3 million loss in fourth -- but for the full year, the total negative impact from foreign exchange revaluation totaled $11 million compared to a gain of $4 million in 2019.\nWe recorded tax expenses in the quarter of $4.6 million on a pre-tax loss of $14.9 million during the fourth quarter.\nFor the full year, tax expense was $6.9 million on a pre-tax loss of $58 million.\nThere were additional tax expenses recorded in Q4 related to the growth in income from our foreign operations during the latter part of the year.\nNow let's talk of Q4 and fiscal 2020 cash flow.\nI realize that I'm beating the cash flow drum a lot lately but it was one of the most paramount actions to take at Titan during 2020 and we achieved the targets we set out at the beginning and perhaps a bit more.\nAgain cash improved another $18.5 million in Q4 versus Q3 and for the year it improved by almost $51 million.\nThis has put us much in a more stabilized position to manage the business, particularly as the markets recover as we've only begun to see in Q4.\nCash levels were the strongest since early 2018 coming from stronger operating cash flow and cash generated from non-core operations and related transaction as I stated earlier.\nWe generated approximately $57 million in operating cash flow for the full year of 2020, a strong improvement over 2019, and again this came from our focus on working capital management.\nObviously, it was important to manage our inventories in a year of declining sales.\nWith the Company back to strong operating cash flow and those non-core transactions, we generated $89 million of free cash flow for 2020.\nI continue to have confidence in our ability to manage cash levels from focus on working capital in 2021, and that will come from improved, continued improvements in our inventory management across the business.\nWe have strong focus with our operating teams to manage inventory very closely, and we collectively know that there is a balance between managing lack of long-term visibility of our customer demand -- and our customer demand.\nVery healthy increases in sales are expected in 2021, and I do expect inventories to rise, but at a healthy ratio in sales.\nWe continue to improve our forecasting processes to manage demand within our production systems and expect to get better, even as we progressed through 2021.\nCapital expenditures for the fourth quarter were $8.3 million, which was more in line with our quarterly historical levels for capital spending.\nAs normal, we put through maintenance spending and other investments to foster efficient operations.\nFor the full year of 2020, we've spent nearly $22 million on capex, again reflecting the needs to control our investments in amid the pandemic.\nThis compares to $36 million spent in 2019.\nWe anticipate spending to increase in 2021 to roughly $35 million to $40 million, but we will carefully calibrate these investments to work closely with our cash flow from operations through the year.\nI want to stress the fact that while we trimmed our investments, we in no way cut the necessary investments to keep us in front of the innovations to maintain and increase our market leadership.\nWe are in a strong position with our capital program in -- for 2021 to do this as well.\nOur overall debt level at the end of the year was in a stable position relative to the end of the third quarter and while for the year debt declined by $35 million from the end of 2019.\nAs of the end of the year, there were no borrowings on the domestic ABL credit line because of the continued, because of the strong operating cash flow and results from the non-core asset sales during the first nine months of the year.\nShort-term debt at the end of the December was $31 million, which is down over $30 million since last year end.\nThis decline is primarily due to repayments of our normal maturities of loan arrangements in certain of our foreign operations, primarily Russia and Europe.\nA portion of this decline also relates to extending loans on favorable terms in Latin America, in response to liquidity initiatives during the pandemic, earlier in the year.\nThe vast majority of our current maturities at the end of 2020 relate to foreign credit facilities and term loans, which will likely get rolled over and extended as needed in the coming year.\nJust to restate, we took an important step last week to further secure our liquidity in the future with the extension of our domestic ABL facility.\nThe maturity is now February of 2023.\nWe have the flexibility to manage our U.S. and our corporate operations after freeing up borrowing capacity of the domestic credit facility and increasing our cash reserves to a certain extent in Q4.\nAt the end of December, the borrowing capacity, when you take away the letters of credit and adjusting for the borrowing base calculations of AR and inventory was at $51 million on the ABL line.\nWe also anticipate some letters of credits to expire in the first half of the year which could free up an additional $8 million to $13 million in capacity and we also anticipate additional capacity coming on as our borrowing base grows with the business activity.\n2020 was a repositioning year for Titan and it was critical to take the swift and decisive actions in the midst of the pandemic as the world has turned back on our improved and stabilized liquidity position enables us to have the flexibility to manage our business.\nWe are staying focused on managing our working capital this year as well.\nThe real job is ahead of us as we managed growth in the business.\nWe have to keep a relentless focus on what has gotten us here.\nLast thing I want to discuss relates to our bonds.\nThe confidence in our Titan's financial position has improved and our markets have gotten better.\nWe are now in a stronger position to review our options for refinancing in a more reasonable fashion.\nIn the days ahead, we'll be actively reviewing the opportunities there in front of us for potential refinancing.\nAnd that concludes my remarks today.\n",
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"content": "in q1 2021, increased prices to offset rising raw material costs.\nexpect 2021 capital expenditures to be in range from $35 million to $40 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm excited to join the Two Harbors' team and look forward to working with all of you.\nWe urge you to review this information in conjunction with today's call.\nThese statements are based on the current beliefs and expectations of management and actual results may be materially different because of a variety of risks and other factors.\nPaulenier brings with her more than a decade of financial services and Investor Relations experience, and we are very excited to have her here with us.\nMary will give more details on our financial results, and Matt will discuss our portfolio composition, activity and risk profile.\nTurning to Slide 3.\nWe are very pleased with our fourth-quarter performance and book value of $7.63, which represents a 5.8% quarterly return on book value.\nThe results were driven primarily by continued outperformance of lower coupon TBAs, some improvement in specified pool pay-ups and some marginal tightening in MSR spreads.\nWe have spent a significant amount of resources over the years building out our MSR acquisition and oversight platform, and we reaped some benefits this quarter as we added over $40 billion of unpaid principal balance of MSR through both our flow sale channel and bulk purchases.\nFinally, as a reflection of all of these trends and with the confidence in our forward outlook, we also raised the common stock dividend this quarter by 21% to $0.17 per share.\nWe have also been very focused on our liability structure.\nSubsequent to quarter end, we issued $287 million of a new convertible note maturing in 2026 and whose proceeds were primarily used to refinance the existing convertible note that is maturing in January 2022.\nWe felt it was important to execute this exchange sooner rather than later as it provides uncertainty for us of our capital structure for the intermediate future without having this maturity looming for the next year.\nAdditionally, we wanted to have as many potential opportunities as possible to execute, and this window was available and so we were pleased to access it.\nWith the certainty provided by the exchange and maturity extension of the convertible notes, we also felt it was the right time to call our Series D and E preferred stock.\nAs a consequence of the events of the first quarter, our ratio of preferred stock to total equity had increased from 20% to about 32%.\nWhile we have stated that we felt this amount was manageable, we did recognize that this was not only high compared to our peers, but more importantly, it is not what we would write down on a blank piece of paper for our capital structure.\nDuring 2020, we built up a very sizable liquidity position to protect us against further market stress.\nAs time has passed and as the markets have stabilized, we have come to recognize this amount of available liquidity as overly conservative.\nFurthermore, the primary measure by which we manage our portfolio is potential loss to stockholder equity and not nominal leverage, and we have stated many times that we are comfortable with our portfolio risk profile.\nFurther deploying all of this excess liquidity into our target assets would increase our risk to uncomfortable levels.\nThose two ideas together led us to the conclusion that we had a certain amount of capital that was essentially fallow and that its best use was to call the Series D and E preferred stock.\nAfter the call was completed on March 15, our new ratio of preferred stock to total equity will be about 26%, which we think is appropriate for our Agency plus MSR portfolio.\nThe convertible note exchange and the call of the preferred stock will result in a mix of common, preferred and unsecured debt that is rightsized for our portfolio composition and risk appetite for the foreseeable future.\nIt is also accretive to earnings, as Mary will discuss in a few moments.\nWe continue to see good momentum in our MSR purchase program, which has helped to offset the impact of high prepayment speeds we have been seeing.\nPurchases in our MSR flow program grew by over 136% year over year, reflecting the strength of the platform and relationships we've built to source and manage the asset.\nOn the RMBS side, there are still several tailwinds, the most important of which are very low funding rates and continued Fed involvement which they have indicated will persist for some time.\nHowever, spreads on RMBS are at very tight levels, as Matt will discuss later, and we think some caution is warranted.\nWhile unsure of the timing of any potential spread widening, we believe that in an environment with uncertainty in the direction of RMBS spreads is one where our portfolio with its lower exposure to those spreads because of the MSR offset is especially attractive.\nTurning now to some comments about the full-year performance.\nResults for 2020 as a whole were disappointing to be sure as book value declined to $7.63 from $14.54, a result of the market volatility and dislocation induced by the pandemic.\nThe decisive and proactive actions we took in the first quarter to sell our non-Agency portfolio, derisked the balance sheet and generated a strong liquidity position.\nWe took control of our own destiny, and we met every single market call during the period.\nApart from portfolio returns, 2020 has been a transformational year for Two Harbors as we transitioned to self-management.\nOur stakeholders continue to benefit from the collective investment, risk management, governance and operations expertise from those who have been supporting the company for many years.\nAt the same time, we have the opportunity to deliver additional value through significant annual cost savings and enhanced returns on any future capital growth.\nImportantly, the internalized management structure enhances transparency and further aligns our goals with that and our stakeholders.\nIn many ways, we think of our newly internalized company as Two Harbors 2.0, and we are really excited for 2021 and the years ahead.\nWe generated comprehensive income of $113.5 million or $0.41 per common share, representing an annualized return on average common equity of 22.1%.\nAs Bill mentioned, our book value rose to $7.63 from $7.37 per share on September 30, resulting in a total economic return of 5.8%.\nBook value growth was driven by favorable MSR pricing due to marginal tightening in MSR spreads, TBA dollar roll specialness and lower expenses due to transition to self-management.\nMoving on to Slide 5.\nCore earnings increased to $0.30 per share from $0.28 in Q3.\nInterest income decreased this quarter from $89.7 million to $72.5 million due to lower average balances and coupons as well as higher Agency amortization due to prepayments.\nThis decrease was partially offset by lower interest expense of $22.6 million, reflecting lower borrowing rates and average balances.\nGain on other derivatives increased from $32.9 million to $43.5 million due to higher TBA dollar roll income on higher average balances and continued roll specialness.\nRoll specialness contributed $0.06 to core earnings versus $0.04 in Q3.\nExpenses declined by $6.2 million, primarily due to transition to self-management and lower servicing costs.\nTurning to Slide 6.\nOur portfolio yield in the quarter was 2.26%, and our net spread decreased two basis points to 1.76%.\nPortfolio yield decreased by 16 basis points from 2.42% to 2.26%, primarily due to higher Agency RMBS prepayments.\nOur cost of funds decreased 14 basis points from 0.64% to 0.50%, driven primarily by favorable repo rolls.\nThis quarter, we are providing additional disclosure to reflect the impact of net TBA dollar roll income in our portfolio yield.\nInclusive of this impact, the annualized net spread for the aggregate portfolio was 1.96% with the benefit of 36 basis points in cost of funds.\nI'd like to reiterate that since our RMBS position continues to reflect some accounting yields from the higher rate environment in which they were purchased, both core earnings and portfolio yields are anticipated to exceed our expected economic returns in the coming quarters.\nWe expect our asset yields to decline over time to market rates and the net portfolio spread should converge to market levels that are more consistent with our return expectations.\nSlide 7 highlights our strong liquidity and capital position with ample liquidity with $1.4 billion in unrestricted cash as well as $215 million in unused committed capacity on our MSR asset financing facilities.\nLate in the third quarter, we also added a $200 million servicing advanced facility to provide committed capacity in the event of increased forbearances or defaults.\nAs a reminder, forbearance rates have been to date benign and lower than expected.\nOur economic debt to equity at quarter end declined to 6.8 times from 7.7 times at September 30, as we decreased risk late in the quarter.\nAnd our quarterly average economic debt to equity was 7.5 times in Q4 compared to 7.6 times in the third quarter.\nOn Slide 8, we have outlined the pro forma impact of the liability and capital actions we have taken post-quarter end.\nAs Bill mentioned, the issuance of new convertible debt in February provided certainty around the maturity and refinancing of our existing convertible debt, which matures in January of next year.\nWith that certainty in hand and our plans to optimize the financing of our MSR asset over the coming year, we elected to redeem $275 million of preferred stock, effectively reducing our cost of capital as well as our preferred ratio to 26%.\nTaken together, these actions are expected to deliver an annual net benefit to earnings of approximately $0.04 per share beginning in 2022, from the reduction in preferred dividends, offset by costs associated with the convertible debt and incremental MSR financing.\nAs a final note, we have included information on REIT taxable income and the tax characterization of our dividend distributions on appendix Slide 27.\nFor additional information, regarding the distributions and the tax treatment, please reference the dividend information found in the investor relations section of our website.\nTurning to Slide 9, let's review our quarterly portfolio activity and composition.\nAs previously noted, the fourth-quarter economic performance was primarily driven by a general spread tightening in MBS as the Federal Reserve continued its balance sheet expansion, having purchased almost 1.5 trillion MBS during Q4 so far.\nNot surprisingly, the strongest move was seen in the current coupon mortgages that have been the Fed's focus with a more modest but positive performance in higher coupons.\nWith interest rates modestly better steepening, but generally stable, we also saw some modest improvement in MSR spreads.\nAs Mary noted, we did decrease risk somewhat during the quarter, reflected by lower economic debt to equity of 6.8 times.\nThis is in part from sales and paydowns in our specified pool portfolio, where valuations in some stories and coupons have become less attractive.\nIn addition, after having increased our position size in TBA 2s to $7 billion, a significant spread tightening and resulting valuations in the quarter led us to reduce that exposure.\nOn net, we took our overall notional TBA exposure down by $1 billion to end the quarter at $5.2 billion.\nAnother factor behind the decision to reduce our exposure was that the Fed began to focus its purchase activity in forward months, which aligns more closely with origination sales and has the effect of decreasing roll specialness.\nThe result has been that roll specialness in the 2% coupon has decreased significantly between mid-December and the end of January.\nWe continue to have good success in sourcing substantial volumes of new servicing through our flow channel at attractive levels and have largely been able to maintain the size of our portfolio in this fast prepay environment.\nAdditionally, we opportunistically added almost $200 million market value of interest-only securities, or IO, during the quarter.\nThe market is seeing very strong demand from banks for structured mortgage-backed securities near to par dollar price, which can only be created today by stripping IO off of premium securities.\nThat demand has led the spreads on the strip down security that are tighter than that on the underlying securities.\nWe consider those spreads quite aggressive with some structures actually having negative option adjusted spreads, which means that the result in IO that we retain is very attractive.\nAdditionally, these positions provide portfolio benefits that are similar to MSR when paired with RMBS in reducing mortgage spread exposure even further.\nIn the lower left-hand chart, you can see that specified pool performance was mixed with a 3%, 3.5% and 4% coupon specified outperforming TBA, but flat or underperforming in both lower and higher coupons.\nWhile we don't own any specified pools in the 2% coupon, as I mentioned earlier, we do own TBA, which outperformed by more than one point during the quarter, supported by strong Fed demand and attractive roll dynamics.\nToday, with regards to specified pools, we remain positioned largely in loan balance and geography stories.\nIn the lower right-hand chart, we show a comparison of generic speeds to our specified portfolio speeds by coupon.\nThe slower prepayment speeds of specified compared to generic highlights the reason that specified pools command a significant price premium over TBA.\nMoving to Slide 11.\nYou can see that our MSR portfolio was valued at $1.6 billion as of December 31, based on $186 billion of UPB and with a gross coupon of 3.7%.\nThat translates into a price of about $0.86 or right around a 3.2 multiple on our existing portfolio.\nThe balances from the end of 2019 are also shown here, and I would highlight two things: first, our UPB is up modestly in a fast prepay environment, which is a testament to our ability to source new MSR investment; second, the weighted average coupon fell from 4.1% to 3.7%, consistent again with what you would expect in a refi environment.\nAs we reinvest into new production collateral, it will benefit our portfolio prepayment speeds should rates stabilize.\nWe settled $23 billion UPB of new MSR through our flow program during the quarter, which represents record volume for us as we experienced our biggest three months ever.\nActivity in the bulk market continues to increase as well, and we continue to find valuation situational with some packages trading at precrisis yields, while some are clearing at wider spreads.\nWe had some success in the bulk market and settled on $20.4 billion UPB in four separate transactions.\nLow pricing during the quarter was fairly constant at a three multiple.\nIn the lower right-hand chart, we compare our servicing prepayment speeds in blue versus generic collateral in gray.\nCurrently, a majority of the underlying loans in our servicing portfolio have some form of seasoning or prepayment protection, which is why our speeds are somewhat slower than the implied TBA speeds.\nNevertheless, we do have expectations for speeds to remain high going forward.\nPrimary mortgage rates have continued to grind lower with 30-year rates generally below 3% in national surveys, even with the spread between primary and secondary rates at wide levels.\nThe longer the interest rates stay at these levels, the greater our expectation that primary mortgage rates will decrease further.\nAs a result, unless interest rates sell off and provide prepayment relief, these faster prepayment speeds will certainly continue to impact returns.\nOver the next two slides, we display our effective coupon positioning and risk profile.\nIn the chart on the top of Slide 12, we show the combined exposures of Agency P&I bonds and MSR at year end compared to our positioning at the end of Q3, as indicated by the diamond bullets.\nThe main change in our effective positioning was a decrease in the 2.5% and 4% coupons, a result of the specified pool activity I mentioned earlier.\nThe lower left-hand chart shows our common book value exposure to 25 basis point spread widening or tightening, and it indicates that book value would decrease by only 2.7% in an instantaneous 25 basis point spread winding.\nI would note that we are combining the effect of structured IO with MSR regulation today, which we have not done in prior periods due to smaller position sizes.\nIn aggregate, this 2.7% exposure is lower than in recent quarters due to the reduction in specified pools and TBA positioning.\nMoving to Slide 13.\nHere, we see our interest rate and curve exposure, both are low and in line with our historical positioning.\nI would call it again that the Agency plus MSR portfolio provides significant interest rate offsets, which you can see by comparing the gray bars to the blue bars in both charts.\nLet's look at some data that highlights the attractiveness of the Agency plus MSR portfolio construction.\nAs we've discussed, Q4 has impacted mortgage spreads significantly, which today are at the tight end of the range.\nTo illustrate, let's go over the first chart.\nWhat we have here is 10 years of daily option adjusted spread data on the JPMorgan mortgage index with the x-axis being the OAS.\nIt's important to also point out that this data includes previous periods of quantitative deep when the federal reserve were also active buyers of mortgages.\nThe scatter plot shows the change in OAS spread over a one-year time horizon for any given starting spread.\nDots that are above the x-axis indicate that spreads were wider one year later from where they began, and dots below the x-axis indicate that spreads were tighter one year later.\nYou can see a clear pattern, which is quite intuitive that when spreads are tight, they tend to widen.\nAnd when spreads are wide, they tend to retrace tighter.\nMortgage spreads typically mean reverting.\nAs of January 4, the OAS was 16 basis points and as highlighted by the vertical blue line.\nThis data shows that it's quite common for spreads to widen 20 or 30 basis points in the year that follows.\nIn fact, in the past 10 years, there are exactly 0 instances when spreads were unchanged, let alone tighter one year later.\nThe lower chart quantifies our preference for the Agency plus MSR portfolio construction.\nAgain, the x-axis is the starting OAS, same as the other chart.\nThe y-axis in this case shows the expected returns on the same one-year time horizon, using the average of the one-year spread change data as just described.\nIn particular, we assume that the spread change occurs immediately and the portfolio earns a higher yield for the next one year.\nWe have plotted an Agency-Only portfolio, which represents Agency MBS hedge swaps, which is the light blue line.\nThe Agency plus MSR portfolio is represented by the black line.\nYou can see that at the OAS level of 16 basis points, historically, we've observed spreads move around 20 basis points wider over the next year.\nAnd in that case, the one-year return would be expected to be negative around down 1% in the Agency-Only example.\nBut because of the mortgage spread widening protection embedded into the Agency plus MSR construction, the expected return for the paired strategy is much better and gets you into the mid-high single digits.\nThe flat slope of the Agency plus MSR line relative to the Agency-Only portfolio is what we mean when we talk about our stable expected return and book value profile and it's particularly powerful in tight mortgage spread environments like today.\nWe're not saying spreads are necessarily going to widen, and they're certainly strong supporting technical factors, but valuations are rich and history suggests limited further upside.\nFinally, I'd like to take a look at our outlook for Two Harbors and our return expectations on Slide 15.\nAfter the significant spread tightening we've seen in the last two quarters, we see gross returns for specified RMBS paired with swaps as being less attractive than they were, see them to be in the range of mid- to high single digits depending on coupon and story.\nCurrent coupon TBA returns are enhanced by roll specialness, which is likely to continue for the near future albeit at less attractive levels.\nNew investments in flow MSR paired with RMBS today can also drive returns in the high single digits to low teens.\nAnd if you assume roll specialness on the RMBS component can be higher.\nWe continue to focus on our strong partnerships with MSR sellers and internal platform, which gives us the ability to source significant volumes, especially in today's prepaid environment.\nTo conclude, we feel very good about our Agency plus MSR portfolio and the forward outlook.\nAs Mary highlighted, our capital and liquidity position remains very strong, and we took steps subsequent to quarter end to further optimize our capital structure with the benefits accruing over time to our common shareholders.\nAnd as Matt said, new investments in specified pools are less compelling today with spreads near the tight end of the long-term ranges, and we have reduced risk and leverage somewhat given the environment.\nHowever, as we discussed, we still see returns for our strategy to be supportive of current dividend levels, and this tight spread environment is one where our Agency plus MSR strategy is especially attractive.\n",
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"content": "two harbors investment corp - qtrly reported core earnings of $82.0 million, or $0.30 per weighted average basic common share.\ntwo harbors investment corp - qtrly reported book value of $7.63 per common share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we begin, I'd like to mention we will be discussing future estimates and expectations during our call today.\nOn the call today, we have Scott Donnelly, Textron's chairman and CEO; and Frank Connor, our chief financial officer.\nRevenues in the quarter were $3 billion, up from $2.7 billion in last year's third quarter.\nDuring this year's third quarter, we reported income from continuing operations of $0.82 per share.\nAdjusted income from continuing operations, a non-GAAP measure, was $0.85 per share for the third quarter of 2021, compared to $0.53 per share in the third quarter of 2020.\nSegment profit in the quarter was $279 million, up $90 million from the third quarter of 2020.\nManufacturing cash flow before pension contributions totaled $271 million in the quarter and $851 million year-to-date.\nWe continue to execute well across the company in the quarter.\nAt Aviation, we continue to see a solid recovery in the general aviation market with strong commercial demand, increased deliveries in Citation jets and commercial turboprops and higher aftermarket volume.\nWe delivered 49 jets, up from 25 last year and 35 commercial turboprops, up from 21 in last year's third quarter.\nOrder activity in the quarter remained very strong, resulting in backlog growth of $721 million bringing us to $3.5 billion at the quarter end.\nAlso in the third quarter, the Beechcraft King Air 360 and 260 achieved EASA certification and began to deliver customers throughout the region.\nContinuing with our product strategy of upgrading existing models at NBAA, we recently announced the Citation M2 Gen2 and the XLS Gen2 product upgrades.\nAlso on the new product front, such as SkyCourier is continuing to progress through certification with over 1,600 hours of flight test activity and the Beechcraft Denali successfully completed its initial ground engine runs powered by GE's new Catalyst engine.\nThe Bell revenues were down 3% in the quarter, largely on lower military revenues.\nOn the commercial side of Bell, we delivered 33 helicopters down from 41 in last year's third quarter.\nMoving to future vertical lift.\nIn September, Bell submitted its proposal for the FARA program, a downselecting award is expected in the second quarter of 2022.\nOn FARA, Bell is about 60% of the way through its build of the 360 Invictus prototype remains on schedule.\nAlso in the quarter, Bell inducted the first U.S. Air Force CV-22 for its nacelle improvement modifications.\nWe saw another strong quarter of execution with operating margins at 15.1%, up 190 basis points from last year's third quarter.\nATAC continued to expand its fleet of certified F1 aircraft with two additional aircraft entering service in the quarter bringing the total fleet to 19 aircrafts at the end of the quarter.\nThe fleet continues to support higher customer demand for adversary air services, driving higher revenues in the quarter.\nAt Air Systems, the team booked $25 million in new orders in the quarter, including both fee-for-service activities, as well as new hardware.\nMoving to Industrial, overall revenues were lower in the quarter as we continue to experience manufacturing disruptions related to supply chain challenges.\nIn Kautex, we again saw order disruptions related to the global auto OEM supply chain shortages, which have directly impacted production scheduling and resulting in intermittent line shutdowns of manufacturing efficiencies.\nAt Specialized Vehicles, we saw continued strong demand in our end markets with higher pricing, which offset production disruptions from part shortages.\nTo wrap up, Textron delivered a solid quarter with increased aviation backlog, improved manufacturing margins and continued strong cash generation while working to minimize the impact of supply chain disruptions.\nLet's review how each of the segments contributed, starting with Textron Aviation.\nRevenues at Textron Aviation of $1.2 billion were up $386 million from a year ago, largely due to higher Citation jet volume of $290 million, aftermarket volume of $62 million and commercial turboprop volume of $48 million.\nSegment profit was $98 million in the third quarter, up $127 million from a year ago, largely due to the higher volume and mix of $96 million and favorable pricing net of inflation of $22 million.\nBacklog in the segment ended the quarter at $3.5 billion.\nRevenues were $769 million, down $24 million from last year, largely reflecting lower military revenues.\nSegment profit of $105 million was down $14 million primarily due to lower military revenues.\nBacklog in the segment ended the quarter at $4.1 billion.\nAt Textron Systems, revenues were $299 million, down $3 million from last year's third quarter due to lower volume of $39 million at Air Systems, which primarily reflected the impact from the U.S. Army's withdrawal from Afghanistan on its fee-for-service contracts, partially offset by higher volume, primarily at ATAC and Electronic Systems.\nSegment profit of $45 million was up $5 million to a favorable impact from performance and other.\nBacklog in the segment ended the quarter at $2.2 billion.\nIndustrial revenues were $730 million, down $102 million from last year, reflecting lower volume and mix of $156 million primarily at Fuel Systems and Functional Components, reflecting order disruptions related to the global OEM supply shortages, partially offset by favorable impact of $44 million from pricing, largely at Specialized Vehicles.\nSegment profit of $23 million was down $35 million from the third quarter of 2020, primarily due to the lower volume and mix described above, partially offset by higher pricing net of inflation at Specialized Vehicles.\nFinance segment revenues of $11 million -- were $11 million and profit was $8 million.\nMoving below segment profit.\nCorporate expenses were $23 million and interest expense was $28 million.\nWith respect to our 2020 restructuring plan, we recorded pre-tax charges of $10 million on the special charges line.\nOur manufacturing cash flow before pension contributions was $271 million in the quarter and $851 million year-to-date, as compared to $129 million for the corresponding nine-month period in 2020.\nYear-to-date, our cash generation reflects improved working capital management, which includes more linearity in quarterly aircraft deliveries and higher customer deposits in Aviation from an increased backlog.\nIn the quarter, we repurchased approximately 4.2 million shares, returning $299 million in cash to shareholders.\nWe're raising our expected full year guidance for adjusted earnings per share to a range of $3.20 to $3.30 per share.\nThis includes revised tax guidance at effective rate of 15.5% for the full year.\nWe're also raising our outlook for manufacturing cash flow before pension contributions to a range of $1 billion to $1.1 billion, up $200 million from our prior outlook, with planned pension contributions of $50 million.\n",
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"content": "compname reports q3 adjusted earnings per share $0.85 from continuing operations.\nq3 adjusted non-gaap earnings per share $0.85 from continuing operations.\nq3 earnings per share $0.82 from continuing operations.\ntextron aviation backlog at end of q3 was $3.5 billion.\nbell backlog at end of q3 was $4.1 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: First, I'd like for Brian to give the safe harbor statement.\nNext, I will have some preliminary comments on our quarter results, and then Brian will review the details.\nI'll end with some additional comments, and then we'll take questions.\nDuring the course of this conference call, management may make statements that provide information other than historical information and may include projections concerning the company's future prospects, revenues, expenses and profits.\nWe'd refer you to our Form 10-K and other SEC filings for more information on those risks.\nPlease note that all growth comparisons we make on the call today will relate to the corresponding period of last year, unless we specify otherwise.\nOur first quarter results exceeded our expectations, providing an exceptional start to 2021.\nRecurring revenues, which comprised 75% of our first quarter revenues, were strong, led by a 25% growth in subscription revenues.\nHowever, software licenses and services revenues continue to be pressured by longer sales cycles and delays in projects as clients deal with the ongoing effects of the pandemic.\nA favorable revenue mix with strong subscription growth, coupled with cost efficiencies, drove a 270 basis point expansion of our non-GAAP operating margin to 26.8%.\nCash flow continued to be very robust as cash from operations grew 26% and free cash flow grew almost 34%.\nWe're pleased to see signs of growing activity in our public sector markets and expect that federal stimulus under the American Rescue Plan Act will have a positive impact on government technology spending going forward.\nBookings in the first quarter were solid at approximately $247 million, but were down 22.8% against a very challenging comparison with the first quarter of 2020.\nOur largest deal in the quarter was a SaaS arrangement for our Munis ERP solution with the City of Fresno, California valued at approximately $10 million.\nOther significant SaaS contracts included ERP deals with Hall County, Georgia and Fort Smith, Arkansas and Odyssey Courts deal with Val Verde County, Texas.\nOur largest on-premises contracts include an ExecuTime time contract with the U.S. Virgin Islands, public safety and Brazos citations contracts with Montgomery County, New York and Cicero, Illinois and an EnerGov contract with the Commonwealth of the Bahamas.\nSo far this year, we've been busy on the M&A front.\nOn March 31, we completed two tuck-in acquisitions, DataSpec and ReadySub, for a total purchase price of $12 million in cash.\nDataSpec is a market-leading provider of software for the electronic management of veterans claims.\nDataSpec's web-based Software-as-a-Service system called VetraSpec allows for secure electronic claims submission to the Federal Department of Veterans Affairs and reporting capabilities in addition to scheduling, calendaring and payments.\nDataSpec offers county, state and national versions of VetraSpec, with state solutions making a majority of its implementations.\nThe solution allows state departments to execute and analyze reports on the entire state, individual offices, regions and districts and individual users.\nReadySub is a cloud-based platform that delivers comprehensive absence and substitute teacher management solutions, serving approximately 1,000 school districts across the United States, with only approximately 20 of which overlapping with Tyler's 2,000 school district clients.\nThe solution helps districts with the labor-intensive and demanding task of filling both planned and unplanned staff absences with the most highly qualified substitute resources.\nWith continuous pressure due to substitute teacher shortages, exacerbated by the COVID-19 pandemic, districts can more easily retain a pool of qualified substitutes and automate the searching and filing of needed substitute spots.\nAdditionally, ReadySub can integrate districts' payroll processes, eliminating duplicate work and streamlining related payroll tasks.\nMost importantly, last week, we completed the $2.3 billion cash acquisition of NIC, a leading digital government solutions and payments company that serves more than 7,100 federal, state and local government agencies across the nation.\nNIC delivers user-friendly digital services that make it easier and more efficient for citizens and businesses to interact with government, providing valuable conveniences like applying for unemployment insurance, submitting business filings, renewing licenses, accessing information and making secure payments without visiting a government office.\nIn addition, NIC has extensive experience and expertise and scale in the government payments area, processing more than $24 billion in payments on behalf of citizens and governments last year, which will accelerate Tyler's strategic payments initiative.\nWith the addition of NIC's highly complementary industry-leading digital government solutions and payment services to Tyler's broad client base and multiple sales channels, the combined company will be well equipped to address the tremendous demand at the federal, state and local levels for innovative platform services.\nTogether, Tyler and NIC will connect data and processes across disparate systems and deliver essential products and services to all public sector stakeholders.\nNIC had revenues of $460.5 million and net income of $68.6 million in 2020.\nNIC's core first quarter revenues, excluding the TourHealth and COVID initiatives that are expected to wind down after the second quarter, grew more than 10% over last year.\nIn addition, NIC's operating income, again excluding the TourHealth and COVID initiatives as well as acquisition costs, rose more than 20%.\nNow I'd like for Brian to provide more detail on the results for the quarter.\nYesterday, Tyler Technologies reported its results for the first quarter ended March 31, 2021.\nBoth GAAP and non-GAAP revenues for the quarter were $294.8 million, up 6.6% on a GAAP basis and 6.5% on a non-GAAP basis.\nAs you may recall, we were off to a very strong start in the first two months of 2020 before the COVID-19 pandemic began to significantly affect our business in March.\nSo we're generally pleased with our growth this quarter against that comparison.\nSoftware license revenues declined 20.3%, reflecting both extended sales cycles and a high mix of subscription deals at 66% of new software contract value.\nSoftware services revenue declined 8.6% as a result of the continued impact of the COVID-19 pandemic, and our shift to remote delivery of most services resulted in a decline in billable travel revenue.\nOn the positive side, subscription revenues rose 25.4%.\nWe added 84 new subscription-based arrangements and converted 39 existing on-premises clients, representing approximately $52 million in total contract value.\nIn Q1 of last year, we added 131 new subscription-based arrangements and had 19 on-premises conversions, representing approximately $98 million in total contract value.\nSubscription contract value comprised approximately 66% of total new software contract value signed this quarter, compared to 73% in Q1 of last year.\nThe value weighted average term of new SaaS contracts this quarter was 4.0 years, compared to 5.9 years last year.\nRevenues from e-filing and online payments, which are included in subscriptions, were $26.9 million, up 22.4%.\nThat amount includes e-filing revenue of $15.6 million, up 4.8%, and e-payments revenue of $11.3 million, up 59.3%.\nFor the first quarter, our annualized non-GAAP total recurring revenue, or ARR, was approximately $886 million, up 12.9%.\nNon-GAAP ARR for SaaS arrangements for Q1 was approximately $302 million, up 26.3%.\nTransaction-based ARR was approximately $108 million, up 22.4%, and non-GAAP maintenance ARR was approximately $476 million, up 4.1%.\nOur backlog at the end of the quarter was $1.55 billion, up 3%.\nAs Lynn noted, our bookings in the quarter were solid at $247 million.\nHowever, this was down 22.8% compared to a difficult comparison to Q1 of last year.\nLast year's first quarter bookings included several large contracts, including two significant follow-on SaaS deals with the North Carolina courts, with a combined contract value of approximately $38 million.\nFor the trailing 12 months, bookings were approximately $1.2 billion, down 13.3%, although they do not include the majority of the $98 million extension of our Texas e-filing contract signed in Q4 of 2020 because of certain termination provisions in that contract.\nIf the Texas e-filing renewal was fully included, trailing 12-month bookings would have been down only 6.4%.\nThe prior trailing 12-month bookings also included four significant SaaS deals with the North Carolina courts, with a combined contract value of approximately $123 million.\nThe bookings growth rate in Q1 was also affected by a shorter average term for new subscription contracts.\nOur subscription -- software subscription booking in the first quarter added $10.2 million in new annual recurring revenue.\nCash flow was once again very strong in the first quarter as cash from operations increased 26.4% to $71.7 million and free cash flow grew 33.9% to $61.7 million, representing an all-time high for first quarter free cash flow.\nWe financed the NIC acquisition with a mixture of debt at very attractive rates that gives us a flexible capital structure.\nIn March, we completed a $600 million offering of 0.25% convertible senior notes due 2026.\nThe notes are convertible into Tyler common stock at a conversion price of $493.44, which represents a 30% premium over our closing price on March 4.\nOn April 21, concurrent with the closing of the NIC acquisition, we entered into a new $1.4 billion senior unsecured credit facility with a group of eight banks.\nThe facility includes a $300 million term note due in 2024 and a $600 million term note due in 2026, both of which can be prepaid without penalty.\nThe facility also includes a new five-year $500 million revolving credit agreement that replaces our prior $400 million revolver.\nThe combination of the convertible debt, term notes and revolver provide us with a great deal of flexibility.\nOur balance sheet remains very strong and its pro forma net leverage at the NIC closing was approximately 3.2 times trailing 12-month adjusted EBITDA.\nAnd we expect to end the year with net leverage under 2.5 times.\nThe current blended interest rate on the $1.75 billion of debt we have outstanding today is 1.1%.\nWe remain on track to achieve or exceed the annual revenue and earnings per share guidance that we communicated in February for Tyler, excluding the impact of the NIC acquisition.\nAs Lynn mentioned, NIC also had a very strong first quarter results that exceeded their plans.\nWe expect the NIC acquisition will be accretive to our non-GAAP earnings and EBITDA as well as to our recurring revenue mix and free cash flow per share in 2021.\nBecause of antitrust restrictions, we took a conservative approach to our integration and strategic planning for NIC prior to closing the transaction last week.\nWe are currently working closely with NIC's leadership to evaluate strategic growth opportunities that take advantage of the combined strength of the two businesses and determine the impact on our 2021 plan.\nWe expect to complete the fine-tuning of our joint operating and financial plans for the remainder of the year and issue 2021 guidance for the combined company during the second quarter.\nOur team of professionals, including our new NIC team members, executed at a high level in the first quarter, driving results that surpassed expectations for both Tyler and NIC and provided a great start to 2021.\nExiting 2020, our financial position was stronger than ever, allowing us to continue to pursue strategic acquisitions, including NIC, the largest acquisition in our history with a purchase price of $2.3 billion in cash.\nWe've also been able to continue to invest in and, in some cases, accelerate all of our long-term strategic initiatives, in particular, our shift to a cloud-first approach.\nAs a result, our competitive position has also continued to strengthen.\nWe believe we will continue to see an acceleration of the public sector's move to the cloud, and we are in a great position to support that move.\nI'm happy to say that we are on track with the strategic investments in optimizing our products for the cloud that we discussed on our fourth quarter call.\nThis quarter, we saw early indicators that our market is beginning to recover as some delayed procurement processes are moving forward and RFP activity is growing from the levels of the second half of 2020.\nWe also expect that the $350 billion of aid to state and local governments under the American Rescue Plan Act will provide a significant measure of relief to budget pressures faced by many of our clients and prospects and have a positive impact on recovery of our markets.\nOne topic I've not discussed on these calls before pertains to our efforts regarding environmental and social initiatives.\nTyler's culture guides our commitment to being a responsible partner in the communities where we live, work and serve our clients.\nThis year marks the 50th anniversary of the Tyler Foundation, which since its creation has provided millions of dollars to charities and causes that positively impact our communities.\nOur culture is also the foundation for our belief in the importance of providing an inclusive and diverse workplace.\nWe are proud to have been included in the Forbes America's Best Employers for Diversity List for the past two consecutive years.\nThe pause in normal office occupancy and business travel due to the pandemic provided an opportunity for us to evaluate our environmental impact across our major office locations and identify opportunities to make our practices more consistent and effective.\nLast year, we formed an environmental task force to strengthen our sustainability efforts across our office locations and the communities we impact.\nWe achieved a significant milestone last year by responding to Tyler's first invitation to the Dow Jones Sustainability Index survey.\nMore than 3,500 of the world's largest publicly listed companies provide detailed data and background to this global survey for evaluation by its independent sustainability ranking body.\nCompleting the survey was an important opportunity for Tyler to uncover opportunities to strengthen our core responsibility strategy.\nWe recently published our second annual corporate responsibility report, which is available on our website.\nThis report represents a significant expansion of our reporting on our ESG efforts, and we look forward to continuing our journey and sharing our progress in this area.\nFinally, this week, we are virtually hosting more than 5,000 clients at Connect 2021, our annual user conference with a theme called Virtually Possible.\nTeam members from across Tyler are providing nearly 700 hours of valuable content for our clients using our advanced virtual event platform.\nWe are excited to be able to connect with so many clients at our virtual event, and we look forward to connecting with them in person at Connect 2022.\nWith that, we'd like to open up the line for Q&A.\n",
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"content": "q1 revenue rose 6.6 percent to $294.8 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: First, I'd like for Brian to give the safe harbor statement.\nNext, I'll have some comments on our quarter and then Brian will review the details of our results.\nI'll end with some additional comments, and then we'll take questions.\nWe would refer you to our Form 10-K and other SEC filings for more information on those risks.\nPlease note that all growth comparisons we make on the call today will relate to the corresponding period of last year unless we specify otherwise.\nOur third quarter results were exceptionally strong, building on the momentum we established in the first half of the year.\nThis was our first full quarter including NIC's results, and it was our best quarter ever by most financial measures.\nWe achieved new quarterly highs in revenues, non-GAAP EPS, free cash flow, adjusted EBITDA, bookings and backlog.\nTotal revenues grew 60.9% with organic growth of 7.6%.\nAs a result of the surge in the Delta variant, NIC's COVID-19-related revenues from TourHealth and pandemic unemployment initiatives were significantly above plan at $43.3 million.\nWe had expected those revenues, which have relatively low margins to wind down in the second half of the year, but we now expect they will continue into the first half of 2022.\nNIC's core revenues grew 5% in the quarter.\nRecurring revenues comprised over 80% of our quarterly revenues for the first time and were led by 183% growth in subscription revenues.\nExcluding NIC revenues, subscription revenue growth was robust at 23.9%, reflecting our accelerating shift to the cloud.\nWe have now achieved greater than 20% subscription revenue growth in 55 of the last 63 quarters.\nSoftware licenses and services revenues grew 13.9% or 2% excluding NIC.\nAs expected, our margins compressed compared to last year's third quarter.\nSome expenses like trade shows and employee health claims as well as lower margin revenues like billable travel that declined in 2020 due to COVID pandemic have begun to return this year.\nMargins were also impacted by the inclusion of NIC and particularly, by the continuation of their lower-margin COVID initiative revenue.\nAs a result, our non-GAAP operating margin declined 330 basis points to 25.3%.\nExcluding NIC's COVID initiative revenues and related costs, our non-GAAP operating margin was 26.8%.\nBookings reached a record high in the third quarter at approximately $601 million, more than double last year's third quarter.\nExcluding NIC, bookings grew 51.9%, with the biggest contributor being the $63 million renewal of our fixed fee e-filing arrangement with the state of Illinois.\nWe're very pleased to report early success this quarter with joint sales efforts between NIC and Tyler Solutions teams.\nWe signed agreements with the Virginia Department of Housing and Community Development valued at approximately $24 million to provide a digital and call center solution for tenant, landlord and third-party filing of rent relief program claims.\nWe'll also provide administrative dashboards from our Socrata Data & Insight solutions as well as payment processing capabilities.\nOur largest software deal in the quarter also came from NIC with $6.1 million SaaS contract with the West Virginia Division of Motor Vehicles for digital titling.\nThis new digital vehicle titling and registration management system will go beyond modernization and revolutionize how the DMV manages vehicles and interacts with businesses and citizens.\nIn addition to the streamlining of nearly every vehicle-related process in place today, many legacy paper processes will be fully replaced with secure digital solutions.\nThe solution utilizes technology to govern and secure the vehicle ownership process, adding security, reducing fraud and providing the flexibility that other state DMV's operations are lacking.\nThe arrangement, which leverages our state master agreement has an initial term of five years.\nIn addition to the SaaS fees, the agreement will generate estimated transaction revenue of more than $3 million per year.\nI'd like to also highlight a few more significant deals signed this quarter.\nWe signed appraisal services contracts with the Delaware Counties in New Castle and Kent.\nIn addition, New Castle County selected our iasWorld appraisal solution under a SaaS arrangement.\nThe deals have a combined value of approximately $19 million.\nCoupled with the appraisal services contract signed last quarter was Sussex County, Tyler will now be performing a property reassessment for the entire state.\nAlso for our iasWorld Property Tax and Appraisal solution, we signed SaaS arrangements with the regional municipality of Wood Buffalo in Alberta, Canada, valued at approximately $3.1 million.\nFranklin County, Ohio, valued at approximately $3.5 million and Summit County, Ohio, which also includes our Data & Insights Solutions, valued at approximately $2.9 million.\nOther major SaaS deals included a $4.5 million contract with Arlington Heights, Illinois for our ERP civic services and payment solutions and a $3.4 million contract with Bayer County, Texas for our Odyssey, SoftCode and Supervision Justice solutions.\nOur largest perpetual license contract for the quarter was a $5.4 million contract to provide our MicroPact and entellitrak solution to manage COVID vaccination at stations for the U.S. Department of Justice.\nWe also signed a $2.5 million on-premises license contract with the Commonwealth of the Northern Mariana islands for our Munis ERP and Enterprise Asset Management, ExecuTime and Socrata solutions.\nWe also signed several significant contract renewals with existing clients, including extensions of NIC's state enterprise agreements with the states of Utah and Oklahoma, and a five year renewal of our e-filing arrangement with the state of Illinois, which was expanded to include applications from our Socrata Data and Insights platform.\nOn last quarter's call, we reported that NIC had been selected as one of two vendors to provide the Internal Revenue Service with a digital payment processing solution that would allow taxpayers to securely pay their federal taxes, and that revenue under that contract was expected to begin in January of 2022.\nFollowing the award, three entities filed protest with the GAO.\nPrior to any ruling on the protest by the GAO, the IRS notified the GAO that it was canceling the two awards, including the award to NIC.\nWhile the IRS has not formally terminated NIC's contract, it has issued a stop work order under the contract.\nThe IRS indicated that it will either amend the current solicitation, allowing all bidders to modify their previous submissions and then reevaluate the proposals or terminate the existing solicitation and start the process over with a new procurement in the coming months.\nThe IRS has not yet stated which of these options it will select and we have no information regarding the potential timing of either option.\nGiven these recent developments, we do not expect to recognize any revenue under the IRS award in 2022.\nWhile the specific concerns raised in the protests have not been made public and are not known by Tyler, the decision to cancel the award to NIC was not related to NIC's performance under the contract, its ability to successfully perform under the contract or any allegations of misconduct or improper behavior by NIC.\nOn the M&A front, we completed the acquisitions of VendEngine and Arx during the third quarter.\nVendEngine is one of the fastest-growing technology companies in North America, operating in more than 230 counties and 32 states.\nIts leading cloud-based platform provides a comprehensive suite of applications focused on the corrections market, including deposit technologies for commissary, ordering and warehouse management and various informational electronic communications, security, accounting and financial trust management components.\nArx is a cloud-based software platform, which creates accessible technology to enable a modern day police force that is fully transparent, accountable and a trusted resource to the community it serves.\nThe acquisition of Arx allows Tyler to offer a full suite of public safety solutions, including Arx Alert and Arx Community, designed to maximize efficiency and safety for law enforcement officers while increasing transparency and trust building with communities.\nVendEngine and Arx have combined ARR of approximately $17.5 million and their additions further strengthen Tyler's Justice and Public Safety suites.\nNow I'd like for Brian to provide more details on the results of the quarter.\nYesterday, Tyler Technologies reported its results for the third quarter ended September 30, 2021.\nGAAP revenues for the quarter were $459.9 million, up 60.9%.\nNon-GAAP revenues were $460.6 million, up 61.1%.\nOn an organic basis, GAAP and non-GAAP revenues grew 7.6% and 7.5%, respectively.\nSoftware license revenues rose 13.7%.\nSubscription revenues rose 183.3%.\nExcluding the contribution from NIC, subscription revenues were still very strong, growing 23.9%.\nWe added 144 new subscription-based arrangements and converted 67 existing on-premises clients, representing approximately $84 million in total contract value.\nIn Q3 of last year, we added 114 new subscription-based arrangements and had 46 on-premises conversions, representing approximately $56 million in total contract value.\nSubscription contract value comprised approximately 74% of total new software contract value signed this quarter compared to 47% in Q3 of last year, reflecting our ongoing shift to a cloud-first approach to sales.\nThe value weighted average term of new SaaS contracts this quarter was 3.4 years compared to 4.3 years last year.\nTransaction-based revenues, which include NIC portal, payment processing and e-filing revenues and are included in subscriptions, were $171.2 million, up more than sixfold from last year.\nE-filing revenues reached a new high of $17.4 million, up 15%.\nExcluding NIC, Tyler's transaction-based revenues grew 24.3%.\nFor the third quarter, our annualized non-GAAP total recurring revenue, or ARR, was approximately $1.5 billion, up 79.2%.\nNon-GAAP ARR for SaaS software arrangements for Q3 was approximately $330 million, up 24.7%.\nTransaction-based ARR was approximately $685 million, up 639%.\nAnd non-GAAP maintenance ARR was flat at approximately $471 million.\nOur backlog at the end of the quarter was $1.77 billion, up 14.3%.\nBecause the vast majority of NIC's revenues are transaction-based, their backlog at quarter end was only $27 million.\nExcluding the addition of NIC, Tyler's backlog grew 12.6%.\nAs Lynn noted, our bookings in the quarter were very robust at $601 million, up 105.7% and includes the transaction-based revenues of NIC.\nOn an organic basis, bookings were strong at approximately $444 million, up 51.9% fueled by the renewal of the State of Illinois fixed e-filling filing arrangement of approximately $63 million and the addition of the two Delaware appraisal deals totaling $19 million.\nFor the trailing 12 months, bookings were approximately $1.6 billion, up 31.3%.\nAnd on an organic basis, were approximately $1.4 billion, up 10.8%.\nOur software subscription bookings in the third quarter added $19 million in new annual recurring revenue.\nCash from operations and free cash flow were both record highs for the third quarter at $205.4 million and $192.8 million, respectively.\nOur balance sheet remains very strong.\nDuring the quarter, we repaid the outstanding balance of $65 million on our revolver and paid down $57.5 million on our term loans for a total debt reduction of $122.5 million.\nWe ended the quarter with total outstanding debt of $1.428 billion and cash and investments of $348.4 million, and net leverage of approximately 2.3 times trailing pro forma EBITDA.\nWe expect the net leverage to be approximately two times by year-end.\nWe have raised our revenue and earnings per share guidance for the full year 2021 to reflect our strong year-to-date performance and our expectations for the fourth quarter.\nWe expect 2021 total GAAP revenues will be between $1.577 billion and $1.597 billion, and non-GAAP total revenues will be between $1.580 billion and $1.6 billion.\nWe expect total revenues will include approximately $72 million of COVID-related revenues from NIC's TourHealth and pandemic unemployment services that are expected to wind down in the first half of 2022.\nWe expect 2021 GAAP diluted earnings per share will be between $3.55 and $3.63 and may vary significantly due to the impact of stock incentive awards on the GAAP effective tax rate.\nWe expect 2021 non-GAAP diluted earnings per share will be between $6.94 and $7.02.\nI'm extremely pleased with our third quarter results, both from Tyler's core operations and from NIC in its first full quarter as part of Tyler.\nWhen we spoke to investors in June, we discussed four priorities around the NIC acquisition for 2021.\nFirst, don't mess up the business; second, achieve our 2021 plans for both businesses; third, retain NIC staff and establish a long-term leadership team; and fourth, identify and launch joint strategic initiatives and get our sales teams aligned.\nI'm happy to say we are executing on all of those objectives.\nBoth businesses are executing at a high level and are exceeding our 2021 plans.\nThe NIC team under the leadership of Elizabeth Proudfit is enthusiastic about the combination and the opportunities ahead with Tyler.\nAnd we've hit the ground running, with teams actively working on integration and go-to-market strategies.\nWe're showcasing Tyler products to NIC's entire state general manager team, and NIC's general managers are providing detailed reviews of the NIC State Enterprise contracts and relationships for Tyler's team.\nWe've also established a payments technology integration plan and are in the process of finalizing the joint Tyler NIC payments organization.\nWe've already had some early success in joint opportunities, such as our contract with the Colorado Department of Regulatory Agencies that includes NIC payment processing, Tyler's entellitrak regulatory solutions and our Socrata Data & Insights platform, as well as the recent NIC contract with Virginia for a solution for the rent relief program, which also includes Tyler Socrata applications.\nWe have a current pipeline of more than 40 qualified sell-through opportunities with NIC's state enterprise market across multiple Tyler solutions and have identified Tyler sales opportunities leveraging NIC State Enterprise contracts, to speed up the time from award to contract.\nWe're also beginning to build our combined payments pipeline with early sales in Florida and Louisiana.\nWe continue to see positive trends in public sector market activity.\nIndicators such as proposals, sales demonstrations and pipelines are all up significantly from 2020 and are generally at or, in some cases, above pre-COVID levels.\nOur competitiveness remains strong as reflected by high win rates across our major applications.\nWhile not yet a significant factor, we're starting to see purchasing activity that is identified as being funded through the federal stimulus under the CARES Act and American Rescue Plan.\nWe expect that the $350 billion of aid to state and local governments and $167 billion of aid to schools under the American Rescue Plan Act will provide a significant measure of relief to budget pressures faced by many of our clients and prospects and potentially provide a tailwind over the next two to three years.\nA survey by the National Association of CIOs indicated that most state CIOs expect that remote work will continue and the need for digital services will increase.\nCIOs said they plan to modernize legacy systems in the next two years with human services and public welfare, labor and employment and health services noted as priorities.\nTyler is well positioned to help public sector leaders address those needs.\nWe also remain on track with our R&D projects around our cloud initiative and with our progress toward hosting new SaaS implementations and on-premises conversions in AWS.\nOur cloud operations team is engaged in 2022 planning with a focus on continued product optimization, data center migration and operations maturity.\nKevin is a seasoned IT leader with experience managing technology infrastructures for corporations, statewide judicial courts, statewide executive government agencies and U.S. military organizations, most recently serving as CIO for the Idaho Judicial branch.\nKevin will work closely with our former CIO, Matt Bieri, until Matt's retirement early next year.\nI'd also like to express our deep appreciation to Matt for his tremendous leadership of our IT and hosting organization over the last 11 years and wish him the best in his retirement.\nWith that, we'd like to open up the line for Q&A.\n",
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"content": "q3 revenue rose 61.1 percent to $460.6 million.\nsees fy non-gaap earnings per share $6.94 to $7.02.\nsees fy gaap earnings per share $3.55 to $3.63.\nsees fy revenue $1.577 billion to $1.597 billion.\nqtrly total backlog was $1.77 billion, up 14.3% from $1.55 billion at september 30, 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Yesterday after the close of market, we announced that we have entered into a settlement with the U.S. Securities and Exchange Commission, resolving a previously announced investigation related to disclosure and the impact of certain pull-forward sales for the third quarter of 2015 through the fourth quarter of 2016.\nThis settlement is to our disclosures and does not include any allegations from the SEC that sales during these periods did not comply with GAAP.\nIt is important to note that the ongoing uncertainty related to COVID-19 and its potential impacts on the global retail environment could continue to impact our business results moving forward.\nYou may also hear us refer to amounts under U.S. GAAP.\nAnd with that, may the fourth be with you.\nWith the continued disciplined execution of our strategic playbook, we're happy with our results, which marks a better-than-expected start to our year.\nAs with many companies, our year-over-year comparisons are affected by the significant COVID impacts we experienced in 2020.\nPutting these dynamics aside for a moment, and perhaps what we're most encouraged to see at this early point in our year, is that on a two-year stack, that is skipping over 2020, we're running a better, higher quality, and more profitable business.\nThis is even more evident because of the strategies we've employed over the past couple of years, including significantly reduced sales to the off-priced channel, proactive supply constraints against demand signals to days of exiting undifferentiated distribution, and certainly, on an annual basis, the absence of MyFitnessPal, which we sold at the end of last year.\nBy staying focused on athletic performance, operational excellence, and connecting even more deeply with our consumers, these efforts are beginning to drive more consistent results, particularly in North America, our largest and most challenged business over the past couple of years.\nAt the highest level, we are executing well strategically, operationally, and financially.\nGiven these and other factors, including market dynamics, and continued strong momentum in fitness and wellness, we have meaningfully updated our outlook for the year with revenue now expected to grow at a high-teen percentage rate, bringing our business essentially back in line with our results in 2019.\nAs our transformation continues to translate into improved momentum for Under Armour, there are no changes to the strategies we outlined earlier this year: strengthening the brand, continuous operating model improvement, elevating a direct-to-consumer-focused approach and staying disciplined about returning greater profitability and value to shareholders.\nUsing this construct, I'll take a few minutes to highlight some of the progress we're making in these areas, starting with brand strength.\nFrom a marketing and consumer engagement perspective, our global campaign, The Only Way is Through, is delivering a singular Under Armour voice with focused performers.\nIn 2021, we are evolving these efforts to bring the ecosystem of how we engage and inspire athletes across both physical and digital experiences into even better alignment.\nThese factors, driven by more robust data-driven decisions, a constant consumer insights feedback loop, and our meaningfully improved outlook, gives us confidence that this is an opportune time to amplify the momentum even more greatly in the second half of this year.\nAs such, we plan to make additional investments to support our marketing efforts to help drive awareness and increase conversion.\nThese accelerated investments will primarily focus on North America and critical countries like China and Germany, where we are still significantly underpenetrated from a brand awareness perspective.\nAs a premium athletic performance brand, the products that Under Armour delivers to the marketplace must meet and exceed the consumers' high expectation of performance, fit and style unfailingly to make them better.\nSo whether it's bringing newness and excitement to women with our crossback and Infinity bras and no slip waste band leggings, to the next generation of RUSH and Iso-Chill apparel for all athletes, our go-to-market process, storytelling, and operational excellence are helping to drive more robust consumer demand.\nTaking a moment to talk about our run category.\nWe continue to be quite pleased with the success of our Under Armour HOVR franchise as it's broadened our appeal and preference among runners by offering multiple price points and seasonal newness to inspire loyalty.\nDuring the first quarter, we saw strength in HOVR Sonic, Machina, and Infinite.\nWe also successfully launched our most pinnacle running footwear ever with the UA Flow Velociti Wind.\nPriced at $160, this product is delivering well against our expectations.\nIt's also pushing performance with data from our MapMyRun digital app, telling us that runners wearing these shoes are, on average, going further and faster than any other UA running shoe.\nSo while still early, very exciting to see.\nSwitching gears to our second area of focus, which is continuous operating model improvement.\nWith the critical mass of our transformation now behind us, and appropriately rebased cost structure and optionality that scaled smartly with future growth, we believe we are firmly on a path to returning to double-digit operating margin over the long term.\nThis, of course, is not a one-and-done strategy, there is no finish line.\nYet instead an ever-present focus on getting better, better process, more optimal structure, more efficient systems and vigilance around our decision-making.\nBy region, channel or product, we are constantly challenging ourselves to leverage our foundational horsepower by being more precise and return-based on the investment choices we make as a global company to advance our strategic and financial goals.\nLooking at our business by region.\nLet's review how some of this is playing out.\nI'll start with North America, which by many accounts, I believe to be in the healthiest position it's been in, in quite a few years from both a brand and financial perspective.\nHigh-quality revenue driven by a sharp focus around tight inventory management, proactive demand constraints, improving segmentation, and servicing our customers well puts us in the sweet spot of our strategy to return to brand-right premium growth.\nTo support this confidence and recall in my earlier two-year stack example, we see our full-price wholesale business in North America in 2021 being meaningfully here than the same business in 2019.\nKeep in mind, this is despite several headwinds in the comp set, including proactive demand constraints, exiting undifferentiated retail, a significant reduction in sales to the off-price channel and overall promotional activities.\nSo we've taken, in total, an encouraging sign as to the future of our business.\nThe other side of this equation is our great consumer business in North America, where we remain committed to reducing our promotional activity and driving improved store and digital productivity.\nAnd while traffic challenges persist in our physical stores, the business is performing about plan, and we expect it to deliver solid growth in 2021.\nShifting next to Asia Pacific.\nWhile short-term pandemic-driven impacts continue to present traffic challenges and higher promotional activities across the region, we remain confident in our ability to navigate these dynamics to emerge a stronger brand.\nOpportunistically, given an accelerated shift to online purchase behaviors, investments into CRM and digital activations remain center stage in our playbook to driving better brand affinity in the long term.\nFrom a direct-to-consumer perspective, we remain appropriately cautious concerning the right balance of return on those investments relative to the environment and staying premium.\nNext up is EMEA.\nAnd even though ongoing impacts from COVID-19 and related restrictions are tempering our near-term growth expectations a bit, there's no change to our expectations for this crucial market.\nWith stronger-than-expected bookings coming in for the fourth quarter, we remain encouraged by our strategies to tightly manage inventory while investing in brand awareness and consideration.\nThe reception to new products, combined with the strength of our go-to-market, is enabling us to build strong demand among key wholesale and distributor partners.\nAnd within our direct-to-consumer business, while stores are a bit more challenged due to pandemic restrictions, like last year, our e-commerce business continues to serve as a healthy offset to drive growth.\nAnd finally, our Latin America region.\nAs discussed on our last call, we have begun transitioning our business in certain countries to a strategic distributor model.\nWhile we expect this change to negatively impact our revenue in 2021, over the long term, we believe it will help drive greater profitability and provide a better opportunity to increase brand awareness and affinity across this region.\nNow moving to our third priority, elevating a direct consumer-focused approach.\nConsumer shopping preferences continues to blur the lines between physical and digital, demanding that brands create unique personalized experiences that integrate seamlessly into their lives.\nFor Under Armour, we believe building out the capabilities to execute a powerful omnichannel strategy will enable us to create more connected shopping experiences across all consumer touch points.\nFrom an owned store perspective, our first-quarter results, led by improved traffic trends and higher average order values, along with high gross margins due to reduced promotional activity, are encouraging signs for how we're thinking about our long-term opportunity in retail.\nIn the near term, however, even amid optimism from recent trends, we'll continue to keep an appropriate level of conservatism into mix.\nGlobally, our e-commerce business was up 69% in the first quarter, representing approximately 45% of our total direct-to-consumer business and included solid growth across all regions with better-than-expected conversion.\nGiven the outside strength of e-commerce in 2020 and the continued shift to online due to the pandemic, we are hyper-focused on better understanding the consumer journey and building greater digital capabilities to unlock even deeper connections with athletes.\nAnd ultimately, while it's left to be seen about how sticky last year's e-commerce results are against this year's performance, we're confident that making additional investments in our sites, teams and processes to support our long-term growth expectations is money well spent.\nBringing all these strategies together leads us to our last focus, maintaining our discipline around profitability to drive sustainable shareholder value over the long term.\nWith our expectation of revenue being up at a high-teen rate for the full year, I am pleased with our progress and our expectation to deliver an adjusted operating margin in line with 2019.\nThis is a nice step up toward a double-digit rate over the long term.\nSo to wrap up, I'm pleased with the progress we are making.\nOur transformational strategy to architect a global operating model capable of driving sustainable and profitable growth is on track.\nWith a solid start to the year, this is about continuing to execute the play with patience and allowing the processes, tools, and structure we've built to drive improved capabilities across Under Armour and then further enable our ability to compete for premium brand-right growth.\nAnd with that, I'll hand it over to Dave.\nToday's results are strong evidence that our transformed operating model can efficiently serve strong demand for the Under Armour brand against the continued backdrop of uncertainty due to the COVID-19 pandemic.\nWith an outstanding start to the year, let's dive right in with our first-quarter results.\nRevenue was up 35% to $1.3 billion compared to the prior year.\nThis was better than expected due to higher demand across our wholesale and DTC businesses.\nFrom a channel perspective, our wholesale revenue was up 35%.\nKeep in mind, approximately two-thirds of this growth was due to a Q4 '20 to Q1 '21 shift related to COVID-19 impacts connected to customer order flow and changes in supply chain timing, as noted on our last call.\nIn addition, most of our Q1 wholesale over-delivery was due to stronger sell-through and higher demand from our North American customers.\nOur direct-to-consumer business increased 54%, led by a 69% growth in e-commerce and 44% growth in our owned and operated retail stores.\nOur DTC results were better-than-expected, primarily due to higher average order values in retail and higher e-commerce conversion rates.\nOur licensing business was up 9%, driven primarily by North America.\nBy product type, apparel revenue was up 35%, driven by our train and run categories.\nFootwear was up 47%, driven by our run and team sports categories.\nAnd the accessories business was up 73%, with most of the growth being driven by sports masks.\nFrom a regional and segment perspective, first-quarter revenue in North America was up 32%, driven by growth in our wholesale business, which was driven in part by Q4 to Q1 COVID-19-impacted order shifts.\nAdditionally, we saw strength in our North American DTC business with Factory House and e-commerce leading the way for growth.\nIn EMEA, revenue was up 41%, driven by growth in wholesale, led by our distributor business, including the Q4 to Q1 COVID-19-impacted order shift as well as strength in e-commerce.\nIt's important to note that EMEA continues to face significant impacts due to COVID with about one-third of our owned and partner mono-branded doors closed at the end of the quarter.\nRevenue in Asia Pacific was up 120%, with balanced growth across all channels, including our wholesale business, which partly benefited from Q4 to Q1 COVID-19-impacted order shifts.\nAs a reminder, stores in APAC were closed through most of Q1 2020, so we are comping a more significant COVID-19 impact here than in our other regions.\nIn Latin America, revenue was down 9%, driven primarily by lower wholesale results, partially offset by growth in e-commerce.\nFirst-quarter gross margin was significantly better-than-expected, with a 370 basis point improvement to 50%, driven by approximately 270 basis points of pricing improvements due to lower promotional activity within our DTC channel, along with lower promotions and markdowns within our wholesale business.\nIn addition, we experienced 130 basis points of supply chain benefits, including improved inventory levels resulting in lower reserves and product costing improvements.\nAnd finally, we realized 50 basis points of favorable channel mix due to a lower mix of off-price sales and a higher mix of DTC.\nOffsetting these improvements was about 140 basis points of negative gross margin impact related to the absence of MyFitnessPal, a factor we expect to impact us throughout this year.\nOverall, versus our previous outlook for first-quarter gross margin, we saw tighter inventories driven by stronger-than-expected demand and lower promotions, which resulted in a reduced requirement for inventory reserves, along with more favorable pricing.\nSG&A expenses were down 7% to $515 million, primarily due to lower legal and marketing costs versus the prior year.\nRelative to our 2020 restructuring plan, we recorded $7 million of charges in the first quarter, an amount less than we had anticipated due to slower-than-expected execution.\nIncluding Q1, we've now realized $480 million of pre-tax restructuring and related charges.\nAs detailed last September, this plan contemplates total charges ranging from $550 million to $600 million.\nIt's important to note that all remaining charges are related to initiatives that we determined in 2020, meaning we are not adding anything new in 2021.\nWe expect to incur approximately $35 million to $40 million of charges in the second quarter as we work toward completing this program in the second half of 2021.\nMoving on, our first-quarter operating income was $107 million.\nExcluding restructuring and impairment charges, adjusted operating income was $114 million.\nAfter tax, we realized net income of $78 million or $0.17 of diluted earnings per share during the quarter.\nExcluding restructuring charges and the noncash amortization of debt discount on our senior convertible notes, our adjusted net income was $75 million or $0.16 of adjusted diluted earnings per share.\nAnd finally, inventory at the end of the first quarter was down 9% to $852 million, a clear indicator of the improvements we have made to drive a more efficient operating model.\nNow moving on to our updated 2021 outlook.\nWhile recent consumer trends continue to be more positive than we anticipated, we remain cautious with respect to the demand and the overall marketplace due to the COVID-19 pandemic.\nTherefore, as today's outlook is predicated on our business continuing under the same general macros we've seen most recently, with no significant shutdowns as well as moderate improvements within the greater retail landscape as the year progresses.\nAnd with that said, let's start at the top with revenue, which we expect to be up at a high-teen percentage rate for the full year.\nThis reflects a high-teen percentage increase in North America and a low 30s percentage rate increase in our international business.\nAnd while we see improvements just across our regions, more robust demand in North America is driving most of the gain relative to our last outlook.\nFrom a channel perspective, our Q4 bookings have come in better within about the wholesale business than our initial expectations.\nAs discussed, we are focused on managing our inventory tightly, including constraining supply to meet demand and exiting undifferentiated retail, particularly in North America.\nIn DTC business, we also expect to see stronger results drive through the remainder of the year with retail store growth far outpacing that of e-commerce, given that business is up against the difficult comps in 2020.\nFor gross margin, on a GAAP basis, we expect the full year rate to be up approximately 50 basis points against the 2020 adjusted gross margin of 48.6% with benefits from pricing and supply chain efficiency partially offset by the sale of MyFitnessPal, which carried a high gross margin rate.\nThe gross margin improvement related to previous outlook is due to improving benefits within pricing, partially offset by changes in channel mix and increased freight expense related to port congestion and logistical costs, which remains a rapidly evolving situation.\nFrom an SG&A perspective, as we stated on our last call, We believe we have appropriately rebased our cost structure to scale for future growth.\nThe improved discipline and processes we employ help ensure we stay return-based with the optionality to invest in critical areas like marketing in our DTC and international businesses.\nAs Patrik laid out, we intend to take advantage of some of our improved outlook in the second half of this year with incremental investments, particularly in marketing, to continue driving the underlying momentum we're seeing.\nIn this respect, we expect SG&A to be up at a rate that is approximately one-half that of our revenue growth.\nIn addition to these incremental marketing investments, the other significant part of the overall increase in SG&A relative to our prior outlook is higher incentive compensation when compared to a year that saw significant reductions against target levels.\nWhen combined, these marketing investments and planned higher incentive compensation represent about three-fourth of the increase in our year-over-year SG&A dollars, meaning without them the underlying SG&A is panned up slightly at about 2% to 3% in absolute dollars, which is consistent with the initial outlook we provided earlier this year.\nThat said, remaining discipline about controlling costs and ensuring the right balance between growth, productivity, and profitability is our top priority.\nAfter these factors, we now expect operating income to reach approximately $105 million to $115 million this year or about $230 million to $240 million on an adjusted basis.\nTranslated to rate, we expect to deliver an operating margin of approximately 2% for an adjusted operating margin of approximately 4.5% in 2021.\nAll of this takes us to a diluted loss per share of approximately $0.02 to $0.04, or excluding restructuring impacts, about $0.28 to $0.30 of adjusted diluted earnings per share.\nTo sum it up, we believe we have appropriately updated our outlook to reflect the improvements we see across the business.\nAnd to reiterate some of the comments we made on our last call, headwinds should be taken into consideration for our full year outlook, particularly in the second half, including the absence of MyFitnessPal, continued supply and demand constraints, the exit of undifferentiated retail, which starts in the back half of this year; changes to our Latin American operating model, and lower expected sales of our sports masks.\nFor a little more color on the quarterly flow, we expect our second quarter revenue to be up approximately 70% as we lap last year's significantly shuttered retail world, with the highest regional growth seen in North America and Latin America.\nNext, we expect Q2 gross margin to be down about 120 to 140 basis points primarily due to the following negative impacts: channel mix, with e-commerce being a considerably lower portion of the overall business when compared to last year; and within the wholesale channel, we expect a higher percentage of off-price sales versus the last year's second quarter when off-price was predominantly closed.\nAdditionally, the absence of MyFitnessPal will negatively impact the quarter.\nAnd finally, we anticipate increased freight expense from a supply chain perspective relative to the prior year as we work through ongoing logistics and transportation challenges.\nThese negative factors are expected to be partially offset by an improvement in pricing due to lower planned promotional and discounting activities, along with some tailwinds from changes in foreign currency.\nBringing this to the bottom line, we expect second quarter adjusted operating income to be approximately $40 million to $45 million or about $0.04 to $0.06 of adjusted diluted earnings per share.\nTo close out, with an incredibly focused strategy led by a talented, passionate team and improved operations from our multiyear transformation, we believe Under Armour is well positioned to deliver on our expectations for 2021 and beyond.\n",
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"content": "compname reports q1 earnings per share $0.17.\nsees fy loss per share about $0.02 to $0.04.\nq1 adjusted earnings per share $0.16.\nq1 earnings per share $0.17.\nq1 revenue rose 35 percent to $1.3 billion.\nqtrly north america revenue increased 32 percent.\nexpects to realize approximately $35 million to $40 million in charges related to restructuring plan in q2.\ngiven continued uncertainty related to covid-19, there could be potential material impacts on its full-year business results in 2021.\n2021 revenue is now expected to be up at a high-teen percentage rate.\nexpects to realize about $35 million to $40 million in charges related to restructuring plan in q2.\n2021 adjusted diluted earnings per share is expected to be in range of $0.28 to $0.30.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It's important to note that the ongoing uncertainty related to COVID-19 and its potential effects on the global retail environment could continue to impact our business results moving forward.\nYou may also hear us refer to amounts under U.S. GAAP.\nBut before I hand it over to Patrik, I'd like to take a moment to recognize Carrie Gillard and the fact that this is her last earnings call with Under Armour.\nAs an eight and a half-year veteran of this iconic brand and my partner in Investor Relations for the past four and a half years, it's been a heck of a journey, to say the least.\nOn behalf of the entire executive team, your determination, work ethic, and expertise has been truly appreciated, and you will be missed.\nWe can't wait to see all the great things you'll accomplish in your next adventure.\nAt the halfway point of 2021, our better-than-expected results continue to validate that our multiyear transformation is working, with a stronger top and bottom line performance relative to our previous outlook.\nPerhaps more importantly, we're also driving higher-quality growth, margin expansion, and greater profitability against our pre-pandemic 2019 results.\nIn fact, diluted earnings per share through the first six months of 2021 are greater than the full-year 2019.\nSo all in, a great first half.\nReflecting on the past 18 months amid a historically challenging environment due to the COVID-19 pandemic, I am incredibly proud of Under Armour's global team and the way we've worked to hold ourselves accountable to our strategic playbook.\nBy continuing to sharpen our focus, the operating model and financial discipline we have ingrained within our culture serve as a constant check and balance to deliver premium products and experiences to our consumers and customers.\nAnd by driving higher-quality revenue through a constant lens of operational excellence and applying what we've learned, consistently refining and orienting toward brand-right profitable growth, means we are better positioned today to drive greater returns to our shareholders than we were before the pandemic started.\nAnd yet, with sustained uncertainty related to COVID, which, as of late, is trending unfavorably in key sourcing countries in Southeast Asia, the resiliency we've earned over the last year and a half will continue to serve as an asset while we navigate the second half of 2021.\nIn this respect, we're focused on the things we can control, staying grounded in our four strategic pillars: strengthening the Under Armour brand, improving our operating model, amplifying a DTC-focused approach, and increasing our capacity to return greater profitability across the company.\nStarting with strengthening our brand and the proactive decision we've made to reinvest some of this year's upside into additional marketing efforts.\nThis flexibility is empowering us to amplify our middle to top-of-funnel activations geared at increasing awareness, attraction, and consideration for the Under Armour brand.\nAs we work to connect with new athletes and inspire existing ones, we are centered on our brand attributes, resilience, hard work, heart, and edge.\nIn the second half, this will come to light more holistically as we illustrate the journey to compete through the process of training, setting goals, struggling, and ultimately realizing the results.\nThrough a team sports lens supported by consistent messaging via The Only Way Is Through, our third-quarter activations highlight the importance of mental strength, an often-overlooked aspect of training, and its relationship to unlocking an athlete's full potential.\nCertainly, coming out of a long stretch of COVID restrictions and as team sports hopefully open up more broadly this fall, we believe this is a timely effort to draw consumers into the psyche that is uniquely Under Armour as we work to make them better.\nSo starting this month, via social media, TV, and streaming, be on the lookout for Chase Young, Trent Alexander-Arnold, Ty Harris, and NICKMERCS, among others, helping to highlight mental training and the role it plays in achieving one's personal performance goals.\nAs we say at Under Armour, if you train your mind, you train your game.\nSo while there's still more work to be done to unlock our full marketing potential, I am pleased with the progress we're making in aligning our go-to-market with focused performers and the evolving needs of our key retail partners around the world.\nNot to mention the incremental marketing investments we're making in 2021 are really geared at setting us up for more strong lead in 2022, as awareness and consideration should lead to increased conversion as we strengthen our connectivity.\nIn product, our strategy remains firmly rooted in an athletes' journey to sport, leading with insights and data to provide solutions they didn't know they needed and now can't imagine living without.\nWith quite a few product highlights during the quarter, I'd start by recognizing the incredible milestone that our partners at Virgin Galactic achieved a few weeks ago with their commercial flight into space.\nTo play a part in pushing the boundaries of what is possible, we are excited to see what the future holds as new barriers get broken, inspiring all of us to strive for more.\nIn Apparel, second-quarter highlights included strong sell-through of our Iso-Chill running products, featuring a UA innovation that keeps you cooler in hot conditions.\nWe also saw strong sell-through in men's unstoppable bottoms and women's leggings, including meridian and our no-slip waistband technology.\nWe'll also continue to build on this momentum as well with meaningful increases in our infinity and cross-back products.\nAnd we also saw solid results in tops, featuring our RUSH technology.\nAnd finally, Project Rock apparel continued to build on its strong momentum as well, with an excellent response to new drops.\nIn Footwear, Flow Velociti performed well in all regions, as did HOVR Phantom and Machina 2, including significant growth against last year's already strong performance.\nOur Charged Pursuit 2 and Assert 9 footwear offerings also posted substantial numbers, demonstrating continued success in our segmentation strategy to bring premium innovations across all price points.\nIn Curry, we saw success on and off court with our Curry Flow 8 signature shoe as well as retro styles that we pre-released in APAC, all good signs of momentum as we work toward the launch of the Curry 9 late this year.\nAnd finally, the Project Rock 3 shoe, which combines UA HOVR and TriBase technologies for a highly comfortable and stable training platform, was also a standout.\nSwitching gears to our next area of focus, which is continuous operating model improvement.\nOur second-quarter results demonstrate once again that our ability to service increased demand with efficient, effective execution is getting better.\nCreating product at the right price and getting it to the right place at the right time is at the core of how we'll win.\nTo empower this, the adage holds, \"Success is doing the common things uncommonly well\".\nSimple perhaps, but precisely at the core of our strategic playbook, and what we're obsessing on a day-to-day basis.\nTurning to our regions.\nWe believe it's most helpful to compare our results to 2019 since last year's second quarter was an incredibly unique period, and we believe this two-year stack better represents some of the progress we're making in the overall performance of our business.\nStarting with North America.\nI'd underscore how happy we are with improving our ability to drive higher-quality revenue through sharper segmentation, tighter inventory management, and delivering consistent service to our customers.\nVersus 2019, North American revenue was up 11% in the second quarter and about 3% for the first half of the year.\nNow in context, it's important to keep in mind that these comparable periods have some key differences, including a significant increase in our direct-to-consumer business, offset by considerably lower sales to the off-price channel, lower overall promotional and markdown activities and supply constraints engineered to put us in a more advantaged position in the marketplace.\nAll of this, of course, is geared to continuing to lift the Under Armour brand to a more premium level in our largest market.\nAnd to that point, as evidenced by our gross margin results, this strategy is working.\nFrom a channel perspective, we feel good about the pace we're earning backspace with our key North American wholesale partners, driving full-price revenue and showing up both digitally and physically in a more comprehensive way than ever before.\nRevenue from our owned and operated stores is up meaningfully in the quarter versus the same period in 2019 and includes improved quality and composition of sales.\nFor the full year, we expect our North American business to be up at a low 20s percentage rate compared to 2020.\nVersus 2019, North America will be close to the same revenue, which, taking into consideration the factors I mentioned, less off-price, lower discounts and promotions, and tighter supply constraints, along with our exit of undifferentiated retail, which starts in Q3, leaves me confident that we're setting ourselves up for improving brand-right profitable growth in 2022 and beyond.\nTurning to our international business.\nWe expect revenue to be up at a mid-30s percentage rate versus 2020 or up at a high 20s percentage rates on a two-year stack.\nIn our Asia Pacific region, we remain laser-focused on ensuring our brand remains firmly positioned in athletic performance while staying agile in a quickly evolving marketplace.\nWith second-quarter revenue up 25% versus 2019 or up 35% for the first half on a two-year stack, our results gives us confidence that the additional investments we're making into marketing, CRM, digital activations, and store expansions are working to drive greater brand affinity amid a highly competitive backdrop.\nNext up is EMEA, a region that is also seeing pockets of COVID resurgence, but also delivered strong growth for Under Armour.\nSecond-quarter revenue was up 43% over 2019 and up 44% for the first six months on a two-year stack.\nWithin DTC, we recently upgraded our eCommerce site platform to improve our capabilities and functionality as we focus on driving more seamless shopping experiences for our consumers.\nEMEA wholesale growth was balanced across our full-price and distributor businesses.\nLooking at the rest of the year, we remain confident that our strategies to drive greater reach and connection to our consumers are working well.\nAnd finally, our Latin America region, where second-quarter revenue was up 17% over 2019 or is up 7% for the first six months on a two-year stack.\nAs discussed on our last call, we have begun transitioning our business in certain countries to a strategic distributor model, which we expect to impact revenue more negatively in the back half of this year.\nSo still working through this transition as we rearchitect this business for improved consistency and, we believe, better profitability.\nSwitching to our third pillar, which is our focus on elevating our DTC business.\nWith a 33% increase in revenue for the second quarter and a 32% increase for the first half versus 2019, we're pleased to see the results of our multifaceted strategies come to fruition.\nIn conjunction with consumer behavioral shifts throughout the pandemic and an even greater appetite for product and brand experiences that are personalized, unique, and premium, we are advancing how we show up in stores and online to meet their needs.\nAll of this, of course, starts with our retail and distribution teammates who are at the backbone of our business, playing an essential role in how we serve focused performers.\nEnsuring that they feel valued and appreciated, we increased our minimum pay rate to $15 per hour in our U.S. business as part of a larger effort that includes professional learning and development opportunities and additional incentive plans.\nIn combination, these actions will allow us to drive better connectivity across the consumer journey.\nFrom an owned store perspective, we experienced improved traffic trends and higher average selling prices in the quarter, driving better productivity and more normalized promotions.\nLonger term, we remain focused on building the capabilities necessary to become a best-in-class retailer by creating incredible experiences in our full-priced brand house stores and better leveraging our factory house locations to drive greater overall profit.\nIn our e-commerce business, revenue was down 18% in the quarter, a result that we anticipated being the most challenging of the year considering the shift to online in 2020 following the retail lockdown.\nThat said, given the work we did to exit the highly promotional elements that this business experienced in 2019, along with the investments we've made in our platforms and teams over the last 18 months, and we're very encouraged by a 53% second-quarter increase versus 2019 or a 55% increase for the first six months on a two-year stack.\nThrow in that we expect our eCommerce business to be up at a high single-digit rate in 2021, and that puts our growth up nearly 50% on a two-year stack.\nSo to wrap it up, I'll end with our last area of focus, driving profitability to increase shareholder value over the long term.\nBased on our updated full-year outlook, which includes revenue being up at a low to mid-single-digit rate versus 2019, and our adjusted earnings per share being up meaningfully, our strategy to return to profitable brand-right growth is working.\nWith a high quality and composition of revenue, including significantly reduced off-price sales and less promotions and discounting, we're driving more productive dollars through our P&L, dollars that are contributing nicely to margin improvements and greater EPS, demonstrating the results of our transformation and the stronger foundation we have built over the past couple of years.\nAnd with that, I'll hand it over to Dave.\nAt the halfway point of 2021, our second-quarter results demonstrate that the strategies we've been executing against, and the foundation we've worked hard to reset to increase Under Armour's capacity to return sustainable profitable growth to shareholders, are working.\nOur operational execution has never wavered against an incredibly challenging and dynamic global market, punctuated by COVID over the last year and a half.\nOur attention to Under Armour's focused performers and delivering best-in-class innovations and premium experiences have never been sharper.\nAnd all of this has come together to target full-year top line, bottom line, and working capital performance at better than pre-pandemic levels.\nIn the second quarter, revenue was up 91% to 1.4 billion compared to the prior year.\nVersus our previous outlook, this overdrive was primarily due to higher demand across our wholesale and factory house businesses.\nAnd of course, in general, our second-quarter results were up against last year's significantly restricted retail environment due to the peak of COVID-impacted store closures.\nFrom a channel perspective, our wholesale revenue was up 157%, driven by broad-based growth, as we lap the most significant impact from the retail door closures in the prior year.\nAdditionally, most of our Q2 wholesale overdrive was due to stronger sell-through and higher demand in North America.\nOur direct-to-consumer business increased 52%, led by 234% growth in our owned and operated retail stores, partially offset by an 18% decline in e-commerce, which faced a difficult comp as it was the primary business driver of last year's second quarter.\nOur licensing revenues were up 276%, driven by increases in our North American partner business.\nBy product type, Apparel revenue was up 105%, driven by strength in our train, golf, and run categories.\nFootwear was up 85%, driven by our run and team sports categories.\nAnd our accessories business was up 99%, driven by hats, bags, and sports masks.\nFrom a regional and segment perspective, second-quarter revenue in North America was up 101%.\nIn wholesale, we continue to drive lower markdowns with tighter inventory, enabling fuller-priced sell-through.\nWithin DTC, we saw strength in our owned and operated stores given the easier comparison to the prior year when most of our locations were closed for the quarter.\nThis was partially offset by a decline in our e-commerce business, which, conversely, was up against a particularly tough comparison to last year.\nIn EMEA, revenue was up 133%, driven by growth in wholesale and DTC, with significant strength across our wholesale and distributor partners.\nRevenue in Asia Pacific was up 56%, with balanced growth across all channels.\nAnd in Latin America, revenue was up 317%, driven primarily by lapping the store closures in the prior year.\nAs we move into the back half of the year, we expect the transition of certain countries to distributor models to negatively impact top-line performance, particularly in the fourth quarter.\nSecond-quarter gross margin came in better than expected, improving 20 basis points to 49.5%, driven by 570 basis points of pricing improvements due to lower promotional activity within our DTC channel, along with lower promotions and markdowns within our wholesale business, which was significantly impacted by the pandemic in the prior year, and 100 basis points of benefit due to changes in foreign currency.\nOffsetting these improvements was a 460 basis point negative impact from channel mix, primarily driven by a lower mix of e-commerce and a larger mix of wholesale, including a higher percentage of off-price sales than last year when this channel was essentially closed for most of the quarter.\nAdditionally, we realized 170 basis points of negative gross margin impact related to the absence of MyFitnessPal, which will remain a headwind throughout 2021.\nAnd finally, a 10 basis point negative impact within supply chain as our continued benefits and product costs were more than offset by higher freight and logistics costs due to developing COVID-related supply chain pressures.\nOverall, versus our previous outlook for second-quarter gross margin, we experienced lower-than-planned promotions enabled through higher demand, along with driving more favorable pricing.\nSG&A expenses were up 14% to 545 million, primarily due to higher marketing costs and expenses tied to store operations, given most retail locations were closed throughout the second quarter of 2020.\nRelative to our 2020 restructuring plan, we recorded 3 million of charges in the second quarter, an amount less than we had anticipated due to the timing of specific executions such as the realization of lease and contract terminations.\nThroughout the plan thus far, we've realized 483 million of pre-tax restructuring and related charges.\nAs detailed last September, this plan contemplates total charges ranging from 550 to 600 million.\nIt's important to note that all remaining charges are related to initiatives outlined in 2020, meaning nothing new has been added in 2021.\nFor the quarter -- for the third quarter, we expect to realize approximately 40 to 50 million in charges related to this plan.\nOur second-quarter operating income was 121 million.\nExcluding restructuring and impairment charges, adjusted operating income was 124 million.\nAfter tax, we realized a net income of 59 million or $0.13 of diluted earnings per share during the quarter.\nExcluding restructuring charges, loss on extinguishment of 250 million in principal amount of senior convertible notes, and the non-cash amortization of debt discount on our senior convertible notes, our adjusted net income was 110 million or $0.24 of adjusted diluted earnings per share.\nIn this respect, we are proud to report that in the first half of 2021, we have already surpassed our full-year 2019 diluted earnings per share.\nSo in a great position to finish out 2021 with strength against pre-pandemic levels.\nInventory at the end of the second quarter was down 26% to 881 million as we continue to drive improvements throughout our operating model, along with experiencing some inbound shipping delays due to COVID-related supply chain pressures.\nOur cash and cash equivalents were 1.3 billion at the end of the quarter, and we had no borrowings under our 1.1 billion revolving credit facility.\nWith respect to debt, during the second quarter, we entered into exchange agreements with certain convertible bondholders for 250 million in principal amount of our outstanding convertible notes and terminated certain related capped call transactions.\nWe utilized net 247 million in cash, issued 11 million shares of our Class C stock, and recorded a related loss of approximately 35 million, which is captured in other income and expenses.\nPost this transaction, 250 million of our convertible bonds remain outstanding.\nNext, let's move on to our updated 2021 outlook, where, based on better-than-expected performance in our second quarter, we flowed through the upside for a meaningful increase for our full year.\nThat said, although recent consumer trends continued to track positively, we remain cautious with demand and the overall marketplace due to both the COVID-19 pandemic and developing manufacturing and logistics challenges in key sourcing countries in Southeast Asia.\nAccordingly, today's outlook is subject to our business continuing under the same general macros we've seen most recently, with no significant shutdowns of manufacturing partners or retail or logistics disruptions, along with continuing improvements within the global retail landscape as we progress through the second half of 2021.\nThat said, let's start at the top with revenue, which we now expect to be up at a low 20s percentage rate for the full year.\nThis reflects a low 20s percentage increase in North America and a mid-30s percentage increase in our international business.\nFor gross margin, on a GAAP basis, we expect the full-year rate to be up 50 to 70 basis points against our 2020 adjusted gross margin of 48.6%, with benefits from pricing and benefits from changes in foreign currency being partially offset by the sale of MyFitnessPal, which carried a high gross margin rate, along with higher expected freight expenses.\nThe gross margin improvement relative to our previous outlook is due to improving benefits within pricing, partially offset by increased freight expense related to port congestion and logistics costs, which remains a rapidly evolving situation.\nVersus 2020, we expect a high single-digit rate increase in SG&A, a rate that is less than half that of our revenue growth.\nAs laid out previously, it's important to remember that specific to 2021, we are taking advantage of our improved outlook and proactively making incremental investments, particularly in marketing, to build even deeper connections with our consumers.\nAdditionally, the other significant part of the overall increase in SG&A is higher incentive compensation, which is up against 2020 when we realized significant reductions against target levels.\nAll in, of this expected high single-digit rate increase in SG&A in 2021, on an absolute dollar basis, about one-half of this is related to incremental marketing, one-third related to higher incentive compensation, and the balance related to our other underlying SG&A.\nOn a two-year stack, the most significant drivers of SG&A dollar growth are the incremental marketing investments and higher incentive compensation we expect in 2021.\nBeyond these items, our underlying SG&A is planned to be up only slightly against 2019's base.\nAs we look ahead, remaining disciplined around SG&A and striking the right balance between growth, productivity, and profitability is our top priority.\nWith that, we now expect operating income to reach 215 to 225 million this year or 340 to 350 million on an adjusted basis.\nTranslated to rate, we expect to deliver an operating margin of approximately 4% or an adjusted operating margin just north of 6% in 2021.\nAll of this takes us to an expected diluted earnings per share of 14 to $0.16 or, excluding restructuring charges, the loss on early extinguishment of convertible senior notes and noncash amortization of debt discount on these convertible senior notes, we expect adjusted diluted earnings per share of 50 to $0.52 in 2021.\nIn summary, our full-year outlook reflects the combination of the overdrive we've realized in the first half of 2021, along with improvements across our business, positioning us to deliver growth and stronger profitability relative to 2019.\nNext, before giving more color on how we're thinking about the balance of the year, I'll highlight some headwinds that impact us more directly in the second half of 2021, including lower expected sales of our sports masks, supply and demand constraints, the absence of MyFitnessPal, lower expected sales to the off-price channel, changes to our Latin American operating model, and the exit of undifferentiated retail, which began in the third quarter.\nLooking at quarterly flow, we expect third-quarter revenue to be up at a low single-digit rate and the fourth quarter to be relatively flat to finish out the year.\nNext, we expect third-quarter gross margin to be up 130 to 150 basis points due to pricing benefits and channel mix as we anticipate lower promotional activity and lower sales to the off-price channel.\nThese benefits will be partially offset by the absence of MyFitnessPal, higher expected freight costs, and changes in product mix driven by lower sales of sports masks.\nFor the fourth quarter, we expect gross margin to be down due to negative impacts from the absence of MyFitnessPal, channel mix driven by lower licensing revenue, and product mix driven by a higher percentage of footwear and lower sales of sports masks.\nBringing this to the bottom line, we expect third-quarter adjusted operating income to be 95 to 105 million or 13 to $0.15 of adjusted diluted earnings per share.\nSo to close out, operational excellence, flexibility, a strong balance sheet, and consistent financial management, when combined, form a model that's allowed us to transcend pandemic challenges proficiently.\nLooking at the next six months and the set up all these accomplishments provide for us going into 2022, we believe Under Armour is well-positioned to deliver on our next chapter of profitable growth.\n",
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"content": "compname posts q2 adjusted earnings per share $0.24.\nsees fy adjusted earnings per share $0.50 to $0.52.\nsees fy earnings per share $0.14 to $0.16.\nq2 adjusted earnings per share $0.24.\nq2 earnings per share $0.13.\nq2 revenue $1.4 billion versus refinitiv ibes estimate of $1.21 billion.\nfy 2021 revenue is expected to be up at a low twenties percentage rate compared to previous expectation.\nexpects to recognize approximately $40 million to $50 million in charges related to restructuring plan in q3.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It's important to note that the ongoing uncertainty related to COVID-19 and its potential effects on the global retail environment could continue to impact our business results moving forward.\nYou may also hear us refer to amounts under U.S. GAAP.\nIn the third quarter, higher-than-expected demand for the Under Armour brand and outstanding execution from our global team allowed us to drive strong top and bottom-line results.\nEverything we do at Under Armour is based on driving sustainable long-term growth while at the same time, ensuring we're setting a solid foundation to deliver near-term value to our shareholders.\nThis is the balance you should expect from us and is the commitment we work toward every day.\nWe strike this balance by leveraging our strategic playbook across key elements of our business, including a consumer-centric strategy to drive deep, authentic and emotional connections with focused performers, innovative products and experiences that advantage and inspire an athlete's journey, a constant focus on operational excellence to ensure we manage the marketplace efficiently and steady financial discipline to create meaningful levers to drive greater profitability.\nThese strengths were evident in our third quarter results with revenue up 8%, gross margin up 310 basis points to a record 51% and solid adjusted earnings per share performance at $0.31.\nIn this spirit, as we work to close out 2021, I feel good about the progress we've made, the resiliency we've earned and the potential we have to do even better in the future.\nDemand for our product and consideration for our brand is growing.\nThat gives me confidence that despite potential impact from near-term headwinds, the long-term opportunities before us and our ability to compete and win in an ever-changing global landscape are stronger than ever.\nOf course, it all starts with brand, so with that, let's get into some third quarter highlights, starting with the incremental investments we're making in marketing and how they're translating to improving brand affinity from our focus on consumer awareness, attraction and consideration.\nAs part of our holistic journey to compete strategy, which centers on goal setting, training and what it takes to earn results, we use the team sports lens to focus on the importance of mental strength as an unlock to realize one's full potential.\nThrough uniquely Under Armour execution by our social media, TV, retail and digital activations, the only way is through and train your mine train your game showed up as one global brand and voice across categories, channels and our marketing funnel.\nComing off this effort, we've now shifted gears into fourth quarter activation, which is centered on cold weather training.\nKnowing athletes sometimes see cold as their kryptonite, our human performance research lab is helping equip them and reshape this type of training as an asset to take their performance to new levels.\nValidated by the experiences of our most elite athletes, we're inspiring and educating focused performers for the winter ahead with powerful storytelling, workout routines, product reviews and premium retail capsules, our ecosystem is well set to inspire and capitalize on growing demand.\nGiven the third quarter bridge summer and fall, we realized success on both sides of the temperature spectrum, including solid sell-through of our Iso-Chill apparel products, which cool you and fleece, which saw strength in men's and youth as athletes gear up for the cooler months ahead.\nThere's also continued momentum in men's unstoppable bottoms and women's leggings, including Meridian and our No-Slip Waistband technology.\nAnd finally, the Project Rock collection and tops featuring Rush also built on their year-to-date momentum, so consistency in some of our best sellers.\nIn footwear, our core running products, including Pursuit, Aurora and Assert saw strength in all regions globally.\nAdditionally, Project Rock footwear performed well and we had success in our slides business.\nRegionally, a few of the highlights included the Curry HOVR Splash and Mega Clone in APAC, HOVR Strt and Bandit Trail in EMEA and Flow Velociti SE and cleated footwear in the Americas, driven by better-than-expected back-to-school demand as team sports returned.\nLet's turn next to our regions, starting with North America, where revenue was up 8% to $1 billion, indicative of improving brand health in our largest market, we had stronger-than-expected back-to-school and direct-to-consumer demand.\nIn fact, North America drove the majority of the third quarter overdelivery for the company, so encouraging to see continued progress here.\nCompared to 2019, North American revenue was up 2% in the third quarter.\nIt is important, however, to revisit some key differences in these comparable periods, 2021 North America versus 2019, including a significant increase in our direct-to-consumer business, substantially lower off-price sales, reduced promotional and markdown activities, proactive supply constraints and undifferentiated wholesale exits.\nSo all in, meaningfully higher quality and more productive dollars going through our P&L now than just two years ago.\nTurning to our international business.\nRevenue in our Asia Pacific region was up 19%, driven primarily by wholesale growth.\nGiven some of the recent market trends, particularly in China, where traffic continues to struggle, our consumer insights data tells us that our brand health is holding steady in an otherwise dynamic environment.\nWe attribute this to the investments we're making into marketing, CRM and store expansions, including opening our 1,000th store in the region.\nVersus 2019, third quarter APAC revenue was up 37%, so solid progress on a two year stack.\nNext up is EMEA, where revenue was up 15%, driven by wholesale, which saw continued momentum from our distributor partnerships and a solid direct-to-consumer performance.\nIn our two most prominent countries in this region, the U.K. and Germany, we remain focused on brand development, building long-term relationships with our key wholesale partners and strengthening our direct-to-consumer team and retail capabilities.\nEMEA wholesale growth was balanced across our full price and distributor businesses.\nVersus 2019, third quarter revenue in EMEA was up 50%.\nAnd finally, our Latin America region was up 27%, driven by strength in our full-price wholesale and distributor businesses.\nVersus 2019, third quarter revenue in Latin America was up 8%.\nAs previously detailed, we are transitioning certain countries in this region to a strategic distributor model, of which most of this change takes place in the fourth quarter.\nAccordingly, we expect top-line pressure in Latin America as we finish out 2021.\nAnother highlight is the performance of our direct-to-consumer business, which was up 12%.\nAnd although traffic trends were somewhat mixed in our own stores and mirrored various COVID restrictions around the world, we continued to see improvements in average selling prices and productivity.\nDue to higher-than-expected demand during the quarter, we further reduced promotions and realized higher price sell-through, which, of course, you see in our gross margin results.\nVersus 2019, direct-to-consumer was up 31% for the third quarter.\nSo in summary, we're pleased with our third quarter performance and our ability to close up Under Armour's and split adjusted earnings per share here in our history.\nIn the near term, however, we remain both confident and cautious with several fluid headwinds continuing to impact nearly every sector, it's important to remember that Under Armour is battle-tested and mission proven.\nI am incredibly proud of our global team and how we work to maintain balance and trajectory regardless of what has thrown our way.\nWe continue to get sharper, smarter and more efficient.\nAcross our business, by channel, product or region, there remains one constant.\nWe obsess the intersection of Under Armour serving focused performers, industry-leading innovations, premium experiences, heart-led but data-driven, we empower those who strive for more.\nAnd with that, I'll hand it over to Dave.\nWith three quarters of the year behind us, our strong third quarter results demonstrate our ability to execute quickly to meet the needs of our consumers and customers, all while driving toward record revenue and earnings in 2021.\nSo let's dive right into our results.\nCompared to the prior year, revenue was up 8% to $1.5 billion.\nVersus our previous outlook, this overdrive was primarily due to higher demand across our full-price wholesale and factory house businesses in North America.\nPatrik covered our regional performance earlier, so now let's click down into our channel results on a global basis.\nThird quarter wholesale revenue was up 10%, driven by higher-than-expected demand in our full-price business, particularly in North American wholesale, which was tempered by a reduction in sales to the off-price channel as we continue to work to elevate our brand positioning.\nOur direct-to-consumer business increased 12%, led by 21% growth in our owned and operated retail stores, partially offset by a 4% decline in e-commerce, which faced a difficult comparison to last year's third quarter.\nBut I would also note that when compared to the third quarter of 2019, our e-commerce business was up over 50%.\nAnd licensing revenue was up 24%, driven by improving strength within our North American partner businesses.\nBy product type, apparel revenue was up 14% with strength across all categories, particularly in train and golf.\nFootwear was up 10%, driven primarily by strength in running.\nAnd our accessories business was down 13% due to lower sales of our sports masks compared to last year's third quarter.\nRelative to gross margin, our third quarter improved 310 basis points over last year, landing at 51%.\nThis expansion was driven by 400 basis points of pricing improvements due primarily to lower promotional activity within our DTC channel, along with lower promotions and markdowns within our wholesale business and 120 basis points of benefit due to channel mix, primarily related to lower mix of off-price sales versus last year's third quarter.\nPartially offsetting these improvements was about 100 basis points of negative impact related to the absence of MyFitnessPal and 90 basis points of negative impacts from higher freight and logistics costs due to COVID-related supply chain pressures.\nVersus our previous expectation, our higher-than-expected Q3 gross margin improvement was primarily due to lower than-planned promotional activity within our DTC business and more favorable pricing related to sales to our off-price partners.\nSG&A expenses were up 8% to $599 million due to increased marketing investments, incentive compensation and nonsalaried workforce wages.\nRelative to our 2020 restructuring plan, we recorded $17 million of charges in the third quarter.\nSo we now expect to recognize total planned charges ranging from $525 million to $575 million.\nThus far, we've realized $500 million of pre-tax restructuring and related charges.\nAs a reminder, all remaining charges are related to initiatives outlined in 2020, meaning nothing new has been added in 2021.\nWe expect to recognize any remaining charges related to this plan by the first calendar quarter of 2022.\nOur third quarter operating income was $172 million.\nExcluding restructuring and impairment charges, adjusted operating income was $189 million.\nAfter tax, we realized a net income of $113 million or $0.24 of diluted earnings per share during the quarter.\nExcluding restructuring charges, loss on extinguishment of $169 million in principal amount of senior convertible notes and the noncash amortization of debt discount on our senior convertible notes.\nOur adjusted net income was $145 million or $0.31 of adjusted diluted earnings per share.\nIn this respect, we are excited to report that the $0.71 of adjusted diluted earnings per share that we've realized year-to-date has surpassed our highest previous full year split adjusted earnings, thus solid traction and excellent progress.\nInventory was down 21% to $838 million, driven by improvements in our operating model and inbound shipping delays due to COVID-related supply chain pressures.\nOur cash and cash equivalents were $1.3 billion at the end of the quarter and we had no borrowings under our $1.1 billion revolving credit facility.\nWith respect to debt, during the third quarter, we entered into exchange agreements with certain convertible bondholders for $169 million in principal amount of our outstanding convertible notes and terminated certain related cap call transactions.\nWe utilized net $168 million in cash, issued 7.7 million shares of our Class C stock and recorded a related loss of approximately $24 million, which is captured in other income and expenses.\nFollowing this transaction and our actions in the second quarter, $81 million of convertible notes remain outstanding.\nNow moving on to the balance of the year.\nFactoring in the current supply chain challenges emanating from Southeast Asia and logistics challenges being experienced worldwide, we're staying appropriately cautious in the near term.\nHowever, it is important to note that today's revised outlook assumes no additional shutdowns of manufacturing partners or further retail sector disruptions as we close out 2021.\nNow, turning to our updated 2021 outlook.\nLet's start with revenue, which we now expect to be up approximately 25% for the full year.\nThis reflects a high 20s percentage rate increase in North America and a mid-30s increase in our international business.\nFrom a channel perspective, wholesale is expected to be up at a mid-30s rate and our DTC business up at a mid-20s rate with e-commerce up at a low single-digit rate for the full year against 2020.\nConcerning our top-line expectation for the fourth quarter, the same significant headwinds from our last call remain in play.\nIn addition to the developing COVID-related supply chain issues currently facing the sector.\nTurning to gross margin.\nOn a GAAP basis, we expect the full year rate to be up approximately 130 basis points against our 2020 adjusted gross margin of 48.6%, with benefits from pricing and changes in foreign currency being partially offset by higher expected freight expenses and the sale of MyFitnessPal, which carried a high gross margin rate.\nThe gross margin improvement relative to our previous outlook is primarily due to pricing benefits, partially offset by increased freight expenses related to supply chain challenges, which we continue to monitor.\nVersus 2020, we now expect that full year SG&A will be up 6% to 7%.\nAs laid out previously, specific to 2021, we have taken advantage of our improved results and proactively made incremental investments, particularly in marketing, to build even deeper connections with our consumers.\nWe also expect higher incentive compensation, which is up against 2020 when we had significant reductions against target levels as well as higher nonsalaried wages.\nWith that, we now expect operating income to reach approximately $425 million this year or $475 million on an adjusted basis.\nTranslated to rate, we expect to deliver an operating margin of just under 8% or an adjusted operating margin of approximately 8.5% in 2021.\nAll of this takes us to an expected diluted earnings per share of approximately $0.55 or adjusted diluted earnings per share of approximately $0.74 in 2021, with an average weighted diluted share count of approximately 468 million shares.\nAnd finally, from a balance sheet perspective, we expect to end the year with inventory relatively flat against 2020's year-end and we expect to close the year with approximately $1.5 billion in cash and cash equivalents.\nLooking forward, a reminder that we are changing our fiscal reporting year in 2022.\nMechanically, the first calendar quarter will serve as a transition period until we begin our new fiscal year 2023 and on April 1.\nThat said, there are supply chain pressures that are challenging the industry in the near term.\nAnd while we believe the impact to our P&L in 2021 are expected to be relatively minimal, we are taking precautions to navigate some of the volatility and anticipated business disruptions in the first half of 2022, including the work we began in the second quarter of 2021 to adjust orders and shipping with our factory partners and logistics suppliers, working with wholesale customers to narrow and edit our spring, summer 2022 order book and assessing various mitigation offsets for inflationary pressures, including elevated logistics costs and higher wages.\nGiven that the situation is still fluid, it is difficult to estimate the full extent of potential effects on our business at this point.\nHowever, on what we know, based on what we know today, we are forecasting material impacts to the first half of 2022.\nAnd therefore, with respect to the first calendar quarter, we expect revenue to be up at a low single-digit rate.\nConcerning a longer-term view, as of this week, nearly all factories that Under Armour does business with, including those in Vietnam are open.\nSo definitely encouraging news.\nOf course, full capacity will take some time to ramp back up and this is only one part of the equation.\nOver the next several quarters, we expect longer-than-usual transit times as backlogs and congestion find balance.\nSo this may create some variability in our results.\nThat said, the proactive strategies we're employing, greater operational agility and overall demand for the Under Armour brand give us confidence in our ability to navigate effectively through the coming environment.\nWith that, I'd like to close today's call by returning to Patrik's opening thought and the balance we are committed to striking between driving sustainable long-term growth while delivering near-term value to our shareholders.\nAll global companies operate in a constantly changing environment.\nAnd over the past few years, through our transformation and the pandemic, Under Armour has demonstrated its ability to effectively manage our business under a range of conditions.\nLastly, as we look to close out the strongest top and bottom-line performance in our history, the work we've done to rearchitect our strategy, operations and financial discipline sets us up well to leverage this balance and thus create improved value for our shareholders over the long term.\n",
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"content": "sees fy adjusted earnings per share about $0.74.\nsees fy earnings per share about $0.55.\nsees fy revenue up about 25 percent.\nq3 revenue rose 8 percent to $1.5 billion.\nqtrly gross margin increased 310 basis points to 51.0 percent.\nsees fy2021 revenue to be up about 25% versus previous expectation of a low-twenties percentage increase.\nsees fy2021 operating income to reach about $425 million versus previous range of $215 million to $225 million.\ninventory was down 21 percent to $838 million at quarter-end.\nunder armour - sees fy2021 gross margin to increase about 130 basis points.\nqtrly revenue was up 8 percent to $1.5 billion.\nq3 earnings per share $0.24.\nq3 adjusted earnings per share $0.31.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It's important to note that due to ongoing uncertainty related to COVID-19 with respect to the duration and extent of the virus' immediate and long-term impact on the global retail environment, we continue to expect the possibility of material impacts on our business results.\nAccordingly, future results could differ meaningfully from historical practices and results or current descriptions, estimates and suggestions.\nBefore we start, I'd be remiss not to point out what a fantastic past weekend this was for sport and for Under Armour.\nFrom Stephen Curry scoring 57 points, the eighth time he scored more than 50 in a game, to Chase Yarn winning the NFL Defensive Rookie of the year and Joel Embiid putting up 33 to keep the 76ers in first place to Jordan Spieth posting a career-best 10 birdies in a round, there was no shortage of UA highlights this weekend.\nOh, and of course, there's one more highlight or better yet, make that the seventh as a No.\n7 for the gold quarterback, Tom Brady, as he had led the Tampa Bay Buccaneers for their second-ever Super Bowl victory.\nWith Tom, it's quite easy to run out of ways to describe yet again another incredible accomplishment he's added to his unparalleled career.\nIn his 10 years as an Under Armour athlete, Tom has exemplified what perseverance, hard work and leadership can do in pursuit of excellence.\nNow turning back to our results.\nAs I reflect on my first year as CEO amid a global pandemic that has tested all of us, I'd start by underscoring just how incredibly proud I am of our team's resilience and their ability to execute at an incredibly high level against our long-term strategy.\nWe've made significant progress on our way to becoming a stronger brand and a better run company during the past year from managing through a three-month global retail shutdown and relaunching our North American e-commerce platform to executing a comprehensive restructuring effort and divesting the MyFitnessPal platform, our mantra, the only way is through, turned out to be even more foretelling than perhaps we had intended it to be.\nDespite an incredible amount of uncertainty in 2020, we stayed the course by harnessing the strength of our rearchitected go-to-market engine to deliver performance-based products and experiences along with targeted data-driven storytelling, Under Armour showed up stronger and more holistically as a brand than in years past.\nFrom an operations perspective, increasingly more effective supply and demand planning, along with our best-in-class distribution network, enabled us to quickly adapt to the needs of our customers and consumers with greater precision and efficiency, getting the right product to the right place at the right time.\nAs we closed out 2020, our efforts over the past couple of years to pursue a clearly defined target consumer, rebase our cost structure and fundamentally change the way we work is beginning to yield results, empowered by a clear identity of who we are, a leading athletic performance brand, our foundation is solid, our discipline tested and proven and the opportunity before us is robust.\nAs I look ahead, I'm energized by our transformation.\nI'm confident that our operating model is strengthening our ability to drive sustainable returns to our shareholders over the long term, yet we remain confronted with uncertainty due to the COVID-19 pandemic.\nAs a result, some parts of our business have fundamentally changed, including new ways of working and interacting with our consumers, customers and teammates.\nHow these changes ultimately play out over the next few years remains to be seen.\nStill, I'm confident that we are significantly better equipped to navigate through the changes, given our improved levels of agility and optionality.\nThe last year has also brought about meaningful changes in consumer behavior and related marketplace demand impacts.\nIn this respect, we remain focused on controlling what we can while staying prudent.\nThis means being patient and measured in how we manage our business and conscious about where we are within our journey while maintaining the same level of discipline that got us here.\nTo this effect, we will continue to constrain demand in 2021, a decision that, as discussed in previous calls, may impact our ability to drive top line volume in the near term.\nHowever, whether through proactive wholesale door-reduction efforts in North America or ordering slightly less product against future demand based on the brand and margin benefits that we realized in 2020, we are confident that this focus will help elevate our premium positioning with consumers and, therefore, driving better profitability.\nCarrying forward into 2021, there are four areas of focus that we laid out on our last call.\nFirst is continuing to strengthen the brand through increased engagement and consideration with the focused performer.\nSecond is continuous improvement within our operating model to drive even greater efficiency across all end-to-end processes.\nThird is elevating a D2C-focused approach to deepen and amplify our most intimate connection with Under Armour's consumers.\nAnd finally, as we get back to profitable growth in 2021, making sure our discipline stays aligned with driving shareholder value over the long term.\nStarting with brand strength and engagement.\nAbout a year ago, we launched a powerful global Under Armour voice to drive increased consideration with our target consumer, the focused performer, empowered by enhanced tools and real-time metrics as consumer behavior shifted toward e-commerce, as well as working out from home, including a large shift toward running, we too altered course.\nFrom the only way is through to through this together and other variations along the way, we refocused our efforts more surgically to drive greater returns at an exceedingly dynamic environment.\nAnd while these efforts, of course, take time to manifest into sea change, exiting a year like 2020 with increased consideration, conversion and higher selling prices in many parts of our business gives us greater confidence in our strategy and execution for the year ahead.\nSuccessful storytelling, of course, needs to partner with great products.\nIn 2020, we stuck to our playbook and leaned heavier into brand and product marketing to support successful introductions like our Project Rock collection, Meridian Pant, Infinity Bra, UA SPORTSMASK and in footwear, the HOVR Machina, Phantom 2 and the Breakthru.\nOne highlight we're especially encouraged by is the continued momentum in our women's business, specifically bras and bottoms and broad-based interest across our run category, led by our innovation-driven HOVR franchise.\nAnother highlight is the launch of the Curry brand in December.\nAs a purpose-led collaboration powered by Under Armour, we're excited to partner with Stephen to deliver performance products that, along with focused partnerships, will help fund youth sports in under-resourced communities through equitable access and safe places to play.\nAs a pinnacle expression of this effort, we launched the Curry 8 basketball shoe, the first product to feature UA Flow.\nAs the second footwear cushioning technology released under our reengineered go-to-market, Flow's proprietary nonrubber outsole has manifested into our most obedient and highest traction footwear yet.\nUp next, UA Flow is set to launch in one of our largest long-term growth opportunities: running.\nBuilding on the success and momentum of HOVR, the UA Flow running platform will help us accomplish two things.\nAs an innovation, we believe this product's performance attributes, including its unique traction, ride and energy return structure, will help drive even more significant consideration and authenticity with core runners.\nAnd second, as our most pinnacle running footwear offering, it will broaden our ability to segment and help differentiate our assortment, thereby creating opportunities for shelf space expansion within running specialty and key wholesale accounts.\nSwitching gears to our second area of focus is our operating model evolution.\nThroughout 2020, we work to rebase our cost structure to ensure we are positioned from a strategic, operational and financial perspective with an appropriate foundation and agility to scale with future growth.\nAnd within our comprehensive restructuring plan, we believe our central purpose continues to put us in a position to return to double-digit operating margin over the long term.\nIn this spirit, we've been asked many times if we've reached an optimal cost structure for Under Armour or where our general breakeven ratio lies.\nAt 2.2 billion of SG&A in 2020, our cost structure is not meant to support the 4.5 billion revenue that we realized last year, but instead, a larger top line business where we can begin to leverage some of the foundational investments necessary for our growth expectations.\nTherefore, our breakeven is somewhere around the 4.7 billion mark.\nWith our cost structure now appropriately rebased, it's important to understand a few elements of how we're thinking about SG&A expenses and investments moving forward.\nWhen considering our restructuring efforts and how they've impacted or will continue to affect our overall cost structure, it's essential to remember that most of these efforts have been related to future cost avoidance versus current cost reductions.\nThat said, we had realized underlying SG&A benefits in certain areas.\nHowever, it's not as simple as cutting cost to gain leverage.\nAs we mentioned early within our restructuring efforts, our main objective was to unburden ourselves of decisions and commitments made when we expected to be a much larger company than we are now.\nWithin those scenarios, there was also an expected level of productivity that was never realized.\nAs a business in pursuit of brand-right growth, we will continue to invest in driving that growth.\nAnd for us specifically, that means marketing, IT and elevating our international and D2C footprints.\nMore simply put, while the absolute SG&A dollars may not change much in the near term, I'd underscore that productivity and return on the investments that we are making are appropriately greater than just a few years ago.\nAnd should market factors impact our growth track in the near term, we're now also capable of flexing and managing our costs with greater discipline and optionality to maintain a more consistent profitability trajectory.\nThese factors, along with improved visibility and tighter alignment of our demand and supply planning functions, have afforded us greater flexibility with our customers and our ability to service higher-than-planned demand.\nThis is especially evident in our year-end inventory position, which was at the same level that we ended 2019.\nIn 2021, we plan to manage this even more tightly, helping us drive fuller price selling across all distribution points while keeping an eye on increasing our productivity and therefore, turns.\nMoving to our third priority, elevating a D2C-focused approach, and the pandemic has certainly magnified and accelerated digital adoption rates worldwide.\nWith e-commerce up 40% in 2020 and representing nearly half of our total D2C business for the full year, we are hyper-focused on better understanding the consumer journey and building greater personalization capabilities to unlock even deeper connections with athletes.\nIn our retail stores, we are working to evolve concepts to drive more profitable formats, particularly for our full-price brand house locations.\nOur factory house business is about driving greater productivity in store, reducing our promotional levels and leveraging the fleet to clear through excess product.\nWhile this foundational work continues to help us in our journey to be a best-in-class retailer, with the acceleration of e-commerce and tightening of wholesale, this truly becomes an omnichannel conversation.\nWhether it's drop ship, endless aisle or RFID, we believe executing a powerful omnichannel strategy will enable us to create a more seamless and connected shopping experience across all consumer touch points.\nAnd finally, being in a position, both strategically and operationally, to pursue this channel-agnostic approach is something that we believe will serve as a key unlock to strengthening our brand ecosystem wherever and whenever consumers choose to engage Under Armour.\nBringing all these strategies together leads us to our last priority, maintaining our discipline around profitability to drive sustainable shareholder value over the long term.\nFrom operating model refinements, our innovation pipeline and brand-elevating strategies to our tighter inventory management and a rebased cost structure, it's well understood across the enterprise what we must do as we work to deliver greater leverage and sustainable profitable growth over the long term.\nSo to wrap up, I am proud of what Under Armour has accomplished in the last year, particularly our ability to efficiently navigate an incredible amount of marketplace variability while continuing to advance our transformation.\nBuilding on this demonstrated proficiency, as we move into 2021 amid uncertainty that has carried over from last year, I am confident about our ability to meet near-term challenges, accomplish our goals, and balance them with our long-term objectives.\nAnd with that, I'll hand it over to Dave.\nIn the fourth quarter and for the full year, we delivered stronger-than-expected results, a performance to be proud of, especially during a global business environment that faced significant macro and micro challenges.\nOver the past few years, the work we've accomplished created the space and optionality necessary to work through these challenging conditions.\nFrom industry-leading product innovations to connecting consumers through fantastic brand stories and improved shopping experiences to deliver decisions to ensure liquidity, along with executing the divestiture of MyFitnessPal, I'm pleased with the way we closed out 2020.\nWith that said, let's dive into our fourth-quarter results starting with revenue, which was down 3% to 1.4 billion compared to the prior year.\nThis was better than we had expected due to higher-than-anticipated demand across our wholesale and DTC businesses.\nFrom a channel perspective, our wholesale revenue was down 12%.\nKeep in mind, about 130 million in orders shifted out of the fourth quarter into the first quarter of 2021 due to timing impacts from COVID-19 related to customer order flow and changes in supply chain timing that we discussed on our last call.\nRelative to our plan, we experienced stronger sell-through and higher demand from our customers.\nOur direct-to-consumer business increased 11% driven by 25% growth in our e-commerce business.\nRelative to our plan, we experienced better-than-expected traffic trends in our retail business.\nOur licensing business was down 12% driven primarily by lapping one-time settlements in the prior year with two of our North American partners and lower minimum royalty payments.\nThis result was better than expected driven primarily by our Japanese partner.\nBy product type, apparel revenue was down 4% driven by declines in our train and team sports categories.\nFootwear was down 7% mainly driven by declines in our team sports category.\nAnd finally, our accessories business was up 32%, with all of the growth being driven by SPORTSMASK.\nFrom a regional and segment perspective, fourth-quarter revenue in North America was down 6%, negatively impacted by the COVID-19 timing impacts, I previously mentioned, as well as reduced off-price sales.\nThese headwinds were partially offset by strength in e-commerce within our DTC business in the quarter.\nIn EMEA, revenue was down 11%, also negatively impacted by COVID-19 timing impacts, partially offset by solid growth within our DTC business, primarily due to e-commerce.\nRevenue in Asia Pacific was up 26% driven by growth across all channels, partially offset by timing impacts from COVID-19.\nIn Latin America, revenue was up 2% driven by DTC growth, which included strength in our e-commerce business, partially offset by impacts from COVID-19.\nAnd finally, our Connected Fitness business was down 5% due to the sale of the MyFitnessPal platform in the quarter, which was completed in mid-December.\nIt is important to note that following this sale, we will no longer be reporting the Connected Fitness segment.\nStarting with the first quarter of 2021, the remaining MapMy business will be consolidated within our Corporate Other segment.\nFourth-quarter gross margin increased 210 basis points to 49.4%, including a 12 million impact related to restructuring efforts.\nExcluding restructuring charges, adjusted gross margin increased 300 basis points to 50.3% driven by approximately 150 basis points of positive channel mix benefiting from lower year-over-year distributor and off-price sales, which carry a lower gross margin and a heavier mix toward DTC, which included strong e-commerce growth.\nAdditional year-over-year increases included 90 basis points of supply chain benefits primarily driven by product costing improvements and 30 basis points of positive regional mix driven by APAC growth in the quarter.\nRelative to our previous expectations for gross margin in the fourth quarter, our results were significantly better than expected as we experienced higher-than-anticipated demand, which allowed us to sell in and sell through with considerably less discounting and markdowns than we had initially anticipated.\nSG&A expense decreased 4% to $586 million due to our restructuring efforts and tighter spend management.\nIn the fourth quarter, we recorded 52 million of restructuring charges and certain impairments related to long-lived assets.\nAs a reminder, we expect to incur total estimated pre-tax restructuring and related charges under this plan in the range of 550 to 600 million.\nFor the full year, we realized 473 million in restructuring and related impairment charges and 141 million from impairments of long-lived assets and goodwill.\nWe expect to complete our restructuring charges within the first half of 2021 with most of the remaining charges coming in the first quarter.\nOur fourth-quarter operating income was 56 million.\nExcluding restructuring and impairment charges, adjusted operating income was 120 million.\nAfter tax, we realized net income of 184 million or $0.40 of diluted earnings per share during the quarter.\nExcluding restructuring charges, as well as the noncash amortization of debt discount on our senior convertible notes and the gain in deal-related costs associated with the sale of MyFitnessPal, our adjusted net income was 55 million or $0.12 of adjusted diluted earnings per share for the quarter.\nFrom a balance sheet perspective, I am pleased to report we ended the fourth quarter with 1.5 billion in cash and cash equivalents, inclusive of 199 million related to the sale of MyFitnessPal.\nWe also had no borrowings outstanding under our 1.1 billion revolver.\nAnd finally, inventory for the fourth quarter was 896 million, relatively unchanged compared to the prior year.\nConcerning our 2021 outlook, while recent consumer trends have been more positive than we anticipated, we remain cautious in planning our business given the continued uncertainties with respect to demand and the overall marketplace due to the COVID-19 pandemic.\nTherefore, the outlook we are providing today is predicated on our business continuing in the near term with the same general macros that we've seen most recently followed by moderate improvements within the greater retail landscape as the year progresses, meaning we're assuming no major retail or other business shutdowns or other new significant adverse economic impacts due to COVID-19.\nThat said, I will provide some high-level color on how we are thinking about our business for 2021.\nRelative to revenue, we expect a high single-digit rate increase for the full year compared to 2020, reflecting a high single-digit increase in North America and a high-teens growth rate in our international business.\nLooking at 2021, some of the things included within our outlook that we anticipate will serve as revenue headwinds include the following.\nFirst would be the absence of MyFitnessPal.\nSecond, to Patrick's earlier point about maintaining our current supply and demand planning and inventory management discipline, we plan to constrain orders against expected demand.\nThird, as previously discussed, we will begin to exit certain undifferentiated wholesale distribution, primarily in North America, starting in the back half of 2021 with a plan to close about 2,000 to 3,000 wholesale partner doors, thereby expecting to win closer to 10,000 doors by the end of 2022.\nAnd finally, we're making several changes to our operating model in Latin America, including shifting certain countries to strategic distributorship models, which will negatively impact revenue but should help improve operating margins.\nFrom a channel perspective, within wholesale, it's important to keep in mind that we are just now finalizing our third-quarter bookings and have only recently started to take orders for the fourth quarter.\nTherefore, we have limited visibility into the back half of the year.\nAnd as Patrik mentioned, we will look to manage our inventory tightly, and in some instances, constrain demand continue to return to more premium revenue growth.\nAll of this means we are taking a prudent approach to forecasting and managing our business this year.\nFrom a DTC perspective, we expect retail to outpace e-commerce's growth as our digital business is up against strong comps from 2020.\nFor gross margin on a GAAP basis, we expect the full-year rate to be up slightly against our 2020 adjusted gross margin of 48.6%, with benefits from pricing and supply chain efficiency being largely offset by the sale of MyFitnessPal, which was a high gross margin business.\nFrom an SG&A perspective, as Patrik detailed, we believe we have appropriately rebased our cost structure.\nAnd we believe the improved discipline and processes we currently have in place have instilled a more return-based approach to our investments that should drive greater prioritization into the areas that deliver the highest return and support our long-term growth opportunities.\nHowever, critical areas like DTC, international and marketing will require us to continue investments to support our growth expectations.\nTherefore, we are planning on slight SG&A growth for the year.\nWith all of that considered, we expect reported operating income to reach approximately 5 to 25 million and adjusted operating income to be approximately 130 to 150 million, which will take us to a reported diluted loss per share of about $0.18 to $0.20 or adjusted diluted earnings per share in the range of $0.12 to $0.14.\nNow to provide a little bit more color on the first quarter of 2021.\nWe are currently planning for first-quarter revenue to be up approximately 20%.\nThis expectation includes about 130 million of orders that shifted out of the fourth quarter of 2020 into the first quarter of 2021 due to timing impacts from COVID-19 related to customer order flow and changes in supply chain timing that we discussed earlier.\nNext, we expect gross margin to be up about 180 to 200 basis points compared to the prior year driven primarily by pricing benefits related to lower promotions, primarily in DTC compared to the prior year, and continued supply chain benefits related to product costing improvements.\nWe expect these benefits will be partially offset by the absence of MyFitnessPal.\nBringing this to the bottom line, we expect a first quarter operating loss of approximately 55 to 70 million.\nExcluding planned restructuring impacts, we expect adjusted operating income to be approximately 30 to 35 million.\nExcluding restructuring, we expect about $0.03 of adjusted diluted earnings per share.\nThis will become effective on April 1st, 2022.\nBased on our revenue being more heavily weighted in the second half of the calendar year, we believe this change, namely putting those two quarters in the middle of our new fiscal year, will provide us with greater visibility and subsequent forecast accuracy as it relates to strategic business decisions and providing our initial annual outlook.\nMechanically, nothing changes this year for fiscal 2021.\nNext year, in 2022, we will have a three-month or one quarter transition period that runs January 1st through March 31st, which we'd expect to report in May like our current first-quarter cadence.\nFollowing that transition period, our fiscal 2023 will begin April 1st, 2022, and run through March 31st, 2023.\nAccordingly, there will be no full-year fiscal 2022 reporting.\nIn closing, we have made great progress against our transformational journey, which afforded us increased agility and flexibility to navigate through what was undoubtedly an unprecedented year.\nWe've reengineered our go-to-market, optimized our product and innovation engines and focused on our well-defined target consumer.\nAdditionally, the continued actions we took this year to protect and strengthen our balance sheet, drove significant improvements in our ability to generate cash and protect liquidity.\nMoving forward, our approach remains appropriately cautious, given the high level of uncertainty related to COVID-19.\nThat said, we will maintain our disciplined approach in executing our strategies and continue to put Under Armour in the best position possible to achieve sustainable, profitable growth over the long term.\n",
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"content": "compname posts q4 earnings per share $0.40.\nq4 revenue $1.4 billion versus refinitiv ibes estimate of $1.26 billion.\nq4 adjusted earnings per share $0.12.\nq4 earnings per share $0.40.\nqtrly wholesale revenue decreased 12 percent to $662 million and direct-to-consumer revenue increased 11 percent to $655 million.\nqtrly gross margin increased 210 basis points to 49.4 percent compared to prior year.\nquarter-end inventory was relatively flat at $896 million.\nsees 2021 diluted loss per share is expected to be about $0.18 to $0.20.2021 revenue is expected to be up at a high-single-digit percentage rate.\nsees 2021 adjusted diluted earnings per share in range of $0.12 to $0.14.\nexperienced significant ecommerce growth around world during q4 and full-year 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It is important to note that the ongoing uncertainty related to COVID-19 and its potential effects on the global retail environment could continue to impact our business results going forward.\nYou may also hear us refer to amounts under U.S. GAAP.\nAt the beginning of last year, we were confronted with significant uncertainty about our business due to impacts from the COVID-19 pandemic.\nWith dynamic changes in purchase behavior and marketplace demand, we faced several obstacles as we worked through what we believe to be a recovery year following a difficult 2020.\nAt that point, it would have been easy to stay conservative and adopt a wait-and-see strategy, yet the tremendous progress we made following our multiyear transformation, including healthier demand for the Under Armour brand, and the passion that this team shows up with every day meant going on offense was the only path for 2021.\nAnd because we stayed on offense, Under Armour delivered a record year of financial results, a year that exemplifies the power of our long-term strategic plan and our ability to stay hyperfocused on execution while leveraging our core strengths to position us more strongly for our next chapter of growth.\nThroughout 2021, we worked methodically to expand our brand's awareness and engagement, ensuring we showed up more consistently, louder and with a sharper point of view about the distinct role we play in an athlete's journey to compete.\nWe underscored our commitment to performance by delivering some of the most innovative products that we've ever produced.\nWe forged deeper and more productive relationships with our key wholesale partners.\nWe saw significant progress in our largest long-term growth drivers, our international, direct-to-consumer, women's and footwear businesses.\nAnd we're stronger financially than we've ever been.\nIn this respect, looking at some of our highlights.\nWhile our year-over-year comparisons benefited from the significant COVID-19 impacts we experienced in 2020, we are equally pleased with our performance over the past two years.\nFor the full year 2021, revenue was up 27% to reach $5.7 billion, which is a record.\nVersus 2019, revenue is up 8%.\nSo solid progress from before the pandemic, and the result driven by several strategies that have lifted the quality and composition of our sales compared to a few years ago.\nWholesale revenue increased 36% to $3.2 billion in 2021.\nOn a two-year basis, wholesale is up 3%.\nAs detailed in previous calls, this performance has been tempered by the strategic decisions we've made to improve brand health by reducing our sales to the off-price channel and exiting approximately 2,500 undifferentiated retail doors in North America, an effort which is now concluded.\nOur direct-to-consumer business was up 26% to $2.3 billion in 2021.\nVersus 2019, direct-to-consumer is up 29%, with strong momentum in our owned and operated stores and our e-commerce business.\nFollowing a 40% increase in 2020, our e-commerce business was up 4% in 2021, equating to 45% growth on a two-year stack.\nThis result gives us confidence that this business is well-positioned following a prolonged period of elevated promotional activities.\n2021 gross margin was up 210 basis points to a record 50.3%.\nVersus 2019, gross margin is up 340 basis points, so excellent progress over two years, driven by benefits from pricing and a more favorable channel mix being offset by supply chain headwinds related to COVID-19 and the absence of MyFitnessPal, which we sold at the end of 2020.\nRounding out the P&L.\nOur full year operating income reached $486 million, net income was $360 million, and our diluted earnings per share was $0.77, all three of which are records.\nWe also realized strong balance sheet and cash flow performances with inventory down 9% to an absolute dollar value that is only slightly higher than in 2015 when we were a $4 billion business.\nAnd finally, one more record having ended the year with $1.7 billion in cash.\nAll in, what an incredible period for Under Armour.\nHaving operated for nearly two years amid a global pandemic, I am proud of the progress we've made, the resilience we've shown and the potential we have to do even better in the future.\nBy staying focused on our key strategies, we are competing and executing at progressively higher levels, helping us unlock value and returns for our shareholders.\nDriving us forward at the heart of why we exist is our purpose.\nWe empower those who strive for more.\nFor Under Armour, everything is about the journey.\nFrom an awful workout when you want to quit but don't, to pushing through that last rep and adding one more, to earning that PR because you put in the work, Under Armour makes you better.\nWe do this by delivering innovative products, experiences and styles influenced by athlete insight and real-world data.\nInnovations wrapped in our engineering to empower the journey to sport through training, competition and recovery, 2021 was an exceptional year for Under Armour products.\nThere are too many to list, but a few standouts on the apparel side include RUSH, Iso-Chill, Rival Fleece, Crossback, Infinity, Unstoppable and Meridian, all names that delivered a 33% increase in revenue we achieved.\nOn the footwear side, franchises like HOVR Sonic, Machina and Infinite; UA Flow Velociti Wind; Charged Pursuit, Assert, Aurora; Curry; and Project Rock contributed nicely to 35% growth, validating one of our largest long-term growth opportunities.\n2021 was also an exceptional year in Under Armour's progress to connect our brand even more deeply with consumers.\nFrom the optionality we created in our P&L, we were able to make incremental marketing investments, which we expect to fuel even stronger brand momentum in the years ahead.\nAt the center of these efforts, product, experience and inspiration fits The Only Way is Through.\nMore than a mantra, it's become an ethos, synonymous with the hard work necessary to power the journey, and it's always a journey.\nFrom an initial product drawing to shopping bag to the closet, we obsess athletes and those who strive for more.\nHowever, being purpose-led means that it's about more than just shirts and shoes.\nAnd sport is so much more than just a game.\nIt teaches us to push past our limits, to be collaborators, to be leaders.\nIt increases confidence, reduces stress and improves mental health.\nYet many young athletes face barriers that prevent them from starting their journey to sport.\nWith a lack of fields and courts, gaps in coaching, shrinking leagues and the shortage of gear to play, train and compete with, we recognize that not everyone has access to sport.\nAddressing this opportunity, a few weeks ago, we announced the long-term commitment of our resources, focus and energy to break down these barriers.\nAs we lay the foundation for our Access to Sport initiative, we are excited to share more in the years ahead as we build opportunities for millions of youth to engage in sport by 2030, ensuring that the next generations of focused performers are inspired even more holistically than those before them.\nNow back to our business.\nAnd the last two years have proven to be one of the most dynamic yet opportunistic times in Under Armour's history.\nManaging the marketplace prudently through our constant focus on operational excellence to ensure we're keeping the brand healthy and moving forward, we are delighted with our results.\nThat said, let's look at how our regions performed in 2021, starting with North America, where revenue was up 29% to $3.8 billion or up 4% since 2019.\nIn our largest market, we continue to focus on three fundamentals.\nFirst is becoming a better retailer by creating more compelling in-store experiences and delivering best-in-class service across our fleet.\nAdditionally, this means continuing to build on the momentum we've seen in our e-commerce business.\nRealizing we'd likely see traffic declines compared to the abnormality that was 2020, we stayed focused on quality by investing in high-return vehicles like targeted PLAs and improved product wayfinding to improve our online shopping experience, and it's working.\nIn 2021, while we did experience a year-over-year traffic decline, it was more than offset by meaningful increase in conversion and therefore, solid revenue growth.\nSecond, with the critical mass of undifferentiated wholesale door exits behind us, we are encouraged by the productivity KPIs we're seeing across this channel in North America.\nA more premium position driven by outstanding inventory management and promotional discipline is translating nicely to additional shelf space opportunities with our largest strategic partners, higher AURs and significantly better turns.\nAnd that last point turns, which is really about execution, is a core element that gives me confidence that we're in an excellent position to adapt to however the environment may develop over the short term.\nThird, we are continuing to drive performance by investing more smartly in marketing, which shows up in improved brand affinity scores around awareness, consideration and conversion.\nGaining better productivity from how and where we spend has always been the goal.\nBy delivering higher quality traffic through strategic paid media and targeted email activations, our ability to connect more meaningfully across key moments and multiple platforms has never been greater.\nTurning to our international business.\nRevenue in EMEA was up 41%, driven by nearly 50% growth in our wholesale business and continued momentum in direct-to-consumer.\nWe are encouraged by the quality of business results delivered in 2021.\nOur efforts to position Under Armour as premium performance, healthier wholesale relationships and improved retail capabilities continue to validate the power of our playbook.\nOur two-year performance is strong as well, with revenue in EMEA up 36% versus 2019.\nNext up is Asia Pacific, where revenue was up 32% in 2021, driven by nearly 50% growth in our wholesale business and a strong increase in direct-to-consumer sales.\nClearly, the story here is about a more challenging environment that has developed in China as of late as evidenced by a 6% decline in our fourth quarter APAC revenue.\nThe recent market trends in China are impacting our business.\nHowever, our focus in China remains the same: staying premium; continuing to invest in digital innovation, including working to deliver much improved end-to-end consumer engagement platform; and ensuring that store expansions are done at an appropriate pace in the dynamic market conditions.\nVersus 2019, revenue in Asia Pacific was up 31%, so strong growth on a two-year basis.\nAnd finally, revenue in our Latin America region in 2021 was up 18%, driven by strength in our full-price wholesale and distributor businesses.\nAs a reminder, we have transitioned certain countries in this region to a strategic distributor model, a decision we believe will begin to optimize this region's ability to grow and contribute more profitably in the years to come.\nVersus 2019, revenue in Latin America is about flat on a two-year basis.\nSo in closing, we remain both confident and cautious in this operating environment.\nAnd while current macro factors are having material impact on our business, we have no intentions of sitting idle.\nInnovation, consumer connectivity and inspiring those to strive for more are not tactics at Under Armour.\nThey are a way of life.\nMoving forward, we believe that the things we can control will continue to serve us as strengths, just as they did in fiscal 2021.\nRegardless of the short-term environment, we are running a stronger, better company, one that is increasingly more capable of delivering sustainable, profitable growth and value creation for our shareholders over the long term.\nI am pleased with where Under Armour is sitting, incredibly proud of this team.\nAnd in my nearly five years here, I have never been more excited about our future.\nAnd with that, I'll hand it over to Dave.\nSince the beginning of COVID-19 pandemic, our intent has been to deliver appropriate financial performance while protecting the Under Armour brand and positioning ourselves for sustainable, profitable growth over the long term.\nLeveraging the strength of a data-driven, consumer-centric strategy and a constant focus on operational excellence, we believe we can emerge from this unprecedented time as a stronger, more profitable company.\nDespite the high level of uncertainty, we committed to staying agile to minimize downside risk while executing against our playbook to help us capitalize on upside opportunities as they arose.\nIn 2021, we did just this.\nThat isn't to say that uncertainty is over.\nWe remain vigilant about the dynamic environment we are operating in, including ongoing supply chain headwinds, rising wages and inflationary input cost pressures that continue to permeate the marketplace.\nYet we remain confident in our ability to deliver against our plan by staying focused on our business strategies and remaining nimble as we implement them.\nOur fourth quarter results reinforce that confidence.\nCompared to the prior year, revenue was up 9% to $1.5 billion.\nAs a reminder, we expected several headwinds in the quarter, including lower sales of SPORTSMASKs, lower sales to the off-price channel, the absence of MyFitnessPal and proactive supply constraints, among others.\nVersus our previous expectation, our revenue overdrive was primarily due to higher demand across our full-price wholesale and direct-to-consumer businesses, particularly in North America, coupled with better-than-expected supply chain execution during this challenging environment.\nFrom a channel perspective, fourth quarter wholesale revenue was up 16%, driven by strong performance in our full-price business, partially offset by lower year-over-year sales to the off-price channel.\nOur direct-to-consumer business increased 10%, led by 14% growth in our owned and operated retail stores and 4% growth in our e-commerce business.\nIn addition, our e-commerce business is up more than 30% on a two-year basis.\nAnd licensing revenue was down 33%, driven primarily by the recognition timing of minimum royalty payments.\nBy product type, apparel revenue was up 18%, with strength in our training and outdoor businesses.\nFootwear was up 17%, driven primarily by our running and training categories.\nAnd our accessories business was down 27% due to planned lower sales of our SPORTSMASKs compared to last year's fourth quarter.\nFrom a regional and segment perspective, fourth quarter revenue in North America was up 15% to $1.1 billion, driven by premium growth in our full-price wholesale and direct-to-consumer businesses.\nSo excellent barometers to improving brand strength and consumer demand in our largest region.\nCompared to 2019, North American revenue was up 8% in the fourth quarter, driven by higher quality revenue than two years ago.\nIn our international business, EMEA revenue was up 24%, driven primarily by strength in our wholesale business.\nCompared to the fourth quarter of 2019, revenue in EMEA was up 11%.\nNext up is APAC, where the business was down 6% in the quarter, driven by softer demand in our wholesale business, which more than offset DTC growth.\nCompared to 2019, total APAC revenue was up 19%.\nAnd finally, in line with expectations, Latin America revenue was down 22% due to the change in our business model as we moved certain countries to distributors, an effort which is now completed.\nVersus the fourth quarter of 2019, Latin America was down 20%.\nRelated to gross margin, our fourth quarter improved 130 basis points to 50.7%.\nThis expansion was driven by 350 basis points of pricing improvements due primarily to lower promotional activity within our DTC business, favorable pricing related to sales to the off-price channel and lower promotions and markdowns across our wholesale business.\nAnd 90 basis points of benefit related to lower restructuring charges.\nThese improvements were partially offset by 190 basis points of COVID-related supply chain impacts, driven by higher freight costs, which meaningfully offset product cost benefits during the quarter; 80 basis points related to the absence of MyFitnessPal; and 50 basis points of unfavorable product mix, related primarily to lower SPORTSMASK sales, which carry a higher gross margin.\nVersus our previous expectation, our fourth quarter gross margin overdelivery was primarily due to favorable pricing developments from lower-than-planned promotional activity within our DTC business, more favorable pricing related to sales to the off-price channel and lower-than-planned promotions and markdowns within our wholesale business.\nSG&A expenses were up 15% to $676 million, primarily due to increased marketing investments, incentive compensation and nonsalaried workforce wages.\nRelated to our 2020 restructuring plan, we recorded $14 million of charges in the fourth quarter.\nSo we now expect to recognize total planned charges ranging from $525 million to $550 million.\nThus far, we've realized $514 million of pre-tax restructuring and related charges.\nWe expect to recognize any remaining charges related to this plan by the end of the first quarter of our fiscal year 2023.\nMoving on, our fourth quarter operating income was $86 million.\nExcluding restructuring and impairment charges, adjusted operating income was $100 million.\nAfter tax, we realized a net income of $110 million or $0.23 of diluted earnings per share during the quarter.\nExcluding restructuring charges, income related to our first year of the MyFitnessPal divestiture earnout and the noncash amortization of debt discount on our senior convertible notes, our adjusted net income was $67 million or $0.14 of adjusted diluted earnings per share.\nFrom a balance sheet perspective, inventory was down 9% to $811 million, driven by continued improvements in our operating model and inbound shipping delays due to COVID-related supply chain pressures.\nOur cash and cash equivalents were $1.7 billion at the end of the quarter, and we had no borrowings under our $1.1 billion revolving credit facility.\nFinally, following last year's convertible bond exchanges, we are proud to share that our cash position less debt of $663 million nearly doubled to $1 billion by the end of the fourth quarter.\nLooking forward, one last reminder about our fiscal reporting year change.\nMechanically, the current period we're in right now, January 1 through March 31, 2022, will serve as a transition period until we begin our new fiscal year 2023 on April 1.\nTo revisit what we detailed last year, we believe this change, namely putting our two largest quarters in the middle of our new fiscal year, will provide us with greater visibility when providing our initial annual outlook.\nIn this respect, by the time of our next call, which is expected in early May, we'll have booked orders in hand for the majority of our fall/winter wholesale business.\nThat said, let's turn to our outlook for the current transition quarter.\nFrom a revenue perspective, we now expect our transition period to be up at a mid-single-digit rate compared to the previous expectation of a low single-digit rate increase.\nThis includes approximately 10 points of revenue headwinds related to reductions in our spring/summer 2022 wholesale order book from supply constraints associated with ongoing COVID-19 pandemic impacts.\nMoving forward, we expect many of these headwinds to continue well into fiscal 2023 until longer-than-usual transit times, backlogs and congestion find balance, associated freight and logistics costs normalize and inbound shipping delays subside.\nAt this time, we do expect these uncertainties to cause material impacts and variability in our future results.\nAnd accordingly, we will remain cautious and agile as we operate our business into fiscal 2023.\nThat said, the proactive strategies we're employing, greater operational agility and overall demand for the Under Armour brand give us confidence in our ability to navigate this dynamic and challenging business environment effectively.\nAnd we believe these COVID-related supply chain pressures are just a temporary speed bump on our road to continued profitable growth over the long term.\nTurning to gross margin.\nWe expect our transition quarter rate to be down approximately 200 basis points against our Q1 2021 adjusted gross margin, which includes approximately 240 basis points of negative impact from higher freight expenses related to ongoing COVID-19 supply chain challenges in addition to an unfavorable sales mix, partially offset by pricing benefits.\nWith that, we expect operating income to reach approximately $30 million to $35 million and diluted earnings per share to be approximately $0.02 to $0.03.\nIn closing, we're proud of the record results we achieved in 2021 and the consistent progress we've made over the past couple of years.\nThis gives us great confidence in our brand and business and our team's ability to navigate this dynamic environment.\nAs we work through our transition quarter and head into fiscal 2023, we're monitoring and tracking the dynamic supply chain and inflationary pressures.\nAnd we'll be mindful of the uncertainty and volatility that comes along with it.\nThese conditions demand that we maintain a high degree of agility, and I am confident we will.\n",
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"content": "q4 adjusted earnings per share $0.14.\nq4 earnings per share $0.23.\nqtrly revenue was up 9 percent to $1.5 billion (up 8 percent currency neutral) compared to prior year.\nqtrly inventory was down 9 percent to $811 million.\nunder armour - qtrly gross margin rose 130 basis points to 50.7% versus prior year, driven by benefits from pricing and restructuring charges in prior year.\nsees gross margin is expected to be down 200 basis points compared to prior year period's adjusted gross margin in q1.\nnow expects to recognize $525 million to $550 million in charges related to 2020 restructuring plan.\ncurrently expects to recognize any remaining charges related to plan by end of q1 of its fiscal year 2023.\nsees q1 revenue to increase at a mid-single-digit rate versus previous expectation of a low single-digit rate increase.\nrelated to restructuring plan, recognized $514 million of pre-tax charges to date, including $14 million in q4 of 2021.\nq1 diluted earnings per share are expected to be $0.02 to $0.03.\ncurrently expects material impacts for its spring-summer 2022 season.\ncould be further material impacts on under armour's results in future periods due to covid-19, supply chain constraints, others.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And I want to get the call started with a few comments about our overall performance for Unifi's third quarter.\nSo all in all, we had a solid quarter three, stronger than we anticipated, and we continued to see a steady recovery from the pandemic.\nOur Brazil and Asia business had very strong sales and gross profit performance.\nThat's whether you look at it versus Q3 of last year or versus the previous quarter.\nNorth American sales saw a year-over-year growth in March, so we now have all three regions showing solid growth trajectory.\nOur EBITDA performance was very positive in Q3.\nOur balance sheet continues to be strong as does net debt, and our overall financial performance really puts us in a position so that we can invest in growth as we move into the future.\nIf you look at Q4, while there's still some uncertainty in the Brazil market and even the U.S. market with regards to COVID.\nEven with that, we see a path to sequentially improving our sales for Q4 and finishing the fiscal year in a way that sets us up for a strong 2022.\nI'd like to tell you about one positive trend that's growing in the market that's worth noting.\nThere's a very definite momentum for sustainable products from consumers and also from our customers.\nThis bodes well for REPREVE's future, and we can hear this in the discussions that we have with our customers and in their future plans for not only apparel but also home furnishings, footwear and also automotive.\nMany customers are increasing their commitments to making products using recycled material, and they're actually taking action on those commitments.\nThis quarter 3, we've seen the REPREVE hang tags with our co-branding partners increase by 80%.\nNow that number year-to-date is 50% so that we can see the trends continuing to strengthen.\nFor the fiscal year, we expect to end the year at 90 million hang tags on products across the marketplace, so the awareness of our brand is climbing in a very positive way.\nThe management team at Unifi is now seeing the benefit of being in place and working together for multiple quarters after what I'd consider to be a fairly instable management situation over previous years.\nThis is now starting to pay dividends and has become a clear driver of our improved performance.\nI got to say that I'm very proud of the team, and I'm grateful for their resiliency over these last 12 months.\nAs Al mentioned, our third quarter fiscal 2021 results surpassed our initial expectations and are a testament to our strong global presence and the resilience of both our employees and our business model.\nTheir compliance to the safety measures we put in place over a year ago has allowed us to maintain low COVID case numbers, while continuing to operate our business effectively and navigate a recovery.\nOn slide three, we have provided an overview of the quarter.\nThe business demonstrated another quarter of significant strength, and I'm very happy to report we exceeded pre-pandemic revenue levels.\nQ3 revenues were up 10% sequentially and 5% on a year-over-year basis, with solid performance across all segments and geographies.\nWe generated a 530 basis point improvement in gross margin year-over-year due to the strong results we saw in our Brazil and Asia segments.\nBrazil had the strongest segment performance during the third quarter, and momentum in that region continued well past Q2 as improved selling prices and product availability during Brazil's economic recovery led to strong margin performance.\nOur Asia segment's also demonstrated strength during Q3 as volumes continued to trend up year-over-year, experiencing a meaningful return to growth.\nOur team in Asia has continued to successfully manage cost and improve product mix, allowing for gross margin expansion.\nIn regards to the U.S. raw material costs and supply chain, the March 2021 quarter was the most volatile period we've seen in quite a few years.\nMany people and businesses in Texas experienced harsh weather conditions in February, but we were fortunate that our supply chain remained operational, albeit with surcharges on selected input materials and freight.\nCombination with rising petrochemical prices, our raw material costs exhibited a meaningful step-up during the March 2021 quarter.\nWith those higher costs now in our business, we have been working closely with our customers to ensure that the appropriate selling price adjustments are implemented.\nWe do expect some margin pressure to occur into Q4 from the inherent lag that occurs during such a process.\nHowever, we do remain confident in our underlying business momentum and our responsiveness in addressing these cost headwinds.\nStepping back to the consolidated business, again, our financial position remains strong and easily supported the two bolt-on acquisitions we completed in the fiscal 2021.\nIn addition, I am proud of the progress we've made with improving our balance sheet across the globe.\nSwitching to REPREVE-branded Fiber.\nI am pleased to report that momentum remains, comprising 33% of net sales in this Q3 -- in Q3 versus 29% for the year ago quarter.\nAnd as you can see on slide four, the trend remains strong.\nSequentially, REPREVE Fiber was lower than our record Q2 performance, and this is not a concern due to the typical seasonality of the Chinese New Year and the outperformance by Brazil's predominantly virgin platform.\nWe have several exciting brand highlights to touch on today, starting with our traditional co-branding partnerships which have continued to accelerate.\nRealtree launched their new fishing shirts at Walmart, which contained REPREVE and carry the iconic REPREVE green bottle hang tag.\nIn addition, EleVen, a brand by Venus Williams, launched a women's tennis coat collection that co-brands with REPREVE.\nThese launches represent an extension of REPREVE into broader sporting goods categories.\nIn the home goods category, we continue to win new business and launched several programs this quarter.\nOur customer, Marina's carpets, a Turkish producer and retailer of carpeting, launched a line of carpeting made from REPREVE.\nAnd additionally in the U.S., Rollease Acmeda launched Ambient Renew, a new line of eco-friendly window coverings using REPREVE in the place of PVC.\nFrom a marketing and media perspective, we had a remarkable few months working with various partners to promote REPREVE's sustainability benefits for them and, of course, for society.\nFor example, you may have caught the television ads that feature REPREVE during the Phoenix Open Golf tournament, created by the newly rebranded WM, formerly known as Waste Management.\nWM is a major supplier of bailed recycled plastic bottles used in our U.S. bottle washing facility and announced in February that they will be outfitting their staff with uniforms made from REPREVE via our customers, Aramark and Cintas.\nIn addition to being our customer, WM is working on additional rebounding campaigns, which will continue to feature REPREVE and Unifi as a strategic sustainable partner who enables recycling.\nWM will continue to air 30-second commercials on national television that feature how Unifi's U.S.-based manufacturing transforms recycled plastics.\nIt also mentioned that through our partnership with L2 Brands and Pepsi's sponsorship of the Super Bowl halftime show, t-shirts made with REPREVE were provided a surprise for Pepsi's social media followers.\nIn March, our sponsorship of the Pac-12 Team Green resulted in additional television advertising on the Pac-12 network and ESPN, with circular economy stories that explain how we take bottles from many university campuses and transform them into well-known branded apparel that can be purchased from their university bookstores.\nWe believe that telling these stories will enhance REPREVE equity and brand awareness in the broader consumer market.\nOur momentum continues to build and partnerships such as these have propelled REPREVE's growth.\nThis quarter, we hit a milestone of 25 billion bottles recycled into REPREVE.\nThis growth led us to congratulate our valued customers who drove us to this point, with the announcement of our fourth annual Champions of Sustainability Awards in March.\nThese awards celebrate bottle cap milestones achieved by our customers as well as newcomers and partners and innovation.\nNow turning to our operating segment performance during the third quarter.\nI will provide some high-level commentary on each segment before Craig takes you through more specific details.\nPolyester came a little lower on a year-over-year basis, and the shortfall can be attributed to last year's ramp-up in demand as antidumping volumes drove strong utilization and sales trends just prior to the impact of COVID-19.\nThat said, over the last nine months, the Polyester segment has shown strength, achieving a gross margin of 10% during the pandemic versus 8.2% in the prior pre-pandemic comparable period.\nThe Asia segment delivered another strong quarter as business conditions continued to improve and net sales surpassed pre-pandemic levels.\nVolumes in Asia were up significantly and benefited from pull-through on new and existing customer programs.\nWith Brazil, as Al noted, had another record-setting quarter and beat our own internal forecast.\nSimilar to the outperformance we experienced in the region during the first and second quarter, our unique market position has continued to allow us to take market share that was previously held by competitive importers.\nOur team in Brazil continues to do great work and has been able to capture even more unfulfilled demand.\nWe will work to hold on to our market share gains within the region, but note that the COVID-19 knockdowns that lasted from late March into April are expected to impact volumes in the June 2021 quarter.\nWith that said, as Brazil worked its way out of the recent spike in COVID-19 cases and the country's retail environment opens back up in the coming months, we anticipate that volumes will ramp back up to normal levels during the first quarter of our new fiscal year.\nLastly, the Nylon segment performance met our expectations for the quarter, reflecting a balanced sales level.\nNow before I pass the call over to Craig, I will simply remind everyone that our ongoing trade petitions, involving textured polyester yarn imported from four countries: Indonesia, Malaysia, Thailand and Vietnam continue as expected.\nWe anticipate further determinations will be published in the next two months.\nLike the rest of the team, I am pleased with our third quarter fiscal 2021 results and our ability to navigate the complexities of this recovery with a regional and responsive business model.\nBecause of these strong results, we are able to return to our quarterly comparative discussions on a year-over-year basis, which is something that we have not been able to do for the past several quarters.\nI will begin with a quick overview of profitability before moving on to slide five.\nOperating income and adjusted EBITDA were up significantly from Q3 of fiscal 2020.\nThe increase is primarily attributable to the gross profit outperformance by Brazil, further aided by robust results from Asia.\nOperating income and adjusted EBITDA in the just completed quarter included two specific expense items that are worthy of additional commentary: first, we recognized the remaining fiscal 2021 maximum bonus expense in Q3 of fiscal 2021 due to the overall outperformance of Unifi's adjusted EBITDA from our consolidated business.\nAs such, we recorded approximately $2.4 million of expense in the just completed quarter that was originally anticipated for the fourth quarter of fiscal year 2021.\nOf this additional expense, approximately 2/3 affected SG&A expense and the other 1/3 affected cost of sales.\nSecond, as our installation of new eAFK Evo texturing machines in Yadkinville, North Carolina continues to ramp up.\nWe disposed of some older machinery with remaining book value, generating a noncash loss of $2.5 million in this third quarter.\nThis was included in other operating expense in the income statement and was not added back to our calculation of adjusted EBITDA.\nConsolidated net sales increased to $178.9 million, up 4.6% from $171.0 million in Q3 of fiscal 2020.\nFor the Polyester segment, prior period sales volumes were boosted by the finalization of antidumping trade petitions against China and India, in combinations with customers accelerating purchases in February 2020 and in anticipation of April and March 2020 lockdowns.\nThe Asia segment exhibited a return to pre-pandemic momentum with continued underlying demand from REPREVE, driving segment revenue growth of 25.5%.\nThe Brazil segment maintained its position of market strength, adjusting prices to accommodate movements in global pricing dynamics and competition, driving 22.1% revenue growth in spite of a much weaker Brazilian real than one year ago.\nThe Nylon segment was essentially flat to the prior year with a shift in sales mix after the first three months of impact from the recently completed Fiber and Yarn acquisition, which was a positive contributor to both revenue and profitability for this segment.\nSlide six provides an overview of gross profit, exhibiting the 66% increase in gross profit and 530 basis point increase in gross margin from Q3 fiscal 2020 to Q3 fiscal 2021.\nGross profit for the Polyester segment increased $190,000 as the shortfall in sales volume was more than offset by an improved sales mix.\nThe Asia segment was able to increase gross profit by $2.6 million or 290 basis points from an improved sales mix and supply chain efficiencies.\nIn Brazil, we were able to triple gross profit from $3.4 million to $10.6 million and achieved a record gross margin of 41.2% due to higher pricing levels underpinned by a strong market position.\nThe Nylon segment was essentially flat in comparison to Q3 of fiscal 2020.\nSlides seven and eight include a net sales overview and gross profit overview, respectively, for the nine months ended March 2021 versus March 2020.\nMoving on to the balance sheet on Slide 9.\nStability in our debt and liquidity positions is demonstrated by maintaining diligence around working capital components and generating cash flows while completing two bolt-on acquisitions during this fiscal 2021.\nGreat progress recently on our net debt metric, we continue to have 0 borrowings on our ABL revolver, which had an availability of $63 million as of March 28, 2021.\nUnifi's commitment to financial health has allowed us to leverage our strong balance sheet during 12 months challenged by the global pandemic.\nWe will continue to allocate capex to new eAFK Evo texturing technology in the Americas.\nUnder our balanced approach to capital allocation, we will continue to invest in the business to drive innovation and organic growth, maintain a strong balance sheet and remain opportunistic with share repurchases and M&A opportunities.\nYou will note we were able to include more detailed forecast information than we have been able to provide in the past couple of quarters, as our business visibility continues to return to, let me say, more normal levels.\nThe third quarter's strong performance supports the expectation we laid out earlier in the fiscal year that we will see incremental progress in net sales trends throughout fiscal 2021.\nWe are encouraged by recent sales trends in our REPREVE and other value-added products and expect recent strengths to continue.\nWith this sustained business momentum, the company anticipates sales volumes to increase and June 2021 quarter net sales to improve sequentially on the March 2021 quarter by approximately 1% to 3%.\nIts adjusted EBITDA for the fourth quarter of fiscal 2021 is expected to be in the range of $12 million and $14 million and includes our current expectations for the following: pandemic uncertainty, especially following a quarter of record performance from the Brazil segment; raw material cost increases that occurred in the March 2021 quarter that will adversely impact gross profit for the June 2021 quarter due to the inherent lag in responsive selling price adjustments, with those impacts partially offset by a lack of incentive compensation expense due to the full recognition during the first nine months of fiscal 2021.\nLastly, we expect an effective tax rate of between 45% and 55%.\nAnd given the momentum from the third quarter, our fourth quarter capex should fall in the range of $10 million to $12 million.\nI believe our strong performance during the just completed quarter reflects the resiliency of our global business model and what we can achieve under normal market conditions.\nGoing forward, we continue to focus on managing our costs, selling prices and working capital to drive gross margin improvement, using our innovation to partner with global brand leaders interested in sustainable products in an effort to diversify and grow our portfolio, and maintaining our strong financial position and strong balance sheet to expand opportunities through further organic growth and strategic M&A.\n",
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"content": "q3 sales rose 4.6 percent to $178.9 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Actual results may differ significantly because of risks and uncertainties that are difficult to predict.\nWe will also describe our business using certain non-GAAP financial measures.\nUGI delivered strong third quarter results and performed well while managing the ongoing impact of the COVID-19 pandemic.\nOur third quarter GAAP earnings per share was $0.71, while adjusted earnings per share was $0.13, $0.05 over a $0.08 performance in the comparable prior year period, reflecting strong execution across our diversified business and increased margins at UGI International.\nOn a year-to-date basis, our GAAP earnings per share of $4.48 and adjusted earnings per share of $3.30 represent record earnings through the first three quarters of the fiscal year.\nWe are really pleased with this performance, which demonstrates the earnings strength of our diversified business.\nDuring the Q2 earnings call, we shared the revised earnings per share guidance of $2.90 to $3 for this fiscal year.\nGiven the strong year-to-date performance, we expect to be at the top end of our guidance range.\nNext, I'll comment briefly on several key accomplishments during the quarter before turning it over to Ted, who will provide you with an overview of UGI's financial performance.\nDuring the quarter, our teams continued to execute on our major business initiatives as we deliver reliable earnings growth, progress incremental opportunities related to renewables and make investments to rebalance our portfolio.\nWe are well positioned to meet our objectives and are pleased with the pipeline of opportunities ahead.\nTurning to the key highlights for the quarter.\nUGI Utilities is on track for another record year of capital expenditure, where we will invest in infrastructure replacement and reinforcement.\nThese investments, which are primarily focused on replacement of cast iron and bare steel, are expected to drive continued reliable earnings growth as our PA utility has seen a rate base CAGR of 11.4% over the past five years.\nThe Utilities team also continues to focus on adding new customers across our system with more than 2,200 new residential heating and commercial customers added in Q3 and roughly 10,000 added on a year-to-date basis.\nOur Midstream & Marketing business continues to leverage our supply assets to take advantage of opportunities that arise, and we continue to expect that we will invest substantial capital over the next several years.\nOur recent investments in the UGI Appalachia system, including our interest in the Pine Run system continue to perform well, and we were pleased with the strong production volumes during the quarter.\nAs we continue to see growth in demand and rising prices, we remain confident that our midstream assets position us well for future opportunities.\nOur LPG businesses had a strong quarter of execution as we continue to deliver on the business transformation initiatives we previously outlined.\nWe will drive efficiencies within our operations, improve the customer experience and remain focused on operational and commercial excellence.\nWe are on track to deliver the previously targeted benefits for both AmeriGas and UGI International.\nAnd expect that this strategy, coupled with continuous improvement, will generate customer and shareholder value.\nOur teams are progressing on exciting and attractive range of investment opportunities in renewable solutions as we execute against the renewable strategy that we previously shared with you.\nYesterday, we announced that UGI Energy Services has entered into definitive agreements to develop innovative food waste digestive projects to produce renewable natural gas in Ohio and Kentucky through the Hamilton RNG joint venture.\nIn conjunction with that project, pipeline quality RNG will be injected into a local natural gas pipeline that serves a regional distribution system.\nIn addition, we are able to leverage GHI, which will be the exclusive offtaker and marketer of RNG for Hamilton RNG, similar to the arrangement with Cayuga RNG.\nIn addition, during our last investor update, we discussed the intent to create a joint venture for the production and use of renewable dimethyl ether.\nWe have started the regulatory filing process with the European authorities, and we will provide an update on our future calls as we progress on this venture.\nAs you can see, we are making strong progress on a number of initiatives across our businesses.\nWe will remain focused on executing against our strategy of delivering reliable earnings growth, exploring renewables opportunities and rebalancing our portfolio.\nWe are confident that this will allow us to continue to deliver long-term earnings per share growth of 6% to 10% and 4% dividend growth.\nI'll return later on the call to discuss other business updates.\nAs Roger mentioned, we're pleased with the strong third quarter results.\nWe delivered adjusted diluted earnings per share of $0.13, an increase of $0.05 over the prior year fiscal quarter.\nOur reportable segments had EBIT of $98 million compared to $81 million in the prior year.\nThis table lays out our GAAP and adjusted diluted earnings per share for fiscal year 2021 compared to fiscal year 2020.\nAs you can see, our adjusted diluted earnings exclude a number of items such as: the impact of mark-to-market changes in commodity hedging instruments, a gain of $1.09 this year versus $0.55 in the third quarter of fiscal 2020.\nLast year, we recorded an $0.18 impairment of our ownership interest in the Conemaugh Station.\nThis interest was divested as of September 30, 2020.\nAlso last year, we had a $0.02 loss on foreign currency derivative instruments.\nWe adjusted out $0.07 of expenses associated with our LPG business transformation initiatives compared to $0.02 in the prior year.\nLastly, we had a $0.44 impairment related to our PennEast assets.\nIn June, the U.S. Supreme Court ruled in favor of PennEast, which is categorically good news for the industry and consumers.\nNatural gas will continue to play an important role in meeting our energy needs.\nHowever, even with this positive news, it is unclear when other remaining issues, such as a decision by FERC on the request to phase the project will be resolved allowing the project to be brought into service.\nThis has led us to impair our investment.\nWhile there is uncertainty regarding the timing of PennEast, we have ample opportunity to deploy capital in other areas that meet our return objectives as we have discussed in the past.\nLooking at our year-over-year quarterly performance, this chart provides some additional color to the $0.05 improvement in earnings we achieved versus the prior year period.\nThis performance was largely due to higher volumes at our international LPG business on weather that was almost 55% colder than prior year.\nThere was also an increase due to the new gas base rate that went into effect at Utilities at the beginning of this calendar year as well as continued discipline in margin and opex management throughout our businesses.\nOur domestic businesses saw warmer weather than prior year, which impacted demand at AmeriGas and the Utilities.\nAt the corporate level, we saw a $0.15 decrease versus the prior year period, largely due to CARES Act tax benefits that were realized last year.\nWhen we shared our revised FY 2021 guidance range of $2.90 to $3, we noted that this included $0.10 of anticipated COVID headwind in tax benefits of roughly $0.12 from CARES and other strategic tax planning actions.\nOur experience during the quarter continues to align with the amounts we previously projected.\nAnd as Roger shared, we expect to deliver at the top end of our guidance range.\nDelivering at the top end of our guidance range and given our year-to-date non-GAAP results of $3.30, we expect that Q4 will see a sizable reduction that is primarily driven by tax items when compared to the prior year period.\nIn FY 2020, the entire GILTI tax benefit was realized in Q4, while that benefit is reflected in the quarterly results of FY 2021.\nIn addition, our leverage of the CARES Act is reduced with our strong performance this year.\nLooking at the individual businesses.\nAmeriGas reported EBIT of $11 million compared to $19 million in the prior year.\nThere was a slight increase in total retail volume driven by an 18% increase in national account volumes in comparison to the prior year period.\nThis volume increase fully offset a 19% decrease in cylinder exchange volume that we saw as sales normalized after a significant uptick in Q3 of FY 2020.\nWhen compared to 2019 third quarter, there was a 5% increase in cylinder exchange volume this quarter.\nOverall, the business saw a decline of $14 million in total margin that was largely attributable to customer mix.\nWe saw lower volumes in the higher-margin residential and cylinder exchange customer segments that was partially offset by the higher volumes from lower-margin commercial and motor fuel customer segments.\nOther income increased by $7 million, largely due to higher finance charges, which were suspended in response to the COVID pandemic in the prior year period and onetime gains on asset sales in the current period.\nUGI International generated EBIT of $41 million compared to $21 million in fiscal 2020.\nRetail volumes increased by 21%, largely due to the significantly colder than prior year weather that I described earlier.\nAnd recovery on certain volumes that were impacted by the COVID-19 pandemic last year.\nThis increase in bulk and cylinder volumes drove the higher total margin and offset the slightly lower unit margins given the 81% increase in average wholesale propane prices over prior year.\nWe saw roughly an $18 million or 86% improvement in the year-over-year constant currency performance in EBIT.\nSeparately, our hedging strategy which is intended to offset the multiyear impact of foreign currency exchanges is working as intended, and reducing the volatility associated with U.S. dollar shifts over time.\nMoving to the natural gas businesses.\nMidstream & Marketing reported EBIT of $21 million, which was fairly consistent with fiscal 2020.\nThe business experienced improved margins from capacity management, gas gathering and renewable energy marketing activities in comparison to the prior year period.\nOur recent investment in Pine Run continues to deliver in line with our expectations and is the primary driver for the increase in this quarter's EBIT versus prior year.\nUGI Utilities delivered a strong performance for the quarter and reported EBIT of $25 million, $4 million higher than the prior fiscal year.\nThis increase was largely attributable to continued growth in our customer base and implementation of increased gas base rates on January 1.\nDepreciation expense increased due to continued distribution system and IT capital expenditure activity.\nTurning to our liquidity.\nCash flows remained strong with a 9% increase in the year-to-date cash provided by operating activities over the corresponding prior year period.\nAs of the end of the quarter, UGI had available liquidity of $2.4 billion, approximately $800 million more than the prior year period.\nOur balance sheet remains strong.\nWe continue to be comfortable with the financing capacity across all of our business units and are well within our debt covenants.\nWe have now completed the financing needed to close the Mountaineer acquisition, and that includes a mix of debt and equity units consisting in part of convertible preferred stock, which is consistent with the financing mix that we shared in the past.\nAnd with that, I'll hand the call back over to Roger.\nBefore we move to Q&A, I'll share with you some other key business updates since our last call.\nFirst, the Mountaineer acquisition continues to progress smoothly.\nIn July, we completed a key milestone in the regulatory process by filing an agreement for settlement as well as providing testimony in a hearing before the commission.\nOur next step will be to file a proposed order by August 10, seeking the commission's approval.\nWhile the precise timing of the commission's approval is uncertain, we have completed several key steps in the regulatory approval process, and now expect to close well before the end of the calendar year and even potentially within this fiscal year.\nWe continue to expect the transaction will be accretive to earnings in the first full year of operation and believe Mountaineer will provide meaningful growth opportunities moving forward.\nDuring the quarter, our UGI Utilities Electric division reached a settlement agreement on its rate case and filed a joint petition for approval of that agreement with the Pennsylvania PUC on July 19.\nUnder the terms of the settlement agreement, the Electric division would be permitted to increase base rates by $6.15 million, and we anticipate new rates going into effect in November 2021.\nSeparately, the second phase of the gas base rate increase of $10 million went into effect on July 1.\nIn July, UGI Utilities completed construction of a new state-of-the-art centralized safety training facility.\nSafety is our top priority and a core value at UGI.\nWe are pleased to place this new facility in service as it reinforces our commitment to safety across the organization.\nLastly, our AmeriGas team continues to increase the footprint of our home delivery service, Cynch.\nDuring the quarter, we launched Cynch in three additional markets, bringing the total to 23 cities across the U.S. As we look forward to the remaining quarter in this fiscal year and fiscal year 2022, we are pleased with the strong year-to-date performance and the investment opportunities available to us as we execute on our strategy.\nWe have demonstrated our resiliency and our ability to operate effectively despite a challenging and volatile macro environment.\nI remain confident that we're well positioned both strategically and financially to continue executing and delivering reliable long-term earnings per share growth of 6% to 10% and return capital to shareholders through a robust dividend that we expect to grow at 4% over the long term.\nTo do this, we will remain committed to our core businesses, driving continuous improvements and efficiencies in our operations and lean into investment opportunities in our natural gas business and in renewable energy solutions.\n",
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"content": "q3 adjusted earnings per share $0.13.\nq3 gaap earnings per share $0.71.\nsees fy earnings per share $2.90 to $3.00.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Courtney Holben, Vice President of Investor Relations.\nBefore we begin, I'd like to cover a few details.\nAlthough appropriate under generally accepted accounting principles, the company's results reflect charges that the company believes are not indicative of its ongoing operations and that can make its profitability and liquidity results difficult to compare to prior periods, anticipated future periods or to its competitors' results.\nThese items consist of post retirement, debt exchange and extinguishment and cost reduction and other expense.\nManagement believes each of these items can distort the visibility of trends associated with the company's ongoing performance.\nThe following measures are often provided and utilized by the company's management, analysts and investors to enhance comparability of year-over-year results as well as to compare results to other companies in our industry.\nNon-GAAP operating profit, non-GAAP diluted earnings per share, free cash flow and adjusted free cash flow, EBITDA and adjusted EBITDA and constant currency.\nFrom time to time, Unisys may provide specific guidance or color regarding its expected future financial performance.\nSuch information is effective only on the date given.\nUnisys generally will not update, reaffirm or otherwise comment on any such information, except as Unisys deems necessary, and then only in a manner that complies with Regulation FD.\nCopies of those SEC reports are available from the SEC and along with the other materials I mentioned earlier on the Unisys investor website.\nWe achieved double-digit year-over-year revenue growth and significant year-over-year improvements to profitability and cash flow.\nProgress in the quarter against our key strategic goals included advancing our DWS transformation, broadening our cloud capabilities and expanding our enterprise computing solutions.\nI would note that enterprise computing solutions or ECS, is a new name for the segment previously referred to as ClearPath Forward.\nThis is a change to the segment name only, not to the ClearPath Forward product line.\nMike will provide detail on our financial performance and accomplishments, but first, I will give some insight into the business.\nStarting with Digital Workplace Solutions, or DWS, our goal has been to transform this business to focus on higher growth and higher-margin solutions through broadening our offering portfolio and increasing our focus on experienced solutions through a build/partner/buy approach.\nOur recognized leadership position in the DWS market, supported by our IntelliServ platform, world-class delivery capabilities and NPS scores consistently and significantly above IT services averages, positions us to achieve these goals.\nThe second quarter continued our work, laying the foundation for a sustainable growth through execution against this strategy, with a focus on maturing and enhancing our solution portfolio.\nSpeaking of organic developments, we are building out additional solutions to support cloud-native Virtual Desktop interface within workplace as a service and are hiring new consultative resources to expand our transformation services capabilities, all within DWS.\nWe also continue enhancing this -- the automation and artificial intelligence capabilities in our solutions, including completing the migration of all service desk clients to our cloud contact center platform as of April, allowing for increased usage of conversational AI solutions in voice and chat and expanded deployment of all of our IntelliServ automation capabilities for these clients.\nAutomation as a percentage of service desk ticket volume increased 500 basis points sequentially and 300 basis points year-over-year in the second quarter.\nWith respect to partner developments, we enhanced our modern device management capabilities including by entering into several new partnerships during the quarter.\nWe are already leveraging these new partnerships to create more powerful end-to-end solutions for our clients.\nWe also acquired Unify Square, a unified communications as a service, or UCaaS company, with a focus on seamlessly managing, securing and optimizing enterprise communications and collaboration, including through partnerships with companies such as Microsoft and Zoom.\nUnify Square broadens our UCaaS portfolio, which is projected to be one of the fastest-growing portions of the DWS market.\nThe acquisition also enhances our experience solutions and expertise, which improve the productivity of clients' digital workplaces and deliver higher value than our traditional DWS offerings.\nFinally, we also see significant cross-selling opportunities as a result of this transaction, especially since the two companies have only one shared significant client.\nFor DWS, during the quarter, one of the largest healthcare providers in the U.S. awarded us a contract under which we will proactively measure and improve user experience, increased productivity of field services and service desk personnel, decreased service tickets and enhanced device and software management with real-time data.\nA key differentiation in our proposal was our holistic approach to device management and proactive experience capabilities.\nWe also signed a contract with a consortium of U.S.-based energy companies to provide a full range of IT solutions, including digital workplace, application support and cloud infrastructure with security oversight and protection.\nMoving to the C&I segment.\nOur emphasis is to grow cloud in our targeted markets.\nWe believe our established credentials, CloudForte IP-led platform and embedded security solutions position us to achieve this goal.\nDuring the second quarter, strong revenue growth continued in C&I, with cloud revenue specifically growing 28% year-over-year.\nIn July, we completed a new release of capabilities within the CloudForte platform with improved automation and standard repeatable approaches to increase speed and reliability of hybrid-cloud deployments.\nSecurity is embedded with cloud-capable Stealth and AI-enabled threat protection and detection and faster remediation.\nThe new capabilities also allow for quicker application releases and advanced Kubernetes and container deployments.\nBy focusing on a secure transition to the cloud, we differentiate ourselves with clients, including a number in the U.S. public sector as well as with third-party advisors and industry analysts.\nIn addition to existing partnerships with Microsoft Azure and AWS, we recently announced joining the Google Cloud Partner-Advantage Program as a Google Cloud and Google Workspace reseller partner.\nWith respect to client wins, during the quarter, we expanded modernization and security work at the Georgia Technology Authority and with the Virginia Information Technologies Agency, both highlighting our opportunities for add-on work and our continued success with U.S. state government clients.\nWe also signed a contract with the State of Wisconsin that spans both our C&I and DWS segments to provide a cloud-based contact center solution that will improve the experience of how citizens interact with government.\nAs I noted, this refers to the segment previously referred to as ClearPath Forward.\nOur near-term goal for this business has been to grow revenue through expanding and enhancing ECS services, while maintaining the stability of license revenue.\nWe believe there is meaningful opportunity to expand ECS services, given our relatively low penetration, combined with our clients' increasing desire to migrate to cloud and hybrid environments and for a seamless application set that works across these architectures.\nClients also need help managing application workflow creation and orchestration in these environments.\nWe are uniquely positioned to help with all of this given our embedded IP.\nWe recently released a new version of ClearPath Forward with enhanced capabilities and functionality.\nThe new release allows clients to enhance existing ClearPath Forward applications using Python and enhances interoperability with other environments.\nIt is also uses enhanced security features, including expanded-multifactor authentication and mobile device facial recognition and fingerprint identification.\nOur partnership with Microsoft Azure offers another avenue for growth within ECS as clients migrate to ClearPath Forward cloud and hybrid environments.\nWe recently went live with ClearPath Forward for Azure with a public sector client, and we are in discussions with a number of additional clients.\nWe're seeing early stage traction with ECS services expansion, with revenue from these services up 2% year-over-year.\nLicense revenue in the quarter was also strong, helped by higher volumes than anticipated, which Mike will discuss later.\nWe signed a contract with one of the largest financial services institutions in Brazil during the quarter, for consulting and application services for their ClearPath Forward and related application environment, including development and modernization relating to the integration of more than 90 systems to support the institution's mortgage processing operations.\nMoving to our go-to-market metrics.\nOur efforts across segments resulted in total company TCV being up 50% year-over-year in the second quarter and 24% sequentially.\nTotal company Pipeline was up 2% sequentially, though down 3% year-over-year.\nHowever, as of the end of July, Pipeline was up 8% versus the end of the first quarter this year and 2% versus the end of the second quarter last year.\nWe continue to be recognized for our market leadership in important areas of the business, including being named a leader for Managed Security Services in Australia, Brazil and the U.S. and a leader in Technical Security Services in the U.S., all in ISG's Provider Lens for Cyber Security Solutions and Services.\nIn late July, we launched a new corporate website, which we encourage you to visit.\nIt is faster and more user-friendly, giving visitors a richer experience and an easier way to learn about our solutions.\nWe expect the new website to help visitors gain a deeper understanding of the outcomes, our capabilities deliver and to lead to additional opportunities for us.\nAnd finally, with respect to workforce management, our workforce management initiatives such as upskilling, rotations, work from anywhere flexibility and enhanced recruiting efforts have been benefiting us.\nAlthough total company last 12 months voluntary attrition was 12.9% in the second quarter, versus 10.4% in the first quarter, the second quarter level was 210 basis points lower than the prior-year period, and 480 basis points lower than the pre-pandemic level in the second quarter of 2019.\nOur attrition levels have not impacted the ability to meet client demand, in part due to the workforce management initiatives I highlighted.\nOur open positions filled internally increased 13% since year-end 2020.\nApplicants for open position increased 30% sequentially.\nOur time-to-fill positions decreased 25% since year-end 2020, and referral based hiring has increased significantly relative to last year.\nSo in conclusion, we are energized by the progress we are making toward the goals we laid out at the beginning of this year.\nThose efforts not only include with respect to clients but also include with respect to bringing on friends and others that they know into this company, which shows quite a lot about our existing associates' views of this company.\nIn my discussion today, I'll refer to both GAAP and non-GAAP results.\nAs a reminder, reconciliations of these metrics are available in our earnings materials.\nAs Peter highlighted, we made continued progress in the second quarter against many of the key strategic goals that we outlined in our Investor Day earlier in the year, while also achieving strong financial results including double digit year-over-year revenue growth and significant year-over-year improvements to profitability and cash flow.\nPeter covered much of the progress on our strategic goals, so I'll focus more on the financial accomplishments, including the fact that we were free cash flow positive for the quarter.\nOverall, our second quarter results were in line with or slightly ahead of our internal expectations, and we met or exceeded consensus estimates on all key metrics.\nRevenue grew 18% year-over-year and 1% sequentially, supported by revenue growth in each of our segments.\nDWS revenue grew 10% year-over-year, driven in part by growth in revenue from our new proactive experienced solutions and the early results of the new partnerships that Peter mentioned.\nAdditionally, this was the segment and the quarter most impacted by COVID last year, so the post COVID recovery also contributed to year-over-year revenue improvement.\nDWS revenue was also up 4% sequentially.\nOur emphasis within C&I on cloud work for our targeted sectors is also yielding positive results, demonstrated by revenue growth for the segment of 10% year-over-year and 1% sequentially.\nWithin C&I, cloud revenue was a key driver of growth, up 28% year-over-year in the quarter.\nAs Peter noted, the segment formerly referred to as ClearPath Forward has been renamed enterprise computing solutions or ECS.\nI would note that ClearPath Forward product name is unchanged but will refer to the license revenue from these and other solutions as ECS license revenue.\nECS segment revenue grew significantly year-over-year, up 40% and showed a 1% sequential increase.\nThe growth was driven in part by higher license revenue than anticipated based on higher volumes than projected in the quarter, Additionally, ECS services revenue grew 2% year-over-year.\nThe second quarter represents the strongest year-over-year revenue growth that we anticipate for 2021.\nAs we've previously noted, we expect ECS license revenue to be split 55% and 45% between the first and second half of the year, with the third quarter assumed to be the lightest of the year.\nAs a reminder, the prior year first half/second half split was 40% and 60%, with 40% of the full year segment revenue coming in the fourth quarter.\nThis year's renewal schedule is much more evenly distributed with significantly less reliance on fourth quarter signings.\nTotal company backlog was $3.3 billion as of the end of the second quarter relative to $3.4 billion as of the end of the prior quarter.\nOf the $3.3 billion, we anticipate $375 million will convert into revenue in the third quarter.\nThe sequential decline in backlog was attributable to a delay in a signing of a large DWS contract that we expected in the second quarter and ultimately was signed in July.\nOur plan calls for go-to-market strategic initiatives that Peter highlighted to begin expanding the pipeline and improving our backlog over the coming quarters.\nAs we indicated in January, we expect our year-end backlog to show positive growth year-over-year.\nThe seasonality trends I referenced regarding revenue have been anticipated, and overall, we're on plan for revenue for the full year 2021.\nAs a result, we're reaffirming our full year guidance range of 0% to 2% year-over-year revenue growth.\nThe operating efficiency enhancements that we've undertaking as well as our shift to higher-value solutions drove significant year-over-year improvement to non-GAAP operating profit margin in the second quarter.\nThis metric was up 950 basis points year-over-year to 9.7%, supported by year-over-year improvements to gross margin in each of the segments.\nDWS gross margin increased 840 basis points year-over-year to 15.2%.\nThis was helped by higher margins earned on some of the newer proactive experience solutions and increased automation.\nOur operational efficiency improvements, such as reducing our real estate footprint and refining our workforce management strategy as well as post-COVID revenue recovery also contributed to margin increases.\nDWS gross margin was also up 210 basis points sequentially.\nC&I gross margin improved 730 basis points year-over-year to 12.5% and was up 280 basis points sequentially, helped by higher cloud revenue and the same real estate and workforce management cost efficiencies that I note for DWS.\nECS gross margin increased 1,430 basis points year-over-year to 61.3%, helped by flow-through of strong ECS license revenue driven by the renewals and volume increases that I noted earlier against the relatively fixed cost base.\nECS gross margin was roughly flat sequentially with both periods over 61%.\nAs I've noted, our margins were aided by the cost efficiencies and automation that we've been implementing.\nI've highlighted in previous discussions that pre-reinvestment, we were targeting $130 million to $160 million of run rate savings exiting 2021.\nAnd as of the end of the second quarter, I'm happy to report that we've completed all the actions necessary to achieve this target, and our expected run rate savings exiting 2021 is at the high end of that range.\nApproximately $35 million of the annualized actual savings was included in the second quarter results, and we believe the full amount of savings will be realized by the end of next year.\nAs Peter noted, our workforce management initiatives have been very effective and helped drive the total cost of labor as a percent of revenue to continue to decline.\nThe metric was down 80 basis points sequentially in the quarter, even factoring in retention-focused salary increases that we implemented during the period.\nDuring the second quarter, we also successfully achieved our goal of removing $1.2 billion in gross pension liabilities from the balance sheet.\nIn conjunction with the final actions to achieve this, we recognized a non-cash settlement charges of approximately $211 million or $2.37 per diluted share, which was the only reason that our net loss from continuing operations was $140.8 million or $2.10 per diluted share.\nThe improvements to non-GAAP operating profit also flowed through to adjusted EBITDA, which increased 125% year-over-year to $94.4 million.\nAdjusted EBITDA margin increased 860 basis points year-over-year to 18.2%, and non-GAAP diluted earnings per share increased significantly to $0.68 from a loss of $0.15 in the prior year period.\ncapex for the second quarter was $23 million, down 35% year-over-year, reflecting the continuation of our capital-light strategy and our focus on integrating best-of-breed solutions to enhance our client offerings and help optimize software development costs.\nThe margin expansion and capex reductions also contributed to significant year-over-year improvements in cash flow, resulting in us being free cash flow and adjusted free cash flow positive for the quarter.\nCash from operations improved $56 million year-over-year and was positive at $42 million.\nFree cash flow improved $69 million year-over-year to a positive $19 million, and adjusted free cash flow improved $92 million to a positive $55 million.\nThese metrics were all up significantly on a sequential basis relative to negative cash flow for each metric during the first quarter.\nAs we look to the rest of the year, we're projecting our third quarter non-GAAP operating profit margin to be roughly in line with the prior year period.\nFourth quarter non-GAAP operating profit margin is anticipated to be the strongest of the year, though lower year-over-year, in part due to the ECS license renewal timing I mentioned earlier.\nAs with revenue, the seasonality trends in profitability were expected and were on plan overall for the year with respect to non-GAAP operating profit margin and adjusted EBITDA margin.\nAs a result, and in addition to affirming revenue guidance, we're also reaffirming our guidance ranges for these two metrics at 9% to 10% and 17.25% to 18.25%, respectively.\nWe're also forecasting our capex spend for the year to be lower than initially anticipated and now is expected to be approximately $115 million.\nOther full year cash flow expectations are the following: we anticipate cash taxes to be approximately $45 million to $55 million, and we expect restructuring payments to be approximately $65 million to $70 million.\nAdditionally, as we noted in January, working capital is currently at a run rate use of approximately $20 million to $30 million, which we still believe will improve over time.\nAs a result of all of this, we are projecting to be free cash flow positive for the full year 2021.\nTo wrap up, I'd like to echo Peter's enthusiasm about the progress we're making in just two quarters into our refresh strategy, which we've been able to implement as a result of our improved balance sheet.\nWe're appreciative of the hard work that our associates have been putting in to help drive this transformation, and we look forward to continual successful execution over the remainder of the year.\n",
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"content": "compname announces 2q21 results.\nq2 non-gaap earnings per share $0.68 from continuing operations.\nq2 loss per share $2.10 from continuing operations.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Courtney Holben, Vice President of Investor Relations.\nBefore we begin, I'd like to cover a few details.\nAlthough appropriate under generally accepted accounting principles, the company's results reflect charges that the company believes are not indicative of its ongoing operations and that can make its profitability and liquidity results difficult to compare to prior periods, anticipated future periods or to its competitors' results.\nThese items consist of post-retirement, debt exchange and extinguishment, and cost reduction and other expense.\nManagement believes each of these items can distort the visibility of trends associated with the company's ongoing performance.\nThe following measures are often provided and utilized by the company's management, analysts and investors to enhance comparability of year-over-year results as well as to compare results to other companies in our industry, non-GAAP operating profit, non-GAAP diluted earnings per share, free cash flow and adjusted free cash flow, EBITDA and adjusted EBITDA and constant currency.\nFrom time to time, Unisys may provide specific guidance or color regarding its expected future financial performance.\nSuch information is effective only on the date given.\nUnisys generally will not update, reaffirm or otherwise comment on any such information, except as Unisys deems necessary and then only in a manner that complies with regulation FD.\nCopies of those SEC reports are available from the SEC and along with the other materials I mentioned earlier on the Unisys's investor website.\nDuring the third quarter, we made continued progress executing on our strategy for sustained revenue growth and margin improvement by expanding our solution portfolio and enhancing our go-to-market efforts while managing our workforce to successfully attract and retain talent in a competitive labor market.\nWe also increased gross profit and free cash flow year-over-year.\nMike will provide detail on our financial performance and accomplishments.\nBut first, I will give some insight into the business.\nStarting with Digital Workplace Solutions, or DWS, our goal has been to transform to a higher growth and higher-margin business by enhancing and expanding our solution portfolio with a focus on proactive experience, leveraging our recognized leadership position in the market and our IntelliServ and Power Suite platforms.\nIn the third quarter, we made progress toward these strategic goals, while exiting some contracts that weren't core to how we plan to grow this business.\nWith respect to the build portion of our build partner buy strategy, we have developed our experienced model office solution, or XMO.\nThis offering analyzes data from multiple sources, including device experience tools such as our Power Suite solution, our Cloud contact center platform and other satisfaction and sentiment tools to identify and remediate pain points and improve user experience.\nThis will help clients achieve business goals such as maximizing productivity and improving employee engagement and will also streamline our support model by reducing reactive service needs.\nAdditionally, we defined and began incorporating our second-generation experience level agreement or XLA framework into contracts, providing a more advanced persona-based way for clients to assess the impact our solutions are having on user experience.\nWe believe we are leading the market in advancing to second-generation XLAs and our clients are responding positively.\nWe also filled several key leadership and architect rules during the quarter.\nWith respect to partnerships in DWS, we have broadened our relationships with some leading device experience management partners to become channel partners in addition to solution partners.\nAnd our integration of Unify Square is progressing as we continue to actively assess additional opportunities to enhance our solution portfolio through acquisitions.\nIn the quarter, we signed a DWS contract with a global commercial real estate services firm to implement a case management system, which will help the client move to a centralized global model for this process and technology.\nAlso in the quarter, Unify Square signed contracts with nearly 20 new logo clients, including consulting contracts and Power Suite software subscriptions focused on migrating to or managing Zoom and Microsoft Teams, UCaaS environments.\nMoving to Cloud and Infrastructure Solutions, or C&I.\nWe continue to execute on our strategy of growing Cloud in our targeted markets by leveraging our established credentials, CloudForte and embedded security solutions to help clients transform their traditional ITO environments to effective hybrid and multi-Cloud solutions.\nRevenue growth continued during the third quarter in C&I with Cloud revenue specifically growing 26% year-over-year.\nAs we noted on our last call, in July, we completed a new release of our CloudForte program.\nAnd since July, we have continued to enhance the artificial intelligence embedded in CloudForte with a specific focus on Cloud spend optimization.\nWe're also utilizing predictive analytics to help clients avoid incidents and automated root cause analysis to remediate and prevent future issues.\nAdditionally, increased migration automation in our solution allows us to move significantly more workloads to the Cloud more quickly at increased levels of reliability.\nWe are on schedule for a new release of the CloudForte platform with additional functionality in the fourth quarter.\nWe're also expanding our partnering with CloudForte, including enhanced integration with Google Cloud, increasing our ability to deliver outcome-based end-to-end Cloud services to clients using Google Cloud and to help them optimize their workforce environment.\nWe have broadened our work with AWS and Microsoft Azure, increasing automation to enable a more seamless experience for clients with improved functionality, while also enhancing cost efficiency.\nWe are assessing potential C&I acquisition candidates with a focus on enhancing specific capabilities and increasing geographic coverage.\nAnd during the quarter, we signed a contract with a leading Mexican insurance company to design a hybrid environment, integrating public and private Clouds and to perform related migration work.\nTurning to Enterprise Computing Solutions, or ECS.\nOur goal is to grow revenue through expanding the ECS ecosystem while maintaining license revenue to bill.\nWe are enhancing our existing services and platforms and developing new solutions to help clients manage their ClearPath Forward environments.\nWe are incorporating advanced AI and automation into our application life cycle management platforms and workflow-oriented design into our application development solutions.\nWe're also expanding the interoperability of our ClearPath Forward systems, which are already able to be deployed in the public Cloud via ClearPath Forward for Azure to enable use in Hybrid and multi-Cloud environment.\nOur IP-led industry-focused solutions, such as AirCore and Elevate, represent an additional opportunity for growth in ECS.\nWe're partnering with software and platform developers to modernize our application development and to enhance our life cycle management of these solutions, and we are working with channel partners to embed these industry applications into their solutions to increase our client reach.\nWe are also evaluating opportunities to acquire smaller companies that support ClearPath Forward.\nWe recently signed a contract with New Zealand's Waka Kotahi NZ Transport agency to extend our engagement to manage IT infrastructure on the ClearPath Forward platform that supports systems processing approximately 25 million driver's license and 60 million motor vehicle transactions per year.\nTurning to our broader go-to-market efforts.\nOur total company TCV was up 13% year-over-year in the third quarter, and total ACV was up 30% year-over-year.\nAs we price contracts, we're aiming to offset our anticipated cost increases relating to the competitive market for labor.\nTotal company pipeline was also up 5% sequentially, supported by growth in our proactive experienced DWS solutions and Cloud solutions pipelines, which increased sequentially, both on a dollar basis and as a percent of total pipeline.\nWe are increasing awareness in our new DWS and Cloud capabilities, meeting frequently with industry analysts, such as Gartner, IDC, Everest, ISG, and HFS, and we have been recognized for our leadership in a number of areas.\nWe were recently named a leader in advisory firm ISG's provider lens study on the future of work in both managed employee experienced services and managed digital workplace services in the U.S., the U.K. and Brazil, in addition to other regional leadership recognition.\nWe were also named a leader in the next-gen private and Hybrid Cloud-managed services by ISG in the U.S., the U.K. and Brazil, and were recognized by IDC as a major player in worldwide managed multi-Cloud services.\nWe have evolved significantly as a company.\nAnd we're launching a global advertising campaign to help ensure that the market knows who Unisys is today.\nWe're undertaking a similar initiative aimed at attracting talent in key recruiting geographies.\nWe're also expanding the depth and breadth of content on our website and implementing a cross-selling initiative to highlight our full portfolio of solutions across segments to clients.\nThe mark of the talent remains highly competitive, but our workforce management efforts, including compensation retention adjustments and increased associate initiatives such as talent development, internal mobility and focus on work-life flexibility have helped us to continue to attract and retain key resources needed to execute on our strategy.\nOur last 12-month voluntary attrition was 15.3%, which is significantly below the pre-pandemic level of 17% for the third quarter of 2019.\nThe demand for open roles filled internally as a percent of total, increased six points for the year-to-date versus 2020 to 36%, reflecting the effectiveness of our internal development, mobility programs and upskilling and referrals represent over 20% of total hiring on a year-to-year basis.\nOur commitment to DEI is a bedrock of our people strategy.\nWith that, I'll turn over the call to Mike to discuss our financial results.\nIn my discussion today, I'll refer to both GAAP and non-GAAP results.\nAs a reminder, reconciliations of these metrics are available in our earnings material.\nAs Peter highlighted, during the third quarter, we continue executing on our strategy for sustained revenue growth and margin improvement by expanding our solution portfolio and enhancing our go-to-market efforts while proactively managing the workforce and increasing gross profit and free cash flow year-over-year.\nOverall, our year-to-date performance is in line with our internal expectations, and we are reaffirming all full year 2021 guidance metrics as a result.\nDuring the third quarter, we grew revenue in two of our three segments with continued year-over-year revenue growth in both C&I and ECS.\nOur ongoing enhancements to our Cloud capabilities and efforts to increase awareness with industry analysts and clients continue to yield results with C&I revenue growth of 1.7% year-over-year to $118.9 million in the third quarter.\nThis was supported by Cloud revenue growth within the segment of 26% year-over-year.\nOne item to keep in mind going into the fourth quarter is that we expect our C&I revenue to be down year-over-year due to a timing issue associated with revenue recognition from a public sector client that benefited us in the fourth quarter of 2020 as well as some runoff of traditional infrastructure work that's not part of how we're planning to grow this business.\nWe still expect C&I to be the fastest-growing segment overall for the full year 2021.\nThe enhanced functionality associated with our ECS solutions, including ClearPath Forward for Azure and our focus on growing ECS services continues to provide benefits to the ECS segment.\nECS revenue grew 1.8% year-over-year.\nThis growth was helped by higher license revenue than expected in part due to a contract being renewed for a longer duration than initially anticipated.\nI think the fact that clients are signing eight year agreements for ClearPath Forward operating system is a testament to the strength of the solution and the modernization roadmap that supports this offering.\nECS services revenue grew 1% year-over-year.\nAs we've previously noted, we had expected the third quarter to be the lightest of the year in terms of license revenue, which we still expect to be split approximately 55% and 45% between the first and second half of the year.\nThis software renewal cadence is as expected and actually de-risks the fourth quarter as ECS license revenue is more evenly distributed throughout the year, with a lot less reliance on fourth quarter signs.\nAs a reminder, the prior year first half/second half split was 40% -- 60%, with 40% of the full year segment revenue coming in the fourth quarter.\nWe expect overall 2021 ECS revenue to be roughly flat year-over-year.\nWith respect to DWS, we're moving into the next phase of our transformation of this segment with a heavy emphasis on our go-to-market implementation, enabling us to bring our enhanced experienced solutions to new and existing clients.\nWe have transitioned away from some heritage contracts that were not core to how we're planning to grow this business.\nWe also saw some impacts related to supply chain shortages, and both of these items impacted revenue, which was down 4.7% year-over-year to $141.3 million.\nAs a result of all of this, the total company revenue was down 1.5% year-over-year in the third quarter to $488 million.\nAs I noted, though, this does not change our expectations for revenue for the full year as this quarterly cadence was anticipated and was embedded in our guidance, as was our expectation for year-over-year decline in the fourth quarter revenue due to the timing issues I mentioned, which is why we're reaffirming that guidance at 0% to 2% year-over-year revenue growth.\nThe company backlog was impacted by the continued shift of our mix of business toward higher growth and higher-margin solutions and the exiting of some nonstrategic contracts.\nAdditionally, during 2021, we have seen the duration of contracts and backlog shortening as it did in 2020 and 2019.\nAs a result, total company backlog was $3 billion as of the end of the third quarter relative to $3.3 billion as of the end of the prior quarter.\nType of solutions that we are shifting our mix toward are less capital-intensive and have a shorter implementation timeframe, which we expect will lead this backlog to convert to revenue more quickly than it has in the past.\nThis is supported by year-over-year increase in ACV that Peter noted.\nOf the $3 billion in backlog, we expect approximately $380 million will convert into revenue in the fourth quarter.\nThird quarter total company gross profit was up year-over-year, and gross profit margin was up year-over-year as well.\nThese results were supported by year-over-year improvements in C&I and ECS gross margins.\nC&I gross profit increased 116.3% year-over-year to $9.3 million, and gross margin improved 410 basis points to 7.8%, driven by the improvements to margin in both Cloud and traditional infrastructure work.\nECS gross profit increased 28.8% year-over-year to $97 million, and gross margin improved 1,360 basis points to 65%, helped by the higher revenue I mentioned earlier.\nDWS gross profit was $16.8 million relative to $21.6 million in the prior year period, largely driven by the flow-through impact of lower revenue.\nDWS gross margin was 11.9% relative to 14.6% in the prior year period.\nAs with revenue, our year-to-date non-GAAP operating profit margin results are roughly in line with internal expectations, and accordingly, we're reaffirming our full year 2021 guidance for this metric at 9% to 10%.\nSG&A expense increased year-over-year in the quarter, largely due to increased investments in our go-to-market efforts, primarily related to direct sales support and increases in noncash-based compensation.\nAs a result, total company non-GAAP operating profit margin was 5.7% relative to 8.6% in the prior year period.\nWe anticipated additional investments in our go-to-market efforts over the next few quarters to support our growth strategy, increased awareness of our enhanced solution portfolio and within the context of a highly competitive labor market across the IT services industry, increased compensation to retain and attract top talent, we need to maximize our growth strategy.\nBased on this, we expect to be toward the lower end of the non-GAAP operating profit margin guidance I just mentioned.\nConsistent with our discussions over the last couple of quarters, I'm pleased to report that we've concluded our cost optimization program, and it is now fully underpinned.\nThe annualized savings associated with this program are at the high end of the targeted range we provided, which was $130 million to $160 million.\nAs I mentioned already, the reinvestment of a portion of these savings has begun and will continue through the first half of 2022.\nOur net loss from continuing operations was $18.7 million or $0.28 per diluted share versus $13.3 million or $0.21 per diluted share in the prior year period.\nNon-GAAP net income was $6.9 million versus $36.8 million in the prior year period, and non-GAAP diluted earnings per share was $0.10 versus $0.51 in the prior year period.\nThese GAAP and non-GAAP net income and earnings per share results are reflective of lower operating profit that I mentioned as well as higher taxes this year due to the geographies in which the income was earned.\nAs with revenue and non-GAAP operating profit margin, our year-to-date adjusted EBITDA results are generally in line with our expectations, and so we are reaffirming full year 2021 guidance for this metric at 17.25% to 18.25%.\nAdjusted EBITDA in the quarter was $74.6 million relative to $82.3 million in the prior year period, and adjusted EBITDA margin in the quarter was 15.3% versus 16.6% in the prior year period based on similar drivers as non-GAAP operating profit and margin.\nLikewise, as with operating profit, we expect to be toward the lower end of the guidance range in light of these investments in our team to support growth in a competitive labor market.\nWe continue our capital-light strategy and our focus on integrating best-in-class offerings to enhance our solutions and optimize our development costs.\nOur capital expenditures declined year-over-year again in the third quarter, down 18.4% to $26.1 million.\nWe now expect capex to be between 100 and $110 million for the full year 2021, which is lower than our previous expectations.\nFree cash flow and adjusted free cash flow also continued to improve, with free cash flow up 14.9% year-over-year to $39.4 million and adjusted free cash flow up 36.3% to $69.9 million.\nThese cash flow metrics were also up significantly on a sequential basis, and we continue to expect to be free cash flow positive for the full year 2021.\nIn continuing our efforts to further derisk our balance sheet, we completed a transfer of additional gross pension liabilities in October through a $235 million annuity contract.\nWe expect a onetime noncash pre-tax settlement charge in the fourth quarter associated with this liability transfer of approximately $130 million or $1.94 per share.\nAnother positive balance sheet item to note is last week, Moody's has resolved the positive outlook associated with our debt by providing an upgrade of our corporate family rating to B1 with a stable outlook, and our senior secured notes were upgraded to B1 as well.\nTo wrap up, our third quarter was consistent with our expectations and represent continued progress on our refresh strategy and the achievement of both our short and long-term financial goals, and we look forward to continuing this progress in the fourth quarter.\nMike will be taking on the role of President and Chief Operating Officer, effective upon the hiring of a new CFO.\nAs you know, Mike has played a central role in the significant financial transformation of the company since becoming CFO in 2019, including the substantial strengthening of the company's balance sheet.\nMike has also played an important operational role in the company, and he currently oversees our corporate development efforts and our strategy function.\nEric has been instrumental in improving the financial performance of the company over the last few years and in the implementation of our new strategy and operating model as well as other elements of the company's business during his tenure.\nEric will be leaving his current role on November 30.\nWe have begun a search for a new CFO, and Mike will continue to fill that role until we have appointed a new CFO.\nAt that point, he will transition to President and Chief Operating Officer.\nI will assume Erik's responsibilities on an interim basis until the CFO transition is complete.\nAs a reminder, I also served as President from January of 2015 until March of 2020.\nWe wish Eric's success in his future endeavors and look forward to Mike's contributions in his new role.\n",
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"content": "compname reports 3q21 results.\ncompname announces 3q21 results.\nq3 non-gaap earnings per share $0.10 from continuing operations.\nq3 loss per share $0.28 from continuing operations.\nq3 revenue fell 1.5 percent to $488 million.\nq3 non-gaap earnings per share $0.10.\ncompany reaffirms fy 2021 guidance.\nannounced appointment of unisys cfo mike thomson as president & coo, effective upon hiring of a new cfo.\nthomson will succeed current president and coo eric hutto who is stepping down to pursue other interests.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: In addition, during today's call, we will be discussing non-GAAP financial metrics.\nWe are pleased to report our results for the third quarter ended September 30, 2020.\nUMH continues to achieve excellent results despite the COVID-19 pandemic.\nOur rent collections remain in line with our historical performance.\nCurrently, over 98% of our third quarter rental and related charges have been collected.\nDemand throughout our communities remain strong as evidenced by our 320 basis point improvement in same community occupancy and our 54% sales growth as compared to the same quarter last year.\nWe further demonstrated the success of our business plan by obtaining $106 million of GSE financing at 2.62%.\nThis loan pioneered GSE acceptance of up to 60% rental homes in communities.\nSubsequent to quarter end, this capital was used to redeem our 8% Series B preferred stock.\nThis 500 basis point improvement will result in over $5 million in additional FFO per year or approximately $0.12 per share.\nUMH is well positioned to excel in 2021.\nNormalized FFO for the third quarter was $0.18 per diluted share compared to $0.15 in the prior year period.\nThis represents an increase of 20%.\nWe are pleased that our $0.18 dividend per quarter is now fully covered by our current operating performance.\nThis is prior to the positive impact that the redemption of our Series B preferred will have on FFO.\nOur community operating results continue to improve.\nIn accordance with our business plan, the value-add communities that we have acquired over the past few years are now starting to deliver significant revenue growth and are positively impacting our overall performance.\nThroughout the pandemic, we have continued our capital improvements, expansions and rental home additions.\nOur communities look better and are operating more efficiently than ever before.\nTotal income for the quarter is up 16%.\nYear-to-date, total income is up 11%.\nOur operating expense ratio has decreased from 47.8% to 44.6%.\nThe combination of income growth and expense ratio reduction resulted in overall NOI growth of 17% for the quarter and 19% for the year.\nOur same-property occupancy rate improved 320 basis points to 86.9% from the same quarter last year.\nThis translates to an increase of 706 revenue-producing sites year-over-year.\nThis occupancy growth has contributed to income growth of 8.6% for the third quarter and 7.8% year-to-date, generating same-property NOI growth of 12.9% and 13.7%, respectively.\nThis is the fourth quarter in a row that we have delivered double-digit same-store NOI growth.\nThe primary driver of our overall occupancy and revenue growth is the rental home program.\nThrough the COVID-19 crisis, rental homes have proven to be as stable and income stream as homeowner occupied sites.\nWe have increased our rental home portfolio by 684 units so far this year.\nWe are on track to add 800 to 900 new rental units this year.\nWe now own approximately 8,100 rental homes.\nAt quarter end, our rental home occupancy rate was 95.4%.\nAs a result of our performance through COVID, we are more convinced than ever that rental homes and manufactured housing communities are the best way to provide quality affordable housing.\nWe continue to seek value-add acquisition opportunities in strong markets where we can implement our rental home program.\nWe recently entered into a line of credit with FirstBank secured by our rental homes and the income derived by them.\nThis line allows us to tap into the equity that we have in our rental homes at a reasonable rate of prime plus 25 basis points.\nOur goal is to continue to increase our rental home program and reduce the cost of capital used for that purpose.\nGross sales for the quarter were $6.8 million, representing an increase of 54% over the same period last year.\nGross sales for the year are at $15 million, which is now up 8% over the first three quarters of 2019.\nDespite the COVID-19 pandemic, we continue to see increasing demand for sales throughout our portfolio.\nOur sales generated income of approximately $640,000 for the quarter and approximately $450,000 for the year.\nAs we continue to grow our sales volume, we expect to generate meaningful income, which will further improve FFO.\nTo ensure that we have the lots available to generate this volume, we are working on developing additional sites at many of our best sales locations.\nWe remain on track to complete the development of 191 sites this year.\nIn 2021, we expect to obtain approvals on approximately 800 sites.\nWe should develop about 400 of these approved sites in the next 18 months.\nDuring the quarter, we closed on the acquisition of two communities containing 310 sites for a total purchase price of $7.8 million or $25,000 per site.\nThese are value-add communities with an in-place occupancy rate of 64%.\nOver the next few months, we expect to complete our initial turnaround work and begin to infill the communities with rental homes.\nThese communities are both located in markets that we already operate in, creating management efficiencies.\nWe have been able to add to our acquisition pipeline.\nWe have executed letters of intent on four communities in three new states that fit our growth criteria.\nThese communities contain approximately 580 sites, of which 64% are occupied.\nThe total purchase price for these communities is $21 million or $36,000 per site.\nOn previous calls, we have discussed our plans to improve community operating results, acquire and expand communities, improve sales profitability, refinance our capital stack and ultimately improve our FFO.\nDuring extremely difficult economic circumstances, we have achieved many of these goals and made substantial progress toward achieving the others.\nWe have covered our $0.18 dividend prior to the positive impact that the redemption and refinance of our Series B preferred will have on earnings.\nThis change in our capital stack is expected to add $0.12 of FFO per share annually.\nWe have laid the foundation to deliver excellent FFO growth in 2021 and beyond.\nNow Anna will provide you with greater detail on our results for the quarter and for the year.\nNormalized FFO, which excludes realized gains on the sale of securities and other nonrecurring items, was $7.4 million or $0.18 per diluted share for the third quarter of 2020 compared to $6 million or $0.15 per diluted share for the prior year period.\nAs we had previously announced, we redeemed all 3.8 million issued and outstanding shares of our 8% Series B cumulative redeemable preferred stock totaling $95 million on October 20.\nThis, together with our recent GSE financing, will generate savings of approximately 500 basis points or $0.12 per share annually going forward.\nRental and related income for the quarter was $36.4 million compared to $32.9 million a year ago, representing an increase of 10%.\nCommunity NOI increased by 17% for the quarter from $17.2 million in 2019 to $20.1 million in 2020.\nThese increases are attributable to our acquisitions, rent increases, the success of our rental home program and reduction of our operating expense ratio.\nOur operating expense ratio improved from 47.5% for the third quarter of 2019 to 44.7% for the current quarter.\nFor the nine months, our expense ratio decreased from 47.8% to 44.6%.\nAt quarter end, our portfolio average monthly site rent increased by 2.7% to $455 over the same period last year.\nOur average monthly home rent increased by 2.8% to $781 over the same period last year.\nSame-property income for the third quarter increased 8.6% over the same period last year, while expenses increased by 3.2%, resulting in same-property NOI growth of 12.9%.\nSales of manufactured homes increased 54% for the quarter from $4.4 million in 2019 to $6.8 million in 2020.\nWe sold a total of 108 homes, of which 48 were new home sales and 60 were used home sales.\nThe gross profit percentage improved from 25% for the three months ended September 30, 2019, to 31% for the current quarter.\nFor the nine months, we sold a total of 252 homes, of which 102 were new home sales and 150 were used home sales.\nThe gross profit percentage was 29% and 27% for the nine months ended September 30, 2020 and 2019, respectively.\nAs we turn to our capital structure, at quarter end, we had approximately $507 million in debt, of which $472 million was community level mortgage debt and $35 million was loans payable.\n93% of our total debt is fixed rate.\nThe weighted average interest rate on our mortgage debt was 3.81% at quarter end compared to 4.14% in the prior year.\nThe weighted average maturity on our mortgage debt was 6.3 years at quarter end compared to 6.2 years a year ago.\nAt quarter end, UMH had a total of $383 million in perpetual preferred equity, not including the $95 million of our Series B preferred stock, which was redeemed on October 20.\nOur preferred stock, combined with an equity market capitalization of $564 million and our $507 million in debt, results in a total market capitalization of approximately $1.5 billion at quarter end, representing an increase of 3% over the prior year period.\nFrom a credit standpoint, our net debt to total market capitalization was 31%.\nOur net debt less securities to total market capitalization was 25%.\nOur net debt to adjusted EBITDA was 5.8 times.\nOur net debt less securities to adjusted EBITDA was 4.7 times.\nOur interest coverage was 4.1 times, and our fixed charge coverage was 1.5 times.\nFrom a liquidity standpoint, we ended the quarter with $55 million in cash and cash equivalents, $60 million available on our unsecured credit facility with an additional $50 million potentially available pursuant to an accordion feature and $29 million available on our revolving lines of credit for the financing of home sales and the purchase of inventory.\nWe also had $85 million unencumbered in our REIT securities portfolio.\nThis portfolio represents approximately 6% of our undepreciated assets.\nWe limit our portfolio to no more than 15% of our undepreciated assets.\nWith the exception of reinvesting our dividends, we are committed to not increasing our investments in the REIT securities portfolio.\nThe company continues to enhance its liquidity position.\nThrough our preferred and common stock ATM programs, we raised net proceeds of $9.8 million during the quarter and $73 million during the nine months.\nSubsequent to quarter end, we raised an additional $14.2 million through these programs.\nAdditionally, as Sam mentioned, in October, we entered into a $20 million line of credit with FirstBank secured by our rental homes and the income derived by them.\nThis line is expandable to $30 million with an accordion feature.\nIn conjunction with the Series B preferred stock redemption, subsequent to quarter end, we drew down $30 million on our unsecured credit facility and $26 million on our margin line.\nWe have been incredibly pleased with the performance of our portfolio of 124 communities.\nWe believe the favorable performance will continue in the years ahead.\nOur staff, despite the burden of the pandemic, has continued to serve the housing needs of our communities.\nUMH has acquired communities, installed and rented new homes, profitably sold homes, completed capital improvements, expanded communities and financed communities and rental homes at historically low interest rates.\nAs a result of these accomplishments, UMH is well positioned for a productive 2021 and beyond.\nThe shortage of affordable housing is a critical domestic issue facing our nation.\nThe pandemic has caused the population migration from the cities to the suburbs.\nUMH is now experiencing an increased demand for affordable single-family housing.\nIn an age where environmental, social and governance concerns are highly valued, UMH seeks to become a preferred investment as it provides the nation with much-needed affordable housing.\nUMH's capital stock includes preferred shares that could be redeemed with lower-cost capital in both 2022 and 2023.\nOur properties have become more valuable.\nThey have increased occupancy levels and improved operating metrics.\nIncumbent properties should become eligible for increased GSE financing at low rates.\nThe potential for favorable changes in the capital stock is one important factor.\nThe favorable economics in the housing market provides a pathway for UMH's improved operating results.\nHousing values are now increasing because of economic fundamentals.\nIn addition, the winds of inflation may also begin to blow across the landscape.\nWe have built a much needed important housing company over our 53 year history.\nThe years ahead can reflect the prudence of long-term values and visions.\n",
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"content": "q3 adjusted ffo per share $0.18.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Steven Sintros, UniFirst's President and Chief Executive Officer.\nActual future results may differ materially from those anticipated, depending on a variety of risk factors.\nAs I have said the last couple of quarters, I want to start by saying that first and foremost, our thoughts are for the safety and well-being of all those dealing with the impact of this virus.\nOverall, we're pleased with the results of our first quarter, which came in mostly as expected from a top line perspective.\nConsolidated revenues for the quarter were $446.9 million, down 4% from our fiscal 2020 first quarter.\nThese results were impacted by a strong quarter from both the nuclear and cleanroom operations of our Specialty Garments segment.\nFully diluted earnings per share for the quarter was $2.20, which exceeded our expectations as many variable expenses trended lower than our projections.\nAs we have discussed, the pandemic has clearly highlighted the essential nature of our products and services.\nWe believe the need and demand for hygienically clean garments and work environments positions our company well to support the evolving economic landscape.\nLike many businesses, we expect the quarters ahead to be uneven and bumpy, but we continue to be confident in the Company's position to weather the storm.\nWe also continue to position our sales resources to take advantages of opportunities that exist in the market today and as the economy recovers.\nSome positive trends of note for the quarter include new business installs at roughly the same level as the first quarter a year ago, as well as improved customer retention.\nIn addition, although reductions in wearers continue at higher than normal levels, the significant reductions experienced in our energy-dependent markets during the third and fourth quarters of fiscal 2020 have started to moderate.\nOverall, the outlook continues to be difficult to forecast.\nVaccine optimism is being balanced by uncertainty as to when and how quickly the vaccine will create positive movement in the economy.\nIn addition, the recent surge in positive COVID cases has started to cause increased business restrictions in certain states, provinces and municipalities.\nThe impact of these or further potential restrictions could have an impact on our results moving forward.\nAs a result of the ongoing uncertainty, we will not be providing any guidance at this time.\nAs we've talked about over the last year or two, we continue to be focused on making good investments in our people, infrastructure and technologies.\nAll of our investments designed to deliver solid long-term returns to all UniFirst stakeholders and are integral components to our primary long-term objective to be universally recognized as the best service provider in our industry.\nOur solid balance sheet positions us well to meet the ongoing challenges presented by the COVID-19 pandemic while continuing to invest in growth and strengthen our business.\nCertain investments scheduled for this year will continue as planned including the deployment of our new CRM system.\nAs we've talked about before, some of these investments will pressure on margins in the near term.\nHowever, we feel strongly that keeping these improvements to our company on schedule, will be critical to our long-term success.\nAs Steve mentioned, in our first quarter of 2021, consolidated revenues were $446.9 million, down 4% from $465.4 million a year ago and consolidated operating income decreased to $56 million from $60.1 million or 6.7%.\nNet income for the quarter decreased to $41.9 million or $2.20 per diluted share from $48.2 million or $2.52 per diluted share.\nOur effective tax rate in the quarter was 25% compared to 22.1% in the prior year which unfavorably impacted the earnings per share comparison.\nOur Core Laundry operations revenues for the quarter were $393.2 million, down 5.6% from the first quarter of 2020.\nCore Laundry organic growth, which adjusts for the estimated effect of acquisitions as well as fluctuations in the Canadian dollar, was also 5.6%.\nThroughout our quarter, our weekly revenues remained relatively stable.\nHowever, as expected, our organic growth rate trended unfavorably compared to our prior sequential quarter, due to the timing of certain annual pricing adjustments in the prior year.\nCore Laundry operating margin decreased to 12.4% for the quarter or $48.9 million from 12.9% in prior year or $53.8 million.\nThe decrease in the segment's profitability was primarily due to the impact of the decline in rental revenues on our cost structure, which was partially offset by lower travel-related, healthcare and energy costs.\nHowever, the segment's operating income exceeded our expectations due to a slightly stronger revenue performance, combined with a number of other costs that trended favorably compared to our expectations.\nAs we have discussed in the past, some of our expenses can be variable from quarter to quarter and difficult to forecast in the short term.\nWe do expect that a number of these costs that have been trending favorably will eventually normalize and pressure margins in the quarters ahead.\nEnergy costs decreased to 3.6% of revenues in the first quarter of 2021, down from 3.9% in prior year.\nRevenues from our Specialty Garments segment, which delivers specialized nuclear decontamination and cleanroom products and services, increased to $38.1 million from $33.4 million in the prior year or 14.2%.\nThis increase was primarily due to higher direct sales and project-related work in the U.S. and Canadian nuclear operations as well as continued growth in the clean room operations.\nSegment's operating margin increased to 18.8% from 14.6%.\nThis increase was primarily due to lower production and delivery costs as a percentage of revenues as well as lower travel-related, healthcare and energy costs.\nThese items were partially offset by higher merchandise expense as a percentage of revenues.\nThe Specialty Garments' quarterly top line and profit performance significantly exceeded our expectations as certain direct sales and project related work that had been deferred in the second half of fiscal 2020 related to the COVID-19 pandemic were finally realized as well as some additional direct sale activity that was anticipated later in fiscal 2021 came through early.\nAs we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality and the timing of nuclear reactor outages and projects that require our specialized services.\nOur First Aid segment's revenues were $15.5 million compared to $15.7 million in prior year.\nHowever, the segment's operating profit was nominal compared to $1.4 million in the comparable period of 2020.\nThis decrease is primarily due to reduced sales from the segment's higher margin wholesale business combined with continued investment in the Company's initiative to expand its first aid van business into new geographies.\nWe continue to maintain a solid balance sheet and financial position with no long-term debt and cash, cash equivalents and short-term investments totaling $473 million at the end of our first quarter of fiscal 2021.\nFor the first three months of fiscal 2021, capital expenditures totaled $41.8 million as we continue to invest in our future with new facility additions, expansions, updates and automation systems that will help us meet our long-term strategic objectives.\nOur quarterly capex spend was elevated primarily due to the purchase of a building in New York City for $14.1 million, which will provide us a strategic location for a future service center.\nDuring the quarter, we capitalized $2.9 million related to our ongoing CRM project which consisted of license fees, third-party consulting costs and capitalized internal labor costs.\nAs of the end of our quarter, we had capitalized a total of $25.5 million related to the CRM project.\nAs discussed on our last call, we are piloting a number of locations and expect that we will start a broader deployment in the second half of this fiscal year, at which time we will begin depreciating the system.\nEventually, the depreciation of the system combined with additional hardware we will install to support our new capabilities, like mobile handheld devices for our route drivers, will ramp to an estimated $6 million to $7 million of additional depreciation expense per year.\nDuring the first quarter of fiscal 2021, we repurchased 41,000 common shares for a total of $7.2 million under our previously announced stock repurchase program.\nAs of November 28, 2021 [Phonetic], the Company had repurchased a total of 355,917 common shares for $59.5 million under the program.\nAs Steve discussed, due to continued uncertainty regarding how states, provinces, municipalities and our customers will respond to the recent surge in positive COVID cases, as well as how quickly the vaccine will provide pandemic relief to the economy, we will not be providing guidance at this time.\nHowever, I will remind you that our second fiscal quarter tends to be a lower margin quarter due to the seasonality of certain expenses that we incur.\nAs we have done in our recent quarters, we also wanted to provide you an update on our current revenue trends.\nThroughout December, the weekly rental billings in our Core Laundry operations have been trending down compared to the comparable weeks in prior year by approximately 3.5% to 4%.\n",
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"content": "compname posts q1 earnings per share $2.20.\nq1 earnings per share $2.20.\nq1 revenue $446.9 million versus refinitiv ibes estimate of $438.5 million.\nhad no long-term debt outstanding as of november 28, 2020.\nat this time, overall outlook in quarters ahead remains uncertain.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Steven Sintros, UniFirst's president and chief executive officer.\nActual future results may differ materially from those anticipated depending on a variety of risk factors.\nOverall, we are pleased with our results for the first quarter of fiscal 2022.\nOur team continues to focus on providing industry-leading services to our customers as well as selling prospective customers on the value that UniFirst can bring to their businesses.\nThe results for our first quarter were largely as we anticipated, with consolidated revenues growing 8.8% and an overall adjusted operating margin for our core laundry operations of approximately 10%.\nThe team continues to execute well, producing solid performances in both new account sales as well as customer retention during the quarter.\nIn addition, wearer additions versus reductions during the quarter were positive, indicating the continued growth and recovery of our customer base.\nThis is a favorable comparison to a year ago when many customer wearer levels remained depressed due to the impact of the pandemic.\nThe strong year-over-year growth in the quarter was also impacted by adjustments to customer pricing as we continue to work with our customers through this inflationary environment.\nAs a reminder, from a profitability perspective, we discussed during our year-end earnings call that going forward over the next few years, we are going to be reporting adjusted results, which exclude the impact of costs that we are expending on three discrete strategic initiatives that are critical in our efforts to transform the company in terms of our overall capabilities and competitive positioning.\nAs a reminder, these three initiatives are the rollout of our new CRM system, investments in the UniFirst brand, and a corporatewide ERP system with a strong focus on supply chain and procurement automation and technology.\nAs we have talked about over the last year or two, we continue to be focused on making good investments in our people, our infrastructure, and our technologies.\nAll of the investments designed to deliver solid long-term returns for UniFirst stakeholders and are integral components of our primary long-term objective to be universally recognized as the best service provider in our industry.\nAfter excluding our costs in our quarter related to these investments, our adjusted operating margin is showing an anticipated decline compared to a year ago.\nThe comparison of adjusted margin is being impacted by increases in costs we've been highlighting for a couple of quarters now.\nSome are simply bouncing back from depressed levels during the pandemic and others are being impacted by the inflationary environment and some are being impacted by both.\nAs a reminder, these costs include merchandise amortization, costs related to raw materials and the overall supply chain disruption, the cost to hire and retain labor, energy, and travel.\nOur solid balance sheet positions us well to meet these ongoing challenges while continuing to make investments in growth and strengthen our business.\nAlong those lines, during December, we closed on two small acquisitions, which will improve our footprint in key markets.\nAs we have highlighted before, acquisitions continue to be part of our overall growth strategy.\nDespite the challenges in the overall operating environment, we continue to be confident in our ability to manage and execute through these obstacles.\nWe maintain a sharp focus on taking care of our employees, our customers, and bringing new customers into the UniFirst family.\nAs we have discussed previously, the pandemic has clearly highlighted the essential nature of our products and services and we feel the company is positioned well to support the evolving economic landscape.\nIn our first quarter of 2022, consolidated revenues were $486.2 million, up 8.8% from $446.9 million a year ago, and consolidated operating income decreased to $44.8 million from $56 million in -- or 20.1%.\nNet income for the quarter decreased to $33.7 million or $1.77 per diluted share from $41.9 million or $2.20 per diluted share.\nOur financial results in the first quarter of fiscal 2022 included $5.9 million of costs directly attributable to the three key initiatives that Steve discussed.\nExcluding these initiative costs, adjusted operating income was $50.7 million, adjusted net income was $38.1 million, and adjusted diluted earnings per share was $2.\nAlthough our financial results in the prior year may have included direct costs related to these key initiatives, which in our first quarter of 2021 would have primarily been for our CRM initiative, the company did not specifically track the amounts that were being expensed.\nThis is because the amount was less significant in value and a large number of the costs were still being capitalized.\nAs a result, we will not be providing adjusted amounts for the prior year comparable period.\nOur core laundry operations revenues for the quarter were $428.8 million, up 9.1% from the first quarter of 2021.\nCore laundry organic growth, which adjusts for the estimated effect of acquisitions as well as fluctuations in the Canadian dollar, was 8.6%.\nThis strong organic growth rate was primarily the result of customer reopenings, solid sales performance, and improved customer retention in fiscal 2021 as well as efforts to share with our customers the cost increases that we are seeing in our business due to the current inflationary environment.\nCore laundry operating margin decreased to 8.5% for the quarter or $36.5 million from 12.4% in the prior year or $48.9 million.\nCosts we incurred during the quarter related to our key initiatives were recorded to our core laundry operations segment.\nAnd excluding these costs, the segment's adjusted operating margin was 9.9%.\nThe decrease from prior year's operating margin was primarily due to higher merchandise amortization, which continues to normalize from depressed levels during the pandemic, as well as the effect of large national account installations, which are providing additional merchandise amortization headwinds.\nAlso, inflationary pressures and the overall supply chain disruption continued to impact our other merchandise costs.\nDuring the quarter, the adjusted operating margin was also impacted by higher travel and energy costs as a percentage of revenues as well as wage inflation we are experiencing, responding to the very challenging employment environment.\nEnergy costs increased to 4.3% of revenues in the first quarter of 2022, up from 3.6% in prior year.\nRevenues from our specialty garments segment, which delivers specialized nuclear decontamination and cleanroom products and services, increased to $39.5 million from $38.1 million in prior year or 3.5%.\nThis increase was primarily due to growth in our cleanroom and European nuclear operations.\nThe segment's operating margin increased to 21.9% from 18.8%, primarily due to lower merchandise costs as a percentage of revenues.\nAs we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality and the timing of nuclear reactor outages and projects that require our specialized services.\nOur first aid segment's revenues increased to $17.8 million from $15.5 million in prior year or 14.8%.\nThis increase was due to improved top line performance in both our wholesale distribution as well as our first aid van business.\nHowever, the segment had an operating loss of $0.3 million during the quarter primarily due to continued investment in the company's initiative to expand its first aid van business into new geographies.\nWe continue to maintain a solid balance sheet and financial position with no long-term debt and cash, cash equivalents, and short-term investments totaling $478.1 million at the end of our first quarter of fiscal 2022.\nDuring the quarter, our net cash provided by operating activities was impacted by our reduced profitability as well as heavier than normal working capital needs of the business.\nContributing to these higher working capital needs were elevated supply inventory balances related to the ongoing supply chain disruption as well as increases to rental merchandise and service as our balance sheet position continues to normalize coming out of the pandemic-impacted period.\nCapital expenditures for the quarter totaled $31.1 million as we continued to invest in our future with new facility additions, expansions, updates, and automation systems that will help us meet our long-term strategic objectives.\nNow that our CRM project has transitioned from a development phase to deployment, the majority of the costs are now being expensed.\nAs a result, the capitalization of costs related to our CRM project in the quarter totaled only $1.7 million.\nDuring the first quarter of fiscal 2022, we repurchased 22,750 common shares for a total of $4.8 million under our previously announced stock repurchase program.\nI'd like to take this opportunity to provide an update on our outlook.\nAt this time, we now expect our full-year revenues for fiscal 2022 will be between $1.94 billion and $1.955 billion.\nThis revised top-line guidance includes the anticipated impact of the two small acquisitions we closed in December that Steve discussed.\nThese acquisitions are expected to add approximately $10 million to our fiscal 2022 revenues.\nWe further expect that our diluted earnings per share for fiscal 2022 will now be between $5.50 and $5.80.\nThis earnings per share guidance assumes an effective tax rate of 24% and continues to include an estimate of $38 million worth of costs directly attributable to our key initiatives that will be expensed during the year.\nPlease also note the following assumptions regarding our guidance.\nCore laundry operations adjusted operating margin at the midpoint of the range is now 9.2%, which reflects continued pressure from costs that trended lower during the pandemic and the current inflationary environment.\nOur assumed adjusted tax -- our assumed adjusted tax rate for fiscal 2022 is 24.25%.\nAdjusted diluted earnings per share is expected to be between $7 and $7.30.\nGuidance does not include the impact of any future share buybacks or potential tax reform, and guidance assumes a stable economic environment with no pandemic-related headwinds, including potential expenses related to government COVID-19 mandates.\n",
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"content": "q1 revenue $486.2 million.\nq1 earnings per share $1.77.\nnow expect revenues for fiscal 2022 to be between $1.940 billion and $1.955 billion.\nexpect 2022 diluted earnings per share to be between $5.50 and $5.80.\n2022 adjusted diluted earnings per share is expected to be between $7.00 and $7.30.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Steven Sintros, UniFirst's President and Chief Executive Officer.\nActual future results may differ materially from those anticipated, depending on a variety of risk factors.\nAs I have the last couple of quarters, I want to start by saying that first and foremost, our thoughts are for the safety and well-being of all those dealing with the impact of the COVID-19 pandemic.\nOur second quarter results continued to be impacted by the pandemic as well as severe winter storms in Texas and the surrounding states during February.\nConsidering these challenges, we are pleased with the solid results for our quarter.\nThey truly continue to deliver in every way.\nConsolidated revenues for our second quarter were $449.8 million, down 3.2% from the prior year and fully diluted earnings per share was $1.71, down 6% from the prior year.\nShane will provide the details of our quarterly results shortly.\nOur second quarter began during a time where positive COVID-19 cases were surging and there was strong potential for further economic shutdowns.\nCases have sharply declined during the quarter from those peaks and vaccinations have started to pick up, creating more stability in our overall operating environment.\nThat being said, economic activity remains somewhat stagnant, and we have yet to see significant recovery activities take hold.\nThis is especially true in the energy dependent markets that we service which have also stabilized, but have not yet begun to recover.\nWe continue to focus on providing our valuable products and services to existing customers and selling new customers on the value that UniFirst can bring to their business.\nAs we have discussed, the pandemic has clearly highlighted the essential nature of our products and services.\nWe believe the need and demand for hygienically clean garments and work environments positions our Company well to support the evolving economic landscape.\nWe continue to position our sales resources to take advantage of the opportunities that exist in the market today and as the economy recovers.\nAlthough our new account sales have been solid during the first six months of the year and comparable to the first half of fiscal 2020, they are down from the record level set in fiscal '19.\nThe overall impact from COVID-19 as well as sharp declines in activity in the energy dependent markets that we service are contributing to those comparisons.\nThis decline has been partially offset by increased sales to existing customers.\nOn a positive note, we do expect stronger activity over the second half of the year, and from a retention standpoint, we are showing marked improvements over the first half of fiscal 2020.\nAlthough the trajectory of an eventual recovery is difficult to forecast, we do feel that the improved stability in the overall environment allows us enough comfort to share with you our outlook for the remainder of the year which Shane will provide shortly.\nVaccine optimism continues to be balanced by uncertainty as to when and how quickly the vaccine will create strong positive movement in the economy.\nOur solid balance sheet positions us to meet these ongoing challenges presented by the COVID-19 pandemic while continuing to invest in growth and strengthen our business.\nAs we've talked about over the last year or two, we continue to be focused on making good investments in our people, our infrastructures and our technologies.\nAll of these investments are designed to deliver solid long-term returns to UniFirst stakeholders and are integral components to our primary objective to being universally recognized as the best service provider in our industry.\nWe continue to make good progress on these core initiatives such as our CRM systems project.\nWe are pleased to report that we have successfully completed several pilot locations and have now officially moved into the deployment phase of the initiative.\nOur CRM deployment is certainly a foundational change to our infrastructure that will allow for service improvements and efficiencies moving forward.\nWe will continue to invest in our future over the next several years, including key investments in supply chain, other technology infrastructure, route efficiency, as well as our brand.\nWe will provide additional details as we progress with some of these key initiatives in the quarters ahead.\nAs Steve mentioned, our second quarter of 2021's consolidated revenues were $449.8 million, down 3.2% from $464.6 million a year ago.\nAnd consolidated operating income decreased to $40.7 million from $44.1 million or 7.8%.\nNet income for the quarter decreased to $32.6 million or $1.71 per diluted share from $34.7 million or $1.82 per diluted share.\nOur effective tax rate in the quarter was 22.7% compared to 24.2% in the prior year which favorably impacted the earnings per share comparison.\nAs a reminder, our tax rate can move from period to period based on discrete events including excess tax benefits and efficiencies associated with the employee share based payments.\nOur core laundry operations revenues for the quarter were $398.2 million, down 3.4% from the second quarter of 2020.\nCore Laundry organic growth which adjusts for the estimated effective acquisitions as well as fluctuations in the Canadian dollar was negative 3.6%.\nThroughout the quarter, our weekly revenues remained relatively stable as we did not experience any significant headwinds from states, provinces, municipalities or our customers responding to the surge in positive COVID-19 case counts during the holiday period.\nNor did we see any significant tailwind from the impact of the rollout of the COVID-19 vaccines.\nHowever, during the quarter, our top line performance was impacted by approximately $2 million from the effect of severe winter storms in Texas and the surrounding states on our operations as well as our customer locations.\nCore Laundry operating margin decreased to 8.9% for the quarter or $35.4 million from 9.3% in prior year or $38.4 million.\nThe segment's profitability was negatively impacted by the decline in rental revenues on our cost structure as well as higher healthcare claims costs.\nIn addition, the lost revenue and additional expense we incurred from the severe winter storms in Texas and the surrounding states reduced our operating income by approximately $2.6 million or $0.10 on EPS.\nThese items were partially offset by lower merchandise and travel related costs.\nAs Steve discussed, throughout the pandemic we have maintained our long-term perspective when managing the business, and as a result, we continued to invest in our core initiatives, including the further development and upcoming deployment of our CRM system.\nEnergy costs increased to 4.2% of revenues in the second quarter of 2021, up from 4.1% in prior year.\nThis increase was primarily due to additional utility expenses the Company incurred related to higher demand during the severe winter storms in Texas and the surrounding states.\nExcluding those elevated expenses, energy costs would have been 3.9% of revenues as the benefit that we have been seeing over the last several quarters started to moderate with the price of fuel increasing nationally.\nRevenues from our Specialty Garments segment, which delivers specialized nuclear decontamination and cleanroom products and services, decreased to $35.2 million from $36 million in prior year or 2.1%.\nThis decrease was primarily due to lower activity in the US and Canadian nuclear operations, which was partially offset by continued growth in the cleanroom business.\nBoth periods discussed benefited from significant one-time direct sales, which contributed to strong top line performance in a quarter that is usually negatively impacted by seasonality.\nThe segment's operating margin increased to 14.9% from 12.9%, primarily due to higher gross margin on its direct sales as well as lower travel related costs.\nThese items were partially offset by higher payroll costs as a percentage of revenues.\nAs we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality and the timing of nuclear reactor outages and projects that require our specialized services.\nOur First Aid segment's revenues were $16.3 million compared to $16.4 million in the prior year.\nHowever, the segment's operating profit was nominal compared to $1.1 million in the comparable period of 2020.\nThis decrease is primarily due to reduced sales from the segment's higher margin wholesale business, combined with continued investment in the Company's initiative to expand its first aid van business into new geographies.\nWe continue to maintain a solid balance sheet and financial position with no long-term debt and cash, cash equivalents and short-term investments totaling $509.6 million at the end of our second quarter of fiscal 2021.\nFor the first half of fiscal 2021, capital expenditures totaled $66.9 million as we continue to invest in our future with new facility additions, expansions, updates and automation systems that will help us meet our long-term strategic objectives.\nAs a reminder, capex spend is elevated primarily due to the purchase of a $14.1 million building in New York City in our first quarter of 2020 which will provide us a strategic location for a future service center.\nDuring the quarter we capitalized $2.2 million related to our ongoing CRM project which consisted of license fees, third-party consulting costs and capitalized internal labor costs.\nAs at the end of our quarter, we had capitalized a total of $27.7 million related to our CRM project.\nAt this time, we have started a deployment of this application to our numerous locations and anticipate this will continue through fiscal 2022 and into fiscal 2023.\nAs a result, we will start to depreciate the system over a 10 year life in our third fiscal quarter of 2021, with depreciation in the second half of the year approximating $1.5 million to $2 million.\n[Technical Issues] for our new capabilities like mobile handheld devices for our route drivers will ramp to an estimated $6 million to $7 million of additional depreciation expense per year.\nDuring the second quarter of fiscal 2021, we repurchased 12,200 shares of common stock for a total of $2.3 million under our previously announced stock repurchase program.\nAs of February 27, 2021, the Company had repurchased a total of 368,117 shares of common stock for $61.8 million under the program.\nAt this time we believe our ability to project our results has improved, and I would like to take this opportunity to provide an update on our outlook for fiscal 2021.\nWe expect our fiscal 2021 revenues to be between $1.793 billion and $1.803 billion, which at the midpoint of the range assumes an organic growth rate in our core laundry operations of 3.5%.\nAs a reminder, the prior year comparison for the second half of fiscal 2021 will be negatively impacted by a $20.1 million large direct sale to a healthcare customer that we recorded in our third fiscal quarter of 2020.\nFull year diluted earnings per share is expected to be between $7.30 and $7.65.\nThis outlook assumes an operating margin in our core laundry operations for the second half of the year of 10.4% and reflects additional expense we expect to incur related to the deployment of our CRM system of approximately $5 million.\nJust to be clear, this amount includes the depreciation expense that I mentioned earlier.\n",
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"content": "compname posts q2 earnings per share $1.71.\nq2 earnings per share $1.71.\nq2 revenue $449.8 million versus refinitiv ibes estimate of $446.4 million.\nsees fy earnings per share $7.30 to $7.65.\nsees fy revenue $1.793 billion to $1.803 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Steven Sintros, UniFirst's President and Chief Executive Officer.\nActual future results may differ materially from those anticipated, depending on a variety of risk factors.\nI want to start the call by saying that our thoughts go out to all the individuals and businesses, continuing to be impacted by the coronavirus pandemic.\nThis is an unprecedented time for our company, the country and the world, and first and foremost, our thoughts are for the safety and well-being of all those dealing with the impact of this virus.\nIt goes without saying that the company's focus in the third quarter centered around our pandemic response efforts, including our top priority of ensuring the safety of our Team Partners, while continuing to provide our value-added services to the many essential businesses in our communities.\nWe as a company as well as our customers continue to adapt to the practical challenges of operating in this ever changing environment.\nDuring the quarter, our results were most impacted by customer closures, primarily the result of state mandated shutdowns of non-essential businesses.\nIn addition, we have been dealing with higher than normal reductions of wearers and customers who have remained open or recently reopened.\nPart of this impact has been driven by the decline in the demand of oil and the corresponding reduction in business activity in the energy dependent markets that we service.\nDuring the quarter, customer closures peaked in mid-April, causing the weekly revenues of our core laundry operations to be down about 18% at that time, from the weekly revenue run rate in the weeks of February and March immediately preceding the disruption.\nFrom that point in April until last week, revenues have been steadily -- have steadily recovered to the point where last week's revenues were down about 8% from pre-pandemic run rates.\nThis recovery was primarily fueled by the reopening of businesses.\nIn addition, we have also benefited from the increase in sale of personal protective equipment, primarily face masks and hand sanitizers and soaps.\nOf the revenue shortfall that remains, businesses that remain closed or limited, such as restaurants, business services, hotel, schools and entertainment are prominently represented.\nAs I'm sure you can appreciate, it remains a fluid environment with many states recently reporting increases in many of the metrics that you're using to measure the status of the virus spread.\nAs a result of the evolving nature of the pandemic and its impact on our communities, our ability to assess the financial impact on our -- the ability to assess the financial impact on our business continues to be limited.\nAs a result, we are not providing guidance for the remainder of fiscal 2020.\nWith respect to the third quarter results.\nConsolidated third quarter revenues were $445.5 million, a decrease of 1.8% over the same quarter a year ago.\nThe overall shortfall in revenue was mitigated by a large direct sale of $20.1 million to a large healthcare customer as well as strong revenues from our First Aid segment.\nOur consolidated operating margin was 6.2%, and was impacted by the revenue shortfall in our US and Canadian laundry operations as well as numerous costs related to our COVID-19 response efforts.\nFor example, we instituted certain compensation programs to mitigate the impact of our revenue decline on our service teams' wages as well as to show appreciation to all of our front-line workers for their continued dedication and commitment during the early months of the pandemic.\nThese programs are temporary in nature and we currently expect that they will begin to phase out in the fourth quarter.\nShane will take you through the details of our financial results shortly.\nAlthough we instituted some reduction in labor and cost containment during the quarter, based on the evolving situation with our customers, our financial strength and our desire to support our employees during these difficult times, we were patient in our approach.\nWe will continue to be patient as we work to get our arms around the longer term impact of this pandemic.\nIn the meantime, we will continue to support our employees, our customers, and make decisions in line with improving our business in the long run.\nDespite all of the events of the quarter, we continue to generate positive free cash flows and ended the quarter with $421.3 million in cash and cash equivalents on hand and no debt on our books.\nAs a result, we believe we are well positioned to deal with the adversity that we are facing related to the coronavirus pandemic.\nIn addition, the pandemic has clearly highlighted the essential nature of our products and services.\nWe believe the need in the demand for hygienically clean garments in work environments positions our company well to support the evolving economic landscape.\nLike many businesses, we expect the quarters ahead to be uneven in bumpy, but we are confident in the company's position to weather the storm and take advantage of a broad economic recovery.\nAs Steve mentioned, consolidated revenues in our third quarter of 2020 were $445.5 million, down 1.8% from $453.7 million a year ago.\nAnd consolidated operating income decreased to $27.7 million from $60.2 million or 54%.\nNet income for the quarter decreased to $21.3 million or $1.12 per diluted share from $47.2 million or $2.46 per diluted share.\nOur Core Laundry Operations revenues for the quarter were $388.4 million, down 2.8% from the third quarter of 2019.\nCore Laundry organic growth, which adjusts for the estimated effective acquisitions as well as fluctuations in the Canadian dollar was negative 3.2%.\nDuring the quarter, our revenues were mostly impacted by customer closures related to the coronavirus pandemic as well as related reductions in workforce for customers who remained open.\nThe company was able to partially offset these declines with a $20.1 million direct sale to a large healthcare customer as well as increased safety and PPE sales.\nThe result of our customers increased focus on maintaining a hygienically clean and safe work environment for their employees and patrons.\nCore Laundry operating margin decreased to 5.1% for the quarter or $19.7 million from 13.4% in prior year or $53.4 million.\nThe segment's profitability was affected by many items, including the impact of the decline in rental revenues on our cost structure, a higher cost of revenues related to the large $20.1 million direct sale and additional costs the company incurred related to the pandemic.\nSome of the more notable items include merchandise amortization, which is expense that is recognized related to rental merchandise that has been placed in service, was up significantly as a percentage of revenues.\nThis is because our merchandise in service is amortized on a straight-line basis over the estimated service lives of the related merchandise, which average approximately 18 months.\nAlthough our new garment additions into service were down significantly in the quarter, the amortization expense was little changed because of the amortization of prior period expenditures.\nAs Steve discussed, our number one priority during the quarter was the safety of our employees.\nAnd we sourced a significant amount of safety supplies for internal use.\nOver the last few months these products were in high demand and prices were significantly higher than they had been prior to the pandemic.\nThese prices have recently started to normalize and as a result, we expect that the costs we will incur in subsequent periods will be dramatically less than our current quarter.\nWe incurred additional costs related to certain employee compensation programs we instituted during the quarter, also discussed by Steve, and some of these programs will continue into the fourth quarter of 2020.\nAs of last week, our weekly revenues were down about 8% from pre-pandemic run rates, primarily related to customer locations that remained closed.\nDuring the quarter, the company recorded additional reserves for uncollectible accounts receivable, primarily due to the increased risk that these customers will be able to pay their outstanding balances.\nThese items were partially offset by lower incentive compensation due to revised expectations of the company's growth and profitability in fiscal 2020 as well as lower healthcare, energy, and travel related costs as a percentage of revenues.\nEnergy costs decreased to 3.4% of revenues in the third quarter of 2020 from 4.2% in prior year.\nRevenues from our Specialty Garments segment, which delivers specialized nuclear decontamination and cleanroom products and services, decreased to $36.2 million from $37.3 million in prior year or 3.1%.\nThis decrease was largely due to lower direct sale activity in the quarter, partially offset by growth in our cleanroom and European nuclear operations.\nThe segment's operating margin increased to 17.6% or $6.4 million from 14.4% or $5.4 million in the year ago period.\nThis increase was primarily due to bad debt recovery from a customer in bankruptcy and lower travel-related costs.\nThese items were partially offset by higher merchandise expense and costs incurred responding to the pandemic, including employee compensation and amounts paid for internal use safety supplies.\nAs we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality and the timing of nuclear reactor outages and projects that require our specialized services.\nOur First Aid segments revenues increased to $20.9 million from $16.6 million in prior year or 26%.\nThis increase was primarily due to increased demand for the segment safety and PPE offerings.\nOperating margin decreased to 7.8% from 8.4%, primarily due to higher merchandise costs as a percentage of revenues.\nWe continue to maintain a solid balance sheet and financial position, with no long-term debt and cash, cash equivalents and short-term investments totaling $421.3 million at the end of our third quarter of fiscal 2020.\nCash provided by operating activities for the first three quarters of the fiscal year was $205.4 million, an increase of $6.0 million from the comparable period in prior year.\nFor the first three quarters of fiscal 2020, capital expenditures totaled $91.2 million.\nWe continue to scrutinize our capital expenditures due to ongoing uncertainty related to COVID-19.\nAs we move through the remainder of our fiscal year, we will continue to evaluate the timing of our growth-related capital expenditures, taking into consideration the revenue recoveries that we continue to see.\nDuring the quarter, we capitalized $3.3 million related to our ongoing CRM project, which consisted of license fees, third-party consulting costs, and capitalized internal labor costs.\nIn the first three quarters of our fiscal year, we have capitalized a total of $9.9 million related to this project.\nDuring the third quarter of fiscal 2020, we repurchased 46,667 shares of common stock for a total of $7.5 million under our previously announced stock repurchase program.\nThe company has not repurchased any additional shares since early in this fiscal quarter, due to the uncertainty related to COVID-19.\nAs of May 30, 2020, we had repurchased a total of 314,917 shares of common stock for a total of $52.3 million under the program.\nAnd we would now be happy to answer any questions that you may have.\n",
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"content": "q3 earnings per share $1.12.\nq3 revenue $445.5 million versus refinitiv ibes estimate of $382.5 million.\ncontinue to believe that ability to assess financial impact on business remains limited.\nnot providing guidance for remainder of our fiscal 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Steven Sintros, UniFirst President and Chief Executive Officer.\nActual future results may differ materially from those anticipated depending on a variety of risk factors.\nAs we look back over our fiscal year 2021, we are pleased with what we have accomplished as a team in the face of what continues to be a unique and challenging operating environment.\nDuring the year, our Company and the communities that we operate and then serve continue to deal with the impact of the COVID-19 pandemic.\nProgress was certainly made at the introduction of vaccines has allowed for improvements in the overall public health situation as well as the reopening of many businesses.\nAs you are all keenly aware however, the challenges related to COVID-19 continue to evolve and are not fully behind us just yet.\nI also want to continue to highlight that for over a year now, our team partners have continued to put forth tremendous efforts in the face of the many obstacles created by the pandemic.\nThey've worked extremely hard to take care of each other and our customers during these extraordinarily challenging times.\nFor our full year fiscal 2021, the Company reported revenues of $1.826 billion exceeding fiscal 2020's total of $1.804 billion.\nWhen we provided guidance at the beginning of the fiscal year, we had articulated that showing any growth during fiscal 2021 would be a challenge.\nTherefore, overall, we were pleased with this outcome.\nOur Core Laundry Operations revenue over the second half of the year were positively impacted by a modest level of customer reopenings as well as increases in the sale of PPE.\nIn addition, our Specialty Garments segment was also a strong contributor to our overall results, producing a record year from a top and bottom line perspective.\nFrom a profit perspective, full year diluted earnings per share was $7.94 compared to $7.13 in fiscal 2020.\nThe improved earnings comparison for the full year was primarily due to our depressed results in the second half of fiscal 2020 when the impact of the COVID-19 pandemic was greatest on our business, primarily in the form of customer closures.\nShane will provide the details of our fourth quarter results shortly.\nAs we've talked about over the last year or two, we continue to be focused on making good investments in our people, our infrastructure and our technologies.\nAll of our investments designed to deliver solid long-term returns to our UniFirst stakeholders and are integral components to our primary long-term objective to be universally recognized as the best service provider in the industry.\nAs we look ahead to fiscal 2022, there are number of key initiatives, we are excited about progressing as we continue to transform the Company in terms of our overall capabilities and competitive positioning.\nThe first being the rollout of our new CRM system which we have spoken quite a bit about previously.\nWe continue to make solid progress on this key initiative, which we will continue -- which will continue through fiscal 2022 and well into fiscal 2023.\nThe second is an investment in the UniFirst brand.\nOur brand is an area that has not been significantly invested in over the years and we are excited for this revitalization which will not only evolve the look and feel of who UniFirst is, but will solidify our message internally and externally around what we stand for as a company and why we are a great choice for existing and prospective customers and employees.\nFinally, during fiscal 2022, we will be embarking on a multi-year project to implement a corporate wide ERP system with a strong focus on supply chain and procurement automation and technology.\nThis phase initiative will become the core of UniFirst technology footprint and will integrate and complement the capabilities of the CRM system, we are currently deploying.\nFrom an operating standpoint, heading into fiscal 2022, we carry solid momentum from a top line perspective into the year.\nDespite the external challenges that the team has hindered, our sales performance has been very solid selling both new business as well as internally to our existing customers.\nIn addition, our customer retention for fiscal 2021 was much improved compared to recent years.\nWe also will clearly be looking to work with our customers to sharing the cost increases that we are experiencing in various aspects of the business.\nAs a result of these top line drivers, we expect organic growth for fiscal 2022 to exceed what we've been experiencing in recent years.\nShane will provide the details of our outlook shortly.\nFrom a bottom line perspective, there are two categories of costs.\nWe expect to present challenges from a margin perspective in fiscal 2022.\nThe first group consists of costs that are bouncing back from depressed levels during the pandemic, and costs that are being impacted by the increasingly inflationary environment.\nLast quarter, I highlighted some of these items including merchandise amortization, costs related to raw materials and the overall supply chain disruption, the cost to hire and retain labor, energy and travel.\nThe second group consists of investments we are making in the future of our company.\nA subset of these costs relate to building stronger overall capabilities as a company that we feel are necessary to enhance our competitors -- competitiveness, accelerate growth and ultimately improve efficiency and profitability.\nThese investments are being made in several areas including human resources, supply chain, central services and marketing among others.\nIn addition, significant costs are expected to be invested in fiscal 2022 and upcoming years related to the three discrete initiatives I discussed earlier.\nGoing forward we'll be carving out the portion of costs related to these initiatives that we view are transitionary, and excluding them from a measure of adjusted profitability and we will continue to report until these key initiatives are completed.\nYou can expect we'll be providing regular communication during our quarterly earnings calls regarding cost that we are expanding during these large initiatives, so investors can have a better sense of what our results look like excluding some of these costs.\nEven excluding these transitory costs related to these large initiatives, our margins will be pressured in fiscal '22 by investments we continue to make in our overall capabilities.\nHowever, we feel strongly about the need to invest in these areas and believe in the future benefits they will provide.\nWe also firmly believe, on the other side of these initiatives, there will be opportunities not only to rationalize the direct costs related to these initiatives, but to improve the overall efficiency of our cost structure that currently is working to support multiple systems through this technology transformation.\nOur solid balance sheet positions us well to meet our ongoing challenges while continuing to make these investments in growth and strengthen our business.\nWe also continue to routinely evaluate our strategy around capital allocation.\nAs part of that review, we announced earlier today, we will be increasing our quarterly dividend by 20% to $0.30 per share of the Company's common stock and $0.24 per share on the Company's Class B common stock.\nAt this time, we believe that a continued annual increase to our dividend was over time expands, commensurate with our free cash flow generation will be a foundational piece to our capital allocation strategy.\nIn addition, we have reloaded our share purchase authorization program to allow for the Company to purchase up to $100 million of its outstanding shares.\nAnd finally, as always we continue to focus on providing our valuable products and services to existing customers and selling new customers on the value UniFirst can bring to their business.\nAs we have discussed, the pandemic has clearly highlighted the essential nature of our products and services.\nWe believe the need and demand for hygienically clean garments and work environments positions our Company well to support the evolving economic landscape.\nConsolidated revenues in our fourth quarter of 2021 were $465.3 million, an increase of 8.5% from $428.6 million a year ago.\nConsolidated operating income increased to $44.9 million from $40.8 million or 10.1%.\nNet income for the quarter increased to $34.6 million or $1.82 per diluted share from $31.6 million or $1.66 per diluted share.\nOur effective tax rate in the quarter was 22% compared to 26.6% in the prior year.\nAs a reminder, our tax rate can move from period to period based on discrete events including excess tax benefits and efficiencies associated with employee share based payments.\nOur Core Laundry operations revenues for the quarter were $415.1 million and increased 7.9% from the fourth quarter of 2020.\nCore Laundry organic growth which adjusts for the estimated effective acquisitions as well as fluctuations in the Canadian dollar was 7.2%.\nThis increase was primarily driven by the COVID-19 pandemic, significantly impacting our customer operations and wearer [Phonetic] levels in prior year as well as solid sales performance and improved customer retention in 2021.\nCore Laundry operating income was $41.8 million for the quarter, up from $38.1 million in prior year.\nAnd the segment's operating margin increased to 10.1% compared to 9.9% in 2020.\nThe increase in 2021's operating margin was primarily due to lower merchandise amortization as a percentage of revenues, partially offset by higher energy, healthcare claims cost and travel.\nIn addition, production payroll cost increased as a percentage of revenues, but were offset by costs we incurred responding to the pandemic in prior year providing a favorable comparison.\nCompany's G&A costs also trended higher during the quarter as we prepared for and advanced the key initiatives that Steve discussed earlier.\nEnergy costs increased to 4.2% of revenues in the fourth quarter of 2021, up from 3.5% a year ago.\nRevenues from our Specialty Garments segment which deliver specialized nuclear decontamination and cleanroom products and services were $33.9 million for the fourth quarter of fiscal 2021, an increase of 22.5% over 2020.\nThe segment's strong top line growth was driven by improved performance in both its cleanroom as well as its US and European nuclear operations.\nThe segment's operating income increased to $4.1 million or 12.1% of revenues from $2 million or 7.1% of revenues in the year-ago period.\nThis increase was primarily due to the improved revenue performance resulting in strong operating leverage as well as lower casualty claims expense as a percentage of revenues.\nThese benefits were partially offset by higher merchandise cost as a percentage of revenues.\nAs we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality as well as the timing and profitability of nuclear reactor outages and projects.\nOur First Aid segment's revenues in the fourth quarter of 2021 decreased to $16.3 million from $16.4 million primarily due to elevated PPE sales in the prior year, partially offset by growth in the First Aid van business.\nIn addition, the segment had an operating loss in the quarter of $1 million compared to operating income of $0.7 million in 2020.\nThe current quarter's operating results reflect continued investment in the Company's initiative to expand its First Aid van business into new geographies.\nWe continue to maintain a solid balance sheet and financial position with no long-term debt and cash, cash equivalents and short-term investments totaling $512.9 million at the end of fiscal 2021.\nCash provided by operating activities for the year was $212.3 million, a decrease of $74.4 million from the prior year.\nThis decrease was primarily due to sizable working capital needs of the business as some of our asset positions which were abnormally depressed during the pandemic have returned to pre-pandemic balances.\nCapital expenditures for fiscal 2021 totaled $133.6 million as we continue to invest in our future with new facility additions, expansions, updates and automation systems that will help us meet our long-term strategic objectives.\nDuring the quarter, we capitalized $2.3 million related to our ongoing CRM project which consisted of both third-party consulting costs and capitalized internal labor costs.\nAs of August 28, 2021, we had capitalized $34.2 million related to the CRM project.\nAs a reminder, we started deploying this system to our locations earlier in the fiscal year and anticipate, this will continue through fiscal 2022 and well into 2023.\nWe are depreciating this system over a 10 year life, including the additional hardware we installed to support our new capabilities like mobile handheld devices for our route drivers, we incurred approximately $2 million in depreciation and amortization in fiscal 2021 [Phonetic].\nIn 2022, we expect that the amortization of the system and depreciation of the related hardware will approximate $5 million in total and eventually ramp to an estimated $6 million to $7 million per year.\nAlthough, our acquisition activity in fiscal 2021 was relatively nominal, we continue to look for and aggressively pursue additional targets as acquisitions remain an integral part of our overall growth strategy.\nI'd like to take this opportunity to provide our outlook for fiscal 2022.\nAt this time, we anticipate our full year revenues for fiscal 2022 will be between $1.92 billion and $1.945 billion.\nThis top line guidance assumes a Core Laundry organic growth rate of approximately 6.1% at the midpoint of the range.\nAs Steve mentioned, this strong expected organic growth rate is primarily a result of customer reopenings, solid sales performance and improved customer retention in fiscal 2021 as well as anticipated efforts to share with our customers, the cost increases that we are seeing in our business.\nFor fiscal 2022, we further expect that our fully diluted earnings per share will be between $5.70 and $6.10.\nThis guidance includes $38 million of costs that we expect to incur in the fiscal year directly attributable to the three key initiatives that Steve discussed, our CRM and ERP system initiatives and our branding efforts.\nExcluding these transitionary investment costs, our Core Laundry operations adjusted operating margin assumption at the midpoint of the range is 9.5%.\nThis adjusted operating margin reflects certain costs that are normalizing from depressed levels during the pandemic like merchandise amortization and travel costs, costs we are incurring to hire and retain labor in this challenging employment environment, elevated input costs related to the current inflationary environment and global supply chain challenges as well as additional investments we are making in strengthening our overall capabilities.\nBased on the current energy prices, we are modeling the energy costs in our Core Laundry operations will increase to 4.6% of revenues in fiscal 2022, up from the previously discussed 4.2% in 2021.\nNext year's effective tax rate is assumed to be 24% compared to 22% in fiscal 2021.\nOur Specialty Garments' segment revenues are forecast to be relatively flat compared to 2021.\nHowever, the segment's operating income is expected to be down approximately 11%.\nAs a reminder, fiscal 2021 was a record year for this segment from both a top and bottom line perspective and the anticipated decline in operating margin is due to the timing and relative profitability of its planned outages and project work.\nOur First Aid segment's revenues are expected to be up approximately 10% compared to 2021.\nHowever, this segment's profitability will be relatively marginal in 2022 as a result of the investments, we continue to make in building out the geographic footprint of our van operation.\nWe expect that our capital expenditures in 2022 will approximate $125 million.\nOur guidance for fiscal '22 also assumes our current level of outstanding common shares.\nNo impact related to potential tax reform and no deterioration in the current economic environment.\nIn addition, as I'm sure that you are aware, last month President Biden issued broad sweeping vaccine and or testing requirements for all companies with more than 100 employees.\nThese rules have not yet been finalized nor has an effective date been communicated.\nAs such, we have not included any costs in our forecast that we do expect would be incurred to comply with these requirements.\n",
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"content": "compname announces financial results for the fourth quarter and full year of fiscal 2021; quarterly dividend increase; new $100 million share repurchase authorization.\nq4 earnings per share $1.82.\nq4 revenue $465.3 million.\nfor fiscal 2022, expect revenues to be between $1.920 billion and $1.945 billion.\nfor fiscal 2022, expect fully diluted earnings per share to be between $5.70 and $6.10.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: All went very well, and we expect him fully back in just a few days.\nI'm quite confident he is listening now, so I hope you're doing well, Boss.\nWe're here today to discuss third-quarter results and the expanding opportunities we see looking ahead.\nAs a result of the progress at both Optum and UnitedHealthcare, we have increased our 2021 adjusted earnings outlook to a range of $18.65 to $18.90 per share.\nWe continue to prioritize three themes Andrew has discussed before which our -- before which are foundational to the growth of our enterprise.\nFirst, unlocking the collaborative potential within Optum and UnitedHealthcare for the benefit of all.\nSecond, further developing our technology and data science platform to aid patient care and experience and to help the system run better.\nThird, strengthening our consumer experience, capabilities and value.\nI'll briefly highlight a couple of items for you.\nYou will likely have seen the CMS Medicare Advantage Star quality rating showing 95% of our UnitedHealthcare members will be in four star-rated plans or better for 2023, up from 78% for 2022 and a new high for our company.\nWithin Optum Care, on behalf of the many payers we serve, 99% of Medicare Advantage patients will be in four-star plans or better for 2023.\nA second important highlight in the quarter.\nWe were encouraged by the ongoing strength in our employer and individual business, which has now grown by over 330,000 people this year with revenue up 7% year over year.\nWe continue to see active interest in our product innovations, such as our All Savers level-funded offering and are encouraged by our competitiveness in the market and momentum heading into '22.\nWe also elevated consumer connectivity by incorporating fitness offerings from industry-leading partners.\nOptumHealth continues to build momentum as well.\nEntering the open enrollment period for Medicare Advantage, we have more than 2.2 million people served under physician-led, fully accountable arrangements and expect '22 to be another year of record expansion in this key part of our portfolio.\nOur broad home-based clinical care initiatives at Optum and UnitedHealthcare are central to improving near and longer-term health outcomes for people with medical, behavioral and social needs.\nThese efforts include Optum at Home, which delivers high-quality primary care services in the convenience of the home setting and support recovery after hospitalizations.\nSeniors served by our home and community offering experienced a 14% lower rate of hospital admissions and about a 4% higher rate of physician encounters.\nIn addition to caring for people in their homes, we continue to expand capabilities in other optimal sites of care, including via digital means.\nOptum is distinctively enabling virtual care for patients using their own primary care physicians and with behavioral clinicians.\nFor example, a physician engaging in a virtual visit with a patient can easily bring in a behavioral health professional for a real-time consultation.\nUnitedHealthcare is using Optum's virtual capabilities to introduce a new suite of digital-first products, offering a near seamless experience between virtual and traditional primary, specialty, and urgent care.\nWe expect during 2022 and beyond to further build on these opportunities to connect and integrate multiple channels of care, simplify the experience for patients and providers and deliver quality care that is affordable and in the optimal setting.\nLet me now go a little deeper in a few areas to give you an assessment of how we're doing on the themes I mentioned at the outset.\nOptumInsight continues to drive better clinical and operational performance at the health system level.\nLast week, we reached a new multiyear partnership with a leading and innovative health system, SSM Health, whose 40,000 employees, 33 hospitals and post-acute facilities and 300 physician clinics serve the people of Missouri, Oklahoma, Wisconsin and Illinois.\nOptumInsight brings real value in helping systems strengthen and scale essential functions, such as care coordination, revenue cycle management and digital modernization, all to improve health outcomes and patient's care experiences.\nThese and similar efforts to simplify processes, reduce administrative burdens and help our partners focus -- help our partners focus more attention on their care -- on their core missions of patient care.\nOptumRx continues to deliver to health system partners, such as its new multiyear agreement with Point32Health, which serves more than 2 million people in New England through its founding organizations, Harbor Pilgrim Health Care and Tufts Health Plan.\nOptumRx will provide integrated pharmacy benefit and specialty offerings that will enhance services and deliver improved affordability for their plan members.\nOptumRx is having a substantial impact through its community behavioral health pharmacies, which now serve nearly 700,000 people with mental health, addiction and other conditions through more than 600 dispensaries across 47 states.\nThe pharmacies deliver a high-touch approach to care that contributes to a more than 90% medication adherence rate and lowers emergency room visits and hospitalizations by 18% and 40%, respectively, driving better outcomes and a lower total cost of care.\nWithin our UnitedHealthcare government businesses, we have increased processing efficiency by 25% over the last year by using Optum technology to improve auto adjudication rates and intelligent work distribution to appropriately skilled channels.\nWe have many such initiatives underway across the enterprise in affordability, provider experience and product development as we employ advanced technology and data analytics to drive even greater value for the people we serve and the health system.\nBefore turning over the call to John, a quick word on our pending combination with Change Healthcare.\nWe continue to work diligently to satisfy regulatory requests and now believe, based on our experience so far, the transaction should close in the first part of 2022.\nWe are highly energized about the positive impact we can have working together with the exceptional change team, a team aligned with our mission and values and focused on delivering substantial benefits for the healthcare system.\nThese benefits will include helping clinicians by simplifying access to real-time, evidence-based guidance as they are serving patients, closing gaps in care more rapidly to improve health outcomes and lower cost, reducing unnecessary complexity by removing administrative waste and obstruction to make the care process simpler, more cost effective and more transparent.\nAnd bringing greater convenience and simplicity to managing consumer health finances, while ensuring care providers get paid more quickly and accurately.\nOptum and Change Healthcare's capabilities fundamentally are complementary and distinct because both companies already successfully serve health plans and state governments, care providers and consumers in a highly competitive market.\nWe believe this combination will make the healthcare system work better for everyone and bring exceptional value to those we serve.\nThis growth was led by OptumHealth, primarily our care businesses.\nIn the third quarter, the Optum platform comprised 54% of enterprise operating earnings and continues to show strong growth momentum.\nOur performance reflects the diverse and complementary strengths of our business, setting the stage for growth in the years ahead.\nOur updated full-year '21 outlook includes unfavorable COVID impacts, consistent with the expectations we have discussed throughout the year.\nDuring the third quarter, while direct COVID care and testing costs ran above the expectations we had nearly a year ago, we again saw elective care offsetting the impacts of higher case rates, much like previous cycles in the pandemic.\nThis quarter, there were approximately 60,000 COVID hospitalizations meaningfully above the second quarter, with the month of August peaking at nearly 30,000 and then declining in September.\nLooking at specific business performance.\nOptumHealth's third-quarter revenue and earnings increased 32% and 37%, respectively, year over year.\nRevenue per consumer grew by 30%.\nThis reflects the increasing impact and number of value-based relationships within OptumCare.\nThe expansion of our in-home and community health platform, as well as the growing acuity of the needs we can serve.\nOptumInsight's revenue grew 13% in the quarter, and earnings grew 15% as the revenue backlog increased by 12% to $22.3 billion.\nWe see overall business development sourcing and activity levels increasing, particularly with care provider customers, and for our software and analytics offerings.\nOptumRx revenue and scripts grew 6% year over year and earnings, 5%.\nOptumRx has seen both strong customer retention levels and sales success for the largely completed '22 selling season and early activity for '23.\nThe third quarter showed increasing member growth in our commercial offerings, particularly in employer-sponsored benefits.\nIncreased employment is a broad underlying contributor, but we are particularly encouraged by the growth we are achieving in our affordable consumer-centric offerings.\nMedicare Advantage membership has grown 745,000 this year, inclusive of plans which serve dual special needs members.\nWe expect to add a total of over 900,000 Medicare Advantage members.\nThe number of people served through managed Medicaid grew by more than 1 million members over last year as we began to serve people in new regions such as North Carolina, Kentucky and Indiana, and as state-based redetermination activities remained paused.\nWe were honored to begin serving people in the Missouri Medicaid expansion this month.\nOur liquidity and capital positions remain strong with third-quarter cash flows from operations at $7.6 billion, or 1.8 times net income, and we ended the quarter with a debt-to-capital ratio of 39%.\nNow, with the close of the third quarter, your attention understandably turns to next year.\nAs is our custom, we will offer a few early observations here while reserving the majority of this conversation for our November 30 investor conference, which we hope will be held in person in New York.\nOur businesses are both growing and operating well with strong momentum heading into next year.\nWhile the pandemic-related impacts remain difficult to predict, given the current trends, we would expect a lower unfavorable COVID impact than experienced in '21.\nStill, as the dramatic variation over the last 20 months has demonstrated to all, prudent management suggests we should offer an outlook respectful of the fact that the current situation is without precedent.\nTaking all elements together at this distance, we see current analyst consensus as reasonably beginning to calibrate a '22 outlook.\nEnvisioning that consensus as being toward the upper end of our initial adjusted earnings per share outlook range, with the range being similar to that offered initially for '21.\nThe still untapped collaborative potential between UnitedHealthcare and Optum to benefit individuals in the system, the power of applied technology to advance care and service, improved opportunity in consumer health and experience and the passion of our people.\nThese and so many other elements lead us to believe our performance expectations for the years ahead remain fully supportive of our long-term 13% to 16% earnings-per-share growth outlook.\nWe look forward to going into more detail on both our view of '22 and the many years of growth beyond at our investor conference.\nWith that, operator, let's open it up for question.\nOne per caller, please.\n",
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"content": "sees fy adjusted earnings per share $18.65 to $18.90.\ncompany's full year 2021 outlook for net unfavorable covid-19 earnings effects is consistent with previous expectations.\ncash flows from operations in q3 were $7.6 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our SEC filings can be found in the Investors section of our website.\nNet income for the first quarter of 2021 included: first, the net after-tax loss from the second phase of the closed block individual disability reinsurance transaction of $56.7 million, which is $0.27 per diluted common share.\nSecond, the after-tax amortization of the cost of reinsurance of $15.8 million, which is $0.08 per diluted common share and a net after-tax realized investment gain on the company's investment portfolio and this excludes the net realized investment gain associated with the reinsurance transaction of $13.5 million or $0.06 per diluted common share.\nNet income in the first quarter of 2020 included a net after-tax realized investment loss of $113.1 million, which is $0.56 per diluted common share.\nSo excluding these items, after-tax adjusted operating income in the first quarter of 2021 was $212 million or $1.04 per diluted common share compared to $274.1 million or $1.35 per diluted common share in the year-ago quarter.\nMark is an experienced leader in the insurance industry, and we're very happy to have him here at Unum.\nOur first-quarter results represent a solid start to 2021.\nWith improving trends, we entered the quarter with positive momentum and -- I'm sorry, entering second quarter with positive momentum and increasing optimism.\nWe expect to see a strong second-half recovery from the COVID-related pandemic.\nIt certainly has been a tumultuous period, but we believe we are well-positioned both strategically and financially to return to our pre-pandemic levels of profitability and margins in the coming quarters.\nEach quarter over the past year, we've described how the COVID-19 pandemic and resulting economic impacts have influenced our operations and financial results across our business.\nEach quarter has had its own set of dynamics.\nThis quarter was no different with the sharp increase in infections and deaths through the year-end period.\nWe have seen rapid changes since that period of time, but nonetheless, it has had an impact on the quarter.\nFirst, COVID has significantly impacted mortality experience in our life insurance businesses and generated higher volumes of short-term disability claims and leave requests at the workplace.\nAdditionally, the severe dislocations to the economy and national employment levels have dampened our premium growth by slowing sales and negating the natural growth we typically see in our in-force premium base.\nAnd finally, the downdraft in the financial markets last spring and the sharp decline in interest rates further pressured new money yields.\nWe expect each of these trends to turn.\nThroughout these challenging times, I've been proud of how our employees have stepped up and successfully met our corporate purpose to help people thrive throughout life's moments.\nAs we stand today, I'm confident that the challenges posed by COVID-19 and the 2020 recession are largely behind us.\nI'm optimistic that while the pandemic certainly is not over, and we expect to see lingering effects into the second quarter, we will also see a strong recovery in our results through the balance of 2021.\nComing back to our first-quarter results, the core business continued to perform well, generating solid sequential premium growth, continued strong persistency, and favorable benefits experience across most lines.\nThe challenges from COVID continue to be well-defined within our life insurance product lines, primarily within Unum U.S. Group life.\nWhile the human loss from the pandemic continues to be heartbreaking for all of us, COVID-19 related mortality across the U.S. has been trending favorably on a weekly basis from peak levels in December and January.\nOur own results mirror these week-to-week improving trends that you see in national statistics, and we look forward to improved results in our life insurance lines, beginning in the second quarter and accelerating further into the second half of 2021.\nIn addition to improving COVID-related trends for mortality and infection rates, we are very encouraged by the improving economic environment that's emerging.\nThe forecast for strong GDP growth in coming quarters, along with continued financial fiscal stimulus and further improvement in employment levels and wage growth, we are expecting to see -- expecting both of those to be beneficial to the growth of our business.\nAdditionally, the improved interest rate environment and ongoing strength in the credit markets are all positives for us.\nWe believe we are already beginning to see these benefits emerge in our results.\nMost notable, the increase of 2.8% in premium income growth we experienced in our core business segments from the fourth quarter of 2020 to the first quarter of 2021.\nThis growth is reemerging due to continued strong persistency trends in our major product lines, along with the sales rebound that has emerged in our U.S. employee benefit lines combined with the stabilization and natural growth on our in-force blocks as employment levels improve.\nWe anticipate that this will accelerate through the year as sales momentum continues to build and economic growth reemerges as a tailwind for us.\nI mentioned the improving trend that is evident in COVID-related mortality, but as infection rates also subside, we expect to see more favorable trends in our short-term disability and leave services line that have been adversely impacted over the past year.\nIn our other lines of business, we saw good results with the benefit experienced in the first quarter.\nOur voluntary benefits businesses for Unum U.S. and Colonial performed well this quarter.\nOutside of the impacts, we felt in our life insurance exposures.\nThe recently issued individual disability line continued to show favorable benefits experience, and we saw a very good recovery in our Unum UK results this quarter with strong performance in the group income protection and group critical illness lines, offsetting adverse COVID-related mortality there as well in the group life.\nThe benefits experience for our Unum U.S. long-term disability line was within our expectations and consistent with the trends of the past several quarters.\nThough it was up from the very favorable performance of the fourth quarter as we anticipated.\nFinally, experience in our long-term care line remained quite favorable relative to our long-term expectations.\nThough we believe results in this line are beginning to trend back toward our long-term expected ranges.\nA couple of thoughts on our investment portfolio.\nThis is another area where we've seen meaningful improvement over the past several months.\nFor the first quarter's performance, our alternative asset portfolio has now fully recovered from the markdowns recorded in the second quarter of last year and are on a solid path to generating the expected returns going forward.\nWe remain very pleased with the overall performance and quality of the portfolio and are currently seeing very few areas of credit concerns and an increased outlook for upgrades within the portfolio.\nTurning to our capital position.\nOur strong position gives us significant financial flexibility to execute our growth plans going forward.\nOur holding company cash position finished the quarter at $1.7 billion, aided by the successful completion of Phase two of the closed Disability Block Reinsurance transaction.\nRisk-based capital for our traditional U.S. insurance companies remained solidly above our targets at 370%, and our leverage is down three points from a year ago.\nAs the pandemic winds down, we are evaluating alternatives on how to best utilize this capital position to drive growth in line with our strategy as well as shareholder value.\nWe expect to have more on that for you in the coming months.\nAs we look to enter an accelerated recovery period, an important area of differentiation for us and is the strong engagement we have continued to have with our commercial markets.\nThat connection starts with a strong employee engagement, and I continue to be very proud of the work our employees continue to do to provide excellent service to our customers while we have navigated through this disruptive time.\nIt's no surprise that strong employee engagement drives the strong claimant satisfaction scores we are seeing.\nAdditionally, I'm very pleased to see the growing acceptance of the various digital capabilities we have invested in over the past several years.\nRecently, we rolled out our new total leave offering, which will help employers and employees better manage the complex leave process.\nWe anticipate that these advanced tools and capabilities will help us further enhance our leadership position in the employee benefits market.\nAnd finally, a couple of words on how we have focused on our culture of the company.\nOur purpose is clear in serving the working world at time of need.\nIt requires a foundation of strong values throughout the enterprise.\nWe are proud to be recognized as one of the world's most ethical companies designated by Ethisphere.\nYou can see some of the great work in our newly launched ESG report on our website.\nIt adds to the totality of who we are at Unum.\nNow I'll ask Steve to cover the details of the first-quarter results.\nI'll start with the Unum US segment, which reported adjusted operating income for the first quarter of $115.7 million compared to $143.5 million in the fourth quarter.\nAs I'll describe in greater detail, these results were significantly impacted by COVID-related mortality in our group life business line and the life insurance line within the voluntary benefits business.\nBeyond the significant mortality impact, we were pleased with the underlying performance of the rest of the businesses, particularly the 2.7% increase in premium income related to the fourth quarter.\nStarting with the Unum US group disability line, adjusted operating income for the first quarter was $64.1 million compared to $64.7 million in the fourth quarter of 2020.\nWe were very pleased to see premium income increased by 3.5% compared to the fourth quarter, with solid sales this quarter, very good persistency, and natural growth stabilizing.\nThe benefit ratio was 74.8% compared to the very favorable 72.5% in the fourth quarter.\nAs we expected, the first quarter benefit ratio was elevated due to the short-term disability line, where we continue to see high COVID-related claims driven by infection rates.\nWe continue to expect the annual group disability benefit ratio to run in the 73% to 74% range with some quarterly volatility.\nThere are two other points to mention on group disability: first, net investment income was slightly higher in the first quarter, largely driven by higher miscellaneous investment income.\nSecond, the expense ratio improved nicely, declining to 28.4% in the first quarter from 30.4% in the fourth quarter.\nSome of this improvement relates to timing of expenses.\nSo the ratio is likely to move up slightly in future quarters those stay below the fourth-quarter level.\nWe're pleased with the improvement in the expense ratio this quarter as we balance making investments to further enhance our service capabilities with managing through the ongoing pressures on expenses from our leave services offerings related to COVID driven volumes.\nAdjusted operating income for Unum US Group Life and AD&D continue to show the impact of COVID-related mortality, with a loss of $58.3 million in the first quarter compared to a loss of $21.9 million in the fourth quarter.\nThe change from the fourth to the first quarter is largely explained by the national COVID-related mortality trend that showed an increase from approximately 145,000 nationwide observed deaths in the fourth quarter to approximately 200,000 in the first quarter.\nOur 1% claims rule of thumb for Unum share of COVID-related mortality did hold consistent in the quarter, and we estimate that we incurred approximately a 2,050 COVID claims with an average claim size of approximately $50,000.\nNon-COVID-related mortality did not have a significant impact on results in the first quarter as while incidence was slightly higher on a seasonally adjusted basis, it was largely offset by a lower average claim size compared to the prior quarter.\nNow looking ahead to the second quarter, national COVID mortality is trending favorably from the peak level seen in December and January.\nSecond-quarter estimates of U.S. COVID-related mortality are in the 50,000 to 60,000 range compared to the first quarter level of approximately 200,000.\nWe are seeing this improving trend in our COVID claims experience as well.\nThe magnitude of the decline is expected to drive a recovery in our group life results.\nHowever, the 1% rule of thumb we have experienced throughout the pandemic is likely to change somewhat.\nIf the age distribution of mortality changes and is skewed more to younger people and away from the elderly population due to the vaccine rollout, we would expect to see a higher percentage of national claim counts and a higher average claim size since working-age policies tend to have higher policy amounts than retired and over age 65 individuals.\nThis does equate to an approximately $40 million impact to group life income from COVID-related claims compared to over $100 million in the first quarter.\nIn other words, using these estimates, we would expect our group life earnings to improve by approximately $60 million from the first quarter to the second quarter to an approximately breakeven level of earnings in the second quarter.\nNow shifting to the Unum US supplemental and voluntary lines, we saw an improved quarter with adjusted operating income of $109.9 million in the first quarter compared to $100.7 million in the fourth quarter.\nOutside of the COVID-related mortality impacts we saw in the voluntary benefits life insurance line, we were generally pleased with the trends we saw in this segment.\nThe individual disability line continues to generate favorable results with a benefit ratio at 42.4% in the first quarter compared to 42% in the fourth quarter and 52.1% in the year-ago quarter, driven primarily by continued favorable incidence and mortality trends in the block.\nBenefits experienced for voluntary benefits, excluding life insurance exposure, was generally in line with our expectations.\nFinally, utilization in the dental and vision line was higher this quarter, pushing the benefit ratio to 73.2% in the first quarter compared to 65.4% in the fourth quarter.\nDental and vision utilization has been volatile since the significant decline in utilization we experienced in the second quarter of 2020.\nSales for Unum US in total declined by 10.3% in the first quarter compared to the year-ago quarter.\nWithin that, sales increased 15.9% for the employee benefits lines, which are STD, LTD, group life, and AD&D combined, with a good mix of growth in both large case and core market business.\nThis is consistent with our outlook that sales in our group employee benefit lines would recover more quickly than our voluntary benefits businesses.\nWe are currently seeing a good level of quote activity in the group markets, which has recovered to pre-pandemic levels.\nRecovery and sales growth in the supplemental and voluntary lines is slower, which is in line with our expectation.\nOur recently issued individual disability sales were down 25.1% in the quarter, coming off a strong pre-pandemic first quarter last year.\nVoluntary benefit sales were down 21.5% in the quarter, which is consistent with our view that mid and larger case VB sales will take longer to recover.\nLarge case VB sales, in particular, have a longer sales cycle and are more concentrated around January one effective dates, so we wouldn't expect to see growing momentum there until later in the year.\nFinally, sales in dental and vision were 25.9% lower, caused by the disruption in group sales resulting from discounts and other incentives, many carriers are providing in response to the unusually favorable claims trends seen in the second quarter of last year.\nWe are seeing a positive offset with higher persistency for dental and vision at 87.4% for the first quarter compared to 81.9% in the year-ago first quarter.\nPersistency for our major product lines in Unum US were in line to higher this quarter relative to the first quarter last year, giving us a good tailwind of premium growth for the full year.\nNow let's move on to Unum International segment, where adjusted operating income for the first quarter showed a strong improvement to $26.4 million compared to $20.7 million in the fourth quarter last year.\nA big driver of this improvement was improved results in Unum U.K. with adjusted operating income of GBP18.6 million in the first quarter compared to GBP15.4 million in the fourth quarter.\nBenefits experience improved in the U.K. with strong performance in the group income protection line due to improved claim recoveries and higher levels of mortality, and we also experienced improved performance in the group critical illness line.\nThis improvement offset adverse experience in the group life line, largely resulting from a higher level of COVID-related mortality.\nUnum Poland has seen adverse impacts from COVID on its results in the first quarter relative to the year-ago quarter, but we are pleased with the growth we're seeing in this business with growth in premium income of 11.7% on a year-over-year basis.\nAlthough we are encouraged by the improved income in the international operations, we do remain cautious with our near-term outlook as both the U.K. and Poland deal with COVID and related economic impacts.\nNext, we are very pleased with the results generated by Colonial Life, with adjusted operating income of $73.3 million in the first quarter compared to $71.2 million in the fourth quarter.\nThis uptick was primarily driven by a slight improvement in the benefit ratio and a lower expense ratio.\nThe benefit ratio of 55.4% was slightly improved from 56.6% in the fourth quarter but did remain higher than our historical trends due to the continued impact from COVID on our life insurance line.\nResults in the accident, sickness, and disability line, as well as the cancer and critical illness line, were generally consistent with our long-term experience.\nPremium income for the first quarter picked up slightly from the fourth quarter, increasing 1.8%, primarily the result of favorable persistency trends.\nWe will need to see further recovery in new sales to rebuild premium growth back to the historic levels of 5% to 6%.\nWe're encouraged by the sales trends we saw in the first quarter for Colonial.\nAlthough quarterly sales were down 9.2% year-over-year, that has sharply improved from the 31% cumulative decline we experienced for the last three quarters of 2020.\nWe look forward to further improvement in sales momentum over the balance of 2021.\nWe are encouraged by the uptake we are seeing in our recently developed digital enrollment tools, which in the quarter accounted for about 1/3 of our enrollments.\nIt is also encouraging that face-to-face enrollments are rebuilding as we find new, safe and socially distanced ways to conduct these face-to-face enrollments.\nAnd turning to the Closed Block segment.\nAdjusted operating income, excluding the impact of the Closed Block individual disability reinsurance transaction, was $97 million in the first quarter compared to $104.2 million in the fourth quarter last year, both strong quarters relative to our historical levels of income for this segment.\nLooking at the primary business lines within the Closed Block, for the LTC block, the interest adjusted loss ratio was 77.7% for the first quarter compared to 60.2% in the fourth quarter, excluding the income of the reserve assumption update in the fourth quarter of last year.\nThe results for the first quarter remain favorable to our long-term assumption of a range of 85% to 90%, primarily due to the continued impact of COVID-related mortality on our claimant block.\nIn the first quarter, we estimate the accounts were approximately 15% higher than expected, a similar trend to what we experienced in the fourth quarter.\nLTC claim incidence was higher in the first quarter compared to the fourth quarter and remains volatile on a monthly basis.\nWe anticipate that the interest-adjusted loss ratio for LTC will likely revert to our long-term range over the next several quarters as mortality and incidence trends normalize from the impacts of COVID.\nFor the Closed Disability Block, the interest adjusted loss ratio was 68.9% in the first quarter and 79.5% in the fourth quarter, both excluding the impacts from the reinsurance transaction in these quarters.\nThe underlying experience on the retained block, which largely reflects the active life reserve cohort and other smaller claim blocks we intend to retain ran favorably to our expectations, primarily due to lower submitted claims.\nThen wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $38.9 million in the first quarter.\nThis is favorable to the fourth quarter 2020 adjusted operating loss of $42.7 million, primarily due to higher net investment income, which offset a slightly higher level of operating expenses.\nKeep in mind that the assets backing the required capital, which were freed up from the individual disability reinsurance transaction have now been allocated to the corporate segment and generate a higher level of absolute net investment income for this segment.\nAs these assets are allocated out to the product lines in future quarters or deployed, the favorable net investment income for the corporate segment is expected to decline.\nNow I'd like to turn to the completion of the Closed Block individual disability reinsurance transaction, which we first announced back in December.\nPhase two involved the transfer of approximately $767 million of assets to the reinsurer and the recording of a net after-tax loss on the transaction of $56.7 million.\nThe components are detailed in the statistical supplement.\nIn addition, the amortization of the after-tax cost of reinsurance was $15.8 million this quarter.\nWith the transaction now completed, we are very pleased with the ultimate release of approximately $600 million of capital to holding company cash and the flexibility that creates for us.\nNow I'd like to next turn to our investment portfolio with a few points to highlight.\nFirst, we recorded an after-tax net realized investment gain of $66.9 million in the first quarter.\nOf that gain, $53.4 million was associated with the completion of Phase two of the Closed Block individual disability reinsurance transaction.\nThese assets had unrealized gains, which were realized and the assets were transferred to the reinsurer at market value.\nThe balance of this quarter's realized investment gains, which result from normal investment operations was $13.5 million and was largely driven by a positive mark on our Modco embedded derivative balance.\nSecond, as I mentioned previously, we continue to see a strong recovery in the valuation mark on our alternative invested assets of $35.9 million this quarter, following a positive mark of $29.4 million in the fourth quarter.\nGiven the current portfolio size, we would expect quarterly positive marks in the portfolio of $8 million to $10 million.\nWe have now fully recovered the valuation lost from the market decline in early 2020, while also earning our expected returns over that period.\nI'd also note that it was a higher-than-average quarter for traditional miscellaneous investment income from bond calls in the first quarter, following an unusually low amount in the fourth quarter.\nThird, with Phase two of the reinsurance transaction, we were able to retain approximately $361 million of invested assets that were not transferred to the reinsurer.\nOf that amount, $234 million of investment-grade assets with a book value -- with a book yield of 7.4% have been allocated to the LTC portfolio.\nAnd then finally, we remain very pleased with the overall quality of the investment portfolio.\nDuring the first quarter, we saw only $92 million of investment-grade bonds downgraded to below investment grade and $13 million of upgrades of below-investment-grade bonds to investment-grade status.\nOur holdings of high-yield fixed-income securities were 7.7% of total fixed income securities at the end of the first quarter, which was down from 7.9% at year-end 2020.\nOur watch list of potentially troubled investments remains at very low levels as we've taken advantage of the rebound in the credit market to reduce our exposure of these positions.\nThen looking to our capital position, we are very pleased with the financial position of the company and the flexibility it provides us as we come out of the pandemic.\nThe risk-based capital ratio for our traditional U.S. insurance companies is slightly over 370% and holding company cash is at $1.7 billion as of the end of the first quarter, both well above our targeted levels.\nIn addition, I'd note that our leverage ratio has declined to 26%, providing additional flexibility.\nWe are actively evaluating our capital plans as we come out of the pandemic, and we'll have more to update you on in the coming months.\nImportantly, we intend to focus on the deployment opportunities that we believe can create the greatest value for the company and our shareholders which historically has included investing in the growth of our core businesses, maintaining a competitive dividend and payout ratio and repurchasing our shares in the market.\nI'll close my comments with an update to our expectations regarding our outlook for 2021.\nWith our fourth-quarter reporting in February, we outlined our expectation of a modest decline of 5% to 6% for full-year 2021 adjusted operating income per share relative to the 2020 level of $4.93 per diluted common share.\nIn our view, that continues to be a realistic outlook as we look for a strong recovery in the second half of 2021, following some lingering COVID-related mortality impacts in the second quarter.\nAs you can hear from our comments, we continue to be very pleased with the operational performance of the company through what has been an extraordinary environment.\nWe believe we're well-positioned to benefit from improving business conditions as vaccines take hold and mortality and infection rates from COVID-19 continue to subside.\n",
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"content": "q1 adjusted operating earnings per share $1.04.\nqtrly total revenue $3,072 million versus $2,871.1 million.\ncompany anticipates a strong recovery in after-tax adjusted operating income per share in second half of 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our SEC filings can be found in the Investors section of our website at unum.com.\nNet income for the second quarter of 2020 included net after-tax realized investment gains of $25.4 million and an after-tax impairment loss of $10 million on the right-of-use asset related to one of our operating leases on an office building, we do not plan to continue to occupy.\nNet income in the second quarter of 2019 included a net after-tax realized investment loss of $5.7 million.\nAs a reminder, net realized investment gains and losses include changes in the fair value of an embedded derivative in a modified coinsurance arrangement, which resulted in an after-tax realized gain of $33.1 million in the second quarter of 2020 and an after-tax realized investment loss of $600,000 in the year ago quarter.\nTherefore, the net after-tax realized investment loss from sales and credit losses totaled $7.7 million in the second quarter of 2020.\nSo excluding these items, after-tax adjusted operating income in the second quarter of 2020 was $250.1 million or $1.23 per diluted common share compared to $286.9 million or $1.36 per diluted common share in the year ago quarter.\nDespite the many challenges brought on by the COVID-19 pandemic, the corresponding sharp economic downturn and the resulting upheaval and unemployment conditions and workplace environments, we produced solid financial results in the second quarter.\nThe operating trends we experienced were generally consistent with the expectations we discussed in the first quarter.\nHowever, the magnitude of the pluses and minuses was different than expected, particularly with mortality trends.\nWe'll outline these impacts as well as other COVID related impacts on the business in greater detail throughout our commentary today.\nBefore I get into the discussion of the results, I want to express how proud I am of the hard work and dedication of our teams over these past several months through this difficult time.\nOur teams are feeling challenge and uncertainty in their own lives, but their efforts to support our customers, communities as well as each other through this time has been exceptional.\nWe have remained true to our purpose of helping people thrive throughout life's moments.\nAnd what we are witnessing today has amplified the need for what we do.\nWe are also focused on the disciplined execution of our business plans and adapting to our changing world.\nWe are operating very well in a largely work-from-home setting with high customer satisfaction and solid productivity.\nIn this environment, we continue to be well prepared to navigate through a variety of economic scenarios.\nThe entire set of circumstances we face today reinforces the need for our core business of providing affordable and accessible financial protection products to individuals and their families through the work site.\nThe fragility of many Americans' financial lives has never been more obvious than what we are experiencing today.\nOur focus on delivering great social value remains paramount.\nIt ranges from supporting a family with a loss of a loved one to helping America's workers with short-term disability to many other needs created by this pandemic.\nIt is why we are here.\nIf we turn to the totality of our second quarter financial results, we were pleased with the overall performance this quarter in the wake of the stressful conditions in the business environment.\nAdjusted operating earnings per share were $1.23, which is down from the $1.36 of the year ago second quarter, but was solid overall given the headwinds of the market.\nWe experienced more volatility within our segment results than usual, and we'll walk you through the details throughout our commentary.\nStarting with our top line.\nWe continue to see growth in premiums, which were up 1.7%, while underlying business origination was more mixed.\nWhen we think of our business growth, we think first of customers that are staying with us because of the value of the protections we provide.\nThis is even more true in the midst of the pandemic.\nPersistency levels are holding up well so far this year, with only modest impacts currently.\nIt is reasonable to expect that persistency will be further pressured in the second half of the year as the effects of lower unemployment lower employment levels flow through our blocks, particularly in our voluntary benefits businesses.\nSales trends showed varying levels of impacts depending on the distribution model, size of customer and product and services set.\nUnum US Total sales declined just under 3%.\nInternational sales increased just over 1%, while Colonial Life sales declined 43%, reflecting the challenges of face-to-face sales.\nThese trends were consistent with our expectations as cases with large companies performed better than smaller businesses and group life performed better than the voluntary lines.\nWe expect premium income for our core business segments to be flat to a slight increase for full year 2020 after increasing just over 2% in the first half.\nFrom a benefits perspective, clearly, mortality impacts are the biggest variable on people's minds.\nWhen the pandemic started, it was believed to impact older ages much more severely, which meant the belief was that group carriers, such as us, would see less claims as the working population skews younger.\nIn fact, what we saw was that death rates were similar to our overall non-COVID age distribution, negatively affecting our U.S. group life block and our other life insurance blocks within our voluntary benefits businesses and the U.K. On the other hand, higher mortality drove significantly higher claim terminations in the long-term care block resulting in the interest adjusted loss ratio of 67%, which is well below historical trends.\nSteve will provide more detail in his comments, but our experience was generally consistent with the trends for mortality as published in national studies.\nBeyond these outsized mortality impacts experienced this quarter, we saw several other less severe anomalies in our benefits trends resulting from the pandemic, which touched every part of the company.\nIn the U.K., disability results continue to be challenged by the limitations we are experiencing in accessing the healthcare system to get the information we need to adjudicate and settle claims and return claimants to work.\nWithin Unum US, our growing leave management business experienced higher volumes, which drove higher expenses and dampened profitability in the group disability line.\nOur dental businesses, on the other hand, benefited from unusually low utilization rates, producing favorable operating income for Unum US supplemental and voluntary.\nAnd within the group disability line, newly submitted long-term disability claims were slightly higher, but with strong claim recoveries and favorable short-term disability trends, we experienced favorable risk performance in the Unum US group disability loss ratio.\nOn our investment portfolio, we saw a very dramatic improvement in the credit markets in the second quarter as the Fed became heavily involved in bringing forms of stimulus to aid the economy and the purchase of debt securities.\nCombined with improved oil prices, we saw reduced credit losses, much lower ratings migration and a sharply improved net unrealized gain position in our fixed income portfolio relative to the first quarter.\nSo far, we are tracking favorably to the credit scenario we laid out in the first quarter.\nOn the other hand, Fed actions in a more difficult economy have pushed interest rates to low levels.\nSo in the world of tightening credit spreads and low government rates, ongoing pressure to new money yield is creating a challenging environment to put money to work for our team.\nWhen we bring it all together, we saw excellent statutory earnings generated again this quarter, which has been true for the first half of the year.\nOur capital metrics remained solid with RBC at approximately 370% and holding company cash of $1.6 billion.\nThe results this quarter demonstrate the resilience of the franchise and underscore the disciplined approach we take to operating the business, while bringing good value to our customers.\nNow I'll ask Steve to cover the details of the second quarter results.\nAnd while doing so, give you some insights into what impacts were seen from the current business environment and how they could play out in the third quarter.\nI'll also discuss what trends we're seeing in the investment portfolio and the impacts we see it having on our capital position.\nTo reiterate Rick's comments, we are pleased with the overall results for the second quarter.\nThere was more volatility than we normally see in our segment results but the fact that overall results remain solid and our statutory results were very good speaks to the balance of our business mix and the focus we have maintained on discipline in all aspects of managing the company.\nLooking at the quarter from a high-level perspective, I want to start with a summary of what we estimate the COVID-19 and related impacts were on our second quarter results.\nTo be clear, these are our best estimates as we do not always know that a claim is directly tied to COVID, but this is intended to give you our best approximation of the impacts.\nI'll break the impacts into three categories, starting with impacts to claims experience.\nWe estimate that COVID produced a net unfavorable impact to our claims experience of between $12 million and $16 million, with the biggest unfavorable impacts occurring within Unum US group life the overall Unum UK results and the Closed Disability Block.\nWe did experience favorable financial impacts in the dental and long-term care blocks, as I'll describe in a moment.\nThe second category covers impacts to net investment income and the investment portfolio, which we estimate in the range of $24 million to $28 million unfavorable.\nThe larger items were the mark on our alternative asset investment portfolio and the valuation of hybrid securities, which I'll detail in the Closed Block discussion.\nThe third category is expenses, which relates primarily to higher expenses in our leave services business, driven by higher utilization of those services.\nIn all, these items produced an unfavorable impact in the high $40 million to $50 million range on a before-tax basis for the second quarter.\nAlthough there was an unfavorable impact to sales and persistency, it is more difficult to quantify the current quarter impact on earnings.\nWith that said, I'll start my discussion with Unum US.\nAdjusted operating income declined 9% to $231.9 million, primarily reflecting adverse mortality impacts from COVID-19 on the group life business, along with higher expenses in our leave management operation.\nThis offset favorable benefits experience in the group disability line and stronger earnings growth in the supplemental and voluntary lines of business.\nPremium growth for Unum US in the second quarter was 1.2% year-over-year, which is a slightly lower trend than we have seen in recent quarters.\nThe current sales environment remains challenging, declining by 2.9% in total for the segment.\nAs we expected, we saw better sales results in the large case market for group products with those sales advancing 9.5% compared to a decline of 3.6% for sales of core market group products using 2,000 lives as a dividing line.\nIn the large case segment, we continue to experience success selling packaged products with HR Connect, which is a secure connection between Unum and select employer HCM systems that automates many time-consuming HR activities.\nPersistency in Unum US was generally lower year-over-year, though we did see a slight increase in voluntary benefits.\nPersistency levels and new sales activity will continue to be watch areas as we navigate the volatile employment trends in coming quarters.\nClaims trends for Unum US showed a wide range of results in the second quarter, but the benefit ratio for this segment was generally consistent year-over-year at 68.1% compared to 67.6% in the year ago quarter, reflecting our broad diversification within the employee benefits market.\nThe group disability line continue to show strong performance producing an improved benefit ratio of 72.8% in the quarter compared to 74.7% last year, driven by strong claim recoveries.\nThis was offset by higher submitted claim incidents, although the recent trend in paid claims has been more favorable.\nWithin the supplemental and voluntary lines, both the individual disability and voluntary benefit lines showed consistent trends year-over-year.\nWhile the dental and vision line benefited from a sharp decline in utilization due to COVID-19.\nThis pushed the benefit ratio significantly lower to 36% from 71.6% last year.\nWe are already seeing a utilization already seen utilization return to more normal levels for dental and vision and expect the benefit ratio to increase, but remain volatile as the pandemic continues to play out.\nThe leave management business, which is reported within the group disability line, experienced significantly higher volumes related to COVID-19, driving higher expenses for that line, which negatively impacted earnings.\nThe group life and AD&D line had a sharp decline in adjusted operating income to $19.4 million in the quarter from $62.7 million a year ago as the benefit ratio increased significantly to 81.8% in the quarter from last year's 72.9%, predominantly driven by COVID-19-related mortality.\nWe experienced an increase in the number of paid claims this quarter by approximately 12% or slightly over 900 excess claims, along with an increase in the average claim size by approximately 7%.\nIn addition, at the end of the second quarter, we estimated an additional number of incurred but not reported COVID claims leading to an increase in the IBNR reserve balance for group life of $7 million.\nTo put this into perspective, the total impact to the quarter was approximately 1,100 excess life claims above our quarterly average, which is slightly less than 1% of the approximately 120,000 COVID-19 deaths reported by Johns Hopkins in the second quarter.\nOur experience tracked national trends closely throughout the second quarter with higher claims reported from the New York and New Jersey Metro area early in the quarter and the later skewing more to the South and Midwest in the second half of the quarter.\nOverall, despite the volatility, it was a good quarter for Unum US.\nLooking ahead, third quarter claims trends will likely continue to be volatile as the pandemic continues, though likely less than what we experienced this quarter.\nGiven the recent trend in COVID-related mortality, we expect group life claims to remain elevated in the third quarter and recommend that you follow the mortality data provided by Johns Hopkins to get a sense for how our claims experience may evolve.\nFinally, we are already seeing a return to more normal utilization in the dental block.\nThe Colonial Life segment produced very good earnings this quarter with adjusted operating earnings of $90.9 million, an increase of 7.7% over the year ago quarter.\nPremium income increased 4.2% as persistency held up well, offsetting the decline we are seeing in new sales activity.\nThis quarter, new sales declined by 43%, reflecting the challenges of selling and enrolling in what has traditionally been a face-to-face sales environment.\nThe benefit ratio was slightly lower at 50.7% compared to 51.4% a year ago as improved results in accident, sickness and disability and cancer and critical illness offset the incrementally higher mortality we experienced in the business.\nOverall, it was a good earnings quarter for Colonial Life, but we're likely to see further pressure on top line growth from the pandemic until sales activity recovers.\nWe anticipate some rebound in third quarter sales, though it will continue to remain pressured relative to the year ago quarter.\nWe believe that the investments we've been making in digital capabilities to support growth and improved productivity will benefit us in this environment.\nWe are excited to see increased utilization of these new tools by our agency force.\nIn addition, we will likely see further pressure on persistency in the coming quarters given the volatility in employment conditions and pressure on small businesses.\nResults in our Unum International segment remained weak this quarter with adjusted operating income of $15.1 million compared to $30.7 million a year ago.\nWe continue to have challenges in getting the necessary documentation and certifications for claim assessments and terminations, given the disruption in our customers' workplaces and the overburdened healthcare system in the U.K. from COVID-19.\nWhile we did see some improvement at the end of the second quarter, this trend continued to pressure results in the group disability line.\nAdditionally, like our U.S. group life trends, we experienced higher mortality in the U.K. group life block, which represents a little less than 20% of the overall U.K. business.\nPremium income, however, did increase in both Unum UK, up 1.9%; and Unum Poland, up 11.1%, both in local currency.\nFinancial results from our Poland operation were very good again this quarter with a strong year-over-year increase in adjusted operating income.\nLooking forward, economic conditions in the U.K. are expected to remain pressured by the COVID-19 pandemic, the ongoing Brexit negotiations and the low interest rate environment, creating significant headwinds for the U.K. business.\nBusiness trends in June were more favorable than April and May as we are beginning to see some improvement in the information flow necessary to produce claim recoveries.\nHowever, a full recovery may be slow and is not expected until there is increased confidence that the health aspects of the pandemic are under control and that the economy will rebound.\nThe Closed Block segment produced a very good quarter with adjusted operating income increasing almost 9% to $36.7 million.\nI'll discuss the operating trends of the LTC and Closed Disability Blocks in just a minute, but first, let me walk through some of the factors impacting net investment income, which is an important driver of results in this segment.\nIn total, net investment income for the Closed Block segment declined 8% in the second quarter to $326.3 million.\nAs we have discussed with you in the past, we allocate most of our alternative investments to this segment as we feel that over time, these investments can generate higher returns, which are important in supporting the LTC line.\nAlong with these higher potential returns over the long-term income volatility in quarterly investment income, that was evident this quarter with a negative market value adjustment on these investments of $31.3 million reflecting market values at March 31, which are reported on a lagged basis.\nTo put this in perspective, in 2019, we reported average quarterly positive marks of approximately $8 million a quarter.\nSo this was a significant negative variance from historical results.\nWith the second quarter recovery in financial markets, we do expect the valuation for many of these investments has also improved and will be reflected in our third quarter reporting.\nWe do not expect, however, a full recovery in the third quarter, but do expect them to fully recover over time and generate our assumed returns.\nThe second item to note regarding investment income for the Closed Block are the marks on two perpetual preferred securities that are mark-to-market quarterly and reported through net investment income, not as a part of realized investment gains or losses.\nThese are energy-related investments and both rebounded strongly in the second quarter with the recovery in oil prices.\nTherefore, there is a positive market value adjustment of $10 million in the second quarter compared to the $17 million negative adjustment in the first quarter.\nAside from these impacts to net investment income, the long-term care line within the Closed Block had an exceptionally positive quarter.\nThe second quarter interest adjusted loss ratio dropped to 67%, bringing the rolling four quarters ratio to 81.1%, well below the expected range of 85% to 90%.\nThe favorable results were primarily driven by elevated claim mortality, which was approximately 30% higher than average this quarter.\nHigher mortality was not evident this quarter in the active lives block, but we continue to closely monitor that experience.\nNew claim incidents for LTC was also favorable this quarter, driven in part, we believe, by the hesitancy of many to enter nursing homes or assisted living facilities or receive home care because of the pandemic.\nGiven the uncertainty of the timing of future claim filings, as a result of the pandemic, we did increase the incurred but not recorded reserve for long-term care by an incremental $20 million in the quarter.\nIn addition, we decreased our near-term mortality assumption in our best estimate claim reserve.\nWe believe this will take into account potential acceleration of mortality in our claimant population.\nLooking out to the third quarter, we expect mortality in the claimant block to remain elevated, though not at second quarter levels.\nAlso related to LTC, we made further progress this quarter with several new rate increase approvals on in-force business, and now we're at 65% of our $1.4 billion reserve assumption.\nThe Closed Disability Block experienced an increase in the interest adjusted loss ratio to 89.5% in the quarter from 81.3% a year ago, driven primarily by higher submitted incidents.\nNew claims submissions, which we attribute in part to COVID-19 and related to economic impacts, were heavy in the early part of the second quarter, but they did return to more normal levels later in the quarter.\nMortality did not have a meaningful impact on Closed Disability results this quarter.\nI'd like to now turn to a discussion of the investment portfolio, which showed a dramatic recovery from the first quarter, given the recovery in the financial markets.\nA few points to highlight are: first, net after-tax realized investment losses from sales and credit losses declined to $7.7 million in the second quarter from $44.4 million in the first quarter of this year.\nSecond, downgrades of investment-grade securities to high-yield totaled $193 million for the second quarter compared to $336 million in the first quarter.\nYou'll recall, we previously referenced $119 million of downgrades that occurred in April.\nSo the activity in May and June declined significantly.\nThe increase in second quarter downgrades created a minimal $11 million increase to required capital, which impacted the second quarter RBC ratio by only one point.\nAnd then third, the net unrealized gain position on the fixed maturity securities portfolio improved to $7.4 billion in the second quarter from $4.3 billion at the end of the first quarter.\nWithin that, the Energy Holdings, which do total 9.2% of our fixed maturity securities moved to a net unrealized gain position of $437 million from a net unrealized loss of $350 million, a significant improvement in values due to spread tightening, given the recovery in economic and oil prices.\nIn the first quarter, we outlined an investment credit scenario for defaults and downgrades of investment-grade securities to high-yield for 2020, that assumed as a base case $85 million of defaults and $1.6 billion of downgrades.\nWe are tracking favorably to this scenario and have refreshed our view of our portfolio on a credit-by-credit basis.\nOur capital forecast now includes $70 million of defaults and $1.3 billion of downgrades in 2020, including what we have already experienced.\nWe will monitor our investment portfolio and realize there is continued uncertainty in the markets for the remainder of the year, but are optimistic that the portfolio will outperform these planning assumptions.\nEven with this scenario, we still expect to meet our capital metric targets for risk-based capital and holding company liquidity throughout 2020.\nLooking to our capital position.\nWe finished the second quarter in very good shape with the risk-based capital ratio for our traditional U.S. insurance companies at approximately 370%, above the 350 targeted level and holding company cash at $1.6 billion.\nWe target maintaining holding company cash at greater than 1 times our fixed obligations, which is approximately $400 million.\nDuring the second quarter, we issued $500 million of debt.\nAnd as a reminder, we have a $400 million debt maturity in September.\nBeyond this upcoming maturity, the next maturity is not until 2024.\nIn addition, an important driver of our capital position is after-tax statutory operating earnings in our traditional and U.S. insurance companies, which were quite strong again in the second quarter, totaling $327 million compared to $278 million in the year ago quarter.\nI would reiterate that in a very tough environment that the team and the strength of the franchise have responded.\nWe enter the second half of the year recognizing the challenges if the pandemic persists, but we have been adapting well and continue to stay focused on serving our customers well.\nSo I'll ask Jonathan to begin the question-and-answer session.\n",
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"content": "q2 adjusted operating earnings per share $1.23.\nsuspending its financial guidance for remainder of 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our SEC filings can be found in the Investors section of our website at unum.com.\nNet income for the third quarter of 2020 included a net after-tax realized investment gain of $3.8 million and after-tax cost related to an organizational design update of $18.6 million.\nNet income in the third quarter of 2019 included a net after-tax realized investment loss of $20.8 million and after-tax debt extinguishment costs of $19.9 million.\nSo excluding these items, after-tax adjusted operating income in the third quarter of 2020 was $245.9 million or $1.21 per diluted common share compared to $282.7 million or $1.36 per diluted common share in the year ago quarter.\nOur third quarter performance demonstrates a very good operating performance by our Unum team.\nThis is in the face of difficult business and economic conditions that persist in our world, and specifically in the employee benefits market.\nOverall, our financial results were solid this quarter and largely consistent with the expectations we set back in July.\nIn the previous two quarters, we outlined what we believe are the factors that will influence our business, and these have evolved largely as expected, though impacts and recoveries are moving at different speeds.\nSo in the backdrop, I'd like to outline the high level business and economic conditions that persisted throughout the quarter and had meaningful impact on our results.\nAs we look at it, there are three major trends to follow.\nFirst and foremost, the health effects of COVID-19 remains significant with high mortality and high infection rates that impacted our benefits experience in multiple ways.\nSecond, the sharp spike in unemployment rates in the spring has abated somewhat, but unemployment remains high relatively to pre-COVID levels and continues to present a headwind to our growth rates.\nThird, we are beginning to see parts of the economy reopen and individuals return to more normal behavior and activities in their daily lives.\nThis trend, when done in a responsible way, we think is a positive, but it did produce more negative impacts on our results in the third quarter relative to the second quarter.\nIt may take time, but the longer term implications of the containment of the COVID-19 pandemic, leading to a full reopening of the economy will be very beneficial for our business.\nSo when we take these three dynamics; health, unemployment and gradual reopening, I'd like to highlight the important trends affecting our business in the current quarter.\nSadly, high mortality rates continued into the third quarter and impacted our life insurance businesses as well as seeing higher mortality within our long-term care claimant population.\nAlthough these claims impact our results, it reaffirms exactly why we are here; to take care of people at time of need.\nOur average death claim is around $50,000.\nAnd this may be the only form of life insurance these individuals and their families have.\nWe are also seeing infection rate negatively impact our short-term disability and leave services businesses.\nThese increases will follow the course of the pandemic and will abate as infection rates slow.\nComing out of the March timeframe, the shock of shutting down the economy froze new business trends and disrupted our delivery models.\nWe also saw high unemployment negating what we usually see as growth in payrolls.\nAs our delivery models adapt and employment conditions stabilize, our long-term premium growth rates will return as the economy improves and more people get back to work.\nAlthough we are happy to see at the early phases of the reopening of the economy tend to produce more short-term negative trends for us with higher dental utilization relative to the second quarter and a return to more normal levels of non-COVID-related STD claims in concert with COVID-related claims remaining elevated.\nSo this is a moment in time, and we look forward to seeing these influences moderating and settling back down in future quarters.\nWe remain very committed to our business model.\nAnd we expect to return to more normal business and economic conditions, while demonstrate to providing financial protections to the workforce is good for employers and their employees.\nAs we head into the final months of 2020, there are clearly some positive trends that have continued despite the challenges of this year.\nAn example is that we continue to see strong performance from our Unum U.S. long-term disability business.\nThis is a testament to our disciplined approach over many years to all facets of managing this business.\nBenefits experienced in the closed long-term care block remained favorable, while the team continued to make progress on achieving rate increase approvals.\nThe investment portfolio continued to trend favorably and expectations around impairments and downgrades have not materialized to the extent predicted.\nOur investment team has done a good job of analyzing our credit portfolio at a granular level and is executed well in this environment.\nAnd finally, our capital position remains with very good RBC at approximately 380% and holding company cash at $1.2 billion at quarter end, both nicely above our targeted levels.\nDespite the pandemic and the challenges it presents in the day-to-day management of our operations, we continue to operate the company with a focus on the future.\nThe $18.6 million of organizational design update cost we recorded this quarter was part of an ongoing effort and continue to manage our operations with an eye toward the future.\nThe savings generated allowed us to continue to reallocate dollars to invest in the growth areas of our business.\nImportantly, we are seeing the pay-offs with investments made to date with the growing adoption of our digital assets throughout the organization, which is leading to strengthened relationships with customers and their employees.\nA few examples of these returns on our investment include our HR Connect platform, which digitally links our customers' HCM systems directly to Unum benefits.\nThis allows for the automation of activities such as enrollment, billing, leave management and evidence of insurability.\nAdditionally, we have made investments to improve the customer experience through web and mobile claim submission tools and automated claimant communications.\nAnd one final example I'll mention is the MyUnum platform that creates a simple and intuitive end-to-end self-service experience for clients to administer their benefits and ultimately eases the administrative burden for HR managers.\nThese are just a few of the ways we are transforming our operations to better serve employers, their employees and their families throughout these difficult times.\nIt also positions us well for the future.\nTo wrap up, I want to express how proud I am of the hard work and dedication of our teams this year through these difficult conditions.\nOur teams feel the challenge and uncertainty in their own lives, but their efforts to support our customers and each other has been exceptional.\nWe have remained true to our purpose of helping people thrive throughout life's moments, and what we are witnessing today has amplified the need for what we have always done.\nAnd now, I'll ask Steve to cover the details of the third quarter results.\nOur intent is to show how the company is progressing through the pandemic and resulting recession, and outline for you the impacts it has had on our results.\nAs Tom outlined in his opening, after-tax adjusted operating income in the third quarter was $245.9 million or $1.21 per common share.\nBy comparison, in the second quarter of this year, excluding the lease impairment costs and net realized investment gain, after-tax adjusted operating income was $250.1 million or $1.23 per common share.\nThe tax rate was impacted this quarter by an increase in the U.K. corporate tax rate to 19% from 17% adding $9.3 million in additional tax expense.\nSo we believe a good starting point for analyzing our results this quarter on a sequential basis is to look at before tax adjusted operating income, which showed a slight increase to $318.5 million in the third quarter compared to $316.5 million in the second quarter.\nAs I begin, let me remind you of the economic and business conditions that existed in the quarter and outline the impact that it had on our results.\nFirst, obviously COVID-19 had a significant impact on the external environment, driving a high level mortality once again plus the continued high level of infections.\nExcess deaths in the U.S. from COVID totaled an estimated 80,000 in the third quarter.\nThe high mortality rate clearly impacted results in the Unum U.S. group life and Voluntary Benefits businesses and Closed Block long-term care.\nIn addition, the high rate of COVID infections that continued through the third quarter resulted in elevated short-term disability claims and drove higher expenses in the leave services business.\nSecond, employment conditions remained challenging.\nThe unemployment rate is rebounding to 7.9% for September compared to the peak level in April of 14.7%, but by comparison remained significantly higher than 3.5% % at September 30, 2019 and a strong monthly employment reports leading up to the spike in April.\nHigh unemployment levels throughout the quarter negatively impacted premium growth in our U.S. employee benefits business lines as it negated the benefit we usually experience from natural growth in the in-force blocks.\nAt the same time, there has been a reopening of the economy with some people beginning to return to more normal activity in their daily lives.\nWe saw this with dental utilization that rebounded from the low utilization rates of the second quarter, higher AD&D claim activity, which often mirrors property and casualty claims, higher non-COVID STD claims as individuals begin to catch-up on procedures postponed in the spring and some normalization of LTC claim incidents, though those trends remain highly volatile for month-to-month.\nFinally, financial markets were generally stronger in the quarter.\nThis is most impactful to Unum and the credit markets where bond spreads continue to tighten on average, while U.S. treasury rates increased a few basis points.\nWhile this combination continues to create a challenge for achieving attractive new money yields on investment opportunities, it is generally favorable for credit conditions and our outlook going forward for potential credit impacts that is credit downgrades and impairments.\nIn addition, income from our alternative asset investment portfolio improved back to our historical expectations this quarter after a significant negative mark in the second quarter.\nAgainst this high level backdrop, I'll focus on our reporting lines beginning with Unum U.S. group disability.\nAdjusted operating income for the third quarter was $73 million, down slightly from $76 million in the second quarter.\nSeveral factors impacted results on a sequential quarter basis.\nFirst, we experienced pressure on STD claims from continued high COVID impacts, while non-COVID claims began to return to normal levels.\nSecond, pressure on expenses from a continued high level of leave volumes, which increased over the second quarter and were approximately 60% above year ago volumes.\nAnd third, pressure on premium growth due to lower recent sales activity and a reversal natural growth in the in-force block due to the increase in unemployment.\nThese trends were partly offset by continued favorable results in the long-term disability block, but generally stable in new claim incidents and continued strong claim recoveries as well as favorable net investment income driven by a higher level and miscellaneous investment income.\nAs Rick said, we continue to be very pleased with the consistency of the results in LTD as demonstrated by group disability benefit ratio of 74.1% this quarter, which is consistent with the ratio a year ago of 74.2%.\nAdjusted operating income for Unum U.S. group life and AD&D remain depressed at $13.9 million for the third quarter compared to $19.4 million in the second quarter.\nWhen we analyzed these results, we believe that the impacts from the group life mortality matched up very consistently with the mortality trends we outlined for you in the second quarter.\nThe big driver of the sequential quarter decline in income was due to a weaker performance in the AD&D line where we experienced higher claims.\nThis is driven in part by seasonal patterns, but also by reopening of the economy, which resulted in higher rates of accidents.\nShifting back to the COVID impact on the group life business in the quarter, we experienced slightly more than 900 excess life claims or about 12% higher than expected, benchmarked against a base of approximately 80,000 COVID-related deaths nationwide as reported by Johns Hopkins.\nThis compares to our second quarter reporting, which showed approximately 1,100 total excess death or about 14% higher than expected relative to reported base of 120,000 COVID-related deaths.\nAs we stated before, our rough estimate is that we expect to see approximately 1% at the U.S. mortality by count given our market share of life insurance in the country.\nWhile there continues to be a lot of volatility in these trends, all in all, we view these results to be largely in line with our expectations.\nWe believe our year-to-date experience in group life is correlated closely to national trends and statistics, and over the year, the characteristics of our COVID claims has followed the evolution of the virus' impact nationwide.\nWe believe this close relationship to national trends will continue, and suggest you use that as a basis for your projections and estimates in future quarters.\nI'll add that so far in the fourth quarter, these trends are matching our third quarter results with a slightly higher average claim size, which is now in the low $50,000 range.\nThe Unum U.S. supplemental and voluntary lines experienced a more significant decline in the third quarter from the very favorable second quarter with adjusted operating income of $101.3 million in the third quarter compared to $136.5 million in the second quarter.\nThe biggest driver we experienced was a pickup in utilization in the dental and vision block from the unusually favorable trends in the second quarter.\nIn addition, we saw an elevation in average claim size as policyholders caught up on dental services they put off in prior months.\nThis resulted in the benefit ratio increasing to 76.8% from 36% in the second quarter.\nWithin the voluntary benefits line, we saw an uptick in the benefit ratio due to higher life claims in the block, which we believe are largely driven by COVID.\nFor the individual disability line, benefits experience returned to a more normal level of both claim incidents and size of new claims.\nBeyond these benefit and trends, premium income in the supplemental voluntary lines declined 2.8% on a sequential quarter basis due to lower new sales in recent quarters, slightly lower persistency and the effects of weaker employment trends by natural growth.\nSales for Unum U.S. declined 18.5% in the third quarter compared to the year ago quarter.\nThe group lines, which are LTD, STD and group life combined, increased by 1.5% as we continue to see good traction from our HR Connect platform that links customer HCM systems directly to Unum.\nAs we expected and outlined on previous calls, the supplemental lines showed more pressure than the group lines.\nVoluntary benefits sales declined 35.8% year-over-year.\nBut keep in mind that third quarter sales for this line largely reflects second quarter enrollments, which were significantly disrupted by the pandemic and economic shutdown.\nDental and vision sales declined 33.1%, largely due to the disruption we are seeing in group sales activity as in-force providers are offering discounts and other incentives in response to the unusually favorable claim trends the industry experienced in the second quarter.\nMoving to the Unum International segment.\nWe are pleased to see improvement in adjusted operating income to $21.4 million in the third quarter compared to $15.1 million in the second quarter.\nWhile Unum Poland, continue to be a strong performer overall, the bulk of the sequential quarter improvement came from Unum U.K., which produced adjusted operating income of GBP15.2 million in the third quarter compared to GBP10.1 million in the second quarter.\nColonial Life continued to report favorable results with adjusted operating income of $92.2 million in the third quarter compared to $90.9 million in the second quarter and $87.2 million in the year ago quarter.\nPremium income for the third quarter declined 4.3% from the second quarter driven by the decline in sales this year and the negative impacts from individual lapses with in-force cases.\nThe benefit ratio was slightly elevated in the third quarter at 52.2% compared to 50.7% in the second quarter, largely reflecting the continued higher life and STD claims related to COVID with less offset from favorable accident and cancer lines.\nNet investment income also benefited this quarter from a higher amount of miscellaneous investment income.\nSales for Colonial Life declined 27.6% year-over-year in the third quarter, an improvement over the second quarter when sales showed a decline of 43% year-over-year.\nThe sales environment remains challenging, but we are encouraged by the adoption of the digital sales tools we have developed.\nWhile our traditional agent assisted sales remain pressured, we are seeing strong double-digit sales growth from the telephonic enrollment and the self-service platform.\nIn addition, agent recruiting remained strong with an 8% increase year-over-year.\nAnd then in the Closed Block segment, adjusted operating earnings increased to $70.8 million in the third quarter compared to $36.7 million in the second quarter, largely driven by the continued favorable impact on high claimant mortality on the LTC block and a return to more normal positive marks on the alternative investment portfolio from the significant decline in value as of the end of the second quarter.\nKeep in mind that the valuation of much of the alternative portfolio is recorded on a one quarter lag.\nThe positive mark on the holds was $11.3 million this quarter compared to a loss of $31.3 million in the second quarter, which we've reflected the negative market conditions at the end of the first quarter.\nFor the LTC block, the interest-adjusted loss ratio was 67.4% in the third quarter compared to 67% in the second quarter, and over the past four quarters is now 75.6% compared to our long-term expected range of 85% to 90%.\nOur claimant mortality was a major factor again this quarter as mortality was approximately 15% higher than expected.\nThis impact was less than the second quarter, which was approximately 30% higher than normal.\nUnlike the second quarter, we did see new claim incidents for LTC return to more normal levels.\nHowever, the month-to-month trends remain highly volatile.\nTherefore, we increased IBNR reserves for LTC again this quarter.\nAt this point, we are not seen anything in these claim trends that would change our long-term assumptions.\nFor the closed disability block the, interest-adjusted loss ratio was 86.6% in the third quarter compared to 89.5% in the second quarter with slight improvement in underlying claims experience.\nComing back to LTC, we are pleased to have another successful quarter of in-force premium rate increase approvals, which gets us to $1 billion of the $1.4 billion of margin in our reserve assumptions.\nSo then wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $77.4 million in the third quarter.\nIncluded in this are expenses related to the organizational design update that Rick referenced in his comments of $23.3 million before taxes or $18.6 million after taxes.\nExcluding these costs, the adjusted operating loss of $54.1 million was consistent with our expectations and was largely driven by interest expense on our outstanding debt, which totaled $49 million in the third quarter.\nWith the maturity in September of a $400 million debt issue, our interest expense is expected to decline to approximately $45 million in the fourth quarter.\nFor the corporate segment, in total, we continue to expect quarterly losses in the mid $15 million range.\nI'd like to now turn to a discussion of the investment portfolio, which continues to show a strong recovery from the first quarter given the recovery in the financial markets.\nA few points to highlight are; first, net after-tax realized investment losses from sales and credit losses totaled $7.3 million this quarter compared to $7.7 million in the second quarter and $44.4 million in the first quarter.\nThis is consistent with our expectation that the majority of the impairments would be realized in the first quarter.\nSecond, the trend of downgrades of investment-grade securities to high yield continued to improve, and our outlook for potential future downgrades has improved.\nIn the third quarter, we saw $141 million of these downgrades compared to $193 million for the second quarter and $336 million in the first quarter.\nThe impact to RBC this quarter was immaterial.\nThird, the net unrealized gain position on the fixed maturity securities portfolio improved to just over $8 billion from $7.4 billion in the second quarter and $4.3 billion at the end of the first quarter.\nAnd then finally, we continue to bring down our expectation for potential credit impairments and credit downgrades given the performance of the portfolio the past few quarters and are increasingly positive outlook for credits.\nOur outlook for fallen angels for 2020 is now half of our original scenario.\nThis gives us further confidence in exceeding our capital targets at year end 2020.\nThen looking to our capital position, we finished the quarter in very good shape with the risk-based capital ratio for our traditional U.S. insurance companies at approximately 380% and holding company cash at $1.2 billion, both comfortably above our targeted levels.\nAgain, the cash balance at September 30 reflects the $40 million debt maturity in September and our next maturity is not until 2024.\nI'll wrap up by reiterating the results we are seeing remain consistent with what we had anticipated.\nWe will likely continue to experience more volatility in our results as long as the pandemic persist, but remain encouraged by the overall profitability of the company and our financial position.\nWe continued to be pleased with the operational performance of the company through what continues to be an extraordinary environment.\nAnd we do believe we are well positioned to benefit from an improving economy and better business conditions as society continues to reopen.\nAnd in the meantime, we'll continue to focus on crisp execution to manage through today's challenges.\nSo I'll ask the operator to begin the question-and-answer session.\n",
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"content": "q3 adjusted operating earnings per share $1.21.\nqtrly after-tax adjusted operating income was $1.21 per diluted common share.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our SEC filings can be found in the Investors section of our website at unum.com.\nNet income for the third quarter of 2021 included the after-tax impairment loss on internal-use software of $9.6 million or $0.05 per diluted common share, the after-tax amortization of the cost of reinsurance of $15.5 million or $0.08 per diluted common share, the net after-tax reserve decrease related to reserve assumption updates of $143.3 million or $0.70 per diluted common share, and a net after-tax realized investment loss on the Company's investment portfolio of $100,000 or a de minimis impact on earnings per diluted common share.\nNet income in the third quarter of 2020 included after-tax costs related to an organizational design update of $18.6 million or $0.09 per diluted common share, and a net after-tax realized investment gain on the Company's investment portfolio of $3.8 million or $0.01 per diluted common share.\nExcluding these items, after-tax adjusted operating income in the third quarter of 2021 was $210.5 million or $1.03 per diluted common share compared to $245.9 million or $1.21 per diluted common share in the year ago quarter.\nWe saw top-line growth in our business lines at good returns.\nWe also recognized the continued challenge that COVID presents on our near-term results.\nIt has cast a shadow on our core returns, but we still see a great business that we believe will return to the levels of profitability that we expect.\nLet me start with the overall operations before commenting on these COVID trends.\nI would first highlight that core premium growth has been steady and tracking to the expectations we previously laid out for you.\nOn a year-over-year basis in the third quarter, Unum US generated an increase in premium income of 1.2%.\nColonial Life was slightly better than breakeven, falling three previous quarters with negative comparisons, and our International lines also generated positive premium trends.\nThis premium growth momentum is building back as sales growth reemerges, persistency remains favorable, and the external environment of employment growth and wage inflation benefits our business.\nOutside of the COVID-related impacts, we remain very encouraged with the benefits experience and operating income contributions from our other business lines.\nThe supplemental and voluntary lines, Colonial Life, our International businesses and our Closed Block segment all showed generally stable results and made substantial contributions to income this quarter.\nWe're also pleased with our overall investment results this quarter.\nIt was another quarter for strong returns from our alternative investments and also another quarter of higher than normal bond call premiums.\nThe underlying credit quality of the portfolio is excellent and the investment team remains diligent in their analysis of our credits through the changing market dynamics.\nWith this backdrop of strength, we were also highly affected by the evolving nature of the COVID pandemic.\nGiven the breadth of our customer base across the U.S., we have seen this quarter we have been impacted by the resurgence of higher infections, hospitalizations and mortality brought on by the Delta variant.\nAs we have discussed throughout the pandemic, the best way to monitor COVID's impact on our results is to follow national mortality and infection rates.\nDifferently in this quarter, we also need to focus on how the demographics of the incremental mortality relate specifically to our customer base.\nTo put it in context, in the third quarter, the U.S. experienced a significant increase in national COVID mortality counts to approximately 94,000 lives, which is almost double the 52,000 in the second quarter.\nThe dramatic increase over the course of the third quarter occurred very rapidly and consistently throughout the quarter.\nIn fact, just 90 days ago, most experts were estimating a third quarter mortality count of approximately 44,000 deaths, an estimate that has more than doubled over the course of the quarter.\nThe absolute increase in mortality has certainly been impactful to our industry and for us, most notably in our Unum US group life business, although we also saw impacts in our voluntary benefits lines.\nBeyond the higher mortality counts in aggregate, data from the CDC also shows that the third quarter working-aged individuals comprised approximately 40% of the COVID-related mortality, double that of the fourth quarter of 2020 and first quarter of 2021 before vaccinations began to widely be available.\nThis shift in demographics impacts us three-fold.\nFirst, we announced the higher impacts in the working-age population, our primary customers who are covered by our group and voluntary products.\nIn addition, these younger working-aged individuals tend to have higher benefit amounts that we saw before.\nAn additional, but smaller impact that we see is that Delta -- the Delta variant has brought on a resurgence of infections and hospitalizations, leading quickly to higher claims at our short-term disability business and pressure on our group disability benefit ratio.\nWhile COVID impacts are evident in our results this quarter, we believe as the pandemic continues to come better under control with increased vaccinations and advanced treatments, then we will see a strong reemergence of growth and profitability in our business.\nThe recovery from COVID has been delayed longer than we anticipated by the Delta variant, but we do expect to see a recovery ahead.\nIt is because of that view that we're excited to begin to deploy a portion of the Company's excess capital in a way that we believe can create value for our shareholders.\nWe start first with a capital position that remains very healthy with holding Company cash of $1.6 billion and weighted average risk-based capital ratio for our traditional U.S. -- U.S.-based life insurance companies at approximately 380%.\nThis gives us the opportunity to begin to deploy a portion of that capital to enhance shareholder value, while also maintaining a healthy position for opportunities that could materialize in the future.\nLast week, we were pleased to announce the $250 million share repurchase authorization approved by our Board, which we intend to initiate in the fourth quarter with an execution of an accelerated share repurchase of $50 million.\nWe expect to continue the program through the end of 2022.\nIn addition to buying shares, we also plan to accelerate recognition of the premium deficiency reserve for the Long-Term Care Block by a similar amount over this same timeframe.\nWe see value in accelerating the recognition ahead of the original seven-year schedule and could see its completion as early as the end of 2024 under certain market conditions.\nEven with the additional capital we plan to allocate to share buybacks and accelerated PDR recognition, we will continue to maintain a strong capital position and flexibility.\nWhile we remain optimistic over the long-term, given the volatility of the pandemic, we will move our traditional December Analyst Meeting to the first quarter of 2022 to discuss with you our full-year outlook.\nThe area to stay focused on is our continued premium growth in our core business lines looking into 2022, as well as the impact of our capital deployment plans.\nWe expect the impact of the pandemic to subside over the course of next year, but we do expect fourth quarter of this year to be impacted similarly to the third quarter.\nWe are watching the national numbers as are all of you, and as the Delta wave subsides, we look to return to the growth and profitability we believe that we can deliver.\nNow, I'll ask Steve to cover the details of the third quarter results.\nI will also describe our adjusted operating income results by segment, excluding the impacts from our GAAP reserve assumption updates.\nThe biggest component of the actuarial reserve review was the release of $215 million before tax in the Unum US long-term disability line.\nClaim reserves should represent our best estimate of the future liability, and since the last GAAP reserve review, investments in our operations have impacted our claims management and resulted in improvements in claim recoveries over the past several years, which we now believe are sustainable.\nAs such, these reserves have been adjusted to better reflect the expected costs of claims.\nThis reserve update will have little impact on our forward expectations for earnings from this line or the expected benefit ratio.\nThe reserve review also determined that reserves should be increased in three lines within the Closed Block reporting segment.\nFor the Closed Group Pension Block, policy reserves were increased by $25.1 million before tax.\nFor the Closed Disability Block, claim reserves were increased by $6.4 million before tax.\nAnd finally for Long-Term Care, claim reserves were increased by $2.1 million before tax.\nAlthough the net of these reserve updates are excluded from adjusted operating income, they did contribute $0.70 per share to the Company's book value.\nI'll start the discussion of our operating results with the Unum US segment, where COVID significantly impacted our results this quarter, driving higher mortality and a higher average claim size in the group life business and higher short-term disability claims in the group disability business.\nFor the third quarter in the Unum US segment, adjusted operating income was $88.5 million compared to $179.3 million in the second quarter.\nWithin the Unum US segment, the group disability line reported adjusted operating income, excluding the reserve assumption updates of $39.5 million in the third quarter compared to $59.9 million in the second quarter.\nThe primary driver of the decline was an increase in the benefit ratio to 78.9% in the third quarter compared to 74.7% in the second quarter, which was primarily driven by increased claims in the short-term disability line related to the COVID Delta variant and the current external environment.\nPremium income declined slightly on a sequential quarter basis, but we were pleased to see an uptick in growth to 2.6% on a year-over-year basis.\nWhile short-term disability results were challenged this quarter, our long-term disability line performed in line with our expectations as new claim incidence showed an increase mostly driven by the flow-through of STD claims to LTD status, which was offset by continued strong claim recoveries.\nIt is likely that we will continue to see an elevated overall group disability benefit ratio as COVID and the current external environment continue to impact our STD results.\nWe do feel that COVID is a key driver of the higher benefit ratio for the group disability line and that as direct COVID impacts lessen over the first part of next year, we will see improvement in the benefit ratio.\nAdjusted operating income for Unum US group life and AD&D declined to a loss of $67.1 million in the third quarter from income of $5.2 million in the second quarter.\nThis quarter-to-quarter decline of roughly $70 million was largely driven by the changing impacts from COVID that Rick described in his comments.\nWe were impacted by the deterioration in COVID-related mortality from our reported 52,000 national deaths in the second quarter to approximately 94,000 in the third quarter along with the age demographic shifting to higher impacts on younger working-aged individuals.\nEstimated COVID-related excess mortality claims for our Group Life Block increased from approximately 800 claims in the second quarter to over 1,900 claims in the third quarter.\nAccordingly, our results reflect mortality to level that represents approximately 2% of the reported national figures compared to a 1% rate experienced through 2020 when mortality was more pronounced in the elderly population.\nWith a higher percentage of working-age individuals being impacted, we also experienced higher average benefit size, which increased from around $55,000 in the second quarter to over $60,000 this quarter.\nFinally, non-COVID-related mortality did not materially impact results in the third quarter relative to the experience of the second quarter.\nLooking ahead to the fourth quarter, our current expectation is for U.S. COVID-related mortality to continue to worsen to approximately 100,000 deaths.\nWith continued higher mortality among working-aged individuals, we believe that group life results will remain under pressure with the expected fourth quarter loss similar, if not potentially worse than the experience of the third quarter.\nNow looking at the Unum US supplemental and voluntary lines, adjusted operating income totaled $116.1 million in the third quarter compared to $114.2 million in the second quarter, both very good quarters that generated adjusted operating returns on equity in excess of 17%.\nLooking at the three primary business lines.\nFirst, we remain very pleased with the performance of individual disability recently issued block of business which has generated strong results throughout the pandemic.\nWe continue to see very favorable new claim incidence trends and recovery levels in this block.\nThe voluntary benefits line reported a strong level of income as well, though income was slightly lower on a quarter-to-quarter comparison.\nThe uptick in the benefit ratio in the third quarter to 46.6% from 44.2% in the second quarter was driven by increased COVID-related life insurance claims, which offset generally favorable results in the other VB product lines.\nFinally, utilization in the dental and vision line improved, leading to an improvement in the benefit ratio to 75% this quarter from 77.1% in the second quarter.\nLooking now at premium trends and drivers, total new sales for Unum US increased 7.7% in the third quarter on a year-over-year basis compared to the declines that we experienced in the first half of the year.\nFor the employee benefit lines which do include LTD, STD, group life, AD&D and stop-loss, total sales declined by 2.5% this quarter, primarily driven by lower sales in a large case market and generally flat sales in the core market, which are those -- which are those markets under 2,000 [Phonetic] lines.\nSales trends in our supplemental and voluntary lines rebounded strongly in the quarter, increasing 21.8% in total when compared to the year ago quarter.\nWe saw sharp year-over-year increases in the recently issued individual disability line up 22.9% and in the dental and vision line up 48.2%.\nVoluntary benefit sales also recovered following lower year-over-year comparisons in recent quarters, growing 13.7% in the third quarter.\nWe also saw overall favorable persistency trends for our major product lines in Unum US.\nOur group lines aggregated together showed a slight uptick to 89.4% for the first three quarters of 2021 compared to 89.1% last year.\nBoth the voluntary benefits and dental and vision lines also showed year-over-year improvements, while the individual disability line declined slightly.\nThe solid persistency numbers and improving sales trends provide a good tailwind for premium growth as we wrap up this year and move into 2022.\nNow let's move on to the Unum International segment.\nWe had very good -- we had a very good quarter with adjusted operating income for the third quarter of $27.4 million compared to $24.8 million in the second quarter, a continuation of the improving trend in income over the past several quarters.\nThe primary driver of these results is our Unum UK business, which generated adjusted operating income of GBP18.4 million in the third quarter compared to GBP16.8 million in the second quarter.\nThe reported benefit ratio for Unum UK improved to 79.2% in the third quarter from 82.5% in the second quarter.\nThe underlying benefits experience was favorable for our Group Income Protection Block, primarily due to lower new claim incidence through -- though claim recoveries continue to lag our expectations somewhat.\nThe Group Life Block experienced adverse mortality primarily from non-COVID-related claims incidence and higher average size.\nWe did not see much impact this quarter from COVID in our UK Life Block.\nBenefits experience in Unum Poland was also favorable this quarter helping generate a slight improvement in adjusted operating income.\nPremium growth for our International businesses was also favorable this quarter compared to a year ago.\nLooking at the growth on a year-over-year basis and in local currency to neutralize the benefit we saw from the higher exchange rate, Unum UK generated growth of 2.9% with strong persistency and the continued successful placement of rate increases on our in-force block.\nAdditionally, sales in Unum UK rebounded in the third quarter, increasing 40.2% over last year.\nUnum Poland also generated growth of 12.5%, a continuation of the low double-digit premium growth this business has been producing.\nNext, results for Colonial Life are in line with our expectations for the third quarter with adjusted operating income of $80.1 million compared to the record quarterly income of $95.8 million in the second quarter.\nAs with our other U.S.-based life insurance businesses, Colonial's life insurance block was negatively impacted by COVID-related mortality, which was the primary driver in pushing the benefit ratio to 55.9% in the third quarter compared to 51.7% in the second quarter.\nWe estimate that adverse COVID-related claims experienced in the life block impacted results by approximately $16 million, the worst impact we have seen from COVID throughout the pandemic and a level that is likely to persist through the fourth quarter.\nExperience in the other lines being accident, sickness and disability and cancer and critical illness remained in line with our expectation and continue to drive strong earnings for this segment.\nAdditionally, net investment income increased 25% on a sequential basis in the third quarter, largely reflecting unusually large bond call activity this quarter.\nWe do not expect the benefit from bond calls to net investment income to continue at this level in the fourth quarter.\nWe were very pleased with the improving trend we are seeing in premium growth for Colonial Life, which was flat this quarter on a year-over-year basis after showing year-over-year declines in each of the past three quarters.\nDriving this improving trend in premiums is a continuing rebound in sales activity at Colonial Life increasing 28.6% on a year-over-year basis this quarter and now showing a 21.1% increase for the first three quarters of 2021 relative to last year.\nPersistency for Colonial Life continues to show an encouraging trend at 78.9% for the first three quarters of 2021, more than a point higher than a year ago.\nIn the Closed Block segment, adjusted operating income which does include -- which excludes the reserve assumption updates and the amortization of cost of reinsurance related to the Closed Block individual disability reinsurance transaction that did fully close earlier this year was $109.8 million in the third quarter and $111.2 million in the second quarter, both very strong results driven by favorable overall benefits experience in both the Long-Term Care line and Closed Disability Block, and strong levels of investment income to -- due to higher than expected levels of miscellaneous investment income, which I will cover in more detail in a moment.\nLooking within the Closed Block, the LTC Block continues to produce results that are quite favorable to our long-term assumptions.\nThe interest adjusted loss ratio in the third quarter was 74.8% and over the past four quarters is 71.8%, which are both well below our longer-term expectation of 85% to 90%.\nIn the third quarter, we continue to see higher mortality experience in the claimant block, where accounts were approximately 5% higher than expected which is similar to our experience in the second quarter.\nLTC submitted claims activity was higher in the third quarter, though much of the increase has not resulted in significant ongoing claim costs.\nLooking out to the end of 2021 and into 2022, we do anticipate that the interest adjusted loss ratio for LTC will likely trend closer, though slightly favorable to our long-term assumption range, as mortality and incidence trends continue to normalize from the impacts of COVID.\nFor the Closed Disability Block, the interest adjusted loss ratio was 58.2% in the third quarter compared to 69.6% in the second quarter, both very favorable results for this line.\nThe underlying experience on the retained block, which largely reflects the active life reserve cohort and certain other smaller claim blocks we retained performed very favorably relative to our expectations, primarily due to lower submitted claims again this quarter.\nSo overall, it was a very strong performance again this quarter for the Closed Block segment.\nHigher miscellaneous investment income continues to contribute to the strong adjusted operating income for the segment, driven by both higher than average bond call premiums, as well as strong performance in our alternative asset portfolio.\nLooking ahead, we estimate the quarterly adjusted operating income for this segment will over time run within a range of $45 million to $55 million, assuming more normal trends for investment income and claim results in the LTC and Closed Disability lines.\nFirst, we saw a high level of bond calls again this quarter as many companies refinanced higher coupon debt and took advantage of today's favorable credit market conditions.\nWe recorded approximately $20 million in higher investment income from bond calls this quarter relative to our historic -- our historical quarterly averages.\nThe Closed Block and Colonial Life segments were the primary beneficiaries of higher investment income this quarter.\nUnum US was in line with historic averages, but lower this quarter than what we received in the second quarter.\nWhile these calls enhance current period investment income, they are volatile from quarter-to-quarter.\nSecond, we continue to see strong performance in our alternative investment portfolio, which earned $38.2 million in the third quarter, following earnings of $51.9 million recorded in the second quarter.\nBoth quarters are well above the expected quarterly income on the portfolio of $12 million to $14 million.\nThe higher returns this quarter were generated from all three of our main sectors being credit, real estate and private equity, and reflected the strong financial markets and strong economic growth.\nIt is hard to predict quarterly returns for miscellaneous investment income, but for the fourth quarter, we believe that they will moderate to our expected quarterly returns.\nMoving now to capital, the financial of the Company continues to be in great shape, providing a significant financial flexibility.\nThe weighted average risk-based capital ratio for our traditional U.S. insurance companies improved to approximately 380%, and holding company cash was $1.6 billion as of the end of the third quarter, both of which are well above our targeted levels.\nIn addition, leverage has trended lower with equity growth and is now 25.7%.\nAs Rick mentioned, we're very pleased to clarify our capital deployment plans for the balance of 2021 and for 2022.\nFor context, with the capital measures that I just discussed, we are in a very strong capital position with substantial financial flexibility.\nOur strategy for deployment has not changed and our priorities remain consistent, including first, funding growth in our core businesses; second, supporting our LTC Block; third, executing opportunistic acquisitions that support our long-term growth; and fourth, returning capital to shareholders in the form of dividends and share repurchases.\nWe began to roll our plans out last week with the announcement of the authorization by our Board of Directors and to repurchase up to $250 million of our shares by the end of 2022.\nWe plan to begin this program with the execution of an accelerated share repurchase of $50 million in the fourth quarter.\nWe also plan to allocate capital to accelerate the recognition of the premium deficiency reserve for the LTC Block by a similar amount by the end of 2022.\nWe feel that this combination strikes a good balance of repurchasing our shares at what we believe are very attractive prices, while also fully fund in the PDR ahead of the original 2026 target to help lessen the valuation drag on our stock from the LTC exposure.\nWith this additional deployment of capital, we continue to project having a very solid capital position at the end of 2022 with holding company cash around $1 billion and an RBC ratio well above our target.\nNow shifting topics, I wanted to give you a brief update on our progress in adopting ASC 944 or Long Duration Targeted Improvements.\nAs a reminder, this accounting pronouncement applies only to GAAP basis financial statements and has no economic statutory accounting or cash flow impacts to the business.\nWe continue to feel good about our readiness to adopt the pronouncement as of January 1, 2023, and we'll be sharing some qualitative information in our Form 10-Q filing, which is later today.\nAlthough we continue to evaluate the effects of complying with this update, we do expect that the most significant impact of the transition date will be the requirement to update our liability discount rate with one that is generally equivalent to a single A interest rate.\nWe expect this will result in a material decrease to accumulated other comprehensive income and primarily be driven by the difference between the expected interest rates from our investment strategy and interest rates indicative of a single A rated portfolio.\nAs we continue to progress our work, we plan to provide updates to you in 2022 as we near adoption.\nSo let me close with an update on our expectations for the remainder of 2021.\nWith COVID-related mortality expected to increase further in the fourth quarter to approximately 100,000 nationwide deaths, we expect to see similar, if not slightly worse trends for mortality impacts on our life insurance businesses in the fourth quarter than we did experience in the third quarter.\nThe Unum US group disability benefit ratio is also likely to remain elevated due to continued high levels of STD claims.\nIn addition, we do not anticipate miscellaneous investment income to be as strong in the fourth quarter as it was in this quarter.\nThese impacts will likely pressure our fourth quarter results relative to what we experienced here in the third quarter.\nAs Rick mentioned, we plan to update you on our 2022 outlook during the first quarter of 2022 when we expect to have a more informed view of COVID mortality and infection trends.\nWe feel confident that premium growth in our core business segments in 2022 can build off of the momentum that began to reemerge this year and then we'll also see the benefits of executing our share buyback authorization.\nWith that said, future COVID trends will be a very important factor in our expected benefits experience.\nWe do continue to be pleased with the operational performance of the Company through what has been an extraordinary environment.\nWe believe we're really well positioned to benefit from today's strong business conditions and we have to remain vigilant as COVID-related mortality and infection rates continue to persist.\n",
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"content": "q3 adjusted operating earnings per share $1.03.\nwill not provide an outlook for remainder of 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our SEC filings can be found in the Investors section on our website at unum.com.\nNet income for the fourth quarter of 2020 included the following items, a net after-tax gain from the Closed Block individual disability reinsurance transaction of $32 million, an increase to the reserves backing the Closed Block long-term care product line of $119.7 million after tax, an increase to reserves backing the group pension block, which is a part of the other product line within the Closed Block of $13.8 million after-tax, and a net after-tax realized investment gain on our investment portfolio, excluding the net realized investment gain associated with the Closed Block individual disability reinsurance transaction of $1.6 million.\nSo net income in the fourth quarter 2019 included a net after-tax realized investment gain of $7.2 million and after tax debt extinguishment cost of $1.7 million.\nSo excluding these items, after tax adjusted operating income in the fourth quarter of 2020 was $235.3 million or $1.15 per diluted common share compared to $290.7 million or $1.41 per diluted common share in a year ago quarter.\nWe certainly appreciate you all joining us today.\nAnd today, we will take you through our financial and operating results for the fourth quarter which finalized many of the items we shared with you on our Investor Day back in our Investor meeting in December.\nThis will be inclusive our Closed individual disability reinsurance transaction, which we are very happy about.\nSo let me start by saying, we closed out a very tumultuous year in a very strong position, as we continue to navigate the challenges of the pandemic.\nBut I'd also like to recognize the entire Unum team who have shown great resilience through the year and ensuring that our customers are well cared for and that we continue to build a dynamic employee benefits franchise.\nMany of these factors including COVID-related mortality, saw a resurgence in the fourth quarter that is carried over into the early weeks of 2021.\nThese factors will help frame up our financial results during our discussion today, as well as our views for 2021.\nFirst of all, the impacts from COVID-19 and related economic challenges in 2020.\nHave been very transparent in our financial results.\nAnd those impacts were amplified in our fourth quarter results by this resurgence that I mentioned with related deaths and infections specifically in December.\nAs we'll discuss in greater detail COVID-related deaths in the US for the full year totaled 345,000 with 138,000 occurring in the fourth quarter.\nFurther, over half of these fourth quarter deaths occurred in December alone, making it the deadliest month that we saw in the pandemic in 2020.\nSince we met with you at our Investor meeting in mid December, death counts have increased significantly.\nSadly, that trend has continued into January and we will no doubt -- and it will no doubt impact our first quarter results even more than what we've seen in previous quarters.\nTo detail that high mortality in our life insurance business lines high-claim rates in short-term disability and high expenses from leave volumes with partial offsets from high claim terminations caused by mortality and the closed of long-term care block.\nAs we look forward, we are very optimistic that this will turn.\nRecently, we have seen infection rates declining coupled with the rollout of vaccines.\nThe CDC reports that approximately 80% of the COVID-related deaths have been over the age of 65 and this population will be vaccinated in the coming months.\nThis same group also represented about 50% of our group life deaths by count, many of whom are retirees who maintain some level of their coverage.\nThis in turn is expected to drive a strong rebound in our results, likely in the second half of 2021, and cause us to expect to get back to our historic levels of growth and profitability in 2022.\nThere will be some volatility in our results as we progressed through this rollout period, but we remain highly confident in a full recovery as we get the pandemic behind us.\nThe pandemic and related impacts on the economy have also had significant impacts on our top-line premium income.\nOur premiums in our core businesses for several years have seen growth in the 5% range.\nBut this year, it only grew by 0.6%.\nAnd in the fourth quarter, it was down by 1.4%.\nThis outcome was consistent with the revised outlook we provided when the pandemic first hit that premium income would be flat to up slightly for the full year with declining year-over-year comparisons throughout 2020.\nSo to give perspective on the drivers of premium headwinds, there are three macro factors to highlight.\nFirst, the immediate shift to work from -- to a work from home environment in March, resulting from the onset of the pandemic has significant impacts on new sales.\nFull year sales for our core business segments, all declined in 2020, Unum US by 10%, Colonial Life by 27% and Unum International by 9.5%.\nThe most impacted were the voluntary benefit lines, which have a heavier emphasis on face to face sales and enrollments which require active selection.\nLooking forward, this has created an acceleration of the trends we were seeing with an increased adoption of digital sales and enrollment tools, that we have invested in over the past few years, especially for our Colonial Life agents, where we saw a 240% increase in the number of agents utilizing these digital tools.\nLooking at the group market, we are encouraged by the momentum, which was initially impacted by the dramatic economic shock of the pandemic, but is recovering to a more normal pace of activity as people have slowly returned to work.\nAlso helping our premium is how persistency is held up well in the face of the pandemic across most of our business lines.\nThe benefits and services we provide are highly valued by employers and [Technical Issues] they're -- came through and the retention of benefit plans, despite the financial stress many employers were facing.\nI believe it also reflects the investments we have made in our customer service and the dedication of our employees to serve these customers in this time.\nAnd finally, natural growth had a significant impact and a slowdown in premium growth in 2020.\nThe shock to employment levels in the spring, rising from 3.5% to a peak of 14.7% virtually wiped out all the benefit we usually see from growth in employee count and wages for existing customers.\nWe expect to see the benefits of natural growth reemerge as the pandemic slows and employment levels improve throughout 2021 with a more complete recovery in 2022.\nThe next broad factor to highlight is the interest rate environment, which continues to be a headwind for all insurance and financial services companies.\nOver the course of 2020, the yield on a 10-year treasury fell from its peak of 1.92% at the beginning of the year to a low of 50 basis points in March and ended the year at 92 basis points.\nThese levels coupled with historically tight credit spreads continue to create challenges for achieving attractive new money yields for our investment portfolio.\nOur strategy to gradually build out our alternative investment portfolio has benefited us with a well-diversified portfolio that focuses on consistent, predictable cash flows.\nIn addition, we have also taken the necessary steps to lower our interest rate assumptions as part of our annual reserve adequacy assumption updates.\nIn the tragedy of the pandemic, we see the economic effects on Unum is a once in a lifetime event.\nUnlike what you might see in a P&C CAT event.\nThis impact has been spread out over the course of a year.\nIt will impact our growth and profitability for a period of time, but we will come back strong.\nWe would also note that through this period, our capital remained in excellent shape, as we ended the year in a strong financial position with healthy capital levels above our targets and holding company cash almost 4 times our target.\nThis speaks to the financial resiliency of our franchise.\nAnd just as importantly the pandemic will be looked at as an event which we have successfully met our purpose, which is helping people through lifes challenging moments and reinforce the social value of the benefits we provide to working people and their families.\nWe have paid out over $150 million in COVID claims, mostly in small face amounts and provided by a company as a benefit.\nI continue to be very proud of the work of our employees to provide excellent service to our customers, while we have navigated through this disruptive year.\nIn our most recent surveys, we have seen strong improvements in both overall Unum employee engagement and claim and satisfaction scores over 2019.\nI'm also very pleased that despite disruption is presented in 2020.\nOur teams were able to complete an important transaction which was the sale through reinsurance of our Closed Block of individuals disability business.\nOnce fully executed, it will have the benefit of freeing up approximately $650 million of capital, primarily to holding company cash, part of which we see in our fourth quarter numbers.\nThe transaction is a culmination of many years of effectively managing this book of business and helps us move our capital to more effective uses.\nWell, the numerous disruptions of 2020 have masked the progress we are making in growing many of our more capital efficient businesses such as Voluntary Benefits, Dental and Vision and Medical Stop Loss, we are well positioned strategically and competitively in these product lines and I'm very optimistic about their long-term growth potential.\nSo to wrap up the year, we will look back on 2020 as the year of COVID.\nIt changed so much of our world, it changed a lot in how we operate our business, but it only reinforced our purpose as a company.\nWe saw high mortality rates, short-term claims volatility and the unprecedented disruption to the economy and the workplace.\nBut these are times when we step-up and deliver on our promises.\nAnd we did, as our highly engaged and dedicated employees provided excellent service to our customers when they most needed it.\nIn a year of unprecedented challenges from the economy, interest rates, credit markets and the health crisis, the strength of our capital metrics improved year end in 2020 compared to a year ago, with holding company cash increasing $650 million to $1.5 billion, risk-based capital holding steady at 365% and leverage declining almost 3 points to 26%, the measures of strength and stability of the company combined with the know-how of our team give us great confidence as we work through what we all hope are the last stages of the pandemic to a more stable environment ahead.\n[Technical Issues] cover the details of the fourth quarter results.\nThis will allow us to show how the company's business lines are progressing through the pandemic and resulting economic challenges, and outline for you the impacts it has had on our results.\nBefore I do so, I want to level set our reported adjusted operating income of $1.15 per share for the fourth quarter against the outlook we provided at our December 17, outlook meeting, which did call for adjusted operating earnings per share within a range of $1.14 to $1.24.\nLooking back on those assumptions we provided in December actual fourth quarter results for premium growth sales, persistency, year end capital metrics and investment income impacts were consistent with the expectations we discussed.\nIn addition, the capital benefits from the Closed Block individual disability reinsurance transaction which were realized Phase one were slightly better and the reserve increased for LTC as well as the capital contributions we made to back this block were consistent.\nThe one area that did diverge significantly from our expectations with late quarter mortality, for setting [Phonetic] expectations for benefits experience, our outlook was based on an assumption of fourth quarter mortality from COVID-19 of 92,000 deaths nationwide.\nActual mortality turned out to be substantially higher at approximately 138,000 excess deaths with December accounting for over 50% of those deaths.\nMore specifically 25% of the quarter's excess deaths occurred in the last two weeks of the year with the average daily death count approaching 2600 pushing our reported income toward the lower end of our expected range.\nThe year-end surge that occurred negatively impacted our deferred tax operating income by approximately $22 million relative to the midpoint of our expectation, primarily in Unum US Group Life with minor impacts to short-term disability, Voluntary Benefits and Colonials Life Insurance business.\nThis was offset in part by approximately $10 million favorable before tax operating income in long-term care from higher claim claimant mortality.\nThis $12 million net impact late in the quarter impacted our operating income by $0.05 per share.\nAs Tom outlined in his opening after tax adjusted operating income in the fourth quarter was $235.3 million or $1.15 per common share.\nBy comparison in the third quarter of this year, after-tax operating income was $245.9 million or $1.21 per common share.\nSo we saw about an $11 million decline in sequential quarterly earnings.\nAs I'll outline in my comments in more detail, the primary drivers of that quarter-to-quarter change were higher mortality impacts in US Group Life and Colonial, higher short-term disability claims and leave volumes and group disability, and lower levels of miscellaneous investment income from bond call premiums.\nWe did experience some favorable offsets from long-term care claims experience and positive marks on the alternative investment portfolio.\nBefore I begin my discussion of operating results this quarter, let me summarize for you the economic and business conditions that existed in the quarter and outline the impacts that it had on our results.\nFirst, as I mentioned, COVID-19 continues to have a significant impact on the external environment, driving a high level of mortality plus a continued high level of infections.\nThese count showed a significant resurgence in the fourth quarter as excess deaths in the US from COVID totaled an estimated 138,000 compared to 80,000 in the third quarter.\nThe impacts to our business are higher mortality across our Life Insurance business lines and increased short-term disability claims, which increased by 3% relative to the third quarter.\nSecond, employment conditions remain challenging.\nFortunately, the unemployment rate is gradually improved to 6.7% for December compared to 7.8% for September and the peak level in April of 14.8%.\nHowever, today's rate is higher than the 3.5% level, the US economy was experiencing heading into the pandemic a year ago, high unemployment rates negatively impacted premium growth in our core business lines it a negated the benefit we usually experienced from natural growth in the in-force blocks.\nWe are seeing signs in our results as the impact is leveling out supporting our view that premium growth in 2021 for our core segments is expected to show a slight increase with group line increases offsetting small declines in the voluntary businesses.\nWith a resurgence of infections and mortality in the fourth quarter, the reopening in the economy, with some people returning to more normal activity in their [Technical Issues] day -- generate some inconsistencies [Technical Issues] COVID-related STD claims increased with the resurgence of infections pressuring overall STD benefits experience.\nLeave requests continued to run significantly above year-ago levels and on a quarter-to-quarter basis, driving continued expense pressure in the group disability line.\nProviding a small offset that was dental utilization in the fourth quarter, which was somewhat lower than we experienced in the third quarter.\nThe net impact to our fourth quarter results from these trends was negative, related to what we experienced in the third quarter.\nFinally, financial market conditions were generally favorable in the quarter.\nThis is most impactful to Unum in the credit markets where corporate bond spreads continue to tighten while US Treasury rates did increase.\nThis combination continues to create a challenge for achieving attractive new money yields on investment opportunities, but it is favorable for overall credit quality and our outlook going forward for potential credit impacts.\nWe've seen a dramatic reduction in downgrades and impairments in the first quarter 2020, as well as the significant decline in our watchlist for potential credit concerns.\nIn addition, the marks on our alternative asset investment portfolio showed a strong improvement in the fourth quarter and we estimate the portfolios recovered roughly half of the valuation decline experienced in the second quarter.\nAgainst this high level backdrop, I'll now focus on our business lines, beginning with Unum US group disability.\nAdjusted operating income for the fourth quarter was $64.7 million compared to $73 million in the third quarter.\nThere were three primary factors that impacted these results.\nFirst, we experienced pressure on STD claims from the resurgence in COVID infection rates with the volume of COVID-related stand-alone STD claims, increasing 45% by count from the third quarter to the fourth quarter.\nSecond, pressure on expenses from leave request volumes remains high and continued to impact results, with those volumes running approximately 6% higher relative to the third quarter.\nAnd third, pressure on net investment income impacted operating income as miscellaneous investment income was $10 million lower due to lower levels of bond call premiums.\nMiscellaneous investment income from bond calls was unusually high in the third quarter at $12 million and slightly below average in the fourth quarter at $2 million.\nThese trends were partly offset by continued favorable results in the long-term disability block with generally stable new claims incidents and continued strong claim recoveries.\nWe continue to be very pleased with the consistency of the results and LTD throughout this volatile environment as demonstrated by the group disability benefit ratio of 72.5% this quarter, the lowest in recent history, compared to 74.1% in the prior quarter.\nAdjusted operating income for Unum US Group Life and AD&D remained depressed with a loss of $21.9 million in the fourth quarter compared to income of $13.9 million for the third quarter, with the change driven primarily by unfavorable claims experience.\nThe pandemic clearly impacted results.\nThough our analysis continues to show a consistent pattern between our mortality trends and the National COVID mortality statistics.\nThat is we continue to see approximately 1% of the excess mortality by count in our Group Life results.\nSpecifically, in the fourth quarter, we had approximately 1,300 excess claims by count or slightly under 1% of the 138,000 reported deaths nationwide.\nIn the third quarter, we reported slightly more than 900 excess life claims benchmark against the base of approximately 80,000 COVID related deaths nationwide, a higher claim count of approximately 350 at an average claim size of $50,000 in the fourth quarter, accounts for part of the decline in operating earnings.\nLooking ahead to the first quarter, the national mortality rate in January has exceeded the experience of December and will likely further pressure results in Group Life in the first quarter.\nWe believe this 1% mortality relationship to national trend will continue in the early part of 2021 and suggest that you use that as a basis for your projections and estimates in future quarters.\nOver time this relationship could change and potentially exceed 1% on what we expect to be a declining overall mortality count as vaccinations rollout to different sectors of the population, initially to the elderly, teachers, medical personnel and first responders, but we will update you as these trends evolve.\nThe Unum US supplemental and voluntary lines experienced consistent -- generally consistent results in the fourth quarter with adjusted operating income of $100.7 million compared to a $101.3 million in the third quarter.\nWhile consistent in total, there were some different trends for each of the primary product lines.\nThe voluntary benefits results were softer in the fourth quarter driven by worse experience in the individual life and short-term disability [Technical Issues] higher by COVID related claims.\nThe IDI line had favorable results with the benefit ratio declining to 42% in the fourth quarter from 48.6% in the third quarter, driven primarily by favorable incidence and mortality trends in the block.\nFinally, results in the Dental and Vision business improved in the fourth quarter with the benefit ratio declining to 65.4% from 76.8% primarily driven by lower utilization.\nSales for Unum US declined 7% in the fourth quarter compared to the year ago quarter, sequentially though we see sales momentum building with improvement in the year-over-year decline from 18.5% in the third quarter to 7% in the fourth quarter.\nReflecting there is still -- there is still difficult yet improving commercial environment.\nTotal sales for group lines meaning LTD, STD and Group Life combined decreased 4.3% as the fourth quarter experience the impact of a higher than normal level of large case sales recorded in the third quarter.\nAlthough new sales were down in total, we continue to be encouraged by the success from our HR Connect platform, which provides the differentiated experience on leading HCM platforms.\nSales on this platform increased 6% in the fourth quarter over the year ago quarter and increased 17% for the full year.\nOn the persistency front all group products saw an uptick from the third quarter.\nAs discussed throughout 2020 and on our outlook call, the supplemental lines show more pressure than the group lines, voluntary, benefits sales declined 24.2% compared to the year ago quarter, but did improve their sequential year-over-year decline, which is 35.8% in the third quarter.\nDental and Vision sales declined 9.4% as we continue to see disruption in group sales stemming from discounts and other incentives carriers are providing in response to the unusually favorable claim trends, the industry experienced in the second quarter.\nThis dynamic is evident in our persistence results as well, which improved to 85% versus 82.6% in the year ago quarter.\nSimilar to VB, we also see momentum building in the sequential year-over-year sales decline improved in dental and vision from down 33.1% in 3Q to down 9.4% in 4Q.\nFinally, stop-loss sales continue to grow from a small base, up over 140% for the fourth quarter and full year providing a good long-term growth opportunity for us in a very capital efficient product line.\nMoving to Unum International segment.\nAdjusted operating income for the fourth quarter remained generally consistent at $20.7 million compared to $21.4 million in the third quarter.\nIncome for Unum UK was GBP15.4 million this quarter compared to GBP15.2 million in the prior quarter.\nOverall benefits experience was slightly favorable quarter-to-quarter, so premium income was slightly lower due to persistency and an increase in reinsurance ceded.\nUnum Poland saw more pressure on its results in the fourth quarter relative to prior quarters due to impacts from COVID, which began to emerge late in the year.\nAlthough, we are encouraged by the improved income in the second half of 2020 in the international operations.\nWe are cautious with our near-term outlook as both the UK and Poland and deal with COVID impacts and related economic shutdowns.\nColonial Life had a more challenging fourth quarter with adjusted operating income of $71.2 million compared to $92.2 million in the third quarter.\nThese results were primarily impacted by a higher benefit ratio of 56.6% compared to 52.2% in the third quarter, which was primarily driven by higher COVID-related life insurance and disability claims as well as weaker results in the cancer and critical illness products.\nIn previous quarters, the negative impacts on our life block from COVID claims had been partially offset in favor -- by favorable results in our other two product lines.\nHowever, in the fourth quarter, those favorable offsets were negated by a pickup and utilization of many of our health and wellness, and accident products where performance had been favorable.\nPremium income for the fourth quarter was in line with the third quarter.\nAs we indicated in our prior meetings, it will take a return to more normal sales growth before we see growth reemerge in premium income.\nI'd also point out the fourth quarter net investment income was lower than third quarter, reflecting the unusually large $8.1 million of miscellaneous investment income we did record in the third quarter.\nSales for Colonial Life declined 26.5% in the fourth quarter relative to year ago.\nThis represents some improvement related to year-over-year trends we saw in the second and third quarters, which were down 43% and 27.6% respectively.\nThe sales environment remains challenging, but we are encouraged by the adoption of the digital sales tools we have developed.\nWhile our traditional agent assisted sales remained pressured, we saw a 30% increase in telephonic enrollment and a 25% increase in our digital self service platforms.\nIn addition, agent recruiting remains strong with a 10% increase year-over-year.\nIn the Closed Block segment, adjusted operating earnings increased to $104.2 million in the fourth quarter, which did exclude the significant items that I'll cover in just a moment.\nThis compares with $70.8 million in the third quarter, largely driven by the impact of higher climate mortality on the LTC block and positive marks on the alternative investment portfolio following the significant decline that we saw in value as of the end of the second quarter.\nThe positive mark on the alts was $29.4 million in the fourth quarter compared to $11.3 million in the third quarter and a loss of $31.3 million in the second quarter, which did reflect the negative market conditions at the end of the first quarter.\nWe estimate that we have recovered about half of the valuation hit we saw in the second quarter, focused mostly on the equity based and credit segment of the portfolio, and we anticipate additional recovery in future quarters.\nFor the long-term care block the interest adjusted loss ratio was 60.2% in the fourth quarter, excluding the impact of the reserve assumption update, which I'll cover separately in a moment.\n[Technical Issues] the results of both quarters remain well below our expected long-term range of 85% to 90%.\nThe underlying results this quarter continued to be highly favorable relative [Technical Issues] driven by higher mortality on the claimant block.\nClaimant mortality by count was approximately 15% higher than expected in the fourth quarter.\nAs a reminder, claimant mortality was approximately 15% higher than expected in the third quarter and 30% higher in the second quarter.\nFor the Closed Disability Block, the interest adjusted loss ratio was 79.5% in the fourth quarter, excluding the impacts from the reinsurance transaction, compared to 86.6% in the third quarter.\nFourth quarter experience was more consistent with our expectations as the reinsurance transaction closed in mid December, our results reflect the performance of this block for the majority of the fourth quarter.\nThen wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $42.7 million in the fourth quarter.\nThis is favorable to the run rate of losses of $45 million to $50 million per quarter that we did outline for you back in our December meeting, primarily due to lower expenses in this quarter.\nNow I'd like to cover the significant items recorded in the quarter, beginning with the Closed Block individual disability reinsurance transaction that we announced at our December outlook meeting.\nWhile the accounting treatment for the transaction is complex, the primary economic impact is the ultimate release of approximately $650 million of capital backing this block, primarily as holding company cash.\nThis occurs with the closing of the first phase of the transaction we're reporting today with our fourth quarter results and the completion of Phase two, which we're making very good progress on here in the first quarter and we will discuss at our first quarter earnings call.\nFrom a balance sheet perspective, the active life cohort of the block is being accounted for under deposit accounting rules and then the disabled life cohort is being accounted for as reinsurance.\nAs a result of accounting under different accounting model we are separating the transaction components, which results in recognizing a prepaid cost of reinsurance on the DLR component and a deposit asset on the ALR cohort.\nThe prepaid cost of reinsurance of $815.7 million, which largely reflects the negative ceding commission and difference between GAAP and statutory reserves held on the block, will be amortized over the life of the block with the amortization reported as a non-GAAP measure and excluded from our adjusted operating earnings.\nThe deposit asset related to the ALR cover is initially $88.2 million and will be adjusted going forward to reflect the net cash flows related to the performance and accretion of interest.\nAs I mentioned, there is a lot of complexity in the accounting of the transaction, but the economic impact driving the rationale for the transaction is the release of capital back in the block, primarily to holding company cash and the financial flexibility it provides us.\nAs we also just discussed back in our December meeting, we completed an update of our GAAP reserve adequacy for the LTC block and did record a reserve increase of $119.7 million on an after-tax basis which was really at a midpoint of our expected range.\nThe assumptions we implemented with this review were generally consistent with what we described previously.\nAs we mentioned, we lower the interest rate assumption for the 10-year treasury yield to an ultimate rate of 3.25% and extended the mean reversion period to seven years.\nThis change added approximately $500 million to reserves, but we also had favorable offsets with the success of our rate increase approval program lower expense expectations and movements in our group LTC inventories.\nCash contributions for the LTC blocks ended 2020 consistent with the expectations we provided at our outlook meeting.\nThe amounts contributed for full year 2020 were $411 million for Fairwind and $55 million for First Unum.\nThe Fairwind contribution includes funding $181 million after-tax for the LTC premium deficiency reserve in conjunction with the Maine Bureau of Insurance Examination.\nThese are all reflected in the capital metrics I'll outline in the capital discussion.\nAlso in the fourth quarter, as part of our GAAP reserve adequacy review, we did record a reserve increase of $13.8 million after tax in the group pension block, which is included in the other product line within Closed Block segments.\nThis Closed Block has reserves of approximately $700 million and runs off at a rate of approximately $40 million annually.\nThe reserve increase was really driven by lowering the interest rate assumption for this block to be more consistent with that of the LTC block.\nI'd like to now turn to our investment portfolio with a few points to highlight.\nFirst, we recorded a large after-tax realized investment gain of over $1 billion in the quarter.\nThis is largely related to the reinsurance transaction as the assets being transferred to the reinsurer were mark to market before being transfered as part of Phase one of the transaction.\nThese assets had large and unrealized gains, which were realized and the assets were transferred to the reinsurer at market.\nSecond, and related to the reinsurance transaction, we were able [Technical Issues] assets, which had [Technical Issues] to the Closed Disability Block, but were not transferred to the reinsurer as part of the transaction.\nThis quarter we allocated $360 million of these securities with a 7.4% yield and BBB rating to the LTC investment portfolio.\nThese above market yields add strength to the balance sheet and represent additional economics of the transaction.\nThird, the overall quality of the portfolio remains in very good shape.\nDuring the fourth quarter, we saw only $85 million of investment grade bonds downgraded to below investment grade, and $52 million of which will be upgraded back to investment grade status when the acquisition of that company is completed this year.\nOur watch list is of potentially troubled investments has declined, a very low levels and we have taken -- as we have taken advantage of the rebound in the credit markets to trade out of these positions.\nA final point I'll make is that we saw a strong recovery in the valuation mark on our alternative investment assets of $29.4 million this quarter.\nGiven the current portfolio size, we would expect quarterly positive marks on the portfolio between $8 million and $10 million.\nWe estimate we have recovered about half of the valuation loss from the market decline in early 2020 and continue to expect a full recovery over time.\nI'd also note that it was an unusually low quarter for traditional miscellaneous investment income from bond calls.\nFollowing an unusually high amount in the third quarter, you will see that impact in many of our core business lines.\nNow looking to our capital position, we finished the year in very good shape with a risk-based capital ratio for our traditional US insurance companies at approximately 365% and holding company cash at $1.5 billion, which are both comfortably above our targeted levels.\nThe cash balance, includes the capital released from the Phase one of the reinsurance transaction of approximately $400 million and we'll have an additional benefit at Phase two of the transaction is completed in the first quarter.\nSo in total, once the reinsurance transaction was fully executed in the first quarter, we anticipate releasing over $650 million of capital, primarily to the holding company.\nIn addition, our leverage ratio has declined to 26.2%.\nSo now I'll close my comments with an update to our expectations regarding our outlook for 2021.\nAt our outlook meeting back in December, we indicated that we expected 2021 after tax adjusted operating income to be relatively flat with our expected income for 2020.\nWe also outlined a pattern for expected income of the first half 2021, mirroring the second half of 2020 with then the second half of 2021 beginning to rebound to more historic levels of growth and profitability.\nSo now based on the higher than estimated COVID-related mortality we experienced in the fourth quarter of 2020 and our revised assumption of a 30% increase in mortality accounts in the first quarter of 2021.\nWe now expect a modest decline of 5% to 6% for full year 2021 adjusted operating income per share.\nWe anticipate COVID having a more negative impact on our first quarter results with mortality in January being the worst month of the pandemic.\nHowever, we continue to expect second half 2021 income to be in line with our previous outlook producing a stronger recovery as the impacts of the pandemic subside.\nAs for our outlook for capital metrics, we anticipate year end 2021 level of holding company cash and risk-based capital to be very in line with our year-end 2020 metrics of 365% RBC and $1.5 billion of holding company liquidity, which will provide a strong stable capital base as we work through the remaining impacts from the pandemic.\nI I'll summarize by saying that we continue to be pleased with the operational performance of the company through continues to be an extraordinary environment.\nAnd we do believe we are well positioned to benefit from improving business conditions as vaccines take hold and we move past the December and January surge in mortality and new COVID infections.\nIn the meantime, we'll continue to focus on the crisp execution and managed through the challenges we see today.\nWe will be -- this will be his last quarterly earnings call.\nSo I just want to recognize Peadar.\nPeadar has been a great part of our executive team and we will certainly miss his leadership and expertise.\nI will ask the operator to begin the Q&A session.\n",
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"content": "q4 adjusted operating earnings per share $1.15 excluding items.\nanticipates a strong recovery in after-tax adjusted operating income per share in second half of 2021.\nqtrly total revenue $4,273.5 million versus $3,034.6 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our SEC filings can be found in the Investors section of our website at unum.com.\nNet income for the fourth quarter of 2021 included the aftertax amortization of the cost of reinsurance of $15.5 million or $0.08 per diluted common share and a net aftertax investment loss on the company's investment portfolio of $6.8 million or $0.03 per diluted common share.\nNet income in the fourth quarter of 2020 included a net aftertax gain from the closed block individual disability reinsurance transaction of $32 million or $0.16 per diluted common share.\nA net aftertax reserve increase related to assumption updates of $133.5 million, which is $0.66 per diluted common share; and a net aftertax investment gain on the company's investment portfolio, excluding the net aftertax realized investment gain associated with the closed block individual disability reinsurance transaction of $1.6 million or $0.01 per diluted common share.\nSo excluding these items, aftertax adjusted operating income in the fourth quarter of 2021 was $182 million or $0.89 per diluted common share compared to $235.3 million or $1.15 per diluted common share in the year ago quarter.\nAs we wrap up 2021, what we saw in the fourth quarter is a continuation of the good performance of our business model, impacted by the difficult environment of ongoing COVID-related claims.\nBefore getting to the quarter, I'd like to recognize the extraordinary work of our teams in serving our customers in this challenging time through their empathy, passion and resilience.\nThroughout the pandemic, they have not wavered in fulfilling our purpose, while still positioning the company for the future.\nAs we turn to our financial results, our fourth quarter played out largely as we anticipated, with aftertax adjusted operating earnings per share at $0.89 for the fourth quarter.\nI'll come back to the COVID impacts in a minute, but as we look beyond these areas of our business directly impacted by COVID, I'm very pleased with many of our product lines that performed well in the quarter.\nAdjusted operating income for the Unum US supplemental and voluntary line this quarter was among the highest in our history, with strong results in the IDI recently issued and voluntary benefit lines, as well as more stable performance in the dental and vision line.\ncolonial life produced a solid level of income this quarter, with a strong adjusted operating return on equity of approximately 16%.\nIn addition, adjusted operating income in our international business continues to build momentum and the overall performance in the closed block remains strong.\nWe saw a favorable benefits experience in both long-term care and individual disability and continued excellent returns from our alternative investment portfolio.\nIn addition to the favorable returns from the alternative investments more broadly, our investment portfolio is in great shape as we continue to see very healthy credit trends.\nLooking at the top line, we are also very pleased with the trend in premium income growth for our core business segments.\nThis includes the acceleration in year-over-year growth that we have seen in recent quarters.\nPremium growth in the fourth quarter on a year-over-year basis was just under 3% for our core businesses in aggregate, with growth of 3% for Unum US, 7% for international businesses and 1% for colonial life.\nPersistency levels have remained healthy.\nWe are also seeing a growing benefit to our top line from natural growth, with strong employment levels and wage growth coming through in our in-force block.\nFrom a benefits perspective, our results were significantly impacted by COVID claims.\nWe saw continued elevated mortality in the group life business.\nCOVID-related mortality remained elevated at the national level and the age demographics continued to show a high impact among working-aged individuals.\nAs in the third quarter, the fourth quarter was due to the Delta variant.\nThe age demographics are a key driver for our business and there was a slight decrease to 35% of national deaths in the fourth quarter from 40% in the prior quarter.\nWe will continue to watch this dynamic as new variants like omicron emerge.\nIn addition, we continue to see pressure on our short-term disability results from the high levels of infection rates and hospitalizations.\nThese also lead to an increase in leave request volumes, which pressure expenses in the group disability line.\nThese COVID impacts are clear in our results and will linger into 2022.\nBut as the impact from the pandemic lessens, we anticipate seeing recovery from the underlying strength of the business.\nAnd finally, our capital position remains in a very, in very healthy shape, even after paying more than $0.5 billion in life claims through the pandemic.\nThe weighted average risk-based capital ratio for our traditional U.S.-based life insurance companies was approximately 395% to close the year and holding company cash totaled $1.5 billion.\nBoth of these metrics are well ahead of our long-term targets and relative to year-end 2020, holding company cash remained stable and RBC improved by approximately 30 points.\nThis is the highest year-end RBC level since year-end 2016 and also reflects the impacts from the C1 factor changes that were implemented in 2021.\nIn addition, we added $400 million of pre-capitalized trust securities, which gives us contingent capital on top of our pre-existing credit lines.\nAll of this points to broad financial flexibility moving into 2022.\nSteve will get into our total LTC funding actions, but one area to highlight is our First Unum subsidiary, where we have been adding reserves and capital for the last decade.\nFor the first time in many years, we released reserves at year-end and we're able to pay a dividend to our holding company.\nThis is an example that the funding needs for LTC can turn, particularly as interest rates move up.\nOverall, we wrapped the year with a very strong capital picture.\nLooking forward, our outlook in the near term will be influenced by COVID trends, specifically the level of mortality, its demographics and the rate and severity of COVID infections.\nWe expect improvement in these trends over time, but it has proven difficult to forecast these trends and their impacts.\nOur focus remains the same, that is to ensure that we are taking the appropriate actions to rebuild profit margins and the overall level of earnings back to pre-pandemic levels.\nThis will take several quarters, assuming diminishing COVID-related impacts over time.\nAn important step in this process is to take the appropriate pricing actions with our new sales and renewals.\nThat disciplined approach can have near-term implications for sales and persistency, but we have worked hard to be known in the market as a disciplined and consistent price when we work with our customers through these pricing actions.\nWe experienced that, to some extent, with fourth quarter sales in Unum US, particularly large case and mid-market sales in the group disability and lifelines, but we think it is the appropriate path to take.\nAs we take these actions, we were pleased with the multiple business lines that showed very good sales trends, particularly colonial life, the Unum US voluntary benefits and individual disability benefits businesses and our international segment.\nThe breadth of our offerings allow us to manage through challenges in some lines as we look to overall growth.\nLooking ahead, we plan to connect with you later in February on the 25th to provide our outlook for the full year 2022 and give you insights into the strategic actions we're taking to deliver on our purpose, to protect more people and position ourselves for good profitable growth.\nTo wrap up, I'm very pleased with our position as we move into 2022.\nIt's a testimony to the strength of our franchise that despite the impacts from COVID in the past two years, the primary measure to the top-line growth and capital strength have improved over the course of the year, providing us with optimism for growth and the underpinnings of a strong capital base.\nNow, I'll ask Steve to cover the details of the fourth quarter results.\nI will also describe our adjusted operating results by segment, excluding the impacts from our GAAP reserve assumption updates that did occur last quarter.\nI'll start the discussion of our operating results with the Unum US segment, where COVID again significantly impacted our results this quarter, driving high mortality and a high average claim size in the group life business and higher claims in the group disability business.\nFor the fourth quarter in the Unum US segment, adjusted operating income was $81.4 million compared to $88.5 million in the third quarter.\nWithin the Unum US segment, the group disability line reported adjusted operating income of $34.1 million in the fourth quarter compared to $39.5 million in the third quarter.\nWe saw promising trends in premium income, which increased 2.9% relative to the third quarter and 5% on a year-over-year basis, with increasing levels of natural growth as we benefit from improving employment levels along with rising wages.\nThe expense ratio was elevated this quarter at 29.9% compared to 28.1% in the third quarter, which reflected higher people-related costs and technology spend to support our digital strategies.\nThe benefit ratio for group disability and the underlying drivers were generally steady in the fourth quarter relative to the third quarter.\nThe ratio did improve slightly to 78.3% from 78.9% in the third quarter, primarily driven by a lower level of incidence in the short-term disability line.\nWhile short-term disability results did improve this quarter, STD continues to be impacted by high COVID-related claims and, therefore, remains a drag on the overall profitability of this line relative to our pre-COVID trends.\nThe LTD line experienced generally stable incidence in the fourth quarter relative to the third and claim recoveries remain strong.\nWe expect to continue to see an elevated overall group disability benefit ratio as COVID and the current external environment continue to impact our results.\nWe do feel that COVID is a key driver of the high benefit ratio for the group disability line and that as direct COVID impacts lessen over time, we will see improvement in the benefit ratio back toward prepandemic levels.\nAdjusted operating income for Unum US group life and AD&D declined to a loss of $71.7 million for the fourth quarter from a loss of $67.1 million in the third quarter.\nThis quarter-to-quarter decline was primarily impacted by a decrease in the deferral of acquisition costs in the quarter due to lower expected recoverability in the short term as a result of the losses driven by COVID-related life claims for the full year.\nThis impacted the quarter by approximately $15 million.\nThe benefit ratio improved to 98.3% for the fourth quarter compared to 100.6% in the third quarter.\nWe were impacted by the continued high level of national COVID-related mortality, which was a reported 94,000 in the third quarter and increased to a reported 127,000 in the fourth quarter.\nAge demographics continue to show a high impact on younger, working-aged individuals though this impact is lessened in the fourth quarter.\nFor our group life block, we estimate that COVID-related excess mortality claims declined from over 1,900 claims in the third quarter to an estimated 1,725 claims in the fourth quarter.\nAccordingly, our results reflect an improvement to approximately 1.4% of the reported national figure in the fourth quarter compared to approximately 2% of the reported national figures in the third quarter.\nWe also experienced a higher average benefit size, which increased to around $65,000 in the fourth quarter from just over $60,000 in the third quarter.\nAnd then finally, non-COVID-related mortality did not materially impact results in the fourth quarter relative to the experience in the third quarter.\nSo looking ahead, the level of composition of COVID-related mortality will heavily influence our group life results.\nWhile we are waiting until later this month to hold our 2022 outlook meeting when we expect to have a more informed view of potential trends for the year, it is clear that first quarter mortality will continue to impact our group life results and we suggest that you follow the national trends as a basis for your projections and estimates.\nNow, looking at the Unum US supplemental and voluntary lines, adjusted operating income totaled $119 million in the fourth quarter compared to $116.1 million in the third quarter, both of which are very strong quarters that generated adjusted operating returns on equity in the range of 17% to 18%.\nLooking at the three primary business lines.\nFirst, we remain very pleased with the performance of the individual disability recently issued block of business, which has generated strong results throughout the pandemic.\nThe benefit ratio was generally stable at favorable overall levels from the third quarter to the fourth quarter, with strong recoveries offsetting an increased level of incidents.\nThe voluntary benefits line reported a strong level of income as well, with a benefit ratio in the fourth quarter declining to 42.9% from 46.6% in the third quarter, primarily reflecting strong performance across the A&H products.\nAnd finally, utilization in the dental and vision line decreased relative to the third quarter leading to an improvement in the benefit ratio to 65.6% compared to 75% in the third quarter.\nNow, looking at premium trends and drivers, we were pleased to see an acceleration in premium income growth for Unum US in the fourth quarter, with a year-over-year growth of 3%.\nFor full year 2021, premium income increased 1%.\nThe group disability product line had a very positive quarter, with premium increasing 5% year over year, with strong growth in the STD line as well as the benefit of natural growth on the in-force block.\nWe estimate the benefit we're seeing from natural growth across our businesses to be in the 3% to 3.5% range measured on a year-over-year basis, with different impacts to our various product lines.\nTo date, we've seen more of a benefit from rising wages overall, with the benefit from higher employment levels being more pronounced in the less than 2,000 lives sector of our blocks than in our larger case business.\nPersistency levels were slightly lower year over year, but remain at strong overall levels.\nNew sales were down for both the STD and LTD lines reflecting the pricing actions we are taking in the market and increased competition.\nFor the group life and AD&D line, premium income increased 2.1% year over year, benefiting from higher persistency and favorable trends and natural growth.\nCompared to a year ago, fourth quarter sales were lower by 4.7%.\nFinally, in the supplemental voluntary lines, premium income increased 0.6% in the fourth quarter relative to last year, with strong sales growth in both the voluntary benefits and the individual disability recently issued lines, a year-over-year increase of 8.3% in dental and vision premium income, as well as strong improvement in persistency in the voluntary benefits line.\nNow, moving to the Unum international segment.\nWe had a very good quarter, with adjusted operating income for the fourth quarter of $27.1 million compared to $27.4 million in the third quarter.\nThe primary driver of our international segment results is our Unum UK business, which generated adjusted operating income of GBP 18.7 million in the fourth quarter compared to GBP 18.4 million in the third quarter.\nThe reported benefit ratio for Unum U.K. was 81.4% in the fourth quarter compared to 79.2% in the third quarter.\nThe underlying benefits experience was generally consistent between the two quarters, with favorable experience in group life offsetting a slightly higher benefit ratio in group disability.\nThe quarter-to-quarter increase in the benefit ratio was largely driven by the impact of rising inflation in the U.K. As we have outlined in previous quarters, the higher benefit payments we make that are linked to inflation are offset with higher income that we received from inflation index-linked yields in the investment portfolio.\nBenefits experienced in Unum Poland continued to trend favorably and adjusted operating income was generally consistent from quarter to quarter.\nThe year-over-year premium growth for our international business segment was also strong this quarter.\nOn a local currency basis to neutralize the impact from changes in exchange rates, Unum UK generated growth of 5.1% with strong persistency, good sales and the continued successful placement of rate increases on our in-force block.\nAdditionally, sales in Unum UK were strong in the fourth quarter, increasing 28.1% over last year.\nUnum Poland generated sales growth of 43.6%, a continuation of the strong growth trend this business has been producing.\nSo next, I'll move to the colonial life results.\nThey remain at healthy levels and in line with our expectations, with adjusted operating income of $80 million in the fourth quarter and $80.1 million in the third quarter.\nOne of the primary drivers of results between the third and fourth quarters was an improvement in the benefit ratio in the fourth quarter to 52.5% compared to 55.9% in the third quarter.\nThis was largely driven by lower cancer and life insurance claims.\nOffsetting this improvement was a lower level of miscellaneous investment income, with the fourth quarter at an average level for bond calls compared to the unusually high income we saw in the third quarter from calls.\nWe were pleased to see a continuation in the improving trend in premium growth for colonial life, which did increase 1.1% on a year-over-year basis after being flat to negative over the past four quarters.\nDriving this improving trend in premiums is the improvement in persistency and sales activity.\nFor the fourth quarter, sales for colonial life increased 7.8% compared to a year ago and for the full year 2021, sales increased 16.1%.\nPersistency for colonial life ended the year in a strong position, increasing to 79.3% for the full year compared to 77.8% in 2020.\nIn the closed block segment, adjusted operating income, excluding the amortization of cost of reinsurance related to the closed block individual disability reinsurance transaction and the items related to the reserve assumption update in the prior quarter, was $76.7 million in the fourth quarter compared to $109.8 million in the third quarter.\nFor both the long-term care and closed block individual disability lines, we saw favorable results relative to our long-term assumptions, but we did see benefits experience continuing to return to more historic levels of performance.\nFor LTC, the move in the interest adjusted loss ratio to 82.2% in the fourth quarter from 74.8% in the third quarter was driven by less favorable terminations and recoveries, partially offset by lower submitted new claims.\nFor the closed block individual disability line, the move in the interest adjusted loss ratio to 75.4% in the fourth quarter from 58.2% in the third quarter was driven by higher submitted claims.\nAgain, the experience for both lines in the fourth quarter remained favorable relative to our long-term assumptions.\nHigher miscellaneous investment income continues to contribute to the strong adjusted operating income for the closed block segment.\nHowever, we did experience a reduction of approximately $10 million in total miscellaneous investment income from the third quarter to the fourth quarter, with the reduction driven by a lower level of bond calls.\nThe contribution to income from our alternative asset portfolio remained approximately the same between the two quarters, with improved results from our exposure to real asset partnerships.\nLooking ahead, I'll reiterate from our messaging in prior calls with you that we estimate quarterly adjusted operating income for this segment will, over time, run within a $45 million to $55 million range, assuming more normal trends for investment income and claim results in the LTC and closed disability lines.\nSo then wrapping up my commentary on the quarter's financial results, the adjusted operating loss in the corporate segment was $45.1 million in the fourth quarter and $45.4 million in the third quarter, which are both generally in line with our expectations for this segment.\nI'd also mention that the tax rate for the fourth quarter of 2021 was lower than we historically reported at 17.3%, with the favorability as compared to the U.S. statutory tax rate, driven primarily by tax exempt income and various credits.\nThe comparable full year tax rate of 20.2% is consistent with our expectations and in line with the past two years.\nMoving now to investments and net investment income.\nMiscellaneous investment income has had a meaningful impact on our financial results and quarterly comparisons.\nFor the fourth quarter, we saw a decline of approximately $16 million relative to the third quarter, driven by a significant reduction in bond call activity, which was unusually high in the third quarter, but was still elevated above average levels for us in the fourth quarter.\nOur alternative investment portfolio remained very strong, generating income of $39.4 million in the fourth quarter compared to $38.2 million in the third quarter.\nThe closed block segment continues to be the primary beneficiary of the strong performance of the alternatives portfolio, while the reduced level of net investment income from bond call activity primarily impacted colonial's sequential results.\nFor the full year 2021, miscellaneous investment income generated unusually high levels of income, which we expect to moderate in 2021.\nMoving now to capital.\nThe financial position of the company continues to be in great shape, providing us significant financial flexibility.\ninsurance companies improved to approximately 395% and holding company cash was $1.5 billion at the end of the year, both well above our targeted levels.\nIn addition, leverage has again trended lower with equity growth and is now 25.3%.\nDuring the fourth quarter, we successfully added $400 million of contingent capital through pre-capitalized trust securities, with a 4.046% coupon and 20-year tenor, which we view as a cost-effective way to enhance our balance sheet strength and flexibility.\nIn terms of capital deployment in the fourth quarter, we executed an accelerated share repurchase transaction to buy back $50 million of our shares.\nWe continue to anticipate repurchasing approximately $200 million of our shares during 2022.\nAnd looking at the capital contribution to support the LTC business, we were really pleased with the improvements in the fourth quarter outcomes.\nCapital contributions in the Fairwind subsidiary were $165 million for the fourth quarter and totaled $285 million for the full year 2021, which was a decline from $424 million in 2020.\nThe recognition of the premium deficiency reserve for LTC, which is included in the Fairwind capital contributions, totaled $346 million after tax for full year 2021.\nA portion of the funding for the PDR was generated from the favorable operating earnings in the Fairwind subsidiary and its high capital levels.\nMoving to First Unum, given the better position of the LTC Block in that subsidiary, resulting from higher interest rates and the benefit of rate increase approvals for that block during 2021, we were in a position to release $75 million of the asset adequacy reserve after many years of additions to that reserve.\nWith this reserve release, we were able to take a $30 million dividend out of First Unum in the quarter, the first in several years.\nFinally, we have a small portion of our LTC business in the provident life and accident subsidiary.\nAnd with the increase in interest rates and repositioning our investment portfolio, the premium deficiency reserve in that block was reduced by $66 million after tax.\nTo summarize, we experienced favorable outcomes for LTC contributions given the improved interest rate environment, recent underlying performance of the block and rate increases on the in-force block.\nSo in closing, I wanted to give you an update on our progress in adopting ASC 944 or long-duration targeted improvements.\nAs I mentioned in October, this accounting pronouncement applies only to GAAP basis financial statements and has no economic, statutory accounting or cash flow impacts to the business.\nWe continue to feel good about our readiness to adopt the pronouncement as of January 1, 2023 and began to communicate some qualitative information with the filing of our third quarter Form 10-Q.\nAlthough we continue to evaluate the effects of complying with this update, we expect that the most significant impact of the transition date will be the requirement to update our liability discount rate with one that is generally equivalent to a single A interest rate.\nAs we stated in the 10-Q, we expect this will result in a material decrease to accumulated other comprehensive income and primarily being driven by the difference between the expected interest rates from our investment strategy and interest rates indicative of a single A rated portfolio.\nWe plan to provide updates to you in 2022 as we near adoption.\nSpecifically, we plan to provide an update on the impact at the transition date as well as our 2022 outlook with a conference call on February 25.\nWe'll release details on the logistics for that call in the next several days.\nI'd reiterate, we continue to be pleased with the operational performance of the company through what continues to be an extraordinary environment.\nWe believe we're well positioned to benefit from today's business environment, but remain vigilant as COVID-related mortality and infection rates continue to persist.\n",
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"content": "compname reports q4 adjusted operating earnings per share of $0.89.\nq4 adjusted operating earnings per share $0.89.\nanticipates hosting a conference call on february 25, 2022 to provide its outlook for 2022.\nqtrly total revenue $2,979.1 million versus $4,273.5 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the quarter, the Union Pacific team dealt with multiple network disruptions that required us to rebuild bridges, reroute trains and connect more closely with other links in the supply chain to support and to serve our customers while we still have work ahead, our employees' dedication is a critical success factor in navigating all of those challenges.\nTurning to our third quarter results.\nThis compares to $1.4 billion or $2.01 per share in the third quarter of 2020 despite the network and global supply chain challenges our quarterly operating ratio of 56.3% improved 240 basis points versus last year and represents a third quarter record.\nWe also set 3rd quarter records in operating income, net income and earnings per share.\nThe team did an excellent job of managing the business to produce strong results a comparison to 2019 a period with higher volumes further highlights our performance and demonstrates our focus on driving productivity and network efficiency to overcome external factors.\nWe also continue to make progress on our goal to reduce our carbon footprint.\nThe team achieved strong productivity to produce an all-time quarterly record low fuel consumption rate.\nThis represented a 1% improvement versus 2020 and helped our customers eliminate 5.7 million metric tons of greenhouse gas emissions.\nIn the quarter by using Union Pacific versus truck, momentum is building and before the end of the year, we plan to detail our emissions reduction plan with the release of our initial Climate Action Plan.\nBefore I talk about our market performance.\nFocusing back on our review of the business, our 3rd quarter volume was flat compared to a year ago.\nGains in our bulk and industrial segments were driven by market strength in our business development efforts.\nThose gains were offset by declines in our premium business group as our served markets continue to be impacted by semiconductor chip shortages and global supply chain disruption, however, freight revenue was up 12%, driven by higher fuel surcharges, strong pricing gains and a positive mix.\nLet's take a closer look at each of these business group, starting out with our bulk commodities.\nRevenue for the quarter was up 14% compared to last year, driven by a 4% increase in volume and a 9% increase in average revenue per car, reflecting strong core pricing gains and higher fuel surcharge revenue.\nCoal and renewable carloads grew 9% year-over-year and 17% from the second quarter.\nOur efforts to switch customers to index-based contracts are supporting domestic coal demand as a result of higher natural gas prices coupled with increased coal exports.\nGrain and grain products were down 1% compared to last year and down 9% from the second quarter, due primarily to lower US grain stocks.\nHowever, this was partially offset by our business development efforts and strong demand for biofuels.\nFertilizer carloads were up 10% year-over-year due to strong agricultural demand and increased export potash shipment.\nAnd finally, food and refrigerated volume was flat year-over-year and sequentially from the second quarter.\nMoving on to industrial, industrial revenue improved 22% for the quarter, driven by a 14% increase in volume.\nAverage revenue per car also improved 6% driven by higher fuel surcharge core pricing gains and positive mix.\nEnergy and specialized shipments were up 16% compared to last year and up 5% versus the second quarter, the gains were due to an increase in petroleum products as demand recovers from this time last year, and new business wins from Mexico energy reform.\nVolume from forest products grew 15% year-over-year primarily driven by demand for brown paper used in corrugated boxes along with strong housing starts driving lumber shipments.\nHowever, compared to the second quarter volume was down 2% due to the impact of the lot of fire in Northern California.\nIndustrial chemicals and plastic shipments were up 6% year-over-year due to strengthening demand and business wins that production rate for plastic improved from 2020.\nMetals and minerals volume was up 21% compared to 2020 and up 3% versus the second quarter, primarily driven by our business development effort along with strong steel demand as industrial markets recover coupled with favorable comps for frac sand.\nTurning now to premium revenue for the quarter was up 1% as a 9% decrease in volume was more than offset by higher average revenue per car.\nARC increased by 11% from higher fuel surcharges and core pricing gains.\nAutomotive volume was down 18% compared to last year and down 4% versus the second quarter.\nSemiconductor shortages had an adverse impact to both our finished vehicles and auto parts business segment.\nIntermodal volume decreased 6% year-over-year and 8% compared to the second quarter.\nInternational volume continue to face challenges from global supply chain disruption with regard to domestic, strong demand and new business wins were also hampered by supply chain disruptions, plus e-commerce business all tough comp versus last year.\nNow looking ahead to the 4th quarter of 2021.\nStarting out with our bulk commodities, we're optimistic about grain business due to another strong harvest and grain export demand.\nAlso grain products will continue to benefit from growth of the biofuel market food and refrigerated volume should be positive with increased consumer demand, post pandemic restaurant reopenings and truck penetration growth.\nLastly, we expect coal to remain strong for the remainder of the year based on our current natural gas futures, inventory replenishment, as well as export demand.\nLooking at -- looking at our industrial markets.\nWe continue to be encouraged by the strength of the forecast for industrial production for the rest of 2021, which will positively impact many of our markets like metals and forest.\nThe year-over-year comps to our energy markets are favorable.\nHowever, we expect narrow spreads will negatively impact crude by rail shipment, but on a positive note, we expect to mitigate the lower cruise shipments with strengthened other petroleum and LPG product.\nAnd lastly for premium, we anticipate continued challenges in automotive related for semiconductor shortages for the 4th quarter.\nIn regards to intermodal, limited truck capacity, inventory restocking and strength in retail sales will continue to drive intermodal demand in the 4th quarter.\nHowever, we expect international volumes to be constrained as ocean carriers have recently taken additional actions to speed up their container returns as challenges in labor, port capacity, warehouses and drayage persist.\nAnd on the domestic side, opportunities will face continued supply chain challenges with limited Holloway capacity and floor chassis turn time.\nOverall, I'm encouraged by the opportunities in front of us for the rest of 2021 but more importantly, I want to recognize the commercial team, as they continue to focus on providing solutions for our customers to win in the marketplace.\nAs we had in the 2022, our commercial team is driving growth through new business plan.\nFrom wildfires to mudslides and hurricanes, the team demonstrated perseverance to restore our network and deliver strong financial results.\nIn addition, as Kenny just described, the demand picture has turned out differently than we expected at the beginning of the year.\nWorking closely with marketing the operating team has adjusted transportation plans and added resources into the network for surging demand in coal, metals, lumber and grain.\nThese actions demonstrate the agility and strength of our franchise.\nTaking a look at our key performance metrics for the quarter on slide 9.\nDriven by wildfires and weather events during the quarter our freight car velocity and trip plan compliance metrics deteriorated compared to 2020.\nFreight car velocity decreased due to increased terminal dwell and higher operating inventory levels, which led to lower trip plan compliance results.\nOur entire team has been fully engaged on restoring network fluidity and the recovery is progressing.\nWe are seeing improvement in our metrics with reduced up car inventory and improved freight car velocity.\nOur reported weekly metrics show the time required to recover the network from these events.\nWhile we made improvement from our freight car velocity weekly low of 184 in August, to 210 miles per day in the last 2 weeks of September, our goal remains to return freight car velocity toward and 220 miles per day.\nOur intermodal trip plan compliance results improved and on August the low of 61% to gain 12 points in September to 73%.\nOur manifest and auto trip plan compliance results improved from 57% in August to 61% in September.\nWe recognize improving trip plan compliance is critical to support our customers and our long-term growth strategy.\nWe have maintained higher crew and locomotive resources in the short term to assist and reducing excess car inventories to drive increased fluidity.\nAs operating car inventory declines, we will quickly adjust resources to current volume levels.\nOur cooperation and work with partners at the West Coast ports have reduced rail container dwell back to more normal levels, and with the Biden administration's efforts to expand operations at the port to ease congestion, we stand ready to move more rail containers provided that point further along the supply chain can handle increased volume.\nWhile there is still work to be done, the team is confident in our ability to restore service to the levels our customers expect and deserve.\nTurning to slide 6, we continue to make good progress on our efficiency initiatives, however, disruptions during the quarter impacted these results as well.\nLocomotive productivity declined 8% compared to a year ago as we deployed additional resources to handle traffic reroutes.\nOur record 3rd quarter workforce productivity was driven by efficiencies in our Engineering, Mechanical and management workforces and offset slightly by increases in train and engine workforce to address our network recovery.\nWe continued our focus on increasing train length, achieving a 4% improvement from the 3rd quarter 2020 to approximately 9,360 feet.\nNow that the bridge has been restored, the team is again driving productivity through increasing train length as evidenced in our September train length growth to over 9,500ft.\nTurning to slide 11.\nOur ability to grow train length is also enabled by the completion of 9 sidings to date in 2021 with an additional 26 under construction or in the final planning stages.\nThese investments will enable a more reliable and efficient service product for future growth.\nWe also produced a record quarterly fuel consumption rate improving 1% compared to last year.\nThrough productivity initiatives and technology improvements, we were able to offset most of the inefficiencies stemming from the wildfires.\nThe operating department understands the importance we play in achieving our long-term greenhouse gas emission goals and have more work underway.\nOur approach is multi-pronged with the primary emphasis around our locomotive fleet, both looking at alternative energies as well as biofuel.\nAs we drive productivity and manage the various network challenges in 2021.\nThe health and safety of our workforce is paramount, although our year-to-date employee safety results have not shown improvement in 2020 recent monthly trends provide positive momentum for the team to build upon.\nAgain, our approach is across a number of fronts, including employee engagement, broader deployment of technology as well as looking externally for best practices.\nAdditionally, we reduced cost of rail equipment incidents during the quarter.\nWe are encouraged by the improvement but know that we must maintain focus on promoting a safe working environment to reduce employee injuries.\nSo everyone goes home safe each day.\nSafe operations also have a direct impact on our service product.\nSo this work will benefit all stakeholders.\nWrapping up on slide 12, as we look to close out 2021, I have the utmost confidence that we will continue to improve safety, increased network fluidity, improve our service product and drive productivity as we support business growth with our customers.\nAs you heard from Lance union Pacific achieved strong 3rd quarter financial results with earnings per share of $2.57 on an operating ratio of 56.3%.\nAs noted in an 8-K last month, we incurred additional expense this quarter related to wildfires, and weather the full impact of those events including loss revenue negatively impacted our operating ratio of 50 basis points and earnings per share by $0.05.\nRising fuel prices throughout the quarter, negatively impacted operating ratio by 140 basis points.\nHowever, the year-over-year impact of our fuel surcharge programs added $0.05 to EPS.\nSetting aside these exogenous issues, UP's core operational performance drove operating ratio improvement of 430 basis points and added $0.56 to EPS.\nOur performance demonstrates the resiliency and efficiency built into our franchise through PSR even when operating in less than ideal conditions.\nLooking now at our 3rd quarter income statement on Slide 15 where we're showing a comparison to both 3rd quarter 2020 as well as 3rd quarter 2019.\nThe comparison of 2021 to 2019 most clearly illustrates the efficiency we've achieved over the past 2 years, as we generated 9% higher operating income on 4% less volume.\nFor 3rd quarter 2021, the operating revenue up 13% and operating expense only up 9%.\nWe generated 3rd quarter record operating income of $2.4 billion, net income of $1.7 billion and earnings per share also with 3rd quarter records.\nLooking more closely at 3rd quarter revenue.\nSlide 16 provides a breakdown of our freight revenue both year-over-year and sequentially versus the second quarter.\nFreight revenue totaled $5.2 billion in the 3rd quarter, up 12% compared to 2020 and 1% compared to second quarter.\nLooking first at the year-over-year analysis, although volume was flat, the overall demand environment remains strong and supports pricing actions that yield dollars exceeding inflation.\nOn a year-over-year basis, those gains were further supplemented by a positive business mix, driving 650 basis points in total improvement.\nLower intermodal shipments, combined with higher industrial shipments drove that positive mix.\nFuel surcharges increased freight revenue 600 basis points compared to last year as our fuel surcharge programs continue to chase rising fuel prices.\nLooking at freight revenue sequentially, lower volume versus the second quarter decreased rate revenue 250 basis points, highlighted by the factors that Kenny highlighted.\nContinued core pricing gains and a more positive business mix.\nIncreased freight revenue 75 basis points on a sequential basis, driven by that same combination of higher industrial carloads and lower intermodal shipments.\nFinally, rise in fuel prices and the resulting uptick in sequential fuel surcharges increased freight revenue 125 basis points.\nNow let's move on to Slide 17 which provides a summary of our 3rd quarter operating expenses, which increased 9% in total versus 2020.\nThe primary driver of the increase was fuel expense, up 81% as a result of a 74% increase in fuel prices, a small offset to the higher prices was a 1% improvement in our fuel consumption rate.\nBetter efficiency was a product of both our business mix and productivity initiatives, which offset inefficiencies associated with wildfires in the quarter.\nLooking further at the other expense line.\nCompensation and benefits expense was up 3% versus 2020.\nThird quarter workforce levels were down 1% compared to last year despite our train and engine workforce growing 3%.\nThis increase reflects the additional crews needed to navigate the network impact from bridge outages and whether.\nManagement, engineering and mechanical workforces together decreased 3%.\nWage inflation along with higher recrew and overtime costs associated with our network issues increased cost per employee 4% while still a tad elevated this level of per employee compensation increase is more in line with future expectations.\nPurchased services and materials expense was flat, as higher locomotive and freight car maintenance associated with the larger active fleet was offset by reduced contractor expense.\nAnd with automotive shipments forecasted to remain soft for at least the balance of the year, we now expect purchased services and material expense to only be up low-single digits for full year versus 2020.\nEquipment and other rents was flat consistent with volume.\nOther expense decreased 10% or $29 million this quarter, driven primarily by lower write-offs of in progress capital projects in 2021.\nAs we look ahead to the 4th quarter.\nRecall that last year we incurred a one-time $278 million non-cash impairment charge in this expense category.\nLooking now at our efficiency results on Slide 18 operating challenges during the quarter, again impacted our productivity, which totaled $45 million.\nIn total for 2021 productivity is at 280 million dollars led by our train length improvement and locomotive productivity offset by roughly $55 million of weather and incident related headwinds.\nOur incremental margins in the quarter were a very strong 94% driven by solid pricing gains, positive business mix as well as continued efficiency.\nPSR clearly gives us the platform to add volumes to our network in an extremely efficient manner.\nTurning to Slide 19, year-to-date cash from operations increased to $6.5 billion from $6 billion in 2020, a 9% increase.\nOur cash flow conversion rate was a strong 95% and year-to-date free cash flow increased $728 million or 38% driven by higher net income and lighter year-to-date, capital spend compared to last year.\nSupported by our strong cash generation and cash balances, we've returned $7.9 billion to shareholders year-to-date through dividends and share repurchases.\nActions taken during the year include increasing our industry-leading dividend by 10% in May and repurchasing $27.5 million shares, totaling $5.9 billion.\nWe finished the 3rd quarter with a comparable adjusted debt-to-EBITDA ratio of 2.8 times, which is on par with second quarter.\nWe remain committed to returning great value to our owners and are demonstrating that again this year.\nWrapping things up on Slide 20, as you heard from Kenny, the overall economic environment remains positive.\nIt provides confidence for the future growth of our company.\nBulk is driven by strong grain volumes and coal continues to exceed expectations.\nIndustrial volumes remain consistent and strong across many sectors like forest products, metals and plastics.\nSo we are bullish on several fronts, but as you also well aware headwinds and autos and Intermodal persist, global supply chain disruptions, semiconductor shortages and the additional pressure with international intermodal volumes that Kenny just described continue to constrain our premium volume.\nSo, balancing these variables and with just over 2 months left in the year, we now expect volume to be up closer to 5% for full year 2021.\nWe are also adjusting our productivity guidance for the year, down to $350 million as the weather impact and related network challenges impede the progress we expect to make with our efficiency in 2021.\nTo put that in context, however, at the end of this year we will have generated almost $1.8 billion of productivity since our implementation of PSR in late 2018.\nSo great work overall by the team.\nAnd more importantly, this lower cost structure and improved service product provide Union Pacific the foundation for future growth and strong incremental margins.\nLower expectations for volume and productivity are headwinds to our 2021 operating goal.\nIn addition, we've seen fuel prices continue to rise and pressure margins.\nIn fact, over the last 30 days, barrel prices have increased around $10 with spot diesel prices up over $0.25 per gallon.\nOffsetting some of this margin pressure is a positive business mix and strong pricing environment.\nSo, all in, we now expect our full year operating ratio improvement to be in the neighborhood of 175 basis point or not quite to the high end of the guidance range we established back in January, we view that level of improvement as another great milestone on our journey to 55.\nx operating ratio in 2022, especially in light of the unexpected headwinds we've had to overcome to get here.\nWrapping it up, it was a tough quarter operationally.\nWe made great strides to strengthen our franchise and achieved solid results.\nIn fact, we stand poised to finish 2021 as Union Pacific's most profitable year ever.\nThat achievement would not be possible without our tremendous employees.\nSo we're on the front lines every day serving our customers safely and efficiently while producing these record results.\nWhile our safety metrics lag 2020 there are some positive signs, including strong September results that indicate we're taking the right actions to produce desired long-term results.\nThe entire team understands that safety is foundational to everything we do at Union Pacific.\nOur service product has shown improvement over the past 60 days.\nBut there is still work to be done with increasing volumes related to the grain harvest and intermodal peak season approaching.\nWe understand the importance of delivering for our customers.\nThe opportunity to provide freight solutions to our customers is strong and gives us confidence that our long-term goals for growth remain intact.\nAnd as you heard from Kenny even with macroeconomic headwinds, we're winning with our customers, while supply chain disruptions will likely persist in the next year, we see our 3rd quarter and year-to-date results as proof of our team's ability to perform in the face of significant challenges as headwinds turned to tailwinds, we're well positioned to build off our success and deliver even more value to our stakeholders.\n",
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"content": "q3 revenue rose 13 percent to $5.6 billion.\nq3 earnings per share $2.57.\nset a quarterly record for fuel consumption rate.\nqtrly union pacific's 56.3% operating ratio improved 240 basis points.\nhigher fuel prices negatively impacted operating ratio by 140 basis points in quarter.\nqtrly business volumes, as measured by total revenue carloads, were flat.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These reports, when filed, are available on the UPS investor relations website and from the SEC.\nFor the fourth quarter of 2021, GAAP results include a noncash after-tax mark-to-market pension charge of $14 million and after-tax transformation and other charges of $45 million.\nThe after-tax total for these items is $59 million, an impact to fourth quarter 2021 earnings per share of $0.07 per diluted share.\nThe mark-to-market pension charge of $14 million represents losses recognized outside of a 10% corridor on company-sponsored pension and postretirement plans.\nUnless stated otherwise, our comments will refer to adjusted results, which exclude year-end pension charges and transformation and other charges.\nWhat an incredible year it's been at UPS.\nLet me begin by recognizing the efforts of our amazing UPSers, 534,000 strong around the world.\nNot only did our team once again provide industry-leading service during peak, but over the last year, we delivered 1.1 billion COVID-19 vaccine doses, with 99.9% on-time service.\nI'm so very proud of our team and what we've accomplished.\nThe external environment is challenging due to the ongoing impacts of the pandemic, labor tightness, upstream supply chain jams and rising inflation.\nBut inside our better, not bigger framework, we are maniacal about controlling what we can control.\nWe are laser-focused on improving revenue quality, reducing our cost to serve and allocating capital in a disciplined fashion.\nThis is enabling us to move faster and to be more agile so that we capture the best opportunities in the market, enhance the customer experience and continuously improve our financial performance.\nLooking at the fourth quarter, our results exceeded our expectations, driven by improved revenue quality across all three of our business segments and significant gains in productivity.\nConsolidated revenue rose 11.5% from last year to $27.8 billion, and operating profit grew 37.7% from last year to $4 billion.\nThis is the highest quarterly operating profit in the company's history.\nAnd for the full year 2021, our business delivered record financial results.\nConsolidated revenue increased 15% to reach $97.3 billion, and operating profit totaled $13.1 billion, 50.8% higher than last year.\nWe generated $10.9 billion in free cash flow, more than double the amount generated in the prior year.\nAnd diluted earnings per share were $12.13, an increase of 47.4%.\nIn a moment, Brian will provide more detail about our financial results.\nAt our June investor and analyst day, I said intent is not a strategy and vision without action is just a dream.\nAt UPS, we are acting on our customer-first, people-led, innovation-driven strategy as we transform nearly every aspect of our business.\nStarting with customer first.\nAs we've discussed, we are focused on growing in the parts of the market that value our end-to-end network, including B2B, healthcare, SMBs and large enterprise accounts.\nIn 2021, our SMB average daily volume grew 18% and represented 26.8% of our total U.S. volume, putting us on track to achieve our 2023 target of more than 30%.\nOur digital access program, or DAP, makes it easy for SMBs to access UPS services, and it's an important driver of our SMB growth.\nIn 2020, I challenged the team to turn DAP into a $1 billion business.\nIn 2021, DAP generated $1.3 billion in revenue.\nLooking ahead, we expect DAP to reach more than $2 billion in 2022 as we add new partners and expand to additional countries.\nAnd in the fourth quarter, our international SMB revenue growth rate was 18%.\nAs we expand DAP, grow with SMBs across Europe and introduce new partnerships, we expect to gain overall SMB revenue share faster than the market growth.\nHealthcare is another market we are focused on.\nAnd in 2021, our healthcare portfolio reached more than $8 billion in revenue.\nHere, we serve complex customers with our global footprint of healthcare facilities and cold chain solutions.\nOur healthcare expertise and end-to-end solutions are unmatched in the industry, and we are well on our way to hitting our $10 billion revenue target for 2023.\nAnd amid the bottlenecks and uncertainty, our supply chain solutions group is providing customer supply chain flexibility and resiliency through alternative routings and solutions.\nDemand for forwarding products continued to be strong in the fourth quarter.\nIn fact, ocean shipments were up double digits and container rates remain elevated in the market.\nNow, from an experience perspective, customer first is about providing a frictionless end-to-end customer experience.\nWe are attacking the biggest pain points first and, over the last several months, have rolled out improvements to the digital experience in pickup, claims and ups.com.\nYou may not know this, but we generate over $9 billion in gross revenue annually from transactions on our global website.\nWe redesigned the U.S. site in 2021 and saw site visits grow 100-fold, with an equally impressive growth in monthly page views, up from 10,000 in January to 600,000 in December.\nWe've got more plans to improve the ups.com experience around the world.\nwhich should lead to higher revenue and better customer satisfaction.\nWe know it will take time to move the needle on our Net Promoter Score, which stands at 30, but we set a target of 50 and have laid out a path to get there.\nMoving to the second element of our strategy, people led.\nHere, we focus on the employee experience and making UPS a great place to work.\nWe measure our performance by how likely an employee is to recommend others to work at UPS.\nWhen I became CEO in 2020, our likelihood to recommend metrics stood at 51% globally, and our goal is to surpass 80%.\nWe've made great strides, gaining 10 percentage points to finish 2021 at 61%.\nAnd now to the last leg of our strategic platform, innovation driven is at the heart of what we do.\nOur global smart logistics network, powered by technology developed by UPS engineers, enabled us to deliver another successful peak.\nIt may have been our hardest peak ever.\nWe had higher volume than we expected at the beginning of the quarter and lower volume at the end, but our sales, engineering and operating teams remained agile and pivoted with changes in global market conditions and the needs of our customers.\nWe delivered excellent service levels, avoided chaos costs and improved efficiency in the network.\nIn fact, productivity in our U.S. operations improved by 1.7% for the fourth quarter, as measured by pieces per hour.\nProgress on the innovation-driven element of our strategy is all about driving higher returns on invested capital.\nAs Brian will detail, in 2021, we reversed a multiyear downward trend in this metric and delivered a return on invested capital of 30.8%, 910 basis points above 2020.\nWe remain disciplined in our capital allocation priorities and commitments.\nIn regard to capital expenditures, we are increasing our investments back into the business to drive innovation and growth.\nWe just started the first phase of what we're calling smart package, smart facility, which, over time, will put RFID tags on all of our packages.\nThis initiative will enhance customer experience while improving UPS productivity by eliminating millions of manual scans every day.\nBrian will share more detail on our capex plans during his remarks.\nIn June, we told you we were going to target a dividend payout ratio at year-end of 50% of adjusted earnings per share, and we're doing just that.\nToday, the UPS board approved a 49% increase in the quarterly dividend, from $1.02 per share to $1.52 per share.\nThis represents the largest quarterly dividend increase in our company's history.\nOur strategy is building a solid foundation for our business and enabling agility.\nWhile we expect 2022 to be another challenging year, we've got momentum.\nSo let me end by sharing our 2022 financial goals.\nBuilding on the record results we delivered last year, we anticipate delivering our 2023 consolidated revenue and operating margin targets one year ahead of our plan.\nIn 2022, consolidated revenues are expected to be about $102 billion.\nOperating margin is expected to be approximately 13.7% and return on invested capital is anticipated to be above 30%.\nBrian will provide more details on our outlook.\nI'm excited about the many opportunities in front of us.\nIn my comments, I'll cover three areas, starting with our fourth quarter results, then I'll cover our full year 2021 results, including cash and shareholder returns.\nAnd lastly, I'll share our financial outlook for 2022.\nIn the fourth quarter, supply chain challenges and the emergence of the Omicron COVID-19 variant weighed on global economic growth.\nIn fact, the U.S. December retail sales report came in lower than forecasted, and the inventory-to-sales ratio remained at historic lows.\nDespite these factors, our financial performance was better than we expected as the progress we've made executing our strategy continues to deliver strong results.\nConsolidated revenue increased 11.5% to $27.8 billion.\nConsolidated operating profit totaled $4 billion, 37.7% higher than last year.\nConsolidated operating margin expanded to 14.2%, which was 270 basis points above last year.\nFor the fourth quarter, diluted earnings per share was $3.59, up 35% from the same period last year.\nAnd full year earnings per share was $12.13 per diluted share, an increase of 47.4% year over year.\nNow, let's look at our business segments.\nU.S. domestic delivered outstanding fourth quarter results.\nOur success was driven by gains in revenue quality and productivity, as well as our ability to quickly adjust our network to match capacity with the needs of our customers while providing industry-leading service.\nAverage daily volume increased by 39,000 packages per day, or 0.2% year over year, to a total of 25.2 million packages per day.\nThis was below our expectations due to the soft retail environment in December.\nRegarding revenue quality, the impact of our better, not bigger approach is continuing to drive improvement in customer mix.\nIn fact, SMB average daily volume, including platforms, grew 8.4%, outpacing the market.\nAnd in the fourth quarter, SMBs made up 25.8% of U.S. domestic volume, up 240 basis points versus last year.\nMix also shifted positively toward commercial volume as our B2B average daily volume continued to recover and was up 8.8%.\nB2B represented 36% of our volume compared to 33% in the fourth quarter of 2020.\nFor the quarter, U.S. domestic generated revenue of $17.7 billion, up 12.4%, driven by a 10.5% increase in revenue per piece.\nFuel drove 380 basis points of the revenue per piece growth rate and demand-related surcharges drove 110 basis points of the growth rate increase.\nRevenue per piece grew across all products and customer segments, with ground revenue per piece up 10%.\nTotal expense grew 8.1%.\nFuel drove 230 basis points of the expense growth rate increase.\nWages and benefits, which included market rate adjustments, drove 410 basis points of the increase.\nAnd the remaining increase in the expense growth rate was due to several factors, including higher depreciation, federal excise taxes and weakened expansion costs.\nProductivity improvements helped partially offset the increase in expense.\nFor example, through our ongoing efforts to optimize our trailer loads, we eliminated over 1,000 loads per day compared to the same time period last year.\nOur teams did an excellent job executing our plan and adjusting where appropriate.\nEarly in the quarter, volume came in stronger than expected, and we quickly adjusted the network by leveraging our weekend operations, package flow technology and automated facilities.\nLate in the quarter, volume levels were lower than we expected as Omicron and inventory challenges negatively impacted the enterprise retail sector.\nAgain, our operators adjusted the network and, importantly, also pulled out cost.\nWe decreased staffing levels and returned rental equipment early, which helped to lower the year-over-year operating expense growth rate.\nThe U.S. domestic segment delivered $2.2 billion in operating profit, an increase of $786 million or 57% compared to the fourth quarter of 2020, and operating margin expanded 340 basis points to 12.2%.\nThe segment delivered excellent results by focusing on revenue quality and adjusting network capacity.\nBecause of tough year-over-year comps and COVID-19 dynamics, we anticipated a fourth quarter decline in average daily volume, which was down 4.8%.\nOn a more positive note, product mix was favorable, with B2B average daily volume up 4.7% on a year-over-year basis.\nThis partially offset a decline in B2C volume, which was down 18.4% compared to an increase of 104% during the same period last year.\nIn addition to tough year-over-year comps, total export average daily volume declined by 5.2% due to the decrease in volume between the U.K. and Europe arising from Brexit disruptions and from fewer flights coming out of Asia.\nIn the fourth quarter, we operated 105 fewer flights than planned, primarily due to COVID-19.\nDespite these factors, for the fourth quarter, international revenue increased 13.1% to $5.4 billion.\nRevenue per piece increased 16.4%, including a 730-basis-point benefit from fuel and a 340 basis point benefit from demand-related surcharges.\nThe international segment delivered record operating profit and fourth quarter operating margin.\nOperating profit was $1.3 billion, an increase of 14.7%, and operating margin was 24.7%.\nNow, looking at supply chain solutions.\nThe business segment delivered record fourth quarter top and bottom-line results as our team executed extremely well in a challenging environment.\nRevenue increased to $4.7 billion, up 6.7%, despite a $789 million reduction in revenue from the divestiture of UPS freight.\nLooking at the key performance drivers.\nForwarding revenue was up 37.9% and operating profit more than doubled as global market demand remained strong and capacity stayed tight.\nInternational air freight kilos increased 3.3%.\nAnd in ocean freight, volume growth on the Transpacific Eastbound Lane, our largest trade lane, grew 7.8%, which was more than twice the market growth rate.\nWithin Forwarding, our truckload brokerage unit grew revenue and profit by double digits, driven by revenue quality initiatives and strong cost management.\nAnd our healthcare portfolio delivered strong profits in the fourth quarter, led by pharma and medical device customers.\nIn the fourth quarter, supply chain solutions generated strong operating profit of $456 million and delivered an operating margin of 9.7%.\nWalking through the rest of the income statement, we had $173 million of interest expense.\nOther pension income was $267 million.\nAnd lastly, our effective tax rate came in at 22%.\nNow, let me comment on our full year 2021 results.\nStarting at the consolidated level, revenue increased $12.7 billion to $97.3 billion.\nWe reduced our cost to serve through a combination of nonoperating cost reductions, along with improved productivity.\nWe grew operating profit by $4.4 billion, an increase of 50.8%, finishing the year at $13.1 billion.\nOperating margin was 13.5%, an increase of 320 basis points.\nAnd for context, this is the highest consolidated operating margin we've had in 14 years.\nWe increased our ROIC to 30.8%, an increase of 910 basis points.\nWe generated $10.9 billion of free cash flow, an increase of 114% over 2020, and we strengthened the balance sheet by paying off $2.55 billion of long-term debt.\nAnd we reduced our pension liabilities by $7.8 billion, which improved our debt-to-EBITDA ratio to 1.9 turns compared to 3.6 last year.\nAnd we returned over $3.9 billion of cash to shareholders through dividends and share buybacks.\nNow, for a few full year highlights for the segments.\ndomestic, operating profit was up 62.7%, an increase of $2.6 billion, to reach $6.7 billion for the full year.\nAnd we expanded operating margin to 11.1%, a year-over-year increase of 340 basis points.\nInternational grew operating profit by $1.2 billion, ending the year at a record $4.7 billion in profit.\nAnd operating margin was 24.2%, an increase of 200 basis points.\nAnd supply chain solutions increased operating profit by $649 million, up 61.3%, and delivered operating margin of 9.8%, 280 basis points above 2020.\n2021 was an outstanding year for UPS, which brings us back to our outlook for 2022.\nGlobal GDP is expected to grow 4.2%.\nWe are continuing to pay close attention to and manage through several external factors, including COVID-19, inflationary pressures, upstream supply chain constraints and labor shortages.\nAs a result, we expect the environment to remain dynamic in 2022.\nMost importantly, within this backdrop, we will focus on controlling what we can control and continuing to advance our strategic initiatives.\nAnd as Carol stated, we expect to deliver our 2023 consolidated financial targets one year early.\nSo looking at 2022, on a consolidated basis, revenues are expected to be about $102 billion, which takes into account the divestiture of UPS freight.\nAdditionally, consolidated operating margin is expected to be approximately 13.7%.\nIn U.S. domestic, we anticipate revenue growth of around 5.5%, with revenue per piece growing faster than volume.\nWe expect pricing in the industry to remain firm and will continue to price based on the value we provide to our customers.\nAs a result, we anticipate domestic operating margin will expand around 50 basis points in 2022.\nLastly, in the U.S., we expect to deliver an incremental revenue-to-profit conversion percentage in the low 20s for the full year.\nMoving to the international segment.\nWe expect to continue growing faster than the market.\nRevenue growth is anticipated to be approximately 7.7%, with volume growing slightly faster than revenue.\nMore specifically, we expect to grow fastest in our transborder ground products.\nAdditionally, we expect international demand-related surcharges to remain elevated in 2022.\nPulling it all together, operating profit in the international segment is expected to increase around 5% and operating margin is anticipated to be around 23.6%.\nIn supply chain solutions, we expect revenue to be around $17 billion, driven by continued strong growth in healthcare and elevated demand in Forwarding.\nHowever, we expect ocean surcharge rates to moderate below 2021 peak levels.\nTherefore, we expect operating profit to be down from what we reported in 2021.\nOperating margin is expected to be about 9.4%.\nAnd for modeling purposes, below the line, we anticipate $1.2 billion in other pension income, partly offset by $665 million in interest expense.\nThe full year net impact is expected to be around $570 million, which can be spread evenly across the quarters.\nNow, let's turn to full year 2022 capital allocation.\nAs we discussed at last year's Investor and Analyst Day, we've transitioned to a disciplined and programmatic approach to capital expenditures.\nIn line with the capex range we shared then, we expect 2022 capital expenditures to be about 5.4% of revenue or $5.5 billion.\nThese investments will continue to improve overall network efficiency and move us further down the path to achieving our 2050 carbon-neutral goals.\nAbout 60% of our capital spending plan will be allocated to growth projects and about 40% to maintenance.\nLet me give you a few project highlights.\nWe have 30 delivery centers and two automated hub projects planned to be delivered this year.\nCombined, these projects will enable us to drive greater efficiency by better balancing sort capacity with delivery capacity.\nWe will purchase over 3,700 alternative fuel vehicles this year, including around 425 arrival electric delivery vehicles to be deployed in the U.S. and in Europe.\nWe will take delivery of two new 747-8 aircraft in 2022, which adds international capacity and will make predelivery payments on the 19 Boeing 767 freighters that we announced in December.\nThe 767s are planned to enter our fleet between 2023 and 2025.\nAnd lastly, across these projects and others, our annual capital expenditures will again include over $1 billion of investments that support our carbon-neutral goals.\nNow, let's turn to our expectations for cash and the balance sheet.\nWe expect free cash flow of around $9 billion, including our annual pension contributions, which are equal to our expected service costs.\nAs Carol mentioned, the board has approved a dividend per share of $1.52 for the first quarter, which represents a 49% increase in our dividend.\nWe are planning to pay out around $5.2 billion in dividends in 2022, subject to board approval.\nWe expect to buy back at least $1 billion of our shares, and we'll evaluate additional opportunities as the year progresses.\nWe expect diluted share count to be about 880 million shares throughout the year.\nFinally, our effective tax rate is expected to be around 23%.\nIn closing, the strategic and financial progress we've made in 2021 delivered consistent returns and created strong momentum as we entered 2022.\nWe remain laser-focused on continuously improving our financial performance by enhancing revenue quality, reducing our cost to serve and staying disciplined on capital allocation.\nAnd operator, please open the lines.\n",
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"content": "releases 4q 2021 earnings.\nsees fy revenue about $102 billion.\nfor q4 of 2021, gaap results include a total charge of $59 million, or $0.07 per diluted share,.\nfor q4 of 2021, gaap results include a total charge of $59 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As you saw yesterday, we reported a really strong performance out of the gate in '21 and what's shaping up to be a great year.\nWe knew we had built good momentum in Q4 and that the economy was moving in the right direction.\nBut the first quarter was still uncertain as we ended the year, while not anymore, both our operating conditions and our performance have improved faster than we expected.\nWe gained back a lot of the ground on the rental revenue, narrowing the decline from 2020 and importantly, we exited the quarter up year-over-year in March.\nOur customers are also optimistic.\nThey're gaining more visibility and they're turning to us for the equipment they need.\nJust a few months into the year, we've absorbed almost all of the excess fleet we had in 2020.\nThis was evident in the sequential improvement in our fleet productivity that we reported.\nAnd we took advantage of a healthy used-equipment market driving record retail sales to generate almost 30% more proceeds in the quarter than we did a year ago.\nNone of this would be possible without our greatest asset, our employees and their willingness to take on the challenges as well as the opportunities presented to them.\nA lot of people know how much I respect them for their commitment and our customers feel the same way.\nAnd I'm proud to report the team United delivered $873 million of adjusted EBITDA in the first quarter and they did it safely turning in another quarterly recordable rate below one.\nGiven all these factors, we feel confident in raising guidance across the board.\nThis includes a new revenue range that starts above the top end of the previous guidance.\nWe feel equally comfortable leaning into M&A as evidenced by our recent acquisition of Franklin Equipment and our agreement to acquire General Finance, which we expect to close mid-year.\nWe feel the time is right to allocate capital to attractive deals like these that meet our M&A criteria for a strong strategic, financial and cultural fit.\nWith Franklin, we added 20 stores to our General Rental footprint in the Central and Southeast regions.\nGeneral Finance is a market leader in mobile storage and modular office rentals.\nAnd these services complement our current specialty in gen rent offerings and we're excited about the opportunity to unlock additional growth while solving more of our customers' needs with these new products.\nWe'll be entering these markets with a strong presence and established footprint and a talented team with solid customer relationships, many of them new to our company.\nIt's a textbook example of one plus one equaling more than two.\nNow let us pivot to demand, where we have more good news to share.\nThe rebound we are seeing in our end markets is broadly positive.\nAnd this is true of our General Rental business, and even more so in our Specialty segment.\nSpecialty had another robust performance led by our Power & HVAC business.\nRental revenue for Specialty moved past the inflection point and it was positive year-over-year for the full quarter.\nAnd we're continuing to invest in growing our specialty network with six cold starts year-to-date and another 24 planned this year.\nAnd now I'll drill down to our customers and our end markets.\nCustomer sentiment continues to trend up in our surveys, as a majority of our customers expect to see growth over the next 12 months.\nAnd importantly, the percent of customers who feel this way has climbed back to pre-pandemic levels.\nAnd we think there are few reasons for this.\nFor one thing, our customers have a significant amount of work-in-hand and they can also see that our project activity is continuing to recover.\nThe vaccines are rolling out, restrictions are easing in most markets, and the weather is turning warmer.\nThree positive dynamics converge in right before our busy season.\nAlso we're seeing the return of activity in the manufacturing sector after more than a year of industrial recession.\nAnd the construction verticals that have been most resilient throughout COVID are still going strong, areas that we've discussed like technology and data centers, power, healthcare, and warehousing and distribution.\nAnd with infrastructure, our customers are encouraged that it's back on the table in Washington.\nMost of the infrastructure categories and the administration's current proposal are directly in our wheelhouse, things like bridges, airport and clean energy.\nAnd we'll see how the process goes, but almost any infrastructure spending will benefit us in the long term both directly and indirectly.\nNow there are some markets that are taking longer to recover, like energy.\nMost parts of the energy complex including downstream remains sluggish.\nAdditionally, retail office and lodging are largely in limbo.\nSo while we are firing on all cylinders at United, there are pockets of the economy that are still catching up and this means more opportunity for us down the road.\nI'll sum up my comments with this perspective.\n2021 is shaping up to be a promising year and our performance, says a lot about our willingness to lean into that promise, whether it's with capex, M&A, cold starts or other strategic investments in the business.\nOur balance sheet and cash flow give us the ability to keep every option on the table.\nThroughout last year, we made the decision to retain capacity by keeping our branch network and our team intact.\nAnd now at the end -- the economic indicators are flashing green.\nOur strategy is paying off by driving value for our people, our customers and our shareholders.\nAnd with that, I'll ask Jess to take you through the numbers, and then we'll go to Q&A.\nOver to you, Jess.\nThe strong start to the year is reflected in our first quarter results as rental revenue and used sales exceeded expectations and costs were on track, that strength carried through to our revised guidance and more on that in a few minutes.\nLet's start now with the results for the first quarter.\nRental revenue for the first quarter was $1.67 billion, which was lower by $116 million or 6.5% year-over-year.\nWithin rental revenue, OER decreased $117 million or 7.7%.\nIn that a 5.7% decline in the average size of the fleet was a $87 million headwind to revenue.\nInflation of 1.5% cost us another $24 million and fleet productivity was down 50 basis points or a $6 million impact.\nSequentially fleet productivity improved by a healthy 330 basis points recovering a bit faster than we expected.\nFinishing the bridge on rental revenue this quarter is $1 million in higher ancillary and rerent revenues.\nAs I mentioned earlier, used equipment sales were stronger than expected in the quarter, coming in at $267 million, that's an increase of $59 million or about 28% year-over-year, led by a 49% increase in retail sales.\nThe end market for used equipment remained strong and while pricing was down year-over-year, it's up for the second straight quarter with margins solid at almost 43%.\nNotably, these results in used reflect our selling over seven year old fleet at around half its original cost.\nLet's move to EBITDA.\nAdjusted EBITDA for the quarter was just under $873 million, a decline of $42 million or 4.6% year-over-year.\nThe dollar change includes an $84 million decrease from rental, in that OER was down $86 million, while ancillary and rerent together were an offset of $2 million.\nUsed sales were tailwind to adjusted EBITDA of $19 million, which offset a $2 million headwind from other non-rental lines of business and SG&A was a benefit in the quarter up $25 million as similar sales the last couple of quarters.\nThe majority of that SG&A benefit came from lower discretionary costs mainly T&E.\nOur adjusted EBITDA margin in the quarter was 42.4%, down 70 basis points year-over-year and flow through as reported was about 62%.\nI mentioned two items to consider in those numbers.\nFirst, as I mentioned in our January call, we'll have a drag in bonus expense during 2021, as we reset to our plans target of that reset started in the first quarter.\nSecond, used sales made up a greater portion of our revenue this quarter, which was a revenue mix headwind.\nAdjusting for those two results is an implied detrimental flow through for the quarter of about 37%.\nAcross the core business, the first quarter's cost performance played out as we expected and reflects our continued discipline as we respond to increasing demand and is our costs continue to normalize.\nOur shift to adjusted EPS, which was $3.45, that's up $0.10 versus Q1 last year, primarily on lower interest expense and a lower share count.\nQuick note on capex.\nFor the quarter gross rental capex was $295 million.\nOur proceeds from used equipment sales were $267 million, resulting a net capex in Q1 of $28 million.\nNow turning to ROIC, which remained strong at 8.9%.\nAs we look back over what's obviously been a challenging 12 months.\nOne of the things that we're most pleased with is the ROIC we've generated, which has consistently run above our weighted average cost of capital through what was the trough of the down cycle.\nFree cash flow was also strong at $725 million for the quarter.\nThis represents an increase of $119 million versus the first quarter of 2020 or about a 20% increase.\nAs we look at the balance sheet, net debt is down 21% year-over-year without having reduced our balance by about $2.3 billion over those 12 months.\nLeverage continues to move down and was 3 times at the end of the first quarter, that compares with 2.5 times at the end of the first quarter last year.\nLiquidity remains extremely strong.\nWe finished the quarter with over $3.7 billion in total liquidity that's made up of ABL capacity of just under $3.2 billion and availability on our AR facility of $276 million.\nWe also had $278 million in cash.\nAnd since Matt mentioned our acquisitions earlier, I'll take a second here to note that we expect to fund the General Finance deal later this quarter with the ABL.\nThis update does not include any impact from General Finance.\nIf we close as expected in June, we'll update our guidance likely on our Q2 call in July to reflect the impact of that business.\nWhat is included in this update is mainly three things.\nFirst, the impact of higher rental revenue.\nSecond, increased used sales capitalizing on a stronger than expected retail market.\nAnd third, the contribution of our Franklin Equipment acquisition, which we estimate at about $90 million of revenue and $30 million of adjusted EBITDA for the remainder of the year.\nWe revised our current view to rental revenue given the start to the year and how we expect things to play out from here.\nThe increase in our guidance reflects a range of possibilities with a growth opportunity over the remainder of the year, largely follows normal seasonality, albeit from a higher starting point.\nAnd as you can see at midpoint, our updated guidance implies strong double-digit growth over the remaining nine months of the year.\nA quick note on the guidance change in EBITDA and what hasn't changed in this revision, which is our continuing to manage costs tightly even as activity ramps more than forecasted.\nOur revised range on adjusted EBITDA considers that cost performance across the core business, and reflects the impact of higher used sales and the Franklin acquisition with margins and flow through in line with our prior guidance.\nA certain of our costs continue to normalize from low levels in 2020.\nBonus expense remains the headwind we've discussed previously, and at midpoint is about a 60 basis point drag in margin year-over-year.\nFinally, the increase in free cash flow reflects the puts and takes, from the changes I mentioned and remains robust at a midpoint of $1.8 billion.\nOperator, would you please open the line.\n",
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"content": "qtrly adjusted earnings per share of $3.45.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Three months ago we said that 2021 was shaping up to be a great year for United Rentals, and that's still very much the case.\nOur operating environment continues to recover.\nOur customers are increasingly optimistic about their prospects and our company is continuing to lean into growth from a position of strength as a premium provider and our industry's largest one-stop shop, with the supply leader in the demand environment, and we've leveraged that to deliver another consecutive quarter of strong results.\nThe big themes of the second quarter are strong growth in line with our expectations and robust free cash flow, either after the step up in our capex, positive industry indicators, including a strong used-equipment market, where pricing was up 7% year-over-year.\nThe expansion of our go-to-market platform through M&A and cold starts.\nThis is timed to the broad based recovery in demand and our focus on operational discipline, as we manage the increase in both volume and capacity, while driving fleet productivity of nearly 18%.\nAnother key takeaway our safety performance and I'm very proud of the team for holding the line on safety with another recordable rate below 1, while at the same time managing a robust busy season and on-boarding our acquired locations.\nThis includes General Finance, which we acquired at the end of May.\nAs you know, this was both a strategic and financial move designed to build on our strength.\nThe acquisition expanded our growth capacity and gave us a leading position in the rental market for mobile storage and office solutions.\nThe integration is going well.\nAnd while we still have more work to do, we're moving steadily through our playbook.\nAs you saw in our release, we raised our outlook to include the expected impact of General Finance and other M&A we closed since the first quarter.\nIt also includes some additional investments we plan to make in capex that will serve us beyond 2021.\nThis outlook follows the higher guidance we issued in April when we raised every range compared to our initial guidance.\nSo as you can see, we're tenacious about pursuing profitable growth and the investments we're making will still have a positive impact on our immediate performance as well as future years.\nAnd before Jess gets into the numbers, I want to spend a few minutes on our operating landscape.\nAlmost all of the challenges of 2020 have right of themselves.\nWe have a better line of sight and so to our customer.\nWhen we surveyed our customers at the end of June, the results showed that over 60% of our customers expect to grow their business over the coming 12 months, which is a post-pandemic high.\nAnd notably, only 3% saw a decline coming over the same period.\nCustomer optimism is a great barometer and the trends we see in the field support their view.\n2021 is a pivotal year for us.\nIt confirms our return to growth, including our 19% rental revenue growth in the second quarter.\nI'll point to some of the drivers of that growth, starting with geography.\nThe rebound in our end markets continues to be broadly positive with all geographic regions reporting year-over-year growth in rental revenue.\nOur Specialty segment generated another strong performance with rental revenue topping 25% year-over-year, including same-store growth of over 19%.\nAnd importantly, we grew each major line of business by double digits, which underscores the broadness of the demand.\nFor years now, our investment in building out our specialty network has been a key to our strategic position.\nThese services differentiate our offering to customers and add resilience to our results throughout the cycle and this is true of cold starts as well as M&A.\nThis year, we've opened 19 new specialty branches in the first six months, which puts us well on our way to our goal of 30 by year-end.\nWe're also investing in growth in our General Rental segment, where the big drivers are non-res construction and plant maintenance.\nBoth areas a continuing to gain traction and most of our end markets are trending up.\nVerticals like chemical process, food and beverage, metals and mining, and healthcare all showing solid growth.\nAnd while the energy sector remains a laggard, it was up year-over-year for the first time in eight quarters.\nWe also have customers in verticals that are less mainstream, like entertainment, where demand for our equipment on movie sets and events more than doubled in the quarter.\nAnd while it's a relatively small part of the revenue, it's a good sign to see it come back.\nI also want to give you some color on project types.\nThere are two takeaways, the diversity of the projects in Q2 and the fact that each region contributed to growth in its own way.\nThe recovery has taking root across geographies and verticals on both coasts, with solid activity in heavy manufacturing, corporate campuses, schools and transmission lines.\nIn this quarter, we're also seeing project starts in power transit and technology.\nThese job sites are using our General Rental equipment and our trench safety and power solutions.\nAnd fluid solutions has seen a rebound in chemical processing and sewer [Indecipherable] as well as mining.\nThese are just a few of the favorable dynamics in a very promising up cycle.\nAnd I want to put that in context.\n2020 was about the temporary loss of market opportunity, particularly in the second quarter.\nNow, the pendulum is swinging back.\nAnd 2021 is about locking in that opportunity within the framework of our strategy and our team is managing that extremely well.\nOne proof point is our financial performance and the confidence we have in our guidance.\nAnother is our willingness to lean into growth today to create outsized value tomorrow.\nAnd it's about more than capex and cold starts.\nWe're constantly exploring new ways to capture growth by testing new products in the field, developing new sales pipelines and forging digital connections with customers.\nAnd finally, the most important proof point is the quality of our team.\nYou could see that reflected our safety record and our strong culture.\nAnd here's the thing to remember about 2021.\nThis is still the early innings of the recovery.\nWe're committed to capitalize on more and more demand as the opportunity unfolds.\nWe see a long runway ahead to drive growth, create value and deliver shareholder returns.\nOver to you, Jess.\nWhen we increased our 2021 guidance back in April, we expected a strong second quarter supported by the momentum we were seeing to start the year.\nWe're pleased to see that play out as anticipated with the second quarter results.\nAnd importantly, we're also pleased to see the momentum accelerate in our core business and support another raise to our guidance for the year.\nWe've also added the impact from our acquisitions, notably the General Finance deals.\nAnd I'll give a little bit more color on our guidance in a few minutes, but let's start now with the results for the second quarter.\nRental revenue for the second quarter was $1.95 billion, that's an increase of $309 million or 19%.\nIf I exclude the impact of acquisitions on that number, rental revenue from the core business grew a healthy 16% year-over-year.\nWithin rental revenue, OER increased $231 million or 16.5%.\nThe biggest driver in that change with fleet productivity, which was up 17.8% or $250 million, that's primarily due to stronger fleet absorption on higher volumes in part as we comp the COVID-impacted second quarter last year.\nOur average fleet size was up 0.2% or a $3 million tailwind to revenue and rounding out OER, the inflation impact of 1.5% cost us $22 million.\nAlso within rental, ancillary revenues in the quarter were up about $65 million or 31% and rerent was up $30 million.\nAnd we'll talk more about the increase in ancillary revenues in a moment.\nUsed equipment sales came in at $194 million, that's an increase of $80 million or about 10%.\nPricing at retail in the quarter increased over 7% versus last year and supported robust adjusted used margins of 47.9%, and that represents a sequential improvement of 520 basis points and is 190 basis points higher than the second quarter of 2020.\nUsed sales proceeds for the quarter represented a strong recovery of about 59% of the original cost of fleet that was on an average over seven years old.\nLet's move to EBITDA.\nAdjusted EBITDA for the quarter was $999 million, an increase of 11% year-over-year or $100 million, that included $13 million of one-time costs for acquisition activity.\nThe dollar change includes a $141 million increase from Rentals and in that, OER was up $125 million, ancillary contributed $10 million and rerent added $6 million.\nUsed sales were tailwind to adjusted EBITDA of $12 million and other non-rental lines of business provided $6 million.\nThe impact of SG&A and adjusted EBITDA was a headwind for the quarter of $59 million, which came mostly from the resetting of bonus expense.\nWe also had higher commissions on better revenue performance and higher discretionary expenses like T&E that continue to normalize.\nOur adjusted EBITDA margin in the quarter was 43.7%, down 270 basis points year-over-year and flow-through as reported was about 29%.\nLet's take a closer look at margin and flow-through this quarter.\nImportantly, you'll recall that our COVID response last year included a swift and significant pullback in certain operating and discretionary costs that was especially pronounced in the second quarter and is impacting flow-through this year as activity continues to ramp and costs continue to normalize.\nWe expect this will play through the rest of the year, notably in the third quarter.\nAnd specific to the second quarter, we've shared in previous calls that one of the costs that will reset this year is bonus expense from the low levels incurred last year.\nAs a result, we had an expected drag in flow-through in the second quarter as we reset and now true up this year's expense.\nFlow-through and margins were also impacted as anticipated by acquisition activity, including the one-time costs I mentioned earlier.\nI also mentioned higher ancillary revenue in the second quarter, which represents in part the recovery of higher delivery costs.\nDelivery has been an area where we've seen the most inflation pressure, including higher costs for fuel and third-party hauling.\nWhile recovering a portion of that increase in ancillary protected gross profit dollars, it impacted flow-through and margin this quarter as a pass-through, and we expect to see that play out over the next couple of quarters as well.\nAdjusting for these few items, the implied flow-through for the second quarter was about 46% with implied margins flat versus last year.\nWith our expenses normalizing, that reflects the cost performance across the core that came in as expected.\nI'll shift to adjusted EPS, which was $4.66 for the second quarter, including a $0.13 drag from one-time costs.\nThat's up $0.98 versus last year, primarily on higher net income.\nLooking at capex and free cash flow.\nFor the quarter, gross rental capex was a robust $913 million.\nOur proceeds from used equipment sales were $194 million, resulting in net capex in the second quarter of $719 million, that's up $750 million versus the second quarter last year.\nEven as we've invested in significantly higher capex spending so far this year, our free cash flow remains very strong at just under $1.2 billion generated through June 30th.\nNow turning to ROIC, which was a healthy 9.2% on a trailing 12-month basis.\nNotably, our ROIC continues to run comfortably above our weighted average cost of capital.\nOur balance sheet remains rock solid.\nYear-over-year, net debt is down 4% or about $454 million.\nThat's after funding over $1.4 billion of acquisition activity this year with the ABL.\nLeverage with 2.5 times at the end of the second quarter.\nThat's flat to where we were at the end of the second quarter of 2020, and an increase of 20 basis points from the end of the first quarter this year, mainly due to the acquisition of General Finance in May.\nI'll look at our liquidity, which is very strong.\nWe finished the quarter with over $2.8 billion in total liquidity.\nThat's made up of ABL capacity of just under $2.4 billion and availability on our AR facility of $106 million.\nWe also had $336 million in cash.\nLooking forward, I'll share some color on our revised 2021 guidance.\nWe've raised our full year guidance ranges at the midpoint by $350 million in total revenue and $100 million in adjusted EBITDA, as we now expect stronger double-digit growth for the core business in the back half of the year.\nOur current guidance also includes the impact of acquisition activity since our last update, predominantly to include General Finance.\nThat increase for acquisitions reflects $250 million in total revenue and $60 million in adjusted EBITDA, which includes $15 million of expected full year one-time costs.\nAdditional capex investment will help support higher demand.\nTo that end, we raised our growth capex guidance by $300 million, a good portion of which reflects fleet we are purchasing from Acme Lift.\nWhile the fleet will provide some contribution in 2021 and is assumed in our guidance, we expect to see the full benefit next year.\nFinally, our update to free cash flow reflects the additional capex we'll buy as well as the puts and takes from the changes I mentioned.\nIt remains a robust $1.7 billion at the midpoint and we'll continue to earmark our free cash flow this year toward debt reduction to enhance the firepower we have to grow our business.\nJonathan, would you please open the line.\n",
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"content": "qtrly adjusted earnings per share of $4.66.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As we look back on the past year, I feel that 2020 was a proven ground for our company.\nIt gave us the opportunity to prove the resiliency of our business model and the disciplines we've engineered for more than a decade: things like capital management, cost management, operational agility and the willingness of our team to embrace change.\nWe've demonstrated these capabilities during choppy periods in the past, but last year wasn't just a downturn, it was a sharp and significant economic disruption.\nAnd we stood up to those conditions while keeping our people safe, streamlining our operating costs, aggressively flexing our capex and managing our excess capital to reduce leverage.\nIn addition, we kept our full year adjusted EBITDA margin to within 50 basis points of 2019, despite significantly lower market demand, and we generated record free cash flow.\nAnd now, things are getting better.\nMost of our end markets have been on a steady path to recovery since the third quarter, and we saw that continue in Q4.\nThese factors help us narrow the gap in rental revenue year-over-year from being down over 13% in Q3 to down just 10% in Q4.\nAnd as you saw yesterday, our fourth quarter results were better than our guidance for total revenue, adjusted EBITDA and free cash flow.\nI was also pleased that throughout 2020, we stayed laser-focused on execution, while remaining flexible and agile in a very fluid environment.\nAnd most importantly, we never wavered from our fierce determination to take great care of our employees and our customers.\nWe didn't resort to reactive cuts in our service capacity that would harm our customer service or slow us down in the upcycle or impact our long-term earnings power.\nEarly on, we committed to keeping the key in the ignition on capacity so we could start the engine up at any time.\nAnd as we enter '21, this has proven to be the right decision.\nThe execution of that decision rests squarely with our people, and they have consistently delivered.\nThey're the reason why our safety reportable rate remained below one for all four quarters of 2020.\nAnd it's a credit to their professionalism that our COVID protocols were adopted so quickly companywide, allowing us to serve our customers safely.\nAnd the financial results you saw yesterday were generated by the talent and commitment of our people all working together as one UR.\nIt's an exceptional team, and I'm very proud to work beside them.\nNow let's look forward to the current year.\nCOVID isn't a traditional cycle, but it's a cycle nonetheless.\nAnd we believe it will continue to have an impact for the foreseeable future.\nAs our guidance indicates, we'll continue to gain ground in '21 as we work our way back toward pre-COVID levels.\nOur sentiment echos the majority of our customers in our recent surveys, the comments we hear from the field and other external data points we've collected.\nWe're optimistic of the year, while being realistic that visibility is still somewhat limited.\nWhat our guidance doesn't show is the cadence of demand this year.\nBut once we lapped the first quarter, our toughest comp will be behind us, and then we expect to return to growth as we move through '21.\nAnd we base this on a couple of factors.\nThe recent spike in COVID cases is projected to settle down in the coming months, which should help reactivate some projects that were temporarily halted.\nAnd as the vaccines are rolled out, business confidence should continue to improve.\nAnd this will provide a tailwind for both capital projects and MRO spending.\nAnd as demand trends up, we're well positioned to be first call for our customers.\nAnd before I get into our operating environment, I want to mention our fourth quarter revenue from used equipment sales.\nIt was $275 million, almost 13% higher than prior year, and it was driven by healthy retail demand.\nAnd as you know, we look at the strength of the used equipment market as a key indicator for the rental industry.\nAnd when the retail market is favorable, it tells us that contractors are projecting needs for that fleet.\nAnother positive indicator is that our industry overall showed great discipline on the supply side in 2020, and this is a good place to be as activity ramps up.\nLooking at our operating environment, there are some encouraging signs.\nThe verticals we called out as most resilient on our last call are continuing to lead project activity in markets like power, healthcare, distribution and technology.\nWithin these verticals, we're looking at a range of jobs, including data centers, hospitals, warehouses and even power plants.\nAnd on the other side of the ledger, petrochem continued to be soft in the fourth quarter.\nThe good news is that we're seeing light at the end of the COVID tunnel, and we expect this sector to do better this year led by scheduled turnaround activity in downstream and chemical process.\nWithin non-res, which is our largest revenue base, a number of new projects broke put ground in the fourth quarter and others plan to start up this year.\nThese include some big stadium projects that were postponed when COVID hit.\nAnd the same is true of airport construction and renovation.\nWe see a number of these multiyear projects back on the table.\nAnd to a lesser degree, road and bridge work, which generally has remained steady.\nInfrastructure has been topical since the election.\nAnd while the details and the timing are unknown at this point, President Biden has been clear that this will be a priority for his administration.\nAnd as the economy continues to heal, United Rentals is in a strong position to benefit from any increase in end market spending, including infrastructure.\nAnd we've invested for years in positioning the company for this type of scenario.\nOur specialty segment had another good quarter, led by our power and HVAC business, which generated fourth quarter same-store revenue that was higher than the prior year.\nIt underscores the importance of our ongoing investments in specialty operations.\nIn total, we plan to open another 30 specialty cold starts this year, which is double the number that we opened last year.\nAnd this will bring us close to 400 specialty locations by December.\nYou may recall our mantra that figure doesn't really matter unless we're constantly driving for better.\nAnd the way we get there is by doing what we say we're going to do.\n2020 did its best to challenges on that, but we came through for all of our stakeholders, and the learnings we gained from that experience have been incorporated into our operations.\nAnd we'll leverage these learnings as we return to growth.\nFinally, we said we would fulfill our responsibility to investors by protecting the long-term earnings power of the business, and we're doing that, too.\nThe takeaway from 2020 isn't what went wrong in the external environment, it's what went right when we committed to a course of action and met our goals.\nYesterday, you saw the results of that commitment.\nAnd today, we're telling you that we intend to deliver again in '21.\nSo I'll stop here and ask Jess to take you through the numbers, and then we'll go to Q&A.\nSo Jess, over to you.\nOur financial results in the fourth quarter were better than we expected, with rental volumes continuing to recover and strong used sales activity at retail, and more on both in a minute.\nCosts were in line and supported by -- supported solid margins in the quarter.\nFree cash flow for the year also exceeded expectations, and our leverage at year-end was down versus 2019.\nThat's all good news as we move into 2021.\nI'll provide some color on our '21 guidance before we get to Q&A.\nLet's start now with the results for the quarter.\nRental revenue for the fourth quarter was $1.85 billion, which was lower by $208 million or 10.1% year-over-year.\nWithin rental revenue, OER decreased $190 million or 10.9%.\nIn that, a 5.6% decline in the average size of the fleet was a $98 million headwind to revenue.\nInflation of 1.5% cost us another $25 million, and fleet productivity was down 3.8% or a $67 million impact.\nSequentially, fleet productivity improved by a healthy 420 basis points, mainly from better fleet absorption.\nRounding out the decline in rental revenue for the quarter was $18 million in lower ancillary and rerent revenues.\nAs I mentioned earlier, used equipment sales were stronger-than-expected in the quarter, coming in at $275 million.\nThat's an increase of $31 million or about 13% year-over-year, driven almost entirely by an increase in retail sales.\nThat reflected OEC sold up 35% year-over-year in the retail channel for the second quarter in a row.\nUsed margins in the quarter were solid at 42.5%.\nNotably, these results in use reflect our selling over seven-year-old fleet at just shy of 50% of original cost.\nLet's move to EBITDA.\nAdjusted EBITDA for the quarter was just under $1.04 billion, a decline of $117 million or 10.1% year-over-year.\nThe dollar change includes a $143 million headwind from rental.\nAnd in that, OER made up $140 million and ancillary and rerent together were the remaining $3 million.\nUsed sales were a tailwind to adjusted EBITDA of $11 million, which offset a $3 million headwind from our other non-rental lines of business.\nAnd SG&A was another benefit in the quarter of $18 million, with the majority of that help coming from lower discretionary costs, mainly T&E.\nOur adjusted EBITDA margin in the quarter was 45.5%, down 150 basis points year-over-year, and flow-through as reported was about 66%.\nI'll mention two items to consider in those numbers.\nFirst, used sales made up a greater portion of our revenue this quarter, which was a headwind to margin and flow-through.\nSecond, I mentioned on our Q3 call, back in October, that we had a benefit in bonus expense in Q4 2019 that would cause a drag this Q4.\nAdjusting for those two items implies a margin of 46.1% and flow-through for the quarter of just over 56%.\nBoth results were largely as expected and pointed to continuing cost discipline even as certain operating costs started to normalize.\nA quick comment on adjusted EPS, which was $5.04 That compares with $5.60 in Q4 last year.\nThe year-over-year decline is primarily due to lower net income from lower revenue.\nLet's move to capex.\nFor the quarter, rental capex was $176 million, bringing our full year spend to $961 million in gross rental capex, which was 55% less than what we spent in 2019.\nProceeds in 2020 from used equipment sales were $858 million, resulting in net capex of $103 million.\nROIC remained strong at year-end, coming in at 8.9%.\nThat continues to meaningfully exceed our weighted average cost of capital, which currently runs about 7%.\nYear-over-year, ROIC was lower by 150 basis points, primarily due to the decline in revenue.\nTurning to free cash flow, which was a record for us at over $2.4 billion in 2020.\nThis represents an increase of over $860 million versus 2019.\nAs we look at the balance sheet, our having dedicated the majority of our free cash flow to debt reduction in 2020 resulted in a $1.9 billion or almost 17% decrease year-over-year in net debt.\nLeverage was 2.4 times at year-end, down from 2.6 times at the end of 2019.\nLiquidity remains extremely strong.\nWe finished 2020 with just under $3.1 billion in total liquidity.\nThat's made up of ABL capacity of just over $2.7 billion and availability on our AR facility of $166 million.\nWe also had $202 million in cash.\nOur view to total revenue includes a return to growth in rental revenue with the season, starting in April.\nWe look forward to getting past the challenging comp in Q1 as we lapped the start of the pandemic and move to delivering rental growth for the rest of the year.\nOur guidance includes a range of outcomes given our seasonal patterns and assumptions we've made on the pace of continuing recovery across our end markets.\nWe're planning for another strong year in used sales, and we'll look to increase our capex spend to replace that fleet.\nWithin our guidance, that reflects over $1.9 billion in replacement capex.\nBeyond that, we continue to be focused on absorbing the fleet we own, and we'll adjust our growth capital accordingly with total spend planned at pre-COVID levels.\nOur range on adjusted EBITDA considers not only the volume growth we expect in revenue, but also our continuing to manage costs tightly.\nWe'll leverage what we've learned in 2020 using our own capacity to support our customers with less reliance on third-parties.\nAs our business continues to recover, we'll also see a reset of costs that ran low in 2020, such as T&E and bonuses.\nFinally, one of the best indicators of the strength of our business model is the resiliency of our cash flow, especially as we invest behind growth.\nIn 2021, we expect another year of generating significant free cash flow, and that's after considering a return to over $2 billion in capex spending.\nWe'll continue to use our free cash flow to pay down debt and reduce our leverage.\nOperator, would you please open the line?\n",
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"content": "anticipate another robust year of free cash flow generation, after significantly increasing our capex to support growing demand.\nrental revenue for q4 was $1.854 billion, reflecting a decrease of 10.1% year-over-year.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Also joining us on the call are our Chief Risk Officer, Jodi Richard; and our Chief Credit Officer, Mark Runkel.\nI'll begin on Slide 3.\nIn the second quarter, we reported earnings per share of $1.28.\nWe released $350 million in loan loss reserves this quarter supported by our outlook on the economy and continued improvement in credit quality metrics, the pace of which has been better than expected.\nNet revenue totaled $5.8 billion in the second quarter.\nAs expected, net interest income grew in the second quarter, while our fee businesses benefited from improving consumer and business spending trends.\nNotably, as of late June, total sales volumes for each of our three payments businesses, credit and debit card, merchant acquiring and corporate payment systems, were above 2019 levels for the first time since the beginning of the pandemic.\nOur expenses were relatively stable compared with the first quarter.\nOur book value per share totaled $31.74 at June 30, which was 4% higher than March 31.\nDuring the quarter, we returned 79% of our earnings to shareholders in the forms of dividends and share buybacks.\nFollowing the results of the Federal Reserve's stress tests in late June, we announced that management will recommend that our Board of Directors approve a 9.5% increase in our common dividend in the third quarter payable in October.\nSlide 4 provides key metrics, including a return on tangible common equity of 20.9%.\nSlide 5 highlights continued strong trends in digital activity.\nAverage loans were stable compared with the first quarter, in line with our expectations.\nStrong demand for our instalment loans drove other retail loan growth, while C&I loans increased 0.9%, supported by strong growth in asset-backed lending, partly offset by continued pay down activity and other C&I categories.\nWe saw a decline in residential mortgage loans and increased pay downs.\nAverage credit card loan balances were stable compared with the first quarter as the payment rates remained high at 38%, reflecting a significant level of consumer liquidity.\nHowever, period end balances increased 4.5% on a linked quarter basis as we saw some pickup in activity toward the end of the quarter.\nTurning to Slide 7.\nAverage deposits increased 0.7% compared with the first quarter and grew by 6.4% compared with a year ago, reflecting the significant level of liquidity in the financial system.\nOur overall deposit mix continues to be favorable.\nIn the second quarter, our non-interest bearing deposits grew 5.9% linked quarter, while time deposits declined by 8.1%.\nTime deposits now account for 6% of total deposits compared with 11% a year ago.\nSlide 8 shows credit quality trends, which continue to be better than expectations.\nOur net charge-off ratio totaled 0.25% in the second quarter compared with 0.31% in the first quarter.\nThe ratio of non-performing assets to loans and other real estate was 0.36% at the end of the second quarter compared with 0.41% at the end of the first quarter.\nWe released reserves of $350 million this quarter, reflective of better-than-expected credit trends and a continued constructive outlook on the economy.\nOur allowance for credit losses as of June 30 totaled $6.6 billion or 2.23% of loans.\nThe allowance level reflected our best estimate of the impact of improving economic growth and changing credit quality within the portfolios.\nSlide 9 provides an earnings summary.\nIn the second quarter of 2021, we earned $1.28 per diluted share.\nThese results include the reserve release of $350 million.\nNet interest income on a fully taxable equivalent basis of $3.2 billion increased 2.4% compared with the first quarter, primarily driven by higher yields and volumes in our investment securities portfolio and favorable earning asset and funding mix shifts, partly offset by lower loan yields.\nOur net interest margin increased 3 basis points to 2.53%.\nThe impact of lower loan yields was more than offset by a favorable mix shift in both our investment portfolio and funding composition as well as lower premium amortization expense.\nSlide 11 highlights trends in non-interest income.\nCompared with the year ago, non-interest income was relatively stable as the expected decline in mortgage banking revenue and commercial product revenue was offset by higher payments revenue, trust and investment management revenue, treasury management fees and deposit service charges.\nOn a linked quarter basis, non-interest income increased 10%, driven by higher business and consumer spending activity, reflecting broad-based reopenings of local economies.\nBoth year-over-year and linked quarter mortgage banking revenues were negatively impacted by slower -- slowing refinancing activity and reduced gain on sale margins.\nLinked quarter mortgage revenue growth of 15.7% was primarily driven by the favorable linked quarter impact of a change in fair value of mortgage servicing rights, net of hedging activities.\nSlide 12 provides information on our Payment Services business.\nIn the second quarter, total payments revenues increased 39.5% versus a year ago and was higher by 16.4% compared with the first quarter.\nEach of our three payments businesses saw strong revenue growth on both a linked quarter and a year-over-year basis, reflective of the strengthening economy and the increased spend activity.\nCredit and debit card revenue increased 39.4% on a year-over-year basis, driven by stronger credit card sales volumes and higher prepaid card processing activities related to government stimulus programs.\nSales volume trends, which are the primary driver of payments revenues, are encouraging.\nThe bottom charts on Slide 12 indicate that as of the end of June, total sales volumes across each of the three payments businesses exceeded comparable 2019 levels.\nCertain pandemic impacted spend categories continue to lag, in particular corporate T&E.\nHowever, consumer travel and hospitality spend volumes are rebounding faster than we expected and the pace of improvement in recent weeks has accelerated a bit.\nTurning to slide 13.\nNon-interest expenses was relatively stable on a linked quarter basis as expected.\nSlide 14 highlights our capital position.\nOur common equity Tier 1 capital ratio at June 30 was 9.9% compared with our target CET1 ratio of 8.5%.\nGiven an improving economic conditions in the second quarter, we bought back $886 million of common stock as part of our previously announced $3.0 billion repurchase program.\nFor the third quarter of 2021, we expect fully taxable equivalent net interest income to be relatively stable compared to the second quarter.\nWe expect total payments revenues to be relatively stable compared to the second quarter, but we'll continue to track favorably on a year-over-year basis.\nWhile we expect sales volumes growth in each of our three payments businesses to continue to improve sequentially, prepaid card volumes are expected to decline toward pre-pandemic levels as the impact of government stimulus dissipates.\nWe expect non-interest expenses to be relatively stable compared to the second quarter.\nCredit quality remains strong.\nOver the next few quarters, we expect the net charge-off ratio to remain lower than normal.\nFor the full year of 2021, we expect -- we currently expect our taxable equivalent tax rate to be approximately 22%.\nI'll hand it back to Andy for closing remarks.\nOur second quarter results came in as expected.\nAnd there are many reasons we are optimistic as we head into the second half of the year.\nThe economy continues to recover toward pre-pandemic activity levels and the consumer and business spending activity continues to improve.\nCredit quality trends have been a positive surprise.\nAnd our payments volumes have come back a bit faster than we expected as recently as a few months ago.\nWe are well positioned for the cyclical recovery that we expect to play out over the next several quarters.\nMore importantly, we are well positioned to delivering superior growth and industry-leading returns on equity over the next several quarters, given our business mix, our comprehensive and holistic payments and banking capabilities and our expansive distribution model supported by world-class digital capabilities.\nWe will now open up the call to Q&A.\n",
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"content": "u.s. bancorp - q2 diluted earnings per common share $1.28.\nqtrly diluted earnings per common share $1.28.\nqtrly net charge-off ratio of 0.25% in 2q21 compared with 0.31% in 1q21 and 0.55% in 2q20.\nallowance for credit losses declined $350 million during the quarter given improving economic outlook and credit trends.\ncet1 capital ratio up to 9.9% at june 30, 2021, versus 9.0% at june 30, 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We hope that you and your families are doing well.\nAs many of you know, the TDS family of companies has a practice of long, orderly succession periods to ensure a smooth and seamless transitions.\nAnd in that spirit, I will be transitioning the Corporate Relations role to Colleen Thomson over the next couple of quarters.\nColleen brings significant knowledge of US Cellular, where she has held leadership positions since 2012.\nI am excited to have you meet her.\nAnd after that transition, Iam remaining with the company in the role of Corporate Secretary for both TDS and US Cellular.\nAnd as most of you know, we've historically held our calls at 9 AM on Friday, but there is a calendar conflict this quarter and we moved our call to accommodate that.\nBut going forward, we do expect to move our call back to Friday's at 9 AM Central.\nWe know it's a busy day.\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 US Cellular's wireless partnerships.\nIn terms of our upcoming IR schedule, Slide 3.\nUS Cellular is attending the Wells Fargo Virtual TMT Summit on November 30th.\nAnd then in January, we are attending the Raymond James Deer Valley Summit in person on January 3 through 5 and Citi's Apps Economy Conference virtually on January 6.\nAnd as always, our open-door policy can now be open door, open phone, open video.\nSo, please reach out if you're interested in speaking with us.\nTurning to Slide 4.\nWe continue to make progress on our environmental, social and governance or ESG program.\nAnd most recently, we published TDS's very first ESG report.\nFrom our founding over 50 years ago, TDS believes that being a good corporate citizen is fundamental to our long-term success.\nThis being serving as a good steward of the environment and enacting governance practices that align with our corporate values, and truly carrying about our customers, our associates and striving to enhance the lives of the people in the communities we serve.\nThese responsible practices, which make up the S in ESG are what we call our 3 Cs; customer, culture and community.\nGoing forward each quarter, we're going to briefly highlight a recent action that illustrates this commitment.\nBefore turning the call over, I want to remind everyone that due to the FCC's anti-collusion rules related to the ongoing Auction 1-10, we will not be responding to any questions related to spectrum auctions.\nBefore speaking about the balance sheet, I want to recognize all the actions that both business units are taking to lead to higher returns and stronger businesses over the next several years.\nAs we've discussed on past calls, maintaining financial flexibility is one of the pillars of our corporate strategy.\nOver the years, we've worked to retain relatively low leverage levels, long-dated debt maturities, sufficient undrawn revolving credit facilities and term loans, and significant cash balances to make sure we have the financial resources we need to fund our businesses.\nOn Slide 5, I want to call your attention to all the work that has been done to raise new capital to fund the growth in our business as well at the same time, lowering the average cost of our balance sheet.\nAs you can see, we've raised $3.4 billion since the beginning of 2020 at an average cost of 4.9% and redeemed six separate bond series comprising $1.6 billion in debt with a weighted average cost of 7%.\nThe new capital is a mix of low cost, preferred stock and very long-term retail bonds, along with shorter term EIP securitization debt and bank term loan debt.\nThis fulfills a commitment we made at the beginning of the year to reduce the average cost of our balance sheet and diversify our funding sources.\nGoing forward, we believe that we will continue to have excellent access to the debt capital markets through a variety of instruments in order to continue to fund our business.\nFinally, before turning the call over to LT, I want to point out that our income tax rate for the quarter was 29%.\nThis is up significantly from the 2020 level in which we saw significant one-time benefits from the CARES Act, which have not recurred.\nWe continue to see positive momentum in those growth areas of our business and we're making progress toward our return on capital goals.\nLater on, I'm going to let Doug cover the operational and the financial highlights of the third quarter, but first I thought I'd provide a few thoughts on some of these strategic priorities.\nSo top of mind for me continues to be the competitive environment.\nDuring the third quarter, we saw a continuation of aggressive promotions in the industry for both new and existing customers.\nThey have had an impact on our postpaid subscriber results and on loss on equipment for the quarter.\nWe expect the high level of promotional aggressiveness to continue through the holiday season and beyond.\nI'm really pleased with the operational pivot that we've made toward regionalization.\nWe've effectively leveraged that regional strategy to test a variety of different offers and to help us hone in on an approach to properly balance the subscriber growth with profitability.\nWe had a variety of offers in the marketplace in conjunction with the iPhone launch, some much more aggressive than others.\nAnd I'm pleased that we're now set up to effectively trial multiple approaches in the marketplace.\nIt's going to be help us -- It's gonna help us be much more effective in optimizing our business.\nI spoke to you last quarter about some of our new initiatives to drive growth in our business and government in our prepaid operations.\nWe reported another strong quarter of results for prepaid, and we're seeing positive momentum in business sales, particularly in the IoT space and the private networking space.\nWe're also seeing some really terrific traction in our tower business.\nApplications are up substantially, and operating metrics, particularly cycle times, have improved meaningfully.\nIt's clear to the industry that we're open for business in towers and we're really seeing the benefit of that approach.\nTalking briefly about network, our network modernization program in multi-year 5G deployment remains on track, the majority of our traffic is now carried by sites that have 5G deployed, equally important, we're getting 5G devices into our customers' hands.\nSo far we have about a quarter of our smartphone subscribers with 5G capable devices.\nI'll talk a bit about millimeter wave spectrum.\nWe're optimistic on the use of the spectrum for fixed wireless access, we're continuing trials to validate network performance and customer experience and we recently launched commercial offers in a small set of markets, we have more aggressive commercialization plan in 2022.\nWe're offering commercial millimeter wave fixed wireless access speeds of up to 300 megabits per second and to date we're seeing many customers experiencing speeds that far exceed that.\nGiven the speeds that we're seeing in our trials and the enthusiastic reception we received from customers, it's clearly demand for this type of home broadband service.\nWe also believe this product to be a game changer in conjunction with deeper fiber buildouts and helping to bridge the digital divide.\nI'm also optimistic that the house will be able to address their differences shortly and see their way clear to pass the infrastructure funding bill that's already been passed by the Senate on a bipartisan basis.\nHope we can reach a satisfactory outcome so that we have the funding needed to get this technology deployed to those in this underserved areas that need it.\nTo talk briefly about supply chain constraints, they have impacted us like everyone in the industry, we continue to experience some constraints on certain devices.\nWe think we're managing this pretty effectively.\nIt has not had a material impact on our results to date.\nOn the network side, we're seeing extended lead times for various network related components from multiple suppliers.\nBut today, we've been able to mitigate these risks in partnership with our suppliers, like everyone, we continue to closely monitor ongoing global supply and logistics risks.\nI'd like to end with a comment about the people at US Cellular.\nAnd we recently completed our annual engagement survey and the results confirm what I've observed since joining this company.\nEngagement is incredibly high.\nWe recently received a net promoter score 40, which is an amazing loyalty score.\nThis is especially important right now given expectations about what you're hearing in the press around the great resignation.\nOn that note, our current retention rates are actually higher than they were a year ago.\nThat has a tangible impact on our financials.\nIt comes to things like on boarding and training costs.\nLet's start with the review of customer results on Slide 8.\nPostpaid handset gross additions increased by 3,000 year-over-year, largely due to higher switching activity in combination with our strong promotional activity.\nOf course, this was against the backdrop of industrywide promotional aggressiveness on handsets.\nWe saw connected device gross additions declined 26,000 year-over-year.\nThis was driven by lower sales of Internet products such as hotspots and tablets compared to the prior year when we experienced an increase in demand due to the pandemic.\nTotal smartphone connections increased by 8,000 during the quarter and by 65,000 over the course of the past 12 months.\nThat helps to drive more service revenue given that smartphone ARPU is substantially higher than feature phone ARPU.\nMoving to Slide 9, I also want to call it the strong trends for prepaid, which were driven by enhancements to our prepaid offerings.\nWe saw prepaid gross additions improved by 9,000 year-over-year.\nNext, let's turn to the postpaid churn rate shown on Slide 10.\nPostpaid handset churn depicted by the blue bars was 0.95% up from 0.88% a year ago.\nThis is driven by voluntary churn, which continues to run higher year-over-year as a result of increased switching activity and aggressive industry wide competition.\nInvoluntary churn also increased slightly in the quarter, but it's still below pre-pandemic levels.\nTotal postpaid churn combining handsets and connected devices was 1.15% for the third quarter of 2021 higher than a year ago as we've also seen churn increase on connected devices due to certain business and government customers disconnecting devices that were activated during the peak periods of the pandemic in 2020.\nNow let's turn to the financial results on Slide 11.\nTotal operating revenues for the third quarter were $1.016 billion, a decrease of $11 million or 1% year-over-year.\nRetail service revenues increased by $25 million to $699 million.\nThe increase was driven in part by a higher average revenue per user, which I will discuss in a moment.\nInbound roaming revenue was $30 million, that was a decrease of $12 million year-over-year driven by a decrease in data volume and rates.\nOne of the factors contributing 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 $59 million flat year-over-year.\nFinally, equipment sales revenues decreased by $24 million year-over-year due to a decrease in average revenue per unit, in large part as a result of an increase in promotional activity as well as a decrease in overall sales volume.\nWe continue to engage an aggressive promotional activity during the third quarter of 2021 to remain competitive with the industry.\nAs LT mentioned earlier, our level of promotional aggressiveness differed by region as we look to optimize our approach creates subscriber gains and profitability.\nA portion of the resulting promotional costs reduce equipment sales revenues and increased loss on equipment which represents equipment sales revenue [Indecipherable] equipment sold.\nIn addition, loss on equipment in the third quarter 2020 was mitigated by the impacts of the pandemic, specifically lower switching activity and thus aggressive promotional activity.\nAs a result of the combined impact of these factors [Indecipherable] equipment increased $19 million year-over-year from $5 million in 2020 to $24 million in 2021, this change in [Phonetic] loss of equipment was the primary driver of our decline in profitability year-over-year.\nWe expect the aggressive promotional environment to persist for the remainder of 2021 and into 2022 and our full year guidance for 2021 reflects the corresponding financial impact.\nNow a few more comments about postpaid revenue shown on Slide 12, the average revenue per user or connection was $48.12 for the third quarter up $1.02 or approximately 2% year-over-year.\nOn a per account basis, average revenue grew by $2.72 or 2% year-over-year.\nThe increases were primarily driven by favorable plan and product offering mix, an increase in regulatory revenues and an increase in device protection revenues.\nTurning to Slide 13, as we continue our multi-year network modernization in 5G rollout, control of our towers remains critical.\nBy owning our towers, we ensure that we maintain operational flexibility to add new equipment and make other changes to our cell sites without incurring additional costs.\nAs you can see on this slide, with the assistance of our third-party marketing agreement, we have seen steady growth in tower rental revenues.\nThird quarter tower rental revenues increased by 6% year-over-year.\nWe are seeing positive momentum in tower colocation applications and we'll continue to focus on growing revenues from these strategic assets.\nMoving to Slide 14, 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 $213 million, a decrease of 8% year-over-year.\nAs I commented earlier, total operating revenues were $1.016 billion, a 1% decrease year-over-year.\nTotal cash expenses were $803 million, an increase of $8 million or 1% year-over-year.\nTotal system operations expense increased 1% year-over-year.\nExcluding roaming expense, system operations expense increased by 7% due to higher circuit costs, cell site rent and maintenance expense.\nRoaming expense decreased $8 million or 17% year-over-year driven by lower data rates and lower voice usage.\nCost of equipment sold decreased $5 million or 2% year-over-year due to a significant decline in Connected Device sales, partially offset by slightly higher average cost per unit sold as a result of the mix shifting more heavily toward smartphone sales.\nSelling general and administrative expenses increased $11 million or 3% year-over-year, driven primarily by an increase in bad debts expense and cost associated with supporting enterprise projects and billing system upgrades.\nTurning to Slide 15, I'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 $262 million, a decrease of $20 million or 7% year-over-year.\nEquity in earnings of unconsolidated entities remain flat year-over-year and we expect the fourth quarter 2021 distribution from the LA partnership to be aligned with the distribution received in the fourth quarter of 2020.\nNext, I want to cover our guidance for the full year 2021.\nFor comparison, we're showing our 2020 actual results.\nFirst, we have narrowed our guidance for service revenues to range of $3.075 billion to $3.125 billion, maintaining the midpoint.\nFor adjusted operating income and adjusted EBITDA, we are maintaining our guidance ranges of $850 million to $950 million and $1.025 billion to $1.125 billion respectively.\nMaintaining wider ranges reflects our expectation of a continued highly competitive environment for the remainder of the year as well as uncertainty related to the amount of promotional expense that will be incurred during the holiday selling season.\nFor capital expenditures, we are decreasing our guidance range to $700 million to $800 million as we are moving certainly equipment and project spend into 2022, this shift did not impact our 2021 build plan and as LT mentioned our multi-year 5G and network modernization program remains on track.\nWe have also provided a breakdown of capital expenditures by major category.\nI'm pleased to report on our results and the progress we are making on our strategic priorities as we move toward the end of the year.\nTDS Telecom grew its footprint 6% from a year ago, now serving $1.4 million service addresses across its market.\nBased on the successes we have experienced to date, we are increasing our fiber deployment program substantially with the announcement of additional new communities in Wisconsin, Idaho and North Carolina and we are entering into the state of Montana.\nThis significantly advances our goal to bring state of the art dropping capability and competition to more growing communities.\nIn addition, we are now capable of delivering 2 gig Internet speeds in our Spokane, Washington and Meridian, Idaho market and going forward, we will launch 2 gig product in all of our new fiber expansion market.\n2 gig provides an exceptional customer experience, doubling our previous maximum speed offering and helping to further differentiate us from the cable competition.\nAlso in the quarter, we completed fiber to the home construction in our Southern Wisconsin cluster where we are seeing total broadband penetration of 38% in the fully launched cluster.\nIn total, during the quarter, we added 20,000 fiber service addresses surpassing 40% of our wireline service addresses, a key milestone for us.\nFrom a financial perspective, overall, we grew our topline 2% while planned investment spending on new market launches resulted in lower adjusted EBITDA as expected.\nTurning to Slide 18, we remain committed to the strategic priorities we set out at the beginning of the year.\nAs previously discussed, our primary objective is to generate growth by investing in our high-speed broadband services.\nWe have a multifaceted approach to this growth that includes leveraging existing networks and constructing greenfield fiber in new markets to expand our footprint.\nWe are very pleased that where we have invested in fiber and our incumbent market, we have achieved superior market share and in our expansion markets we are seeing strong customer pre-registration.\nIn addition, we continue to drive faster speeds in our more rural incumbent market by building to meet our ACAM obligations in utilizing State Broadband grant.\nWe were recently awarded two broadband grants in Wisconsin to expand fiber services to two rural communities.\nMoving to Slide 19, total residential connections increased 3% due to broadband growth in new and existing markets, partially offset by a decrease in voice connection.\nTotal telecom broadband residential connections grew 7% in the quarter as we continue to fortify our network with fiber and expand into new market.\nWe are on track in our network construction under the A-CAM program also helping to drive growth in our incumbent market.\nOverall, higher value product mix and price increases drove a 4% increase in average residential revenue per connection.\nOn Slide 20, you can see the broadband connection growth across all markets.\nOur focus on fast reliable service has generated a 13% increase in total residential broadband revenue.\nWe are offering 1 gig broadband speeds to 57% of our total footprint, including both our fiber and DOCSIS 3.1 market.\nThe 1 gig product along with our 2 gig product in certain expansion markets are important tool that will allow us to defend and to win new customers.\nIn areas where we offer 1 gig service, we are now seeing 20% of our new customers taking the superior product.\nTurning to Slide 21, we have augmented our success growing broadband with our TDS TV offering.\nA majority of TDS Telecom's residential customers take advantage of bundling options as 63% of customers subscribed to more than one service which helps to keep our churn well.\nResidential video connections were nearly flat, wireline growth of 6% driven by our expansion market nearly offset losses in the cable market.\nVideo continues to remain important to our customers.\nFor example, we are experiencing a 38% video attachment rate to every broadband connection in our wireline market where we offer IPTV services.\nOur strategy is to increase video connections through the offering of our cloud-based TDS TV plus product.\nThe rollout of this product currently cover 61% of our total operations including cable.\nMoving to Slide 22, we continue to be very bullish on our fiber strategy and how it will transform TDS Telecom in a very meaningful way over the next several years.\nAs we discussed last quarter, given the attractiveness of this opportunity and the heightened level of participation by other over builders, our sense of urgency has increased.\nWe have upsized the number of expansion markets we expect to build over the next several years as well as increasing our fiber builds within our existing footprint.\nFiber is the most economical long-term solutions to deliver the best broadband experience.\nWe continue to refine our market selection criteria, and are highly confident in this process.\nAs a result of this strategy, 40% of our wireline service addresses are now served by fiber, which is up from 34% a year ago.\nThis is driving revenue growth while also expanding the total wireline footprint 8% to 891,000 service addresses.\nOn Slide 24, we highlighted the total service addresses to the cluster.\nThe clusters that are in construction and we are actively marketing.\nWe recently announced our expansion of fiber into several new communities.\nFurther expanding our existing clusters we announced Nampa, Idaho and several communities in Wisconsin including [Phonetic] anchor markets Green Bay and (Indecipherable).\nIn addition, we announced several communities that will plant a flag in new geographies.\nEau Claire, Florida and Onalaska, Wisconsin creating a Western cluster Billings, Montana, the first in this state and several communities just southeast of Charlotte in North Carolina, where we operate a cable market today.\nIn total, these communities add more than 270,000 additional service addresses to our existing fiber deployment plan.\nThrough the third quarter, we have 358,000 total fiber service addresses and are working to build out the footprint in these announced market growing to 929,000 service addresses over the next several years.\nYear-to-date, we completed construction of 51,000 fiber addresses, adding 20,000 service addresses in the quarter.\nThis progress continues to be slower than planned due to permitting complexity and contractor scheduling delays and is putting pressure on service address delivery target in the fourth quarter.\nFor example in Meridian, Idaho, we experienced a temporary delay on more than 35,000 service addresses and just recently have restarted construction.\nAs a result, we expect to fall short of our construction goal this year, but still improve our delivery compared to last year.\nTherefore, we have lowered our guidance for capital expenditures to reflect these delays, but we still expect to be within the guidance range for revenue and adjusted EBITDA for the year.\nWe also continue to proactively manage future construction and customer equipment inventory demand where we are seeing lengthening leave times with our suppliers.\nAs an example, some contractors have experienced staffing shortages and are unable to complete fiber builds in the desired timeframe, we will continue to monitor these challenges and update you on our progress going forward.\nOn Slide 25, total revenues increased 2% year-over-year to $252 million driven by the strong growth in residential revenue, which increased 6% in total.\nThe chart include residential revenue mix, which highlights the increasing contribution of our expansion markets.\nIncumbent wireline markets also showed solid residential growth of 3% due to increases in broadband connections as well as increases from within the broadband product mix, partially offset by a 4% decrease in residential voice connection.\nCable residential revenue grew 6%, also due to increases in broadband connections as well as the product mix.\nCommercial revenues decreased 6% in the quarter, primarily driven by lower CLEC connections, partially offset by a 5% increase in broadband connection, wholesale revenues decreased 5% due to certain state USF support timing.\nSo let me sum up the combined financial results for the quarter as shown on Slide 26.\nTotal revenues increased 2% from the prior year as growth from our fiber expansions that increases in broadband subscribers exceeded the declines we experienced in our legacy business.\nCash expenses increased 3% due to both supporting our current growth as well as spending related to future expansion into new market, which is not yet reflected in our revenue.\nFuture market costs include direct costs such as sales, marketing, real estate and technicians in addition to shared service costs necessary to support new market growth.\nAs a result, adjusted EBITDA decreased 2% to $77 million as expected.\nCapital expenditures were down 1% to $91 million as increased investment in fiber to finance were offset by decreased cent on core operation and on Slide 27, we provided our updated 2021 guidance.\nOur revenue and adjusted EBITDA are right in line with our expectations.\nAnd now that we are closer to the end of the year, we are narrowing our ranges and slightly increasing the midpoint on revenue.\nWe expect revenues to be between $990 million and $1 billion, $20 million and adjusted EBITDA to be between $295 million and $315 million.\nWith the construction delays and build challenges I mentioned earlier, we are lowering our expectations for capital expenditures to be between $400 million and $450 million.\nIt's the dedication and hard work of all our associates that contribute to our company's success and for that I am grateful.\nI look forward to sharing our final 2021 quarterly results with everyone in February.\nOperator, we're ready to take questions.\n",
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"content": "q3 revenue $1.016 billion.\nunited states cellular corp qtrly earnings per share 38 cents.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We wanted to send our continued best wishes out to you and your families and hope that you are all 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 UScellular's wireless partnerships.\nIn terms of our upcoming IR schedule, Slide 3, we will be virtually attending the Raymond James Institutional Investors Conference on March 2, the Morgan Stanley TMT Conference on March 4, and the Deutsche Bank Media, Internet & Telecom Conference on March 9.\nAnd our open-door policy obviously is now more of an open phone or an open video policy, so please reach out to us, if you'd like a meeting.\nBefore turning the call over, I want to remind everyone that due to the FCC's anti-collusion rules related to Auction 107, which are still in effect, we will not be responding to any questions relating to that auction.\nI'm going to make some brief comments about the balance sheet and our funding position.\nBut before doing so, I'd like to recognize the impressive operational and financial results of both businesses in 2020.\nIt is these results that give us the confidence to invest back into the businesses.\nAs we've discussed on past calls, maintaining financial flexibility is one of the pillars of our corporate strategy.\nOver the years, we've 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 can see on Slide 4, at year-end, TDS continue to have a good financial position, including ample available funding sources consisting of cash and cash equivalents, available revolving credit facilities, undrawn term loans and undrawn portions of our EIP securitization facility.\nUScellular and TDS Telecom are both currently in investment cycles, with UScellular investing in network modernization, 5G and spectrum, and TDS Telecom aggressively investing in out-of-territory fiber.\nGiven this, we were very busy last year raising new capital and locking in committed sources of capital.\nAt UScellular, we executed on two $500 million bond transactions, increased the size of our term loan in EIP securitization program, and extended the term of our revolver.\nAt TDS, we put in place a new term loan and extended our revolver.\nThese financings put us in a position to largely fund our capital plans for 2021.\nNevertheless, we will continue to look for opportunities to lock down additional financing during 2021 to satisfy future funding needs, especially our fiber program, reduce the cost of our balance sheet and otherwise adjust our balance sheet.\nWe believe that we have access to a wide range of potential debt and debt-like securities.\nI also want to highlight that in 2020, the CARES Act provided a unique opportunity to carry back tax losses from 2020 against profits made in prior years when the federal tax rates were 35%, which is 14% higher than the current rate.\nTo take advantage of this, among other actions, we accelerated some capital spending from 2021 into 2020.\nThe net effect of all this activity was an expected cash refund of approximately $180 million, the majority of which we expect to receive in the first half of 2021, which includes a permanent tax benefit of $60 million.\nFor GAAP accounting purposes, this yielded an unusually low effective tax rate of 6.4%.\nTDS continues to return value to its shareholders primarily through dividends, as we again raised our dividend, representing the 47th consecutive year that we have increased it.\nIn sum, we are in a financially solid position to take advantage of growth opportunities in each of our businesses.\nWe're going to cover not just our strong results for the fourth quarter and all of 2020, but we'll also lay out our plans and objectives for 2021.\nSo, I've been here long enough now to understand that this is a heck of a company and we have a lot of potential and we have the culture and we have the assets to seize the opportunities in front of us.\nI'm looking forward to discussing that with all of you today.\nIf we flip to Page 6, just to state the obvious, 2020 was a challenging year.\nI think it underscored not just the strength and resilience of our company, but just how essential our services are basically to society.\nI think the entire industry has stepped up to the challenge of 2020.\nAnd I think that the public views us very differently than they did before the pandemic.\nAnd I think this will have lasting benefits.\nOperationally, pandemic led to significant increased demand in the network.\nWe saw over 50% increases in data usage year-over-year.\nOn the flip side, we saw decreased store activity.\nOur traffic was down almost 30% in the fourth quarter, and that's just a little bit less impact than the retail industry in general over that same time period.\nI'm really proud about how our team responded.\nAs you'll see in the numbers that Doug is going to go through, we recorded very low levels of churn.\nIt's proof that our network team continues to deliver outstanding experience.\nWe also posted strong subscriber numbers, proof that our sales teams are doing the most with the available opportunities.\nMost importantly, we've worked hard to ensure the safety of our associates and our customers.\nJust to put a little bit of detail behind that, employees whose jobs can be performed remotely are working from home.\nWe do consistent enhanced cleanings of our facilities, all of our associates have PPE that they are worn during customer interactions, we have a daily health check for all of our associates, and we continue to require social distancing and mask wearing in all of our Company facilities and that includes our stores.\nWe reported a strong year with improved subscriber and financial results.\nAnd Doug is going to provide some more details in a moment, but just at a high level, we maintained low postpaid churn, we grew postpaid net adds.\nService revenues were increased, driven mostly by an increase in postpaid ARPU.\nCash expenses decreased as a result of favorable bad debt expense and continued expense discipline.\nWe realized increased income from our equity method investments and all of that together drove adjusted EBITDA to increase 5% year-over-year.\nAs I mentioned earlier, we experienced a 54% year-over-year increase in daily usage, but we managed our systems operations expenses to only a 3% year-over-year increase.\nWe also completed our VoLTE rollout in the fourth quarter.\nWe ended the year with 5G capability at 24% of our cell sites.\nAnd those cell sites handle 50% of our overall traffic.\nBy the end of the first quarter of this year, we'll have 5G service in at least a portion of every single one of our markets.\nLet's turn the page to Slide 7.\n2020 has placed us in a strong position.\nWe've got great sales and profitability momentum.\nAnd so our strategic imperatives for 2021 are pretty simple, you need to drive growth.\nWe've adopted a regional model to be more agile, respond better to our customers, and execute more market-specific promotions.\nWe'll also be enhancing our digital capabilities to provide better lifecycle management, targeting and messaging.\nWe're also placing increased emphasis on the prepaid in the B2B segments and we currently under index on those and I've mentioned those growth areas in previous calls.\nOur long-term goal is to improve return on capital.\nWe have a fairly clear mission for our organization.\nAnd that's to connect our customers to the things that matter most to them.\nExecuting on that mission requires investment.\nAs you'll see when Doug goes through our capital plans, we need to expand our return on capital in order to optimize that investment.\nWe'll be pulling every lever at our disposal to improve return over time.\nYou can expect to see revenue growth, coupled with expense discipline, as well as capital optimization.\nThat approach will not be limited to our wireless operating business.\nWe'll also be looking to optimize the significant value that exists within our broader asset portfolio, that includes our towers, spectrum and our partnerships.\nNetwork performance continues to be a hallmark of our strategy.\nWe'll be continuing our network modernization program and the multi-year 5G deployment.\nWe will begin to deploy our millimeter wave spectrum in order to offer fixed-wireless access.\nWe're starting with three test markets.\nThat will give us some valuable learnings as we look to rollout this high speed product to additional markets in our footprint.\nOne of the factors that drew me to UScellular is that this company is built on the foundation of bringing connectivity to the underserved.\nYou can expect to see us working with regulators and partners in the industry to continue to work toward ensuring that all Americans have access to high-quality and affordable communication services.\nIt's important to note that I view this issue as separate from encouraging 5G deployment.\nAs an industry, we need to focus on 5G leadership for America.\nWe also need to make sure we're bridging the digital divide, and those two issues are not always synonymous.\nWe'll continue to focus on culture development.\nWe have an amazing culture at UScellular, but we have to continue to emphasize diversity, equity and inclusion efforts to ensure that we remain a fantastic place to work.\nFinally, I want to take you back to the first bullet on this page.\nWhen it comes to pandemic, I'm optimistic there is a light at the end of the tunnel, but we have to remain vigilant and we have to remain focused on keeping our customers and associates safe.\nWe had a lot of challenges in 2020.\nLet me pass it over to Doug.\nLet me touch briefly on postpaid connections results during the fourth quarter shown on Slide 8.\nPostpaid handset gross additions decreased due to lower switching activity and decreased store traffic due primarily to the impacts of COVID-19.\nThis decrease was partially mitigated by increased demand for connected devices.\nTotal smartphone connections increased by 47,000 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 12,000 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 Q4, we saw an average year-over-year decline in store traffic of around 30% related to the impacts of COVID-19.\nThe decrease in store traffic had a negative impact on gross additions, although connected device activity remained stronger than the prior year.\nNext, I want to comment on the postpaid churn rate shown on Slide 9.\nCurrently, as you would expect, churn on both handsets and connected devices is running at low levels.\nPostpaid handset churn, depicted by the blue bars, was 1.01%, down from 1.11% a year ago.\nThis was due primarily to lower switching activity as customers' shopping behaviors were altered due to the pandemic.\nThe FCC Keep Americans Connected Pledge ended on June 30.\nAnd about 60% of the customers that were on the pledge at June 30 are actively paying.\nOur churn was not materially impacted by the pledge in the fourth quarter or the full-year 2020.\nTotal postpaid churn, combining handsets and connected devices, was 1.21% for the fourth quarter of 2020, also lower than a year ago.\nNow let's turn to the financial results on Slide 10.\nTotal operating revenues for the fourth quarter were $1.073 billion, a modest increase year-over-year.\nRetail service revenues increased by $17 million to $683 million.\nThe increase was primarily due to a higher average revenue per user, which I will discuss in a moment.\nInbound roaming revenue was $33 million.\nThat was a decrease of $9 million year-over-year, driven by a decrease in data volume.\nOne of the factors contributing 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 $60 million, an increase of $5 million year-over-year, partially due to a 9% increase in tower rental revenues.\nFinally, equipment sales revenues increased by $8 million year-over-year due to an increase in average revenue per unit for new smartphones, partially offset by lower accessory sales.\nNow a few more comments about postpaid revenue shown on Slide 11.\nAverage revenue per user or connection was $47.51 for the fourth quarter, up $0.94 or 2% year-over-year.\nOn a per account basis, average revenue grew by $3.88, or 3% year-over-year.\nThe increases were 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.\nTurning to Slide 12.\nAs we continue our multi-year network modernization and 5G rollout, control of our towers remains very important.\nBy owning our towers, we ensure we maintain the operational flexibility to add new equipment and make other changes to our cell sites without incurring additional costs, which is very important, particularly 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, with the assistance of our third-party marketing agreement, we have seen steady growth in our tower rental revenues.\nFourth quarter tower rental revenues increased by 9% year-over-year.\nWe will continue to focus on growing revenues from these strategic assets.\nMoving to Slide 13, 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 $178 million, a decrease of 2% year-over-year.\nAs I commented earlier, total operating revenues were $1.073 billion, a 2% increase year-over-year.\nTotal cash expenses were $895 million, increasing $24 million or 3% year-over-year.\nTotal system operations expense increased year-over-year.\nExcluding roaming expense, system operations expense increased by 7%, driven partially by costs associated with our network modernization and 5G deployment, including higher maintenance and support costs for network operations, higher cell site rent expense and an increase in costs to decommission network assets.\nNote that total system usage grew by 36% year-over-year.\nRoaming expense increased $3 million, or 9% year-over-year, due to a 68% increase in off-net data usage, partially offset by lower data rates.\nCost of equipment sold increased $14 million, or 5% year-over-year, due primarily to an increase in the average cost per unit for new smartphones, partially offset by a decrease in accessory sales.\nSelling, general and administrative expenses decreased $4 million, or 1% year-over-year, driven primarily by a decrease in bad debts expense.\nBad debts expense decreased $10 million, due to lower write-offs, driven by fewer non-pay customers as a result of a better credit mix and improved customer payment behavior.\nAlso contributing to the decrease was lower advertising expense due to reduced sponsorship expense from canceled events related to COVID-19.\nTurning to Slide 14 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 $222 million, flat year-over-year.\nEquity and earnings of unconsolidated entities increased by $4 million, or 11%.\nTotal operating revenues were $4 billion, a modest increase year-over-year.\nThis was driven by an increase in retail service revenues due to higher average revenue per user, partially offset by a decline in the average postpaid subscriber base.\nAlso contributing to the increase were higher tower rental revenues and miscellaneous other service revenues.\nThese increases were partially offset by decreases in inbound roaming revenues and equipment sales.\nTotal cash expenses were $3.2 billion, a decrease of $29 million year-over-year.\nThis was due primarily to a decrease in selling, general and administrative expenses, driven by decreases in bad debts expense and advertising expense.\nAlso contributing to the decrease was lower cost of equipment sold.\nSuch factors were partially offset by an increase in system operations expense.\nSystem operations expense increased by 3%, despite a 54% increase in total system usage on our network and a 59% increase in off-network data usage.\nAdjusted operating income and adjusted EBITDA grew by 5%.\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.\nAs such, COVID-19 financial impacts consistent with those experienced in the second half of 2020 have been contemplated in establishing the assumptions used in developing our financial guidance.\nFor total service revenues, we expect a range of approximately $3.025 billion to $3.125 billion.\nThis reflects our expectation of low single-digit growth in billed revenues and ongoing pressure with respect to inbound roaming revenues as legacy Sprint roaming traffic continues to decline and other carriers take measures to manage their roaming traffic.\nWe expect adjusted operating income to be within a range of $800 million to $950 million, and adjusted EBITDA within a range of $975 million to $1.125 billion.\nThis guidance reflects our estimates for moderate growth in both revenues and cash expenses.\nCash expenses are impacted by estimated increases in loss on equipment due to a higher expected transaction volume and bad debts, as this expense trends toward pre-pandemic levels.\nFor capital expenditures, the estimate is in a range of $775 million to $875 million.\nThis reflects our expectation of lower network capital spend.\nWe have provided a breakdown by major category for our 2020 and estimated 2021 capital expenditures.\nWe were able to pull some network spend forward into 2020 from 2021, and completed our VoLTE deployment, which contributed to the decrease in expected 2021 capital expenditures compared to 2020.\nI'm pleased to speak to you about our progress on our growth strategies by sharing some of our accomplishments during the past year.\nOverall, Telecom had an outstanding year.\nOur highest priority, much like UScellular, has been to keep our employees and customers safe during the pandemic.\nThis required quick actions, sound judgments and a significant number of new protocols to service our customers, creativity on the part of our sales and marketing teams and flexibility across the entire organization.\nDespite the many challenges we had to overcome, we grew revenues 5% and reinvested savings from operational efficiencies into our growth initiatives, while still modestly improving adjusted EBITDA.\nThe pandemic continues to confirm the importance of high-speed Internet and how important our investments have been to serve all of our customers.\nWe continue to remain focused on expanding and upgrading our broadband services.\nWe see the opportunity to work with industry allies, seeking additional support to improve Internet for our rural customers to help bridge the digital divide.\nWe have been extremely active in deploying fiber by investing a $130 million during 2020.\nIn addition to the expansion of fiber-to-the-home infrastructure, we connected over 67,000 service addresses to our network, bringing total fiber addresses to 307,000, both in existing markets and our growing expansion markets.\nWe have moved new markets from the planning stage to construction, and have been very pleased with our pre-launch registrations and orders.\nIt is critical to build these fiber networks and connect subscribers quickly to stay in front of potential competitors.\nWe have an active pipeline of identified markets and a tested game plan to plant our flags in new markets that will expand our out-of-territory footprint even further.\nWe had strong broadband sales across both our wireline and cable markets.\nWe continue to improve our broadband products in terms of speed, capacity and reliability.\nAs a result, we have continued to see increased market share.\nWe have augmented this success with the launch of our TDS TV+ offering across our wireline IPTV markets and cable markets.\nI'm really pleased with our next generation video platform.\nIt enhances the customer experience by combining linear and non-linear programming and enabling personalized content recommendations, while adding user interfaces to mobile devices.\nAs a bundle, these products provide a best-in-class customer experience and help us to increase our broadband market share.\nEqually important is our focus on operating lean.\nThrough system and process improvements, we are taking costs out of our legacy business, so we can redeploy those savings into our growth initiatives.\nWe achieved significant cost savings in 2020.\nWe curtailed spending due to the uncertainty of the pandemic and achieved savings through our aggressive supply chain management.\nWe also accelerated self-serve capabilities and preventative network maintenance, which reduced truck rolls and calls into our call center.\nIn our fourth year of investment under the A-CAM program, we spent $30 million and have exceeded our subscriber gross add and revenue projections for the year.\nWe met our year-four A-CAM obligations for reportable locations in all, but two states, where we have taken measures to address this shortfall.\nFinally, we have successfully integrated the Continuum acquisition that closed on December 31, 2019.\nWe are upgrading the existing plant to DOCSIS 3.1, and are deploying fiber in neighborhoods not previously built.\nThe financial results have been in line with our expectations, confirming our desire to pursue opportunistic cable acquisitions.\nNow turning to slides 19 and 20.\nOur 2021 strategic priorities remain focused on growth and continuous improvement.\nOur goal for the year is to generate overall revenue growth of around 3%, with new market growth offsetting wireline commercial and wholesale erosion and cable continuing its strong performance.\nWe plan to deliver 150,000 new fiber service addresses by the end of 2021, more than doubling last year's address delivery and increasing our wireline footprint by nearly 20%.\nWithin our markets, we expect to continue to increase our broadband market share and improve our product offerings to increase ARPU.\nWe continue to be bullish on our fiber strategy.\nFiber is the most economical long-term solution to deliver the best broadband experience.\nSelecting the right markets remains key.\nAnd while we have an attractive funnel of markets identified, we continually refine our selection process with new learnings.\nOur marketing and sales techniques enable us to effectively market at the neighborhood level.\nThis gives us tremendous flexibility over timing and execution to consistently target a high broadband take rate.\nOur strategy to cluster markets is critical, as it gives us economies of scale and better returns over time.\nAdditionally, our strategy capitalizes on strong macroeconomic trends, such as growing work-at-home environments, strong population migrations in our chosen markets, favorable advances in technology that support our platform, and bipartisan support for rural broadband funding.\nIn closing, I want to highlight our most powerful resource.\nIt's the strength, resiliency and talent of our people and their proven ability to execute our focused strategy.\nFostering diversity, equity and inclusion in our teams makes us even stronger.\nOur team may not be the largest in the industry, however, they are highly motivated to compete and win.\nLet me begin by highlighting our consolidated financial results for the quarter, as shown on Slide 21.\nRevenues increased 6% from the prior year, as growth from our fiber expansions, increases in broadband subscribers and the Continuum cable acquisition exceeded the declines we experienced in our legacy business.\nCash expenses increased 8%, due to additional spending from our growth initiatives and increases in facility maintenance.\nAdjusted EBITDA declined 2% to $74 million.\nCapital expenditures increased to $147 million, as we continue to increase our investment in fiber deployment and success-based spend.\nI will cover our total fiber program more in detail in a moment, but for now, let's turn to our segments beginning with wireline on Slide 22.\nBroadband residential connections grew 9% in the quarter, as we continue to fortify our network with fiber and expand into new markets.\nFrom a broadband speed perspective, we are offering up to 1 gig broadband speeds in our fiber markets as 13% of our wireline customers are taking this product where offered.\nAcross our wireline residential base, including our new out-of-territory markets, 40% of broadband customers are taking 100 megabit speeds or greater compared to 33% a year ago, helping to drive a 5% increase in average residential revenue per connection.\nWireline residential video connections grew 8%.\nAnd at the same time, we expanded our IPTV markets to 55, up from 40 a year ago.\nVideo remains important to our customers.\nApproximately 40% of our broadband customers in our IPTV markets take video.\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 41% of our wireline footprint today, leaving opportunity to further leverage our investment in video.\nSlide 23 shows the progress we are making this year on our multi-year fiber footprint expansion, which includes fiber into existing markets and also out-of-territory fiber builds.\nAs a result of this strategy, over the last several years, 307,000 or 36% of our wireline service addresses are now served by fiber, which is up from 30% a year ago.\nThis is driving revenue growth, while also expanding the total wireline footprint 7% to 845,000 service addresses.\nWe recently announced our expansion of fiber into the city of Boise, Idaho and the Fox Cities, several communities centered around Appleton, Wisconsin.\nThese additional markets bring our fiber program, which began in 2019, to 430,000 service addresses, which will expand our total footprint -- our total fiber footprint to 620,000 service addresses by 2024.\nWe continue to be pleased with overall take rates, which are generally exceeding expectations in the areas we have launched to date.\nWe are expecting our fiber service address delivery to double in 2021.\nNow looking at our wireline financial results on Slide 24.\nTotal revenues increased 1% to $173 million, largely driven by the strong growth in residential revenues, which increased 8% due to growth from broadband and video connections as well as growth from within the broadband product mix, partially offset by a 2% decrease in residential voice connections.\nCommercial revenues decreased 8% to $37 million in the quarter, primarily driven by lower CLEC connections.\nWholesale revenues decreased 3% to $46 million due to certain state USF timing support.\nIn wireline, cash expenses increased 3% on higher video programming fees, maintenance expense and advertising, partially offset by the capitalization of new modems previously expensed.\nIn total, wireline adjusted EBITDA decreased 8% to $50 million.\nMoving to cable on Slide 25.\nCable total revenues increased, due to the acquisition of Continuum and increased broadband connections.\nTotal cable connections grew 2% to 379,000, driven by 8% increase in total broadband connections.\nBroadband penetration continued to increase, up 200 basis points to 46%.\nOn Slide 26, total cable revenues increased 18% to $76 million, driven in part by the acquisition.\nWithout the acquisition, cable revenues grew 9%, 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 27% increase in total residential broadband revenue, including organic growth of $5 million or 18%.\nAlso driving the revenue change is a 6% increase in average residential revenue per connection, driven by higher-value product mix and price increases.\nCash expenses increased 19%, including those from the acquisition, or 12% excluding acquisition due to increased employee expense.\nAs a result, cable adjusted EBITDA increased 14% to $23 million in the quarter.\nBefore I move to guidance, let me summarize our consolidated financial results for the full year, as shown on Slide 27.\nRevenues increased 5%, about half of which was due to the cable acquisition.\nCash expense also increased 5%, again, mostly due to the acquisition, but also as we redeploy spending from our legacy businesses to our growth initiatives and expansion into new markets.\nAdjusted EBITDA grew 1% from last year to $317 million.\nOn Slide 28, we provided guidance for 2021.\nWe are forecasting total Telecom revenues of $975 million to $1.025 billion in 2021, compared to $976 million in 2020.\nThis reflects our goal of 3% top line growth, driven by continued improvements in both the wireline and cable segments.\nThis includes contributions from our new fiber markets growing to $22 million in 2020 to nearly $50 million in 2021, offsetting declines in the legacy parts of our business.\nThe increase in revenue will contribute to an adjusted EBITDA that we expect will be between $290 million to $320 million in 2021, compared to $317 million in 2020.\nIncreases in fiber expansion costs are expected to outpace cost reductions made in other areas of our business, as we expect to more than double our service address delivery in 2021 compared to 2020.\nCapital expenditures are expected to be between $425 million and $475 million in 2021 compared to $368 million in 2020.\nWireline capex guidance includes $240 million for fiber deployments, nearly double our 2020 spending as well as nearly $90 million in success-based spending in both wireline and cable and approximately $25 million for the A-CAM program.\nAnd Shelby, we are ready to take questions.\n",
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"content": "q4 revenue $1.073 billion versus refinitiv ibes estimate of $1.06 billion.\nunited states cellular corp - sees 2021 capital expenditures $775-$875 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As we announced last September, Colleen Thompson will be taking over leadership of the IR function in May.\nWe've been working together to ensure a smooth transition, but I'll certainly be involved for the next few months.\nI've spoken to a number of you in the past couple of months, but for those that I haven't met yet, I look forward to the opportunity.\nWe provide guidance for both adjusted operating income before depreciation and amortization or done and adjusted earnings before interest, taxes, depreciation and amortization, or OIBDA, and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, to highlight the contribution of UScellular's wireless partnerships.\nIn terms of our upcoming IR schedule, on Slide 3, the team is dividing and conquering conquering and presenting at both the Raymond James and the Morgan Stanley conferences on March 7.\nAnd then on March 14th, we will be participating at the Deutsche Bank conference.\nAnd as always, our open-door policy can now be an open door, phone or video policy.\nSo please reach out if you're interested in speaking with us.\nIn December, we announced that I will be retiring in May, and Vicki Villacrez will be replacing me.\nVicki has been CFO of TDS Telecom since 2012 and prior to that, led financial planning and strategic analysis for the enterprise, so this transition should be very seamless.\nVicki has been an important driver of TDS Telecom's success over the past 10 years, and she will bring a wealth of experience to her new job.\nI congratulate her on this new challenge.\nOn Slide 4, as we look to -- at 2022, I want to highlight all the positive trends impacting our businesses.\nDemand for broadband continues to grow.\nConnectivity, whether mobile or fixed, is a necessity to remote education, healthcare, and work.\nThe markets we serve, primarily suburban and rural, are benefiting from people migrating to these areas out of major cities.\nAdditionally, 5G offers high speed fixed wireless.\nAnd with fiber available to only 30% of households in the U.S., this represents a great opportunity for us.\nTDS was founded 50 years ago on a mission of bringing connectivity to unserved and underserved markets, so the introduction of the infrastructure bill brings opportunities for both of our businesses.\nAnd lastly, over that time, TDS has also held a multi-stakeholder approach to good corporate citizenship at the forefront of its values.\nAs we expand our ESG program, we are essentially reinforcing the values that we have already had, caring about customers and associates, striving to enhance the lives of people in our communities, as well as serving as a good steward of the environment.\nAs we discussed on our past calls, maintaining financial flexibility is one of the pillars of our corporate strategy.\nOur strong financial position and ready access to the debt capital markets enabled UScellular to purchase valuable mid-band spectrum while also enabling TDS Telecom to expand investments in our growing fiber program.\nThis strong financial position and market access will be important as we continue to invest in our fiber program in the future, as Jim will discuss later in the call.\nBefore the business units discuss their successes, I want to briefly talk about the transformation of our balance sheet as illustrated on Slide 5.\nFirst, we have worked to diversify our funding sources through a variety of different types of financings, including preferred stock and export credit term loan, a syndicated term loan, new 10-year co-bank term loans, and an increase in our equipment installment receivables securitization facility.\nIn addition, we had a goal to lower the average cost of our financings.\nSince the beginning of 2020, we have raised three and a half billion in new capital, both debt and preferred equity at 4.8% while at the same time redeeming $1.8 billion in debt.\nThat carried a weighted average cost of 6.9%, reducing our average cost from 6.7% to 5%, and resulting in $37 million in annual coupon savings.\nImportantly, going forward, we believe that this -- that we will continue to have access to the debt capital markets through a variety of instruments to continue to finance our future growth.\nFinally, I want to highlight that we have again increased our dividend rate.\nThis represents the 48th consecutive year that we increased our dividend, quite an accomplishment.\nWe continue to see positive momentum in several focus areas of the business, and that includes prepaid, business and government, and fixed wireless.\nWe've developed tactical plans to reach our return on capital goals over the next three years.\nI'm going to let Doug cover the operational and financial highlights, as well as our guidance for 2022.\nI first want to provide a few thoughts on these strategic priorities.\nLast year, we launched a regional aviation strategy.\nThat's something our competitors can't replicate.\nThat lets us test and optimize a wide range of actions, and that includes pricing constructs, promotions, media mix.\nThe renewed focus on prepaid led to some encouraging initial results and positive prepaid ads for the year, as well as laying the foundation for future growth with expanded distribution and a new approach to lifecycle management.\nLast year, we laid the foundational work to build the business and government side of the business.\nAnd that includes segmentation and specialization of our internal sales team, as well as the addition of new distribution, new partners, new channels.\nAnd this should position us to generate meaningful revenue growth.\nAs I discussed in previous calls, we've strengthened our market position as a tower company, made numerous enhancements, which let the market know that we're open for business.\nYou can see that in the results.\nI think we're just getting started here.\nTurning to the network, we continue to pursue our network modernization program in our multi-year 5G deployment.\nThe majority of our traffic is now carried by sites that have 5G deployed.\nAnd equally important, we're getting 5G devices into our customers hands.\nSo far, nearly 30% of our smart phone subscribers have 5G-capable devices.\nThe biggest development on the network side in 2021 was our targeted acquisition of C-Band and DOD spectrum.\nWe now have a really solid mid-band spectrum portfolio.\nEven though the auctions were quite expensive when you compare them historically, I'm really pleased that our outcome.\nAnd I'm going to ask Mike Irizarry to give you a bit more detail on this.\nTurning to Slide 8, we continue to advance our 5G spectrum strategy.\nAnd with the spectrum we acquired in the C-Band and DOD auctions, we will have mid-band spectrum and substantial majority of our operating footprint, covering 80% of our subscribers with 100 megahertz of mid-band.\nThis is in addition to our strong, low band and millimeter wave spectrum positions.\nMid-band serves as the bridge between our low band and our high band holdings.\nAs a reminder, we have previously acquired millimeter wave spectrum with an agreeable spectrum depth of 530 megahertz across our footprint.\nThis gives us strong positions in all three spectrum bands low, mid and high, and provides us plenty of capacity to continue to deliver outstanding mobile and fixed wireless services to our customers and support future 5G services and use cases.\nIn total, including required incentive and relocation payments, we have invested slightly over $2 billion in mid-band spectrum and have done so at efficient prices as our average price per megahertz pop that we paid in both auctions, 107 and 110, was lower than the overall auction averages.\nAs mentioned earlier, we were able to successfully raise the capital to finance these purchases while also reducing our cost of financing.\nWe are preparing to deploy mid-band equipment on our network, optimizing power climbs, and radio requirements for both DOD and C-band, as well as leveraging efficiencies with our ongoing 5G modernization plan.\nThese efforts will begin prior to our C-band spectrum being cleared, which will allow us to turn on our mid-band spectrum efficiently.\nOverall, our strong spectrum position and the network experience that it enables will be key to enabling our 2022 goals, which LT will discuss next.\nWe turn to Page 9.\nOur strategic priorities for 2022 will look familiar to you, and they build on our progress in 2021.\nOur mission remains the same.\nOur company is dedicated to connecting our customers to the places and the people that matter most to them.\nAs you know, executing that mission requires a lot of investment.\nI mentioned the investment we made in spectrum earlier.\nYou're going to hear from Doug later that we plan to maintain a steady pace of capital investment.\nWe modernize our network and roll out the mid-band spectrum that we purchased.\nOr to justify that investment, we have to expand our return on capital.\nAnd that's the key metric we use to set our long-term plans for the business.\nOne key opportunity that we have in the next year or two that should help a lot with our return on capital goals is to take advantage of the funds being allocated through the recently passed Infrastructure Investment and Jobs Act, the IIJA.\nThis is a potential game changer, not just for UScellular, but for finally connecting the un- and underserved, particularly in rural America.\nPut some context around it, you got $46 billion allocated to broadband.\nThe specific allocations are still being worked out but you can think of about $20 billion likely flowing to the states that we operate in and at least $8 billion flowing to the areas where we operate network.\nA lot of that will go to fiber, it should.\nAs I mentioned in our last call, I would encouraged the Department of Commerce had committed to avoiding symmetry requirements.\nThat allow its fixed wireless to potentially play a big role as well.\nI talked in previous calls about how encouraged I am by the results from our millimeter wave fixed wireless trials.\nYou see nearly one gig of speeds across seven kilometers with line of sight.\nWe've commercially launched our millimeter wave product at 300 gigs.\nThat's a massive improvement over existing solutions.\nBut the challenges in the tower economics, in order provide comprehensive coverage, we need much denser towers.\nThe IIJA can provide the funding necessary to make the economics work.\nIt's a lot cheaper to build and run fiber to one tower, covers hundreds of homes and businesses, than it is to run fiber to each of those individual locations.\nAnd the exciting part is that the benefit doesn't stop with fixed wireless.\nWe can use infrastructure funding to improve the economics for tower builds to focus on fixed wireless.\nYou can also improve the coverage profile of 5G.\nThat'll significantly improve our mobile network experience to our postpaid and prepaid base.\nThis is an extra benefit to provide funding to wireless carriers for broadband deployment the fiber can't match.\nAnd just in case you forgot, and I know you didn't, we're also the only mobile operator that owns our towers.\nSo we can market those new towers to other carriers, which also creates positive economics.\nIt would take several years to execute this plan but I'm enthusiastic about the prospects to work with state and local governments to really improve the experience for underserved areas, helping to bridge the digital divide in the communities in which we invested, significantly advancing our network, and doing it all with positive economics for our stakeholders.\nAnd before I talk more about the growth levers for 2022, I do want to talk about one other key strategic area, and that's our talent.\nWe manage the great resignation incredibly well thus far.\nOur attrition was relatively stable year over year in 2021.\nWe recognized on Forbes list of America's best employers.\nWe're number 141 in the country.\nThat's up from number 413 last year, and we're ranked as the best employer in telecom.\nThat's ahead of Cox at 180, ahead of Verizon at 244, ahead of T-Mobile at 336, and ahead of a lot of others that weren't even ranked.\nAnd in my view, that's due to the tremendous culture of this place but we're going to have to keep investing in it.\nAnd you can expect to see an even increased emphasis on diversity, equity, and inclusion to ensure that we remain a fantastic place to work.\nAnd if you'd like to witness our customer-focused culture firsthand, I encourage you to tune in to Undercover Boss on CBS on March 4th just to see how powerful our culture is, and you can also laugh at my outrageous mustache.\nA major strategic objective for us is growth, and I want to cover that objective in a bit more detail.\nWe made a lot of investments in growth in 2021.\nWe started to see the benefits in many areas of the business.\nPrepaid is a really good example.\nWe pivoted the business to net add growth, and I expect even better momentum in 2022.\nThe one area, and it's a big one, but I was not satisfied with last year, was our postpaid net additions and the lack of growth in our postpaid connections base.\nThe environment remains as competitive as ever, particularly for upgrades, and that carries challenging economics for the entire industry.\nAt the same time, customers are holding devices for longer than ever, and that somewhat dilutes the impact of aggressive device promotions.\nThat's a really challenging dynamic, not just for UScellular.\nWe've a variety of initiatives underway to stabilize our postpaid market share through improvements on value proposition, customer lifecycle management, and the digital experience.\nYou can also expect to see us continue to leverage our regional approach, adjusting our go-to-market on a community-by-community basis, getting even closer to our customers.\nWe talked briefly in the business and government sector.\nWe laid the groundwork in the space in 2021 with new distribution.\nWe're confident in our ability to expand revenues in this area in the long term, particularly in the IoT and the private networking space.\nAs a regional operator, UScellular has always been a part of the communities we serve.\nWe estimate there are over 3 million businesses in our operating footprint.\nThat provides real opportunity to significantly expand our market share going forward.\nFinally, we expect continued growth from our tower portfolio.\nWe made a number of operational changes in 2021, including substantially reducing cycle time.\nAs a result of that work, we have really strong sales momentum heading into this year.\nBefore I hand it to Doug, let me just share a few thoughts on our 2022 guidance.\nWe expect to see expanded retail service revenue.\nWe're going to continue to see headwinds from roaming and that affects overall service revenue.\nAdditionally, our guidance assumes a continuation of aggressive, ongoing promotional activities, and that's on both upgrades and acquisitions.\nI'm bullish on growth over the long term, and we're making the necessary investments in distribution and in network to make it happen.\nOur long-term goal remains substantive expansion and return on capital.\nWe'll be pulling every lever at our disposal to improve return over time.\nYou can expect to see revenue growth, coupled with expense discipline, as well as capital optimization.\nThat will hopefully be supported by meaningful participation in some of the government funding efforts that I mentioned earlier.\nWith that, let me hand it to Doug to cover some of the details on subscribers and financials.\nLet's start with a review of customer results on Slide 11.\nPosted handset gross additions increased by 6,000 year over year, largely due to higher switching activity in combination with a strong promotional activity.\nOf course, this is against a backdrop of industrywide promotional aggressiveness on handsets.\nWe saw our connected device gross additions to climb 12,000 year over year, driven by lower hotspot sales compared to the prior year, when we experienced an increase in demand due to the pandemic.\nNext, let's turn to the postpaid churn rate shown on Slide 12.\nPostpaid handset churn was 1.10%, up from 1.01% a year ago.\nThis is driven primarily by voluntary churn, which continues to run at higher year over year -- these are higher year over year as a result of increased switching activity and aggressive industrywide competition.\nInvoluntary churn also increased slightly in the quarter.\nTotal postpaid churn combined in handsets and connected devices was 1.35% for the fourth quarter of 2021, higher than a year ago due to the higher handset churn and certain business and government customers disconnecting connected devices that were activated during the peak periods of the pandemic in 2020.\nMoving to Slide 13.\nPrepaid and continue to improve compared to the prior year, driven by enhancements to our prepaid offerings throughout the year.\nWe saw prepaid gross additions increased by 7,000 year over year and saw an overall increase of 14,000 to our prepaid base compared to prior year end.\nNow let's turn to the financial results on Slide 14.\nTotal operating revenues for the fourth quarter were $1.068 billion, essentially flat year over year.\nRetail service revenues increased by 2% to $696 million, primarily due to a higher average revenue per user, which I will discuss in a moment.\nInbound roaming revenue was $24 million, decrease in 27% year over year due to lower data volume and rates.\nOne of the factors contributing to this data volume decrease is the merger of Sprint and T-Mobile, and the continuing migration at Sprint roaming traffic through T-Mobile's network.\nOther service providers were $62 million, up 3% year over year.\nFinally, equipment sales revenues decreased by 4% year over year, in large part as a result of an increase in promotional activity.\nWe continue to engage in aggressive promotional activity during the fourth quarter of 2021 to remain competitive with the industry.\nA portion of the resulting promotional cost reduces equipment sales revenue and increases loss on equipment.\nIn addition, loss on equipment in the fourth quarter of 2020 was mitigated by the impacts of the pandemic.\nSpecifically, lower switching activity and less aggressive promotional activity relative to 2021.\nAnd as a result of the combined impact of these factors, loss on equipment increased $24 million year over year.\nThis change in loss on equipment, however, was offset by a reduction in other operating costs as profitability increased slightly compared to the prior year.\nWe expect the aggressive promotional environment, including retention offers, to persist throughout 2022 and our guidance for 2022 reflects the corresponding financial impact.\nNow, a few more comments about postpaid revenue shown on Slide 15.\nAverage revenue per user or connection was 48.62 for the fourth quarter, up 2% year over year.\nOn per comp basis, average revenue per -- average revenue also grew 2% year over year.\nThe increases were driven primarily by favorable plan and product offering mix and an increase in device protection revenue.\nThese increases were partially offset by an increase in promotional costs.\nAs you can see on Slide 16, we have seen steady growth in tower rental revenues.\nFourth quarter tower rental revenues increased by 9%.\nWe are seeing positive momentum in tower co-location applications and we'll continue to focus on growing revenues from these strategic assets.\nMoving to Slide 17, I want to comment on adjusted operating income before depreciation, amortization, and accretion in gains and losses.\nTo keep things simple, I'll refer to this measure as adjusted operating income.\nAs shown in the slide, adjusted operating income was $181 million, an increase of 1% year over year.\nAs I commented earlier, total operating revenues were $1.068 billion, essentially flat.\nTotal cash expenses were $887 million, a decrease of 1% year over year.\nTotal system operations expense decreased 3%, largely driven by lower roaming expense resulting from lower data rates and lower voice usage, combined with lower cell site maintenance.\nCost of equipment sold increased 4% due to an increase in units sold in a higher average cost per unit sold, driven by a higher mix of smartphone sales.\nSelling, general, and administrative expenses decreased 4%, driven primarily by decreases in advertising and legal expenses.\nSuggested EBITDA, which incorporates the earnings from our equity method investments along with interest and dividend income, was $225 million, an increase of 1% year over year.\nTotal operating revenues are $4.1 billion, a 2% increase year over year.\nThis is driven by an increase in retail service revenues due to higher average revenue per user and an increase in equipment sales.\nAlso contributing to the increase were higher tower rental revenues and miscellaneous other service revenues.\nThese increases were partially offset by a decrease in roaming revenues.\nTotal cash expenses were $3.3 billion, an increase of 3%.\nThis is due to -- this is due primarily to an increase in cost of equipment sold, partially offset by a decrease in selling, general, and administrative expenses.\nExcluding costs of equipment sold, cash expenses decreased 1%.\nAdjusted operating income and adjusted EBITDA declined 1% due primarily to an increase in loss on equipment, which increased $70 million from $41 million to $111 million, which is a result of the highly competitive and promotional environment that we experienced throughout 2021.\nNext, I want to cover our guidance for the full year 2022.\nAgain, our guidance assumes the aggressive promotional environment that we experience in 2021 will persist throughout 2022.\nWe expect ranges of approximate $3.1 billion to $3.2 billion in service revenues, $750 million to $900 million in adjusted operating income, and $925 million to $1.075 billion in adjusted EBITDA.\nThis guidance reflects our estimates for low single digit growth in retail service revenue, continued decline of high margin roaming revenue, continued elevated levels of promotional costs, including loss on equipment, given the anticipated aggressive promotional environment, and modest growth in other cash expenses as we continue to invest in 5G and the growth areas of our business.\nFor capital expenditures, the estimate is in a range of $700 million to $800 million.\nOur multi-year 5G and network modernization program remains on track.\nWe will also continue our targeted millimeter wave buildout in 2022 and begin making investments to deploy the mid-band spectrum we acquired in auctions 107 and 110.\nWe've also provided a breakdown of capital expenditures by major categories.\nI'm pleased to share that our transformation to become the preferred broadband provider in our markets is well underway.\nI've never been more optimistic about TDS Telecom's future.\nWe're in a strong position today to do a number of growth initiatives we started executing on five years ago.\nIn fact, we surpassed $1 billion in operating revenues and we exceeded 500,000 broadband connections for the first time in TDS Telecom's history.\nIn 2021, we turned up 86,000 new fiber marketable service addresses, bringing total fiber addresses to nearly 400,000.\nIt's critical to build these fiber networks and connect customers quickly to stay in front of potential competitors.\nWe have an active pipeline of identified markets and continue to plant [Inaudible] in the most attractive new markets that will expand our footprint even further.\nWe continued to address the broadband needs in our most rural markets by upgrading our copper networks with federal AKM funding and state broadband grant programs.\nWe've continued to transform our workforce and adapt to the opportunities and challenges brought on by the pandemic and labor shortages.\nWe moved to a hybrid work environment.\nIn addition, we have placed extra emphasis on strategic strategies to promote diversity, equity, and inclusion objectives through our organization to keep us an attractive employer.\nOur associates are our most powerful resource.\nMoving to Slide 22, we have five strategic pillars enabling our robust transformation.\nFirst, we are growing our scale through fiber market expansions.\nSecond, we are growing our revenue through increased revenue per connection, customer penetrations, and through continued fiber expansions.\nIn our third pillar.\nWe are continuously streamlining and automating our operations to reduce legacy costs and invest in new growth initiatives.\nOur first -- fourth pillar is keeping the customer at the center of everything we do, continuously investing in customer experience improvements.\nFinally, the foundation of our entire business is our highly engaged, resilient, and dedicated workforce.\nWe invest in our people to make sure we attract and retain top talent.\nMoving to Slide 23, let me share some specific data points that demonstrate the transformation happening within our business.\nI have set bold goals for the team, which will require us to scale up more quickly, plant more [Inaudible] and build relationships with our vendor partners.\nAs we execute our strategy over the next five years, we plan to reach approximately 2.2 million service addresses, with about 60% of those addresses being fiber and 80% capable of gig or faster speeds.\nAs Pete mentioned earlier, we have several strong underlying trends as tailwinds to our broadband strategy.\nThere's increased bipartisan support for providing high quality, affordable broadband services to rural America.\nWith support from state and federal broadband programs, we intend to significantly reduce our expansion to ungraded copper, and we will continue to see opportunities to improve broadband products for our most rural customers.\nOur strategy is working.\nFor the past several years, we have ramped up our broadband strategy, investing in our networks, and we are positioning the business for faster growth over the next five years.\nOn Slide 24, I'll describe our fiber program in more detail.\nWe plan to triple our total fiber service addresses over the next five years to 1.2 million with aspirations of increasing that target as we identify new opportunities.\nOur sense of urgency has increased given the attractiveness of this opportunity and the heightened level of participation by other overbuilders.\nSpecifically in 2022, we expect service address delivery to outpace 2021 by one-and-a-half to two times.\nAlong with the rest of the industry, we continue to face an actively managed broader economic, supply chain, labor challenges affecting our industry, including permitting complexities and contractor delays.\nFor example, to increase our speed to market, we are accelerating our deployment schedules.\nWe are adding more markets to increase our flexibility, and we are strengthening our relationships with our vendors and strategic partners.\nWe have a rigorous process for selecting expansion markets.\nWe focus on areas that have a favorable competitive environment, such as areas that do not have fiber competition, have potential for household growth, and have customers with the propensity to adopt high broadband speeds.\nWe also look to partner with communities, who are eager to bring fiber into their cities and offer a welcoming regulatory environment.\nFinally, we work for the ability to create larger market clusters so we can leverage our network and fuel resources.\nFor the markets we have selected, we expect to achieve broadband penetration rates between 40% and 50% in a steady state, making us the leader in our markets.\nOur experience today is supporting the business case penetration assumptions and we are pleased with our fiber expansion results so far and see even more opportunities for further expansion.\nAs we announced earlier, Vicki will be replacing Pete Sereda as CFO of TDS.\nVicki has been instrumental in driving the successful transformation at TDS Telecom, and we look forward to her contributions leading the finance teams across the TDS enterprise.\nMichelle's previous -- previously served as vice president of financial analysis and strategic planning at TDS, and I am confident she will excel in her new position.\nI am very proud to have served as TDS Telecom's CFO for the past 10 years, and I look forward to continued success in my new role at TDS.\nI've been working closely with Michelle over the last several years on TDS Telecom's strategy, and I'm looking forward to her continuing TDS Telecom transformation.\nWith that said, let me begin by highlighting some of our operational accomplishments for the quarter.\nMoving to Slide 25, we grew our total service addresses 7% year over year, and are now offering one gig broadband speeds to 58% of our total footprint.\nTotal residential connections increased 2% due to broadband growth in new and existing markets, partially offset by a decrease in voice and video connection.\nDespite the connection losses, video continues to remain important to our customers and a key part of our bundling strategy as it helps to increase our broadband penetration and reduce churn.\nLooking at the chart on the right, overall, higher value product mix and price increases drove a 4% increase in average residential revenue per connection.\nMoving on to Slide 26, you can see the broadband connection growth across all markets.\nTotal telecom broadband residential connections grew 7% in the quarter as we continue to fortify our networks with fiber and expand into new markets.\nWe are on track in our network construction under the AKM program, also helping to drive growth in our incumbent market.\nOur focus on fast, reliable service has generated a 12% increase in total residential broadband revenue.\nThe one gig product, along with our two gig product in certain markets, are important tools to allow us defend and to win new customers.\nIn areas where we offer one gig service, we are now seeing 20% of our new customers taking this superior product.\nOn Slide 27, total revenues increased 2% year over year, driven by strong broadband growth.\nResidential revenues increased 6% across all markets.\nCommercial revenue decreased 7% in the quarter on lower [Inaudible] connections, partially offset by a 5% increase in broadband connection.\nWholesale revenue decreased 2%.\nLet me sum up the combined financial results for the quarter and the year, as shown on Slide 28.\nTotal revenues increased 2% in the quarter and 3% for the year.\nAnd growth from our fiber expansions and increases in broadband subscribers exceeded the declines we experienced in our legacy business.\nCash expenses increased 2% in the quarter and 5% for the year due to both supporting our current growth, as well as spending related to future expansion into new markets, which is not yet reflected in our revenue.\nFuture market costs include direct cost, such as sales, marketing, real estate and technicians, in addition to shared service costs necessary to support new market growth.\nAdjusted EBITDA increased 2% for the quarter to $75 million, but decreased 2% for the full year due to planned investment spending on new market.\nCapital expenditures increased 2% for the quarter and 12% for the year due to increased investment in fiber deployment.\nOn Slide 29, we've provided guidance for 2022.\nOur guidance factors in the foundational investments we are making to support the fiber expansion program over the next several years.\nWe are forecasting total telecom revenues of $1.01 billion to $1.04 billion.\nThis reflects our goal of top-line growth, driven by continued improvements in residential revenue across all of our markets, offsetting declines in the legacy parts of our business.\nA key assumption in our guidance is how many marketable fiber service addresses we can deliver.\nOur plans include address delivery of approximately 160,000 fiber service services.\nGiven our construction delays last year, our conservative approach to financial guidance factors in potential shortfalls in service address delivery should we experience similar challenges.\nA reminder that seasonality will impact the quarterly cadence of fiber service address delivery, starting slowly in the first quarter and steadily building throughout the year.\nAdjusted EBITDA is expected to be between $260 million $290 million in 2022, compared to $310 million in 2021.\nThis increase in adjusted EBITDA is primarily due to our heightened market expansion plans that Jim just discussed.\nWe expect increases in front-end loaded market expansion costs to outpace cost reductions made in other areas of the business.\nCapital expenditures are expected to be between $500 and $515 million in 2022, compared to $411 million in 2021.\nNearly 90% of our capital spending is allocated to broadband growth, with more than 60% going directly into cyber investment.\nWith that, I'd like to say it's been my pleasure to serve as TDS Telecom CFO and to drive our shift in strategy to be the preferred broadband provider.\nI look forward to updating you in my new role in the future.\n",
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"content": "q4 revenue $1.068 billion.\nunited states cellular corp - provides guidance for 2022.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll refer you to today's news release for UTI's comments on that topic.\nThe safe harbor statement in the release also applies to everything discussed during this conference call.\nDuring today's call, we'll refer to adjusted operating income or loss, adjusted EBITDA, and adjusted free cash flow, which are non-GAAP measures.\nAdjusted operating income or loss is income or loss from operations, adjusted for items that affect trends and underlying performance from year-to-year and are not considered normal recurring cash operating expenses.\nAdjusted EBITDA is net income or loss before interest expense, interest income, income taxes, depreciation, amortization, and adjusted for items not considered as part of the company's normal recurring operations.\nAdjusted free cash flow is net cash provided by or used in operating activities less capital expenditures, adjusted for items not considered as part of the company's normal recurring operations.\nStarting with the third quarter of fiscal 2019 and through fiscal 2020, we will report operating metrics such as student applications and starts, excluding our Norwood, Massachusetts campus.\nAs we have shared previously, Norwood stopped accepting new student applications in the second quarter of fiscal 2019 and will fully close before the end of fiscal year 2020, so we believe it is appropriate to exclude its impact.\nWe sincerely appreciate your interest and investment in UTI and look forward to working with you in the future.\nAs many of you know, and for those of you who are new to the call, UTI is the nation's leading provider of technical training for automotive diesel, collision repair, motorcycle, and marine technicians, and we also offer welding technology and computer numerical control, CNC machining programs.\nWe have a nationwide network of 13 campuses, where we offer hands-on training in state-of-the-industry labs, complemented by our new online training, which allows us to offer quality education during the COVID-19 pandemic and will serve UTI and its students going forward.\nOur newly assembled executive management team is leading that charge and is supported by a solid balance sheet and excellent financial flexibility.\nIn our 54-year history, UTI has proven its ability to adapt to changing financial and regulatory landscapes and has seen increased student demand in times of economic hardship.\nI'll add more on that later, but first, I'd like to discuss the recent quarter and review how we're approaching the COVID-19 crisis, preparing for the near-term, and positioning the company for the future.\nIn the second quarter, results were positive, and we demonstrated continued momentum.\nNew student starts were, up 6.6% year-over-year, excluding our Norwood campus, where we're winding down operations.\nContracts for the quarter grew 4.5% year-over-year, and our show rate improved 100 basis points.\nTotal revenues increased 1.2% to $82.7 million.\nNet income, which included an income tax benefit of $10.8 million, was $10.1 million, and adjusted EBITDA was $3.1 million.\nTroy will get into more details of our financial results a little later in the call.\nIndeed, it was a busy quarter.\nWe bolstered our executive leadership team with new leaders heading up our corporate strategy, IT, and legal departments, changed our marketing and admission functions, and began the search for new commercial and human resource officers.\nAnd we wish Roger Penske well, as he transitioned off the board after more than 20-years of insightful guidance and counsel.\nEven in the face of the pandemic and as many challenges, we continue to move forward with our growth and improvement initiatives; including expanding our welding program to new campuses, optimizing admissions and marketing, and maximizing the productivity of our campuses.\nIn February, we successfully raised $49.5 million in a primary equity offering led by B. Riley FBR, who also led the December secondary offering and brought in many new investors.\nLike many businesses, we began to feel the impact of COVID-19 pandemic in the last two weeks of March.\nWe were able to quickly pivot the business model in response, implementing changes that will help see us through the pandemic and innovations that can serve our students and our business for the long-term.\nIn response to this unprecedented situation, we implemented strict, CDC-guided safety precautions at all of our campuses and our home office, and quickly transitioned our in-person education model to online.\nAs the threat was first identified, we remained operational and immediately implemented protocols recommended by the CDC.\nAs governors and local officials began to issue orders and mandate closings of schools and businesses, we suspended all in-person classes at our 13 campuses on March 19 and transitioned all classroom learning to online.\nThe following week, we transitioned our first wave of students to the online platform, and within less than two weeks, we were fully operational and up and running.\nWe're proud of the dedicated team and their extraordinary efforts, as this type of curriculum transition would normally take many schools many, many months to execute.\nToday, we have over 11,000 students enrolled, with more than 8,000 currently progressing their education through the online platform, including over 500 students, who have started directly into the online platform over the past several weeks.\nOur online curriculum consists of instructor-led lectures and demonstrations, and we continue to engage students and give them one-on-one support through virtual classroom reviews and virtual office hours.\nThe transition to the online curriculum has been successful and opens new opportunities for the company and our students.\nHowever, the uncertainty and disruption created by COVID-19 crisis means we do have more students on leave of absence.\nWe are now beginning to meet those students' need to practice and master hands-on skills that are so important to their success, by resuming in-person training, while online education continues.\nTo protect our students and staff, and align with the CDC guidelines and state and local directives, we have -- we are modifying our class sizes and schedules for safety and social distancing.\nAs of today, Dallas, Ft.\nWorth and Houston campuses are operating in this modified format, and our Avondale, Arizona, Phoenix, Arizona, Long Beach, California, and Mooresville, North Carolina campuses should resume face-to-face labs the week of May 11th, and Florida's not far behind.\nWe've also revised our marketing message to focus on the durable opportunities for skilled technicians in the transportation field.\nBroadly, our message to potential students feeling the economic impact of the virus is, we feel for you, we're here for you, and we want you to come to UTI because this is where the jobs are now and in the future.\nNow, with no live sports on TV, broadcast media consumption among our target demographic is down.\nIn order to optimize our lead generation in this environment, we cut $2 million from our broadcast budget and have intensified our focus to where our target audiences are spending their time right now, which is social media.\nIt's paying off, evidenced by our inquiry activity.\nInquiries pre-COVID through the first half of March were better than the prior year and beat our internal expectations.\nWhile we did see a significant dip in mid-March through the first week in April, we've seen an accelerating improvement since then.\nThe full month of April performed similar to the first half of March, solidly above prior year and our internal expectations.\nWe also have shifted our admissions model, which has been almost exclusively face-to-face, and are now connecting with students and their parents through online meetings, virtual tours, and other events.\nFor example, in April, in addition to telephone interview, our admission reps averaged 80 virtual interviews a day.\nOur admissions reps have noticed an increase in the number of people, who want to talk and meet with us virtually, many of whom have come away with the -- impressed by the technical education we offer and our teaching facilities.\nIf you haven't had a chance to visit one of our campuses in person yet, I invite you to go to our investor website, where you can take a virtual tour and see for yourself.\nWhile it by no means has been easy transition, we're proud of the work to keep the students in school through the crisis and are finding innovative ways to introduce our education to people, who can greatly benefit from it, especially now, as our country begins to process and emerging from the crisis and moves into a period of economic recovery.\nToday, new student enrollments are above where they were last year at this point.\nThis bodes well for our fourth quarter, where the majority of our students start.\nBut with fewer students currently active in school overall, and the expense of transitioning online and modifying our educational model, we've taken some decisive actions to reduce cost.\nThis required some very difficult decisions, including the furlough of approximately 280 of our employees.\nEmployees on furlough continue to receive full benefits, and we look forward to bringing them back as soon as we're able to reopen all of our campuses and our student population continues to recover.\nSo, to sum it up, right now, we're keenly focused on student retention, continuing to grow and bring in new students, and cash preservation.\nThere of course will be challenges as the world recovers from COVID-19, but we believe our deeply held commitment to delivering value for both our students and industry partners, and our strength in innovation, which allowed us to transition to an online model and find safe and effective ways to offer our unique, industry-aligned education, will continue to serve UTI and our students.\nAs Jerome noted, we performed well for the majority of our fiscal 2020 second quarter and posted solid results, but they were impacted, starting in mid-March by the COVID-19 pandemic, which lowered our revenue approximately $2.5 million to $3 million from our pre-COVID expectations for the quarter.\nThe revenue impact is primarily a timing differential, due to the temporary student leaves of absence, or LOAs, we have discussed.\nWe partially offset the revenue impact on profitability by taking steps to mitigate costs, such as the employee furloughs, and reduced variable and discretionary spend across the enterprise for categories like travel, contract services, and campus supplies, so that the profitability impact in the quarter was approximately $1.25 million to $1.7 million.\nAs students on LOA return to continue their education, we fully expect to recover the associated revenue and profit.\nWe're also stringently managing payment terms with our vendors, working cash optimization opportunities on a number of fronts.\nFor student metrics, new student starts in the second quarter increased 6.6% year-over-year, and were 2,093 in the quarter.\nIn the first half of 2020, starts were higher by 7.1% year-over-year.\nWe saw start growth across all three channels in the quarter and year-to-date.\nThis is all same-store growth and is driven by enrollments, which were higher by 4.5% in Q2 and 5.1% year-to-date, and show rate improvement of 100 basis points in the quarter and in the first half.\nWe continue to yield very positive results from our marketing, student engagement, and grant strategies.\nI'll now turn to a few highlights on our second quarter and first half 2020 financial results.\nRevenue increased 1.2% to $82.7 million, driven by higher revenue per student, partially offset by a decrease in the average student population, due to the student LOAs that caused the $2.5 million to $3 million impact in the quarter I mentioned previously.\nFirst half 2020 revenue of $170 million is up 3.1% versus the first half of fiscal 2019, due primarily to higher revenue per student.\nAverage students for the quarter were down 3.1% year-over-year, and slightly positive for the first half of the year, when compared to the first half of 2019.\nWe ended the second quarter with 7,373 active students.\nThis has since increased to approximately 8,300 active students, with another approximately 600 students on LOA, who only need to complete their remaining hands-on labs to graduate from the program.\nThere are approximately 2,500 other students currently on LOA versus approximately 300 at the same time last year.\nWhile we cannot be certain, based upon their scheduled return dates and feedback we have gathered to-date, we would expect that a significant majority of these students will elect to resume their education over the coming months, as we resume hands-on labs on our campuses and the overall COVID-19 situation further stabilized.\nOperating expenses decreased by 4.7% to $83.2 million, for our fifth straight quarter of year-over-year expense declines, while growing revenue.\nThe year-over-year decrease in the quarter is primarily due to lower costs related to compensation and benefits, as a result of reduced headcount and benefit plan savings.\nCompensation and related costs were 52% of revenue in the quarter and down 450 basis points as a percent of revenue year-over-year.\nHeadcount was 1,645 as of March 31st, a decrease of 70 versus the end of the prior-year quarter.\nAlso of note, when you look at the P&L line items, you continue to see the impact of the lease standard implementation this fiscal year, with higher year-over-year occupancy costs offset by lower depreciation costs, due to the change in treatment for build-to-suit leases.\nFirst half 2020 expenses of $166.2 million are down 6.4% year over year.\nSpecific to COVID, we incurred expenses from increased cleaning and related supplies throughout March, as well as costs related to our online learning transition and disrupted campus operations in the last two weeks of the month.\nWe're quantifying all the COVID cost impacts, beginning in March and continuing through the duration of the crisis, so we can better understand run rate impacts, and also ensure we have appropriate details to support available cost offset opportunities afforded with the CARES Act.\nAs we think about our cost structure and our employee-related costs on our campuses, the introduction of the online curriculum enables significant efficiency opportunities.\nOur student-to-on-campus instructor ratio is typically 27:1, while a typical online learning ratio is much higher.\nAs we begin to resume hands-on labs on our campuses in the near term, we will have some inefficiencies, as the student-to-instructor ratio will be 9:1.\nHowever, we will maintain a blended model, with online learning for the classroom component, and we'll look to integrate this more permanently over time, along with other efficiencies we develop through our current remote operation.\nNet income for Q2 was $10.1 million, translating to basic and diluted earnings per share of $0.18.\nWe had 32.7 million basic shares outstanding as of the end of the quarter, which reflects the 6.8 million shares transferred from treasury stock for our February equity offering.\nQ2 net income improved $15.4 million from the prior-year quarter and included a $10.8 million income tax benefit resulting from net operating loss carryback revisions within the CARES Act.\nAssuming the IRS is able to process the refund request in a reasonable timeframe, we would expect to receive the cash refunds by the end of the fiscal year.\nFirst half 2020 net income is $14.8 million, up $27.8 million year over year, and also includes the income tax benefit.\nOperating cash flow of $10.9 million for the first half of 2020 increased $8.1 million year-over-year and reflects our improved profitability in cash management, as well as working capital timing.\nAs I spend a moment on our adjusted results, a quick reminder that our adjustments for FY '20 reflect costs associated with the Norwood campus closure and with our CEO transition, while in FY '19, they reflect costs associated with the termination of our transformation consultant agreement and with the Norwood campus closure.\nAdjusted operating income for the quarter was $500,000, a $4.7 million increase year-over-year, and $7 million for the first half of 2020, a $14.2 million year-over-year improvement.\nAdjusted EBITDA was $3.1 million in Q2, a $2.3 million year-over-year increase, and $13.1 million for the first half, an $11 million year-over-year improvement.\nBoth the Q2 and first half results include the $1.3 million per quarter negative year-over-year impact, due to the leasing standard implementation this fiscal year.\nAdjusted free cash flow was $6.7 million for the first half of 2020 and increased $3.7 million versus the prior year.\nCapex was $5.2 million for the first half of 2020, up slightly versus the prior year, and reflects spend associated with our welding program expansion investments, the Exton, Pennsylvania facility rightsizing, and other spending.\nThrough our February equity raise, we significantly strengthened our balance sheet to enable further steps in our long-term strategy of growth, diversification, and scale.\nOur available liquidity as of March 31st was $118.1 million, which includes $76.6 million of unrestricted cash and cash equivalent, and $41.5 million of short-term held-to-maturity securities.\nThese consist of Treasury securities and high-quality corporate bonds, and provide us incremental yield benefits.\nIn addition to the cash preservation, operational and cost efficiencies, and working capital management actions I've mentioned, there are further opportunities resulting from potential applicability of the CARES Act.\nAs we announced previously, we expect to receive approximately $33 million in grant funds through the CARES Act Higher Education Emergency Relief Fund.\nPer the Department of Education's guidelines, at least 50% of these funds will be used to grant emergency financial aid to students impacted by COVID-19.\nThe company also intends to use a portion of these funds to offset costs that have arisen as a result of the COVID-19 crisis, for the operations and infrastructure investments needed to support our students' education and curriculum needs during this time.\nWe are expecting additional guidelines from the Department of Education that will give us better clarity on what costs and investments these grant funds can be used to offset.\nThere may also be opportunities for us to leverage the employee retention credit.\nWe are currently reviewing the updated guidelines released by the IRS late last week for potential applicability.\nFrom a cash perspective, we are electing to defer our payroll tax payments starting with April 2020 through the end of calendar 2020, and expect a quarterly cash benefit of approximately $1.5 million to $2 million.\nNote, we are not eligible for the Payroll Protection Program, due to our size, and are not currently applying for any other loan programs, but do not completely rule out doing so if we deem it beneficial or necessary.\nTurning briefly to our real estate footprint optimization efforts, for the Norwood campus closure, we were running ahead of schedule, prior to the suspension of in-person instruction at the campus.\nWe are still pushing to have the campus fully closed before the end of this fiscal year, dependent upon the timing of the campus resuming hands-on labs, and potential delays to those students' graduation date.\nOur headquarters relocation and downsizing remains on track for completion by June 30th.\nAs noted previously, this action will save approximately $1.3 million annually.\nWe also have longer-term opportunities across a number of our campuses for consolidation and rightsizing, and are actively engaged with landlords on these discussions.\nThe introduction of the blended learning environment may afford us new efficiency opportunities in the future and is something we will incorporate into these discussions.\nWe expect to have more details on these actions in the coming quarters.\nAs we announced in our business update on April 22nd, we have withdrawn our guidance for fiscal 2020.\nAs we noted then and I've touched on today, there are multiple variables related to COVID-19 that can impact our business.\nThe five key variables we are closely tracking, continued engagement of students in the online curriculum; timing of resuming hands-on labs at our campuses; timing of students returning from LOAs; potential cost recovery opportunities associated with the CARES Act, and Q4 and post-COVID-19 student demand.\nAssuming by the end of the third fiscal quarter all of our campuses are open for hands-on labs, and a significant portion of the current student LOAs return without material new LOAs, we estimate that the overall negative impact from COVID-19 would primarily be realized in the fiscal third quarter.\nIn this type of scenario, we estimate full-year revenue could be roughly flat to FY '19.\nHowever, if any of these are not the case, or we see deterioration in our current Q4 start expectations as a result of COVID-19, then we will likely see negative financial impacts extending into Q4 and an overall greater impact to the fiscal year.\nRegarding cash, as we look to the third quarter under the same scenario, we expect we will be a measurable cash user.\nThe seasonality of our business would normally have us consume cash in the quarter, given Q3 is our lowest-revenue quarter in the fiscal year.\nThis will be heightened in the quarter, due to the expected Q3 COVID impact, and also, the delay in receipt of Title IV funds for existing students, until they complete their current hands-on labs.\nUnder this scenario, we estimate that the net cash burn in Q3 could range between $25 million and $35 million, and that we could fully recover it in Q4.\nHowever, while we normally generate most of our full-year cash flow in the fourth quarter, we will need to see how these factors play out, along with a more complete view of Q4 starts, before we can understand how the year will look from a cash and total liquidity perspective.\nWe will continue working to minimize impacts to profitability and cash flow under any scenario.\nNote, these are only estimates around potential scenarios and should not be considered revised guidance.\nAs leading indicators, we are very encouraged by the fact we were able to start over 500 students directly into the online curriculum in April.\nWe started resuming hands-on labs at several of our campuses, and that we are pacing ahead of last year and are within a few percentage points of our original goal for FY '20 new student enrollments.\nWe still have a few months to make up the gap caused by COVID-19, which is not out of the question, given the momentum we've regained with our marketing and admissions activity.\nWe will also be looking to attract a broader audience of potential students, given the macroeconomic circumstances.\nWe are working as diligently as possible across all the dimensions I've discussed to minimize financial impacts, while ensuring the health and safety of our students and employees.\nSuccess on near-term student retention and cash preservation will ensure that UTI's long-term growth agenda can be maintained, and the company could possibly emerge even stronger on the other side of the COVID-19 disruption.\nBefore closing, I want to commend all of our UTI employees for their amazing efforts over the past two months, overcoming every challenge put in front of them.\nWe are fortunate to have such a dedicated and talented workforce, which is one of our key competitive advantages.\nAs we continue to support our students and team through this uncertain time, we remain confident in our ability to attract and train the technicians this industry needs.\nIn times of weak economy, like what we are facing today, there will be fewer jobs available that offer competing entry-level wages, which drives interest in the technical trade skills education and the student value proposition that UTI provides.\nWe anticipate seeing benefits gained by the new marketing and admissions and blended learning approaches we are using, which have potential to accelerate timelines and speed and increase capacity.\nOnline instruction is more efficient in terms of number of students per teacher, and the format could help reach new students, for whom the program format, in particular the length, did not work for them in the past.\nThe new blended learning offering would help increase capacity, for example, at Dallas and Bloomfield, and will help us allow to have staggered lab starts.\nIt can also help us reevaluate our real estate footprint moving forward, as a significant space is currently used in in-person classroom instruction.\nWe are moving ahead, while deliberately being cautious on identifying longer-term organic and inorganic growth opportunities.\nNow, the lead times on these opportunities vary in length, none with an immediate turnaround, and some that can be very long.\nWe look forward to providing updates as appropriate on those.\n",
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"content": "compname reports q2 earnings per share of $0.18.\nq2 earnings per share $0.18.\nq2 revenue $82.7 million versus refinitiv ibes estimate of $83.5 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During today's call, we'll refer to adjusted operating income or loss, adjusted EBITDA and adjusted free cash flow, which are non-GAAP financial measures.\nAdjusted operating income or loss is income or loss from operations, adjusted for items that affect trends and underlying performance from year-to-year and are not considered normal recurring cash operating expenses.\nAdjusted EBITDA is net income or loss before interest expense, interest income, income taxes, depreciation, amortization and adjusted for items not considered as part of the Company's normal recurring operations.\nAdjusted free cash flow is net cash provided by or used in operating activities less capital expenditures, adjusted for items not considered as part of the Company's normal recurring operations.\nStarting with the third quarter of fiscal 2019 and through fiscal 2020, we have reported operating metrics such as student applications and starts, excluding our Norwood, Massachusetts campus.\nAs we have shared previously, Norwood stopped accepting new student applications in the second quarter of fiscal 2019 and the campus was fully closed in July 2020.\nSo we believe it is appropriate to exclude its impact.\nBefore I jump in, please indulge me, while I once again share heartfelt debt of gratitude to the UTI team who in 2020 represented the very best in human spirit and dedication, while helping our institution, our students, our industry partners navigate some of the most challenging conditions imaginable.\nTroy will then provide some guidance on a handful of key metrics for 2021.\nThe three areas I'd like to focus on in the next few minutes are outcomes, accomplishments and our vision for the future of UTI.\nOutcomes are metrics and standards that have truly set us apart in the industry for the past five decades, continue to underscore our unique value proposition today and will be critical to the success of our business strategies going forward.\nWith respect to accomplishments, I'll share with you some thoughts and examples of the effectiveness and importance of the credentials our students earn, as well as innovations we put into place to help our students succeed more efficiently and effectively in the workforce.\nAnd finally, I'd like to share with you our vision for the future of UTI by updating you on our growth and diversification plans.\nLet me start with outcomes.\nAt the very heart of our operating model and UTI's unique value proposition is the relentless focus on improving the employment and career outcomes for our current students and graduates.\nThis starts with ensuring that they succeed in their vocational curriculum and successfully graduate.\nOur keen kept on the number of students who persistent in their education and graduate is one of the ways which we prove our value every day.\nNationally, just 40% of college students earn a certificate or degree within six years of beginning their post-secondary studies, yet at UTI nearly 70% of our students graduate within two years.\nThis is in no small part due to the investment our faculty and support teams make in the success of our students.\nWe worked closely and individually with them to work through the many challenges that life brings so that they can stay focused on their passion, finish their studies and go on to rewarding careers.\nOne such recent example is Jonathan Pagen.\nAfter graduating from high school, Jonathan joined the U.S. Army, where he served four years as a mechanic.\nFollowing this further, after leaving the military he enrolled in a local community college to pursue a degree in electronics engineering.\nJonathan soon found that there was his word, just too much involved with navigating the community college courses including general education requirements and electives that were not part of his chosen field.\nHe said it was just to challenging to keep up and was looking for a more focused education, so he enrolled at our Avondale, Arizona campus, where he completed our core auto program and went on to our forward advanced training program.\nJonathan graduated during the pandemic, and immediately went to work in Arizona for a dealership.\nHe told us that he loves the security of having a good steady job and doing something that he likes, and wants to do every day, rather than in his words, struggling through college or working in a random job that would not be as much fun or fulfilling.\nJonathan's goal is to become Ford master technician.\nThe story of Jonathan and all students like him makes us proud at UTI and is all too familiar example of the student who is struggling or a traditional career path and found success at UTI.\nHis journey also underscores another area of focus for UTI, employment.\nWhile only 47% of those who attend traditional post-secretary of institutions are working in their field of study today, approximately 80% of UTI's graduates go to work in their chosen field after graduation.\nOver the years, our teams have worked diligently to build our industry partnerships and employer networks in order to directly connect our students to employment opportunities during school and upon graduation.\nAs we've outlined in past updates, the Bureau of Labor Statistics projects the year there are nearly 160,000 new technicians annually needed in our subject areas over the next 10 years.\nWhile technician training will only provide the market with a combined set of credentials of about 50% of those needed to go out into the workforce, this disconnect underscores that the jobs are there, students just need programs designed to match their interest and talents, industrial training that provides the hard and soft skills and credentials employers require and connections to industry opportunities.\nIn the last three years, we brought innovative agreements with over 4,500 employers offering a range of incentives to attract and retain our graduates.\nOver 3,500 of them offer lucrative tuition reimbursement programs up to $25,000.\nThese programs help students more easily evaluate and find employment opportunities, erase debt they accumulated while in school, and lower the possibility of student loan default.\nWe've also created an early employment partnership program with key employers designed to offer employment, mentoring and hands-on experience to students, while they're in school, with the opportunity to continue after graduation at higher salaries and receive tuition reimbursement.\nEmployers and manufacturer partnerships like these are at the heart of how we maintain such high employment outcomes for our students and deliver trained talent to our industry partners at the same time.\nNothing underscores the value of these types of partnerships more than the story of Volare Cantare, who recently graduated from our Houston campus.\nAlthough Valerio says he has always been a car guy, he initially chose to enroll in a four year college for engineering degree right out of high school.\nBy the second year, he knew it wasn't right for him and he transferred to our Houston campus for automotive and diesel program.\nValerio itself here, he was among one of the top students in this program, and only one of 12 students Nationwide selected to participate in the most recent Porsche advanced training program.\nFor someone like Valerio, whose Venezuelan heritage talking that Porsche is the brand, it was in his word, a boyhood dream come true.\nHe started and completed the program during the pandemic, using our new blended learning model following his graduation in late September, he went for work right away at Momentum Porsche in Houston, a job he loves.\nFour year degree programs can be right choice for many young adults,.\nbut for others like Valerio, a fast track, quality technical education can be a powerful path to success.\nValerio who has experienced both education models told us college was no comparison to what he learned at UTI.\nNow Valerio story is not an isolated case, all the graduates of Valerio's class in the course technology apprenticeship program, which is offered exclusively in partnership with Universal Technical Institute, whet immediately to work at Porsche dealerships in New York, California, Texas, Florida, Pennsylvania North and South Carolina and Alabama.\nAll tuition and housing costs are covered by Porsche and the Company also arranges local part-time employment for students, while they're in the 23-week program.\nThe Porsche program is offered in a blended format combining online education with hands on training and CDT compliant labs.\nPorsche directly supports, equips and invests in the program, allowing students to receive training on all the latest Porsche vehicles and technologies.\nWe've seen similar results during the pandemic for our recent graduating classes coming out of other manufacturer specific advanced training programs, including 98% employment for the Volvo graduates, a 100% employment for Peterborough program, who graduated on October 30.\nAs you can see the outcomes and metrics that mean the most to us are aligned with those that mean the most to our students, manufacturer partners and employers.\nPersistence, graduation and ultimately employment rates are what have defined the success of our education model for the past five decades and will continue to do so going forward.\nNow, I'd like to highlight some of the past year's accomplishments.\nCandidly, there were times in 2020 where it felt like just staying on our feet was a Herculean task, yet due to the hard work and discovery of new and innovative approaches, all of our 12 campuses in eight states are fully operational and have been serving our students throughout the entire quarter.\nWe continue to follow the CDC federal recommendations and guidelines as well as local health authority guidelines and recommendations.\nWe continue to work closely with students with respect to concerns about their health to help them continue their education toward achieving their career goals.\nDespite the challenges, we continue to provide the high quality, state of the industry technical training for which we're known.\nOur campuses have accomplished a great deal.\nSince resuming hands on labs last quarter, we graduated over 2,770 technicians and continue to see high employment rates as the transportation industry continues to serve the nation as critical infrastructure.\nIt's taken innovative new approaches to teaching and learning in order to continue to meet the robust employer demand and support students in completing their education through this challenging year.\nWe're maintaining a key focus on investing capital to hone our new blended learning approach, fine-tuning the student experience and ensuring student success in this new environment.\nBlended learning model will be how UTI students learn going forward.\nThis innovation offers increased safety, and flexibility to our UTI students, better prepares them for high-tech careers that require both hands on and digital skills and aligns with how industry increasingly trains, up skills, and rolls out new technology to its own workforce.\nWith that in mind, we're also providing students with laptops, to ensure that each and every student has viable, cost effective means of accessing the online portion of the curriculum and will serve as an important tool to take with them as they begin their careers.\nTo date with the assistance provided by CARES Act funding we've distributed over 12,000 computers and we'll be continuing the program going forward.\nIt's important to note, that combining the $17.1 million that we've now distributed directly to students in CARES Act emergency grants, with the funds utilized to purchase the laptops for students, $23 million or approximately 70% of UTI's Higher Education Emergency Relief Fund allocation has been distributed directly to students in the form of cash and technology.\nOther accomplishments in 2020 also include the continued expansion of our successful welding technology training program.\nWe added our fourth and fifth programs at our Houston and Long Beach campuses during the fiscal year 2020.\nOur current plan is to launch welding technology at Lisle campus early in the second quarter and a seventh program in fiscal 2021 as well.\nWe continue to see strong demand for our welding program across campuses.\nOn average, once fully ramped, each new welding site launch increases overall student starts by about 1.5%.\nWelding is an important component of our growth and diversification strategy as it broadens our student base and allows us to serve a much wider range of industry customers.\nAt the same time, it complements our core technical training business and is consistent with our commitment to quality education that prepares students for rewarding careers.\nThe U.S. Bureau of Labor Statistics projects that there will be more than 400,000 total job openings for welding over the next decades.\nWith our campuses is fully operational, our new blended learning model firmly in place, and our welding expansion continuing, I'd like to highlight the positive trends and momentum in our business right now.\nAs of October, nearly 80% of our students are on regular course schedules, which means they are no longer making up labs.\nThis is a dramatic improvement from last quarter, when that figure was running at 40%.\nNow nearly 3% of our population are exclusively participating online; again, a significant improvement over the last quarter.\nFurther, the introduction of the new learning model has enabled us to double our class densities since the beginning of the year, while still maintaining CDC health protocols.\nThis increased capacity allows us to better meet the growing demand for our education in more efficient and effective manner.\nAnother innovation I've touched on in the past is our marketing and admissions operating models.\nOur messages have been hone to highlight the robust and durable job opportunities in our field.\nThis sharpening of our strategy is paying off.\nMedia inquiries were up 25% in both Q3 and Q4 compared to 2019.\nNow, we did see some slowdown due to the election, as the campaigns poured millions, and if not billions of dollars into the marketplace seeking that much coveted 18 to 24-year-old voter.\nBut we're already seeing double-digit rebound in November, which bodes well for our December, January and February starts.\nOur admissions organization has also transitioned to primarily a virtual model, and we're seeing some of the upside benefits and efficiencies created by cutting down on travel and other impediments in what was primarily a high touch strategy.\nNot only are increase increasing as noted above, but conversion rates for those increase in the last few months were up nearly 30%.\nNew students scheduled to start for the coming quarters and fiscal year are looking very strong right now and momentum across the business continues to build.\nAs far as student starts in the fourth quarter, overall starts trailed 2019, yet were up 1.1% on a comparable basis.\nIn September, we saw double-digit increases in starts and more importantly showed nice improvement over July and August in the third quarter.\nLooking briefly into Q1 2020, October was great and November is trending even stronger.\nThe number of students who are scheduled to start and start themselves are up double digits.\nWe're off to a strong start in 2021.\nThe overall message here is that, we have our new normal operating model firmly in place.\nThe front-end of our business funnel is continuing to strengthen and gain momentum.\nTroy will share with you some of the details on Q4 and 2020 results and how this momentum translates into guidance for 2021 in just a few minutes, but let me first spend a few minutes looking forward.\nWe're moving into 2021 with the strongest financial foundation we've had in decades.\nAnd as I just indicated, our business momentum is accelerating.\nWith that as a backdrop, I want to take just a few moments to review some of the strategies we've initiated and are pursuing in earnest.\nThe management team supported by our Board continues to focus on around of parallel strategies of growth and diversification, both portions of the strategy, could and likely will be realized by a combination of organic and our inorganic actions.\nWe're looking to maintain flexibility and optionality in terms of timing and capital allocation.\nThe organic components of this growth strategy are focused on both program expansions and extensions, where appropriate and new campus locations as needed.\nThe inorganic components of this growth strategy, which is primarily composed of potential M&A activity could include both tuck-in acquisitions, which give us access to new location, as well as more transformative steps.\nBoth organic and inorganic actions are very much alive and receiving regular attention from the management team and the Board.\nIt's our plan to make some announcements on this front in the coming months.\nDiversification, another important component of our strategy and also continues in both organic and inorganic ways.\nAnd as you heard, we continue to be active on this front.\nEfforts to address student financing, overall affordability and reliance on title for funding are in the planning stages.\nBusiness model transformation opportunities such as those born of implementing our new and more flexible and efficient blended learning model around the horizon.\nAnd not unlike our growth strategies, acquisitions are also a potential component of this effort.\nGrowth and diversification are the cornerstones of our path forward, yet it's also important to underscore that there are multiple levers at our disposal to become even more efficient and strengthen the Company as we grow.\nOne such example is, that our efforts to rationalize our existing real estate footprint and optimize our real estate strategy remains in the forefront of our team's attention.\nTroy will provide more details, but it should not be underestimated how these efforts can and will strengthen the financial foundation of the future.\nIn connection with this implementation of strategic plans I've just outlined, we're reviewing our cash needs and potential usages.\nAs part of this exercise, we're evaluating in collaboration with the UTI Board of Directors, the opportunity to replace our stock repurchase plan, which was initially set at $25 million and had approximately $10 million of authorization remaining.\nIf we believe circumstances are favorable for repurchases, a concept, which we have been asked about in the past, and we are still able to invest in our attractive roster of higher ROI growth and diversification initiatives, our new plan would give us the needed flexibility to act.\nWe will provide you with additional information if and when that purchase plan is put into place.\nBefore I hand the call over to Troy, I want to briefly speak to the idea or view out there bordering on consensus in some parts of the investment community that a Democratic administration is automatically and universally back for our institution and the industry we are part of, the profit education.\nMost notably is the notion that in order to qualify for federal funding institutions such as ours, will need to first prove that they are worthy of federal support.\nAs I outlined today in the form of metrics, examples and outcomes, at UTI, we've held ourselves to a high standard in delivering for our students and industry partners for 50 years.\nOur business model is built on one key tenant, when our student succeed, we succeed.\nRegardless of whether we have a Republican or Democratic presidential administration or Congress, we're optimistic about the future and the path for UTI.\nWe believe both political parties and administrations are big supporters of the tight and value of education and credentials we provide for students.\nThe need for our service is mission critical to keeping America moving, especially during the country's economic recovery.\nWe saw some benefits from the Trump administration and we're hearing about plans including increasing Pell grants and rebuilding infrastructure that could turn into benefits from the Biden administration.\nAs Jerome outlined, we are very pleased with the progress we made during the quarter and with our operating results for the quarter and the fiscal year, given the many challenges presented by COVID-19.\nStarting with student metrics.\nWe started 5,772 new students in the fourth quarter, which increased 1.1% year-over-year when adjusting for the extra start that occurred in the 2019 fiscal fourth quarter and was down 10.3% year-over-year including it.\nNew students scheduled to start increased 6.9% year-over-year for the fiscal fourth quarter, excluding the prior year extra start.\nWe saw a significant positive shift in the momentum of new student starts earlier in the quarter to later in the quarter.\nWe're looking at start dates from August 31 through the end of September, when over 3,200 new students started the program.\nWe saw a 14.8% year-over-year increase and exceeded our pre-COVID expectation by almost 7%.\nNew students scheduled to start for this period increased almost 20% year-over-year and exceeded our pre-COVID expectations by almost 15%.\nThat momentum has continued into the first quarter of fiscal 2021, with thus far through our most recent start we have seen strong double-digit year-over-year growth in new student starts.\nAnd we are currently seeing the same year-over-year strength and the pacing of new students scheduled to start for the first and second quarters.\nFor fiscal year 2020, we started to 11,283 new students.\nWhile this was down 2.4% as compared to fiscal 2019, I'll point out that we started two-thirds of these students during the pandemic directly into our new blended learning model.\nAdditionally, we saw growth in three of the four quarters of the fiscal year -- above last nine most recent quarters.\nIn the fourth quarter we saw improved show rate performance versus the third quarter, with the show rate down 360 basis points year-over-year versus down 400 basis points from the prior quarter.\nSimilar to starts, we saw markedly better results from the August 31 start date through September with the year-over-year show rate down only 180 basis points for that period.\nSo far in the first quarter of fiscal 2021, the overall show rate for our most recent start has improved 140 basis points versus the same prior-year pre-COVID period.\nFor fiscal 2020, show rate was down 220 basis points, with the decline all due to COVID impact in the third and fourth quarters.\nWe attribute the impact primarily to the fact that roughly 50% of our students relocate to attend our programs, but this increases to 55% to 60% in the fourth quarter, when we start more than half our students for the year, most of them from the high school channel.\nThroughout the third and fourth quarters, we have worked extensively with our admissions and campus teams and our students and their families to address any COVID-related concerns they may have.\nWe are seeing the benefits of those efforts through the improved show rates over the past few months.\nAs far as student progression through the curriculum, we are incredibly proud of the progress our team and our students have made since our last earnings call.\nDuring the fourth quarter, we graduated approximately 1,900 students and as of the completion of the most recent course rotation, the percentage of students fully current and not be in makeup labs was 78% versus 40% at the time of our last earnings call.\nThe percentage of students who were exclusively participating online decreased to 3% versus 13% at the time of our last earnings call.\nThis progress allowed us to recognize approximately $8 million of the $11 million revenue deferral from last quarter.\nHowever, the net deferral as of the end of the quarter stood at approximately $6 million and reflects additional deferrals during the quarter based upon the varying stages of progression for students who are still at makeup lessons.\nWe have also seen measurable improvement and stabilization and the number of students lease of assets or LOAs.\nAs of the end of the quarter, the total number of students on LOA was approximately 700 or 5% total students and are at a consistent level currently.\nThis compares to approximately 12% at the end of the June quarter and 9% at the time of our last earnings call.\nGiven the dynamics of COVID, we will likely remain around 5% to 6% of total students in the near term, which is a few points above pre-COVID levels.\nAverage students for the quarter were 11,251, an increase of 2.9% versus the same period last year.\nTotal end of period active students was 12,524, a 1.3% increase versus the comparable period.\nEnding the year positive on these metrics is a testament to the resiliency of the UTI team and the incredible progress they have made working with our students since COVID initially impacted our campus operations in late March.\nTurning to the financials for the quarter and full-year.\nRevenues for the fourth quarter decreased 12.9% year-over-year to $76.3 million and increased approximately $22 million or 40% sequentially versus the third quarter.\nThe year-over-year change was primarily driven by the patient student progress in completing in-person labs due to disruptions from the pandemic, which drove the decrease in the average revenue per student of approximately 15%, inclusive of the revenue deferral.\nSequentially, we saw an approximately 13% increase in the average revenue per student.\nBased upon the current trajectory of students completely makeup labs, we expect to see measurable quarterly improvement in the net revenue deferral in a revenue per student throughout fiscal 2021.\nFor the full year, revenues decreased 9.3% to $300.8 million, also primarily driven by the revenue deferral, the overall pace of student progress in completing in-person labs, as well as lower average students due primarily to the COVID-related LOAs in the third quarter.\nWe prudently controlled costs throughout the quarter, with operating expenses for the quarter decreasing 14.7% versus the prior year to $70.2 million.\nThe decrease fan both education services costs as well as SG&A.\nIt was attributable to lower headcount and related compensation and benefit expenses along with lower occupancy, depreciation and travel expenses.\nOperating expenses for the fiscal year were $304.6 million and decreased 10.2% versus the prior year.\nProductivity improvements and proactive cost actions have been a key part of our operating model the past several years, and we continue to identify and execute on efficiency opportunities throughout our cost structure, while improving and investing in the overall student experience.\nOperating income for the quarter was $6.2 million compared to an operating loss of $5.4 million in the prior year quarter.\nNet income for the quarter was $6.5 million, an 18% increase versus the prior-year period.\nFor fiscal year 2020, net income was $8 million compared to a net loss of $7.9 million in 2019.\nAs previously noted, our full-year net income includes a $10.7 million tax benefit resulting from the application of revised net operating loss carryback rules from the CARES Act.\nBasic and fully diluted earnings per share were $0.10 and $0.09 for the fourth quarter, respectively, and both were $0.05 for the full year.\nTotal shares outstanding as of the end of the quarter were 32,647,000, slightly higher than the prior quarter.\nAdjusted EBITDA was $9.7 million for the quarter as compared to $10.4 million in the prior-year period.\nFor fiscal year 2020, adjusted EBITDA was $14 million compared to $17 million for fiscal year 2019.\nFor the year-over-year comparison, recall that we implemented the new lease standard in fiscal 2020 and did not adjust prior year results.\nTaking this into account, full-year adjusted EBITDA increased by approximately $2 million year-over-year on a comparable basis.\nThis is despite $31 million of lower revenue and is a very strong outcome, considering all that transpired in fiscal 2020.\nNote our adjustments for fiscal 2020 reflect costs associated with the Norwood campus closure and with our CEO transition, while in fiscal 2019 they reflect costs associated with Norwood and a consultant termination fee.\nOur balance sheet strengthened further in the quarter with available liquidity of $114.9 million as of September 30, which includes $76.8 million of unrestricted cash and cash equivalents and $38.1 million of short-term held to maturity securities.\nThis is a $23 million quarter-over-quarter increase, which is consistent with the increase in liquidity we generated in the fourth quarter of fiscal 2019.\nThis is a notable outcome considering the challenging operating environment during the quarter.\nFor the fiscal year, operating cash flow was $11 million, while adjusted free cash flow was $4.3 million, including $9.3 million of capex.\nWe estimate that cash flow was negatively impacted by $10 million to $15 million for the year due to the timing of tighter fund flows tied to COVID related delays and student progression through the curriculum.\nYou can see this impact and increase in our tuition receivables versus this time last year, most of which we expect we realized in fiscal 2021.\nWe believe that our strong balance sheet and ability to generate free cash flow provides us with a solid foundation to execute on our growth strategy as we enter into fiscal 2021.\nWe are actively working on number of strategic initiatives that will create value for our business, our students and our shareholders, and that we plan to share more details on in the months ahead.\nI'll also provide a brief update on our use of the CARES Act per funds.\nDuring the quarter, we completed disbursing the $16.6 million of emergency student funds.\nWe also allocated $600,000 of the institutional funds for emergency grants to students.\nFor the remaining institutional funds, we utilized $9.1 million of these funds in the fourth quarter.\nOf this amount, $5.7 million was for our student laptop PC program.\nThe remainder was for technology and curriculum investments, health and safety on our campuses and costs associated with additional lab sessions to allow for social distancing.\nWe have approximately 900,000 in institutional funds remaining.\nNow, let me touch on our real estate footprint optimization efforts.\nTo recap the actions completed in fiscal 2020, we completed our Exton campus rightsizing of 71,000 square feet in the first quarter and our home office relocation in 16,000 foot reduction in June.\nWe gave back the remaining 152,000 square feet for the Norwood campus after closing it in July, and we signed a new lease for our Sacramento campus in September, which will reduce that campus by 128,000 square feet at the end of calendar 2021.\nCombined these actions reduce our annual occupancy cost by over $8 million, with all that Sacramento captured in our Q4 run rate.\nWe are actively negotiating with landlords in other campuses for similar actions.\nWe will share more details when the negotiations are finalized.\nOur total lease facility portfolio currently stands at 1.85 million square feet.\nWe are also exploring owning versus leasing certain campus facilities, given the strength of our balance sheet, the potential opportunities in the commercial real estate market.\nAnother topic to touch on is the 8-K filed in September regarding the distribution of the preferred shares held by Coliseum Holdings to certain affiliated and non-affiliated entities.\nWe view the distribution as very much in support of our strategic objectives and as overall important step that would further bolstering UTI's capital structure.\nWe appreciate the efforts Coliseum went through to initiate and implement the distribution, as well as their overall support of the Company and focus on long-term value creation for all shareholders.\nThe net effect of this distribution was to reduce Coliseum's direct and indirect holdings to 24.9% of total UTI outstanding shares on an as-converted basis.\nThis ownership threshold is important to the Company, at any action involving 25% or more of the Company's total outstanding shares would require a change in control review by the Department of Education.\nThis type of review could take as long as six to nine months and could delay any future organic or inorganic strategic actions we may be pursuing.\nThe shares held by Coliseum and their affiliates are currently limited by a 9.9% voting and conversion cap which can be lifted through further actions by then, and the Company.\nWe have communicated with a few of the larger preferred shareholders, while we can't sue [Phonetic] for them or them for their attention at any specific point in time, we understand that they are supportive of the Company and our long-term growth strategy, thus and tend to be long-term holders.\nLastly, for the terms governing the preferred shares, the Company has the option to require to conversion of any or all outstanding preferred shares, if the volume weighted average price of the Company's common stock equals or exceeds $8.33 for 20 consecutive trading days.\nThis price could change over time based upon certain adjustments.\nLooking forward, given our business model, we already have considerable visibility into fiscal 2021 and we feel very positive about the outlook based upon what we are seeing right now.\nStudents we have currently generate a significant portion of the fiscal year revenue.\nNew student enrollments and starts are pacing very strongly so far for the year, and we have visibility into and control of the key components of our cost structure, as well as planned investments and productivity improvements.\nHowever, the potential for ongoing impacts from the pandemic cannot be fully determined to quantify.\nImpacts could be on new student enrollments, show rates, LOAs, withdrawals, and overall student progression through the curriculum, all of which could negatively impact revenue.\nRegardless, we would expect to manage costs to limit potential impacts to profitability and cash flow, as we did through the actions we took just for 2020.\nAdditionally, with our blended learning model fully functioning and the enhancements we have planned, we have the ability pivot rapidly in the event of any future campus disruptions, which is a capability we did not possess back in March when the pandemic struck.\nWith that backdrop, I will now provide our guidance for fiscal 2021.\nFor both new student starts and revenue, we expect year-over-year growth of 10% to 15%.\nFor net income, we expect a range of $14 million to $19 million.\nFor adjusted EBITDA, we expect a range of $30 million to $35 million.\nFor adjusted free cash flow, we expect a range of $20 million to $25 million, which assumes capex of $15 million to $20 million, approximately two-thirds of the planned capex support high ROI investments, including the two welding programs we are launching in fiscal 2021, enhancements to our online curriculum and our campus optimization efforts.\nThe remaining amount represents a consistent level of annual maintenance capex and new projects that were deferred from fiscal 2020.\nFrom a timing perspective, we expect starts to be higher year-over-year in every quarter, reflecting the momentum we have referenced with growth in Q1 and Q3 being more pronounced.\nWe expect revenue to be down a few points year-over-year in the first half of the year as we made continued progress on the lab makeup progress and up measurably in the back half of the year, particularly in Q3.\nProfit will also be down versus the prior year in the first half, with the growth in the back half of the year.\nCash flow should follow more normal pattern, neutral to modest cash generation in the first half, cash usage in the third quarter and a significant cash generation in the fourth quarter.\nTo the extent any strategic actions, we now have an impact of fiscal 2021, we will update this guidance accordingly.\nWe will also continue monitoring the situation very closely and we'll update you if it causes any material change in our expectations.\nDespite this financial uncertainty, with the visibility we have into the business and the confidence we have in our operating model, we feel it is appropriate to provide guidance for the investment community as an understanding of where we see the business heading over the upcoming fiscal year.\nTo summarize, the outlook for our business is growing, as we are seeing significant growing interest in our highly valued programs across the country.\nWe're making key investments in our core value proposition, our programs, industry relationships and talent.\nWe're continuing to engage our prospective students via new pathways and methods and they are responding.\nWe're continuing to innovate our educational delivery model in ways that support us today, but also opened new opportunities for the future.\nWe're adapting every day to changes occurring in our market, political and business environment and have demonstrated our ability to operate effectively even when faced unprecedented challenges.\nWe are proud that the innovations and improvements that we have made and will continue to make, have made a stronger UTI today and a better UTI positioned for the future.\nOur business remains resilient and we continue to make meaningful improvements.\nOur financial position is strong and clearly superior to many in our industry.\nFinally, the academic and employment proposition we offer is more valuable than ever to our students, potential employers and industry partners.\n",
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"content": "compname reports q4 earnings per share of $0.09.\nq4 revenue $76.3 million versus refinitiv ibes estimate of $85.5 million.\nuniversal technical institute - expects double-digit growth in new student starts, revenue, adjusted ebitda, net income, and adjusted free cash flow in 2021.\nqtrly earnings per share $0.09.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Also in attendance today is Bob Hevert.\nBob was recently appointed Senior Vice President, Chief Financial Officer and Treasurer, effective July 31, as we will discuss in further detail momentarily.\nThe accompanying supplemental information more fully describes these non-GAAP measures and includes a reconciliation to the nearest GAAP measures.\nThe company believes these non-GAAP measures are useful in evaluating its performance.\nBob brings over 30 years of industry experience in regulatory matters and corporate finance and has testified in over 300 proceedings as an expert witness.\nIn fact, Bob has testified on behalf of Unitil in each of the states where we operate, including most recently as the cost of equity witness in our recent rate case in Maine.\nBob was previously with ScottMadden as Partner and Practice Area Leader of Rates, Regulation and Planning.\nWe believe that Bob's proven track record of success and his broad industry experience will be of great value to the company and its shareholders.\nAt this point, I'd like to give Bob the opportunity to just say a few words.\nI have worked with Unitil on a variety of matters for many years.\nAnd during that time, I became familiar with the company's employees, its culture, and its commitment to excellence, all of which I am sure have proven to be a benefit to both customers and shareholders.\nI'm very excited to join the Unitil team, and I look forward to helping advance the company's long-term strategies.\nWell, we're happy to have you on board, Bob.\nAs Todd mentioned earlier, Bob's appointment will become effective on July 31 or tomorrow, at which point, Larry Brock will step down as CFO.\nLarry will continue on with company as Senior Vice President, working closely with Bob.\nWith that, I'll now move on to slide five, where today, we announced net income of $3.1 million or $0.21 per share for the second quarter of 2020, a decrease of $0.9 million or $0.06 per share compared to 2019.\nThe company estimates that the ongoing COVID-19 pandemic unfavorably impacted net income by approximately $0.4 million or $0.03 per share.\nDuring the first half of 2020, net income totaled $18.3 million or $1.23 per share.\nAs a reminder, in the first quarter of 2019, the company recognized a onetime net gain of $9.8 million or $0.66 in earnings per share on the company's divestiture of its nonregulated business subsidiary, Usource.\nAdjusting for the divestiture gain, net income was down by $2.4 million or $0.16 per share compared to 2019, reflecting warmer winter weather in 2020.\nThe year-to-date decrease in earnings is primarily due to the warmer-than-normal winter weather in Q1, which unfavorably affected net income by approximately $3.1 million or $0.20 per share.\nTurning to slide six.\nSimilar to last quarter, I'd like to recap the company's COVID-19 pandemic response.\nOur highest priority continues to be the safety of our customers and of our employees.\nIn response to the COVID-19 emergency, we implemented our crisis response plan in order to execute preventive and proactive measures during this unprecedented time, and we've also enacted a phased opening plan.\nThe company is currently operating in its limited reopening phase under which most office employees are continuing to work from home when possible.\nIn addition, we continue to require social distancing as well as masks, hygiene, travel limitations and other measures to protect our employees and prevent the spread of the COVID virus.\nOperationally, the company has continued to provide safe and reliable service through the COVID-19 emergency.\nEmployees entering customers' homes are being routinely tested to ensure the safety of both our customers and our employees.\nWe quickly adapted to social distancing and other recommended guidelines while ensuring operational continuity, and our workforce has seamlessly transitioned to work-from-home standards where appropriate.\nOur employees have risen to this extraordinary challenge while continuing to provide exceptional customer service, and the company as a whole remains prepared to adapt in order to serve our customers and communities.\nOn slide seven, we provide an update of how our states are being impacted by the COVID-19 pandemic.\nUnfortunately, many parts of the country have experienced an acceleration in the rate of new COVID-19 cases and consequently, reopening plans are being rolled back in some places.\nHowever, in New England, we remain cautiously optimistic that testing, tracing, masks, social distancing and other measures have successfully slowed the spread of COVID-19 as the new case counts across our territories appear to have leveled off.\nThe percentage of positive COVID-19 tests in our service areas also have stabilized at rates considerably lower than the national average.\nAs the number of new COVID-19 cases have slowed, emergency orders have been moderately relaxed as part of a phased reopening plan in the states where we operate.\nAs outlined on this slide, many businesses, including retail, restaurants and personal services, began reopening during Q2.\nI would also note that most of the major development projects that we have discussed in the past continue to proceed in our service areas, which should contribute to our expanding customer base.\nOn slide eight, we've again summarized our 5-year investment plan.\nWe have not revised our investment plans as a result of the COVID-19 pandemic.\nAnd in fact, through the first half of 2020, our capital spending is more than $10 million higher in comparison to the same period in 2019.\nOn slide nine, as I previously stated, I simply wanted to reaffirm that we do not anticipate any change to our current dividend policy as a result of the pandemic.\nI'll begin the sales and margin discussion on slide 10.\nIn the second quarter of 2020, our gas gross margin was $22.9 million, a decrease of $0.4 million from 2019.\nWe estimate that the COVID-19 emergency unfavorably impacted gas margin by $0.8 million due to lower commercial and industrial usage.\nIn addition, the warmer early summer weather impacted gas margin unfavorably by $0.2 million in the quarter.\nThese decreases were partially offset by $0.6 million due to higher distribution rates and customer growth in 2020 compared to 2019.\nNatural gas therm sales decreased 9% in the second quarter of 2020 compared to the same period in 2019.\nThe decline in gas sales units primarily reflects lower C&I usage due to the ongoing COVID-19 emergency as well as the warm early summer weather.\nIn total, the company estimates that weather-normalized gas therm sales, excluding decoupled sales, were down 5.6% in the quarter.\nCommercial and industrial sales were down 10.7% and residential usage was down 2.1% in the quarter compared to prior year.\nOn a weather-normalized basis, excluding decoupled sales, the company estimates that C&I sales were down 7.4% and residential sales would have been up 3.2% in the quarter.\nMoving to slide 11.\nFor the first six months of 2020, our gas gross margin was $65.3 million, a decrease of $1.5 million from 2019.\nThe decrease was primarily driven by the historically warm winter weather in the first quarter of 2020 that I discussed during our last quarter's earnings call.\nThe company estimates that year-to-date sales margin was lower by $2.7 million due to warmer weather, partially offset by customer growth.\nWe also estimate that the COVID-19 emergency unfavorably impacted margin by $0.8 million due to lower C&I usage.\nThese volume variances were partially offset by higher natural gas distribution rates of $2.0 million in 2020.\nThrough the first six months of 2020, natural gas therm sales decreased 7.5% compared to 2019.\nWe attribute the decline in gas sales to the historically warm winter weather in the first quarter of 2020 and the ongoing COVID-19 emergency.\nThe company estimates that weather-normalized gas therm sales, excluding decoupled sales, were down 1.2% year-over-year.\nFinally, I would note that we are currently serving 1,731 or 2.1% more gas customers than at the same time in 2019, illustrating our growing customer base.\nNext, on slide 12, we discuss electric margin.\nIn the second quarter of 2020, our electric gross margin was $22.4 million, which is flat to 2019.\nElectric sales margins were higher by $0.4 million in the period due to higher electric distribution rates, customer growth and warmer early summer weather.\nThe ongoing COVID-19 emergency negatively impacted electric margin by a net $0.4 million due to lower C&I usage of $0.6 million, partially offset by higher residential usage of $0.2 million.\nTotal electric kilowatt hour sales decreased 2% in the second quarter of 2020 compared to the same period in 2019.\nThe decline in electric sales units primarily reflects lower C&I usage due to the ongoing COVID-19 emergency and warmer early summer weather, partially offset by increased sales to residential customers due to the COVID-19 pandemic stay-at-home orders and the increased use of air conditioning during the warmer early summer period.\nIn total, the company estimates that normal electric kilowatt hour sales, excluding decoupled sales, were down 4.9%.\nCommercial and industrial sales were down 11% and residential usage was up 12.8% in the quarter.\nOn a weather-normalized basis, excluding decoupled sales, the company estimates that C&I sales were down 12.2% and residential sales would have been up 6.4% in the quarter.\nMoving to slide 13.\nFor the first six months of 2020, our electric gross margin was $45.5 million, which is again flat to 2019.\nIn the period, electric sales margins were higher than 2019 by $0.8 million due to higher electric distribution rates, customer growth and warmer early summer weather.\nHowever, these positive differences were offset by the impacts of warmer winter weather in the first quarter of $0.4 million, and as I mentioned last slide, the ongoing COVID-19 emergency also negatively impacted margin by $0.4 million.\nThrough the first six months of 2020, electric kilowatt hour sales decreased 0.5% compared to 2019.\nWe attribute the decline in electric sales principally to the lower average usage by C&I customers as a result of the ongoing COVID-19 emergency and warmer winter weather, which adversely impacted the usage of electricity for heating purposes.\nThis was partially offset by increased sales to residential customers due to warmer early summer temperatures and the fact that people spent more time at home than usual during the COVID-19 stay-at-home orders.\nThe company estimates that weather normal electric kilowatt sales, excluding decoupled sales, were down 1.1% in the period.\nThe number of electric customers being served has increased by 755 or 0.7% compared to the prior year.\nNext, on slide 14, we'll discuss the financial impact on Unitil of the COVID-19 emergency.\nWe are closely monitoring the COVID-19 emergency and its impacts on the financial health of the company.\nAs Tom mentioned earlier, we have estimated that as a result of the COVID-19 emergency, earnings per share were negatively impacted by $0.03 in the second quarter of 2020.\nAs we just discussed, the combined impact on gas electric sales margin from the COVID-19 emergency was $1.2 million in the second quarter of 2020.\nHowever, this was somewhat offset by net lower O&M expenses of approximately $0.6 million that the company identified to be related to the COVID-19 emergency.\nThe lower O&M related to the COVID-19 was due to lower employee benefit costs, primarily lower health insurance claims incurred in the second quarter of $1.0 million, partially offset by net $0.4 million higher other pandemic-related costs related to the purchasing of PPE supplies, facility cleaning, higher bad debt provisions and other expenses.\nOverall, O&M was down by $1.3 million in the second quarter of 2020 compared to 2019, and the remaining decrease is primarily due to lower utility operating costs in the period.\nThe company is also working closely with our regulators and local utility working groups to develop reporting mechanisms to respond to requests from our regulators about the financial impacts of the COVID-19 emergency.\nDue to the ongoing moratorium on service disconnections, the company expects to incur higher levels of customer arrears, which could translate to higher bad debt expense.\nWe'll be tracking the activity, and we are exploring potential options to recover expenses related to the emergency through the regulatory process.\nI'd like to point out that supply related bad debt, which is historically approximately 45% of all write-off activity, is tracked and recovered in reconciling mechanisms and does not impact the company's earnings.\nAlso, as I mentioned last call, the company has no intention to alter staffing levels as a result of the COVID-19 emergency.\nIn order to help stakeholders gauge the potential impact of COVID-19 on sales margin, the company has provided sensitivities between usage and margin for the third and fourth quarters of 2020.\nTurning to the balance sheet.\nIn the second quarter, the company successfully priced $95 million of long-term debt through the private placement market.\nThe debt was priced at competitive investment-grade rates, and we anticipate the transaction to close in quarter 3.\nThe capital will be used to refinance existing and maturing debt, fund our investment programs and for other general corporate purposes.\nWith the company's existing credit facility, which has a borrowing limit of $120 million, and the proceeds recently of the recently priced debt, the company has ample liquidity to execute our growth plans.\nMoving on to slide 15.\nWe provide an earnings bridge analysis comparing 2020 results to 2019 for the 6-month period ended June 30.\nI'd like to note that this layout is slightly different from the Form 10-Q as we isolate the impact of the 2019 Usource divestiture and related revenues and expenses.\nAs discussed, 2020 year-to-date gross margin is lower than 2019 by $1.5 million, largely due to the warmer winter weather.\nCore operation and maintenance expenses decreased $1.5 million compared to the same period in 2019.\nThis decrease is primarily driven by lower employee benefit costs of $1.1 million as well as lower maintenance and storm expenses of $1.0 million, partially offset by higher bad debt expense and higher professional fees of a net $0.6 million.\nDepreciation and amortization was higher by $0.8 million, reflecting higher levels of utility plant in service.\nTaxes other than income taxes increased by $1.1 million, reflecting higher levels of net plant in service as well as a nonrecurring tax abatement realized in 2019 of $0.6 million.\nInterest expense was flat, reflecting interest on higher interest on long-term debt, offset by lower interest on short-term borrowings.\nOther expense increased $0.3 million due to higher retirement benefit costs.\nNext, we've isolated the full Usource impact of $10.3 million, which was realized in 2019.\nThis includes the after-tax gain on the divestiture of $9.8 million, in addition to $0.5 million, which is the net of revenues and expenses realized through Usource operations in 2019.\nLastly, income taxes decreased $0.3 million, reflecting lower pre-tax earnings in the period.\nSo this bridge analysis shows the net changes to reconcile our 2019 net income of $30.5 million to our 2020 earnings of $18.3 million for the first six months of the year.\nOn slide 16, we'll begin our discussion of rate case activity in 2020.\nAs we announced last quarter, our base rate cases in Maine and Massachusetts have concluded.\nWe received an order from the Maine PUC, approving an increase to base revenue of $3.6 million.\nIn Massachusetts, the gas settlement approved has a total distribution revenue increase of $4.6 million, which will be phased in over two years.\nWe began collecting the majority of this revenue award on March 1, 2020, while $0.9 million of the award will be included in rates starting March 1, 2021.\nThe gas settlement was lower as a result of $1.8 million lower expenses related to the pass back of excess deferred income taxes, lower depreciation and a removal of retirement costs from base distribution rates.\nThe Massachusetts electric settlement allows for a distribution increase of $0.9 million to become effective November of 2020.\nThe electric settlement was lower by $1.1 million as a result of lower expenses related to the pass back of excess deferred income taxes and the removal of retirement costs from base distribution rates.\nThe electric settlement also allows for the implementation of a new major storm reserve fund, which will help mitigate expense volatility related to future storms.\nThe company was planning to file the UES rate case during 2020 with the test year 2019, but we expect to defer the filing until the first half of 2021.\nAnd I'd point out that both UES and Northern New Hampshire are required by the New Hampshire PUC to propose revenue decoupling in their next rate case to be filed 2021 or later.\nOver on slide 17, we have provided a summary of significant distribution rate changes in 2020.\nIn 2020, we have been awarded over $7 million of rate relief.\nAs I mentioned last slide, the Fitchburg rate case awards would have been a combined $2.9 million higher if not for lower depreciation and amortization expenses and the removal of retirement costs from base rates.\nOn Slide 17, the negative amounts for the Fitchburg capital trackers reflect the transfer of collections from the tracker mechanisms and into base distribution rates.\nAlso, we have precedent for long-term rate plans or cost trackers across all of our utility subsidiaries.\nFinally, on Slide 18, we provide the last 12 months' actual return on equity in each of our regulatory jurisdictions.\nUnitil, on a consolidated basis, earned a total return on equity of 8.4% in the last 12 months.\nThe company estimates that after weather normalizing the warm winter weather in the first quarter of 2020, the consolidated return on equity would have been 9.3%.\n",
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"content": "compname reports q2 earnings per share $0.21.\nq2 earnings per share $0.21.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Speaking on the call today will be Tom Meissner, Chairman, President and Chief Executive Officer; and Bob Hevert, Senior Vice President, Chief Financial Officer and Treasurer.\nMoving to Slide 2.\nStatements made on the call should be considered together with cautionary statements in other information contained in our most recent Annual Report on Form 10-K and other documents we have filed with or furnished to the Securities and Exchange Commission.\nThe accompanying supplemental information more fully describes these non-GAAP financial measures and includes a reconciliation to the nearest GAAP financial measures.\nThe company believes these non-GAAP financial measures are useful in evaluating its performance.\nI'm going to begin on Slide 4 today.\nSo, today we're pleased to announce net income of $2.7 million or $0.18 per share for the second quarter of 2021.\nFor the first half of 2021, net income was $21.6 million or $1.44 per share.\nThis represents an increase of $0.21 per share over the same six-months period of 2020 and reflects higher Electric and Gas adjusted gross margins.\nNext, I'd like to quickly review a few high level themes.\nFirst, we reiterate our long-term guidance of 5% to 7% growth in earnings per share with 2021 earnings expected to be somewhat above the higher end of the range relative to 2020.\nSecond, the company recently announced a goal of achieving net zero emissions by 2050.\nThis announcement is a major step for the company and reflects our commitment to environmental stewardship and corporate responsibility.\nFinally, I would also like to note the filing of another strategic rate case in New Hampshire for our gas utility, Northern Utilities.\nCombined, the pending rate applications for Unitil Energy Systems and Northern Utilities request a nearly $20 million increase in base distribution revenues.\nBob will discuss the details of these filings later in the call.\nMoving to Slide 5.\nAs I noted earlier, on June 21, we announced our goal to reduce companywide direct greenhouse gas emissions by at least 50% by 2030 relative to 2019 levels and to achieve net zero emissions by 2050.\nThese goals are part of our overall commitment to environmental stewardship, sustainability and corporate responsibility.\nAs I've said before, our vision is to transform the way people meet their evolving energy needs to create a clean and sustainable future.\nWe will continue to work with customers, policy makers and industry leaders to reduce emissions from the energy supply delivered to our customers.\nWith that, I'll now pass it over to Bob, who will provide further detail on our financial results.\nI will begin on Slide 6.\nAs Tom noted today, we announced second quarter earnings per share of $0.18.\nThis represents a year-over-year decrease of $0.4 million or $0.03 per share.\nOn a year-to-date basis, net income increased by $3.3 million or $0.21 per share compared to 2020.\nStrong year-over-year earnings growth primarily is the result of higher Electric and Gas adjusted gross margins, partially offset by higher operating expenses.\nAs Tom mentioned, we expect full year 2021 earnings to be ahead of our 5% to 7% long-term earnings per share growth range relative to 2020 earnings of $2.15 per share.\nTurning to Slide 7.\nFor the six months ended June 30, 2021, Electric adjusted gross margin was $48 million, an increase of $2.5 million or 5.5% relative to 2020.\nThe increase in Electric adjusted gross margin reflects higher residential unit sales of 2.8% and higher commercial and industrial unit sales of 3.1%.\nCustomers increased 0.8% over the first half of 2020.\nThe higher sales volumes reflect customer growth and improving economic conditions.\nAs noted on Slide 8, for the six months ended June 30, 2021, Gas adjusted gross margin was $72.8 million, an increase of $7.5 million or 11.5% compared to 2020.\nThe increase in Gas adjusted gross margin reflects higher rates of $5.1 million and the combined net effect of $2.4 million from the net favorable effect of customer growth, colder winter weather and warmer spring weather.\nThe first half of 2021 was 2.1% colder year-over-year, contributing to higher natural gas therm sales of 4.2%.\nHigher sales also reflect 1,200 additional customers served compared to the same period in 2020.\nMoving on to Slide 9.\nWe provide an earnings bridge comparing 2021 results to 2020 for the quarter.\nAs noted earlier, 2021 adjusted gross margin increased $10 million as a result of higher rates and higher unit sales.\nOperating and maintenance expenses increased $2 million.\nThe current year increase is attributable to higher utility operating costs, higher labor costs and higher professional fees.\nIn the second quarter of 2020, the company realized a benefit from lower labor costs related to the COVID pandemic.\nAs the economies in our service area recover, we have seen that trend reverse, primarily in the area of healthcare.\nThe increase in operating expenses also includes an increase of $0.4 million or roughly $0.02 per share related to a recent decision by the New Hampshire Public Utilities Commission's not to authorize the creation of a regulatory asset for incremental bad debt related to the COVID pandemic.\nInstead the order states these costs will be addressed in each utilities' next rate case.\nUnitil is in a unique position in that we have pending both Electric and Gas rate cases in New Hampshire through which we will seek recovery of those costs.\nDepreciation and amortization increased by $2.7 million, reflecting higher levels of utility plant in service.\nTaxes, other than income taxes, decreased by $0.2 million, primarily due to lower payroll taxes, partially offset by higher local property taxes on higher utility plant in service.\nInterest expense increased by $0.9 million, reflecting interest on higher long-term debt balances, partially offset by lower rates on lower levels of short-term borrowings.\nOther expense decreased by $0.5 million, largely due to lower retirement benefit and other costs.\nLastly, income taxes increased by $1.8 million as a result of higher pre-tax earnings.\nTurning now to Slide 10.\nThe Unitil Energy rate case, which I've discussed on previous calls, is progressing as expected with temporary rates of $4.5 million becoming effective on June 1.\nYesterday, we filed a multi-year rate plan in New Hampshire for our gas utility, Northern Utilities.\nIn that case, we proposed a $7.8 million rate base increase with a $3.2 million temporary rate increase.\nYou may recall that in New Hampshire, it is typical to collect a portion of the revenue deficiency through temporary rates prior to receiving a final order.\nWe anticipate temporary rates for Unitil -- excuse me, for Northern Utilities to become effective in the third quarter of 2021.\nTemporary rates are reconciled to the final rate case award and the difference is collected or refunded usually over a one-year period.\nOur filing also includes a full revenue per customer decoupling proposal and a multi-year rate plan to recover certain capital expenses made in 2021, 2022 and 2023.\nWe anticipate that these rate case filings in New Hampshire will support the return on equity at Unitil Energy Systems and Northern Utilities.\nWrapping up with Slide 11.\nWith the first half of 2021 behind us, we're pleased with what the company has accomplished.\nAt this time, we believe our investment plan for 2021 is on track and our regulatory initiatives are proceeding on schedule.\nWe look forward to providing further updates on our next call.\n",
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"content": "unitil - q2 earnings per share $0.18.\nq2 earnings per share $0.18.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Speaking on the call today will be Tom Meissner, Chairman, President and Chief Executive Officer; Bob Hevert, Senior Vice President, Chief Financial Officer and Treasurer.\nThe accompanying supplemental information more fully describes these non-GAAP measures and includes a reconciliation to the nearest GAAP measure.\nThe company believes these non-GAAP measures are useful in evaluating its performance.\nTurning to Slide 4.\nWe provide an outline for topics to be covered in today's call.\nBeginning on Slide 5.\nToday, we announced net income of $0.3 million or $0.02 per share for the third quarter of 2020.\nThe company estimates that the ongoing COVID-19 pandemic unfavorably impacted third quarter net income by approximately $0.01 per share.\nThrough the first three quarters of 2020, net income is $18.6 million or $1.25 per share.\nFor comparison purposes, recall that in the first quarter of 2019, the company recognized a onetime net gain of $9.8 million, or $0.66 per share, on the company's divestiture of its nonregulated business subsidiary, Usource.\nAdjusting for this onetime gain, net income is down about $4.4 million or $0.29 per share compared to 2019.\nThe year-to-date decrease in earnings is primarily due to the warmer than normal winter weather in Q1, which unfavorably affected net income by approximately $3.1 million or $0.20 per share.\nIn addition to the warmer winter weather, we estimate that net income has been unfavorably impacted by approximately $0.04 per share due to the COVID-19 pandemic.\nTurning to Slide 6.\nAnd similar to last quarter, I'd like to recap the company's response to the COVID-19 pandemic.\nOur highest priority continues to be the safety of our customers and of our employees.\nIn response to the ongoing pandemic, we implemented our crisis response plan to help execute preventive and proactive measures during which are during this unprecedented time and have also enacted a phased reopening plan.\nThe company is currently in its limited reopening phase and is still requiring all office employees to work remotely wherever possible.\nThe company also employed a large number of field workers to construct and maintain its energy infrastructure.\nThese workers have adopted new policies and personal protective equipment to ensure the health and well-being of themselves and of our customers.\nOperationally, the company has continued to provide safe and reliable service throughout the pandemic.\nEmployees entering customers' homes are being routinely tested to ensure the safety of both our customers and our employees.\nWe quickly adapted to social distancing and other recommended guidelines while ensuring operational continuity and our workforce has seamlessly transitioned to work from home where appropriate.\nOur employees have return to this extraordinary challenge while continuing to provide exceptional customer service.\nIn fact, after tropical storm Isaias, we were able to restore power to all of our customers within a 24-hour period.\nAn example of our best-in-class storm restoration system and our ability to adapt in order to serve our communities safely and reliably.\nWe've also been able to provide mutual aid to support other utilities in the region and their restoration efforts seven times this year.\nI would also briefly point out that the states where we operate are managing the pandemic relatively well in comparison to other regions of the country.\nThe positive test rates in each of our states rank in the lowest 10 of all 50 states.\nAnd less than half of the national average.\nOn Slide 7, we're pleased to announce that our 2020 corporate sustainability and responsibility report was recently issued on October 22.\nThis report expands on the inaugural corporate responsibility report released last year and outlines our vision for sustainability and explains how our business strategies will align with the environmental, social and economic expectations of our customers and communities.\nThis report also -- the reports to be published in the future will also define our objectives and strategies and report on key metrics to track our progress and illustrate the benefits to stakeholders.\nSustainability is central to our mission and vision, the interactive report can be found on our website at unitil.com.\nTurning to Slide 8.\nOur sustainability goals primarily fall under three categories.\nFirst, we are focused on advancing the grid.\nThe need to reduce carbon emissions has driven a fundamental transformation within the energy sector, as customers adopt new technologies and as clean renewable energy resources are increasingly distributed across the electricity delivery system, the fundamental architecture of the electric grid must advance.\nWe are actively investing in five key areas that will support our objective of advancing the electric grid and transforming the customer experience.\nThis includes advanced metering, grid intelligence, distributed energy, customer services and innovative rate design.\nThese initiatives will provide customers with greater control and visibility into their energy use, enabling and will enable distributed energy resources, access to the system and advance the system security, safety and reliability.\nThe company also believes that natural gas remains key to a sustainable future as a cleaner and more affordable option for our customers.\nWe estimate that the impact over the last 10 years from our customers choosing natural gas rather than home heating oil has had the impact of taking roughly 60,000 cars off the road.\nNearly 2/3 of main households still rely on fuel oil as their primary energy source for home heating, a larger proportion than in any other state in the United States.\nIn New Hampshire, more than 2/5 of households rely on fuel oil, the second highest proportion of the nation behind Maine.\nThis unusually high penetration of fuel oil presents significant opportunities to reduce emissions through continued customer conversions to natural gas.\nAs we continue to expand the availability of natural gas to more customers, we also will continue to replace outdated infrastructure and modernize our gas system.\nAs a result, we decreased our fugitive emissions from natural gas distribution by 47 metric tons over the last two years, lowering our total generation of fugitive greenhouse gas emissions by 9% in 2019 when compared to 2017.\nWe also continue to look for opportunities to add renewable natural gas to our supply portfolio.\nIn Q3 of this year, we issued a request for expressions of interest to several parties to identify sources of existing or planned RNG resources.\nWe will continue to evaluate the viability of adding RNG into our supply.\nAnother area central to sustainability is creating a sustainable future through our people.\nFinding and retaining quality, highly motivated employees is critical to our sustainability over the long term.\nWe are also committed to providing a safe and healthy working environment to our employees and our contractors and the public.\nIn fact, our safety metrics place us in the top 1/3 of our industry peers and have continued to improve over time.\nNot only is it important to keep employees safe in the field, but also to ensure that they are respected in the workplace.\nAt Unitil, we strive to be an employer of choice for everyone regardless of race, religion, color, gender or sexual orientation by maintaining and accepting, respectful and nondiscriminatory workplace where people are encouraged to bring their unique perspectives to the table.\nWe believe the framework we've established from employee relations has been successful as backed by a recent employee survey where 90% of our employees report being proud to work for Unitil.\nOur goal is to be the most technologically advanced utility in the region or the utility of the future.\nOur vision and mission have grounded us during this historically uncertain time and will guide us to a clean and sustainable energy future as we provide energy for life.\nTurning to Slide 9.\nAs I mentioned on last quarter's call, our investment forecast still has not changed as a result of the COVID pandemic.\nIn fact, compared to the prior year, we have increased our capital investment by more than 20%.\nWe anticipate continuing to realize strong rate base growth, given our broad investment opportunities and advancing the grid and supporting and modernizing our gas distribution infrastructure.\nTo provide one example where we are facilitating the integration of distributed energy resources and overall system efficiency.\nWe are installing a 2-megawatt utility-scale battery storage system in our Massachusetts service area.\nThis energy storage system has the ability to serve over 1,300 homes for over two hours and is designed to reduce peak loading on the substation equipment.\nThis project has a capacity representing over 2% of our system peak in Massachusetts and offers a solution to advanced grid operations control cost variability and aid in the overall system reliability as we support renewable energy solutions.\nI'll begin with the sales and margin discussion on Slide 10.\nYear-to-date 2020, our electric gross margin was $70 million, a decrease of $0.6 million compared to 2019.\nThe decrease in electric margin reflects lower C&I demand sales related to the economic slowdown caused by the COVID-19 pandemic.\nLower average usage per customer associated with energy efficiency and warmer winter weather.\nWe estimate the COVID-19 pandemic unfavorably affected electric margin by approximately $0.7 million.\nThrough the first nine months of 2020, total electric kilowatt hour sales increased 1.2% relative to 2019.\nResidential sales increased 8.2% primarily reflecting stay at home orders and continuing remote work, along with warmer summer weather relative to the prior year.\nC&I sales decreased 3.6%, reflecting lower usage due to the COVID-19 pandemic.\nMoving to Slide 11.\nFor the first nine months of 2020, our gross gas margin was $83.3 million, a decrease of $2.2 million over 2019.\nThat decrease was driven principally by the historically warm winter weather in the first quarter, which we have discussed in the past.\nThe company estimates that year-to-date gas margin was lower by $3.2 million due to warmer weather.\nWe also estimate that the COVID-19 pandemic unfavorably affected gas margin by $1.3 million due to lower commercial and industrial usage.\nThose unfavorable variances were partially offset by higher distribution rates and customer growth of $2.3 million.\nThrough the first nine months of 2020 natural gas therm sales decreased 7.1% compared to 2019.\nWe attribute the decline in gas sales to the historically warm winter weather and the COVID-19 pandemic.\nThe company estimates that weather-normalized gas therm sales, excluding decoupled sales, were down 1.9% year-over-year.\nI also note, we currently are serving 2.9% more gas customers than in the same time in 2019, illustrating our growing customer base.\nMoving on to Slide 12, we provide an earnings bridge analysis comparing 2020 results to 2019 for the nine months period ending September 30.\nAs we've provided in the past, this layout is slightly different than the Form 10-Q as we isolate the effect of the Usource divestiture and related revenues and expenses.\nAs I noted, 2020 year-to-date gross margin -- excuse me, gross sales margin is lower than 2019 by $2.8 million.\nCore operation and maintenance expenses decreased by $0.9 million compared to the same period in 2019.\nThis decrease primarily is due to lower employee benefit costs of $1.2 million as well as lower maintenance expense of $0.3 million, partially offset by higher bad debt expense of $0.4 million and higher professional fees of $0.2 million.\nDepreciation and amortization was higher by $1.7 million, reflecting higher levels of utility plant and service.\nTaxes other than income taxes increased by $0.9 million, reflecting property taxes associated with higher levels of net plant and service and a nonrecurring tax abatement realized in 2019 of $0.6 million, that increase was partially offset by $0.6 million of payroll credits realized in the third quarter associated with the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act.\nInterest expense decreased by $0.2 million, reflecting lower interest rates on short-term debt.\nOther expense increased by $0.4 million due to higher retirement benefit costs.\nNext, we've isolated the full Usource effect of $10.3 million, which was realized in 2019.\nThis includes the after-tax gain on the divestiture of $9.8 million and $0.5 million, reflecting the net of revenues and expenses realized through Usource operations in 2019.\nLastly, income taxes decreased $0.8 million, reflecting lower pre-tax earnings in the period.\nNext, on Slide 13, we summarize the effect of the COVID-19 pandemic.\nWe are closely monitoring the pandemic and any potential effect on the company's financial health.\nAs Tom mentioned earlier, we estimate that the COVID-19 pandemic affected earnings per share by $0.01 in the quarter, bringing the year-to-date effect to $0.04 per share.\nThe combined effect on gas and electric sales margin was $0.8 million in the third quarter of 2020 and $2 million year-to-date.\nThe company has been able to largely offset the decline in revenue with lower expenses.\nAlthough O&M expenses in the third quarter were minimal.\nYear-to-date O&M expenses have been favorable by $0.7 million.\nThat favorable variance was driven principally by lower health insurance claims, slightly offset by higher pandemic costs related to PPE supplies and cleaning expenses.\nAs noted earlier, the company was able to lower taxes other than income taxes by $0.6 million by recognizing payroll tax credits associated with the CARES Act.\nTo help stakeholders gauge the potential effect of COVID-19 pandemic on sales margin, the company has provided sensitivities between usage and margin for the fourth quarter of 2020.\nNow turning to Slide 14.\nIn the third quarter, we received proceeds of $95 million of long-term debt.\nThe debt was placed at our regulated subsidiaries and carries an average interest rate of 3.72% with a 20-year tenor.\nThe proceeds were used to refinance existing short-term debt and to better match the long-term nature of our utility plant assets.\nAs a result of the financing, we have liquidity of about $161 million, enabling the company to continue executing on our long-term plan.\nOn Slide 15, we are pleased to announce that our gas transmission pipeline, Granite State Gas, recently filed an uncontested rate settlement with the FERC providing for an annual revenue increase of $1.3 million, with rates to become effective in the fourth quarter of this year.\nWe reached that settlement with the New Hampshire and Maine state regulators and agencies.\nThe settlement includes a 3-year capital tracking mechanism that will accelerate cost recovery for investments made after the test year.\nThe settlement illustrates our healthy and productive relationship with state agencies and regulators.\nTurning to Slide 16.\nOur regulatory outlook in 2021 includes the planned filing of base rate cases in New Hampshire for both Unitil Energy, our electric distribution utility, and Northern Utilities, our natural gas utility.\nWe plan to file decoupling mechanisms in both cases.\nIf those mechanisms are approved, the percentage of our decoupled sales to total sales would increase from approximately 25% to 75%, and over 80% of our meters would be under decoupled rate structures.\nTurning to Slide 17.\nWe believe that our long-term capital investment goals remain intact with ample investment opportunities in modernizing and expanding our utility system.\nWe believe we are well positioned to continue executing our growth strategies, while pursuing our sustainability goals, all while maintaining excellent service to customers throughout these unprecedented times.\nLastly, we expect to provide any updates to our capital spending plan during our Q4 earnings call.\n",
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"content": "compname reports q3 earnings per share $0.02.\nq3 earnings per share $0.02.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We are off to a strong start to 2021, with solid first quarter results.\nIncluding, close to 12% top line growth, margin expansion in excess of 200 basis points, and a total annualized return on average equity of 23.2%.\nWe continue to make progress on our reinsurance program renewal and were oversubscribed on our first cat bond in March at rates below the low end of our initial range.\nWe have now completed procurement of our Allstate's first event reinsurance program for UPCIC for the 2021 wind season, and we'll have additional details in May as we finalize the remaining pieces of our risk management strategies for our insurance company subsidiaries.\nIn addition, we were encouraged earlier this month when the Florida Senate passed Bill 76, which would enable Floridians to have reliable access to property insurance.\nFor a number of years, Florida has been a significant outlier compared to the rest of the country when it comes to litigated property claims, which has put significant pressure on the Florida property insurance marketplace.\nWe have not been immune to these market dynamics.\nAnd during the first quarter, we actively reduced our policies in force sequentially and reduced new and renewal policy counts in aggregate this quarter when compared to the first quarter of 2020.\nThat being said, we continue to monitor closely the companion bill in the House, House Bill 305, which has differences from the Senate Bill 76.\nWe look forward to continue to make positive strides throughout 2021 and should have additional details on our reinsurance program renewals in the next several weeks.\nAs a reminder, discussions today on adjusted operating income and adjusted earnings per share are on a non-GAAP basis and exclude effects from unrealized and realized gains and losses on investments and extraordinary reinstatement premiums and related commissions.\nAdjusted operating income also excludes interest expense.\nWe ended the first quarter with total revenue up 11.7% to $262.8 million, driven by primary rate increases from 2020, earning through the book as policies renew and an improvement in the unrealized portion of the investment portfolio, partially offset by the impact of higher reinsurance costs when compared to the first quarter of 2020.\nMargins expanded by 210 basis points for the quarter, driven by the incremental fall-through profit from the top line as previously discussed, lower losses in LAE and lower operating expenses as a percentage of direct premiums earned.\nEPS for the quarter was $0.84 on a GAAP and non-GAAP adjusted basis.\nAs to underwriting, direct premiums written were up 9.2% for the quarter, led by direct premium growth of 10.2% in Florida.\nOn the expense side, the combined ratio improved one point for the quarter to 93.1%.\nThe improvement was driven by a two-point improvement in the loss and LAE ratio from decreased weather, favorable prior year reserve development, and a benefit from our claims adjusting business, partially offset by increased reinsurance costs and less than one point of current year strengthening on a direct basis, when compared to the first quarter of 2020.\nThe expense ratio improved on a direct earned basis by 45 basis points as a result of operating efficiencies but was more than offset by the impact of increased reinsurance costs on the net ratio resulting in a one-point increase in the net expense ratio for the quarter.\nOn our investment portfolio, net investment income decreased by 56.3% to $3 million for the quarter, primarily due to significantly lower yields on the reinvested portfolio following the sale of a majority of securities in the portfolio that were in an unrealized gain position in the third and fourth quarters of 2020.\nUnrealized equity losses improved substantially during the quarter when compared to the market volatility seen last March as a result of the COVID-19 pandemic.\nTotal invested assets increased 10.6% to $1 billion since year-end 2020.\nIn regards to capital deployment, during the first quarter, the company repurchased approximately 15,000 shares at an aggregate cost of $245,000.\nOn April 22, 2021, the Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, which is payable on May 21, 2021, to shareholders of record as of the close of business on May 14, 2021.\nAs mentioned in our release yesterday, we are maintaining our guidance for 2021.\nWe still expect GAAP and non-GAAP adjusted earnings per share range of between $2.75 and $3 and a return on average equity of between 17% and 19%.\nThe guidance assumes no extraordinary weather events in 2021 and also assumes a flat equity market for GAAP EPS.\nIf weather events exceed plan, we expect to see both a benefit from our claims adjusting business and increased loss costs.\n",
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"content": "universal insurance holdings q1 revenue $262.8 million.\nq1 revenue $262.8 million.\nq1 adjusted non-gaap earnings per share $0.84.\nq1 gaap earnings per share $0.84.\nmaintaining its guidance for 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Yesterday, we reported solid second quarter results, underpinned by strong top line growth as a result of the pockets of attractive pricing and volume, resulting in an annualized return on average equity in the first half of 2020 of 15.5%.\nIn addition, we continue to enter new states as an agent serving independent third-party carriers with our digital insurance agency Clovered.\nWe launched Clovered just over a year ago and continue to add partners and expand its offerings to consumers, while enhancing the overall digital experience.\nClovered continues to be an attractive growth opportunity for us with approximately 40% premium growth from the year ago quarter to its total book of business, while growing non risk bearing business by over 200% in the same time period.\nThe shift to online policy acquisition continues to grow, in part, due to a very desirable refinance and new home market.\nClovered represents Universal Property & Casualty's fastest growing agency across it's nearly 10,000 independent agents.\nSo, we're off to a solid start to the first half of the year overall, including the successful completion of our reinsurance renewal on time and on budget.\nWe are taking a more measured approach to guidance as a result of previously announced, but starkly above average weather events in the second quarter.\nOur liquidity and ability to drive growth remains strong, and we continue to execute for our consumers and stakeholders.\nAs a reminder, discussions today on adjusted operating income and adjusted earnings per share are on a non-GAAP basis and exclude effects from unrealized and realized gains and losses on investments, and extraordinary reinstatement premiums and related commissions.\nAdjusted operating income also excludes interest expense.\nEPS for the quarter was $0.62 on a GAAP basis and $0.52 on a non-GAAP adjusted earnings per share basis, and $1.23 and $1.32 for the first half of 2020, respectively.\nDirect premiums written were up 13.1% for the quarter, led by strong direct premium growth of 14.5% in states outside of Florida and 12.8% in Florida.\nFor the first half of 2020, direct premiums written were also up double digits, led by 16.5% in states outside Florida and 13.8% in Florida.\nIn both cases, growth was led by increased volume, rate increases becoming effective in a series of states, along with slightly improved retention, contributing to premium growth.\nOn the expense side, the combined ratio increased 12.6 points for the quarter to 99.5% and 9.8 points for the first half of 2020 to 96.8%.\nThe increases were driven primarily by the previously announced increased weather events in the second quarter, a higher core loss ratio and the impact of higher reinsurance costs on the combined ratio, partially offset by a reduction in the expense ratio.\nTotal services revenue increased 16.8% to $16.1 million for the quarter and 20.9% to $31.5 million for the first half of 2020, driven primarily by commission revenue earned on ceded premiums.\nOn our investment portfolio, net investment income decreased 16.6% to $6.2 million for the quarter and 16.3% to $13 million for the first half of 2020, primarily due to lower yields on cash and short term investments during the first half of 2020 when compared to the first half of 2019.\nThe prior year also included onetime income benefits from a special dividend received and onetime reduction in investment expenses.\nAlso to note, we had an increase in our cash and cash equivalents position by 82.2% when compared to the end of 2019 as a result of taking a defensive posture as COVID-19 impacts continue to be felt across the global economy.\nIn regards to capital deployment, during the second quarter, the company repurchased approximately 572,000 shares at an aggregate cost of $10 million.\nFor the first half of 2020, the company repurchased approximately 884,000 shares at an aggregate cost of $16.6 million.\nThe company's current share repurchase authorization program has $11.7 million remaining as of June 30, 2020, and runs through December 31, 2021.\nOn July 6, 2020, the Board of Directors declared a quarterly cash dividend of $0.16 per share payable on August 7, 2020, to shareholders of record as of the close of business on July 31, 2020.\nAs mentioned in our release yesterday, we are updating our full year guidance to reflect the previously announced historically above average second quarter weather events.\nWe now expect a GAAP earnings per share range from $2.31 to $2.61 and a non-GAAP adjusted earnings per share range of $2.40 to $2.70, assuming no extraordinary weather in the latter half of 2020 and no realized or unrealized gains for the second half of 2020.\nThis would yield a return on average equity derived from GAAP measures between 13.5% and 16.5% for the full year.\nI will start with some additional color on prior year catastrophe events, then I'll touch on our experience to date with the second quarter 2020 weather events, and I'll conclude with a few comments on our reinsurance program effective June one.\nOn prior year catastrophe events, we continue to make significant progress in resolving the remaining open claims and, of course, handling the newly reported claims as quickly as possible.\nAs of 6/30, Hurricanes Matthew and Florence each were in the single-digit open claims and continue to be very near the end.\nHurricane Michael had a little over 100 claims open.\nAnd as we start to approach the end on this storm, we did elect to book a modest $9.5 million increase in gross ultimate as of 6/30.\nThis change does not impact our net loss position.\nOn Hurricane Irma, despite the fact that 1,800 new claims were reported during the second quarter, we still successfully reduced the remaining open claim count.\nAs of 6/30, the open Irma account stood at just over 450 we are preparing for the three year statute of limitation for filing new Irma claims to pass in early September, so we can make a final push on closing this event.\nThere was no change to the ultimate as of 6/30.\nWe were directly impacted by 14 different second quarter PCS events, which led us to book an additional $17 million of net pre-tax loss beyond our original weather loss plan as of 6/30.\nA few highlights worth mentioning.\nWe secured more open market catastrophe coverage than at any other point in Universal's history.\nThe top level of UPCIC's reinsurance tower provides coverage to a one in 300-year level.\nThe final estimated cost was in line with our original guidance at approximately 34.6% of estimated direct earned premium for the 12-month treaty period.\nThis compares to 33.3% at this time last year, reflecting a 4.1% increase year-over-year.\nGiven the state of the reinsurance market and the industry's recent loss experience, we view the pricing levels as reasonable for this treaty period.\n",
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"content": "universal insurance holdings q2 gaap earnings per share $0.62.\nq2 gaap earnings per share $0.62.\nadjusted 2020 outlook to reflect historically above average q2 weather events.\nqtrly direct premiums written up 13.1% to $404.7 million.\nhave not seen a material impact from covid-19 pandemic on co's business.\nsees 2020 gaap earnings per share in a range of $2.31 - $2.61.\nsees 2020 non-gaap adjusted earnings per share in a range of $2.40 - $2.70.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We continued to see headwinds in the third quarter as we dealt with elevated industrywide weather events year-to-date, particularly in coastal states.\nOur catastrophe response teams have directly engaged with our insureds to ensure they receive the attention they deserve.\nAs previously announced, we were affected by full retention events from Hurricanes Isaias and Sally in addition to other PCS events year-to-date.\nAs the Statute of Limitations for Hurricane Irma approach is ending, we experienced increased prior-year companion claims, as the window closed.\nThis increase in claims led us to increase our reserves in years prior to 2020.\nWe feel good to have Hurricane Irma behind us, the ability to strengthen reserves appropriately and proud of our employees for their contributions during these unprecedented times.\nOur vertically integrated suite of capabilities continues to differentiate us in our home state.\nOur primary rate increases continue to flow through our book, as evident by our strong direct premiums written growth of 19.4% in the quarter.\nWe continue to selectively write new business, are quickly approaching $1.5 billion in premiums in force, and are optimistic about our prospects in the future.\nAs a reminder, discussions today on adjusted operating income and adjusted earnings per share are on a non-GAAP basis, and exclude effects from unrealized and realized gains and losses on investments and extraordinary reinstatement premiums and related commissions.\nAdjusted operating income also excludes interest expense.\nEPS for the quarter was a loss of $0.10 on a GAAP basis and a loss of $1.43 on a non-GAAP adjusted earnings per share basis.\nYear-to-date, GAAP earnings per share was $1.14 and negative $0.08 on a non-GAAP adjusted earnings per share basis.\nDespite elevated activity year-to-date, we produced an annualized year-to-date return on average equity of 10% with a book value per share that remained relatively flat since the end of 2019 at $15.15.\nAs to underwriting, direct premiums written were up 19.4% for the quarter, led by strong direct premium growth of 18.8% in states outside of Florida and 19.6% in Florida.\nThe quarter's growth benefited from organic new business growth and primary rate increases continuing to flow through the book.\nOn the expense side, the combined ratio increased 36.9 points for the quarter to 134.7%.\nThe increase was primarily driven by previously announced increased weather events in addition to prior years reserve development and the continuation of occurring incremental reserves for current accident year loss cost.\nIn addition, higher reinsurance cost affected the base of the ratio.\nThese increases were partially offset by a benefit from our claims adjusting business and a reduction in the expense ratio.\nTurning to services, total services revenue increased 14.9% to $17.1 million for the quarter, driven by commission revenue earned on CD premiums and an increase in policy fees.\nOn our investment portfolio, net investment income decreased 40.1% to $4.6 million for the quarter, primarily due to lower yields on cash and fixed income investments during 2020 when compared to 2019.\nRealized gains for the quarter were $53.8 million and resulted from taking advantage of increased market prices on our available-for-sale debt investment portfolio.\nWe took the opportunity to monetize the increase in fair value of our investment portfolio as a means to enhance surplus for UPCIC.\nThis facilitates our growth strategy in a hardening primary rate market while strengthening reserves.\nCash and cash equivalents increased 122.5% to $405.1 million when compared to the end of 2019 as a result of the actions taken to realize investment gains leading to higher investment cash flows.\nAs a result of the sales and reinvestment, future portfolio investment income will reflect current market rates.\nIn regards to capital deployment, during the third quarter, the company repurchased approximately 534,000 shares at an aggregate cost of $9.9 million.\nYear-to-date, the company repurchased 1.4 million shares at an aggregate cost of $26.5 million.\nOn July 6, 2020, the Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, which was paid on August 7, 2020, to shareholders of record as of the close of business on July 31, 2020.\nAs mentioned in our release yesterday, we are updating our full year guidance to reflect increased top line revenue, offset by elevated third quarter loss and loss adjustment expense.\nWe now expect a GAAP earnings per share range of $1.80 to $2.10 and a non-GAAP adjusted earnings per share range of $0.55 to $0.85, assuming no extraordinary weather events in the fourth quarter of 2020 and no realized or unrealized gains for the fourth quarter.\nThis would yield a return on average equity derived from GAAP measures of between 11.1% and 14.1% for the full year.\nWe continue to make significant progress in resolving the remaining open claims on prior-year catastrophe events.\nAnd as Steve noted, we reached the Statute of Limitations milestone for Hurricane Irma claims.\nWe did see over 2,000 new Irma claims reported during the third quarter and we elected to book the un-gross ultimate at $1.55 billion.\nThe modest run-up in claims filed in advance of the three-year Statute of Limitation for filing new Irma claims that expired in the second week of September was expected, but we were surprised and disappointed to see quite a number of non-cat Irma companion claims filed simultaneously.\nThis phenomenon contributed to a portion of our third quarter prior-year adverse development.\nWe will continue to monitor the effects of these late reported Irma and Irma-related claims going forward.\nBut we are extremely pleased with the diligence of our claims adjusting staff.\nAs of 9-30, Hurricane Michael had a little over 100 claims open, as we start to approach the end on this storm.\nWe did elect to book the Michael gross ultimate at $386 million.\nThis change does not impact our net loss position.\nEach of these events was booked at 9-30, expecting a full retention loss under its respective reinsurance program.\nFor Hurricane Isaias, that was $15 million pre-tax under our other states program, and for Hurricane Sally, that was $43 million pre-tax under our all states program.\nTogether, these two events resulted in a total net impact of approximately $58 million pre-tax, approximately $44 million after-tax.\n",
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"content": "q3 gaap loss per share $0.10.\nqtrly non-gaap adjusted loss per share of $1.43).\nsees fy 2020 gaap earnings per share $1.80 - $2.10.\nsees fy 2020 adjusted non-gaap earnings per share $0.55 - $0.85.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is a particular note during the current ongoing COVID-19 pandemic when the length severity of the crisis and results of economic and business impacts are so difficult to predict.\nFor information on some of the factors that can affect our estimates, I urge you to read our 10-K for the year ended March 31, 2021, and Form 10-Q for the most recently ended fiscal quarter.\nSuch risks and uncertainties include, but are not limited to, the ongoing COVID-19 pandemic, customer-mandated timing of shipments, weather conditions, political and economic environment, government regulation and taxation, changes in exchange rates and interest rates, industry consolidation and evolution and changes in market structure or sources.\nFinally, some of the information I have for you today is based on unaudited allocations and is subject to reclassification.\nIn an effort to provide useful information to investors, our comments today may include non-GAAP financial measures.\nWe are off to a good start for fiscal year 2022.\nResults for our tobacco operations segment improved on higher African carryover tobacco shipments and a favorable tobacco product mix in the three months ended June 30, 2021 compared to the three months ended June 30, 2020.\nOur Ingredients Operations segment, which includes our October 2020 acquisition of Silva International delivered very strong performance in the three months ended June 30, 2021.\nIt is exciting to begin to see the positive outcome from our capital allocation strategy, which we put in place in May 2018 with the goal of ensuring that we are well positioned for the future.\ninvestments in our tobacco business have enabled us to expand the supply chain services we provide our customers and to create footprint rationalization efficiencies, and we are seeing the returns from those investments in our results.\nOur plant-based ingredients platform is coming together nicely.\nWe continue to believe we are on track for our ingredients businesses to meet our previously announced goal of representing 10% to 20% of our results in fiscal year 2022.\nWe are excited about the performance of our investments thus far, and we'll continue to see prudent strategic opportunities to enhance our businesses and return value to our shareholders.\nTurning to our results.\nNet income for the quarter ended June 30, 2021, was $6.4 million or $0.26 per diluted share compared with $7.3 million or $0.29 per diluted share for the quarter ended June 30, 2020.\nConsolidated revenues of $350 million for the first quarter of fiscal 2022, increased by $34.2 million compared to the same period in fiscal year 2021.\nThe increase was mainly due to the addition of the business acquired in October 2020 in the Ingredients Operations segment, partly offset by modestly lower comparative leaf tobacco sales volumes.\nTurning to the segments.\nThe first fiscal quarter is historically a slow quarter for our tobacco businesses.\nOperating income for the Tobacco Operations segment increased by $3.8 million to $8.9 million for the quarter ended June 30, 2021, compared with the quarter ended June 30, 2020.\nAlthough tobacco sales volumes were down modestly, segment results improved on carryover shipments, product mix and increased supply chain services to customers in the quarter compared to the same quarter in the prior fiscal year.\nCarryover crop shipments were higher in Africa in the quarter ended June 30, 2021, compared to the same quarter in the prior fiscal year, in part due to some shipments that were delayed from fiscal year 2021.\nBrazil experienced an improved product mix on lower volumes in the quarter ended June 30, 2021, compared to the same period in the prior fiscal year when high volumes of lower-margin carryover crops shift.\nCarryover tobacco crop shipments were lower and product mix was less favorable in Asia in the first quarter of fiscal year 2022 compared to the same quarter in fiscal year 2021.\nAnd in the first quarter of fiscal year 2022, we also provided increased supply chain services to customers for wrapper tobacco compared to the same quarter in the prior fiscal year.\nSelling, general and administrative expenses for the tobacco operations segment were lower in the quarter ended June 30, 2021, compared to June 30, 2020, primarily on higher recoveries of value-added taxes and advances to suppliers.\nOperating income for the Ingredients Operations segment was $4.3 million for the quarter ended June 30, 2021, compared to an operating loss of $0.7 million for the comparable quarter in the prior fiscal year.\nResults for the segment improved year-over-year on the inclusion of the October 2020 Silva acquisition.\nFor the first quarter of fiscal 2022, our Ingredients Operations saw strong volumes in both human and pet food categories as well as some rebound in demand from sectors that have been suffering during the ongoing COVID-19 pandemic.\nSelling, general and administrative expenses increased in the quarter ended June 30, 2021, compared to the same quarter in the prior fiscal year on the addition of the acquired business.\nOur tobacco and plant-based ingredients businesses are both currently performing according to our plans.\nLike other industries, we are seeing some logistical constraints around the world with regard to vessel and container availability stemming from the ongoing COVID-19 pandemic.\nHowever, at this time, we do not know what significant such constraints may have on shipment timing or our results.\nWe are continuing to monitor these and other pandemic-related conditions, which affect our operations.\nAnd lastly, as part of our ongoing efforts to set high standards of social and environmental performance to support a sustainable supply chain, we have developed targets to reduce greenhouse gas emissions, which are consistent with the levels required to meet the goals of the Paris Agreement, limiting global warming to well below two degrees centigrade above preindustrial levels.\nOur targets were recently approved by the science-based targets initiative and reflect our commitment to reduce our global greenhouse gas emissions by 30% by 2030.\n",
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"content": "q1 earnings per share $0.26.\nq1 revenue $350 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am joined today by Steve Weisz, Chief Executive Officer; our President, John Geller; and Tony Terry, our new Executive Vice President and Chief Financial Officer.\nThese statements are subject to numerous risks and uncertainties, as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by our comments.\nThroughout the call, we will make references to non-GAAP financial information.\nWhile most of the time we are joining you from sunny Florida, today is particularly exciting is we're at the New York Stock Exchange to celebrate an important milestone for Marriott Vacations Worldwide, our 10th year anniversary as an independent publicly traded company.\n10 years ago we were a pure-play vacation ownership company, with three brands, 64 resorts and approximately 420,000 owners.\nToday we're about vacation experiences, with seven brands, 120 resorts and 700,000 loyal owners in our vacation ownership business and we also have 3,200 resorts and 1.3 million members in our exchange business and more than 150 other resorts and lodging properties in our third-party management business.\nOur large portfolio of offerings allows our owners and members to access virtually any kind of vacation experience they can ever want.\nWe've built a business characterized by strong organic growth and recurring cash flow, driven in part by our capital-efficient inventory approach.\nThis has provided fuel to enable us to expand our resort footprint and pursue M&A activities, including the acquisitions of ILG and Welk Resorts, while simultaneously returning excess cash to shareholders.\nWe've built an incredible team of talented associates throughout the world, I'm sincerely appreciative of their dedication and contributions to our success.\nI'm equally grateful for the millions of loyal owners, members and guests who have put their trust in us to deliver remarkable vacation experiences time and time again to help fuel this growth.\nAnd there's much more to come, including new products, new digital tools to delight our existing customers, while also attracting new ones.\nI've been with Marriott Vacations for 25 years.\nI can honestly say that our best days are still ahead of us.\nStarting with our vacation ownership business.\nOccupancies in our North American resorts were very strong during the quarter, despite softness in a few markets due to the Delta variant and the fires in the Lake Tahoe Basin.\nFor example, we ran nearly 95% occupancy in Hawaii for the quarter, so when the government asked travelers to stay away for a few months, we did see occupancy soften a few points late in the quarter.\nIn Orlando, another large market for us, occupancy dipped during August and September due to the variant, while occupancies at our Florida Beach resorts were well above 2019 levels, illustrating travelers' desire to get back on vacation.\nOur urban locations continued to improve nicely during the quarter, with San Diego running over 85% occupancy and Boston running nearly 95%.\nAnd encouragingly, we saw a nice sequential improvement in our European locations as the quarter progressed.\nWith the strong domestic occupancy, we delivered $380 million in contract sales which was within 3% of 2019 levels.\nFirst-time buyers represented more than 30% of contract sales improving sequentially from the second quarter.\nAnd this is important for the health of the system as first-time buyers have historically doubled their revenue contribution within the first five years of ownership.\nAnd with the products we sell resonating with customers now more than ever VPG excluding, Welk was almost $4500, nearing 30% higher than the third quarter of 2019 with both first-time buyer and owner VPG up double digit.\nMoving to our exchange and third-party management business.\nInterval signed a contract with LS Resorts of leading all-inclusive developer in Nexa.\nThis resort group will transition its members to interval on January 1, leveraging our technology to ensure a seamless customer experience.\nAnd with the acquisition of Welk Resorts earlier this year, we are now working to transition, Welk owners to Interval effective January 1, one year earlier than originally planned.\nThis will not only add new numbers to the Interval network, but also highly desirable inventory in key leisure destinations such as San Diego, Loscabos, Breckenridge and Lake Tahoe.\nIn total these agreements will bring nearly 50,000 new members through the interval system beginning on January 1.\nCompanywide, we also continue to make good progress on our technology initiatives to drive growth and expand margins.\nFor example, our Vacation Ownership business recently launched new digital reservation technology which we expect to increase our marketing efficiency and improve customer service.\nInterval is continuing to work to significantly expand its addressable market beyond this time share and we look forward to sharing our progress on this initiative with the next year.\nAnd we're making good progress linking our Marriott Westin and Sheraton brands into a single point based product, greatly improving owner access across our Marriott branded portfolio products in the first half of next year.\nSo let's talk about the balance of the year.\nWe continue to be very encouraged with the improvement of our business.\nOccupancies remain very strong in October with particularly strong in reach and novel properties.\nThe integration of Welk into our high vacation ownership business continues to go well and we're working diligently to transition Welk owners to Interval, a year earlier than originally planned.\nWe sold more tour packages in the third quarter than we did in the second, ending September with more than 214,000 tours in our package pipeline.\nAnd with the strong ramp-up of package sales this year, we ended the quarter roughly in line with 2019 despite causing most marketing activities for much of last year.\nOwner and preview reservations for the first half of next year are up 10% compared to the same time in 2019.\nIn a recent survey 71% of our owners stated that they are likely to travel within the next three months with 90% likely to travel in the next 12 months.\nWith the change in government restrictions our Cancun and Cabo reports are once again allowed to operate at full capacity and Hawaii's Governor is once again welcoming vacationers to the island.\nAnd we're looking forward to welcoming our international guests back to our US resorts this month now that the restrictions have been relapsed.\nAll of this puts us in a position to close the year on a high note and setting us up for a strong 2022.\nBut before I start, I want to congratulate Tony for his recent promotion.\nI've had the pleasure of working closely with Tony since I joined Marriott Vacations nearly 13 years ago and I couldn't be happier for him.\nToday, I'm going to review our third quarter results, highlight the continued strong recovery across our businesses and discuss the strength of our balance sheet and liquidity position, as well as our expectations for the fourth quarter.\nStarting with our Vacation Ownership business.\nThe value of our leisure-focused business model was evident again this quarter.\nDespite the Delta variant occupancies continue to hold strong in the quarter with owner occupancies above 2019 levels though this was partially offset by some softness in transient and preview bookings.\nAs a result, we grew contract sales by 5% sequentially in the third quarter to $380 million which was almost back to 2019 levels.\nVPG was largely unchanged compared to the second quarter and remain well above pre-pandemic levels, illustrating how well our product continues to resonate with customers as well as the benefits of our channel optimization initiatives.\nAdjusted development profit increased 19% sequentially to $98 million.\nAdjusted development profit margin expanded sequentially by 335 basis points to 30%, the highest margin in our 10 years since becoming a public company, highlighting the benefits of more efficient marketing and sales spending, lower inventory costs and synergy savings.\nTurning to our rental business, as I mentioned last quarter, in order to get more of our owners back on vacation, we decided early in the pandemic to allocate more of our rental keys to owners as demand recovered.\nThis did impact our transient keys rented during the third quarter, but with average revenue per key, increasing 9% sequentially, rental revenues increased 11% and profit grew 73%.\nThe stickier revenue businesses within our vacation ownership segment also performed well in the quarter.\nResort management revenue increased 2% compared to the second quarter and margin was approximately 56% and financing profit increased 16% from the prior year due to the inclusion of Welk.\nWith our contract sales growing 5% sequentially in the third quarter, and financing propensity improving to 60%, our notes receivable balance increased sequentially.\nBased on these trends and the acquisition of Welk, we expect our 2022 financing profit to be well above 2019 levels.\nOur portfolio also continues to perform well with the delinquency and default activity in line or even below pre-pandemic levels for each of our brands, and we expect to complete our next securitization this quarter and terms remain very favorable.\nTurning to the acquisition of Welk, while we're not providing detailed results for the Welk business given its relative size, our vacation ownership results did include $30 million of contract sales and $18 million of adjusted EBITDA better than we anticipated.\nAs a result, total adjusted EBITDA in our vacation ownership segment increased 18% sequentially to $215 million.\nThe quarter benefited from strong growth in development and rental profit and the impact of our business transformation initiatives, enabling us to deliver margins that were nearly 360 basis points higher than two years ago.\nTurning to the exchange and third-party management segment, active members at Interval declined slightly on a sequential basis, and average revenue per member declined 7% due to lower exchange volumes, which I mentioned last quarter.\nAs a result, adjusted EBITDA at our exchange and third-party management segment declined $2 million sequentially.\nHowever, margins expanded by 70 basis points on cost-saving initiatives.\nI'm also very excited about all the new resort affiliations Steve talked about, which will bring nearly 50,000 new interval members to the system by early next year.\nFinally, corporate G&A expense declined 20% sequentially in the third quarter, primarily related to lower bonus expense.\nAs a result, total company adjusted EBITDA increased 25% in the quarter on a sequential basis to $205 million and margin improved to over 27%, more than 300 basis points above the third quarter of 2019, demonstrating the strength of our leisure-focused business model and the benefits of our synergy and transformation initiatives.\nMoving to our balance sheet, as I mentioned last quarter, we've been preparing to return to a balanced capital allocation approach.\nSo with the recovery in the business, we felt that now was the right time to reduce our corporate debt by the $500 million, we borrowed last May at the onset of the pandemic and begin to return cash to shareholders again.\nIn September, we've paid off the remaining $250 million of our 6.5% notes due 2026.\nWe followed that in October by repaying $250 million of the 6% and 8% notes we issued last May.\nWith our current corporate debt at $2.5 billion and the strong recovery in the business, we are on track to get back to debt to adjusted EBITDA of three times or less.\nAnd more importantly by taking advantage of the favorable rate environment and healthy capital markets, we expect our cash interest expense next year to be around $20 million lower than our 2019 cash interest expense.\nWe ended the quarter with $448 million of cash, gross notes receivable eligible for securitization of $278 million and almost $600 million of available capacity under our revolver.\nPro forma for the debt repayment in October, we had $4.1 billion of debt outstanding including $1.6 billion of non-recourse debt related to our securitized notes receivable as well as total liquidity of more than $1 billion.\nFinally our Board of Directors reinstated our quarterly dividend and authorized the $250 million share repurchase program effective September 10, enabling us to repurchase $4.5 million of our own shares in the last couple of weeks in September.\nWe also paid a dividend in October, our first since before the pandemic.\nLooking ahead, while we're not giving guidance, I do want to help you think through what the balance of the year could look like.\nThe fourth quarter has started off well with contract sales above 2019 levels with occupancies at pre-pandemic levels in most of our North America resorts and international travelers now able to visit the United States again.\nWe expect tours to grow sequentially in the fourth quarter while VPGs will remain well above pre-pandemic levels.\nAs a result, we expect contract sales to grow to between $385 million and $405 million in the fourth quarter just above the fourth quarter 2019 at the midpoint.\nSimilar to prior years, we expect reportability to be positive in the fourth quarter.\nFor those trying to compare our fourth quarter results to the fourth quarter of 2019, remember that reportability that year positively impacted our adjusted EBITDA by $22 million.\nAnd this year, we only expect the benefit to be in the $10 million to $12 million range.\nFinally, while we're not providing free cash flow guidance today, with more than $640 million of excess inventory, I would expect our adjusted EBITDA to adjusted free cash flow conversion to be well above our normal 55% range for a number of years enabling us to return to our historic capital allocation strategy.\n",
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"content": "projects contract sales of $385 million to $405 million in q4 of 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These uncertainties are detailed in documents filed regularly with the SEC.\nWe use adjusted constant dollar amounts as lead numbers in our discussions because we believe they more accurately represent the true operational performance and underlying results of our business.\nYou may also hear us refer to reported amounts which are in accordance with U.S. GAAP.\nDue to the significant impact of the coronavirus pandemic on our prior year figures, today's call will also contain certain comparisons to the same period in fiscal 2020.\nThese comparisons are all on a reported dollar basis.\nOn June 28, 2021, the company completed the sale of its Occupational Workwear business.\nAccordingly, the company has reported the related held-for-sale assets and liabilities of this business as assets and liabilities of discontinued operations and included the operating results and cash flows of this business in disc ops for all periods through the date of sale.\nJoining me on the call will be VF's Chairman, President and CEO, Steve Rendle; and EVP and CFO, Matt Puckett.\nAs we move through the halfway point of our fiscal year, I remain encouraged by the underlying momentum across the portfolio and the broad-based nature of this strength gives me confidence that we are driving the right strategy to accelerate growth in the quarters ahead.\nLooking through pandemic-related disruption and near term headwinds in China, we continue to see a healthy retail landscape, a strong consumer outlook and accelerating demand signals across our business.\nWhile the recovery has not been as linear as we had anticipated for some parts of our business, I'm proud of how our teams continue to deliver through the volatility.\nThis is certainly where we excel.\nWe are focused on what we can control.\nAnd despite a more challenging environment than we had envisioned, we are able to reaffirm our fiscal '22 revenue and earnings outlook; a clear testament to the resiliency and optionality of our model.\nWe see our business emerging in an even stronger place than before the pandemic.\nWe've accelerated our strategy to be a more digitally enabled enterprise for driving significant investment behind key capabilities to connect with our consumers.\nWe are driving organic growth as we elevate direct channels, distort Asia, led by China, and accelerate our consumer-minded, retail-centric, hyper-digital business model transformation.\nOn top of that, our number one strategic priority to drive and optimize our portfolio has netted us significant benefits.\nOver the past five years, we have strategically evolved and simplified our portfolio from 32 brands to 12 brands, each with significant D2C and international opportunity, squarely focused on large, growing addressable markets.\nThe macro trends around outdoor and active lifestyles, health and wellness, casualization and sustainability have only strengthened over the past 20 months and our current portfolio is well-positioned to benefit from these accelerating tailwinds.\nActive portfolio management remains an evergreen process and M&A remains our top capital allocation priority.\nThis is a differentiator and a competitive advantage for VF as we continue to refine our portfolio mix to maximize exposure to the most attractive parts of the marketplace.\nWe are confident that we have the right strategy and our continued execution on each of these key strategic pillars positions VF for a stronger emergence.\nNow, moving into our Q2 results.\nWhile noisy, our second quarter results highlight ongoing progress against our strategy and reflect a healthy, accelerating underlying business with broad-based strength across our portfolio.\nI'll start with Vans, which delivered 7% growth in Q2 despite meaningful wholesale shipments pushed into Q3, representing sequential improvement in underlying demand despite a more challenging than anticipated operating environment.\nThe EMEA business has accelerated meaningfully during the quarter.\nHowever, in the U.S., encouraging brick and mortar recovery trends, which had been building into July, were impacted by the Delta surge and its implications across our most important markets.\nThis led to sharp shifts in store traffic trajectory during the peak back-to-school window.\nAdditionally, the brand faced headwinds in Asia Pacific with virus disruption across the region and a more challenging near term consumer environment in China.\nWhile Vans Americas Q2 recovery did not meet our expectations, I'm pleased with our team's response.\nWe're focused on what we can control.\nOur retail associates are driving best-in-class conversion, up 20% relative to pre-pandemic peaks this quarter in the Americas.\nAnd despite the impact of expedited freight, the Vans Americas team has brought full price DTC gross margins above fiscal 2020 levels, supported by discounting below pre-COVID levels.\nAt the same time, leveraging our strong inventory position, we've secured additional shelf space at several key wholesale accounts for the second half.\nSo despite a more challenging operating backdrop than anticipated, we are able to hold on to the low end of our prior outlook for Vans and now expect 7% to 9% growth relative to fiscal 2020.\nWe're confident in Vans' strategic choices as evidenced by improving demand signals and strong consumer engagement.\nThe September Vans Horror collection launch supported the fifth highest sales day on record for our Americas DTC digital business achieving a 100% sell-through within days.\nWe are encouraged by the ongoing strength from Progression Footwear lines, up 15% relative to fiscal 2020 led by UltraRange and MTE and are pleased with the continued growth in Vans Family membership reaching 18.5 million consumers globally.\nOur confidence in the long-term runway for Vans remains unchanged.\nThe brand came into this disruptive period exceptionally strong and consumer engagement has remained healthy.\nThe active space remains a large and growing TAM and the casualization trend continues to present a long-term tailwind for Vans.\nAnd although Vans remains a very important part of our story, we must remember that VF is not just one brand.\nWe have a diversified portfolio of global brands, each with exposure to attractive TAMs with enduring tailwinds.\nWe have significant shared platforms of expertise, highlighted by our international platforms and global supply chain, which are enabling broad-based profitable growth.\nAnd as a result, our model drives ongoing capital allocation optionality to further enhance VF's growth and shareholder return profile.\nMatt will build on many of these themes shortly, but I'd like to start with an overview of the broad-based momentum we're seeing across the portfolio.\nStarting with The North Face, which delivered 29% growth in Q2 despite significant wholesale shipments pushed into Q3, representing a sharp acceleration of underlying demand alongside meaningful margin improvement.\nOur international businesses are gaining share, while the underlying U.S. business has accelerated meaningfully this quarter on tight inventories driving high quality sales.\nWe remain encouraged by the strength across categories as TNF has been successful at balancing On- and Off-Mountain messaging to its consumers.\nOn-Mountain platforms like FutureLight, Vectiv and the recently launched Advanced Mountain Kit continue to drive strong sell-through and reinforce TNF's performance credibility.\nOff-Mountain lifestyle apparel and equipment are delivering outsized growth as strong 365-day demand persisted led by Logowear, Apex and [Indecipherable].\nWe also saw strong performance for more versatile athletic-inspired products, highlighted by the Wrangler franchise.\nWe are raising the outlook for TNF to 27% to 29% growth in fiscal 2022.\nWe continue to believe this moment for TNF is under-appreciated.\nThis will be a $3 billion business, delivering high-teen growth relative to fiscal 2020 levels, with strong margin expansion underway.\nLooking into next year, The North Face will continue to benefit from broad-based brand momentum, fueled by innovation, extremely clean distribution channels, increasing year-round relevancy and ongoing tailwinds from the outdoor marketplace, supported by growing consumer interest in active outdoor lifestyles.\nWe therefore expect The North Face to be at least within its long-term plan range of high-single-digit growth in fiscal 2023.\nMoving on to Dickies, which continues to build upon its incredible run, delivering 19% growth in the quarter.\nThe brand is driving their integrated marketplace strategy, supporting growth horizontally across work and work-inspired categories, as well as vertically as they focus on higher tiers of distribution and bring new consumers into the brand.\nSell-through remains elevated and demand signals continue to be strong.\nAcross the globe, the Dickies team remains focused on the key drivers of their business, expanding core workwear beyond traditional channels and leveraging the brand's authenticity to accelerate the Lifestyle segment.\nIcons have been a focus for the marketing and sales teams and the results are compelling, highlighted by the accelerated growth of the 874 Work Pant.\nThere are several versions of this 50-year-old icon, supported by ongoing innovation, which collectively have delivered over 100% growth year-to-date.\nIn addition to the strong growth trajectory at Dickies, we remain encouraged by the significant margin expansion runway which accelerated in Q2 on the back of strong full price selling and SG&A leverage.\nWe're proud of the continued success at Dickies, which we feel is another under-appreciated part of the story.\nWe are raising the outlook for Dickies to at least 20% growth in fiscal '22, representing at least 30% growth relative to fiscal '20.\nWe expect the brand will approach $1 billion next year as Dickies celebrates its 100-year anniversary.\nNext, Timberland delivered 25% growth in Q2, despite significant wholesale shipments pushed into Q3, representing an acceleration of underlying demand over the quarter.\nThe PRO business remains a consistent growth driver for the brand, supported by a new campaign celebrating the skilled trades to inspire the next generation of worthy workers.\nDespite historically low inventory levels, core boots and outdoor footwear continue to show strength as we head into the holiday, each growing over 40% in Q2.\nTimberland continues to create and own boot culture with the September introduction of GreenStride Eco-Innovation in boots for the first time.\nThe Solar Ridge Hiker launched with much fanfare in New York City and posted 50% sell-through in North America.\nTwo more GreenStride drops will hit in October, driving further momentum behind its important franchise.\nAt the same time, the TrueCloud collection, another eco leadership story, drove strong traffic and social engagement across all regions.\nWe believe the Timberland brand is in a much healthier position today relative to where it was before COVID.\nThis leadership team has a sharpened focus on the brand's product architecture, getting back to Timberland's core, work and outdoor, sustainability and craftsmanship, while increasing energy and newness.\nThey have refocused strategic clarity around the target consumer and on executing the right go-to-market set of choices.\nThe brand is demonstrating strong marketplace discipline, reducing discounts and thoughtfully rebuilding depleted inventory while driving significant improvements in profitability.\nThe integration of Supreme continues to move according to plan and our teams are learning from this highly productive business, including how they manage product creation, building energy ahead of drops, and optimizing assortments in product flow across regions with great agility.\nLooking forward, we remain confident in the significant whitespace opportunity for this brand across geographies with a clear opportunity to leverage VF platforms.\nSupreme remains on track to become VF's fifth billion dollar brand in the coming years.\nAnd lastly, when speaking to the broad-based strength across our portfolio, I'd like to briefly shine a light on our three outdoor emerging brands: Smartwool, icebreaker and Altra.\nThis group collectively represents nearly $550 million in revenue for the mid-to-high-teen growth profile longer term.\nWhile smaller today, these brands are all profitable and are exposed to the attractive tailwinds around health and wellness, active outdoor lifestyles and sustainability.\nAnd we're seeing it in their results.\nThe Smartwool brand is up nearly 60% [Phonetic] year-to-date, representing high-teens growth relative to fiscal 2020.\nWe've accelerated investment in brand awareness campaigns, highlighting the high performance and versatility of this product, while targeting an active, younger consumer.\nWe're seeing it pay off with broad-based strength across categories, led by apparel and outsized growth from new consumers.\nOur other natural fiber brand, icebreaker, has successfully relocated the core leadership team from New Zealand to our Stabio headquarters, further integrating into our EMEA platform, which will accelerate the brand's global reach.\nThe brand has grown nearly 30% year-to-date with balanced growth across its largest markets in Europe and the U.S. Base layers, tees and underwear represent about 70% of icebreaker global revenue confirming the consumer appeal of a 100% natural product in next-to-skin categories.\nAnd lastly, Altra, the fastest growing brand in our portfolio is celebrating its 10th anniversary this year by establishing its legendary Lone Peak franchise as the number one trail running business in the U.S. The brand has continued to build accolades from the running community with awards from Runners World, Self Magazine, Women's Health and Outside Magazine across multiple franchises.\nThrough the first half of the year, the brand has grown over 60% relative to fiscal 2020 and we expect this to accelerate into the back half of the year as the brand continues to expand its presence in road running with innovative new styles and designs.\nWe see tremendous opportunity for Altra to expand distribution domestically and internationally, leveraging its differentiated product and continued strong tailwinds for this category.\nI see significant potential for each of these brands to deliver outsized growth in the years to come.\nWe have demonstrated the ability to scale brands in the big businesses and have confidence that, over time, these outdoor emerging brands will become another strong component of VF's financial algorithm.\nWhile we remain in a disrupted environment, I believe VF's long-term prospects are even more attractive today.\nWe've accelerated our transformation strategy.\nWe have further optimized our portfolio and importantly, this portfolio today is capable of delivering greater broad-based strength, relative to where we were before the pandemic.\nThis gives us even greater confidence in our ability to drive high-single-digit topline and low-teens earnings growth at a minimum as we emerge as an even stronger company.\nI'm happy to give an update on our progress as we navigate the recovery and importantly, I am encouraged by the resiliency of our business during the first half of fiscal 2022.\nThe environment has clearly evolved differently than we had planned in May.\nHowever, our teams remain focused on what we can control, and they are delivering.\nThe underlying topline recovery across the majority of our business has exceeded our plan, offsetting new challenges in the APAC region and ongoing disruptions across the supply chain network.\nWith thoughtful allocation of investments, we've been able to drive continued strategic investment spending, while leveraging other parts of our SG&A base to protect earnings.\nAs a result, I'm proud of our ability to hold on to our fiscal 2022 earnings outlook of about $3.20 despite a more challenging than anticipated operating environment, including an incremental headwind of about $0.09 from expedited freight.\nThis should be a strong signal that this management team is committed to leveraging the significant optionality in our model to deliver on our earnings commitment.\nBefore unpacking our Q2 results, I want to quickly run through the operating environment across the region and share the latest outlook for our global supply chain.\nStarting with the Americas region, product delays and reduced traffic during virus surges impacted the business during the highest volume periods this quarter.\nHowever, the region was able to deliver 22% organic growth in Q2, representing continued sequential underlying improvement.\nRetailers remain bullish on the upcoming holiday season and we are focused on delivering products in time to support strong demand signals.\nCancellation rates remain historically low due to tight inventories, conversion remains exceptionally strong, and we see continued reductions in promotions compared to last year, driving strong average selling prices.\nNext, the EMEA region delivered mid-teen organic growth in Q2 despite meaningful supply chain disruption, particularly for The North Face.\nThe underlying business continues to perform above the overall market, supported by strong performance of key Digital Titans.\nThis region was strong before the pandemic and has shown incredible resiliency throughout this disruptive period.\nStores are showing continuous recapture of volumes despite softer street traffic in large metro areas.\nWe are encouraged to see the brick-and-mortar DTC business for both The North Face and Vans, and quite meaningfully this quarter, each returning to positive growth relative to fiscal year '20.\nRecovery momentum and sustained growth are expected to accelerate throughout the year as vaccine rollouts progress.\nFinally, the APAC region delivered low-single-digit organic growth despite a more challenging backdrop than anticipated for parts of our portfolio.\nDue to a resurgence of COVID-19 across the region, economic growth and consumer confidence has softened since July.\nParts of our business in China have been further impacted by weaker digital traffic for non-domestic brands.\nThis has been more impactful for Active brands relative to Outdoor.\nAcross the portfolio, we believe we are performing better in our respective categories versus other international brands.\nAnd while we remain bullish on the long-term opportunity in the region, these pressures have impacted our near-term outlook.\nWe now expect low-teen growth in China in fiscal 2022.\nMoving on to our global supply chain.\nThe environment remains challenging and has continued to deteriorate following our Q1 call in late July.\nThe resurgence of COVID-19 lockdowns in key sourcing countries like Vietnam have resulted in more impactful production delays and the logistics network continues to face unprecedented challenges.\nWe are experiencing increasing product delays from the supply chain disruption, which is creating meaningful quarter-to-quarter volatility in our results.\nLet me unpack all of this in a little more detail.\nDue to VF's large and strategically diversified sourcing footprint, our overall production capacity has remained better positioned than most with about 85% of production operational throughout the quarter.\nPressures have generally concentrated in the southern region of Vietnam, which represents about 10% of VF's overall sourcing mix.\nWe remain confident in our ability to navigate the production environment.\nHowever, the logistics network remains under increasing pressure.\nPorts are generally open, but operations remain severely impacted by labor and equipment availability, servicing significantly higher ship volumes.\nAs a result, our dwell times at points of destination have increased significantly.\nIn aggregate, supply delays are pervasive and, in some cases, have extended 8 weeks to 10 weeks.\nAs a result, in the most recent quarter, we had a material shift of revenue from Q2 into Q3 with more than half of this tied to Vietnam.\nDespite these delays, cancellation rates have remained below historical levels, signaling strong demand and tight channel inventories.\nHowever, delays ultimately impact product availability across the marketplace.\nVirtually all of our brands are experiencing delayed collections, style and, in some cases, insufficient size assortment, limiting their ability to fully meet strong demand.\nFor example, the Supreme brand has experienced around 30% less inventory around drops.\nSo despite strong sell-through trends, we are losing volume from limited supply.\nThis environment is where our world class supply chain differentiates itself, highlighting the significant competitive advantage VF has created with its platform.\nWe have always maintained a diversified sourcing footprint to provide resiliency against unforeseen changes in the operating or geopolitical environment.\nFor example, our largest market, Vietnam, only represents about one-fourth of our sourcing mix.\nAnd within Vietnam, we work with multiple partners and have presence in multiple provinces, both between the northern and southern regions of the country, and maintain access to multiple ports.\nOur teams are leveraging VF's scale and relationships to navigate the challenging logistics environment in the most cost-effective way.\nWe continue to utilize expedited freight across the large number of air providers.\nWe've doubled our network of ocean carriers and significantly expanded the number of ports utilized across the globe.\nOur commercial and supply chain teams are working closely with our key wholesale partners, increasingly using direct shipping and our work indicates we're doing better than most of the competitive set at keeping products on the shelves.\nOur relationship with these key wholesale partners continues to strengthen with our open, transparent and timely communication throughout this dynamic situation.\nSo despite the unprecedented level of disruption across the global supply chain, our teams have been able to keep products flowing, supporting our strong holiday growth plan and allowing VF to effectively hold our revenue guide for fiscal 2022.\nMoving into some additional highlights on our second quarter.\nTotal VF revenue increased 21% to $3.2 billion despite a significant amount of orders shifted from Q2 into Q3, implying continued sequential underlying improvement for the portfolio.\nFor context, we estimate this shift represented a mid-to-high single-digit impact to VF's Q2 growth rate relative to fiscal 2020.\nOur adjusted gross margin expanded 300 basis points to 53.9% due to higher full price realization, lower markdowns, favorable mix and around 20 basis points contribution from Supreme.\nWhen compared to prior peak gross margins in fiscal 2020, our current year gross margin was impacted by about 180 basis points headwind from incremental expedited freight and FX.\nExcluding these two items, our organic gross margin in Q2 is over 100 basis points above prior peak levels, driven by favorable mix and strong underlying margin rate improvement.\nAnd as a reminder, our Q2 2020 gross margin was very strong.\nSo our ability to deliver this level of underlying expansion against fiscal year '20 margins is a strong testament to the health of our brands in the marketplace.\nOur SG&A ratio improved in Q2, down 100 basis points organically to 37.2% despite elevated distribution spend and continued growth in strategic investments.\nThis strong underlying leverage was driven by discretionary choices and is a clear reflection of the optionality within our model, supporting organic earnings per share growth of 60%.\nI'm proud of our team's ability to deliver earnings of $1.11 in Q2 despite incremental expedited freight expense and significant wholesale shipment timing headwinds in the quarter, reflecting the strong underlying earnings momentum of the portfolio.\nNow a few comments on our revised fiscal 2022 outlook.\nWe are holding our revenue guidance to be about $12 billion despite a weaker China outlook in the near term and a lower than expected back-to-school performance at Vans in the U.S. and ongoing supply chain challenges; all of this, highlighting the broad-based strength across our brands and geographies.\nOur gross margin outlook is now about 56%, including 40 basis points of incremental freight cost relative to what we had expected in July, implying an improving underlying gross margin outlook.\nAnd adjusting for incremental freight and FX, our fiscal 2022 outlook implies over 100 basis points of underlying gross margin expansion relative to peak gross margins in fiscal 2020, driven by favorable mix and clean full price sell-through.\nWe are holding our operating margin outlook to around 13% for fiscal 2022 despite the incremental freight cost covered.\nAs Steve said, we're focused on what we can control and for me, SG&A control is clearly top of mind.\nWe are offsetting supply chain and distribution cost headwinds with spend reduction actions, while protecting strategic investments and demand creation.\nThe business is driving impressive underlying leverage and our confidence is strong that we can continue to accelerate this over time.\nFinally, as discussed, we are reaffirming our full year earnings outlook of around $3.20 despite about $0.09 of incremental costs directly attributed to the supply chain disruption; a strong testament of portfolio resiliency and the optionality of our model.\nBefore the pandemic, VF was more reliant on the Vans brand.\nToday, however, we have a much larger portion of our business performing at or above our expectations.\nThere is broad-based momentum across the portfolio.\nVF also has a power -- has powerful enterprise platforms, highlighted by our world-class supply chain, which provides a significant competitive advantage to our business.\nAnd lastly, VF has the capacity to drive meaningful incremental shareholder value through capital allocation optionality.\nWe've demonstrated this over the course of the pandemic by maintaining our dividend and trading our occupational work business for the Supreme brand.\nAs we have line of sight to our leverage threshold, we have this additional optionality and we'll be opportunistic in share repurchases moving into the balance of this fiscal year.\nVF is not just one brand.\nWe are a diversified portfolio of strong brands supported by world-class enterprise platforms, which we believe at minimum can drive high-single-digit revenue growth, low-teens earnings growth and provide meaningful capital allocation optionality moving forward.\n",
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"content": "sees fy revenue about $12 billion.\nsees fy adjusted earnings per share about $3.20.\nqtrly revenue from continuing operations increased 23 percent to $3.2 billion.\nfull year fiscal 2022 adjusted earnings per share is expected to be around $3.20.\nqtrly adjusted earnings per share from continuing operations $1.11.\nmajority of vf's supply chain is currently operational.\nport congestion, equipment availability and other logistics challenges have contributed to increasing product delays.\nvf is working with its suppliers to minimize disruption and is employing expedited freight as needed.\nas covid-19 uncertainty continues, vf expects ongoing disruption to its business operations.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These uncertainties are detailed in documents filed regularly with the SEC.\nWe use adjusted constant dollar amounts as lead numbers in our discussion, because we believe they more accurately represent the true operational performance and underlying results of our business.\nYou may also hear us refer to reported amounts, which are in accordance with U.S. GAAP.\nDuring the fourth quarter of 2020, the company determined that the occupational workwear business met the held-for-sale and discontinued operations accounting criteria.\nAccordingly, the company has reported the related assets and liabilities of the occupational workwear business in discontinued operations as of the date noted above and included the operating results of this business in discontinued operations for all periods presented.\nAs always, I hope our comments today find you and your loved ones healthy and safe.\nAs we put behind us, we've unfortunately experienced a tumultuous start to 2021 highlighted by the political and ideological divide in our nation as well as ongoing challenges presented by the pandemic across the US, UK in other countries around the world.\nEven so I remain optimistic about the year ahead and to improvements in our geopolitical, macroeconomic and pandemic related situations and I'm confident in VF plan to accelerate growth, continue advancing our business model transformation and deliver on our commitments to our shareholders and stakeholders around the world.\nVF performance during the third quarter was largely ahead of expectations despite additional COVID related disruption to our business.\nConsumer engagement with our brands remains strong and we have conviction that the secular trends related to casual externalization, health and wellness and the desire to get outdoors will be enduring.\nOur business is on track to return to growth in the fourth quarter and I am confident that the strategy we have in place positioned us well to accelerate growth as we head into fiscal 2022.\nAt that time, our business had essentially fully reopen across the globe and underlying business trends have continued to stabilize.\nWe saw strong momentum in China and across our digital platform, which we continue to view as leading indicators for our business.\nConfidence from this momentum, as well as early signs of stability and recovery across our portfolio more broadly, supporting our preliminary outlook for fiscal 2021 and the decision to raise our dividend.\nFurther, in early November, we announced the acquisition of Supreme.\nOur willingness to execute the transaction during the pandemic was a function of the resiliency of Supreme's business model, our early and decisive actions to ensure liquidity as well as our increased confidence in the trajectory of our organic portfolio.\nFast forward to today, our business has continued to perform ahead of expectations and our confidence and visibility heading into fiscal 2021 [Phonetic] continues to improve.\nWhile the environment has proven to be somewhat more difficult than expected, the performance of our business demonstrates the resilience of our portfolio.\nWhile the full extent of these headwinds was not contemplated in our initial fiscal 2021 outlook, we were able to more than absorbed these impacts as a result of the continued strength of our digital and China businesses as well as better than expected performance from our North Face and Timberland brands globally.\nAs a result of the momentum we see building across our portfolio, fueled by our business model transformation, coupled with the closing of the Supreme transaction, we are raising our fiscal 2021 outlook.\nScott will impact the details in a moment.\nBefore getting into the highlights for the quarter, I'd like to provide an update on our progress against our business model transformation.\nUnderstanding and focusing on our consumer connectivity is at the heart of our transformation journey.\nOur teams continue to activate capabilities to better understand and build more intimate relationships with our consumers.\nDigitize the go-to-market process and enhance and integrate the online and offline consumer experience.\nThe continued impact of the pandemic has forced an ongoing reaffirmation of our priorities and we remain committed to both the near-term brand specific initiatives and long-term enterprise wide platform investments.\nContinued investment behind our transformation is critical to our success and long-term growth aspirations, I'm pleased with the significant progress we've made throughout 2020 as evidenced by the resiliency of our performance during this past holiday season and the momentum that is building across our portfolio as we head into fiscal 2022.\nA recent proof point of these accelerated initiatives has been enabling our brands to build omni-channel consumer journeys and optimize supply chain efficiency.\nOn our last call, we shared that ship from store functionality was activated across the majority of our Vans and North Face full price stores, ahead of the holiday season, specifically within our EMEA platform.\nOur teams engineered homegrown solutions to deliver buy online pickup in store, ship from store and reserve online buy in the store right before lockdown down measures applied across the region.\nThese businesses were able to utilize retail inventories and leverage ship from store capabilities when the stores were forced to shut down, supporting an 80% increase in digital revenue.\nPhase 2 of this project is currently under way with the plan to go live in the coming months, including save the sale functionality, which will allow our brands to leverage retail inventory when an item is out of stock online.\nTurning to our brand highlights from the quarter.\nVans revenue continued to sequentially improve declining 8% as 48% growth in Digital was more than offset by brick and mortar store reclosures in the Americas and EMEA markets.\nThe brand accelerated to 9% growth in APAC, led by 58% digital growth and 20% growth in China.\nFrom a product standpoint, all-weather MTE styles increased at a double-digit rate and the Ultra range increased high single digits as Vans consumers turn to more outdoor and active oriented franchises.\nVans ranked number one among the largest brands during the Singles' Day on Tmall getting 700,000 new consumers.\nAlso in November Vans customs launched on Tmall becoming the first global brand offering a full customization engine on this platform, the collaboration with Dave drove the launch generating 870,000 unique visitors on the customer site that day.\nThe Vans family member base continues to grow globally with membership approaching 14 million consumers.\nAlthough the headline number for Vans reflects the challenging brick and mortar operating environment in the US and Europe, we remain confident in the underlying trajectory of the business and expect at least low double-digit growth in the fourth quarter on a reported basis.\nContinued momentum in China and across the digital platform normalized inventory levels across all regions and strong consumer growth and engagement support the brand's return to growth beginning in the fourth quarter.\nMoving on to the North Face.\nRevenue declined 2% with continued sequential improvement in the Americas and double-digit growth in Europe and Asia.\nEurope remains a bright spot for the brand with 17% growth, including a 112% digital growth, offsetting the impact of significant store closures in the region.\nGlobal TNF digital increased 61% with accelerated growth across all regions driving a return to positive growth in D2C.\nIn North America, the VIP loyalty program drew 40,000 sign ups, a more than 90% increase versus last year.\nTNF continue to drive a significant increase in consumer engagement through authentic and purpose led marketing activations.\nCore off mountain icons such as the New-C [Phonetic] franchise performed well and the TNF Gucci Ecolab generated tremendous brand energy with over 15 billion media impressions since its December launch.\nYes, you heard that right over 15 billion media impressions since its December launch.\nOn mountain product also performed well highlighted by future like to expansion deeper into the product assortment leading to triple-digit growth versus the prior year.\nThe new footwear platform Vective [Phonetic] has been well received exceeding our initial sell and targets for this spring's launch.\nWe are pleased with the performance of the North Face and encouraged by the brand strong momentum heading into next year.\nOn a reported basis, we now expect fiscal 2021 revenue for the North Face to declined less than 10% including greater than 20% growth during the fourth quarter.\nTimberland revenue declined 17% relative strength from apparel and positive growth in both outdoor footwear and the pro-business were more than offset by softness in classic footwear, which was significantly impacted by limited inventory availability.\nTimberland continues to drive brand energy with key influencers and retailers to high profile collaborations and the launch of new franchises.\nThe new work Summit boot was launched this quarter contributing to record traffic to Timberland pros digital site, which saw more than a 100% growth.\nWe're encouraged by the opportunity for true cloud.\nA new innovative eco-friendly franchise made from renewable and recycled materials and green straight a new franchise anchored in outdoor.\nWhile still early, and I'm pleased with Timberlands progress in the evolution and diversification of Timberlands new and innovative product portfolio.\nContinued momentum from Timberland Pro, apparel and non-classics footwear coupled with improving demand and inventory levels for core classics position the Timberland brand for continued progress heading into fiscal 2022.\nDickies revenue increased 7% with strong demand across all regions and growth across all channels.\nThe work inspired lifestyle product portfolio continues to develop at a rapid pace increasing at a double-digit rate across all three regions.\nWork inspired lifestyle product now represents about a third of global brand revenue.\nBrand interest accelerated in the quarter-over-indexed toward the key 18 to 24-year-old consumer demographic supported by the United by Dickies global campaign and focus on the brands icon stories.\nFinally, we are thrilled to have closed on the acquisition of Supreme.\nThis move is further validation of the actions we've taken over the past four years to position our portfolio into those parts of the market where there is strong consumer engagement in demand.\nWe are confident that the Scream transaction will serve as a spark for another layer of transformative growth and value creation for VF and our stakeholders.\nIn early January we announced the transformation plan for APAC operations.\nThis represents the first significant action under Project enable.\nHighlights include the following.\nWe will transition our brands center of operations to Shanghai.\nWe will transition the Asia product supply hub to Singapore, I'll also redeploying some of the product supply talent and resources throughout primary sourcing countries to work more closely with key suppliers and drive greater efficiency.\nWe will establish an additional shared services center in Kuala Lumpur, Malaysia, to serve as the home for central activities within our enterprise functions.\nAs you would expect we will take great care as we move through the transition process during the next 12 to 18 months.\nAnd as always, we are committed to supporting the personal needs of all impacted and relocating associates and their families.\nI'm encouraged by the recent performance and resilience of our business and optimistic about the growth outlook for our brands as we move into fiscal 2022 and beyond.\nAs we said from the onset of the pandemic with great change comes great opportunity.\nI am confident VF will emerge from this pandemic an even stronger position ready to build upon our storied history an established track record of delivering strong returns to all stakeholders.\nWhat a year beginning with the unprecedented enterprise preservation actions at the onset of the pandemic to the acquisition of Supreme this has been an unbelievable period for VF and I'm grateful for the work that's been done by our teams around the globe to position us for growth and success moving forward.\nTo recap our quick and decisive actions to ensure liquidity have allowed us continued invested throughout this disruptive period highlighted by our ability to acquire Supreme a perfect complement to our portfolio and accelerant to our long-term strategy and transformation agenda.\nOur aggressive control of inventory while prioritizing newness has allowed us to maintain brand momentum while positioning us for a return to profitable growth from the beginning of the fourth quarter and into the next fiscal year and our sharp control on discretionary spending and the launch of project enable presents a tailwind toward operating leverage moving forward, and the ability to direct more dollars to our highest priority growth investments.\nSo while the near-term environment remains noisy including lock downs, store closures and inventory constraints I could not be more pleased with the overall health of our enterprise and the composition of our portfolio heading into next year.\nI'll open with a quick update on Supreme which I know is of interest to many of you.\nAs announced on December 28, we closed the acquisition for an aggregate purchase price of approximately $2.1 billion subject to customary adjustments.\nWe expect Supreme to contribute about $125 million of revenue and $0.05 of adjusted earnings to the fourth quarter of fiscal 2021.\nAs disclosed that announcement, we expect Supreme to contribute at least $500 million of revenue and at least $0.20 of adjusted earnings in fiscal 2022.\nWe're now moving into the integration phase and carefully on boarding Supreme into the VF family.\nFocused on applying the appropriate amount of governance and oversight where needed while maintaining a light touch approach in other areas to avoid over burdening the brand.\nWe're committed to keeping it business as usual for the brand and its teams, while at the same time understanding how we can begin to enable the brand's growth and strategic vision while activating synergy opportunities where appropriate.\nWhile it's early days, there is a lot of excitement about the future among both the VF and Supreme teams and we're off to a great start.\nMoving on to an overview of the operating environment across the regions.\nStarting with the Americas continued virus related lock downs and disruption present near-term challenges.\nWith that said, the outdoor and active categories continue to outpace overall apparel performance and demand trends have remained resilient.\nRetailer inventories appear to be well positioned to exiting the holiday season but do remain abnormally low in certain categories and channels.\nDespite continued traffic headwinds our Americas business sequentially improved with nearly 50% digital growth offset by store closure headwinds.\nMoving on to the EMEA region where we've seen a second wave of the virus introduce more severe lockdown measures than previously anticipated.\nAs a result the broader EU economy has been among the hardest hit by the pandemic this quarter.\nAs the vaccine rollout is starting across Europe.\nThe region is bracing for another wave of COVID 19 and the UK recently extended more restrictive locked downs until February.\nThere are reasons for optimism however with digital acceleration continuing throughout the region, as we've seen across our own brands and with our digital partners such as Zalando and Asos.\nVF EMEA digital business grew more than 80% in the quarter despite half of our brick and mortar stores being closed for a large portion of the quarter, the EMEA region, saw a meaningful sequential improvement and returned to positive growth on a reported basis.\nFinally, the APAC region continues to offer greater stability than any other even as the effects of the pandemic leaner.\nChina has seen a pickup in consumer spending with positive growth in apparel and footwear categories.\nWe continue to view APAC is the leading indicator of the larger macroeconomic environment.\nOur Mainland China business grew 15% led by strength at Vans which grew 21%.\nThe D2C business in Mainland China accelerated to percent growth led by 24% growth in digital.\nChina retail partner inventory continues to improve and our partner, comp sales return to growth this quarter.\nWe're excited by the continued momentum in China and have high confidence in our outlook of 20% growth this year.\nNow turning to highlights from the quarter.\nTotal VF revenue declined 8% in line with our expectations.\nInternational declined 4% as a 4% decline in EMEA was offset by 1% growth in APAC, including 11% growth in Greater China.\nOur D2C business also declined 4% driven by store closures and continued soft traffic in the Americas and EMEA.\nOur digital business grew 49% with strong performance across virtually every brand in the portfolio.\nIncluding our pure play digital wholesale partners, our total digital business represented about one third of total revenue in the quarter.\nWe now expect D2C digital revenue growth to exceed 50% for fiscal 2021 on a reported basis and including our digital wholesale business, we expect total digital penetration to approach 30% for the year.\nGross margin contracted 150 basis points to 57%, the third consecutive quarter of sequential improvement aided by moderating promotional activity.\nThe decline versus last year was primarily driven by higher levels of promotion and 90 basis points from FX transaction partially offset by 90 basis points of favorable mix benefit, while the promotional environment remains a headwind, it has slightly better than our expectations.\nAs we move into the fourth quarter and into fiscal 2022.\nWe expect the impact of promotions and discounting to continue to moderate.\nOur SG&A spending decline about 4% relative to last year as we return to more normalized levels of strategic investment spending, including demand creation, approaching historical levels of investment.\nAs expected, we did experience cost pressure from higher freight and distribution expenses, although these were more than offset by reductions in discretionary spending and leveraged elsewhere throughout the cost base.\nWe expect to continue to invest in our strategic priorities in the fourth quarter as we return to growth.\nInventories were down 14% at the end of the third quarter, consistent with our prior expectations.\nWe expect to exit our fiscal year end March with inventories at equilibrium in support of our forward growth outlook.\nWe also see relatively clean inventory levels at retail globally positioning our brands for a return to more profitable growth heading into next year.\nAs expected, service and in-stock levels improved as COVID related disruptions had less of an impact in the quarter.\nOur liquidity position remains strong.\nWe ended Q3 with approximately $3.9 billion of cash and short-term investments in addition to roughly $2 billion remaining undrawn on our revolver.\nAfter funding the Supreme acquisition, we expect to exit fiscal 2021 with more than $1.5 billion in cash and nearly $2 billion remaining undrawn on our revolver.\nOur capital allocation priorities remain consistent supported by our robust liquidity position.\nWe remain fully committed to growing our dividend, which continues to be an integral part of our TSR model.\nOur share repurchases program remains on hold as we focus on deleveraging the balance sheet following the acquisition of Supreme.\nSo now turning to our updated outlook.\nWe are raising our fiscal 2021 outlook and now expect full-year revenue to be between $9.1 billion and $9.2 billion and full-year earnings per share of approximately $1.30.\nThe increase in our outlook includes the accretion from Supreme in the fourth quarter results, implying a modestly higher outlook for the organic business.\nWe're also raising our free cash flow outlook to approximately $650 million.\nI know many of you are eager to understand our initial expectations for fiscal 2022.\nWhile it's too early to provide a preliminary outlook at this time, I will provide a few high-level comments to help you understand how we're thinking about the evolution of our business as we head into next year.\nOverall, we see an improving consumer backdrop, particularly in our core categories, along with brand momentum across our largest properties globally.\nThe accelerated shift toward digital in China are beneficial to our fundamentals and recent portfolio actions are immediately accretive to our revenue growth and margin profile.\nWe continue to see encouraging signs of stabilization in the retail marketplace and a normalization of inventory flows from a healthier supply chain.\nWe intend to continue to distort investment toward our strategic priorities and business model transformation in support of our powerful brand portfolio.\nTaken together, I remain optimistic about the strength of our growth algorithm going forward and I'm confident in our ability to emerge from this crisis in an advantaged position.\nThe portfolio actions we've taken over the last five years have left us well positioned to continue delivering superior returns to our shareholders.\n",
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"content": "sees fy adjusted earnings per share about $1.30.\nsees fy revenue $9.1 billion to $9.2 billion.\nqtrly revenue from continuing operations decreased 6% (down 8% in constant dollars) to $3.0 billion.\nas covid-19 uncertainty continues, vf expects ongoing disruption to its business operations.\nqtrly increase in direct-to-consumer digital revenue of 53% (49% in constant dollars).\ninventories were down 14 percent in quarter compared with same period last year.\nintends to continue to pay regularly scheduled dividend & is not currently contemplating suspension of dividend.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These uncertainties are detailed in documents filed regularly with the SEC.\nWe use adjusted constant dollar amounts as lead numbers in our discussion because we believe they more accurately represent the true operational performance and underlying results of our business.\nYou may also hear us refer to reported amounts which are in accordance with U.S. GAAP.\nDuring the fourth quarter of 2020, the Company determined that the Occupational Workwear business met the held-for-sale and discontinued operations accounting criteria.\nAccordingly, the Company has reported the related assets and liabilities of the Occupational Workwear business in discontinued operations as of the date noted above and included the operating results of this business in discontinued operations for all periods presented.\nAs always, I hope our comments today find you and your loved ones healthy and safe.\nAs we conclude our fiscal '21 year, I'm proud of the way both VF and our people navigated what turned out to be one of the most disruptive years in our Company's 122-year history.\nWe didn't know how the pandemic would unfold and we didn't know how long it would last.\nBut we did know one thing, we were determined not just to survive the situation, but to capitalize on the moment, emerge even stronger, and position VF and our brands for the next chapter of growth and value creation.\nCombined with our early actions to preserve liquidity and protect our balance sheet, today I can say with confidence that VF is indeed emerging from this crisis as a stronger, smarter, and more focused enterprise.\nThroughout fiscal '21, our teams remain sharply focused on executing their plans and we continue to invest in our brand's greatest opportunities to drive growth.\nAs you all know, our organic portfolio had strong momentum heading into this crisis, delivering 9% revenue and 19% earnings growth through the first nine months of fiscal '20.\nAll of the actions we've taken throughout fiscal '21 have been squarely focused on regaining the strong organic momentum as we exit the pandemic.\nWe also remained focused on driving inorganic growth by evolving our portfolio to align with near and long-term market opportunities.\nThis is exactly what we did by acquiring Supreme in late 2020 which we believe will deliver significant value creation for VF shareholders in the years to come.\nIn addition, we announced late last month that we've entered into a definitive agreement to sell our Occupational Workwear businesses.\nThe sale of this business will provide greater financial flexibility to fuel the long-term strategic growth initiatives for our remaining portfolio.\nThe continued effects of the pandemic forced an ongoing reaffirmation of our priorities.\nWe've been actively working to accelerate our hyper digital journey in fiscal '21, with continued focus on a central consumer data platform that's accessible to our brands and that enables them to understand consumers more deeply and to engage them in more meaningful and personal ways, and we leveraged new technologies and processes to further digitize our go-to-market approach with advancements in 3D design and development, virtual product reviews and digital printing capabilities that shorten production calendars and accelerate our ability to flow newness and innovation.\nWe also kicked off project Enable, a multi-year initiative to evolve our organizational design to ensure we have the right capabilities, resources and talent in place to propel us forward.\nThis work includes up-skilling and reskilling parts of our workforce to equip them with the know-how to thrive in a digital first world.\nThe Project Enable will help us accelerate our business model transformation and reduce our global cost structure by about $125 million over three years.\nAlong with our focus on business performance and advancing our strategy, we have remained determined to continue building our reputation as a purpose-led company that leads by example.\nWe continue to activate our people first approach through fiscal '21.\nWe prioritized the health and safety of our people worldwide and went to great lengths to support their financial well-being.\nI'm extremely proud to say that even during the darkest days of the crisis when nearly all our stores around the world were closed for months on end, not one of our retail associates was laid off or furloughed because of the pandemic.\nWe also continue to meet our commitments to the communities we serve and the planet we all share.\nLast year was a year of tremendous progress in our efforts around the world to advance environmental sustainability.\nWe allocated the net proceeds from our EUR500 million green bond, the first in the apparel footwear industry, toward VF's eligible, sustainable projects worldwide.\nCollectively, these projects are helping to deliver meaningful environmental benefits.\nIn addition, we announced our goal to eliminate all single-use plastic packaging, including poly bags by 2025.\nGoing forward, all remaining non-plastic packaging used by VF and our brands will originate from sustainable sources and be designed for reuse or recyclability.\nWe also published our first human rights report in alignment with the United Nations' guiding principles on business and human rights.\nWe're very proud of this work, and we aim to continuously improve as we uphold human rights in all our operations and across our global supply chain.\nBeyond the global pandemic, other events of last year laid bare the pervasive racial and social economic injustices that plague our world, especially as they impact people of color.\nIn response, VF and our brands took action to build on our inclusion and diversity work by establishing the Council to Advance Racial Equity, CARE.\nAlthough CARE is still young, we believe it will be a galvanizing force for our entire company as we take collective actions in the years ahead to fight for racial equity and social justice.\nOperating as a purpose-led company is not just the right thing to do, it is what our employees and our consumers expect.\nBrands are more than businesses which deliver product, they have the ability to influence positive movements within their communities.\nThis builds deeper connectivity and engagement between our brand and their consumers, supporting long-term profitable relationships.\nWe are a purpose-led and performance-driven organization.\nTransitioning to our financial results, I want to start with a few highlights from this past year.\nBy any measure, the collective work of our associates to navigate fiscal '21 was nothing short of remarkable.\nDespite unprecedented challenges from rolling virus surges and lockdowns globally, we were able to deliver global revenues of $9.2 billion and adjusted earnings per share of $1.31, in line with our outlook shared in January.\nThroughout the year, Digital and China propelled our business forward.\nOur D2C digital business delivered 55% organic growth.\nAnd when combined with pure play digital wholesale, our total Digital business grew over 40% and accounted for nearly 30% of total revenue.\nThese figures demonstrate how quickly the world turned online and how well our teams adapted to the new reality with incredible speed and agility.\nIn fact, during the five-month period, our digital technology teams engineered home-grown solutions to enhance our e-commerce platform and stand up a new omnichannel capabilities, including buy-online-pickup-in-store, ship-from-store, and reserve-online-buy-in-store programs.\nThese new offerings further simplify the shopping experience for our consumers and enabled us to utilize retail inventory through our digital channels when stores were closed, all of which helped to generate around $50 million of incremental revenue this year.\nOur China business also remained consistently strong throughout fiscal '21 growing 20% and surpassing $1 billion in revenue and exceeding our long-term plan targets.\nWe bolstered our China operations by appointing VF's first ever President of Greater China and we're in the process of restructuring our Asia Pacific operations by moving our brand's regional center from Hong Kong to Shanghai.\nThis will enable our brands to strengthen their in-country presence and gain even deeper insights into our Chinese consumers.\nWe have generated approximately $1 billion in free cash flow in fiscal '21, a testament to the resiliency of our portfolio and strong execution from our global teams.\nWhile many of our peers were forced to pause their dividend commitments, our strong balance sheet and command over free cash flow supported our ability to modestly raise our dividend this year, returning $760 million to shareholders.\nA key objective throughout this year was to exit fiscal '21 in a clean inventory position.\nI'm pleased to say that we ended this year with owned inventories down 18% and our disciplined brand and marketplace management approach globally has resulted in clean inventory positions across channels.\nTurning to our outlook.\nExcluding Supreme, this represents high-single-digit organic revenue growth, above prior peak fiscal 2020 levels.\nSaid differently, we expect our Big Four brands to not only fully recover revenue lost during the pandemic, but delivers -- to deliver strong growth relative to prior peak levels.\nBefore getting into our fiscal '22 plan, I want to take a moment to address a specific question which always is top of minds with this audience, what gives me confidence in Van's ability to reaccelerate and deliver on its forward growth commitments?\nThroughout the past year, the Vans conversation has been focused on the disruption caused by supply delays, the outsized impact of store closures, and the cumulative impact of inventory and marketing investment constraints.\nAs we have consistently discussed, these issues are all short term and episodic which have no impact on the long-term runway for this brand.\nAs we enter fiscal '22, there are several near-term catalysts which give me confidence in Vans' ability to regain momentum and return to the low-double digit growth path we laid out in 2019.\nFirst, we know that the deep connectivity of Vans stores and associates are a distinct competitive advantage for the brand.\nOur stores drive higher loyalty member enrollment, greater purchase frequency and higher average order value.\nA return to in-store shopping will restore this advantage, growing the Vans community while driving a higher annual spend per consumer.\nSecond, a return to normal social usage occasions will accelerate purchases from depressed levels the brand experienced during the pandemic.\nThis is not just a return to in-person schooling for younger consumers.\nThis is a return to seeing family and friends, dining-out, attending concerts and sporting events and traveling.\nWe know Vans has remained top of mind for its core consumers who are ready to reengage with the brand as they return to a normal cadence of lifestyle activities.\nAnd lastly, beginning next month, Vans will initiate a globally coordinated weekly drop cadence that marries both product and experiential demand creation to drive energy, excitement and brand heat.\nA key learning from the past year has been the importance of flowing new product and associated storytelling to deepen engagement with existing consumers and attract new consumers to the brand.\nThis will be accompanied by an elevated vans.com experience to enhance the consumer journey around these exciting drops.\nWhile Vans is our largest brand, I don't want to lose sight of the momentum we're seeing across the remainder of our portfolio.\nAs Matt will unpack shortly, our recovery this quarter and the strength of our fiscal '22 plan is broad based.\nThere is tremendous momentum at The North Face and Dickies, which we expect to accelerate.\nWe believe Timberland has reached an important inflection point and Supreme is off to a strong start and its path for sustainable long-term growth and value creation could not be more clear.\nTaken together, I'm entering this year with a strong sense of optimism.\nWe have a best-in-class portfolio of brands with momentum, a leadership team across our brands and enterprise that possesses the skills and capabilities to lead our teams and to deliver on our commitments.\nThere are tailwinds from both the strengthening consumer across the globe and in the categories where we are most present, and inventory levels are in good shape.\nEach of our brands are uniquely positioned to thrive in the coming year and return to their respective long range plans as we emerge from this crisis as a stronger company.\nAnd first, Steve, let me say how honored, excited and appreciative I am to have the opportunity to serve as CFO of this amazing 122-year old company.\nRest assured, you've had an impact on VF that is immeasurable and you will be missed by all, but by none more than me.\nBest wishes my friend.\nSo, let me start with an overview of the operating environment across geographic regions.\nStarting with the Americas, the U.S. environment continues to improve with vaccine distribution, easing lock down measures, and a strengthening consumer.\nWe started Q4 with about 15% of our doors closed in the region, mostly in California.\nAs we sit today, virtually all of these doors have reopened.\nWhile store traffic remains depressed, conversion and AUR have been strong, and we have seen sequential improvement across the brick-and-mortar fleet, with a notable acceleration in March.\nEach of our largest brands returned to double-digit growth in the Americas, and our total D2C business increased 16% led by 57% growth from digital.\nWholesale channel inventories remain clean, particularly across the outdoor categories, which will provide a strong backdrop to the U.S. wholesale business as we progressed through fiscal 2022.\nIn EMEA, the region has been impacted by rolling store closures throughout the entirety of fiscal '21 and our teams continue to navigate this disruption during Q4.\nWe started the quarter with about half of our doors closed and finished the quarter with about 60% of doors closed.\nKey markets such as the U.K. and Germany were basically fully closed throughout the fourth quarter.\nLockdowns are expected to ease beginning in May for most countries, except Germany and France, although a slower start to vaccine rollouts will likely hindered the pace of recovery in the coming months.\nDespite this choppier brick-and-mortar recovery, our teams have continued to leverage digital, driving 99% growth in that channel during the period, with broad based strength across the portfolio.\nVans digital increased 92%; The North Face, 118%; and Timberland, 122%.\nOur strong partnerships with digital partners such as Asos and Zalando also delivered impressive growth, accelerating in the quarter.\nWe expect strong underlying digital momentum to translate into accelerated growth in fiscal 2022.\nThe APAC region has demonstrated incredible resiliency throughout the past year, led by Greater China and a strong consumer.\nOur Greater China business surpassed the $1 billion milestone in fiscal '21 growing 20%, capped off by 70% growth in Q4.\nCongratulations to our teams in the region for this important milestone.\nThis represents nearly 25% growth over our fiscal 2019 Q4 revenue, the prior peak before the impact of COVID.\nAll VF brands achieved growth in the region, led by 93% growth at The North Face and 107% growth at Dickies.\nWe continue to view China as the leading indicator of the broader recovery in our business.\nAnd as our largest growth opportunity, we remain focused on maintaining momentum and continuing with investments focused toward our Distort to Asia strategy.\nThe transition of our brand leadership teams and commercial operations to Shanghai is on track, which includes standing up a digital hub and establishing a consumer centric structure that will help us transform and advance our capabilities serving Greater China and the region.\nGlobally, our supply chain teams continue to navigate port congestion, capacity constraints, transitory cost pressures, and elevated volatility across the network.\nOur teams are working tirelessly to minimize the impact of these challenges.\nHowever, we expect volatility and certain headwinds to continue for the foreseeable future.\nFortunately, we have one of the strongest supply chains in the industry and are prepared for this challenge, having successfully navigated the unprecedented disruption over the past year.\nNow, moving into our fourth quarter highlights.\nThe impact of this was contemplated in our 2021 outlook shared in January.\nThis benefit was magnified relative to Q4 due to the low base in the prior year and supply chain disruptions resulting from COVID-19.\nImportantly, this dynamic is reflected in the fiscal 2022 plan growth rates we will cover shortly.\nVF delivered 19% growth in Q4 or 12% organic growth despite headwinds from supply chain disruptions and more extended lockdowns throughout Europe.\nThe strength of our business was broad based with 16% growth from the Big Four brands, an acceleration for many of our emerging brands, highlighted by a 53% growth from Altra.\nIn its first quarter with VF, the Supreme brand contributed over $140 million of revenue, exceeding our expectations.\nAs expected, Vans inflected positively, delivering 10% global growth as strength in the Americas and APAC regions more than offset larger than expected headwinds from store closures in Europe.\nGlobally, Vans has seen balanced momentum and performance across heritage and progression footwear.\nDuring Q4, skate high, authentic and old-school heritage styles each grew double digit, while the proskate and MTE progression lines each grew more than 30%.\nApparel also performed well, including mid-teens growth in women.\nVan's digital growth accelerated to 52% including a growing contribution from omnichannel sales which represented over 10% of digital revenue in the Americas.\nVans stores also returned to growth globally after sequential quarterly improvement throughout fiscal 2021.\nVans D2C consumers returned strongly during March, both in stores and online and across both existing and new consumers.\nThe Vans family loyalty program added 1.2 million members in the U.S. in the last four months and now has nearly 15 million enrolled globally.\nWith the reopening of Vans store fleet, new membership growth has accelerated in March and April.\nThe North Face delivered 23% growth led by 56% growth in digital.\nTNF achieved double-digit growth across all regions and channels as outdoor category tailwinds remain robust globally.\nFrom a product standpoint, the brand experienced relative strength from several on mountain categories including outerwear led by our FutureLight offering and footwear, led by our new VECTIV line.\nWe see continued validation of the brand's innovation engine, recently highlighted in Outside Magazine's 2021 Summer Buyers Guide, which feature six products from The North Face, including Gear of the Year Awards for two VECTIV products, awarded the best trail running and hiking shoes of 2021.\nMomentum at The North Face also extent to the brand's off mountain product portfolio, with strength from logowear and Iconic franchises such as the Nuptse, which increased more than 75%.\nThe brand also wrapped up the Gucci collab, with the largest earned media campaign in The North Face's history with more than 17 billion impressions, yielding worldwide 100% sell-through of all collaboration outerwear.\nAnd lastly, due partially to an exceptionally strong first responder program throughout fiscal 2021, The North Face's digital business increased 63% including 49% growth in new paid customers via adding 1.6 million in new loyalty members in the Americas.\nTimberland increased 19% with continued momentum behind outdoor footwear, apparel, Timberland PRO, and an accelerating classics business.\nDigital increased 96% with additional strength from key digital retail partners.\nThe brand successfully rolled out several new product stories including GreenStride which has garnered strong early read.\nTimberland delivered 54% global digital growth in fiscal 2021 and is entering this year with broad-based momentum across the product portfolio.\nFinally, Dickies increased 19% with continued strength across regions channels and categories.\nThe brand continued its strong performance in APAC, highlighted by more than 120% growth in Greater China.\nWork inspired lifestyle product increased at a double-digit rate across all regions and represented 40% of total revenue.\nDespite headwinds from the pandemic, the brand delivered 7% growth in fiscal 2021 through strong execution against the strategic pillars of digital, China and work-inspired product categories.\nFourth quarter adjusted earnings per share was $0.27, including a $0.06 contribution from Supreme, representing 89% organic growth and a strong start to our earnings recovery.\nOur liquidity remained strong as we ended the year with approximately $1.45 billion in cash and short-term investments and approximately $2.2 billion remaining undrawn on our revolver.\nAs Steve referenced earlier, we've entered into a definitive agreement to sell our Occupational Work business to Redwood Capital Investments, which is expected to close in late Q1.\nThis will provide an additional source of liquidity and further reduce our net leverage position.\nMoving now to our outlook for fiscal 2022.\nWe expect total VF revenue to approximate $11.8 billion, representing about 28% growth from fiscal '21 and a low double-digit increase relative to our prior peak revenue in fiscal 2020.\nThis includes approximately $600 million of Supreme revenue.\nExcluding the Supreme business, our fiscal 2022 outlook implies growth of about 23%, representing high-single-digit growth relative to fiscal 2020.\nBy brand, we expect Vans to generate between 26% and 28% growth, representing a 7% to 9% increase relative to prior peak revenue.\nThe North Face is expected to increase between 25% and 27%, representing 14% to 16% growth relative to fiscal 2020 and surpassing $3 billion in global brand revenue.\nWe expect Timberland to increase between 16% and 18%, which implies revenue in line with prior peak levels.\nLastly, we expect continued strength from Dickies with growth accelerating to between 10% and 12% which implies revenue up about 20% from fiscal 2020.\nBy region, excluding Supreme, we expect Europe to increase about 30%, representing about 15% growth relative to prior peak revenue.\nWe expect continued momentum in APAC with close to 20% organic growth led by ongoing strength in China, where we expect growth to exceed 20%.\nIn the Americas, we expect organic revenue growth of greater than 20%.\nBy channel, again excluding Supreme, we expect our D2C business to increase between 28% and 30%, including about 15% growth in digital.\nWe expect approximately half of total VF revenue to come from D2C this year.\nAnd including pure play digital wholesale, we expect our total digital penetration in fiscal 2022 to exceed 30%.\nFinally, our wholesale business is expected to grow at a high-teen rate, essentially recovering revenue lost over the past year and returning to prior peak levels.\nMoving down the P&L, we expect gross margin in excess of 56%, representing organic margins above prior peak levels.\nWe expect an operating margin of about 12.8%, which implies high single-digit organic growth in our SG&A spend relative to fiscal 2020 levels.\nNow, let me take a moment and unpack our expected SG&A growth relative to those prior peak levels.\nA large piece of the growth relates to continued investment against our growth focused strategic priorities.\nRelative to fiscal '20, our fiscal '22 plan assumes over $150 million of incremental investments in demand creation and our business model transformation to be more consumer-minded, retail-centric and hyper-digital, which supports the strong growth commitments cover today.\nOther large drivers within SG&A are episodic to this year.\nA large piece of the growth is simply from foreign currency.\nForeign currency translation represents about 20% of the expected dollar growth in SG&A.\nAnother episodic piece of our SG&A growth relate to elevated distribution and freight.\nWe are confident in our ability to mitigate these cost pressures over time in addition to the strong pricing power our brands enjoy globally.\nHowever, higher costs will be a near-term headwind to profitability.\nMoving forward, we see a path to SG&A leverage as we exit fiscal 2022.\nAnd given the composition of our portfolio today, we see at minimum, a return to our long-term earnings algorithm from our 2024 plan with strong gross margin expansion and SG&A leverage supporting investment optionality.\nTo wrap up our fiscal 2022 P&L outlook, we expect our tax rate to approximate 15%, which brings us to earnings per share of about $3.05, including an expected $0.25 per share contribution from the Supreme brand.\nFinally, we expect to generate over $1 billion in operating cash flow.\nCapital expenditures are planned to approximate $350 million.\nThis includes the impact of growth investments as well as deferred capital spending from fiscal 2021 as a result of COVID.\nThere are no changes to our capital allocation priorities moving forward.\nOur strong balance sheet will continue to be a focus and we expect to end fiscal 2022 with net leverage between 2.5 times and 3 times.\nWe remain committed to growing our dividend.\nAnd, as always, we will remain opportunistic with M&A and other capital allocation alternatives, which we will explore as appropriate.\nSo, in summary, we could be -- we could not be more pleased with how VF has navigated fiscal 2021.\nWe fully executed on our plans in a challenging environment, driving digital growth, managing free cash flow, and investing in our organic business while evolving our portfolio to best position us for long-term value creation.\nAs a result of the hard work throughout fiscal '21, we're exiting this year with broad-based momentum across the portfolio and I'm very confident in VF's ability to drive accelerated growth into fiscal '22 and beyond.\n",
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"content": "compname says 2022 revenue is expected to approximate $11.8 billion.\nsees fy adjusted earnings per share $3.05.\nsees fy revenue $11.8 billion.\nq4 adjusted earnings per share $0.27 including a $0.06 contribution from acquisitions.\nqtrly revenue increased 23% (up 19% in constant dollars) to $2.6 billion.\n2022 revenue is expected to approximate $11.8 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Ron Bernstein, Senior Advisor to Liggett Vector Brands, will join us during the question and answers.\nNick will then summarize the performance of the tobacco business.\nAs of September 30, 2020, Vector Group maintained sufficient liquidity, with cash and cash equivalents of $451 million, including cash of $76 million at Douglas Elliman and $148 million at Liggett, and investment securities and investment partnership interests with a fair market value of $174 million.\nNow turning to Vector Group's operations for the three and nine months ended September 30, 2020.\nFor the three months ended September 30, 2020, Vector Group's revenues were $547.8 million, compared to $504.8 million in the 2019 period.\nIn addition to increases in revenue in both the Tobacco segment and Douglas Elliman, the 2020 revenues include $20.5 million from the sale of a real estate investment in The Hamptons.\nNet income attributed to Vector Group for the third quarter of 2020 was $38.1 million, or $0.25 per diluted common share, compared to net income of $36 million, or $0.23 per diluted common share, in the third quarter of 2019.\nThe company recorded adjusted EBITDA of $103.3 million, compared to $73.7 million in the prior year.\nAdjusted net income was $38.3 million, or $0.25 per diluted share, compared to $36.2 million, or $0.23 per diluted share, in the 2019 period.\nFor the nine months ended September 30, 2020, Vector Group revenues were $1.45 billion and were flat when compared to $1.46 billion in the 2019 period.\nOur Tobacco segment reported an increase of $63.9 million in revenues, and our Real Estate segment reported a decline in revenues of $80 million.\nWhile our Real Estate segment reported increases in revenues in the first and third quarters, the year-to-date decline reflects the dramatic impact of the COVID-19 pandemic on Douglas Elliman's results in the second quarter of 2020 as well as an unusual year-over-year comparison because of the acceleration of real estate closings in New York City in the 2019 second quarter.\nThis acceleration occurred in anticipation of the increase in the New York state mansion tax on residential real estate on July 1, 2019.\nNet income attributed to the Vector Group for the nine months ended September 30, 2020, was $60.7 million, or $0.39 per diluted common share, compared to net income of $90.3 million, or $0.56 per diluted common share, for the nine months ended September 30, 2019.\nThe company recorded adjusted EBITDA of $240 million, compared to $206.9 million in the prior year.\nAdjusted net income was $106.9 million, or $0.70 per diluted share, compared to $92.3 million, or $0.59 per diluted share, in the 2019 period.\nFor Douglas Elliman's results for the three months ended September 30, 2020, we reported $208 million in revenues, net income of $11.8 million and an adjusted EBITDA of $14.1 million, compared to $201.2 million in revenues, net income of $1.9 million and adjusted EBITDA of $3.4 million in the third quarter of 2019.\nFor the nine months ended September 30, 2020, Douglas Elliman reported $506.5 million in revenues, a net loss of $62.2 million and adjusted EBITDA of $5.3 million, compared to $606 million of revenues, net income of $6.6 million and adjusted EBITDA of $11 million in the first nine months of 2019.\nDouglas Elliman's net loss for the nine months ended September 30, 2020, included pre-tax and noncash impairment charges of $58.3 million and pre-tax restructuring charges of $3.3 million.\nWhen compared to both the second quarter of 2020 and the third quarter of 2019, Douglas Elliman's third quarter closed sales improved significantly in markets complementary to New York City, including The Hamptons as well as in Palm Beach, Miami, Aspen and Los Angeles.\nNonetheless, the COVID-19 pandemic continues to have a significant effect on the New York City real estate market.\nTo address the impact of COVID-19, in April 2020 Douglas Elliman reduced personnel by 25% and began consolidating some offices and reducing other administrative expenses.\nThese expense reduction initiatives resulted in a decline in Douglas Elliman's third quarter 2020 operating and administrative expenses, excluding restructuring charges, of approximately $17.8 million compared to the third quarter of 2019 and $39.8 million for the nine months ended September 30, 2019.\nWe believe these initiatives have and will continue to provide long-term upside to Vector Group stockholders.\nFurthermore, fourth quarter cash receipts have continued to strengthen when compared to the third quarter in all regions, including New York City.\nDuring the third quarter, Liggett continued its strong year-to-date tobacco performance, with revenue increases and margin growth contributing to a 25% increase in tobacco adjusted operating income.\nAs noted on previous calls, we are well into the income growth phase of our Eagle 20's business strategy and remain very pleased with the results to date.\nOur market-specific retail programs have proven successful, and we remain optimistic about Eagle 20's increasing profit contributions and long-term potential.\nOur results also reflect the resilience of Pyramid, which continues to deliver substantial profit and market presence for the company.\nPyramid has strong distribution and is currently sold in approximately 98,000 stores nationwide.\nI will now turn to the combined tobacco financials for Liggett Group and Vector Tobacco.\nFor the three and nine months ended September 30, 2020, revenues were $318.9 million and $918.4 million, respectively, compared to $303.3 million and $854.5 million for the corresponding 2019 periods.\nTobacco adjusted operating income for the three and nine months ended September 30, 2020, was $91.6 million and $240.2 million, respectively, compared to $73 million and $202.5 million for the corresponding periods a year ago.\nLiggett's increase in third quarter earnings resulted primarily from higher gross profit margins associated with increased net pricing and lower per-unit Master Settlement Agreement expense.\nThe lower per-unit MSA expense reflects stronger U.S. industry cigarette volumes in 2020, which has increased the value of our market share exemption under the MSA.\nSimilar to other consumer product categories, cigarette industry volumes have outperformed recent historical trends and have benefited from increased consumer demand related to changes in the underlying cigarette purchasing patterns associated with the COVID-19 pandemic.\nAccording to Management Science Associates, overall industry wholesale shipments for the third quarter increased by 1.1%, while Liggett's wholesale shipments declined by 2.2%, compared to the third quarter in 2019.\nFor the third quarter, Liggett's retail shipments declined by 1.1% from 2019, while industry retail shipments increased 1.7% during the same period.\nLiggett's retail share in the third quarter declined slightly, to 4.2%.\nThe modest decline in Liggett's third quarter year-over-year retail share was anticipated, with Eagle 20's volume growth slowing due to increased net pricing.\nThis is consistent with our income growth strategy for Eagle 20's, which began in the second half of 2018.\nEagle 20's is now priced in the upper tier of the U.S. deep discount segment.\nNonetheless, Eagle 20's retail volume for the third quarter increased by approximately 2% compared to the 2019 period, and it remains the third largest discount brand in the U.S. and is currently being sold in approximately 84,000 stores nationwide.\nThe continued growth of Eagle 20's despite increased pricing also reinforces the effectiveness of our long-term strategy to continue to build volume and margin for our business using well-positioned discount brands providing value to adult smokers.\nWith that in mind, and after identifying volume growth opportunities in the U.S. deep discount segment, in August we expanded the distribution of our Montego brand by 10 states, primarily in the Southeast.\nPrior to August, Montego was sold in targeted markets in only four states.\nMontego will be competitively priced in the growing deep discount segment, and we will take a measured approach with further expansion.\nMontego represented about 6.8% of Liggett's volume for the third quarter of 2020 and 5.6% of Liggett's volume for the nine months ended September 30, 2020.\nTo date, we are pleased with the initial wholesale, retail and consumer response to Montego, and I will provide further updates in the coming quarters on our progress.\nIn summary, we are very pleased with our third quarter 2020 performance, particularly in light of the current macroeconomic environment.\nOur results continue to validate our market strategy and reflect our competitive advantages within the deep discount segment, including our broad base of distribution, consumer-focused programs and the executional capabilities of our sales force.\nAs we look ahead, we remain focused on generating incremental operating income from the strong sales and distribution base of both Pyramid and Eagle 20's.\nFinally, while we are always subject to industry and general market risks, we remain confident that we have effective programs to keep our business operating efficiently, while supporting market share and profit growth.\nVector Group has strong cash reserves and has consistently increased its tobacco unit volume and profits and has taken the necessary steps to position its real estate business for future success.\nWe are pleased with our long-standing history of paying a quarterly cash dividend.\nIt remains an important component of our capital allocation strategy.\nWhile we will continue to evaluate our dividend policy each quarter, it is our expectation that our policy will continue well into the future.\n",
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"content": "q3 adjusted earnings per share $0.25.\nq3 revenue $547.8 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Ron Bernstein, Senior Advisor to Liggett Vector Brands will join us during the Q&A.\nI'm also pleased that Dick Lampen, our longtime Executive Vice President, who was recently appointed Chief Operating Officer and a member of our Board of Directors is joining us on the call.\nDick's broad executive experience and deep operational understanding of the Company from serving in a variety of senior leadership roles for Vector Group and its affiliates since 1995 make him a valuable addition to our Board and a natural fit to be COO.\nAdditionally, Dick's experience as CEO of Ladenburg Thalmann Financial Services and vast knowledge of the ways that technology can benefit a brokerage business will be valuable to Douglas Elliman as it continues to enhance the technology-based experience of its agents.\nIt will also be helpful identifying potential synergies leading to further reductions in Douglas Elliman's operating expenses.\nNick will then summarize the performance of the tobacco business.\nAs of December 31, 2020, Vector Group maintained significant liquidity with cash and cash equivalents of $353 million, including cash of $94 million at Douglas Elliman and $45 million at Liggett, and investment securities and investment partnership interests with a fair market value of $188 million.\nAdditionally, in the first quarter of 2021, we took advantage of favorable capital markets and issued $875 million of 5.75% senior secured notes till 2029.\nAll proceeds were used to retire older notes.\nNow turning to Vector Group's operational and financial results.\nFor the three months ended December 31, 2020, Vector Group's revenues were $554.6 million compared to $439.6 million in the 2019 period.\nThe $115 million increase in revenues was a result of an increase of $25.7 million in the Tobacco segment and $89.3 million in the Real Estate segment.\nNet income attributed to Vector Group was $32.3 million or $0.21 per diluted common share compared to $10.7 million or $0.06 per diluted common share in the fourth quarter of 2019.\nThe company recorded adjusted EBITDA of $93.4 million compared to $52.5 million in the prior year.\nAs we will discuss later, we continue to be pleased with Liggett's execution of its still growing strategy as well as Douglas Elliman's resilience and rebound in the second half of 2020.\nAdjusted net income was $32.6 million or $0.21 per diluted share compared to $17.8 million or $0.11 per diluted share in the 2019 period.\nFor the year ended December 31, 2020, Vector Group's revenues were $2 billion compared to $1.9 billion in the 2019 period.\nNet income attributed to Vector Group was $92.9 million or $0.60 per diluted common share compared to $101 million or $0.63 per diluted common share for the year ended December 31, 2019.\nThe company recorded adjusted EBITDA of $333.4 million compared to $259.4 million in the prior year.\nAdjusted net income was $139.5 million or $0.91 per diluted share compared to a $110.11 million or $0.70 per diluted share in the 2019 period.\nNow turning to Douglas Elliman.\nBefore we review the results, I'd like to recognize the resilience of the Douglas Elliman team of 6,700 agents and 750 employees in addressing the challenges of 2020.\nWe have long believed our team sets us apart from other residential real estate brokerage firms.\nAnd when Forbes recently recognized Douglas Elliman in its 2021 list of America's Best Large Employers we were humbled.\nThis recognition is a testament to the hard work and resiliency of the Douglas Elliman family.\nWe congratulate the Douglas Elliman team for this well earned and deserved recognition.\nNow to Douglas Elliman's financial results.\nFor the three months ended December 31, 2020, Douglas Elliman reported $267.5 million in revenues, net income of $14 million and an adjusted EBITDA of $16.7 million compared to $178.1 million in revenues and net loss of $432,000, and adjusted EBITDA loss of $5.7 million in the fourth quarter of 2019.\nFor the year ended December 31, 2020, Douglas Elliman reported $774 million in revenues, a net loss of $48.2 million and adjusted EBITDA of $22.1 million compared to $784.1 million in revenues, net income of $6.2 million and adjusted EBITDA of $5.3 million in 2019.\nDouglas Elliman's net loss for the year ended December 31, '21 included pre-tax charges for non-cash impairments of $58.3 million as well as restructuring charges and related asset write-offs of $4.6 million.\nIn the fourth quarter of 2020, Douglas Elliman's revenues increased by 50% from the fourth quarter of 2019 as its closed sales continue to improve in rural markets complementary to New York City, including the Hamptons, Palm Beach, Miami, Aspen and Los Angeles.\nOur New York City business began to stabilize in the fourth quarter and we are well positioned in New York City.\nFurthermore, Douglas Elliman's expense reduction initiatives continued in the fourth quarter and its fourth quarter 2020 operating and administrative expenses, excluding restructuring and asset impairment charges, declined by approximately $7.9 million compared to the fourth quarter of 2019 and $47.7 million compared to the year ended December 31, 2019.\nWe believe these initiatives have and will continue to provide long-term upside to Vector Group stockholders.\nIn addition, when compared to the first quarter of 2020, first quarter 2021 cash receipts have continued to strengthen from 2020 levels in all regions except New York City.\n2020 proved to be an extraordinary and challenging year for our tobacco operations, and I'm very proud of our response to that challenge.\nOur employees remained resilient throughout and stay focused on the task at hand.\nThey also embraced a tremendous team spirit and I believe our excellent performance throughout this difficult year reflects that effort.\nDuring the fourth quarter Liggett continued its strong year-to-date performance with revenue increases and margin growth contributing to a 33% increase in tobacco adjusted operating income.\nAs noted on previous calls, we are well into the income growth phase of our Eagle 20's business strategy and remain very pleased with the results.\nOur market-specific retail programs have proven successful, and we remain optimistic about Eagle 20's increasing profit contributions and long-term potential.\nOur results also reflect the resilience and strong distribution of Pyramid, which continues to deliver substantial profit and market presence to the company.\nI will now turn to the combined tobacco financials for Liggett Group and Vector Tobacco.\nThe three months and year ended December 31, 2020 revenues were $286.1 million and $1.2 billion, respectively compared to $260.3 million and $1.11 billion for the corresponding 2019 periods.\nTobacco adjusted operating income for the three months and year ended December 31, 2020 were $80 million and $320.2 million, respectively compared to $60.1 million and $262.6 million for the corresponding periods a year ago.\nLiggett's increase in fourth quarter earnings was the result of higher gross profit margins associated with increased volumes, high net pricing and lower per unit Master Settlement Agreement expense.\nThe lower per unit MSA expense reflects stronger U.S. industry cigarette volumes in 2020, which has increased the value of our market share exemption under the MSA.\nSimilar to some other consumer product categories, cigarette industry volumes outperformed recent historical trends and benefited from increased consumer demand related to changes in underlying cigarette purchasing and consumption patterns associated with the pandemic.\nWholesale inventory levels remained elevated throughout the fourth quarter as a result of the prospect of increased restrictions and lockdowns associated with COVID-19 and the timing of industry price increases.\nHowever, we anticipate a normalization of wholesale inventory levels over the course of the first quarter.\nAccording to Management Science Associates, overall industry wholesale shipments for the fourth quarter increased by 3.4% while Liggett's wholesale shipments increased by 2.1% compared to the fourth quarter in 2019.\nFor the fourth quarter, Liggett's retail shipments declined 0.3% from 2019, while industry retail shipments increased 0.6% during the same period.\nLiggett's retail share in the fourth quarter declined slightly to 4.21% from 4.25% in the same period last year.\nThe modest decline in Liggett's fourth quarter year-over-year retail share was anticipated as Eagle 20s' volume growth slowed due to increased net pricing.\nThis is consistent with our income growth strategy for the brand, which began in the second half of 2018.\nEagle 20s is now priced in the upper tier of the U.S. deep discount segment.\nEagle 20s' retail volume for the fourth quarter of 2020 was essentially flat compared to the prior year period.\nIt remains the third largest discount brand in the U.S. and is currently sold in approximately 84,000 stores nationwide.\nThe continued strength of Eagle 20s despite increased pricing also reinforces the effectiveness of our long-term strategy to continue to build volume and margin for our business using well-positioned discount brands that provides value to adult smokers.\nWith that in mind and after identifying volume growth opportunities in the U.S. deep discount segment, in August we expanded the distribution of our Montego brand to an additional 10 states, primarily in the southeast.\nPrior to August, Montego was sold in targeted markets in four states.\nMontego is competitively priced in the growing deep discount segment and we plan to take a measured approach with further expansion.\nMontego represented 8.6% of Liggett's volume for the fourth quarter 2020, and 6.3% of Liggett's volume for the year ended December 31, 2020.\nTo date, we remain very pleased with the initial response to Montego now sold in approximately 25,000 stores representing a 50% increase from the end of the third quarter.\nIn summary, we are very pleased with our 2020 performance, particularly considering the current macroeconomic environment.\nOur results continue to validate our market strategy and reflect our competitive advantages within the deep discount segment, including our broad base of distribution, consumer-focused programs, and the execution capabilities of our sales force.\nAs we look ahead, we remain focused on generating incremental operating income from the strong sales and distribution base of both Pyramid and Eagle 20s.\nFinally, while we are always subject to industry and general market risks, we remain confident we have effective programs to keep our business operating efficiently while supporting market share and profit growth.\nVector Group has strong cash reserves, has consistently increased its tobacco market share and profits, and has taken the necessary steps to position its real estate business for future success.\nWe are pleased with our long-standing history of paying a quarterly cash dividend.\nIt remains an important component of our capital allocation strategy.\nWhile we will continue to evaluate our dividend policy each quarter, it is our expectation that our policy will continue well into the future.\n",
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"content": "q4 adjusted earnings per share $0.21.\nq4 revenue $554.6 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: If you have any questions after reviewing these tables, please feel free to contact our Investor Relations team after the call.\nThe refining business saw a strong recovery in the first quarter as various pandemic-imposed restrictions were eased or withdrawn and as more and more people receive vaccinations.\nHowever, Winter Storm Uri disrupted many U.S. Gulf Coast and Mid-Continent facilities in February due to the freeze and utilities curtailments.\nAlthough our refineries and plants in those regions were also impacted, they did not suffer any significant mechanical damage and were restarted within a short period after the storm.\nWhile we did incur extremely high energy costs, I'm very proud of the Valero team for safely managing the crisis by idling or shutting down the affected facilities and resuming operations without incident.\nWith many of the country's Gulf Coast and Mid-Continent refineries offline due to the storm, there was a significant 60 million barrel drawdown of surplus product inventories in the U.S., bringing product inventories to normal levels.\nLower product inventories, coupled with increasing product demand, improved refining margins significantly from the prior quarter.\nCrude oil discounts were also wider for Canadian heavy and WTI in the first quarter relative to the fourth quarter of last year, providing additional support to refining margins.\nIn addition, our renewable diesel segment continues to provide solid earnings and set records for operating income and renewable diesel product margin in the first quarter of 2021.\nOur wholesale operations also continue to see positive trends in U.S. demand, and we expanded our supply into Mexico with current sales of over 60,000 barrels per day, which should continue to increase with the ramp-up of supply through the Vera Cruz terminal.\nOn the strategic front, we continue to evaluate and pursue economic projects that lower the carbon intensity of all of our products.\nIn March, we announced that we were partnering with BlackRock and Navigator to develop a carbon capture system in the Midwest, allowing for connectivity of eight of our ethanol plants to the system.\nIn addition to the tax credit benefit for CO2 capture and storage, Valero will also capture higher value for the lower-carbon intensity ethanol product in low carbon fuel standard markets such as California.\nThe system is expected to be capable of storing 5 million metric tons of CO2 per year.\nIn our Diamond Green Diesel 2 project at St. Charles remains on budget and is now expected to be operational in the middle of the fourth quarter of this year.\nThe expansion is expected to increase renewable diesel production capacity by 400 million gallons per year, bringing the total capacity at St. Charles to 690 million gallons per year.\nThe expansion will also allow us to market 30 million gallons per year of renewable naphtha from DGD 1 and DGD 2 into low-carbon fuel markets.\nThe renewable diesel project at Port Arthur or DGD 3 continues to move forward as well and is expected to be operational in the second half of 2023.\nWith the completion of this 470 million gallons per year capacity plant, DGD's combined annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.\nWith respect to our refinery optimization projects, we remain on track to complete the Pembroke Cogen project in the third quarter of this year, and the Port Arthur Coker project is expected to be completed in 2023.\nAs we head into summer, we believe that there's a pent-up desire among much of the population to travel and take vacations, which should drive incremental demand for transportation fuels.\nWe're already seeing a strong recovery in gasoline and diesel demand at 93% and 100% of pre-pandemic levels, respectively.\nSince March, air travel has also increased, as reflected in TSA data, which shows that passenger count is now nearly double of what it was in January.\nWe're also seeing positive signs in the crude market with wider discounts for sour crude oils and residual feedstocks relative to Brent as incremental crude oil from the Middle East comes to market.\nAll these positive data points, coupled with less refining capacity as a result of refinery rationalizations, should lead to continued improvement in refining margins in the coming months.\nWe've already seen the impacts of these improving market indicators, with Valero having positive operating income and operating cash flow in March.\nIn closing, we're encouraged by the outlook on refining as product demand steadily improves toward pre-pandemic levels, which should continue to have a positive impact on refining margins.\nWe believe these improvements, coupled with our growth strategy and low-carbon renewable fuels, will further strengthen our long-term competitive advantage.\nSo with that, Homer, I'll hand the call back to you.\nFor the first quarter of 2021, we incurred a net loss attributable to Valero stockholders of $704 million or $1.73 per share, compared to a net loss of $1.9 billion or $4.54 per share for the first quarter of 2020.\nThe first quarter 2021 operating loss includes estimated excess energy costs of $579 million or $1.15 per share.\nFor the first quarter of 2020, adjusted net income attributable to Valero stockholders was $140 million or $0.34 per share.\nThe adjusted results exclude an after-tax lower of cost or market, or LCM, inventory valuation adjustment of approximately $2 billion.\nThe refining segment reported an operating loss of $592 million in the first quarter of 2021, compared to an operating loss of $2.1 billion in the first quarter of 2020.\nThe first-quarter 2021 adjusted operating loss for the refining segment was $554 million, compared to adjusted operating income of $329 million for the first quarter of 2020, which excludes the LCM inventory valuation adjustment.\nThe refining segment operating loss for the first quarter of 2021 includes estimated excess energy cost of $525 million related to impacts from Winter Storm Uri.\nRefining throughput volumes in the first quarter of 2021 averaged 2.4 million barrels per day, which was 414,000 barrels per day lower than the first quarter of 2020 due to scheduled maintenance and disruptions resulting from Winter Storm Uri.\nThroughput capacity utilization was 77% in the first quarter of 2021.\nRefining cash operating expenses of $6.78 per barrel were higher than guidance of $4.75 per barrel, primarily due to estimated excess energy costs related to impacts from Winter Storm Uri of $2.21 per barrel.\nOperating income for the renewable diesel segment was a record $203 million in the first quarter of 2021, compared to $198 million for the first quarter of 2020.\nRenewable diesel sales volumes averaged 867,000 gallons per day in the first quarter of 2021.\nThe ethanol segment reported an operating loss of $56 million for the first quarter of 2021, compared to an operating loss of $197 million for the first quarter of 2020.\nThe operating loss for the first quarter of 2021 includes estimated excess energy costs of $54 million related to impacts from Winter Storm Uri.\nFirst quarter of 2020 adjusted operating loss, which excludes the LCM inventory valuation adjustment, was $69 million.\nEthanol production volumes averaged 3.6 million gallons per day in the first quarter of 2021, which was 541,000 gallons per day lower than the first quarter of 2020.\nFor the first quarter of 2021, G&A expenses were $208 million and net interest expense was $149 million.\nDepreciation and amortization expense was $578 million, and the income tax benefit was $148 million for the first quarter of 2021.\nThe effective tax rate was 19%.\nNet cash used in operating activities was $52 million in the first quarter of 2021.\nExcluding the favorable impact from the change in working capital of $184 million and our joint venture partner's 50% share of Diamond Green Diesel's net cash provided by operating activities, excluding changes in DGD's working capital, adjusted net cash used in operating activities was $344 million.\nWith regard to investing activities, we made $582 million of total capital investments in the first quarter of 2021, of which $333 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance, and $249 million was for growing the business.\nExcluding capital investments attributable to our partner's 50% share of Diamond Green Diesel and those related to other variable interest entities, capital investments attributable to Valero were $479 million in the first quarter of 2021.\nOn April 19, we've sold a partial membership interest in the Pasadena marine terminal joint venture for $270 million.\nMoving to financing activities, we returned $400 million to our stockholders in the first quarter of 2021 through our dividend.\nAnd as you saw earlier this week, our board of directors approved a regular quarterly dividend of $0.98 per share.\nWith respect to our balance sheet at quarter end, total debt and finance lease obligations were $14.7 billion and cash and cash equivalents were $2.3 billion.\nThe debt-to-capitalization ratio net of cash and cash equivalents was 40%.\nAt the end of March, we had $5.9 billion of available liquidity, excluding cash.\nWe expect capital investments attributable to Valero for 2021 to be approximately $2 billion, which includes expenditures for turnarounds, catalysts and joint venture investments.\nAbout 60% of our capital investments is allocated to sustaining the business and 40% to growth.\nOver half of our growth CAPEX in 2021 is allocated to expanding our renewable diesel business.\nFor modeling our second-quarter operations, we expect refining throughput volumes to fall within the following ranges: Gulf Coast at 1.65 million to 1.7 million barrels per day; Mid-Continent at 430,000 to 450,000 barrels per day; West Coast at 250,000 to 270,000 barrels per day; and North Atlantic at 340,000 to 360,000 barrels per day.\nWe expect refining cash operating expenses in the second quarter to be approximately $4.20 per barrel.\nWith respect to the renewable diesel segment, with the start-up of DGD 2 in the fourth quarter, we now expect sales volumes to average 1 million gallons per day in 2021.\nOperating expenses in 2021 should be $0.50 per gallon, which includes $0.15 per gallon for noncash costs such as depreciation and amortization.\nOur ethanol segment is expected to produce 4.1 million gallons per day in the second quarter.\nOperating expenses should average $0.38 per gallon, which includes $0.05 per gallon for noncash costs such as depreciation and amortization.\nFor the second quarter, net interest expense should be about $150 million, and total depreciation and amortization expense should be approximately $590 million.\nFor 2021, we still expect G&A expenses, excluding corporate depreciation, to be approximately $850 million, and the annual effective tax rate should approximate the U.S. statutory rate.\nLastly, as we reported last quarter, we expect to receive a cash tax refund of approximately $1 billion later this year.\nBefore we open the call to questions, we again respectfully request that callers adhere to our protocol of limiting each turn in the Q&A to two questions.\n",
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"content": "q1 loss per share $1.73.\nvalero energy - qtrly operating loss includes estimated excess energy costs of $579 million, or $1.15 per share, related to impacts from winter storm uri.\nq1 adjusted earnings per share $0.34 excluding items.\nvalero energy - refinery throughput volumes averaged 2.4 million barrels per day in q1 2021, which was 414 thousand barrels per day lower than q1 2020.\nvalero energy - continues to target a long-term total payout ratio between 40 and 50 percent of adjusted net cash provided by operating activities.\nvalero energy - pembroke cogen project is on track to be completed in q3 2021 and port arthur coker project is expected to be completed in 2023.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: If you have any questions after reviewing these tables, please feel free to contact our investor relations team after the call.\nWe saw continued improvement in our business during the fourth quarter with refining margins supported by strong product demand.\nIn our system, we ended the year with gasoline demand at pre-pandemic levels and demand for diesel actually higher than pre-pandemic levels.\nWe also saw a significant jet fuel recovery as domestic and international travel opened up, increasing from approximately 60% of pre-pandemic levels at the beginning of the year to approximately 80% at the end of the year.\nProduct inventories were low as a result of the refining capacity rationalization that's taken place in the last two years and weather-related impacts from Winter Storm Uri and Hurricane Ida.\nOn the crude oil side, OPEC+ increased production throughout the year with improving demand, supplying the market primarily with sour crude oils, resulting in wider sour crude oil discounts to Brent crude oil.\nAs a result of all these dynamics, we saw a steady recovery in margins throughout the year, particularly for our complex refining system.\nIn regards to our ethanol segment, ethanol prices were near record highs in the quarter, supported by strong demand and low inventories.\nStrong margins, coupled with solid operational performance across all of our segments, generated record quarterly operating income for our ethanol segment and record overall fourth quarter earnings for Valero.\nI am proud to say that 2021 was our best year ever for employee and process safety.\nIn fact, we've set records for process safety for three consecutive years.\nThese milestones are a testament to our long-standing commitment to safe, reliable and environmentally responsible operations.\nAnd despite the pandemic and weather-related challenges in 2021, our growth projects remained on track.\nWe started up the Pembroke Cogeneration Unit in the third quarter of '21, which provides an efficient and reliable source of electricity and steam and enhances the refinery's competitiveness.\nIn addition, the Diamond Green Diesel expansion project, DGD 2, commenced operations in the fourth quarter on budget and ahead of schedule.\nThe expansion has since demonstrated production capacity of 410 million gallons per year of renewable diesel as a result of process optimization, above the initial nameplate design capacity of 400 million gallons per year.\nThis expansion brings DGD's total annual renewable diesel capacity to 700 million gallons.\nLooking ahead, the DGD 3 project at our Port Arthur refinery is progressing ahead of schedule and is now expected to be operational in the first quarter of 2023.\nWith the completion of this 470 million-gallon per year plant, DGD's total annual capacity is expected to be 1.2 billion gallons of renewable diesel and 50 million gallons of renewable naphtha.\nBlackRock and Navigator's large-scale carbon sequestration project is also progressing on schedule and is still expected to begin start-up activities in late 2024.\nValero is expected to be the anchor shipper with 8 ethanol plants connected to this system, which should provide a higher ethanol product margin.\nThe Port Arthur Coker project, which is expected to increase the refinery's utilization rate and improved turnaround efficiency, is expected to be completed in the first half of 2023.\nOn the financial side, the guiding framework underpinning our capital allocation strategy remains unchanged.\nWe remain disciplined in our allocation of capital, which prioritizes a strong balance sheet and an investment-grade credit rating.\nIn 2021, we took measures to reduce Valero's long-term debt by approximately $1.3 billion.\nWe ended the year well capitalized with $4.1 billion of cash and $5.2 billion of available liquidity, excluding cash and our net debt to capitalization was 33%.\nWe continue to honor our commitment to stockholders, defending the dividend across margin cycles and delivering a payout ratio of 50% in 2021.\nAnd as recently announced, the board of directors has approved a quarterly dividend of $0.98 per share for the first quarter of 2022.\nLooking ahead, we remain optimistic on refining margins.\nwith low global light product inventories, strong product demand, global supply tightness due to significant refining capacity rationalization and wider sour crude oil differentials.\nWe also remain optimistic on our low-carbon businesses, which we continue to expand with the growing global demand for lower carbon-intensity products.\nWe've been leaders in the growth of these businesses and maintain a competitive advantage with our operational and technical expertise.\nIn closing, our team's simple strategy of pursuing excellence in operations, deploying capital with an uncompromising focus on returns and honoring our commitment to stockholders has driven our success and positions us well.\nSo with that, Homer, I'll hand the call back to you.\nFor the fourth quarter of 2021, net income attributable to Valero stockholders was $1 billion or $2.46 per share compared to a net loss of $359 million or $0.88 per share for the fourth quarter of 2020.\nFourth quarter 2021 adjusted net income attributable to Valero stockholders was also $1 billion or $2.47 per share compared to an adjusted net loss of $429 million or $1.06 per share for the fourth quarter of 2020.\nFor 2021, net income attributable to Valero stockholders was $930 million or $2.27 per share compared to a net loss of $1.4 billion or $3.50 per share in 2020.\n2021 adjusted net income attributable to Valero stockholders was $1.2 billion or $2.81 per share compared to an adjusted net loss of $1.3 billion or $3.12 per share in 2020.\nThe refining segment reported $1.3 billion of operating income for the fourth quarter of 2021 compared to a $377 million operating loss for the fourth quarter of 2020.\nFourth quarter 2021 adjusted operating income for the refining segment was $1.1 billion compared to an adjusted operating loss of $476 million for the fourth quarter of 2020.\nRefining throughput volumes in the fourth quarter of 2021 averaged 3 million barrels per day, which was 483,000 barrels per day higher than the fourth quarter of 2020.\nThroughput capacity utilization was 96% in the fourth quarter of 2021 compared to 81% in the fourth quarter of 2020.\nRefining cash operating expenses of $4.86 per barrel in the fourth quarter of 2021 were $0.46 per barrel higher than the fourth quarter of 2020, primarily due to higher natural gas prices.\nThe renewable diesel segment operating income was $150 million for the fourth quarter of 2021 compared to $127 million for the fourth quarter of 2020.\nAdjusted renewable diesel operating income was $152 million for the fourth quarter of 2021.\nRenewable diesel sales volumes averaged 1.6 million gallons per day in the fourth quarter of 2021, which was 974,000 gallons per day higher than the fourth quarter of 2020.\nThe higher operating income and sales volumes were primarily attributed to the start-up of Diamond Green Diesel expansion project DGD 2 in the fourth quarter.\nThe ethanol segment reported record operating income of $474 million for the fourth quarter of 2021 compared to $15 million for the fourth quarter of 2020.\nAdjusted operating income for the fourth quarter of 2021 was $475 million compared to $17 million for the fourth quarter of 2020.\nEthanol production volumes averaged 4.4 million gallons per day in the fourth quarter of 2021, which was 278,000 gallons per day higher than the fourth quarter of 2020.\nAnd as Joe mentioned earlier, the higher operating income was primarily attributed to higher ethanol prices, which were supported by strong demand and low inventories.\nFor the fourth quarter of 2021, G&A expenses were $286 million and net interest expense was $152 million.\nG&A expenses of $865 million in 2021 were largely in line with our guidance.\nDepreciation and amortization expense was $598 million and income tax expense was $169 million for the fourth quarter of 2021.\nThe annual effective tax rate was 17% for 2021, which reflects the benefit from the portion of DGD's net income that is not taxable to us.\nNet cash provided by operating activities was $2.5 billion in the fourth quarter of 2021 and $5.9 billion for the full year.\nExcluding the favorable impact from the change in working capital of $595 million in the fourth quarter and $2.2 billion in 2021 and the other joint venture members' 50% share of Diamond Green Diesel's net cash provided by operating activities, excluding changes in DGD's working capital, adjusted net cash provided by operating activities was $1.8 billion for the fourth quarter and $3.3 billion for the full year.\nWith regard to investing activities, we made $752 million of total capital investments in the fourth quarter of 2021, of which $353 million was for sustaining the business, including costs for turnarounds, catalysts and regulatory compliance and $399 million was for growing the business.\nExcluding capital investments attributable to the other joint venture members' 50% share of Diamond Green Diesel and those related to other variable interest entities, capital investments attributable to Valero were $545 million in the fourth quarter of 2021 and $1.8 billion for the year.\nMoving to financing activities.\nWe returned $401 million to our stockholders in the fourth quarter of 2021 through our dividend and $1.6 billion through dividends in the year, resulting in a 2021 payout ratio of 50% of adjusted net cash provided by operating activities for the year.\nAnd our board of directors recently approved a regular quarterly dividend of $0.98 per share, demonstrating our sound financial position and commitment to return cash to our investors.\nWith respect to our balance sheet at year-end, total debt and finance lease obligations were $13.9 billion and cash and cash equivalents were $4.1 billion.\nThe debt-to-capitalization ratio net of cash and cash equivalents was 33%.\nIn the fourth quarter, we completed a series of debt reduction and refinancing transactions that together reduced Valero's long-term debt by $693 million.\nThese debt reduction and refinancing transactions, combined with the redemption of $575 million floating rate senior notes due 2023 in the third quarter, collectively reduced Valero's long-term debt by $1.3 billion.\nAt the end of the year, we had $5.2 billion of available liquidity, excluding cash.\nWe expect capital investments attributable to Valero for 2022 to be approximately $2 billion, which includes expenditures for turnarounds, catalysts and joint venture investments.\nAbout 60% of our capital investments is allocated to sustaining the business and 40% to growth.\nApproximately 50% of our growth capital in 2022 is allocated to expanding our low-carbon businesses.\nFor modeling our first quarter operations, we expect refining throughput volumes to fall within the following ranges: Gulf Coast at 1.66 million to 1.71 million barrels per day, Mid-Continent at 395,000 to 415,000 barrels per day, West Coast at 185,000 to 205,000 barrels per day and North Atlantic at 430,000 to 450,000 barrels per day.\nWe expect refining cash operating expenses in the first quarter to be approximately $4.80 per barrel.\nWith respect to the renewable diesel segment, we expect sales volumes to be approximately 700 million gallons in 2022.\nOperating expenses in 2022 should be $0.45 per gallon, which includes $0.15 per gallon for noncash costs such as depreciation and amortization.\nOur ethanol segment is expected to produce 4.2 million gallons per day in the first quarter.\nOperating expenses should average $0.44 per gallon, which includes $0.05 per gallon for noncash costs such as depreciation and amortization.\nFor the first quarter, net interest expense should be about $150 million and total depreciation and amortization expense should be approximately $600 million.\nFor 2022, we expect G&A expenses, excluding corporate depreciation, to be approximately $870 million.\nBefore we open the call to questions, we again respectfully request the callers adhere to our protocol of limiting each turn in the Q&A to two questions.\nIf you have more than two questions, please rejoin the queue as time permits.\nPlease respect this request to ensure other callers have time to ask their questions.\n",
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"content": "q4 adjusted earnings per share $2.47.\nq4 earnings per share $2.46.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As the operator indicated, please limit your Q&A participation to one question.\nThis will help maximize participation during our time together.\nWe appreciate your interest in Vulcan Materials and hope that you and your families continue to be safe and healthy.\nI want to begin by saying that our performance in the first quarter was a very promising start to the year.\nDemand in our markets continues to improve and our team executed well as evidenced by our financial results.\nAdjusted EBITDA, which excludes the gain on sale from our reclaimed quarry in California, was $244 million, up 22% compared to last year.\nThis strong growth was driven in part by a 3% increase in aggregate shipments.\nDespite weather impacts across Texas and parts of the Southeast in February, we experienced a pickup in shipments and March proved to be a strong month.\nResidential starts continue to accelerate and highway starts also increased due to improved lettings in the third and fourth quarters of last year.\nWe've experienced an increase in both the number of jobs and the shipping speed in the heavy nonresidential space which is also the most aggregate intensive.\nAnd finally, some of the jobs that had been postponed last year have started.\nWith year-over-year improvement across our footprint pricing was the second driver of our EBITDA growth.\nFreight-adjusted aggregates pricing increased by 2% in the quarter.\nAdjusted for mix, the increase was 1.3%.\nThis was as expected since we were shipping work that have been bid in the middle of the pandemic when there was uncertainty and a lack of demand visibility.\nAs our 2021 price increases gain traction, we will see pricing improvement throughout the year.\nThe third driver of EBITDA growth and the one most within our control was our exceptional cost performance in the quarter.\nAggregate total cost of sales per ton was 2% lower than last year's first quarter.\nAnd cash cost of sales per ton declined by 3%.\nCost control like this is an accomplishment and requires considerable discipline from our operators.\nThe team focused hard on operational execution.\nAnd as a result, all of our operating parameters in the quarries improved year-over-year.\nWe were pleased with the meaningful impact from our four strategic disciplines, which will continue to mature.\nThe most compelling metric, continues to be our strong unit margin gains across the footprint.\nAggregates, cash gross profit per ton, increased by 9%.\nThis demonstrates the attractive operational earnings power of our aggregates business, when demand is combined with strong execution on our four strategic disciplines.\nOverall, our operating results this quarter, helped drive a 90 basis point improvement in our return on invested capital.\nSuzanne will provide further comments on this and other aspects of our financial performance.\nLet's now turn to our view of the end markets and then we'll cover how, that influence our outlook for the full year.\nBroadly speaking, the demand environment improved considerably over the last few months.\nConstruction starts, as measured by Dodge, got better along with other leading indicators, like the Dodge Momentum Index and ABI.\nConstruction employment levels continue to improve as well.\nResidential construction remains the strongest end market.\nThere is pent-up demand for houses and new subdivisions are being built with more to come.\nThe market fundamentals of low interest rates and reduced supply are still in place, which foreshadows continued growth.\nHousing starts are growing faster in Vulcan-served markets.\nThe outlook for our nonresidential end markets remains limited.\nHowever, our quote activity has increased and leading indicators are improving, which suggest that a turnaround is happening.\nThe strongest nonresidential sector relates to e-commerce and technology and encompasses data centers, warehouses and distribution facilities.\nAccording to Dodge, 90% of the growth in this sector will occur in Vulcan-served markets.\nMajority of non-res starts currently fits within this category, but we believe, a strong residential market combined with an increasingly open economy will drive additional demand in other nonresidential sectors.\nWith respect to highways, state budgets and lettings are progressing as anticipated.\nWe are seeing the improvement in lettings from the second half of 2020, now turning to shipments.\nThe COVID-19 relief funds have provided a backstop for any loss transportation revenues for highways.\nOur country's leadership continues to work on an infrastructure package.\nBoth parties have proposed substantial increases in highway funding and this is a priority for both the Democrats and the Republicans.\nTo summarize, our view of end markets, demand is improving.\nWe see evidence of this both on the ground with our customers and in the data from leading indicators.\nAs a result, we've upgraded our aggregates volume guidance for 2021 to a range of 1% to 4% growth compared to 2020.\nExcluding the gain on the sale of the California property, we now expect full year adjusted EBITDA of between $1.38 billion and $1.46 billion.\nAs we look forward to consider opportunities, we have three paths to growth, with higher returns.\nThose paths are organic growth, M&A and greenfields.\nI'll take each in turn.\nFirst, organic growth is a critical part of any strategy, because it offers the most attractive and compelling value proposition on a risk-adjusted basis.\nWe have the best geographic footprint in the industry and the best operators in the industry but we are not satisfied.\nOur four strategic disciplines are designed to accelerate this organic growth strategy.\nAnd the benefits are clear as we grow our unit profitability.\nSecond, we regularly review an active list of M&A targets.\nLast year the M&A market basically shut down.\nBut it's reopened this year.\nWe have a long history of making both large and small acquisitions when they are a good strategic fit.\nSince 2014, we've completed more than two dozen value-enhancing acquisitions in some of the fastest-growing markets in the country.\nAnd finally, we had a long and successful history of developing and opening new aggregate locations.\nThis allows us to pinpoint the location of aggregates reserves in growth quarters where there is no acquisition opportunity.\nAdditional benefits include more control over timing of capital investment and not paying a premium for the assets.\nWe like having a balance between organic and inorganic growth.\nIt provides a high degree of flexibility and is an important part of our capital allocation process and our ability to increase our return on invested capital.\nI'd like to start by highlighting four key areas to consider this quarter.\nOur aggregates unit profitability expansion, return on invested capital, balance sheet strength and the California land sale.\nOur aggregates gross profit per ton increased by 12% to $4.82.\nWe believe this is important because improving the operational profitability of existing locations generally comes with limited capital investment as compared to other growth engines.\nWhen the improvements are both sustainable and widespread across the footprint, significant value is created.\nOur strategic disciplines are making an impact and we have a good track record of execution.\nOver the past three years our compound annual growth rate for gross profit per ton was 7%.\nThe second key area is return on invested capital.\nAs Tom mentioned, the 90 basis point improvement in the quarter pushed our return to 14.8% for the trailing 12 months ended March 31.\nWhile a higher returns profile is always good, the way in which the improvement is achieved is also important.\nAs an example, the first quarter's ROIC gain was comprised of a 1% increase in invested capital and a 7% increase in adjusted EBITDA.\nThis further highlights the importance of the unit profitability discussed earlier.\nOver the past three years, our trailing 12 months ROIC has improved by 280 basis points, driven by a 4% compound annual growth rate in invested capital and an 11% compound annual growth rate in adjusted EBITDA.\nThe third area is the balance sheet.\nOur balance sheet strength has created significant optionality and flexibility as we consider our capital allocation priorities, our balanced approach to growth and shareholder returns.\nOur net debt to adjusted EBITDA ratio is 1.4 times, and we have nearly $900 million of cash on the balance sheet.\nOur debt has a weighted average maturity of 15 years, with no significant maturities in the near-term.\nAnd as always, we will continue to operate the business for the long term.\nWe will not rush decisions to invest, just because extra capital is available.\nThe last of the four key areas, I wanted to highlight, was the sale of the reclaimed quarry in Southern California.\nThe sale generated $182 million of net proceeds and a pre-tax gain of $115 million.\nOne of the strengths of our aggregates-focused business are the multiple opportunities to create value, and the life cycle of this quarry demonstrates that well.\nNow so far on the call, we focused entirely on the aggregates business.\nSo let's shift briefly to non-aggregates.\nGross profit in those segments collectively was $5.6 million in the quarter or $2 million less than last year.\nThe severe weather mentioned earlier affected both asphalt volumes in Alabama, Tennessee and Texas, and concrete volumes in Virginia.\nWith respect to the cost of diesel, it really wasn't much of a factor in the quarter, because the unit price of diesel was relatively unchanged from last year's first quarter.\nFor the full year, we now anticipate that the cost of diesel fuel will be a headwind of approximately $25 million, reflecting higher prices since the start of the year.\nThe last time we spoke with you we expected that our effective tax rate for 2021 would be 21%.\nWe now expect the full year rate to be between 23% and 24%, following a 27% rate in the first quarter.\nThe higher rate in Q1 and the revised expectation for the full year resulted from Alabama's recent change in the law, which modified the methodology by which a company apportions income to the state.\nThis change had the effect of reducing our ability to fully utilize certain net operating loss carry-forwards in Alabama.\nAnd as a result, we recorded a $14 million charge in the first quarter.\nWe will continue to operate Vulcan for the long-term.\nThis means, staying focused on our strong local execution, driving unit margin expansion, maintaining a strong financial position and improving our returns.\n",
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"content": "qtrly total revenues $1,068.3 million versus $1,049.2 million.\nsees 2021 aggregates shipments to increase between 1 percent and 4 percent compared to 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As the operator indicated, please limit your Q&A participation to one question plus a follow-up.\nThis will help maximize participation during our time together.\nWe appreciate your interest in Vulcan Materials Company.\nWe hope you and your families are well and will continue to be safe and healthy.\nDespite the difficulties caused by the pandemic, our company continues to thrive as a direct result of their efforts.\nTurning now to the third quarter.\nOur financial results can be summed up very simply.\nOur teams delivered another quarter of aggregate unit margin expansion through improved pricing, disciplined operating performances and solid execution.\nOur aggregate cash gross profit per ton increased by 5% despite an 8% volume decline.\nVolume was obviously impacted by the pandemic, but also by severe wet weather across the Atlantic Coast, the Southeast and Texas and wildfires on the West Coast.\nWe expanded our unit margins by remaining focused on what we could control and by making sure that we were well positioned to respond to a rapidly changing environment.\nWe've talked about our four strategic disciplines for a number of quarters now, and we believe that they have been a critical part of our success this year.\nOur commercial excellence and our operational disciplines have been particularly helpful.\nOn the commercial side, our aggregate mix adjusted sales price increased by approximately 3% in the quarter.\nOn a year-to-date basis, mix adjusted pricing increased by 3.5% despite a 4% decline in volume.\nOperationally, year-over-year, our cash unit cost of sales was flat, both for the quarter and year-to-date.\nCost control, operating efficiencies and a tailwind from diesel mitigated the impact of lower aggregate volume.\nOur four strategic disciplines continue to drive improvement in our unit margins.\nThis is evidenced by our 7% year-to-date improvement in cash gross profit per ton.\nSuzanne will review the quarter and year-to-date results in more detail shortly, but first, I want to address the demand trends that we're seeing.\nCertain leading indicators are showing signs of improvement, both sequentially and year-over-year.\nHowever, the pace of recovery and the timing of shipments is not certain.\nResidential construction continues to be the most resilient of our market segments.\nStarts and permits have rebounded, particularly in our footprint.\nSingle-family housing is leading the way, and we are especially well positioned in our markets to take advantage of this trend.\nPrivate nonresidential construction continues to be the most variable in use.\nFollowing the drop in the spring, construction starts have remained weak as compared to last year.\nHowever, we are encouraged by improvement in certain leading indicators, which could point to future growth.\nDodge Data states that warehouses and distribution centers, now the largest nonresidential starts category continue to see growth.\nAs a leading supplier in the majority of our markets, we are well positioned to serve all types of nonresidential business regardless of the category.\nAccording to Dodge, Vulcan-served states are expected to account for approximately 90% of the growth in warehouses and distribution centers over the next two years.\nIn addition, nonresidential demand for commercial buildings, like gas stations and grocery stores has historically followed the build-out of new housing subdivisions.\nWe could expect this type of traditional nonresidential construction to follow the growth we're experiencing in residential demand.\nAs we think about these current trends, it's important to keep in mind that unlike the great recession of 2008, nonresidential construction going into the pandemic was not overbuilt.\nThe uncertainty surrounding the pandemic has weighed more heavily on this segment.\nWith respect to public highway construction, most Vulcan-served states have flat to increasing DOT budgets for their fiscal year 2021 versus 2020.\nThis, coupled with a one-year extension of the FAST Act bodes well for highway demand.\nNow that state DOTs have greater clarity around highway revenues, lettings are returning to higher pre-COVID levels and are projected to continue to be consistent with state DOT budgets in 2021.\nTiming of shipments to highway projects may start a little slow early in 2021 due to states conservative approaches to lettings earlier this year, but will pick up as the year progresses.\nAs a more recent data point, aggregate shipments in the month of October were down 5% due to one less shipping day.\nWhile one month doesn't constitute a trend, we were still pleased with the outcome and attribute this performance to better weather and pent-up demand from the third quarter.\nAs we consider the remainder of 2020, we now believe we have sufficient near-term visibility to provide guidance for the full year.\nWe expect that our 2020 adjusted EBITDA will range between $1.285 billion to $1.315 billion.\nThis guidance range is predicated on no major changes in COVID-19 shelter-in-place restrictions, it also assumes our normal weather pattern.\nWith respect to 2021, we are in the midst of our budget season and still have work to do.\nVisibility continues to improve.\nTherefore, we expect to be able to provide 2021 guidance in February.\nThe key point to remember here is, while the pandemic has created uncertainty, our view of the underlying fundamentals of our business remains unchanged.\nOur aggregates-focused business is sound, resilient and adaptable to changing market conditions.\nWe have a history of good operational execution, and this increases our confidence in our ability to compound unit margins.\nWe're in the right geographies.\nOur balance sheet and liquidity position are a great source of strength and flexibility and will support our operational initiatives and our growth plans.\nGoing forward, we will remain focused on the things that we can control, keeping our employees safe and healthy, taking good care of our customers and ensuring strong execution on our operating disciplines.\nWe have confidence in our future success.\nAnd now I'll hand the call over to Suzanne for additional comments.\nI'll cover a few financial highlights and then comment briefly on our balance sheet and liquidity position.\nOur adjusted EBITDA for the third quarter was $403 million.\nAdjusted EBITDA margins increased by 210 basis points as compared to the prior year despite an 8% decline in total revenues.\nSignificant contributors to our quarterly EBITDA margin improvement were: first, the aggregates unit margin expansion that Tom discussed earlier; and second, a 6% or $5 million year-over-year reduction in SAG expense.\nThese metrics have improved on a year-to-date basis as well.\nOur aggregates cash gross profit per ton increased by 7% to $7.15, while aggregates volume decreased by 4%.\nSAG expense for the nine months declined by 5% or $14 million due to the execution of cost reduction initiatives and general cost control.\nNow I'd like to provide a little color on our quarterly segment performance.\nStarting with aggregates, volumes declined in most of our markets, reflecting weaker demand resulting from the pandemic.\nIn addition, the key markets that Tom called out were particularly affected by severe weather as we experienced a record-setting number of named storms.\nCalifornia shipments were impacted by wildfires and resulting power outages, which interrupted the supply of cement or ready-mix concrete production.\nThis limited construction activity.\nAggregate sales price growth in the quarter of nearly 3% on a mix adjusted basis was widespread across our footprint, reflecting a positive pricing environment.\nThe combination of sales price growth and good cost control more than offset reduced volume.\nAnd as a result, virtually all of our markets improved their respective unit profitability.\nMoving to our nonaggregates segments.\nAsphalt gross profit improved by $3 million as compared to last year's quarter.\nA 13% volume decline was more than offset by improved pricing and lower liquid asphalt costs.\nThe concrete segment's gross profit was $12 million, a reduction of $3 million versus the prior year.\nShipments decreased by 11% due to wet weather, particularly in Virginia, our largest concrete market.\nCalifornia's volume was also less than last year's third quarter due to the factors previously mentioned.\nOn a year-over-year basis, we were particularly pleased with our improving return on investment profile.\nFor the trailing 12 months ended September 30, ROI was 14.2%.\nAnd consistent with past practice, this was calculated on an adjusted EBITDA basis.\nTurning now to the balance sheet and liquidity.\nWe took further steps this quarter to enhance our position.\nWe renewed our revolving credit facility for another five years and took the opportunity to increase its size from $750 million to $1 billion.\nAll other terms were substantially similar to those contained in the previous facility.\nAt the end of the quarter, our leverage ratio was 1.7 times on a net debt-to-EBITDA basis, reflecting $1.1 billion of cash on hand.\nApproximately $500 million of this cash on hand will be used to repay a debt maturity coming due in March 2021.\nAnd at September 30, our available liquidity was a very healthy $2 billion.\nWe also generated a robust $1.1 billion of operating cash flow in the trailing 12-month period.\nThat represents a 23% increase as compared to the previous period.\nWe have been and will continue to be disciplined about how we invest our cash and therefore, our capital allocation priorities are unchanged.\nCapital expenditures for the nine months totaled $229 million.\nAnd we now expect to spend between $300 million and $350 million this year, a modest increase from our prior guidance of $275 million to $325 million.\nFor making marked progress toward our longer-term goal of $9 cash gross profit per ton and for driving our improved results through our four strategic disciplines.\n",
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"content": "qtrly total revenues $1,309.9 million versus $ 1,418.8 million.\nexpect full-year 2020 adjusted ebitda of $1.285 billion to $1.315 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate your interest in Vulcan Materials Company, and hope that you and your families continue to be safe and healthy.\nThis is our first earnings call since closing the U.S. Concrete acquisition in late August.\nTherefore, Id like to begin by welcoming the former U.S. Concrete employees and customers to our Vulcan family.\nDespite these challenges, our team managed our controllable costs, move pricing higher in all segments and importantly, expanded our aggregates unit profitability for the 13th consecutive quarter.\nWe generated $418 million of adjusted EBITDA this quarter, an increase of 4% as compared to last year.\nProfitability for the quarter was held back by factors I mentioned earlier, energy inflation was a significant $30 million headwind.\nUnit diesel prices were up over 50%, leading to $14 million of additional expense.\nThe cost of liquid asphalt was over $100 per ton higher than last year.\nThis sharp increase impacted our results by $16 million.\nAnd finally, labor constraints, especially for truck drivers, have caused delays and inefficiencies in our operations as well as those of our customers.\nEven with these headwinds, we improved our aggregate cash gross profit per ton by 3% and to $7.74.\nThis was achieved through consistent execution of our four strategic disciplines which helped to drive volume growth, higher pricing and improved operating efficiencies.\nThis strong performance and the momentum it provides sets us up well for 22, especially with respect to pricing.\nTotal aggregate volume, including U.S. Concrete, increased by 8% versus last years quarter.\nOn a same-store basis, volume was up 5%.\nThis reflects continued improvement in demand across all end markets.\nThe pricing environment in aggregates continues to be very positive across our footprint.\nSame-store prices were up 3.1% in the quarter and mix adjusted prices increased by 3.5%.\nWe saw our early price increases gain traction and as a result, year-over-year average selling prices improved sequentially each quarter this year.\nAlthough inflationary pressures can create short- to medium-term headwinds, the combination of inflation and improving visibility to demand has and will continue to create a favorable environment for price increases.\nOperating efficiencies and disciplined cost control helped to offset some of the higher input costs we experienced.\nOn a same-store basis, our aggregates unit cost of sales in the quarter increased by only 1.7% as compared to last year.\nNow excluding the diesel effect, unit cost of sales actually decreased by 1%.\nWhile costs will be lumpy, we have delivered comparable results for the trailing 12-month period.\nThis solid performance in aggregates helped to more than offset reduced profitability in non-aggregates segment.\nOur Asphalt business was notably affected by both higher energy costs and wet weather.\nQuarterly gross profit in the segment fell from $30 million to $7 million.\nHigher liquid asphalt costs accounted for $16 million of this difference.\nWe also experienced a rise in natural gas prices, which in turn impacted our plant production costs.\nAsphalt volume declined by 8% as volume growth in California was more than offset by lower Arizona volumes due to extremely wet weather.\nAverage selling prices improved by almost 2% year-over-year and better than 2% sequentially, evidence that pricing actions are beginning to ease some of the illiquid asphalt inflation.\nI would expect continued price improvement as we pass along higher costs.\nIn the Concrete segment, gross profit increased by 18%, reflecting our ownership of U.S. Concrete for one month.\nSame-store volumes declined by 7% due to the completion of large projects in Virginia and the availability of drivers to make up for any lost shipping days.\nFor the quarter, same-store prices increased by 2%.\nTurning now to the demand picture.\nThe story is relatively unchanged from the second quarter.\nDemand has improved across all of our major end markets as well as geographies.\nThe residential end-use has shown continued strength with solid starts in single-family housing.\nMultifamily starts have also performed well.\nWith respect to the nonresidential end market, improvement continues at a number of leading indicators we track.\nFrom its low point early this year, starts have consistently improved, returning to growth in recent months.\nThe level of highway starts are up as states have moved back to more normal funding levels with Vulcan markets outpacing other markets.\nWe look forward to the enactment of the bipartisan infrastructure bill and the significant impact on volumes for years to come.\nNow looking forward, I want to briefly touch on our growth strategy and give a very preliminary view of 2022.\nAs we shared on past calls, we have three paths to growth.\nThese three are organic growth, M&A and greenfields.\nEarnings growth in the underlying business is at the core of our growth strategy because it provides the most attractive and compelling value proposition on a risk-adjusted basis.\nThe benefits of this focus are clear as we expand our industry-leading unit profitability despite the macro challenges we may face from time to time.\nWe look for strategic opportunities that naturally complement our principal aggregates business.\nGiven our leading market position, we have visibility to all deals that come to the market.\nThe key is for us to be disciplined as we consider which deals to pursue.\nAll opportunities are not created equal, and we want to do the deals that create the most value over time.\nAnd as the final pillar to our growth strategy is the development of greenfield sites.\nThere are times when an acquisition target is not available in a particular growth quarter.\nIf that is the case, we turn to new greenfield sites, and we have a long successful history of developing them.\nDuring this quarter, we completed the U.S. Concrete acquisition and were excited about the strategic fit and how it naturally complements our principal aggregates business in California, Texas and Virginia and gives us access to new platforms in New York and New Jersey.\nAlready, our teams are working together to identify strategic opportunities.\nAs you would expect, we are taking a thoughtful approach to integration to ensure that we capture all available synergies.\nIts still early days on the integration.\nWe intend to give you a more detailed briefing in February, but were pleased with the wins weve seen so far.\nWe are confident in our ability to generate at least $50 million of synergies on a 12-month run basis beginning midyear next year, when most of the integration is complete, but more to come.\nSuzanne will cover some additional highlights of the quarter and share our latest financial view on how we expect to finish 2021.\nThe 2021 demand and inflationary environment sets us up well as we head into 2022.\nA key to our pricing strategy, were starting early in the spring with announced price increases.\nIn certain markets, we launched further increases.\nThese increases are evident in our sequential quarterly pricing growth.\nAlready, we are discussing 2022 pricing expectations with customers.\nClearly, we need to see where those conversations lead.\nBut at this stage, I would be surprised if next years price increases are not at least 5%.\nThe demand picture also looks good leaning into 2022, although we are watching the labor situation closely.\nIf labor constraints do continue, its important to remember that the work is still there.\nIt may just proceed at a slower pace.\nEffectively, extending the recovery and allowing us the opportunity to compound price, control costs and still grow earnings.\nWeve covered the key financial and operational highlights already.\nSo Id like to speak to the following topics: First, our balance sheet strength and capital allocation priorities; second, our return on invested capital; and finally, our financial guidance for 2021.\nWith respect to the balance sheet, we will continue to prioritize sensible leverage and financial flexibility in order to support our capital allocation strategy and maintain our investment-grade rating.\nThe structure of our debt is sound with long maturities that make sense for our business.\nDue to our strong cash generation, we were able to reduce our net debt-to-EBITDA leverage ratio to 2.7 times following the U.S. Concrete acquisition.\nThis is just above our stated range of two to 2.5 times and we will be focused on getting back within that range in the near term.\nOur capital allocation priorities remain unchanged and the consistent application of those while maintaining a sensible leverage range has allowed us to improve our return on investment over the past three years.\nFor Legacy Vulcan, the return was 14.7%, up 240 basis points from three years ago, with the inclusion of one month of U.S. Concrete earnings, and a 1-quarter impact of the acquisition on average invested capital, our return was 14.2%.\nWell continue to focus on the sequential improvement of returns.\nOur guidance incorporates U.S. Concretes expected EBITDA contribution since acquisition as well as recent trends in demand, price and costs.\nOur adjusted EBITDA guidance range for the full year is now $1.43 billion to $1.46 billion.\nThis includes $50 million to $60 million of EBITDA from the acquisition, but excludes $115 million gain on a land sale completed in the first quarter.\nIm sure there will be a number of questions on business trends and the outlook in the Q&A section.\nOur people are what makes Vulcan better every day.\nWe have and will always operate Vulcan for the long term.\nThis means a strong emphasis on keeping our people safe and continuously improving our already strong culture.\nLocal execution is key to driving improvements in our business, particularly around our strategic disciplines.\nAs we move forward, we will seek to maximize synergies with U.S. Concrete.\nAs always, for Vulcan, we will maximize unit margin expansion through our four strategic disciplines.\nAnd remember, improving financial returns is of paramount importance.\n",
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"content": "qtrly total revenues were $1.52 billion, an increase of 16 percent compared to prior year.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate your interest in Vulcan Materials Company.\nWe hope you and your families are and will continue to be safe and healthy.\n2020 represented another year of strong earnings growth for Vulcan, despite the many challenges associated with the pandemic.\nOur results demonstrated the strength, flexibility and resilient nature of our aggregates business, but most of all 2020 demonstrated the commitment of Vulcan employees as they faced uncertainty and had to make adjustments, both in the professional and their personal lives.\nOur team stayed focus on operating safely, servicing our customers and making progress on our four strategic disciplines.\nCongratulations on a job well done.\nIn a few minutes, Suzanne will share some fourth quarter highlights with you.\nBut first, I'd like to summarize our full-year 2020 accomplishments, and discuss broad themes and where we are headed.\nOur full-year financial results were strong.\nTotal company adjusted EBITDA increased 4% to $1.324 billion and EBITDA margin expanded by 150 basis points.\nCash generation continued to be strong with operating cash flows increasing by 9% to $1.1 billion.\nAnd finally, one of our principal measures, return on invested capital improved by 40 basis points to 14.3%.\nThese results were particularly noteworthy considering our annual aggregates volume declined by 3% as compared to 2019.\nHigher average selling prices and effective cost control were key drivers of this performance.\nAggregates pricing improved by just over 3% on both a reported and mix-adjusted basis.\nImportantly, these pricing gains were widespread across our footprint.\nOur total cost of sales per ton increased by 2%, while our unit cash cost of sales, which is more controllable, only grew by 1%.\nThis led to a 5.5% gain in our aggregates cash gross profit per ton.\nAt $7.11, we are making good progress toward our longer term goal of $9 per ton.\nThis improvement in unit profitability was supported by our four strategic disciplines, commercial excellence, operations excellence, logistics innovation and strategic sourcing.\nWe also experienced improvements in each of our non-aggregates business segments.\nCollectively, gross profit improved 12% across these three segments.\nUnit profitability increased in both asphalt and country.\nAsphalt gross profit increased $12 million or 19% over the prior year, even though volumes declined 7%.\nThis improvement in profitability resulted from stable sales prices and lower liquid asphalt cost.\nOur ready-mix concrete unit profitability increased 8%.\nAverage selling prices increased by 2% and volume declined by 5%, primarily as a result of the cement shortages in California.\nThe higher profitability in each of our business segments and our improving overall EBITDA margin set us up well for 2021.\nWe are well positioned to take advantage of market opportunities in our geographic footprint.\nThe demand environment is also improving, particularly in residential construction and highway construction.\nLet's take each market segment in turn.\nResidential continues to show strength, especially in single family.\nThe market fundamentals of low interest rates, and reduced supply suggests that the growth will continue.\nThis represents a clear opportunity for us as both permits and starts are growing faster in Vulcan-served markets.\nHighway lettings and awards returned to growth in the fourth quarter.\nState DOT budgets have stabilized, with most of our states showing budgets flat to up from 2020.\nThe caution in this market segment is that it will require time to turn awards into shipments given the mid-year 2020 loan awards due to the pandemic.\nWhile timing of shipments is a variable, we will see improvement in highway shipments throughout 2021.\nAs we said in the third quarter, the near-term outlook for the nonresidential construction sector provides the lease forward visibility.\nDodge construction starts are still down year-over-year, but certainly, indicators are beginning to improve, perhaps signaling that potential improvement is just around the corner.\nWeakness lingers in the office space and hospitality related sectors, but there is growth in the heavier nonresidential categories like distribution facilities and data centers.\nIn fact, warehouses are now the largest nonresidential category as measured by square feet and represent approximately one-third of construction awards.\nThese projects are typically more aggregate intensive, and 90% of the near-term growth in this sector will occur in Vulcan-served states according to Dodge.\nThe Administration and Congress are committed to an infrastructure-led economic recovery, and have indicated that they will focus on an infrastructure bill next, after the COVID-19 relief package.\nClearly, our leading market positions will mean broad participation in infrastructure-related spending.\nWe believe demand for aggregates will continue to improve as we progress through 2021.\nThat being said, the timing of shipments to highway projects and nonresidential construction projects remains a variable.\nWe consider these factors as we thought about our 2021 prospects and guidance.\nThat said, we expect our adjusted EBITDA to be between $1.34 billion and $1.44 billion.\nWe anticipate 2021 aggregates shipments could follow a range of a 2% decline to a 2% increase as compared to 2020.\nRegardless of volume swings, we will improve our full-year unit profitability in Aggregates.\nWe expect aggregates freight-adjusted average selling prices to increase by 2% to 4% in 2021.\nAnd gross profit in our non-aggregates segments is forecast to improve by mid-single to mid-high single digits.\nTo sum it up, 2021 will turn out to be a year of solid earnings growth.\nBefore I discuss fourth quarter 2020 highlights, I'll fill in some additional details on our 2021 guidance.\nWe made significant reductions in our selling, general and administrative expenses in 2020.\nWe expect to further leverage our overhead costs in 2021 and anticipate our SG&A expenses to be between $365 million and $375 million.\nWe anticipate interest expense to approximate $130 million for the full year.\nBarring any changes to federal tax law, our effective tax rate will be about 21%.\nThe category of depreciation, depletion, accretion and amortization expenses will be around $400 million.\nNow with respect to capital expenditures, we invested $361 million in 2020.\nWe expect to spend between $450 million and $475 million 2021.\nThis includes fully restarting and advancing growth projects that were delayed last spring, such as the opening of a new quarry in California, capacity expansion at other quarries, and improvements to our logistics and distribution network.\nIt also reflects a catch-up of operating capex that was postponed at the start of the pandemic.\nAs always, we'll carefully monitor the economic environment and adjust our capital spending as necessary.\nAs you model, you'll note that the combination of our assumptions for 2021 leads to another healthy year of cash generation.\nI'll now give a little color on the fourth quarter of 2020.\nAdjusted EBITDA was $311 million, up 4% from last year's fourth quarter.\nAggregates volume declined by 1%, while reported pricing increased by 3% and mix adjusted pricing by 2%.\nCosts were slightly higher in the quarter due to additional stripping costs in advance of future shipping growth and the timing of repairs.\nThere were two items that affected the comparability of our fully diluted earnings per share in both the fourth quarter and full-year 2020 as compared to those same periods in 2019.\nFirst, we recorded a one-time non-cash pension settlement charge of $23 million or $0.13 per diluted share in connection with the voluntary lump sum distribution of benefits to certain fully vested plan participants.\nThis liability management action will benefit future pension expense and funding requirements.\nAnd second, the tax rate for fourth quarter and full-year 2020 was higher than in the comparable periods in 2019.\nLast year, the tax benefits associated with share-based compensation and R&D credits were greater than the same benefits in 2020.\nThe resulting earnings per share effect was $0.04 per diluted share in the fourth quarter and $0.18 per diluted share for the full year.\nMoving on to the balance sheet, our financial position remains very strong with a weighted average debt maturity of 13 years and a weighted average interest rate of 4%.\nOur net debt to EBITDA leverage ratio was 1.6 times as of December 31, reflecting $1.2 billion of cash on hand.\nApproximately $500 million of this cash will be used to repay a debt maturity coming due next month.\nAs Tom mentioned, our cash flow was robust in 2020 and contributed to year-over-year leverage reduction.\nDue to the uncertainty surrounding the pandemic and the resulting slowdown in economic activity, M&A was lighter than usual in 2020.\nWe returned $206 million to shareholders through increased dividends and share repurchases.\nOur capital allocation priorities, which have helped to drive an improvement of 220 basis points and our return on invested capital over the last three years, remain unchanged.\nWe will continue to operate Vulcan for the long term, and our focus on building an even stronger and more profitable business.\nWe know that our leading market positions and our aggregates-focused business are strengths, along with our strong balance sheet.\nWhen combined with the execution capabilities that we demonstrated in 2020, as well as solid long-term fundamentals, we are excited about our future.\nWhile there may be challenges in 2021, we have confidence in its potential.\n",
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"content": "qtrly total revenue $ 1,175.1 million versus $ 1,186.2 million.\nin 2021, expects to spend between $450 million and $475 million on capital expenditures.\nsees 2021 aggregates shipments down 2 percent to up 2 percent versus 2020.\nsees year-over-year aggregates freight-adjusted price increase of 2 to 4 percent in 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Avner will review our financial performance and provide trends and key assumptions for the balance of 2021 with closing remarks from Steve.\nThis will be followed by Q&A.\nA replay of today's call will be available for the next seven days.\nI would now like to call over to our President and Chief Executive Officer, Steve Kaniewski.\nBefore we recap our second quarter results, I would like to share some opening comments.\nLike many companies, we have faced unprecedented levels of cost inflation, especially raw materials and transportation since the beginning of the year.\nThese levels are pervasive and must be accounted for in-market pricing.\nSo, it has been an imperative for us to quickly increase prices globally across all of our businesses.\nCurrent economic trends lead us to believe that inflation will not mitigate in the near term, especially for durable goods and we will continue to take additional pricing actions in all segments as needed while inflationary pressures continue.\nFor example, in North America, Irrigation, this year we've raised price five times on irrigation systems, totaling more than 30% inclusive of upcoming increases.\nAnd then Utility, utilizing our pricing mechanisms, we've raised price seven times on steel monopoles.\nAs we have demonstrated over the past few years, price leadership is a strategic priority for us and will continue to be in all of our served markets.\nI want to commend them on the improvement in ship complete and on-time metrics, even as our business is accelerating.\nWe're proud of our team's persistent focus and we expect to continue building on the strong momentum going forward.\nRecord sales of $894.6 million increased $205.8 million or nearly 30% compared to last year, an increase more than 26% on a constant currency basis.\nSales growth was realized in all segments, most specifically in Irrigation and Utility Support Structures.\nStarting with Utility, sales of $267.9 million grew $36.5 million or 15.8% compared to last year.\nHigher volumes were driven by strong broad-based demand from ongoing investments in grid hardening and modernization, as well as renewable energy generation.\nMoving to Engineered Support Structures, record sales of $269.4 million increased $16 million or 6.3% compared to last year.\nFavorable currency and pricing impacts as well as sales growth in wireless communication products and components were slightly offset by anticipated lower North American transportation market volumes.\nGlobal lighting and transportation sales grew 3.3% as pricing improved in all regions, and international markets benefited from increasing stimulus and infrastructure investments, especially in Europe and Australia.\nWireless communication products and components sales grew 7.2% compared to last year.\nCarrier spending and support of 5G build-outs continues to drive strong demand globally, as evidenced by significantly higher sales of our small cell integrated products.\nFavorable pricing also contributed to sales growth.\nI want to take a moment to congratulate our ESS team on delivering a record quarter of sales in operating income.\nI'm especially proud of our commercial teams for their demonstrated price leadership during this inflationary environment.\nTurning to Coatings, sales of $98.2 million grew $18.2 million or 22.7% compared to last year and improved sequentially from last quarter due to improving end market demand, favorable pricing and currency impacts.\nDuring second quarter, we commenced operations at our new greenfield Coatings facility near Pittsburgh, Pennsylvania, built with enhanced processes to generate less heat and humidity and providing additional recycling opportunities.\nThis facility aligns well with our ESG principles while serving the growing demand for new infrastructure in this region.\nMoving to Irrigation, record global sales of $282 million grew $131.3 million or 87.2% compared to last year with sales growth across all served markets, including more than 35% growth in our technology sales.\nHigher volumes and favorable pricing were driven by the continued strength of Ag market fundamentals and deliveries for the large Egypt project.\nIn North America, sales of $156.1 million grew 57.6% year-over-year.\nStrong market fundamentals and improved net farm income projections continue to positively impact farmer sentiment generating strong order flow.\nSignificantly higher volumes, higher average selling prices and higher industrial tubing sales, all contributed to sales growth.\nInternational sales of $125.9 million grew 1.4 times compared to last year, led by the ongoing delivery of the Egypt project, strong European market demand and record sales in Brazil.\nOur sales through the second quarter have exceeded full-year 2020 revenue, a testament to our market leadership in this region.\nRegarding our project pipeline in Africa, we recently were awarded more than $20 million of additional projects from new customers in Egypt, Sudan and Rwanda demonstrating our market leadership, global operations footprint and project management capabilities.\nTurning to Slide 5, during the quarter, we completed the acquisition of Prospera Technologies, an award winning global leader in AI and machine learning.\nFor those who attended our virtual Investor Day in May, you will recall how we outlined our strategic pillars for long-term profitable growth.\nAccelerating innovation through investments in recurring revenue services is one of the critical components of our industrial tech growth strategy.\nThrough this acquisition, together Valmont and Prospera have created the most global vertically integrated AI company in agriculture, immediately providing highly differentiated solution focused on in-season crop performance that is able to go beyond traditional irrigated acres.\nNo one else in the industry can offer this kind of solution.\nProspera brings advance agronomy and unprecedented visibility to the field.\nTheir technology is currently being used on over 5,300 fields on a variety of crops including corn, soybeans, potatoes, wheat, onions, alfalfa and tomatoes.\nGrowers are very excited about this technology as evidenced by strong adoption rates and the critical need for growers to reduce inputs while increasing yields, aligning well with our ESG principles of conserving resources and improving life.\nThrough Prospera solution, vision and talented team, we are moving to the next stage of agricultural development.\nToday, approximately half of our irrigation technology sales are generated from recurring revenue services.\nWith this acquisition, we expect those particular sales to grow more than 50% per year over the next three to five years.\nWe also expect this acquisition to be accretive to the segment beginning in 2023, as we continue investing in our in-season data services.\nIntegration is going well and we plan to share more on our accelerated market growth strategy in future quarters.\nAdditionally, in today's market, the war for talent is pervasive and competitive.\nProspera brings the strongest team in the industry and we are fortunate to have 100 highly talented and motivated employees on board, including experts in data science and machine learning.\nAs you can tell, I'm very excited about this acquisition.\nIt builds upon our demonstrated success over the past few years as we move forward together as one company.\nWe also completed the acquisition of PivoTrac, the subscription based AgTech company that provides remote sensing and monitoring solutions for the southwest U.S. market, helping grow our technology sales to $50 million year-to-date.\nTurning to Slide 6, our solar business is another area where we are accelerating growth and new product innovation while supporting our sustainability commitments.\nDuring Investor Day, we talked about solar growth opportunities in both utility and agriculture and I'm very excited to see our growing pipeline of projects in both end markets.\nOur backlog of utility-scale and distributed generation projects has been increasing as we expand the solution globally.\nIn the second quarter, we were awarded projects totaling $47 million.\nAdditionally, over the past 18 months, we received more than 30 orders for the North American market.\nWith our industry-recognized class of one status and the benefits of our scale and global supply chain, we're uniquely positioned to help support global customers with their renewable energy goals.\nOur Solar Solutions are also driving accelerated growth in agricultural markets.\nIn the second quarter, we were awarded three projects, totaling $25 million.\nWe've already completed several others in Sun Belt regions like Brazil and Sudan and our planning an official North American market launch this fall at the Husker Harvest Days farm event.\nWe are also partnering with large global food producers to help them achieve their own ESG goals.\nWorking together with our Utility Solar team and world-class Valley dealer network, we have formed a global cross-functional team committed to delivering integrated solutions to support Ag players in their markets.\nWe're very excited about this growth potential.\nTurning to Slide 7.\nAt our Investor Day, I talked about several of our ESG initiatives and highlighted the many ways that our products and services conserve resources and improve life and help build a more sustainable world.\nAs we said before, ESG is a strategic priority for us.\nOur environment and social quality scores have improved significantly this year from a 6 to a 2 for environment and from a 6 to a 3 for social, while governance has held steady at a solid 2.\nWhile this is a continuous journey, we are proud of the progress we have made so far.\nI want to congratulate our teams and business partners who are strengthening our commitment to grow and innovation as a company with ESG in mind.\nTurning to Slide 9 and second quarter results.\nOperating income of $90.9 million or 10% of sales grew $25.2 million or 38% compared to last year driven by higher volumes in irrigation, improved operating performance and a favorable pricing notably in Engineered Support Structures.\nDiluted earnings per share of $3.06 grew more than 50% compared to last year, primarily driven by very strong operating income and a more favorable tax rate of 22.5%.\nThis rate was realized through the execution of certain tax planning strategies.\nTurning to the segments.\nOn Slide 10, in Utility Support Structures, operating income of $21.2 million or 7.9% of sales decreased $4.1 million or 300 basis points compared to last year.\nStrong volume, increased pricing and improved operational performance were more than offset by the ongoing impact of rapidly rising raw material costs during the quarter, which our pricing mechanisms did not allow us to recover.\nMoving to Slide 11 in Engineered Support Structures.\nRecord operating income of $31.9 million or 11.9% of sales increased $9 million or 290 basis points compared to last year.\nWe're extremely pleased with the results from deliberate proactive pricing actions taken by our commercial teams to more than offset the impact of rapid cost inflation.\nWe are also recognizing the benefits of previous restructuring actions.\nAdditionally, our operations team continue to drive performance improvement across the segment through improved productivity and product quality and better ship complete and on-time delivery metrics.\nTurning to Slide 12.\nIn the Coatings segment, operating income of $14.7 million or 14.9% of sales was $4.3 million or 190 basis points higher compared to last year.\nHigher volumes, favorable pricing and operational efficiencies more than offset the impact of raw material cost inflation.\nMoving to Slide 13.\nIn the Irrigation segment, operating income of $42.9 million or 15.2% of sales nearly doubled compared to last year and was 80 basis points higher year-over-year.\nSignificantly, higher volumes and favorable pricing were slightly offset by higher R&D expense for strategic technology growth investments, including product development.\nTurning to cash flow on Slide 14.\nWe delivered positive operating cash flows of $37 million and positive free cash flow this quarter despite continued inflationary pressures, increasing our working capital needs.\nThis quarter we closed on Prospera acquisition for a purchase price of $300 million, funded through a combination of cash on hand and short-term borrowings on our revolving credit facility.\nWe also acquired 100% of the assets of PivoTrac for $12.5 million, funded by cash on hand.\nAs we stated in prior quarters, rapid raw material inflation can create short-term impacts on cash flows.\nThe current market outlook indicates that general inflationary trends may not subside in 2021, so we would expect some continued short-term impacts.\nWe expect working capital levels and inventory to remain elevated to help us mitigate supply chain disruptions and opportunistically lock in better raw material pricing.\nAccounts receivable will also meaningfully increase in line with sales growth.\nAs our historical results have shown, we will see improvements in working capital as inflation subside.\nTurning to Slide 15 for a summary of capital deployment.\nCapital spending in first half of 2021 was $49 million and we returned $42 million of capital to shareholders through dividends and share repurchases, ending the quarter with just over $199 million of cash.\nMoving now to Slide 16.\nOur balance sheet remains strong with no significant long-term debt maturities until 2044.\nOur leverage ratio of total debt to adjusted EBITDA of 2.3 times remains within our desired range of 1.5 times to 2.5 times.\nWe are increasing sales and earnings per share guidance for fiscal 2021.\nNet sales are now estimated to grow 16% to 19% year-over-year driven primarily by very strong agricultural market fundamentals.\nFurther, we now expect Irrigation segment sales to grow 45% to 50% year-over-year and continue to assume a foreign currency translation benefit of 2% of net sales.\n2021 adjusted earnings per share is now estimated to be between $10.40 and $11.10.\nI want to take a moment to discuss the rationale for providing an adjusted earning outlook going forward.\nAs a technology company, the cost structure of Prospera is very different than any acquisition in Valmont's history, including a significant restricted stock grant for talent retention purposes.\nWe have also acquired intangibles technology assets.\nWe believe that by excluding Prospera's intangible asset amortization and share-based compensation in the adjusted financials, the metrics will provide a better comparison a future Irrigation segment performance as compared to historical results.\nOther metrics and assumptions for 2021 are also summarized on the slide and in the release.\nTurning to our second half 2021 Segment outlook on Slide 18.\nIn Utility Support Structures, we expect a meaningful sequential improvement to the quality of earnings, beginning in the third quarter driven by margin improvement as pricing becomes more aligned with steel cost inflation.\nMoving to Engineered Support Structures, we expect continued short-term softness in North American transportation market and improved demand in commercial lighting.\nDemand for wireless communication products and components remains strong and we expect sales growth in line with expected market growth of 15% to 20%.\nMoving to Coatings, end market demand tends to correlate closely to general economic trends.\nWe are focused on pricing excellence and providing value to our customers.\nMoving to Irrigation, we expect a very strong year 45% to 50% sales growth based on strength in global underlying Ag fundamentals, the estimated timing of deliveries of the large Egypt project and another record sales year in Brazil.\nA couple of reminders that I want to mention for this segment.\nThe first is that the third quarter is a lower sales quarter compared to the rest of the year due to normal business seasonality.\nSecond, deliveries of the large Egypt project began in fourth quarter 2020, which will affect year-over-year growth comparisons, and as Steve mentioned earlier, we have been consistently raising prices to offset inflationary pressures.\nTurning to Slide 19 and the long-term drivers of our segments.\nOverall, we continue to see strong demand and positive momentum across all businesses, evidenced by backlog of more than $1.3 billion at the end of second quarter and the demand drivers are in place to sustain this momentum into 2022.\nLike many others, we are closely monitoring the COVID Delta variant and continue to follow state and local regulations to keep our employees and customers safe.\nAt present, government mandated shutdowns in Malaysia, have led to the temporary closure of three of our small facilities there.\nThe expected impacts from these closures have been included in our full year financial outlook.\nTurning to Slide 20.\nIn summary, I'm very pleased with our strong second quarter results and our team's ability to navigate and capitalize on challenging market dynamics.\nWe believe this demonstrates the strength and sustainability of our business and long-term strategy, favorable end market trends and strong price leadership in the marketplace.\nAs we discussed at our Investor Day, we remain focused on the execution of our strategy, which is fueled by our dedicated and talented team of 10,000 employees and our differentiated business model.\nThrough our acquisition of Prospera Technologies and PivoTrac, we are accelerating growth through investments in innovation, technology and IoT building on our strategy to grow recurring revenue services.\nFinally, we're very positive on the year as demonstrated by our updated financial outlook and are poised and well positioned to capture growth and drive shareholder value in the future.\n",
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"content": "q2 revenue $894.6 million .\nq2 adjusted earnings per share $3.06.\nsees fy adjusted earnings per share $10.40 to $11.10.\nnow expects full-year net sales to increase 16% to 19%, and irrigation segment sales to increase 45% to 50%.\nvalmont - in utility support structures unit, sees meaningful sequential margin improvement in h2 as pricing aligns more with steel cost inflation.\nq2 revenue $90.9 million.\nvalmont industries - expect meaningful sequential margin improvement in second half of 2021 as pricing becomes more aligned with steel cost inflation.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Avner will review our financial performance and provide an outlook for the balance of 2021 with closing remarks from Steve.\nThis will be followed by Q&A.\nA replay of today's call will be available for the next seven days.\nIt will also be read in full at the end of today's call.\nToday, I would like to begin by sharing some opening comments and then provide a brief overview of the quarter.\nBefore I do that, I want to take a moment to recognize the contributions of Walter Scott, Jr., who served on our Board for more than 40 years and passed away late last month.\nWalter was an incredible individual whose wisdom and leadership were critical to Valmont's success over the years.\nHis loss is felt deeply by those who knew him and the entire Omaha community.\nWalter's counsel, kindness and mentorship will truly be missed by all of us at Valmont.\nMoving on to the business.\nOur strong performance this quarter, once again, demonstrated the solid demand across our businesses and the consistent execution of our growth strategies, even amid a challenging global environment.\nLike most others, we have safety impacts of broad-based inflation, the COVID-19 Delta variant, and labor and supply chain disruptions.\nGovernment mandated lockdowns in Australia and workforce quarantines in North America, including Mexico and the Southeast United States, impacted certain utility and coatings facilities.\nSupply chain disruptions affect the timing of some shipments in our Irrigation and Solar businesses.\nDespite this, we delivered a strong quarter of growth and profitability.\nOur commercial and operations teams are managing exceptionally well through these unique dynamics of focus and perseverance, while continuing to prioritize employee safety and serve our customers.\nI'm extremely proud of our team's execution throughout this year.\nRecord third quarter sales of $868.8 million increased more than 18% compared to last year.\nSales growth was realized in all segments led by higher pricing and strong broad-based market demand with particularly substantial sales growth in Irrigation.\nMoving to the segments and starting with Utility.\nSales of $276.5 million grew slightly compared to last year.\nA significantly higher pricing and higher volumes were mostly offset by renewable energy projects that did not repeat or that were pushed into future quarters due to customers' supply chain disruptions.\nNorth American utilities have been increasing their planned investments in transmission and distribution projects, even exceeding recent years of higher capital spending.\nFurther, proposed capacity additions in the renewable energy sector are favorable demand drivers across our Utility business.\nWe see strong demand continuing, as both utilities and developers have been increasing their forecast of additional projects over the next several years to comply with mandates to increase renewable energy generation.\nMoving to Engineered Support Structures.\nSales of $281.1 million increased 10% year-over-year, led by favorable pricing in all markets and sales growth of more than 25% in wireless communication products and components.\nPricing improvements across all product lines continued this quarter, and international markets are benefiting from higher stimulus and infrastructure investments, especially in Australia.\n5G build-outs and significant investments by the major carriers are driving demand in our wireless communications business, providing a good line of sight into 2022.\nSales of $96.7 million grew 10% year-over-year, driven by higher pricing, improved general end market demand and sales from our greenfield facility in Pittsburgh.\nGlobal sales of $240.3 million grew more than 72% year-over-year, with sales growth in all regions and higher sales of technology solutions.\nIn North America, sales grew nearly 55%, as strong market fundamentals and improved net farm income projections continue to positively impact farmer sentiment, generating very strong order flow.\nInternational sales doubled year-over-year, led by solid demand in the Middle East and Africa, including the ongoing deliveries of the Egypt project and another record quarter of sales in Brazil.\nLast quarter, we highlighted our acquisition of Prospera Technologies.\nIntegration is going well, and we are making substantial progress building on our new strategy to grow recurring revenue services.\nWe are on track to meet the financial targets that we shared last quarter and look forward to sharing progress toward these goals in the future.\nIn Irrigation, we have a unique market advantage due to our global footprint and highly differentiated AI solutions, both are critical components of our growth strategy.\nOver the past year, we have been increasing opportunities for local manufacturing in the markets we serve, especially in light of the challenging supply chain environment, labor availability and higher freight costs.\nFor example, we recently localized some of our electronics assembly in Dubai facility and are increasing the total capacity in our Brazil factory by 50%, positioning us for long-term international market growth, while we continue enhancing service to our dealers and customers.\nWe are also very pleased that our Irrigation backlog at the end of the third quarter was $388 million, up 26% year-over-year.\nTurning to slide five we've said before, ESG is embedded into the core of our company's purpose, and there are many ways of products and services to serve resources and improve life.\nOne recent example of this is using Solar solutions to transform the Sudan desert into a prosperous and sustainable region for agricultural production.\nSudan is the third largest country in the African continent.\nAgriculture is quickly becoming its primary economic driver, accounting for 40% of the nation's GDP and employing close to 80% of the local workforce.\nBut arid conditions and a lack of direct access to electricity in the region are hindering its expansion.\nTo help overcome these challenges, our Valmont Solar team recently installed a PV plant to bring power to center pivots.\nSunlight is captured and transformed immediately into electricity, eliminating the need for a battery or secondary energy source.\nWe're proud to have initiated this project powering pivots by solar energy, 100% independent from the grid.\nOur innovative solutions are leading the way, precision agriculture in Sudan, opening doors to other solutions that will enhance productivity, empower local communities to solve food security issues, and help build a more sustainable world.\nTurning to slide seven, and third quarter results.\nOperating income of $80.4 million or 9.3% of sales grew 20% year-over-year, driven by higher volumes in Irrigation and favorable pricing, notably in Engineered Support Structures.\nDiluted earnings per share of $2.57 grew 30% compared to last year, primarily driven by higher operating income and a more favorable tax rate of 23.5%, which was realized through the execution of certain tax planning strategies.\nTurning to the segments.\nOn slide eight, in Utility Support Structures, operating income of $24.6 million or 8.9% of sales decreased 170 basis points compared to last year.\nRaw material costs continued to increase during the quarter, impacting our ability to fully recover cost to our pricing mechanism, leading to lower-than-expected margin.\nAlso the impact of workforce quarantine in a few North American facilities led to operational inefficiencies, which we do not expect to repeat.\nMoving to slide nine.\nIn Engineered Support Structures, operating income increased to $34.4 million or 12.2% of sales, a third quarter record.\nThe benefits of proactive pricing actions have more than offset the impact of continued rapid cost inflation, better fixed cost leverage, including SG&A, also contributed to positive results.\nTurning to slide 10.\nIn the Coatings segment, operating income of $12.5 million or 12.9% of sales decreased 270 basis points year-over-year.\nProfitability was impacted by a lag in pricing to recover higher inflation costs, including raw material and labor and start-up costs at the Pittsburgh facility.\nMoving to slide 11.\nIn the Irrigation segment, operating income of $32 million, more than doubled compared to last year, and operating margin of 13.3% of sales improved 270 basis points year-over-year.\nSignificantly higher volumes and favorable pricing were partially offset by higher SG&A expenses from the recent Prospera acquisition.\nWe're also extremely pleased with the profitability of our industrial tubing business and international margin improvement led by consistent and proactive pricing actions taken by our global team.\nTurning to cash flow on slide 12.\nYear-to-date, we have delivered operating cash flows of $62 million, with the use of cash this quarter of $8.4 million that reflects higher working capital levels to support strong sales growth.\nAs we stated in our prior quarters, rapid raw material inflation creates short-term impact on cash flow.\nFor the balance of the year, we expect inventory levels to remain elevated to help mitigate supply chain disruption and strategically secures raw material availability to support strong sales growth.\nAccounts receivable will also increase in line with sales growth.\nAs our historical results have shown, we will see improvements in working capital as inflation subsides.\nTurning to slide 13 for a summary of capital deployment.\nYear-to-date capital spending of $81 million includes $33 million for strategic growth investments and $55 million of capital was returned to shareholders through dividends and share repurchases, ending the quarter with approximately $170 million of cash.\nMoving on to slide 14.\nOur balance sheet remains strong.\nBased on our recently amended revolving credit facility, our net debt-to-adjusted EBITDA of 1.85 times remains within our desired range of 1.5 to 2.5 times.\nWe're increasing our earnings expectations for fiscal 2021 by narrowing the earnings per share guidance range to $10.60 to $11.10.\nThis reflects strong market demand and our solid execution this year and our confidence in our ability to continue this performance.\nTurning to our segment outlook on slide 16.\nIn Utility Support Structures, we expect operating margins to improve sequentially as pricing becomes more aligned with steel cost inflation.\nMoving to Engineered Support Structures.\nWe expect continued stable market condition in North American transportation market and order rates are beginning to improve.\nDemand for wireless communication products and components remains very strong, and we are on track to grow sales 15% to 20%, in line with expected market growth.\nWe remained focused on pricing actions and providing value to our customers.\nWe now expect sales to grow 50% to 53% this year based on strength in global underlying ag fundamentals and a strong global backlog.\nLooking ahead to 2022, strong market demand across our businesses, the strength and flexibility of our global teams and our continued pricing strategies give us confidence in achieving sales growth of 7% to 12%, and earnings-per-share growth of 13% to 15% in line with the three- to five-year growth targets that we have communicated at our Investor Day in May.\nTurning to slide 17.\nThe long-term drivers of our businesses remain solid as evidenced by our record global backlog of more than $1.5 billion, up 35% from year-end 2020.\nThese demand drivers are in place to sustain this momentum into 2022, and our business portfolio is well positioned for growth.\nWe also continue to take pricing actions across our businesses where needed.\nLike others, we are closely monitoring inflation, supply chain disruptions and COVID.\nWe are ready to take additional appropriate actions to address these issues across all our businesses, as needed.\nMeanwhile, our focus on following state and local regulations to keep our employees and customers safe is not wavered.\nTurning to slide 18.\nIn summary, I'm very pleased with our strong third quarter results and our team's ability to navigate through challenging market dynamics.\nWe've demonstrated our ability to grow sales through innovation and execution, while being flexible and responding quickly to meet customer needs.\nWe've improved operating margins by executing on our pricing strategies and advancing operational excellence across our footprint.\nAnd we have invested in our employees and technology to drive new products and services and build upon the strength of our operations.\nThroughout 2021, we have been disciplined in allocating capital to high-growth strategic investments, while also returning capital to shareholders through dividends and share repurchases.\nLooking ahead to 2022, we are confident in our plan to deliver the outlook that we have communicated and remain focused on execution and our ESG principles to build upon our success, while creating additional stakeholder value and improving a return on investor capital.\n",
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"content": "q3 adjusted earnings per share $2.57.\nsees fy adjusted earnings per share $10.60 to $11.10.\nsees fy gaap earnings per share $10.10 to $10.60.\nq3 revenue $868.8 million versus refinitiv ibes estimate of $862.3 million.\nin 2022 we expect sales growth of 7% to 12%.\nin 2022 we expect sales growth of 7% to 12% and earnings per share growth of 13% to 15%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Avner will review our financial performance and provide trends and key assumptions for 2021 with closing remarks from Steve.\nThis will be followed by Q&A.\nA replay of today's call will be available for the next seven days.\nI could not be more proud of their efforts, as they worked hard in the face of the pandemic to provide our customers with the essential products and services while prioritizing safety in our workplace and our communities.\nOur team’s dedication and focus has positioned us very well for success in the future.\nNet sales of $798.4 million increased $115 million or 16.8% compared to last year, due to significantly higher sales in the Irrigation and Utility Support Structures segments.\nStarting with Utility, sales of $271 million, grew 16.9% year-over-year, led by significantly higher sales of global generation products, as expected.\nStrong demand for renewable energy generation is increasing and utilities continue to invest in a more resilient grid.\nMoving to Engineered Support Structures, sales of $256.1 million were similar to last year.\nFavorable pricing and currency impacts were offset by lower volumes, primarily due to lower international sales as COVID-19 impacts continue to affect end market demand, mostly in France and India.\nSales of transportation products were higher in North American markets, driven by states continued investments in road and construction projects.\nWireless communication structures and components sales were similar to last year's record fourth quarter led by continued strong demand and favorable pricing in all regions.\nTurning to Coatings, sales of $89.3 million, were similar to last year, but improved sequentially from the third quarter as demand continues to recover.\nIn Irrigation, sales of $199.3 million, grew nearly 50% compared to last year with growth across all global regions.\nIn North American markets, farmer sentiment has improved significantly as recent increases in agricultural commodity prices are leading to multi-year highs for soybeans, corn, cotton, and wheat.\nInternational sales growth was led by higher sales in the Middle East, European and South American markets, particularly in Brazil where we recognized another record quarter of sales and local currency.\nDeliveries of the multi-year project in Egypt also began during the quarter and we are pleased that how the project is progressing.\nThis project and others like it are helping nations conserve water, strengthening their local economies, enhance food access and availability and support our commitment to improve life across the globe.\nDuring the quarter, we purchased the remaining 40% stake of Torrent Engineering and Equipment, a global designer integrator of high pressure water systems for the agricultural and industrial sectors.\nThis acquisition supports our strategy to deliver full service engineered, turnkey water management solutions to our growers and is critical to large scale agricultural projects.\nOverall, sales and profitability were better than expected across all segments as we continue to successfully manage pricing and operational performance.\nTurning to the full year summary on slide 5, net sales of $2.9 billion, grew 4.6% compared to last year and 5.4 % excluding currency impacts.\nEarlier in the year, visibility of the pandemic impacts on our global end markets was somewhat unclear; however, we exited the year with a more confident view of the tailwinds across the majority of our markets.\nI'm very pleased with our performance and our focused execution throughout the year.\nTurning to the segments, strong sales growth in the Utility Support Structures was led by continued robust demand driven by renewables and grid resiliency and higher sales of global generation products.\nIn Engineered Support Structures, our pricing actions and improved operational performance benefited us throughout the year.\nIn North America, strong demand in transportation markets and an increasing number of site build outs ahead of 5G rollouts offset lower international end market demand.\nAccess Systems sales were down 23% compared to last year due to a strategic decision to exit certain product lines.\nTurning to Coatings, sales were down 6.1% for the year, but improved sequentially in the second half of the year, tracking in line with improving industrial production levels.\nTurning to irrigation, 2020 began as the sixth consecutive year of an off-cycle in North America.\nLow grain prices and food supply disruptions from COVID affected demand earlier in the year.\nBut, strengthening demand during the second half of the year led to a strong finish to 2020.\nIn Brazil, very strong demand led to record sales with sales in local currency, growing 32% year-over-year.\nAdditionally, sales of advanced technology solutions globally grew nearly 20% year-over-year to $67 million.\nThese proprietary solutions now connect over 110,000 of our growers machines helping them to maximize yields, improve water efficiency and optimize input costs.\nTurning to slide 6, during 2020, we made significant progress in many key areas.\nWe elevated our commitment to ESG throughout the organization and set a solid foundation to share more in 2021, of what we're doing to conserve resources and improve life.\nWe accelerated innovation through new products and services including our Spun Concrete Distribution Poles and small cell solutions, as well as technology advancements in our Valley 365 platform for connected crop management and all segments benefited from disciplined pricing strategies throughout the year.\nWe secured the largest irrigation order in the industry's history to supply $240 million of products, services and technology solutions to the Egypt market and we generated over $200 million in free cash flow through a continued intense focus on working capital management.\nWe quickly responded to inflationary pressures, which occurred late in the year by implementing price increases in all four segments and have implemented additional increases in early 2021.\nWe believe that a persistent focus on price and delivering customer value is the primary way to deliver strong operating performance and generate shareholder value.\nTurning to slide 7, last month, we announced a collaboration with the Republic of Kazakhstan to develop the first In-Country Center-Pivot Manufacturing Facility that will take advantage of the region's growing agricultural potential.\nWorking with our joint venture partner Kusto Group, this multi-year agreement is helping enhance mechanized precision agriculture, creating a network of farms that will accelerate efforts to address food security, resource conservation, and increasing export demand.\nKusto Group is a recognized leader in agribusiness and the application of innovative technologies in the region.\nTogether, we have committed to build a local facility with an annual production capacity of up to 1000 pivots.\nGroundbreaking is planned to begin in the second half of 2021 with production ramping by 2024.\nAs the largest economy in the region, Kazakhstan is rapidly embracing agriculture as a key economic contributor with a national plan to more than double the number of irrigated acres over the next 10 years.\nGrowing regional demand coupled with excellent infrastructure will allow us to quickly and efficiently serve the greater market, starting with the multi-year agreement to supply a minimum of 4000 pivots.\nWe are excited for the partnership and potential growth in the region and we'll provide further updates on our progress in future quarters.\nPlease also note that for comparison purposes, references to 2019 operating income and earnings per share exclude the LIFO method of accounting for inventory, which was discontinued at the beginning of fiscal 2020.\nFourth quarter operating income of $68.8 million or 8.6% of sales, grew 180 basis points, or 36% compared to last year, driven by improved operational efficiency in all segments, higher volumes in Utility and Irrigation and the non-recurrence of last year's losses in the Access System product line.\nFourth quarter diluted earnings per share of $2.20, grew 46% compared to last year, driven by higher net earnings and non-recurrence of losses in the Access Systems business and a more favorable tax rate.\nFourth quarter tax rate was 24.4% on an adjusted basis.\nThis excludes a non-recurring $1 million benefit or $0.05 per share from the adoption of US Tax Regulation finalized in 2020 which allows for more favorable treatment of tax payments by our foreign subsidiaries.\nTurning to the Segments, on slide 10, in Utility Support Structures operating income of $28 million or 10.3% of sales decreased 110 basis points compared to last year.\nWhile strong volumes and improved operational performance drove higher profits, quality of earnings was impacted by higher mix of offshore and other complex deal structures.\nMoving to slide 11, in Engineered Support Structures, operating income of $24.4 million or 9.5% of sales increased 540 basis points over the last year.\nOverall, we were very pleased with the results from the actions we took to enhance pricing strategies and improved operational performance, which helped offset lower volumes in international markets as COVID-19 impacted market demand mainly in France and India.\nTurning to slide 12, in the Coatings Segment, operating income of $11.8 million or 13.2% of sales was similar to last year.\nHigher volumes primarily in Australia, New Zealand and a continued focus on operational excellence and standard work, offset lower external volumes in North American markets.\nMoving to slide 13, in the Irrigation Segment, operating income of $25.3 million or 12.7% of sales, was 380 basis points higher, compared to last year.\nStrong volumes across all global markets and improved operational efficiency were partially offset by higher R&D expense for strategic technology growth investments.\nTurning to cash flow on slide 14, our rigorous focus on working capital management helped us deliver solid operating cash flow of $316.3 million this year, an improvement over last year's strong performance and despite an early payment of approximately $18 million for the required 2021 Annual UK Pension Plan contribution.\nTurning to capital deployment, the full year summary is shown on slide 15.\nCapital spending for 2020 was $107 million, which includes approximately $42 million of investment in strategic growth opportunities and approximately $60 million of maintenance capital in line with historical levels.\nGrowth investments include expansion of existing North American infrastructure operations to meet strong market demand, a new start-up coatings facility in Pittsburgh expected to come online at the end of first quarter 2021 and technology investments in our factory and our products.\nAs mentioned last quarter, we resumed our share repurchase program in September returning approximately $93.4 million of capital to shareholders through dividends and share repurchases in 2020, ending the year with approximately $400 million of cash.\nWe continue to have an active acquisition pipeline and are prioritizing strategic investments in higher growth products and markets and business solutions that align with ESG principles while meeting our return on investment capital goals.\nMoving now to slide 16, for balance sheet highlights.\nOur balance sheet remains strong with no significant long-term debt maturities until 2044.\nOur leverage ratio of total debt to adjusted EBITDA of 2.2 times remains within our desired range of 1.5 to 2.5 times and our net debt to adjusted EBITDA is at one time.\nLet me now turning to slide 17 for an update to our 2021 financial outlook, including key metrics and assumptions for first quarter and full year.\nFor the first quarter, we estimate net sales to be between $740 million and $765 million and operating income margins between 9% to 10% of net sales.\nFor the full year, net sales are estimated to increase 9% to 14% year-over-year, which assumes a foreign currency translation benefit of 2% of net sales.\nEarnings per share is estimated to be between $9 and $9.70, excluding any restructuring activities.\nBefore we move to the segments, let me briefly comment on operating margins for the first half of 2021.\nWith unprecedented raw material cost increases and higher freight costs, we have taken quick deliberate steps to implement pricing across all our segments.\nIn some cases we have implemented multiple increases since the beginning of 2021 and are maintaining these strategies across our served markets.\nTurning to our Segment outlook on slide 18, in Utility Support Structures, our strong global backlog is providing good visibility.\nAs mentioned, we have been aggressively adjusting prices due to rapidly escalating raw material costs.\nA reminder that pricing actions in response to rapid inflation in this segment historically take one to two quarters to recover, so we expect unfavorable gross margin comparisons of approximately 220 basis points in the first half of the year when compared to 2020.\nHowever; we do expect gross profit contribution for the full year to be favorable year-over-year as higher steel cost indices are reflected in selling prices.\nMoving to Engineered Support Structures, we have entered the year with a solid global backlog of $247 million.\nWe anticipate some short-term softness in transportation markets as state and local tax revenues have been impacted by COVID, along with delays in approving the FAST Act extension.\nWe expect demand for wireless communication products and components remains strong and anticipate curious investment in 5G to accelerate throughout 2021, with sales expected to grow approximately 15% this year.\nMoving to Coatings, end market demand tends to correlate closely to industrial production levels and we expect to see modest sequential growth as the economy continues to improve.\nMoving to Irrigation, we are providing additional details on our expected sales growth in this segment based on estimated timing of deliveries of the large Egypt project, strong net farm income driving positive farmer sentiment and a robust Brazilian market.\nFull year sales are expected to substantially increase 27% to 30% year-over-year.\nWe expect another quarter of solid operating cash flows driven by continued emphasis on working capital management and ongoing footprint initiatives.\nRaw material inflation can also create short-term impacts on cash flows and as previously mentioned, we have enacted strategies to manage these impacts, including some raw material financial hedges to cover backlog.\nFinally, as part of our ongoing strategic portfolio review, we have decided to divest the access System product line, which generated $88 million of sales in 2020 and serves the Australia and Asia-Pacific markets.\nWe do not see a path for this business to fit our long-term strategy of global product expansion and it will further reduce our exposure to mining and oil and gas end markets.\nFurther updates will be provided in future quarters.\nMoving to slide 19, as we have consistently stated over the past year, the fundamental market drivers of our business remain intact and we are seeing a solid set up for 2021 across all end markets as evidenced by our record, $1.1 billion backlog at the end of the year.\nIn Utility, our strong year-end backlog of nearly $565 million remains at elevated levels and demonstrates the ongoing demand and necessity for renewable energy solutions and grid hardening.\nWe are pleased to announce that in the first quarter, we were awarded the third purchase order of approximately $70 million for the large project in the Southeast U.S., confirming our customers' confidence in our execution, quality and value.\nWe are well positioned to be a preferred strategic partner with utilities and developers for the renewable energy goals and the expanding ESG focus in the Utility Industry is providing us with market opportunities.\nIn Engineered Support Structures, we expect a solid year, with some short-term market softness in transportation as delays in last year's FAST Act renewal begin to flow through state budgets.\nWe have been getting many questions about the impact of an infrastructure bill.\nIf one is past, this segment will experience upside growth approximately 9 to 12 months after an enactment.\nThe long-term market trends for both transportation and wireless communication structures and components remain solid and the critical need for infrastructure investment provides very good economic stimulus for nations.\nGiven the record purchase price of the recent 5G spectrum auction in the US, we expect growth in wireless communication structures and components to accelerate in 2021.\nCarriers' investments are increasingly supporting work and school at home and macro build outs and suburban and rural communities, aligning with recent favorable trends in residential construction.\nOur Coatings business closely follows industrial production trends and general economic activity.\nThe drivers remain solid and the preservation of critical infrastructure and extending the life of steel fits well within our ESG principles.\nAnd in Irrigation, recent improvements in net farm income have improve grower sentiment and tighter ending stocks have driven corn and soybean prices to 6 and 7 year highs.\nThis improved demand along with strength across international markets and the large-scale multi-year project in Egypt is providing a good line of sight for 2021 as evidenced by our year-end global backlog of $328 million, an increase of 5 times the level from one year ago.\nOur investments in Technology remain a priority and this past year, we expanded our Valley Insights anomaly detection solution into more regions across North America.\nAs we entered the third year of offering this innovative solution, I'm excited to share that the number of monitored acres more than doubled to $5 million in 2020 leading to twice as many growers using the service as compared to 2019.\nThis critical milestone on the path to autonomous crop management is expected to double again in 2021 and we look forward to sharing more of this exciting journey with you later this year.\nTurning to slide 20, when analyzing the demand drivers across our business portfolio, one of the early findings of our ESG task force is how well our products and solutions align with ESG principles and themes.\nAltogether, I am very proud that approximately 90% of Valmonts net sales supports ESG efforts.\nAs the world continues to transition to a clean energy economy, approximately 90% of our Utility Support Structures sales are tied to ESG, including 45% to renewable energy initiatives and 45% to grid resiliency and critical reliability efforts.\nApproximately 90% of Engineered Support Structures sales are also attributable to ESG.\nValmont’s products improved traffic flow within roads and cities, while promoting public safety through our lighting solutions.\nFurther, the need for a connected world is now as pressing as ever before, whether it's expanding wireless connectivity to rural communities or strengthening the smart city of the future, our wireless communication product support these initiatives.\nIn coatings, nearly 100% of our sales helps preserve and extend the life of metals up to 3 times longer.\nZinc and steel are both 100% recyclable and hot-dip galvanizing is a proven corrosion protection system and has one of the lowest carbon footprints of any coatings application.\nAnd in Irrigation, nearly all of our sales are tied to sustainability and conservation.\nThe warming climate drives the need for a more efficient use of freshwater and the need to produce more food for our growing global population using sustainable farming techniques, it is critical imperative and is highly supported by our business.\nIn terms of our own sustainability efforts, I'm very pleased that at the end of 2020, we exceeded our global electricity conservation goal set in 2018, resulting in a 14% reduction in normalized electricity consumption, well ahead of our 8% goal.\nAs a further benefit, we also reduced our scope to carbon footprint by approximately 10,000 metric tons in 2020, a notable accomplishment by our green teams.\nWe recognized the increasing focus by many of our stakeholders on addressing ESG and climate change.\nNext month, we will publish our annual sustainability report highlighting the ESG benefits of our products and solutions, additional metrics, employee well-being and our goals and leadership in key ESG elements.\nWe're excited to highlight our commitments throughout the organization along with our plans to conserve resources and improve life in 2021 and beyond.\nTurning to slide 21, in summary, we are expecting solid operating performance and strong earnings per share accretion and are encouraged the sales growth is expected to exceed our stated long-term financial goal.\nWe are focused on profitable growth and return on invested capital improvement while keeping our employees and communities safe and investing in our business for growth.\nOur strategic framework remains fully intact as we position Valmont for success, now and in the future.\nFinally, we are excited to announce our plans to host a Virtual Investor Day in May 2021 and we'll share more details in the coming weeks.\nAs we prepare to celebrate our 75th anniversary as a company in March, I want to again recognize our 10,000 global employees.\nIt is because of your dedication and hard work that we are able to exceed our commitments in 2020 and why I remain confident in our ability to create long-term shareholder value and deliver on our expectations moving forward.\n",
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"content": "q4 adjusted earnings per share $2.20.\nq4 sales $798.4 million versus refinitiv ibes estimate of $724.8 million.\nsees q1 sales $740 million to $765 million.\nsees 2021 diluted earnings per share estimated to be $9.00 - $9.70.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call, we have Raghu Raghuram, Chief Executive Officer; and Zane Rowe, Executive Vice President and Chief Financial Officer.\nActual results may differ materially as a result of various risk factors described in 10-Ks, 10-Qs and 8-Ks VMware files with the SEC.\nIn addition, during today's call, we will discuss certain non-GAAP financial measures.\nThese non-GAAP financial measures, which are used as measures of VMware's performance should be considered in addition to, not as a substitute for or in isolation from GAAP measures.\nOur non-GAAP measures exclude the effect on our GAAP results of stock-based compensation, amortization of acquired intangible assets, employer payroll tax and employee stock transactions, acquisition, disposition, certain litigation matters and other items as well as discrete items impacting our GAAP tax rate.\nOur third quarter fiscal '22 quiet period begins at the close of business, Thursday, October 14, 2021.\nI'm pleased with our Q2 fiscal 2022 performance with revenue of $3.1 billion and non-GAAP earnings of $1.75 per share.\nI'm even more excited and energized today as I approach my 100th day as VMware's CEO.\nI've been spending a lot of concentrated time talking with customers and partners about the opportunities and challenges in the industry today and how we can help them navigate and innovate for the future.\nOver the last few years and especially during the pandemic, enterprises have accelerated their adoption of the cloud.\nCustomers are evolving their strategy from a cloud-first to a cloud smart philosophy where they are picking the right clouds and cloud services for the right workload, including private cloud and even on the edge.\nAnd that means most of our customers are using not just one cloud today, but multiple clouds.\nMulti-cloud is emerging as the customers default strategy for these primary reasons.\nFirst, they need to deliver the best digital app experiences by choosing the location of their services based on the technical capabilities and performance.\nSecond, they need to achieve business flexibility, lower cost and better control, and as a result, avoid being locked into a single cloud.\nThird, they need sovereignty, which is about the ability to control where their data resides.\nThese customer needs are addressed with our multi-cloud portfolio.\nNumber one is application modernization and cloud management.\nThis is where Tanzu and our Cloud Management portfolio are critical as customers build, run and manage cloud-native workloads across public clouds.\nNumber two is cloud-agnostic hybrid infrastructure with VMware Cloud, which provides a comprehensive platform for running enterprise workloads in private clouds and migrating them to any of the major public clouds.\nNumber three are solutions that enable our customers to innovate at the edge and empower a more secure distributed workforce with Workspace ONE.\nAnd across all of these multi-cloud services, we have built our software defined networking and Carbon Black Cloud offering, which is a key component to provide zero trust security, flexibility and agility across all clouds.\nCustomers are using our Tanzu platform to drive a consistent developer and cloud operations experience across all of their clouds, including data centers.\nAs an example, one of the world's largest tire manufacturers adopted the Tanzu portfolio to manage a large container run time across their datacenter, Azure cloud and a number of manufacturing locations at the edge.\nWe are also continuing to see customers who are building their application platform across hybrid clouds, adopting our complete stack for their private cloud environment that can extend to public cloud as needed.\nThis full stack provides cost effectiveness and agility to run enterprise applications and build modern applications with our integrated Tanzu portfolio.\nFor example, a Japanese automaker is building a next-generation open scalable private cloud platform to modernize their business using VMware Cloud Foundation as their infrastructure stack and Tanzu for modernizing their applications.\nCustomers are also seeing the value of VMware Cloud Universal as it provides them flexibility to move to the cloud at their own pace and gives them freedom to move applications based on business conditions.\nWe continue to see momentum with our cloud partners, providing more choice and flexibility for our customers.\nIn Q2, VMware Cloud on AWS customers continued to expand their usage as we delivered key engineering capabilities and footprint expansion, including a new AWS Milan region.\nWe continued to strengthen our go-to-market relationship with AWS, including the ability to offer additional products such as vRealize Cloud via the AWS resale channel.\nIn April, we unveiled VMware SASE, a cloud-native scalable solution that serves as the one-stop shop for security and network services at the edge.\nVMware SASE provides customers a unified edge and cloud service model with a single place to manage business policy, configuration and monitoring.\nIt is also a key component of the VMware Anywhere Workspace Solution which also includes VMware Workspace ONE and VMware Carbon Black Cloud and is designed to help companies deliver better and more secure experiences to their employees, no matter where they are in the world.\nWe continued to work with Zoom Video communications during the quarter to drive interoperability between VMware Anywhere Workspace and the Zoom platform, enabling a better and more secure collaboration experience for hybrid work environments.\nWe also added new innovations to VMware Horizon with new capabilities to make it easier for IT to manage deployments wherever they may be, on-premises or in the cloud.\nOver the past few months, VMware garnered recognition from industry-leading analysts.\nVMware has been recognized as a leader in the August 2021 Gartner Magic Quadrant for unified endpoint management tools for the fourth consecutive year.\nAdditionally, VMware is positioned as a leader in the Forrester Wave Endpoint Security Software as a Service Q2 2021.\nAnd IDC ranked VMware Number 1 in worldwide IT automation and configuration management 2020 market share, as well as ranking VMware Number 1 in software-defined compute for 2020 market share.\nIn Q2, we received recognition in support of our ESG efforts including ranking in the top 1% in emissions intensity versus industry peers on the ISS Climate Scorecard for the fiscal year 2020.\nVMware was also named to the Forbes 2021 List of Best Employers for Women and was recognized as the Best Place to Work for Disability Inclusion in 2021.\nAs we head into fall, SpringOne and VMworld are both on the horizon.\nThese events are the epicenter of industry conversations and breakthrough technological innovations.\nSpringOne takes place September 1 and 2, and is optimized for developers, DevOps pros and software leaders looking to build scalable apps and learn more about the Spring framework, Kubernetes, app modernization and more.\nVMworld, which takes place October 4 through 7, will again be a virtual event where attendees will hear more about our multi-cloud strategy and offerings, while also engaging in over 600 educational and technical content sessions while networking and connecting with peers.\nI look forward to seeing you online at the these two events.\nWe remain on track to spin-off from Dell in early November of this year.\nAs a stand-alone company, we will have increased strategic, operational and financial flexibility to drive VMware's growth strategy while also strengthening our long-standing strategic relationship with Dell, a partnership we expect will continue to benefit our customers and partners as well as both the Dell and VMware.\nWe're pleased with our Q2 and first half of fiscal '22 financial performance.\nTotal revenue for Q2 was $3.1 billion, with combined subscription and SaaS and license revenue growth of 12% year-over-year to $1.5 billion, which was above our expectations for the quarter.\nSubscription and SaaS revenue grew 23% year-over-year, with ARR up 26% to $3.2 billion.\nLicense revenue exceeded our expectations in Q2 with growth of nearly 3% year-over-year to $738 million.\nWe continue to focus on developing and accelerating our subscription and SaaS portfolio and made good progress in Q2 toward that goal.\nOur largest contributors to sub and SaaS were VCPP, modern applications, EUC, Carbon Black and VMware Cloud on AWS, which grew revenue nearly 80% year-over-year.\nWe continue to prioritize flexibility and choice for customers as they adopt our offerings.\nAnd in Q2, we saw customers take a slightly larger-than-expected mix of perpetual licenses as well as term licenses in certain product areas such as EUC.\nWe're also driving continued momentum with our VMware Cloud solutions and hyperscaler-led agreements are becoming an important channel for scaling our cloud offerings.\nWith this route to market, the length of time from bookings to revenue can be slightly longer as compared with VMware Direct sales.\nOur non-GAAP operating income for the quarter of $924 million was stronger than expected, driven by higher revenue and lower-than-expected expenses.\nNon-GAAP operating margin for the quarter was 29.4%, with non-GAAP earnings per share of $1.75 on a share count of 423 million diluted shares.\nWe ended the quarter with $10.3 billion in unearned revenue and $5.9 billion in cash, cash equivalents and short-term investments.\nQ2 cash flow from operations was $864 million, and free cash flow was $777 million.\nRPO was $11.2 billion, up 8% year-over-year, and current RPO was $6.2 billion, up 11% year-over-year.\nTotal backlog was $66 million, substantially all of which consisted of orders received on the last day of the quarter that were not shipped and orders held due to our export control process.\nLicense backlog at quarter-end was $19 million.\nWe're pleased with the overall bookings performance in Q2 as we continue to grow our subscription and SaaS offerings.\nWe saw year-over-year product bookings growth in major product categories, including our multi-cloud and modern applications businesses as well as EUC.\nCore SDDC product bookings increased over 20% year-over-year, with Compute also increasing over 20% and Cloud Management up over 30%.\nGrowth in our Cloud Management business was driven by vRealize Cloud Universal, a service that enables customers to manage their entire multi-cloud environment, including on-prem, edge and public clouds.\nAdoption of vRealize Cloud Universal is a great validation of our multi-cloud strategy, with more customers now embracing a unified cloud-based approach for managing their hybrid and multi-cloud environments.\nEUC and NSX product bookings were both up in the strong double digits versus Q2 last year and vSAN product bookings grew in the low single digits year-over-year.\nCarbon Black Cloud and our Modern Applications business also had continued strong growth in the quarter.\nSubscription and SaaS ACV bookings for EUC grew in the strong double digits year-over-year, driven by both Horizon and Workspace ONE.\nAs employees continued working in hybrid environments, customers are leveraging VMware's Workspace offerings to support employees anywhere they work from knowledge workers back in the office or at home to essential employees and frontline workers.\nIn Q2, we repurchased 2.2 million shares in the open market at an average price of $160 per share.\nThrough the end of Q2, we have utilized $2.2 billion from our current repurchase authorization of $2.5 billion.\nWe successfully completed a $6 billion bond offering in preparation for a special dividend payout to all stockholders associated with our planned spin-off from Dell Technologies in early November of this year.\nOur Q2 cash balance does not reflect the proceeds from this bond offering.\nWe will continue to invest in growing our business, both organically and inorganically and return excess capital to shareholders through share repurchases.\nWe also remain committed to an investment-grade profile and credit rating and we expect to use free cash flow primarily to delever following our planned spin-off from Dell.\nTurning to guidance for fiscal '22.\nWe are reiterating our expectation for total revenue of $12.80 billion, a growth rate of approximately 9% year-over-year.\nWe expect to generate $6.27 billion from the combination of subscription and SaaS and license revenue or an increase of approximately 11.5%, with approximately 51.5% of this amount from subscription and SaaS.\nWe're increasing guidance for non-GAAP operating margin for the full year to 29% and non-GAAP earnings per share to $6.90 on a diluted share count of 423 million shares.\nWe're maintaining our cash flow from operations guidance of $3.9 billion, which now includes nearly $100 million in debt issuance costs and estimated costs associated with the planned spin-off.\nAnd we're also maintaining free cash flow guidance of $3.52 billion.\nFor Q3, we expect total revenue of $3.12 billion or a growth rate of approximately 9% year-over-year.\nWe expect $1.47 billion from subscription and SaaS and license revenue in Q3 and or an increase of nearly 12% year-over-year, with approximately 56% of this amount from subscription and SaaS.\nWe expect non-GAAP operating margin to be 27% for Q3, with non-GAAP earnings per share of $1.53 on a diluted share count of 422 million shares.\nAs we head into our second half and the spin-off later this year, we're energized by the opportunities we see to help customers leverage our trusted software foundation for their multi-cloud environments.\nAnd we look forward to seeing many of you at our Analyst Meeting to be held in conjunction with Virtual VMworld in early October.\nWe'll notify you of the day and time in the coming weeks.\nBefore we begin the Q&A, I will ask you to limit yourselves to one question consisting of one part, so we can get to as many people as possible.\nOperator, let's get started.\n",
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"content": "q2 non-gaap earnings per share $1.75.\nq2 revenue $3.14 billion versus refinitiv ibes estimate of $3.1 billion.\nremains on track for planned spin-off from dell technologies inc. in early november 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call, we have Raghu Raghuram, Chief Executive Officer; and Zane Rowe, Executive Vice President and Chief Financial Officer.\nActual results may differ materially as a result of various risk factors described in the 10-Ks, 10-Qs and 8-Ks VMware files with the SEC.\nIn addition, during today's call, we will discuss certain non-GAAP financial measures.\nThese non-GAAP financial measures, which are used as measures of VMware's performance, should be considered in addition to, not as a substitute for or in isolation from GAAP measures.\nOur non-GAAP measures exclude the effect on our GAAP results of stock-based compensation, employer payroll tax and employee stock transactions, amortization of acquired intangible assets, realignment charges, acquisition, disposition, certain litigation matters and other items, as well as discrete items impacting our GAAP tax rate.\nOur fourth quarter fiscal 2022 quiet period begins at the close of business, Thursday, January 13, 2022.\nI am pleased with the continued strong performance in Q3 fiscal year 2022 with revenue of $3.2 billion and non-GAAP earnings of $1.72 per diluted share.\nEarlier this month, we successfully completed our spin-off from Dell Technologies.\nAs a stand-alone Company, we have more strategic and financial flexibility to deliver on our multi-cloud strategy.\nWe are also able to partner even more deeply with all the cloud and on-premise infrastructure companies to create a better foundation that drives results for our customers.\nCustomers continue to choose VMware as their trusted digital foundation to accelerate their innovation, and we continue to expand and advance our portfolio to meet their needs in these three ways: one, deliver a cloud-native app platform for building modern applications in a public cloud-first world; two, migrate enterprise applications to a cloud-agnostic infrastructure; and three, build out the secure edge to optimize across our workspace and edge-native applications.\nThese three focus areas are built on a horizontal set of offerings across networking, security and management.\nIt's clear that multi-cloud will be the model for digital business for the next 20 years and in this vibrant dynamic marketplace, the pace of innovation is relentless.\nVMware is at the center of it.\nIn the modern app space, we recently provided the Department of Education for one of America's largest cities with application resiliency as part of their business continuity project.\nLeveraging VMware Tanzu, the customer now has improved ability to respond to ever-changing needs of students, their families and faculty while protecting student information and creating an environment to accelerate their innovation and automation.\nOne of our new beta offerings in the space is the Tanzu Application Platform, which will make it easier and simpler for developers to drive productivity and velocity in a more secure fashion on any cloud.\nOur Tanzu portfolio is now one of the most comprehensive in the industry for both Kubernetes operations and developer experience.\nWe also recently unveiled Tanzu Community Edition, a freely available, easy-to-manage Kubernetes platform for learners and users, and Tanzu Mission Control Starter, a multi-cloud, multi-cluster Kubernetes management solution available as a SaaS service.\nWe are pleased to share some customer stories in support of our VMware Cloud services across the hyperscalers.\nPennyMac, a leading financial services firm is leveraging VMware Horizon on VMware Cloud on AWS to provide loan officers and call center agents a more secure work-from-anywhere virtual desktop in a fully automated and scalable cloud environment.\nWe also worked with the University of Miami, who looked to the Azure VMware solution to support their VMware workloads on their preferred public cloud provider.\nRecently, we announced new advancements for VMware Cloud, the industry's first and only cloud-agnostic computing infrastructure.\nNewly unveiled Project Arctic will bring the power of cloud to customers running VMware vSphere on-premises.\nIt will enable cloud-based management for hundreds of thousands of vSphere customers and vSphere deployments around the world.\nCustomers will be able to benefit from life cycle management, cloud disaster recovery and cloud burst capabilities as an extension of their vSphere deployments.\nWe will bring Project Arctic to market next year as the next step in making our portfolio available in a subscription and SaaS form factor.\nWe also announced VMware Sovereign Cloud initiative, where we are partnering across our VMware Cloud providers to deliver cloud services on a sovereign digital infrastructure to customers in regulated industries.\nLastly, we introduced a tech preview of an exciting new management technology, Project Ensemble.\nIt is designed to manage apps across multiple public clouds, bringing together a comprehensive set of costs, security, automation and performance capabilities for the public cloud environment.\nVMware was once again ranked number one in the September 2021 IDC report titled Worldwide Cloud System and Service Management Software Market Shares, 2020: Growth Continues for the Top Vendors.\nIn the area of Edge, we recently helped an international wholesaler with 800 stores across 30 countries to refresh its decade-old in-store platform.\nThe VMware Edge Compute Stack is now serving as a single platform for both the customers existing and modern applications, offering a right-sized resilient solution that is providing ROI for their business.\nAs a continued commitment to helping our customers at the Edge, we recently introduced VMware Edge, a product portfolio that will enable organizations to run, manage and better secure edge-native applications across multiple clouds anywhere.\nTogether, VMware Cloud, Tanzu, VMware Edge and Anywhere Workspace offer our customers a solution for all of their applications across their multi-cloud environment.\nIn the security space, VMware is delivering solutions built specifically for threats customers face today.\nWe use the power of software, combined with a scaled-out distributed architecture, zero trust design principles and a cloud delivery model for better security that's easier to use.\nWe are excited about our continuing innovation in SASE, Secure Access Services Edge, especially as many businesses are now working as a distributed workforce.\nWe also announced the industry's first elastic application security edge, which enables the networking and security infrastructure at the data center or cloud edge to flex and adjust as app traffic changes.\nIn the third quarter, VMware was positioned as a leader in The Forrester New Wave: Zero Trust Network Access Q3 2021.\nOn the telco front, Vodafone recently selected VMware to deliver a single platform to automate and orchestrate all workloads running on its core networks across Europe, starting with 5G stand-alone.\nThis recent work builds on Vodafone's previous selection of VMware Telco Cloud Infrastructure as its network functions virtualization platform.\nIn the third quarter, VMware received additional recognition from leading industry analyst firms, once again being named as a leader in the August 2021 Gartner Magic Quadrant for Unified Endpoint Management Tools.\nAdditionally, VMware was once again named a leader in the September 2021 Gartner Magic Quadrant for WAN Edge Infrastructure.\nOur innovation engine is thriving as we bought many of these new offerings, features, beta programs and partnerships to the forefront during VMworld 2021, which attracted approximately 116,000 registrants.\nWe look forward to hosting VMworld China and VMworld Japan in the coming weeks.\nOur environmental, social and governance agenda continues to be very important to us and core to our culture.\nVMware received recognition for our ESG leadership by being included in the Dow Jones Sustainability Indices, one of the world's leading ESG benchmarks for the second consecutive year.\nIn summary, we strive to serve our customers in three unique ways: by being the trusted foundation for their most critical business operations; by offering a best-of-breed, innovative portfolio of best-in-class solutions to fulfill their multi-cloud vision; and by having a broad set of strategic partnerships required to unlock the full potential of multi-cloud.\nWe are pleased with our Q3 financial performance, which exceeded our initial expectations and is a continuation of the good performance we've seen all year.\nWe saw solid demand in the quarter and continued to execute on our multi-cloud strategy.\nTotal revenue for Q3 was $3.2 billion.\nCombined subscription and SaaS and license revenue grew 16% year-over-year totaling $1.5 billion, ahead of our guidance.\nSubscription and SaaS revenue of $820 million was up 21% year-over-year, in line with our expectations, representing 26% of total revenue for the quarter.\nSubscription and SaaS ARR was $3.3 billion, up 25% year-over-year in Q3.\nOur largest contributors to subscription and SaaS were VCPP, Tanzu, EUC, Carbon Black and VMware Cloud on AWS, which saw strong double-digit year-over-year growth in revenue and ARR.\nLicense revenue in Q3 grew 11% year-over-year to $710 million.\nThe strength we saw was due to good execution in the quarter and our broad installed base of customers that see us as the trusted ally for their mission-critical workloads.\nOur strategy is resonating with our customers who are confident that their investments can be leveraged over the longer-term in multi-cloud environments.\nOur non-GAAP operating income for the quarter of $935 million was driven by our revenue performance and lower-than-expected growth in expenses.\nNon-GAAP operating margin for the quarter was 29.3% with non-GAAP earnings per share of $1.72 on a share count of 422 million diluted shares.\nWe ended the quarter with $10.2 billion in unearned revenue and $12.5 billion in cash, cash equivalents and short-term investments, which includes proceeds from our $6 billion bond issuance.\nThe bond issuance proceeds together with $4 billion of additional borrowings from term loan commitments, as well as other available cash on hand was used to fund a special dividend of $11.5 billion.\nThe special dividend was paid on November 1 to all stockholders of record on October 29 in conjunction with our spin-off from Dell Technologies.\nQ3 cash flow from operations was $1,090 million and free cash flow was $984 million.\nRPO was $11.1 billion, up 9% year-over-year, and current RPO was $6.2 billion, up 11% year-over-year.\nTotal backlog was $124 million, substantially all of which consisted of orders received on the last three days of the quarter that were not shipped and orders held due to our export control process.\nLicense backlog at quarter end was $34 million.\nWe are pleased with the overall bookings performance in Q3 as we continue to scale our subscription and SaaS offerings.\nWe saw strong year-over-year product bookings growth in major product categories.\nCore SDDC product bookings increased over 20% year-over-year.\nCompute was up low-double digits, and Cloud Management was up strong double digits year-over-year.\nBoth of these were helped by our multi-cloud subscription and SaaS offerings.\nWe saw momentum in VMware Cloud, which includes hyperscalers such as Amazon, Microsoft, Google and Oracle.\nWe also continue to drive innovation in new product offerings across our Carbon Black Cloud and Tanzu platforms.\nNSX increased in the low double digits versus Q3 last year, and vSAN grew in the high-teens year-over-year.\nEUC product bookings, as well as sub and SaaS ACV bookings were up in the strong double digits year-over-year.\nIn Q3, we repurchased approximately 1 million shares in the open market at an average price of $150 per share.\nIn early October, our Board of Directors authorized up to $2 billion of stock repurchases through FY'24, which replaced the relatively small balance remaining on our prior authorization.\nAs a part of our capital allocation framework, we plan to use our cash generation and balance sheet to invest in growing our business both organically and inorganically, paying down debt and returning excess capital to shareholders through share repurchases.\nIn addition, we are committed to maintaining an investment-grade credit profile and rating.\nTurning to guidance for fiscal 2022.\nWe're increasing our expectation for total revenue to $12,830 million, a growth rate of approximately 9% year-over-year.\nWe expect the combination of subscription and SaaS and license revenue to total $6,305 million, an increase of approximately 12% year-over-year.\nApproximately 50.5% of this amount is expected to be subscription and SaaS.\nWe are increasing guidance for non-GAAP operating margin for the full-year to 30% and non-GAAP earnings per share to $7.19 on a diluted share count of 422 million shares.\nWe're also increasing our cash flow from operations guidance to $4.1 billion and increasing free cash flow expectations to $3.7 billion.\nThis reflects our performance in Q3 combined with our outlook for FY'22.\nFor Q4, we expect total revenue of $3,510 million or a growth rate of approximately 7% year-over-year.\nWe expect $1,875 million from subscription and SaaS and license revenue in Q4 or an increase of nearly 9% year-over-year with approximately $860 million from subscription and SaaS, reflecting the current pace of adoption of our subscription and SaaS offerings.\nWe expect non-GAAP operating margin to be 30.4% for Q4 with non-GAAP earnings per share of $1.96 on a diluted share count of 422 million shares.\nWe typically provide some color on our upcoming fiscal year at this time.\nWe are driving innovation across the portfolio, scaling our subscription and SaaS offerings and progressively making our products available as subscription and SaaS.\nConsistent with the outlook framework we presented at the Financial Analyst Meeting last month, we currently expect total FY'23 revenue to grow in the high-single digits while we continue to build out our subscription and SaaS portfolio.\nWe are planning on growing our sub and SaaS revenue to nearly 30% of total revenue with our FY'23 exiting ARR growth rate exceeding FY'22's.\nWe expect non-GAAP operating margin of approximately 28%, which is similar to our initial outlook for FY'22, reflecting continued investments in subscription and SaaS and the resumption of more normalized level of T&E as we support our customers.\nIn closing, we are pleased with the progress we are making on our multi-cloud strategy as reflected in our performance this quarter and in our outlook for FY'22 and FY'23.\nAs a stand-alone Company, we are well positioned to enable our customers' multi-cloud journey and become the multi-cloud leader.\nBefore we begin the Q&A, I'll ask you to limit yourselves to one question consisting of one part so we can get to as many people as possible.\nOperator, let's get started.\n",
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"content": "q3 non-gaap earnings per share $1.72.\nrevenue for q3 was $3.19 billion, an increase of 11% from q3 of fiscal 2021.\nsubscription and saas arr for q3 was $3.31 billion, an increase of 25% year-over-year.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call, we have Zane Rowe, CFO and Interim CEO.\nRaghu Raghuram, COO, Products and Cloud Services; and Sanjay Poonen, COO, Customer Operations, will join for Q&A.\nActual results may differ materially as a result of various risk factors described in the 10-Ks, 10-Qs and 8-Ks VMware files with the SEC.\nIn addition, during today's call, we will discuss certain non-GAAP financial measures.\nThese non-GAAP financial measures, which are used as measures of VMware's performance should be considered in addition to, not as a substitution for or in isolation from, GAAP measures.\nOur non-GAAP measures exclude the effect on our GAAP results of stock-based compensation, amortization of acquired intangible assets, employer payroll tax and employee stock transactions, acquisition, disposition, certain litigation matters and other items as well as discrete items impacting our GAAP tax rate.\nOur first quarter fiscal 2022 quiet period begins at the close of business, Thursday, April 15, 2021.\nWe realize you're used to hearing Pat's voice as we start these quarterly conference calls.\nPat is a true partner and a friend, and of course, will still be a VMware Board member.\nWe're pleased with our Q4 financial performance, as it was a good finish to the fiscal year.\nQ4 total revenue increased 7% year-over-year, with non-GAAP earnings per share up over 8%.\nWe finished fiscal 2021 with $11.8 billion in total revenue and non-GAAP earnings per share of $7.20 a share.\nThis past year was one of unprecedented disruption and uncertainty, and we're proud of what the team accomplished.\nAs we quickly adapted to a distributed workforce, we helped our customers accelerate their work-from-anywhere journey and their application and cloud monetization initiatives.\nWe're seeing customers continue to choose VMware to help them deliver the digital foundation to power their apps, clouds, security and user experiences.\nLarge global customers continue to align and partner with us, and the nature of our strategic relationships with our largest customers continues to grow.\nIn Q4, we closed deals with significant aerospace and telco customers and saw particular strength in the financial sector, including wins with HSBC and Wells Fargo.\nWe see financial services customers utilizing a combination of franchise solutions, ranging from modern apps and cloud infrastructure, to networking in our digital workspace offerings.\nWe also continue to see momentum with key communication service providers, such as NTT DOCOMO and Telia increasing their focus on VMware solutions, as well as new and expanded contracts with additional Tier 1 communication service providers globally.\nIn the retail sector, a large customer that's standardized on our technologies in their private cloud is leveraging VMware as a platform for their cloud migrations, while also investing in edge cloud infrastructure and using Tanzu for containers in their retail edge locations.\nWe see this as a repeatable use case for other retailers, along with other e-commerce app development use cases, retailers are building on top of Tanzu.\nOur work with life sciences and healthcare customers is enabling their critical apps to run on our hybrid cloud and is helping to secure their user devices for employees working from anywhere.\nIn addition, our partner ecosystem is driving momentum for VMware solutions.\nWe're expanding the reach of our solutions through key strategic partnerships from our VCPP partners to hyperscalers, to system integrators.\nFor example, earlier this month, we announced an expansion of our partnership with Accenture, resulting in the launch of their dedicated VMware business unit.\nThe group will bring together approximately 2,000 professionals across a variety of industries with expertise in hybrid cloud and cloud migrations, cloud-native and application modernization, as well as security.\nWe also recently formed a joint innovation lab with Lumen, designed to drive edge computing, security and secure access service edge or SASE for customers in a number of industries.\nLooking at the broader portfolio, we continue to further our multi-cloud strategy and are seeing traction as customers align app requirements to the cloud of their choice, whether it's private, hybrid or public.\nThis quarter, we expanded our resell program with AWS to include additional VMware technologies and services such as VMware Cloud, Disaster Recovery and vRealize.\nAdditionally, VMware Cloud on Dell EMC, a Dell Technologies cloud service from VMware expanded to the EMEA market with immediate availability in the UK, Germany and France.\nWe continue to deliver on innovation with Tanzu.\nWith the announcement of general availability of Tanzu Advanced edition, we now have three Tanzu additions in the market; Basic, Standard and Advanced.\nEach addition is targeted at a common customer challenge of modernizing infrastructure and applications.\nTanzu Advanced includes all the capabilities that enterprises need to embrace DevSecOps and manage complete container life cycle.\nWe continue to see strong positive reception to all three Tanzu additions.\nWe also added container security to VMware Carbon Black Cloud, leveraging technology from our recent Octarine acquisition to provide visibility into on-prem and public cloud Kubernetes clusters.\nOur NSX portfolio offers a comprehensive set of L2 to L7 capabilities, implemented completely in software.\nWe recently released the latest version of NSX, which included enhancements across routing, identity firewall, load balancing and cloud.\nIn FY '21, VMware was recognized by top industry analyst firms as a leader in 13 key reports across cloud management, networking, hyperconverged infrastructure and end-user computing.\nIn November, Forrester named VMware a leader in the Forrester Wave Hybrid Cloud Management Q4 2020.\nMore recently, we were named a leader in December's 2020 Gartner Magic Quadrant for Hyperconverged Infrastructure Software.\nAnd in January, VMware was positioned as a leader in three IDC Marketscape reports related to the end-user computing space, including the Worldwide Unified Endpoint Management Software 2021 Vendor Assessment.\nFrom a broader corporate perspective, I'm personally pleased to highlight that we recently unveiled our 2030 agenda, which encapsulates how we will drive ESG goals into every aspect of our business.\nOur 2030 agenda is integrated into the business and is focused on three business outcomes; trust, equity, and sustainability.\nRecently, we also performed well in the areas of sustainability, earning the distinction of being included in the 2020 Dow Jones Sustainability Index among the world's leading ESG benchmarks.\nNow, let's move to more detail on our business performance as well as our forecast.\nIn Q4, the combination of subscription, SaaS, and license revenue grew 8% year-over-year to $1.721 billion.\nWe saw large enterprise demand strength throughout the quarter, which allowed us to close a record 35 deals over $10 million.\nThis was balanced with good performance in our commercial business as well.\nSubscription and SaaS revenue increased 27% year-over-year for the quarter, with strong growth in our VMware Cloud Provider Program, end-user computing, Carbon Black, and VMware Cloud on AWS offerings.\nWe continue to invest and expect to see further growth in this important area for us in FY 2022 and beyond.\nOur focus is on scaling existing offerings as well as adding new solutions.\nVMC on AWS once again had a great quarter, with both workloads and revenue nearly doubling year-over-year as we continue to expand functionality and use case adoption.\nAs of the end of Q4, ARR for subscription and SaaS was $2.9 billion, an increase of 27% year-over-year.\nLicense revenue for the quarter declined 2% year-over-year to $1.014 billion.\nNow, this was better than expected as we had a strong deal closure rate throughout the quarter.\nNon-GAAP operating income increased 8% year-over-year in Q4 to $1.133 billion, primarily driven by better-than-expected revenue growth.\nNon-GAAP operating margin for the quarter was 34.4%, with non-GAAP earnings per share of $2.21 on a share count of 423 million diluted shares.\nWe ended the quarter with $10.3 billion in unearned revenue and $4.7 billion in cash, cash equivalents, and short-term investments.\nCash flow from operations for fiscal 2021 was $4.4 billion, which was well ahead of our expectations.\nQ4 cash flow from operations was $1.324 billion and free cash flow was $1.242 billion.\nNow, this strength was primarily due to our emphasis on closing certain deals prior to calendar year-end, which resulted in receiving the associated cash in FY 2021 rather than FY 2022.\nIn addition, we benefited from early collections and advanced payments from partners and customers as well as certain other expenditures which were lower than expected in FY 2021.\nWith subscription and SaaS becoming a larger share of total revenue, we're now providing our end-of-period total and current RPO.\nFor Q4, RPO was $11.3 billion, up 10% on a year-over-year basis and current RPO was $6.2 billion, up 12% year-over-year.\nTotal backlog was $93 million, substantially all of which consist of orders received on the last day of the quarter that were not shipped that day and orders held due to our export control process.\nLicense backlog at quarter-end was $23 million.\nOverall, our product portfolio performed well in Q4, with customers continuing to purchase solutions that contain multiple products.\nCore SDDC product bookings increased 12% year-over-year in Q4, highlighted by strength in our vRealize management offerings, which are now available both on a perpetual and SaaS basis.\nCompute product bookings also performed well, growing in the low single-digits year-over-year.\nNSX and vSAN had single-digit year-over-year declines, which was an improvement for both versus Q3 of FY 2021.\nThese two technologies continue to be further integrated into our broader solutions.\nThree quarters of our EUC product bookings are now SaaS.\nEUC's ACV SaaS growth rate was 30% year-over-year in Q4, driven primarily by Horizon and our initiatives related to anywhere workspace.\nGiven our focus on SaaS ACV, EUC product bookings decreased in the high-single digits year-over-year.\nCarbon Black Cloud once again grew in the high-double digits year-over-year, and we continue to make progress in expanding our endpoint and workload protection capabilities and delivering intrinsic security value to our customers.\nOur Tanzu portfolio exceeded expectations and had a strong attach rate in eight of the top 10 VMware deals in Q4.\nIn Q4, we repurchased 2.7 million shares in the open market at an average price of $140 per share.\nAt the end of Q4, we've utilized over $1.4 billion from our current repurchase authorization of $2.5 billion.\nTurning to guidance for fiscal 2022.\nWe expect total revenue of approximately $12.700 billion or a growth rate of 8%, which is consistent with the early outlook provided on our last call.\nWe expect to generate approximately $6.300 billion from the combination of subscription of SaaS and license revenue or an increase of 12% with approximately 55% of this amount from subscription in SaaS.\nWe expect non-GAAP operating margin of 28% with non-GAAP earnings per share of $6.68 under diluted share count of 422 million shares.\nAs I mentioned earlier, we had very strong cash flow from operations in Q4 due to a number of initiatives that resulted in exceeding our cash flow guidance by over $650 million.\nWhile we're extremely pleased with this result, the bulk of this over-achievement was accelerated from our upcoming fiscal year.\nTaking that into account for FY 2022, we currently expect cash flow from operations of $3.8 billion and free cash flow of $3.42 billion.\nOn a normalized basis, taking into account the acceleration of cash into FY 2021, cash flow from operations would be roughly flat on a year-over-year basis for FY 2022, in line with our operating performance.\nFor Q1, we expect total revenue of approximately $2.910 billion or a growth rate of 6%.\nWe expect approximately $1.320 billion from combined subscription and SaaS and license revenue in Q1, an increase of 7% year-over-year, with over 55% of this amount from subscription and SaaS.\nOur expected growth rate for Q1 license revenue was impacted by continued growth in subscription and SaaS and the strength we saw in Q1 last year.\nWe expect non-GAAP operating margin of 27.5% for Q1, with non-GAAP earnings per share of $1.49 on a diluted share count of 422 million shares.\nIn closing, we're pleased with our Q4 performance, the improvements we're seeing in the macro environment, and are expanding opportunities to engage with our customers and partners.\nWe're committed to executing at scale as we continue to build our subscription and SaaS business and invest in our future growth, while delivering technologies and solutions today that help our customers and partners with their digital transformations.\nBefore we go to questions, I'm pleased to tell you that we are making progress on the potential spinoff of VMware from Dell.\nWhile our special committee of Independent Directors continues to evaluate the spin-off, we believe that it could be value-enhancing to VMware and its stockholders.\nWe will not be commenting further on these discussions until there's more definitive news to share.\nBefore we begin the Q&A, I'll ask you to limit yourselves to one question consisting of one part, so we can get to as many people as possible.\nRaghu and Sanjay are joining us now for Q&A.\nOperator, let's get started.\n",
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"content": "q4 non-gaap earnings per share $2.21.\nqtrly combination of subscription and saas and license revenue was $1.7 billion, an increase of 8%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These documents as well as our supplemental financial information package are available on our website, www.\nvno.com, under the investor relations section.\nIn these documents and during today's call, we will discuss certain non-GAAP financial measures.\nThe call may include time-sensitive information that may be accurate only as of today's date.\nOn the call today from management for our opening comments are Steven Roth, chairman and chief executive officer; and Michael Franco, president and chief financial officer.\nI hope everyone is healthy, continues to be vigilant and gets vaccinated.\nLet me say it again.\nEverybody, please get vaccinated.\nI'll start by sharing a few things that are happening on the ground, which I hope you all find interesting.\nThe U.S. economy is resilient, it's growing.\nI might even say is booming, and so is New York.\nFinancial, tech and almost all industries are achieving record results.\nIn New York, apartment occupancy, which had dropped to as low as 70% during COVID, is now rapidly climbing back with record numbers of new leases being signed each week at higher and higher rents.\nCondo sales, which had stalled during COVID, are now active, albeit at discounted pricing, except I'm proud to say that our 220 Central Park South where resales are at a premium.\nThis apartment and condo demand is coming from folks who live and work in New York, and that's a very good sign.\nAt 220 Central Park South, where we are basically sold out, resale pricing is up, and that's an understatement.\nA recent spectacular example, which is now public, is a two-floor 12,000 square foot resale that traded at a record-breaking $13,000 per square foot, think about that.\nOur New York office division is now experiencing record incoming RFPs and requests for tours, including from many large and important occupiers who had been on the sidelines during COVID.\nGlen and his team are very busy.\nBy the way, big tech is now very active looking for more space in New York to take advantage of New York's large, highly educated and diverse workforce.\nHere's an interesting fact, a Fortune 100 occupier household name who dropped out of the market during COVID has come back to market.\nThey were originally looking for 300,000 square feet to house 2,800 employees.\nPost-COVID, after extensive study and space planning, they now need and are seeking 400,000 square feet, a 30% increase to house the same 2,800 employees.\nIn both instances, their projected in-office occupancy is the same 60%.\nThe fact that this occupier needs 30% more space post-COVID is contrary to all analyst expectations, but that is the fact.\nAnd we are hearing the same from many, although not all, but many of our tenants that they will need more space, not less post-COVID.\nOne of our analysts and a friend recently wrote that our company suffers from PENN fatigue.\nIt took us over a decade to assemble our vast PENN District hoardings, but as the same goes, this is our time.\nHere's where we stand.\nAt Farley, we have delivered to Facebook all of their 730,000 square feet.\nTheir tenant work is going full bore.\nThe West Side of Seventh Avenue, along the three blocks stretching from 31st Street to 34th Street, is now a massive construction site, where we are transforming the 4.4 million square foot PENN one and PENN 2 into the nucleus of our cutting-edge connected campus.\nThe 34th Street PENN 1 lobby just opened, and our unrivaled three-level amenity offering will be completed at year-end.\nOur full building PENN 2 transformation, including the bustle and reskinning, is 98% bought out on budget and off to a fair start.\nWe couldn't be more excited.\nOur 14,000 square foot sales center the Seventh Floor of PENN 1 is now open to rate reviews from brokers and occupiers.\nAfter working with Glen and Josh in the sales center, the market is understanding our ambitious plans to make the PENN District, the crown jewel of the west side of the new New York.\nBy the way, every quarter and every year, the West side is punching way above its weight, measured by high and growing leasing share -- market share of leases signed.\nAside from our confidence and the market's enthusiasm, even at this early date, we are raising our PENN asking rents.\nWe will shortly begin demolition of the Hotel Pennsylvania to create the best development site in town.\nWe expect demolition and shutdown costs to be about $150 million, which you should look at as land cost.\nOur book basis in this property today is $203 million.\nAnd we are midstream in the process to make the unique high-growth PENN District a separate investable public security.\nOur best in the business team leaders in the PENN District are Glen Weiss Leasing, Barry Langer Development and Dave Bendelman Construction.\nMichael will cover our operating results in a moment, but I can say that, overall, leasing and occupancy statistics in New York tell a misleading story.\nWhile overall availability is 18%, assets newly built or repositioned since 2000 have a much lower direct vacancy rate of 11%.\nLast quarter, 88% of new leasing activity in Midtown was a Class A product.\nIt's clear that the market is voting for new and repositioned assets As you would expect, Class A assets command higher pricing than Class B, in fact, one-third higher.\nObviously, this is the place to be and you should know that substantially all of our assets are repositioned and in this competitive set.\nNew York is coming back to life.\nResidential neighborhoods are bustling, less so the commercial canyons where office utilization is now approximately 23%.\nRemember, it's August, the vacation month.\nThe largest employers in Manhattan have mandated a return to work by Labor Day or shortly thereafter, some with full staff in office and others with a flexible program allowing some work from home.\nAs I have said before, I do not believe that the office will be threatened by the kitchen table.\nAnd I do not believe that even one or two work from home days per week by some number of a tenant's employees will be a negative to us.\nI, for one, I'm unable to predict whether it will take a month or a quarter for office buildings to be back to full up and the canyons to be teeming again.\nThere is no magic date.\nAll that matters is that it will happen soon enough.\nLast week, we announced that Wegmans, the premier grocer in the Northeast region, is opening its first store in Manhattan at our 770 Broadway replacing Kmart.\nAnd you can bet that we will do several more Manhattan deals with Wegmans.\nThe fact that Wegmans is coming is creating excitement with it at last count, 43 print and broadcast press articles celebrating the announcement.\nHere is an interesting fact to it.\nWegmans expects that as much as 50% of its volume will be from in-home delivery -- appropriately from to home delivery.\nWe will be investing $13 million in TIs, leasing commissions and free rent in this long-term lease with a 65% GAAP mark-to-market increase over Kmart's rent.\nThis quarter, we announced that we exercised a ROFO to acquire our partner's 45% interest in One Park Avenue in a transaction that values the building at $870 million.\nBased on the in-place floating rate loan, we project $18 million, $0.09 cents per share first-year accretion.\nLast summer, we brought 555 California Street to market for sale and are unable to achieve fair value, we withdrew, understandable at the height of COVID with travel restrictions and so forth.\nAt that time, we said we will refinance and this past quarter, we did to the tune of $1.2 billion, netting us approximately $467 million at share.\nWe can just carry on the new floating rate loan is almost exactly the same as the old much smaller fixed-rate loan.\nSo one might say the $460 million is free money.\nIronically, I believe, continuing to own this outstanding asset with this superb accretive financing is actually a better outcome.\nIn New York replacement cost is rising quickly over the past many decades, replacement costs with a dip here and there has risen relentlessly.\nAnd if past this is pro-log, replacement costs will undoubtedly continue to rise as far as the eye can see.\nReplacement cost has always been a key predictor of future value a rising umbrella lifting all similar real estate values.\nAnd New York is the poster child of this phenomenon.\nHere is updated guidance for our retail business.\nFor 2021, we guided cash NOI of $135 million.\nAnd now halfway through the year, we expect to do a little bit.\nFor 2022, we guided cash NOI of $160 million, which we affirm.\nFor 2023, we announced new cash NOI guidance of not less than $175 million.\nYou should know that, as expected, Swatch exercised the termination option for a portion of their space at St. Regis, which is effective March 2023 with a $9 million termination fee.\nThe Swatch owned Harry Winston store will remain under lease through its June 2031 expiry.\nThe guidance above takes account of the Swatch termination.\nIf I were a betting man, and I guess in some ways, I am, I would bet that we have already put in the bottom in New York that the worst of the best stuff is behind us and that New York will get better and better and so will New York real estate in space.\nIn our case, occupancy rate, TIs and pricing have bottomed.\nI will start with our second-quarter financial results and end with a few comments on the leasing and capital markets.\nSecond-quarter comparable FFO as adjusted was $0.69 per share compared to $0.56 for last year's second quarter, an increase of $0.13.\nThe increase was driven by the following items.\n$0.09 from tenant-related activities, including commencement of certain lease expansions and nonrecurrent or straight-line rent write-offs impacting the prior period, primarily JCPenney and New York & Company.\n$0.02 from lower G&A resulting from our overhead reduction program and $0.02 from interest expense savings and the start of improvement in our variable businesses, primarily from BMS cleaning.\nOur second-quarter comparable results are consistent with the fourth-quarter run rate we discussed at the beginning of the year as is our overall expectation for the full year.\nSpeaking of our variable businesses, we are beginning to see signs of recovery with a return to normalcy.\nBMS is nearing pre-pandemic levels.\nSignage is starting to pick up with healthy bookings in the second half of the year.\nOur garages are picking up as well and should be fully back in 2022.\nAnd finally, we have a number of trade shows scheduled for the fourth quarter.\nOther than Hotel Penn's income, we expect to recover most of the income from our variable businesses by year-end 2022 with the balance in 2023.\nCompanywide same-store cash NOI for the second quarter increased by 0.5% over the prior-year second quarter.\nOur core New York office business was up 3.2%.\nBlending in Chicago and San Francisco, our office business overall was up 2%.\nConsistent with prior quarters, our core office business, representing over 85% of the company, continues to hold its own, protected by long-term leases with credit tenants.\nOur retail same-store cash NOI was down 6%, primarily due to JCPenney's lease rejection in July 2020.\nBut excluding the impact of JCPenney's lease rejection, the same-store cash NOI for the remaining retail business was up 9.8%.\nOur office occupancy ended the quarter at 91.1%, down 2 percentage points from the first quarter.\nThis was expected and driven by long expected move-out at 350 Park Avenue and 85 Tenth Avenue as well as 825 Seventh Avenue coming back into service.\nWith the activity we have in our pipeline, this quarter should represent the bottom of our office occupancy, and it should improve quarter by quarter from here.\nRetail occupancy was up slightly to 77.3%.\nNow, turning to the leasing markets.\nSince our last call, the pace of office leasing activity in New York City has picked up each successive month.\nWith the vaccination rates high, companies are now fully focused on their return to the office with many returning during the summer and a majority expected back soon after Labor Day.\nPredictably, the overall sentiment in New York continues to improve as company's return and the office market continues to heal.\nDuring the second quarter, leasing volume in Manhattan was its highest since the onset of the pandemic.\nAnd office tour activity has now exceeded pre-pandemic levels with more than 11 million square feet of active tenant requirements.\nImportantly, office-using employment in the city continues to strengthen.\nWith more than 100,000 jobs now recovered, we're at 92% of the pre-pandemic peak.\nWhile leasing volume during the first half of 2021 was dominated by small to medium-sized transactions, driven by well-capitalized financial services and technology tenants, we are now seeing pent-up demand from larger occupiers across all industry types as many have formally entered the market.\nThere are additional signals that the market continues to fought.\nTenants are now entering into leases for longer terms and asking rents in concessions have stabilized.\nAnd in fact, as Steve alluded to, we have recently increased our asking rents in our top-tier assets, reflecting the strong demand for best-in-class assets.\nDuring the second quarter, we signed 33 leases, totaling 322,000 square feet with two-thirds coming from new companies joining our high-quality portfolio across the city.\nThe average starting rent of these transactions was a strong $85 per square foot.\nThe leasing highlight for the quarter was 100,000 square feet at PENN 1, further validating the market's resounding reception to our redevelopment of this property.\nThe largest transaction was a new lease with Empire Healthchoice for 72,000 square feet.\nOur main competition here was newly constructed buildings in both Downtown and Midtown, our new dramatic lobbies in Plaza's best-in-class campus amenity program and premier access to transportation from the data.\nLooking toward the second half of 2021, our leasing pipeline has grown significantly since last quarter with more than 1 million square feet of leases in active negotiation, including 180,000 square feet of new leasing at 85 Tenth Avenue, as well as an additional 1.6 million square feet in various stages of discussion.\nThis includes discussions with several large users newly interested in PENN 2 after seeing our vision at the Experience Center.\nOur activity is a balanced combination of new and renewal deals with the majority of our activity with companies in the financial, technology and advertising sectors.\nOur office expirations are very modest for the remainder of 2021 and 2022, with only 976,000 square feet expiring in total, representing 7% of the portfolio, and 150,000 of this square footage is in PENN 1 and PENN 2.\nAs we look toward our 2023 expirations of 1.9 million square feet, of which 350,000 is in PENN 1 and PENN 2, we are, of course, already in dialogue and trading paper with many of these companies and anticipate announcing important transactions by year-end.\nNow, turning to theMART in Chicago, where the office market is also showing signs of life, and tenant demand is returning coming out of the pandemic.\nWhile short-term renewal leasing dominated the market during 2020, activity has picked up with almost 1 million square feet of new leasing completed during the second quarter, though concessions are unusually high.\nAt theMART, we completed a 91,000 square foot long-term office renewal with 1871.\nChicago's premier technology incubator for entrepreneurs and have an additional 80,000 square feet of new deals in negotiation.\nTwo weeks ago, we produced our first trade show at theMART since February 2020 pre-pandemic.\nThis show in partnership with International Casual Furniture Association featured the largest manufacturers of outdoor furniture in the country.\nAttendance was 10% higher than the same show produced pre-pandemic 2019, and feedback from exhibitors and attendees was very positive.\nWe have eight upcoming trade shows calendared during the remainder of 2021, including NeoCon in October, the largest show in North America focused on commercial design, though we don't expect the tenants to reach 2019 levels this year.\nIn San Francisco at 555, we are finalizing a couple of small, strong leases in our fall other than the cube.\nTurning to the capital markets now.\nThe financing markets are wide open and aggressive for high-quality office companies and buildings, and we are taking advantage of the low all-in coupons.\nIt bears repeating that in May, we upsized our 555 California Street loan from $533 million to $1.2 billion with no additional interest costs.\nWe also reentered the unsecured debt market for the two tranche $750 million green bond offering at a blended yield of 2.77%.\nThere was robust demand for our paper, underscoring investor support for our franchise and belief in New York City.\nWe paid off the loan on theMART with the proceeds and added the remainder to our treasury.\nFinally, our current liquidity is a strong $4.492 billion, including $2.317 billion of cash and restricted cash and $2.175 billion undrawn under our $2.75 billion revolving credit facilities.\n",
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"content": "qtrly ffo per share adjusting for items $0.69.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: An audio recording of today's call will be available on the Internet for a limited time and can also be accessed on our website.\nToday's remarks are governed by the safe harbor provisions of the 1995 Private Securities Litigation Reform Act.\nFor a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings, especially the Form 10-K for the year ended December 31, 2019, and our other recent SEC filings.\nOn the call today are Ziv Shoshani, CEO and president; and Bill Clancy, CFO.\nI will begin with some commentary on VPG's consolidated financial results and sales trends, the impact of the COVID-19 pandemic on our business, and the strategy and actions we have taken to mitigate that impact.\nBill will provide financial details in the second-quarter 2020 outlook.\nMoving to Slide 3, I'd like to begin my remarks by commenting that VPG's team around the world for their hard work and for their dedication during these challenging times as they adjusted quickly to local restrictions and extraordinary working conditions.\nTheir commitment to meeting the needs of our customers has been truly exemplary.\nMoving to Slide 4, even in the rapidly changing market conditions over the past few months, and we are satisfied with our financial and operating performance in the first quarter.\nWe have ended the quarter with a positive book-to-bill of 1.08 and grew our total orders 4.4% from the same quarter a year ago.\nMoving to Slide 5, I'll discuss the operational and EH&S impacts on VPG from COVID-19.\nAs the pandemic begin to unfold around the world, we took steps to keep our employees and customers safe.\nThese measures included suspending business travel and enabling employees whose functions allowed to work from home effectively.\nWe have also implemented workplace distancing and increased sanitizing common areas, as well as adjusting our work shifts to minimize contact with other employees.\nWe know of four employees who tested positive for the virus.\nOf this, two have tested negative after the required quarantine period and two are currently under quarantine.\nAs countries, states and local jurisdictions around the world implemented stay-at-home orders, we quickly made adjustments to maintain the continuity of operations while also complying with those regulations.\nWhile the majority of VPG's facilities were able to continue operations due to the essential nature of our products, our two facilities in India and in China were more significantly impacted.\nAs we indicated in our earnings call in February, our facility in China was impacted by approximately three weeks by government-imposed restrictions.\nThat facility returned to production in mid-February when those restrictions were lifted.\nOur facility in India was also shut down beginning in late March as a result of stay-at-homes order imposed by our Indian government.\nWhile this order has been extended to May 17, we received approval to resume partial operations on our India facility.\nAs of today, with the exception of our India facility, our supply chains and logistics network are functioning as we are able to meet our customers' needs.\nWe created an internal committee to monitor and manage the situation.\nFinancially, we have implemented a companywide salary freeze and have reduced our planned capital spending for 2020 by 30%.\nMoving to Slide 5, in terms of the impact on demand for our products, one of VPG's strength is its broad diversity of VPG's markets, which is a major differentiator from other pure-play sensor technology companies during times of turbulent market conditions that we are seeing now.\nThis breadth enables us to maintain our financial momentum within our segment as stronger end markets offset weaker ones.\nFor Foil Technology Products segment, first-quarter sales of $30.5 million grew 2.8% sequentially, reflecting growth in precision foil resistors and shrinkages in test and measurement and consumer markets, which offset weaker sales in the general industrial market.\nOrder for FTP in the first quarter grew from the fourth quarter of 2019 and included significant order for advanced sensors, which resulted in our book-to-bill of 1.25 as compared to 1.18.\nFirst-quarter sales of Force Sensors of 14.7% -- $14.7 million declined 2.4% and from the fourth quarter of 2019, reflecting slower demand in the industrial weighing markets as well as modest impact from a temporary government-mandated shutdown of our China facility.\nNonetheless, we saw growth in OEM-driven sales for precision ag and construction applications.\nWhile a book-to-bill for Force Sensors in Q1 was 1.02, we expect our second quarter sales for these products to be impacted by the essential shutdown of our manufacturing facility in Chennai, India that I mentioned earlier.\nAssuming the full reopening of this facility on May 17, we expect that our Force Sensors revenues in the second quarter to be reduced by approximately $5 million to $7 million, which is reflected in our guidance.\nWe also expect our operating profit to be impacted by approximately $3.5 million, reflecting the lower revenues, the required payments to employees during the shutdown period and of some partial operations and higher logistics costs.\nFollowing the lifting of these restrictions, we anticipate we will be able to recover the majority of the revenue shortfall in future quarters.\nSales of Weighing and Control Systems in the first quarter of $22.5 million declined 7.9% sequentially.\nThe decline in WCS sales was primarily due to the timing of the end user driven projects in the steel market, which offset modestly higher revenues for certain onboard weighing solutions.\nWe expect to see lower revenue in the second quarter in WCS, primarily in the transportation market.\nBook-to-bill for WCS was 0.9 in the first quarter of 2020.\nAs the world contents with the residual impact from the pandemic on the business environment, we are confident in both our strategy and our strong financial position to weather these turbulent times.\nWe believe we have ample liquidity with a net cash of $42 million on our balance sheet and a new revolving credit facility we put in place in March 2020 that not only gives us expanded borrowing capacity should we need it, but also offers us lower borrowing rates and more favorable terms.\nGiven the high degree of uncertainty in the macro environment, we are focused on what we can control, which are our key strategic initiatives, to both grow our business and to reduce our operating cost.\nThese initiatives, which are critical to our company's future, are intact and we are -- and we intend to be ready to realize their potential as the global economic environment normalizes.\nOn the growth side, we are moving forward with our FTP manufacturing project in Israel.\nAs we have discussed, this project will support future growth of advanced sensors.\nWhile sales of these products were essentially flat sequentially, we have received large orders in Q1 in our other markets, such as consumer and medical.\nFor the overload protection initiatives in Europe, our TruckWeigh and VanWeigh Solutions, which have already been tested by our key OEM truck and van manufacturers, and we have received very positive feedback.\nHowever, several of them have signaled that they are pushing out the implementation further into 2021, pending a return to a more normalized economic activity.\nOur aftermarket OEM sales for this product, which was expected to be booked in this year, was pushed into 2021.\nOn the cost side, we have already implemented a number of initiatives over the past few years to consolidate our manufacturing footprint and to reduce our operating cost.\nWe believe that these steps, which have been already contributed to the margin improvement in some key areas, will increase our operating leverage and financial returns once we see the return to more normalized economic condition.\nAs we continue to meet the challenges of the pandemic and as we can remain vigilant in protecting our employees and our customers, we are confident that we will successfully navigate to these challenges.\nThis confidence is based on strong business model and financial position, our diverse set of markets, and the depth of experience of the VPG management team across the world.\nReferring to Page 7 of the slide deck.\nIn the first quarter of 2020, we achieved revenues of $67.7 million, operating income of $4.6 million or 6.9% of revenues, and net earnings per diluted share of $0.24.\nOn an adjusted basis, which excludes $515,000 of acquisition purchase accounting adjustments related to the DSI acquisition in November 2019 and $130,000 of restructuring costs, our adjusted operating income was $5.3 million or 7.8% of sales and our adjusted net earnings per diluted share was $0.29.\nOur first-quarter 2020 revenue declined 2.1%, compared to 69.1% -- $69.1 million in fourth quarter and were down 11.5% as compared to $76.5 million in the first quarter a year ago, which was also a historical high quarter for VPG.\nForeign exchange negatively affected revenues by $600,000 for the first quarter of 2020 compared to a year ago and had no impact as compared to the Q4 of 2019.\nOur gross margin in the first quarter was 37%.\nOur gross margin on an adjusted basis was 37.8%, which improved from 36.8% in the fourth quarter of 2019.\nOur operating margin was 6.9% for the first quarter of 2020.\nExcluding the above-mentioned purchase accounting adjustments and restructuring charges, our first-quarter adjusted operating margin was 7.8%, which increased from 7.5% we reported in the fourth quarter of 2019.\nSelling, general and administrative expenses for the first-quarter 2020 were $20.3 million or 30% of revenues.\nThis compares to $20.4 million or 26.7% for the first quarter of last year and $20.2 million or 29.2% in the fourth quarter of 2019.\nThe sequential SG&A in the first quarter reflected the inclusion of a full quarter of SG&A expenses for DSI.\nThe adjusted net earnings for the first quarter of 2020 were $3.9 million or $0.29 per diluted share, improved from $3.7 million or $0.27 per diluted share in the fourth quarter of 2019.\nThe impact of foreign exchange rates for the first quarter of 2020 was positive compared to the first quarter of 2019 by approximately $400,000 or $0.03 per diluted share.\nWe generated adjusted free cash flow of $3 million for the first quarter of 2020 as compared to $4.8 million for the first quarter in 2019.\nWe define free cash flow as cash from operating activities with less capital expenditures plus any sale of fixed assets.\nThe GAAP tax rate in the first quarter was 32.3%.\nWe are assuming an operational tax rate in the range of 27% to 29% for 2020 planning purposes.\nWe ended the first quarter with $82.7 million of cash and cash equivalents and total long-term debt of $40.6 million.\nAs Ziv mentioned, in March, we put in place a new revolving credit facility that gives us greater flexibility and lower interest expense as well as less restricted covenants.\nWith a net leverage ratio of about one time, we believe that we have a strong balance sheet and ample liquidity to support our business requirements and to fund additional M&A opportunities.\nTurning to our outlook, given the expected impacts resulting from the COVID-19 pandemic, we now currently expect net revenues in the range of $56 million to $62 million for the second quarter of 2020, which assumes constant first-quarter 2020 exchange rates.\nIn summary, while the COVID-19 pandemic continues to create uncertainty around the world, we are prepared to meet these challenges as we remain diligent in protecting our employees and our customers.\nOur strong operating model, financial position, diverse set of markets, combined with the commitment to our strategic initiatives, gives us confidence in our ability to not only successfully navigate these challenging times, but to accelerate our performance as conditions return to normal.\n",
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"content": "compname reports q1 earnings per share of $0.24.\nq1 adjusted earnings per share $0.29.\nq1 earnings per share $0.24.\nq1 revenue fell 11.5 percent to $67.7 million.\nsees q2 2020 revenue $56 million to $62 million.\nvishay precision group - expect financial results in q2 of 2020 will be negatively impacted by covid-19 pandemic.\nmajority of co's operations have been able to maintain full or partial operations.\nvishay precision group - received approval from indian government to resume partial operations at co's manufacturing facility on may 4, 2020.\nexpects reduction in its india operations to reduce force sensors revenues by $5 million to $7 million in q2.\nvishay precision - if operating restrictions on indian facility not lifted on may 17, anticipate additional negative impact on results of operation.\nvishay precision group - as of may 5, 2020, all of co's facilities, with exception of facility in india, are operating fully.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: An audio recording of today's call will be available on the internet for a limited time and can also be accessed on the VPG website.\nTurning to Slide 2.\nToday's remarks are governed by the safe harbor provisions of the 1995 Private Securities Litigation Reform Act.\nFor a discussion of the risks associated with VPG's operations, we encourage you to refer to our SEC filings and the Form 10-K for the year ended December 31, 2018, and our other recent SEC filings.\nOn the call today are Ziv Shoshani, CEO and president; and Bill Clancy, CFO.\nI will begin with some commentary on VPG's consolidated results and our sales trends and operational highlights by segment.\nBill will provide financial details and then our Q1 2020 outlook.\nMoving to Slide 3.\nThe fourth quarter capped the second best year in VPG's history in terms of revenue and profitability.\nIn spite of some macro headwinds after beginning the year in Q1 with one of our strongest quarters ever, business trends and our revenue slowed in the second half of the year reflecting a global economic slowdown that impacted many of our end markets.\nDespite the headwinds, we achieved solid results for fiscal 2019 with sales of $284 million and adjusted operating margin of 11.7% and adjusted earnings per share of $1.69 and $20.4 million of adjusted free cash flow.\nMoving to Slide 4.\nFor the fourth quarter, sales of $69.1 million were at the high end of our expectations and grew 2.6% sequentially.\nBookings were strong as total orders for the fourth quarter of $79.8 million grew 24% from the third quarter and reflected growth in all three segments.\nThe result was an overall book-to-bill of 1.15 in the fourth quarter, an improvement from 0.96 in Q3.\nLooking at our fourth-quarter business trends by market.\nIn test and measurement, demand for our precision resistors in semiconductor test applications rebounded.\nIn the general industrial market, we saw continuous softness in oil and gas and in industrial process applications.\nIn transportation, where we focus on track in one market orders for our VPG onboard weighing solutions were solid in both the avionics, military and space market or AMS and steel market trends continue to be directionally positive, but our orders reflected the project-driven nature of our products.\nIn the industrial wing and other markets which includes precision, agriculture, construction and medical applications, we saw signs of bottoming as customers replenished their inventories.\nFrom an operation and financial perspective, our profits in the fourth quarter were impacted by a number of factors.\nFirst, our results include -- included $1.7 million of an acquisition-related charges and costs associated with the addition of Dynamic Systems, Inc. or DSI in November of 2019.\nSecond, we recorded a restructuring charge of $1.7 million which primarily relates to the closing and downsizing of facilities as part of our ongoing strategic initiative to align and consolidate our manufacturing operations.\nThird, our margins were further affected by approximately $1.1 million related to inventory reductions as well as one-time inventory adjustments, mainly for manufacturing relocations and system implementations.\nThe results of these factors was an operating income in the fourth quarter of $1.8 million or 2.5% of revenues, and adjusted operating income was $5.2 million or 7.5% of revenues.\nFourth-quarter earnings per diluted share was $0.28.\nAnd adjusted net earnings per diluted share was $0.27.\nMoving to Slide 5.\nLooking at our reporting segments in detail.\nSales of foil technology products of $29.6 million declined 7.7% sequentially and were 19.3% lower than the fourth quarter a year ago.\nThe quarter-to-quarter decline was due to lower sales of precision resistors in the test and measurement market.\nHowever orders for these products grew robustly in the fourth quarter of 2019 for both test and measurements and AMS customers as they place their semi-annual and annual orders.\nThe result was a book-to-bill ratio of 1.18 for foil technology products in the fourth quarter which was up significantly from 0.91 in the third quarter.\nGross margin for foil technology products of 34.9% declined from 37.3% for the third quarter due to lower sales volume of $1.5 million, unfavorable product mix of $300,000 and the one-time inventory adjustment of $200,000 which was partially offset by a reduction in manufacturing costs of $700,000.\nLooking at the force sensors segment, sales in the fourth quarter of $15.1 million declined 7.1% sequentially and were down 11.4% from the fourth quarter of 2018.\nThe sequential decline was primarily due to OEM destocking in the precision weighing and force measurement markets.\nBook-to-bill for force sensors was 1.11 which grew from 0.94 in the third quarter of 2019.\nFourth-quarter gross profit margin for force sensors of 24.2% decreased from 30.4% in the third quarter of 2019.\nThe lower sequential gross profit reflected lower volume of $600,000, approximately $400,000 related to inventory reductions and $200,000 of one-time inventory adjustments.\nFor the Weighing and Control Systems segment, fourth-quarter sales of $24.4 million increased 28.1% from the third quarter and were 5.2% higher than the fourth quarter a year ago.\nThe sequential growth in revenue was primarily attributable to the addition of two months of BSI sales and continued good performance in both our process weighing business in Europe and our legacy steel business.\nBook-to-bill for weighing and controls was 1.15 which compared to 1.04 in the third quarter of 2019.\nThe fourth-quarter gross profit margin for WCS segment of 41.6% or 46.8% excluding the purchase accounting adjustments of $1.3 million for the DSI acquisition, was in line with prior quarter's profit margins.\nMoving to Slide 6.\nBefore turning the call to Bill for some additional financial details for the quarter, I would like to provide an update on a few of our -- of the strategic initiatives that are key elements of value-creation strategy.\nTurning to Slide 6.\nFirst, I would like to elaborate on the progress we are making to realign our manufacturing footprint.\nI already referenced facility closure and downsizing in the fourth quarter of 2019 which relate to transition of manufacturing of force sensors to India and China.\nWe expect these moves to yield approximately $1.6 million of cost savings in 2020 excluding normal inflation and wage increases.\nIn addition, our consolidation project in Modi'in, Israel is on track and we expect to start the relocation in the third quarter of 2020 and to complete the transition as we enter 2021.\nAs we have discussed before, this is a major initiative that not only gives us an additional capacity we need to support the future growth of our advanced sensor business, but also consolidate certain legacy operations which will provide manufacturing efficiencies as the facility ramps production in 2021.\nWe expect to incur approximately $2 million of start-up costs in the second half of this year as we complete the transition.\nSecond, we are pushing forward on a number of VPG-specific growth initiatives.\nWe continue to have a good customer engagement with respect to our advanced sensors as we grew sales of these products, 20% in 2019 compared to 2018.\nAs we have described before, the unique design capabilities and cost-effective manufacturing platform of the advanced sensor business are enabling us to pursue higher volume opportunities which we were not able to address before.\nAnother key initiative relates to our TruckWeigh and VanWeigh overload protection technology which grew 30% in 2019 from the prior year.\nWe expect demand for this product to be further driven by adoption of new regulations in the EU that will require all trucks and vans with load capacities of more than three and a half tons to have this capability.\nWhile the regulation are still being finalized, they are expected to go into effect in the first half of 2021.\nWe believe we are in the leading position in terms of our products capability, reliability and robustness, and we are already working with all the large OEMs to develop solutions that meet the new regulations.\nThird, among the strategic highlights for the quarter was the acquisition of Dynamic Systems, Inc. which was accretive in the fourth quarter.\nDSI is a great example of a bolt-on M&A opportunity.\nWe believe we'll create value for VPG shareholders.\nIt is an established, highly profitable company with a great novel technology that complements our existing footprint in the steel industry.\nWe believe we have a great platform and a solid balance sheet to support value creating M&A, and we hope to make additional acquisitions in 2020.\nOn Slide 7 of the slide deck.\nIn the fourth quarter of 2019, we achieved revenues of $69.1 million, operating income of $1.8 million or 2.5% of revenues and net earnings per diluted share of $0.28.\nOn an adjusted basis which exclude $1.7 million of costs and purchase accounting adjustments related to the DSI acquisition and $1.7 million of restructuring costs, our adjusted operating margin was $5.2 million or 7.5% of sales and adjusted net earnings per diluted share was $0.27.\nContinuing on Slide 7.\nOur fourth-quarter 2019 revenue of $69.1 million increased by 2.6% as compared to $67.4 million in the third quarter, and we were down 10.2% as compared to $77.0 million in the fourth quarter a year ago.\nForeign exchange negatively impacted revenues by $500,000 for the fourth quarter of 2019 as compared to a year ago and had no impact as compared to the third quarter of 2019.\nOur gross margin in the fourth quarter was 35%.\nExcluding $1.3 million related to purchase accounting adjustments for the DSI acquisition, our gross margin on adjusted basis was 36.8% which declined from 38.3% in the third quarter.\nOur operating margin was 2.5% for the fourth quarter of 2019.\nIf we exclude the above-mentioned purchase accounting adjustments, acquisition cost of $400,000 and restructuring expense of $1.7 million related to the facility closures and downsizing, as Ziv mentioned, our fourth-quarter adjusted operating margin was 7.5% as comparted to 10% in the third quarter of 2019.\nThe adjusted gross margin for the fourth quarter of 2019 included approximately $1.1 million of inventory reductions and inventory-related adjustments which are not expected to reoccur.\nExcluding these inventory-related factors, adjusted gross margin would have been 38.5%, above the 38.3% we reported in the third quarter of 2019.\nSelling, general and administrative expenses for the fourth quarter of 2019 were $20.2 million or 29.2% of revenues.\nThis compared to $20.9 million or 27.2% for the fourth quarter last year and $19.1 million or 28.3% in the third quarter.\nThe higher sequential SG&A in the fourth quarter reflected the inclusion of two months of SG&A expenses for DSI which were partially offset by a reduction in bonus accrual reserves.\nThe adjusted net earnings for the fourth quarter of 2019 were $3.7 million or $0.27 per diluted share compared to $5.0 million or $0.37 per diluted share in the third quarter of 2019.\nWhile impact of foreign exchange rates for the fourth quarter was modest compared to the third quarter, they had a much bigger effect compared to the fourth quarter a year ago, impacting net earnings by $900,000 or $0.07 per diluted share.\nWe generated adjusted free cash flow of $4.1 million for the fourth quarter of 2019 as compared to $4.8 million for the third quarter of 2019.\nWe define free cash flow as cash generated from operations which was $6.3 million for the fourth quarter of 2019, less capital expenditures of $2.6 million and sales of fixed assets of $400,000.\nWe recorded a tax benefit of $3.4 million in the fourth quarter of 2019 related to the acquisition of DSI, utilizing our deferred tax liabilities against deferred tax assets.\nWe are assuming an operational tax rate in the range of 27% to 29% for our 2020 planning purposes.\nReflecting the $40.5 million paid for DSI, we ended the fourth quarter with $86.9 million of cash and cash equivalents and total long-term debt of $44.5 million.\nWith a net leverage ratio of about one time, we believe that our balance sheet remains very strong and we have ample liquidity to support our business requirements and to fund additional M&A opportunities.\nTurning to our outlook.\nWhile we see signs of bottoming in some of our industrial markets, there continues to be a number of uncertainties in the macroeconomic environment including the potential spread of the coronavirus.\nWe currently expect net revenues in the range of $63 million to $70 million for the first fiscal quarter of 2020 which reflect the portions of our project-driven business and customers longer lead time orders that are expected to ship in the quarter and assumes constant fourth-quarter 2019 exchange rates.\nIn summary, our sales for the fourth quarter were at the high end of our expectations, and we ended the quarter with a very strong book-to-bill.\nOur manufacturing consolidation projects are on track for on-schedule completion.\nAnd we believe we have the long-term growth and cost strategies in place to achieve our three-year financial targets.\n",
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"content": "compname reports q4 earnings per share of $0.28.\nq4 adjusted earnings per share $0.27.\nq4 earnings per share $0.28.\nq4 revenue fell 10.2 percent to $69.1 million.\nsees q1 2020 revenue $63 million to $70 million.\nvishay precision - operating results for q4 2019 versus q3 2019 were primarily impacted by inventory reductions & negative impact of foreign exchange rates.\nvishay precision group- projected revenue range excludes any potential impact of coronavirus on business, which co is continuing to monitor closely.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As usual, we'll start today's call with the Chief Financial Officer, who will review Vishay's third quarter 2021 financial results.\nDr. Gerald Paul will then give an overview of our business and discuss operational performance as well as segment results in more detail.\nWe use non-GAAP measures because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures that we also provide.\nI will focus on some highlights and key metrics.\nVishay reported revenues for Q3 of $814 million.\nEPS was $0.67 for the quarter.\nAdjusted earnings per share was $0.63 for the quarter.\nThe only reconciling items between GAAP earnings per share and adjusted earnings per share are tax related.\nThere were no reconciling items impacting gross or operating margins.\nRevenues in the quarter were $814 million, down by 0.7% from previous quarter and up by 27.1% compared to prior year.\nGross margin was 27.7%.\nOperating margin was 15.2%.\nThere were no reconciling items to arrive at adjusted operating margin.\nEPS was $0.67, adjusted earnings per share was $0.63.\nEBITDA was $162 million or 19.9%.\nThere were no reconciling items to arrive at adjusted EBITDA.\nReconciling versus prior quarter, operating income quarter three 2021 compared to operating income for prior quarter based on $5 million lower sales or flat sales, excluding exchange rate impacts, operating income decreased by $2 million to $124 million in Q3 2021 from $125 million in Q2 2021.\nThe main elements were: Average selling prices had a positive impact of $10 million, representing a 1.3% ASP increase; volume decreased with a negative impact of $4 million, equivalent to a 1.3% decrease in volume.\nVariable costs increased with a negative impact of $12 million, primarily due to increases in metal prices as well as materials and services and not completely offset by cost reductions.\nFixed costs decreased with a positive impact of $4 million, in line with our guidance.\nReconciling versus prior year, operating income quarter three 2021 compared to adjusted operating income in quarter three 2020, based on $174 million higher sales, or $172 million excluding exchange rate impacts, adjusted operating income increased by $62 million to $124 million in Q3 2021, from $61 million in Q3 2020.\nThe main elements were: Average selling prices had a positive impact of $18 million, representing a 2.2% ASP increase; volume increased with a positive impact of $70 million, representing a 23.2% increase.\nVariable costs increased with a negative impact of $8 million.\nVolume-related manufacturing efficiencies and cost reduction efforts did not completely offset higher metal prices, annual wage increases and higher tariffs.\nFixed cost increased with a negative impact of $17 million, primarily due to annual wage increases and higher incentive compensation costs, only partially offset by our restructuring programs.\nInventory impacts had a positive impact of $9 million.\nExchange rates had a negative effect of $9 million.\nSelling, general and administrative expenses for the quarter were $102 million, in line with our guidance, excluding exchange rate impacts.\nFor quarter four 2021, our expectations are approximately $104 million of SG&A expenses at current exchange rates.\nThe debt shown on the face of our balance sheet at quarter end is comprised of the convertible notes due 2025 net of debt issuance costs.\nThere were no amounts outstanding on our revolving credit facility at the end of the quarter.\nHowever, we did use the revolver from time to time during Q3 to meet short-term financing needs and expect to continue to do so in the future.\nNo principal payments are due until 2025, and the revolving credit facility expires in June 2024.\nWe had total liquidity of $1.7 billion at quarter end.\nCash and short-term investments comprised $916 million, and there are no amounts outstanding on our $750 million credit facility.\nTotal shares outstanding at quarter end were 145 million.\nThe expected share count for earnings per share purposes for the fourth quarter 2021 is approximately 145.6 million.\nOur convertible debt repurchase activity over the past three years, together with the adoption of the new convertible debt standard significantly reduces the variability of our earnings per share to share count.\nOur U.S. GAAP tax rate year-to-date was approximately 18%, which mathematically yields a rate of 17% for quarter three.\nIn quarter three, we recorded a tax benefit of $5.7 million due to the reversal of deferred tax valuation allowances in certain jurisdictions.\nWe also recorded benefits of $8.3 million year-to-date due to changes in tax regulations.\nOur normalized effective tax rate, which excludes the unusual tax items, was approximately 22% for the quarter, and 23% for the year-to-date period.\nWe expect our normalized effective tax rate for full year 2021 to be between 22% and 24%.\nOur consolidated effective tax rate is based on an assumed level and mix of income among our various taxing jurisdictions.\nA shift in income could result in significantly different results.\nAlso a significant change in U.S. tax laws or regulations could result in significantly different results.\nCash from operations for the quarter was $136 million.\nCapital expenditures for the quarter were $57 million.\nFree cash for the quarter was $79 million.\nFor the trailing 12 months, cash from operations was $436 million, capital expenditures were $171 million, split approximately for expansion, $113 million; for cost reduction, $9 million; for maintenance of business, $49 million.\nFree cash generation for the trailing 12-month period was $267 million.\nThe trailing 12-month period includes $15 million cash taxes paid for the 2021 installment of the U.S. tax reform transition tax.\nVishay has consistently generated in excess of $100 million cash flows from operations in each of the past 26 years and greater than $200 million for the past 19 years.\nBacklog at the end of quarter three was at $2.244 billion or 8.3 months of sales.\nInventories increased quarter-over-quarter by $30 million excluding exchange rate impacts.\nDays of inventory outstanding were 81 days.\nDays of sales outstanding for the quarter were 43 days.\nDays of payables outstanding for the quarter were 35 days, resulting in a cash conversion cycle of 89 days.\nAlso in the third quarter, we operated under quite excellent economic conditions characterized by extremely high backlogs.\nWe continue to expand critical manufacturing capacities in order to prepare ourselves for further growth.\nDuring the quarter, we did experience some localized shortages of labor impacting the manufacturing output.\nThere were strong financial third quarter results.\nWe had a gross margin of 27.7% of sales and operating margin of 15.2% of sales.\nEarnings per share were $0.67 and adjusted earnings per share, $0.63.\nVishay in the third quarter generated $79 million of free cash, and we do expect another good year of cash generation.\nAs I said, the economic environment for electronic components remains exceptionally good with backlogs at a historical high.\nExcept for automotive, all markets continue to be in excellent shape and sales are basically limited by the manufacturing capacities.\nThe automotive sector is expected to accelerate again over the next quarters with current supply problems getting resolved step by step.\nThe supply chain continues to be rather depleted in general.\nWe see extremely long lead times and shortages of supply.\nPrice increases are being implemented in general also to offset increased inflationary costs for metals and for transportation.\nConcerning the various regions, not so many differences.\nAll regions remained exceptionally strong.\nPOS in all regions remains close or above all-time highs, and distribution in all regions remains hungry for products every year, no change.\nGlobal distribution continues to get overwhelmed with orders.\nPOS in the third quarter continued on a record level of the second quarter, running 34% over prior year.\nPOS increased versus Q2 by 5% in the Americas and by 3% in Europe.\nAsia was slightly down by 2%.\nAmericas and Europe are at an all-time high.\nInventory turns of global distribution in quarter three turns was at 4.2 turns, started to normalize from quite extreme 4.4 turns in the second quarter.\nIn the Americas, 2.2 turns after 2.1 turns in the second quarter and 1.5 turns in prior year.\nIn Asia, 6.1 turns after 7.4 turns in Q2 and 4.3 turns in prior year.\nAnd in Europe, 4.5 turns in the quarter after 4.6 turns in the second quarter and 3.2 turns in prior year.\nComing to the various industry segments we serve.\nSales to the automotive market remains dampened by customers' inability to secure ICs.\nThe situation is expected to improve step by step.\nAnd as the demand for cars remains on a very high level, you can see that there's money in the bank for 2022.\nIndustrial markets continued strong in all regions, factory automation, alternative energy, power transmission are driving the growth.\nAfter record levels in 2020, personal computing shows signs of normalization, but server markets continue growing.\nProliferation of 5G technology continues to drive sales in fixed telecom.\nMilitary spending remains stable.\nCommercial aerospace starts to recover slowly.\nMedical markets are steady, with focus being more and more shifted back to normal hospital procedures.\nWhite goods, air conditioning and gaming remains strong and profitable.\nComing to Vishay's business development in Q3.\nDue to local labor shortages, third quarter sales, excluding exchange rate impacts came in below the midpoint of our guidance.\nWe achieved sales of $814 million versus $819 million in prior quarter and versus $640 million in prior year.\nExcluding exchange rate effects, sales in Q3 were flat versus prior quarter and up by $172 million or by 27% versus prior year.\nBook-to-bill in the quarter has remained on an extraordinarily high level of 1.26 after 1.38 in prior quarter.\n1.29 book-to-bill for distribution after 1.41 in quarter two; 1.23 for OEMs after 1.34 in the second quarter; 1.27 for semis after 1.41 in Q2; 1.26 for passives after 1.35; 1.30 for the Americas after 1.33 in Q2; 1.14 for Asia after 1.29; 1.41 for Europe after 1.54, I think we can speak of a broad continuation of an excellent economical environment.\nOur backlog in the third quarter has climbed to another record high of 8.3 months after 7.5 in the second quarter, 8.9 months in semis after 8.4 months in Q2 and 7.6 months in passives after 6.7 months in Q2.\nPrice increases become visible in our broad form.\nWe have seen 1.3% prices up versus prior quarter and 2.2% versus prior year.\nFor the semiconductors, it was 2.2% up versus prior quarter and 3.8% up versus prior year.\nFor the passives, 0.3% up versus prior quarter and 0.5% up versus prior year.\nSome highlights of operations.\nDespite the continued good level of plant efficiencies, our contributive margin in the third quarter has suffered from inflationary impacts, in particular as it relates to metals and to transportation.\nSG&A costs in Q3 came in at $102 million according to expectations when excluding exchange rate impacts.\nAnd manufacturing fixed costs in the quarter came in at $137 million, below our expectations when excluding exchange rate impacts.\nTotal employment at the end of the third quarter was 22,730, 1% up from prior quarter.\nExcluding exchange rate impacts, inventories in the quarter increased.\nBy $30 million, $13 million in raw materials and $17 million in WIP and finished goods.\nInventory turns in the third quarter remained at a very high level of 4.5 after 4.8 in Q2.\nCapital spending in the quarter was $57 million versus $22 million in prior year, $41 million for expansion, $2 million for cost reduction and $14 million for the maintenance of business.\nWe continue to expect for the year 2021 capex of approximately $250 million for the most part, of course, for expansion projects.\nWe, in the third quarter generated cash from operations of $436 million on a trailing 12-month basis.\nAnd also, on a 12-month basis, we generated $267 million free cash.\nDespite increased capex, we also for the current year, expect a solid generation of free cash, quite in line with our provision.\nComing to our main product lines, starting with resistors.\nWith resistors, we enjoy a very strong position in the auto industrial, mill and medical market segments.\nWe offer virtually all resistor technologies and are globally known as a reliable high-quality supplier of the broadest product range.\nVishay's traditional and historically growing business has returned to record levels.\nSales in the quarter were $181 million, down by $12 million or 6% from previous quarter, but up by $35 million or 24% versus prior year, all excluding exchange rate impacts.\nIn the third quarter, in particular, some shortages of labor and limited sales.\nThe book-to-bill ratio in the quarter continued strong, 1.26 after 1.39 in the second quarter.\nThe backlog increased further to 7.8 months from 6.6 months in the prior quarter.\nGross margin in the quarter decreased to 27% of sales, down from a peak of 30% in Q2.\nMain reasons were lower volume and higher metal and logistics costs.\nInventory turns in the quarter remained on a very high level of 4.7 after 5.1 in the second quarter.\nSelling prices continued to increase, plus 0.5% versus prior quarter and plus 0.7% versus prior year.\nWe are in process to raise critical manufacturing capacities mainly for resistor chips and for power wirewounds.\nAnd of course, we focus on hiring in the critical places.\nWe expect a very successful year for resistors.\nThe business consists of power inductors and magnetics.\nSince years, our fast-growing business with inductors represents one of the greatest success stories of our company.\nExploiting the growing need for inductors in general, which had developed a platform of robust and efficient power inductors and leads the market technically.\nWith magnetics, we are very well positioned in specialty businesses, demonstrating steady growth there.\nSales of inductors in the third quarter were $85 million, flat versus prior quarter and up by $5 million or by 7% versus prior year, excluding exchange rate effects.\nThe book-to-bill ratio in the third quarter was 1.11 after 1.21 in prior quarter.\nThe backlog for inductors grew further to 5.4 months from 5.1 in the second quarter.\nGross margin continued to run at an excellent level of 32% of sales, slightly down from a peak of 34% in prior quarter.\nInventory turns were at 4.6, practically flat versus prior quarter.\nThere is a substantially reduced price decline at inductors, a slight price increase of 0.2% versus prior quarter and minus 1% versus prior year.\nWe are accelerating the next steps of capacity expansion for power inductors in order to get ahead of the demand curve.\nOur business with capacitors is based on a broad range of technologies with a strong position in American and European market niches.\nWe enjoy increasing opportunities in the fields of power transmission and of ECAs, namely in Asia and China.\nSales in the third quarter were $116 million, 3% below prior quarter but 25% above prior year, which excludes exchange rate impacts.\nShortages of labor, also in the case of capacitors, limited manufacturing output and sales.\nBook-to-bill in the third quarter for capacitors remained at very strong 1.7 on the level of the prior quarter.\nBacklog increased to an absolute record of 8.9 months, up from 7.7 months in the second quarter.\nGross margin in the third quarter reduced to 21% of sales from 24% in the second quarter.\nLower volume meant further increased cost for metals, in particular, worsen the results.\nInventory turns in the quarter remained on a healthy level of 3.5 after 3.9 in prior quarter.\nWe are steadily increasing selling prices, 0.1%-plus versus prior quarter and 1.3%-plus versus prior year.\nWe expect a solid year for capacitors with growing opportunities in the future.\nWe remain confident for capacitors for the midterm in the light of increasing designed wins that we see.\nComing to Opto products.\nVishay's business with Opto products consists of infrared emitters, receivers, sensors and couplers.\nAlso in Opto, we see a strong acceleration of demand.\nSales in the quarter were $71 million, 6% below prior quarter, but 9% above prior year, which excludes exchange rate impacts.\nWe experienced quite substantial losses of manufacturing output due to COVID-related restrictions in Malaysia.\nThis situation should be resolved, for its resolved after all by all the workforce now has been vaccinated, will not repeat itself therefore.\nBook-to-bill in the third quarter continued strong at 1.36 after extreme 1.69 in the second quarter.\nBacklog continued to grow to another record high of 10.9 months after 9.3 months in prior quarter.\nGross margin in the third quarter improved further to 34% of sales after 32% in prior quarter.\nI think we can say Opto continues to perform exceptionally well.\nWe have seen now more normal inventory turns of 5.0 in the quarter after 5.8 in the second quarter.\nThe selling prices are going up, plus 1.9% versus prior quarter and plus 5% versus prior year.\nWe modernized and expand our Heilbronn wafer fab and the production should start in the course of Q4, partially Q1 next year.\nOpto products continue to be a very relevant factor for Vishay's growth.\nDiodes for Vishay represents a broad commodity business where we are largest supplier worldwide.\nVishay offers virtually all technologies as well as the most complete product portfolio.\nThe business has a very strong position in the automotive and industrial market segments and keeps growing steadily and profitably since years.\nSales in the quarter were $185 million, up by $12 million or by 7% versus prior quarter, and up by $61 million or 49% versus prior year without exchange rate effects.\nWe see a continued strong book-to-bill ratio of 1.31 in the quarter after 1.45 in Q2.\nBacklog climbed to an extreme high of 8.9 months from 8.5 months in prior quarter.\nWith growing volume, gross margin continued to improve to 25% of sales as compared to 24% in Q2.\nInventory turns were at 4.5 after 4.7 in prior quarter.\nSelling prices keep increasing by 2.9% versus prior quarter and by 5.1% versus prior year.\nWe have started to expand our fab in Taipei introducing the 8-inch technology there.\nThe business with diode starts to exceed pre-pandemic levels.\nVishay is one of the market leaders in MOSFET transistors.\nWith MOSFETs, we enjoy a strong and growing market position, in particular, in automotive, which in view of an increasing use of MOSFETs will provide a very successful future for this product line.\nThe demand has reached quite extreme levels and increases further.\nSales in the quarter were $176 million, 5% above prior quarter and 31% above prior year, excluding exchange rate impacts.\nBook-to-bill ratio in Q3 was 1.19 after 1.26 in the second quarter.\nBacklog has grown further to an extreme level of 8.1 months as compared to 7.9 in the second quarter.\nHigher volume, better selling prices and good efficiencies allowed gross margin to increase further to 31% of sales, up from 28% in the second quarter.\nInventory turns in the quarter were at 5.1, virtually flat versus prior quarter.\nWe are implementing price increases plus 1.5% versus prior quarter and plus 2.2% versus prior year.\nMOSFETs remain absolute key for Vishay's growth going forward.\nWe intend to keep a proper balance between in-house manufacturing of wafers and purchases from foundries.\nAnd this in mind, we decided to build a 12-inch wafer fab in Itzehoe in Germany, adjacent to our existing eight-inch fab, which will increase our in-house wafer capacity by 70%, 7-0 percent, within three to four years.\nLet me summarize and let me emphasize the following: Clearly we, since a few years, enjoy very favorable economic conditions, and the end of the positive phase of the current cycle is not in sight.\nBut, I think much more important beyond all short-term speculations, the longer-term outlook for electronics and also for components is remarkably bright.\nWe expect noticeably higher growth rates for our products going forward than we have seen them in the past.\nVishay definitely is in a good position to benefit from this favorable trend.\nWe enjoy a very broad and strong market position.\nWe are a broad liner, and we are financially solid and therefore, in the position to take the right steps.\nResults also for the fourth quarter look promising.\nWe guide to a sales range between $805 million and $845 million at a gross margin of 27.7%.\nOver to you, Peter.\nVic, please take the first question.\n",
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"content": "compname reports q3 adjusted earnings per share of $0.63.\nq3 adjusted earnings per share $0.63.\nq3 earnings per share $0.67.\nq3 revenue $814 million.\nsees q4 2021 revenues of $805 to $845 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: As usual, we start today's call with the CFO, who will review Vishay's fourth quarter and year 2020 financial results.\nDr. Gerald Paul will then give an overview of our business and discuss operational performance, as well as segment results in more detail.\nWe use non-GAAP measures, because we believe they provide useful information about the operating performance of our businesses and should be considered by investors in conjunction with GAAP measures that we also provide.\nI will focus on some highlights and key metrics.\nVishay reported revenues for Q4 of $667 million, higher than our original expectations, partially due to foreign currency effects.\nEPS was $0.26 for the quarter, adjusted earnings per share was $0.28 for the quarter.\nDuring the quarter, we repurchased 2.6 million principal amount of our convertible debentures due 2041 and recognized the US GAAP loss on extinguishment.\nI will elaborate on these transactions in a few minutes.\nCOVID-19 continues to have an impact on our business.\nWe see strong signs of recovery during Q4.\nSimilar to the first three quarters 2020, we have identified certain COVID-19 related charges, net of certain subsidies, which are directly attributable to the COVID-19 outbreak.\nThese items were insignificant to Q2, Q3, and Q4 results, but are added back when calculating our non-GAAP adjusted earnings per share for comparability.\nSuch measures exclude indirect impacts such as general macroeconomic effects of COVID-19 on our business and higher shipping costs due to reduced shipping capacity.\nRevenues in the quarter were $667 million, up by 4.2% from previous quarter and up by 9.4% compared to prior year.\nGross margin was 22.8%, adjusted gross margin excluding COVID cost was 22.9%.\nOperating margin was 9%, adjusted operating margin excluding COVID cost was 8.9%.\nEPS was $0.26, adjusted earnings per share was $0.28.\nEBITDA was $95.0 million or 14.4%, adjusted EBITDA was $96.2 million or 14.4%.\nRevenues in 2020 were $2,502 million, down by 6.2% from previous year.\nGross margin was 23.3%, adjusted gross margin excluding COVID costs was 23.4%.\nOperating margin was 8.4%, adjusted operating margin excluding corporate costs was 8.5%.\nEPS was $0.85, adjusted earnings per share was $0.92.\nEBITDA was $352 million or 14.1%, adjusted EBITDA was $364 million or 14.6%.\nReconciling versus prior quarter, adjusted operating income quarter four 2020 compared to adjusted operating income for prior quarter based on $27 million higher sales or $23 million higher excluding exchange rate impact, adjusted operating income decreased by $2 million to $60 million in Q4 2020 from $61 million in Q3 2020.\nThe main elements were average selling prices had a negative impact of $2 million, representing a 0.3% ASP decline.\nVolume increased for the positive impact of $10 million, equivalent to a 4% increase in volume.\nVariable cost increased with a negative impact of $4 million, primarily due to increased costs for freight duties and metal.\nFixed cost increased with a negative impact of $5 million, primarily due to the acquisition, and higher year-end repair and maintenance costs.\nInventory impact had a positive effect of $5 million.\nExchange rates had a negative effect of $4 million.\nVersus prior year, adjusted operating income Q4 2020 compared to adjusted operating income in quarter four 2019, based on $58 million higher sales or $44 million excluding the exchange rate impact, adjusted operating income increased by $19 million to $60 million in Q4 2020 from $41 million in Q4 2019.\nThe main elements were average selling prices had a negative impact of $19 million representing a 2.8% ASP decline.\nVolume increased with a positive impact of $27 million, representing 10.3% increase.\nVariable cost decreased with a positive impact of $9 million.\nCost reductions, lower material prices, as well as improved manufacturing efficiencies more than offset increases in labor and freight costs as well as metal prices.\nFixed cost decreased with a positive impact of $2 million, primarily due to lower travel cost which more than offset inflation.\nInventory impacts had a positive effect of $4 million, exchange rates had a negative effect of $5 million.\n2020 versus 2019, adjusted operating income for the year 2020 compared to adjusted operating income for the year 2019.\nBased on $166 million lower sales or $180 million lower excluding exchange rate impact, adjusted operating income decreased by $73 million to $214 million -- from $287 million in 2019.\nAverage selling prices had a negative impact of $71 million, representing a 2.8% ASP decline.\nVolume decreased with a negative impact of $53 million, representing 4.2% decrease.\nVariable cost decreased with the positive impact of $32 million, cost reductions and lower material prices as well as improved manufacturing efficiencies more than offset increases in labor and freight cost and metal prices.\nFixed cost decreased with the positive impact of $15 million, primarily due to lower travel costs and general belt tightening, which more than offset wage inflation.\nInventory impact had a positive effect of $8 million, exchange rates had a negative effect of $5 million.\nSelling, general and administrative expenses for the quarter were $92 million, which includes a net benefits of $0.6 million of subsidies in excess of identified COVID cost.\nSelling, general and administrative expenses for 2020 was $371 million, which includes a net benefit of $1.5 million of subsidies in excess of identified COVID costs.\nFor Q1 2021, our expectations are approximately $103 million of SG&A expenses.\nThe increase was primarily due to uneven attribution of stock compensation expense, incentive compensation accruals, and wage inflation, which are not completely offset by the impact of our restructuring program.\nFor the full year, our expectations are slightly above $400 million at the exchange rates of quarter four.\nThis increase year-over-year is primarily due to the weakening of the US dollar versus our relevant currencies, increased travel cost anticipated in the second half of the year and incentive compensation accruals and wage increases not completely offset by the impact of our restructuring program.\nBased on our cost cycle, our SG&A expenses will be at the highest recorded level in Q1.\nDuring the quarter, we were able to repurchase the final $3 million principal amount of our convertible debentures due 2041.\nLast Thursday, we completed the redemption of our convertible debentures due 2040, of which only $300,000 principal amount is outstanding.\nThese actions complete the programs we have undertaken over the past three years to retire the convertible debentures due 2040, 2041, and 2042, which had certain tax attributes, which were no longer efficient after US tax reforms.\nWe continue to have a series of convertible notes outstanding, which are due in 2025, while we did not be purchase any of our convertible notes due 2025 during quarter four.\nDuring 2020, we opportunistically repurchased $135 million principal amount of the convertible notes due 2025.\nThe average repurchase price for the notes was 95.3% of face value.\nBy reducing our fixed term debt, repurchase of the convertible notes provides us with future flexibility to better utilize our revolver and to adjust our debt levels as necessary.\nWe continue to be authorized by our Board of Directors to repurchase up to an additional $65 million of convertible due 2025, subject to market and business conditions, legal requirements, and other factors.\nWe had total liquidity of $1.5 billion at quarter end.\nCash and short-term investments comprised $778 million and the useful capacity on our credit facility is approximately $730 million.\nOur debt at year-end is comprised primarily of the convertible notes due 2025.\nThe principal amount or face value of the convert is $466 million.\nThe carrying value of $395 million net of unamortized discount and debt issuance costs.\nThere were no amounts outstanding on our revolving credit facility at the end of the year.\nHowever, we did utilize revolver from time to time during Q4 to meet short-term financing needs and expect to continue to do so in the future.\nNo principal payments are due until 2025 and the revolving credit facility expires in June 2024.\nVishay will early adopt the new accounting standard for convertible debts, effective January 1, 2021.\nFirst on to the new standard, our convertible debt will no longer be bifurcated into debt and equity components and we will no longer be required to amortize the related debt discounts as non-cash interest expense.\nThis means that our reported debt balance will increase to approximately the face value of the convert.\nIt also means that our US GAAP interest expense will decrease to approximate the cash coupon.\nWe expect interest expense for Q1 to be approximately $4.4 million.\nThe new standard also requires application of the if-converted method for earnings per share share count, which would have added 14 million shares to our diluted earnings per share share count.\nIn response to this and consistent with our previously stated intention to net share settle, we amended the indenture for the convertible notes due 2025, requiring Vishay to pay the principal amount of any converted note in cash with any additional conversion value settled in shares of common stock.\nThis results in a similar impact on the diluted share count to that which was achieved under the old standard when assuming net share settlement.\nTotal shares outstanding at quarter end were 145 million.\nThe expected share count for earnings per share purposes for the first quarter 2021 is approximately 145 million.\nOur global cost reduction programs that were announced in mid 2019 have now been fully implemented with lower cost of approximately $15 million annually.\nThe full-year effective tax rate on a GAAP basis was approximately 22%.\nThe full year normalized tax rate was approximately 21%.\nBoth the quarters mathematically yield the tax rate of approximately 19% for GAAP and approximately 11% normalized.\nOur year-to-date GAAP tax rate includes the unusual tax benefits related to the settlement, some of the convertible debentures from Q1 and Q4 and an adjustment to uncertain tax positions $4 million in Q4.\nOur year-to-date normalized rate excludes the unusual tax items as well as the tax effects of the pre-tax loss and extinguishment of debt, the identified COVID costs and the Q2 restructuring charge.\nOur effective tax rate for the full year was lower than we expected at the end of Q3 due to changes in certain processes and business practices, as we continue to adapt our financial and capital structure in response to US tax reform.\nWe expect our normalized effective tax rate for 2021 to be between 22% and 24%.\nOur consolidated effective tax rate is based on an assumed level of mixed income among our various taxing jurisdictions.\nA shift in income could result in significantly different result.\nAlso a significant change in tax laws or regulations could result in significantly different result.\nCash from operations for the quarter was $126 million, capital expenditures for the quarter was $53 million, free cash for the quarter was $73 million.\nFor the year, cash from operations was $315 million, capital expenditures were $124 million, but approximately for expansion $83 million, for cost reduction $9 million, for maintenance of business $32 million.\nFree cash generation for the year was $192 million.\nThe year includes $60 million cash taxes paid related to cash repatriation plus $15 million cash taxes paid for the current year instalment of the US tax reform transition tax.\nVishay has consistently generated in excess of $100 million cash flows from operations in each of the past now 26 years and greater than $200 million for the last now 19 years.\nBacklog at the end of quarter four was at $1,240 million or 5.6 months of sales.\nInventories increased quarter-over-quarter by $1 million, including an exchange rate impact.\nDays of inventory outstanding were 79 days.\nDays of sales outstanding for the quarter were 45 days.\nDays with payables outstanding for the quarter were 31 days, resulting in a cash conversion cycle 94 days.\nThe year 2020 for Vishay and its business partners has been overshadowed by a completely new experience, a global pandemic.\nDuring the year, there were several phases of the pandemic impacting our business in very different ways.\nFrom numerous plant shutdowns mainly in Asia and temporary shortages of supply in the early part of the year over drastic negative reactions of many customers in particular in the automotive segment in the second quarter to an extremely steep and broad recovery of orders since October.\nVishay managed to adapt to a fast-changing economic environment fairly well, keeping up efficiencies, minimizing fixed costs, controlling inventories, and capex.\nVishay in 2020 achieved a gross margin of 23.3% of sales versus 25.2% in 2019, and adjusted gross margin of 23.4% of sales versus 25.2%.\nOperating margin of 8.4% of sales versus 9.8% in 2019, and adjusted operating margin of 8.5% versus 10.7% in 2019.\nEarnings per share of $0.85 versus $1.19 in 2019 and adjusted earnings per share of $0.92 versus $1.26 in 2019.\nThe generation of free cash also in 2020 remained on a quite excellent level.\nWe in 2020 generated free cash of $192 million, which includes taxes paid for cash repatriation of $16 million.\nThe fourth quarter, while benefiting from an accelerated economic recovery, suffered from higher than expected freight costs and metal prices.\nAdditionally, the US dollar weakened versus practically all currencies in which we just incurred costs, but achieved no sales.\nVishay in the fourth quarter achieved gross margin of 22.8% of sales versus 23.7% in Q3, adjusted gross margin of 22.9% versus 23.7% in Q3.\nOperating margin of 9% of sales versus 9.6% in the third quarter, adjusted operating margin of 8.9% versus 9.6% in Q3.\nEarnings per share of $0.26 versus $0.23 in quarter three and adjusted earnings per share of $0.28 versus $0.25 in Q3.\nCurrently, the economic environment for electronics in general can be expressed as friendly to booming.\nThe pandemic even raised its consumption in several market segments and automotive came back to the full extent.\nThere is some economic -- some economic recovery was already seen in the third quarter, but now it has developed quite drastically in the course of the fourth quarter.\nIn particular, distribution contributed and continues to do so, also driven by some anxieties, concerning potentially upcoming shortages of supply.\nWe have realized reduced price pressure across the board and lead times in general are stretching out.\nAll regions enjoyed growth in the quarter, lead by automotive and distribution in Europe.\nThere is a strong continued broad performance in Asia, and growth is also in the Americas to be seen, despite the weakness of oil and gas and commercial avionics.\nGlobal distribution currently is very confident, concerning the short and mid-term business outlook.\nIn fact, there is growing nervousness concerning the availability of components in particular of semiconductors.\nIn the year 2020, POS of global distribution was 3% below 2019, mainly due to a very weak second quarter.\nPOS in quarter four 2020 on the other hand was 4% over prior quarter and 9% over prior year.\nPOS in quarter four was strong in particularly in Asia, with 9% above prior quarter, whereas in Europe and in Americas, POS remains virtually on the levels of the third quarter.\nDistribution inventories in the fourth quarter came down again by $24 million.\nInventory turns of global distribution increased to 3.1 from 2.8 in prior quarter.\nIn the Americas, 1.6 turns after 1.5 in Q3 and 1.4 in prior year.\nIn Asia, 5.0 after 4.3 in Q3 and 3.3 in prior year.\nIn Europe, 3.2 after 3.0 in Q3 and 2.8 in prior year.\nWhat can be stated is that Asian distribution has a very low inventory level currently.\nComing to the industry segments, continued strong orders come from automotive, as OEMs attempt to recoup volume lost during the second quarter closures.\nProduction volumes of light vehicles are approaching pre-Corona levels, but the electronic content has grown and continues to do so.\nAdvanced driver-assist systems, 48V hybrid systems, autonomous driving and in particular electric vehicle charging programs boost the volume.\nIndustrial continues to provide major growth opportunities, despite the present weakness of the oil and gas sector.\nIndustrial automation, new power generation and transmission systems as well as increased residential development propel growth.\nThe market for computers and related products remains remarkably strong, driven by continued demand for tools to support global work from home trends.\nThe AMS sector continues to be burdened by an extremely weak market for commercial avionics, will remain.\nFor Telecom, we for the mid-term continue to expect the major upstream in the context of the introduction of 5G, more short-term 4G systems will continue to grow.\nQuarantine restrictions favor consumer products in general and medical continues to show stable growth.\nLet me comment on our business in the fourth quarter in particular, mostly due to a high demand from distribution Q4 sales, excluding exchange rate impact came in slightly above the upper end of our guidance.\nWe achieved sales of $667 million versus $640 million in prior quarter and $610 million in prior year.\nExcluding exchange rate effects, sales in the fourth quarter were up by $23 million or by 4% versus prior quarter and up versus prior year by $44 million or by 7%.\nSales in the year 2020 were $2,502 million versus $2,668 million in 2019, a decrease of 7%, excluding exchange rate effects.\nThe book-to-bill ratio in the fourth quarter, may I say jumped really to 1.44 from 0.99 in Q3, mainly driven by Asian distribution; 1.89 book-to-bill for distribution after 0.99 in Q3, 0.96 for OEMs after 1.01 in Q3.\n1.61 for semiconductors after 0.98, 1.27 for passives after 1.0.\n1.15 for the Americas after 0.92 in Q3.\n1.75 for Asia after 1.04 in Q3.\nAnd finally, 1.27 for Europe after 1.01 in Q3.\nBacklog in the fourth quarter climbed to an extreme high of 5.6 months after 4.3 in quarter three, 6 months in semis after 4.3 in the third quarter and 5.2 months in passives after 4.4.\nThere is further decrease in price pressure 0.3% prices down versus prior quarter and 2.8% down versus prior year.\nIn semis, there's less price pressure due to the current high demand minus 0.2% prices versus prior quarter, minus 3.9 versus prior year.\nPassives price decline is on normal levels 0.5 down versus prior quarter and minus 1.7% versus prior year.\nSome comments on operations.\nIn 2020, we were not completely able to offset the normal negative impacts on the contributive margin by cost reduction and by innovation, despite good manufacturing efficiencies.\nDuring the year, we suffered from increasing transportation costs, increasing metal prices and in particular in the fourth quarter from the impact of a weakening US dollar.\nAdjusted SG&A costs in the fourth quarter came in at $93 million, $2 million below expectations, when excluding exchange rate effects.\nAdjusted SG&A costs for the year 2020 were at $373 million, 15 million or 4% below prior year at constant exchange rates, mainly due to less traveling and general belt-tightening.\nManufacturing fixed cost in the fourth quarter came in at $133 million, in line with expectations when excluding exchange rate effects.\nManufacturing fixed cost for the year 2020 were $513 million flat versus prior year at constant exchange rates.\nTotal employment at the end of 2020 was 21,555, 4% down from prior year.\nExcluding exchange impacts, inventories in the quarter remained virtually flat.\nInventory turns in the fourth quarter improved to 4.6 from 4.4 in the prior quarter.\nIn the year 2020, inventories were flat versus prior year.\nInventory turns for the entire year 2020 were at a very satisfactory level of 4.3.\nNo change to prior year.\nCapital spending in 2020 was $124 million versus $157 million in prior year, $83 million for expansion, $9 million for cost reduction, and $32 million for maintenance of business, some acceleration vis-a-vis previous expectations of programs had been required in view of the sharply increasing orders.\nFor 2021, we expect increased capex of about $175 million, required to fulfill a strong demand.\nConcerning cash flow generated, we generated in 2020 cash from operations of $315 million, including $16 million cash taxes for cash repatriation compared to $296 million cash from operations in 2019, including $38 million cash taxes for cash repatriation.\nWe generated in 2020 free cash of $192 million including $16 million cash taxes for cash repatriation, compared to a free cash generation of $140 million in 2019, including $38 million cash taxes for cash repatriation.\nI think we can say that Vishay also in a year of an unprecedented economic destabilization has continued to live up to its reputation as an excellent and variables producer of free cash.\nLet me go to our main product lines and as that is always with Resistors.\nThe Resistors, we enjoy a very strong position in the auto, industrial, mill and medical market segments.\nWe offer virtually all Resistor technologies.\nVishay's traditional and historically growing business in the second quarter had suffered substantially from the weakness, especially in automotive, but now is in process of a fast recovery.\nSales in the fourth quarter were $161 million, up by $15 million or by 10% versus prior quarter and up by $8 million or 5% versus prior year, all excluding exchange rate impacts.\nSales in 2020 of $606 million were down by $56 million or by 8% versus prior year again, excluding exchange rate impacts.\nBook-to-bill in the fourth quarter for Resistors was 1.24 after 1.06 in prior quarter and backlog for Resistors increased from 4.5 months to 4.9 months.\nDue to higher volume, gross margin in the quarter increased to 26% of sales from 24% in prior quarter.\nGross margin for the year 2020 was at 25% of sales down from 28% in 2019 due to still lower volume.\nInventory turns in the fourth quarter were at 4.5.\nInventory turns for the full year were at a good level of 4.1.\nLow price decline for Resistors minus 0.1% versus prior quarter and minus 2% versus prior year.\nThe acquisition ATP is in process to be integrated and we do expect a successful year 2021, based on more volume and on an even higher focus on specialty products.\nComing to Inductors, the business consists of power inductors and magnetics since years our fast growing business with Inductors represents one of the greatest success stories of Vishay.\nExploiting the growing need for investors in general, Vishay developed the platform of robust and efficient power inductors and leads the market technically.\nWith the Magnetics, we are very well positioned in specialty businesses, demonstrating steady growth.\nSales of inductors in Q4 were at $75 million, down by $4 million or 6% versus prior quarter and down by $2 million or 3% versus prior year, excluding exchange rate impact.\nSales in 2020 of $294 million were slightly down versus prior year by $6 million or by 2%, again excluding exchange rate impacts.\nThe temporary slowdown of automotive in 2020 also had an impact on the growth of Inductors.\nBook-to-bill in quarter four for Inductors was 1.03 after 0.96 in prior quarter.\nThe backlog is at 4.6 months after 4.3 months in prior quarter.\nGross margin in the quarter was at 30% of sales, down versus prior quarter, which was at 34% of sales, but this has been a record.\nThe exchange rate and higher transportation cost burdened to performance in the fourth quarter to a degree.\nGross margin for the year 2020 was at excellent 32% of sales, virtually on the same level as in prior year.\nInventory turns in the quarter were at a very high level of 5.0 as compared to 4.6 for the whole year.\nWe planned for some inventory additions for supporting service.\nThere is some price pressure predominantly at power inductors minus 1.7% versus prior quarter at minus 3.6% versus prior year.\nWe continuously expand our manufacturing capacitors for power inductors and we do expect to return to traditional growth rates in 2021 and ongoing financial success in our Inductor lines.\nComing to Capacitors, our business with Capacitors is based on a broad range of technologies with a strong position in the American and European market niches.\nWe enjoy increasing opportunities in the field of power transmission and of electric cars namely in Asia, especially in China.\nSales in Q4 were $92 million, 2% below prior quarter and 6% below prior year, which excludes exchange rate effects.\nYear-over-year Capacitor sales decreased from $423 million in 2019 to $362 million in 2020 or by 15% at constant exchange rates.\nThis was strongly impacted by delays of governmental projects and by a non-repetition of a specific 2019 program, two things came together.\nBook-to-bill ratio in quarter four was 1.54 after 0.95 in the previous quarter.\nWe received now a large order or large orders for power capacitors from China.\nThe backlog increased substantially to 6.2 months from 4.4 months in Q3.\nGross margin in the quarter was at 18% of sales, down from 20% mostly due to a less favorable mix.\nGross margin for the year 2020 was at 19% of sales, down from 22% in 2019 due to lower volume.\nInventory turns in the quarter increased to 3.8 as compared to 3.6 for the whole year.\nPrices were stable minus 0.2% versus prior quarter and plus 0.4% versus prior year.\nWe do expect increased volume and better profitability in 2021.\nVishay's business with Opto products consists of infrared emitters, receivers, sensors and couplers as well as of LEDs for automotive applications.\nThe business in 2020 experienced a significant recovery from disappointing results in prior year that had been burdened by major corrections in the supply chain.\nCurrently, we see a really sharp increase in demand.\nSales in the quarter were $68 million, 5% above prior quarter and 29% above prior year at constant exchange rates.\nYear-over-year sales with Opto products went up from $223 million to $237 million or by 5% when excluding exchange rate effects.\nBook-to-bill in the fourth quarter was 1.46 after 0.97 in the prior quarter and the backlog increased substantially to 5.9 months after 4.6 months in the third quarter.\nGross margin in the quarter came in at satisfactory 28% of sales after 33% in the third quarter, which had been a spike.\nGross margin for the year 2020 recovered to a level of 28% of sales as compared to 24% in prior year, which had been depressed primarily due to low volume.\nVery high inventory turns of 6.0 for Opto products in Q4 as compared to 5.5 in the year 2020.\nPrices were fairly stable, in fact 1.2% up versus prior quarter and minus 1.1% versus prior year.\nWe remain confident that Opto products going forward will contribute noticeably to our growth and we are in process to modernize and expand our higher growth in Germany.\nDiodes for Vishay represents a broad commodity business, where we are largest supplier worldwide.\nVishay offers virtually all technologies as well as the most complete product portfolio.\nThe business is in very strong position in the automotive and industrial market segments and keeps growing steadily and profitably since years.\nDiodes for a few quarters had suffered from too high inventory levels in the supply chain and from the weakness of its main markets.\nNow the business has entered the phase of strong recovery.\nWe currently see a fairly dramatic upturn in demand.\nSales in the quarter were $139 million up by $15 million or about 12% versus prior quarter and up by $14 million or 11% versus prior year, which excludes exchange rate effects.\nYear-over-year sales with Diodes decreased still from $557 million to $503 million, a decline of 10% at constant exchange rates.\nBook-to-bill ratio in Q4 climbed abruptly to 1.65 after 1.05 in the third quarter.\nBacklog increased to 6.2 months from 4.7 months in prior quarter.\nGross margin in the quarter improved to 18% of sales as compared to 17% in the third quarter.\nGross margin in the year 2020 was at 18% of sales, down from 20% in prior -- down from 20% in prior year due to substantially lower volume.\nInventory turns increased to 4.8, as compared to 4.4 for the whole year.\nWe see a reduced price pressure, stable prices plus 0.2 really versus prior quarter at minus 3.7% versus prior year.\nWe expect profitability of Diodes to return to more historic levels with increasing volume.\nVishay is one of the market leaders in MOSFETs transistors.\nWith MOSFETs, we enjoy a strong and growing market position in automotive, which in view of an increased use of MOSFETs and automotive will provide a successful future.\nWe currently experience like in Diodes, a quite dramatic increase in demand.\nSales in the quarter were $132 million, 2% below prior quarter, but 12% above prior year at constant exchange rates.\nYear-over-year sales with MOSFETs decreased slightly from $509 million to $501 million by 2% excluding exchange rate impacts.\nBook-to-bill went up sharply to 1.64 in the quarter after 0.93 in quarter three.\nBacklogs climbed to 5.7 months as compared to 3.7 months in the third quarter.\nGross margin in the quarter was at 22% of sales.\nNo change from prior quarter.\nGross margin in the year 2020 came in at 23% of sales, a reduction from 25% in 2019 due to a combination of higher metal prices and inventory reduction.\nInventory turns in the quarter were 4.3 as compared to 4.0 for the entire year.\nPrice decline is relatively normal minus 1.2% versus prior quarter, minus 5.6% versus prior year.\nBut given the high market demand, we expect prices to stabilize going forward.\nMOSFETs in general remain key for Vishay's growth going forward.\nI think there is no need to emphasize that 2020 has been a year of unprecedented challenges for the people globally, for the economy in general, and naturally also for Vishay.\nNevertheless, the following should be highlighted.\nElectronic components continue to be a success story, also during difficult times.\nVishay is a remarkably stable enterprise that reacts quickly and professionally to changes that has a viable business model and pursues its strategies also during times of severe challenges.\nWe remain excited about the fairly overwhelming opportunities electronics increasingly will enjoy in the future.\nVishay is prepared to participate to the full extent.\nFortunately, concerning the pandemic, there is light at the end of the tunnel and we, despite still existing obstacles, expect the strong year 2021.\nFor the first quarter, we at quarter four exchange rates guide to a sales range between $705 million and $745 million at the gross margin of 25% of sales, plus/minus 60 basis points.\nWe will now open the call to questions.\nShelby, please take the first question.\n",
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"content": "q4 earnings per share $0.26.\nq4 adjusted earnings per share $0.28.\nsees q1 2021 revenues $705 to $745 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These materials are available on the Ventas website at ir.\nThis earnings call does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, also with depletion of any vote or approval in connection with the proposed acquisition of New Senior Ventas filed with the SEC a registration statement on Form S-4 that includes a preliminary prospectus for the Ventas common stock that will be issued in the proposed acquisition and that also constitutes the preliminary proxy statement for a special meeting of New Senior stockholders to approve the proposed acquisition.\nThe proxy statement prospectus and other documents filed by Ventas and New Senior with the SEC may be obtained free of charge at Ventas' Investor Relations website at ir.\nventasreit.com or in New Senior's Investor Relations website at ir.\nYou should review such material filed with the SEC carefully because they contain or will contain important information about the proposed transaction, including information about Ventas and New Senior and the respective Directors, executive officers and other employees who may be deemed to be participants in the solicitation of proxies in respect of their proposed acquisition and a description of their direct and indirect interests by security holdings or otherwise.\nSarah, well done, your first public company merger.\nVentas has delivered an outstanding second quarter and we have strong momentum across the board, in health and safety, capital deployment and access, realization of the benefits of prior successful investments, financial strength and most importantly in portfolio growth led by our high quality SHOP business with significant contributions from office and stability in our triple-net lease business.\nWe see a clear path to growth in our demographically driven diversified enterprise, capturing the embedded upside in our senior housing business, the benefit of external investments, reliable cash flow from our office and triple-net businesses and delivery and stabilization of ongoing developments, primarily in the life sciences research and innovation and Canadian senior housing areas.\nOur experienced team is committed to winning the recovery for all of our stakeholders.\nLet me first turn to our second quarter results.\nWe posted $0.73 of normalized FFO per share, which is above the high end of our previously provided guidance.\nI'm delighted that our same-store property portfolio grew 3.6%, sequentially.\nOur outperformance was driven by SHOP, which produced a $111 million in quarterly NOI, a recovery of $50 million of annualized NOI, representing industry-leading growth in same-store cash NOI and occupancy.\nJuly continued these positive SHOP trends for the fifth consecutive month of occupancy growth.\nImportantly, by the end of July, lease reached their highest levels since the pandemic began.\nJustin will unpack these trends, more fully in his remarks.\nAs a result, we've never been more confident that the senior living business is supported by powerful demand that is growing and resilient, while supply remains constrained.\nThat said, given the macro uncertainty in the COVID-19 environment, particularly the national and regional rise in cases and the measures that have been taken or may be taken to contain COVID spread, the path to full recovery may not be a straight line, but we believe that will point inexorably upward.\nIn our third quarter outlook, we have assumed the increase in COVID cases throughout the US may have some impact on the velocity of leasing and expenses.\nRounding out our portfolio performance, office grew nicely in the quarter and our triple-net portfolio continued to stability.\nPete's efforts to increase leasing, keep high retention rates, improved customer relationships and grow NOI are showing results.\nOur on-campus and affiliated MLP strategy with leading health system continues to shine.\nTurning to health systems, our investment in Ardent also continues to deliver benefit.\nIn addition to strong cash flow coverage on our $1.3 billion leasehold position, our 10% equity stake in the Ardent enterprise is benefiting from excellent Ardent results and our prior purchase of $200 million of Ardent senior notes recently paid off with a $15 million prepayment fees, providing us with a 13% unlevered return on our investment in the Ardent notes.\nWith all is said and done I believe and hope that our Ardent investment in real estate, equity and debt will prove to be one of our best risk adjusted return investments.\nTurning to other capital allocation priorities.\nWe certainly are on our front foot regarding external investments.\nIn total, in 2021, we have over $3.5 billion in investments completed, pending or underway with another $1 billion life science research and innovation pipeline with our exclusive development partner Wexford, right behind that.\nOur team is also busy evaluating attractive deals across our asset classes.\nThis year-to-date, we have already reviewed about as many investment opportunities as we saw in all of 2019.\nWe will pursue those that meet our multi-factor investment philosophy, which is focused on growing reliable cash flow and favorable risk adjusted returns, taking into account factors such as cost per square footer unit, downside protection and ultimate potential for cash flow growth and asset appreciation.\nOur $2.3 billion pending investment in New Senior, announced in the second quarter is a great example.\nIn this deal, we are acquiring over a 100 high-quality independent living communities that are well invested and located in advantaged market, at compelling pricing.\nThe per unit cost is estimated to be 20% to 30% below replacement cost.\nThe 5% cash going in cap rate is expected to grow to a 6% cap rate on expected 2022 NOI with upside as the senior housing recovery continues, and the FFO multiple of less than 12 times post synergize 2022 estimated FFO are all attractive valuation metrics.\nI commend Susan Givens and her team for doing a tremendous job creating and realizing value for their stakeholders.\nWe are also confident that Ventas shareholders will receive immediate and long-term accretion and upside from the deal as senior housing recovers and the large middle market demographic expands significantly in the near term.\nAs Justin will describe, the new senior portfolio also fits in with our senior housing strategy and framework.\nNew senior also performed well in Q2 and into July, with occupancy increasing in the same-store portfolio for five straight.\nA unique strategic advantage of the New Senior transaction is a long-standing relationship we have with the principal managers of the portfolio, Atria and Holiday, two leading operators who recently combined to form the second largest senior housing manager.\nCongratulations to Atria for pulling together this industry changing transaction.\nSwitching to our attractive life science research and innovation business, it continues to provide us with value-creating opportunities to invest capital.\nThe Ventas life science portfolio now exceeds 9 million square feet.\nIt's located in three of the top five cluster market, includes three ongoing development projects and is affiliated with over 16 of the nation's top research universities.\nWe also have an incremental $1 billion in potential projects we are working on with Wexford.\nThe first and largest new life science project in the pipeline totaling about $0.5 billion in costs is gaining steam.\nExpected to be 60% pre-leased to a major public research university that rank in the top 5% of NIH funding, this project will be located on the West Coast and should break ground in the first half of 2022.\nWexford with this exceptional reputation among universities is also exploring significant additional life science potential projects beyond those in our existing pipeline.\nNorth of the border, we continue to invest capital in high-end large scale independent living communities with our partner, Le Groupe Maurice in Quebec.\nWe have always tried to create value through both internal and external growth, and we're pleased that we've returned to being a net acquirer in 2021.\nOur team is active and engaged beyond our announced deals and our pipeline of potential investments across asset classes.\nTo fund new investments, we have access to significant liquidity and a wide array of capital sources, including the asset dispositions and receipt of loan repayments, as Bob will describe in greater detail.\nThe demand for senior housing has been robust and sustainable, proving out the value proposition of communities and care providers offered to seniors in their families.\nThe sharp recovery has begun and we've started capturing the significant upside embedded in our existing senior housing portfolio from both pandemic recovery and the 17.5% growth in the senior population projected over the next few years.\nOur diversified business model continues to provide uplift and stability to our enterprise.\nWe are investing nearly $4 billion and announced deals and development projects and our access to and pricing up capital are positive.\nIn closing, the US is in the midst of an impressive economic recovery that together with demographic demand for all our asset classes will benefit our business.\nWe embrace the opportunity to take on any near-term challenges that are temporarily caused by the strength and speed of this recovery, especially because now unlike last year and the beginning of 2021, our employees, residents, tenants and caregivers are largely safe and healthy.\nAs a team at Ventas, we're incredibly pleased about the results we've delivered and the strength and momentum we've demonstrated.\nJustin, over to you.\nWe remain excited about delivering industry-leading occupancy and NOI growth, and we are encouraged about recent trends in the senior housing portfolio.\nAlthough we are still in the early stages of the recovery, we are off to a very strong start.\nVentas is well positioned to benefit from significant senior housing tailwinds, including the sector recovery upside, supportive demand fundamentals and continued improvement in leading indicators.\nI'll review three topics today.\nFirst, our second quarter performance.\nSecond, our perspective on the senior housing operating environment.\nAnd third, our continued execution of our senior housing strategy.\nI'll start by covering our second quarter performance.\nIn SHOP, leading indicators continue to trend favorably and accelerated during the quarter, as leads and move-ins each surpassed 100% of 2019 levels, while move-outs remain steady.\nJune marked the best month for leads and move-ins since the start of the pandemic and July has sustained a strong momentum.\nStrong sales activity has now driven five consecutive months of occupancy growth, inclusive of July.\nIn the second quarter approximate spot occupancy from March 31 to June 30 increased 229 basis points, led by the US with growth of 313 basis points and accelerating leads and move-ins.\nIn Canada, the transfer more muted due to a slower vaccine rollout, for the approximate spot occupancy still increased during the second quarter, driven by 33 basis points of growth in June.\nLeading indicators remain strong in our portfolio as the digital footprint of our operators has significantly expanded over the past year, casting a wider net as traditional high converting lead sources such as personal referrals, respite and professional referrals continue recovery.\nTurning to SHOP operating results.\nSame-store revenue in the second quarter increased sequentially by $3.5 million as strong occupancy growth was partially offset by the impact of a new resident move-in incentives on pricing, specifically at Atria.\nI will touch on that more in a minute.\nOperating expenses declined sequentially by $9.2 million or 2.3% excluding the impact of HHS grants received in the first quarter, driven by a better than expected reduction of COVID-19 operating costs, partially offset by a modest increase in routine operating expenses.\nFor the sequential same-store pool, SHOP generated approximately $111 million of NOI received in the first quarter, which represents a sequential increase of $12.4 million or 12.6% when excluding the impact of HHS grants.\nThis marks the first quarter of sequential underlying NOI growth since the onset of COVID-19 and approximates a nearly $15 million NOI improvement on an annualized basis.\nDuring the quarter, we saw solid contribution to sequential NOI growth in both revenue and operating expenses as average occupancy increased 110 basis points and COVID-19 costs declined substantially and ahead of expectations.\nSequential same-store cash NOI was largely stable in the second quarter and 98% of all contractual triple net rent was received from the Company's tenants.\nOur trailing 12 month cash flow coverage for senior housing, which is reported one quarter in arrears is 1.2 times and down versus the prior quarter, reflecting the timing associated with coverage reporting which now includes effectively four full quarters of operations impacted by COVID.\nMoving onto the current operating environment, which is full of green shoots.\nOur market leading operators continue to demonstrate their strong market position through broad occupancy gains.\nSunrise led the way with 627 basis points of spot occupancy growth in the low point in mid-March to the end of July, benefiting from a rejuvenated management team, significantly well invested communities and a balanced approach demonstrating very strong occupancy gains and pricing power.\nWe would like to congratulate Sunrise's CEO, Jack Callison for adding experience and depth to his management team with this recently announced hires.\nAtria which benefits from a higher absolute occupancy of 81.8% at July end continues to deliver solid volume growth.\nSpot occupancy in July increased 529 basis points since the low point in mid-March, resulting from the combination of their industry-leading vaccine mandate and strategic price incentives to capture movements.\nAtria anticipates tightening incentives moving forward as pricing power recovers and occupancy stabilizes.\nSupporting all of this is Atria's industry leading vaccination rates, which are impressively high at nearly a 100% of both residents and employees.\nLooking ahead, as Debbie mentioned, the third quarter is off to a strong start with July spot occupancy increasing 74 basis points versus June and lease continuing to stand strong at 105% of pre-pandemic levels.\nOur operators have been prioritizing resident safety and weathering several near term headwinds, including the Delta variant and transitory wage pressures from staffing shortages in select markets.\nUnderpinning our leading operating partner relationships and recent sales momentum is our attractive market footprint, which positions us to benefit from the compelling supply and demand outlook in the senior housing sector.\nOur communities in the US are poised for improving performance over time due to our strong presence in submarkets that outpaced the US national average in aging population growth and wealth demographics, but with significantly lower exposure to new construction starts and construction as a percentage of inventory.\nApproximately 30% of our SHOP portfolio on a stabilized basis is located in Canada.\nThe senior housing sector in Canada has performed exceptionally well, with occupancy exceeding 90% every year from 2010 to 2020 and demand outpacing new supply in eight of that last 11 years.\nAs a foundation to these attractive fundamentals, the 75-plus population in Canada is projected to grow more than 20% over the next five years about twice the pace of the US.\nThe Ventas team has been busy executing our senior housing strategy, driven by our experiential operating expertise and underpinned by our analytical capabilities to further strengthen our senior housing business.\nThe underlying goal of our strategy is simply to execute portfolio actions that ensure we are located in the right markets, with the right operator, with assets, with strong local market positioning.\nA notable example of our strategy execution is the New Senior transaction.\nNew Senior has a track record of strong operating performance, benefits from a geographically diverse footprint with favorable exposure to compelling market fundamentals and demographics, and represents a well invested high quality portfolio catering to an attractive market segment.\nThe acquisition also represents an excellent opportunity to further expand our relationships with two long-standing operators in Holiday Retirement and Atria Senior Living and with new relationships such as Hawthorne Senior Living.\nNew Senior will strengthen our existing senior housing business from several strategic perspectives.\nOperationally, New Senior will enhance Ventas' cash flow generation profile.\nIts margin has remained resilient in the 35% plus range during the COVID-19 and occupancy has weathered the pandemic, headwinds of approximately 80 basis points better than the NIC industry average.\nMost recently, New Senior has seen strong sales trends as we progress through the early stages of the senior housing recovery with powerful upside as the portfolio occupancy grew 100 basis points in June.\nGeographically, New Senior has a diverse presence across 36 states, which includes exposure to markets with high home values and high household income levels, ideal proximity to premium retail in high visibility locations and favorable supply outlooks versus industry averages.\nThis transaction is a reflection of our focus on adding high-quality assets to our senior housing platform and maintaining balance across independent living and assisted living product types.\nWe see New Senior's independent living assets is complementary to our existing high end major market portfolio as it provides a lower average resident age and longer length of stay at an accessible price point, with RevPOR of approximately $2700.\nThe purpose-built nature of these communities, which include consistent layout with 120 units per building also will strengthen our ability to effectively and efficiently redevelopment -- redevelop and invest in these assets over time.\nMoving on to new developments.\nWe continue to drive value from our development pipeline through our relationship with Le Groupe Maurice, where we have opened three communities, with more than 1,000 units over the past year.\nTwo of the three developments were delivered in the fourth quarter of 2020.\nBoth projects had substantial pre-leasing activity and have already stabilized at approximately 95% occupancy.\nThe third project, a 287 unit expansion of an existing Le Groupe Maurice community in Montreal, was delivered in June of this year.\nInitial leasing activity has been strong with more than half of the new units occupied as of the end of July.\nOur plans across our broader SHOP portfolio includes significant deployment of refresh and redevelopment capital, strengthening our market leading position, where we expect to realize occupancy growth and pricing upside over the next few years.\nWe continue to actively manage our portfolio with the disposition of non-strategic assets, and the transition of operators in select markets to position our senior housing business for long-term success.\nIn summary, our recovery is off to a strong start.\nWe are well positioned in markets that benefit from outsized aging and wealth demographic, with rapid use of [Technical Issues] we are executing our senior housing strategy to help ensure success in the near and long term.\nI will now hand over to Pete.\nI'll cover the office and healthcare triple-net segments.\nTogether these segments represent over 50% of Ventas' NOI.\nWe continue to produce positive and reliable results.\nWithin these segments, we're seeing a changing business climate.\nHealth system and university business confidence is rising, leading to longer-term commitments and strategic growth investments.\nDuring the pandemic, we kept our business confidence.\nWe remain focused on growth and we continue to invest in incremental leasing resources and in creating a leasing center of excellence, led by an industry veteran.\nShe is now two years in.\nWe've built a technical engineering team to assist our local property teams and running our buildings more efficiently.\nAlso led by an industry veteran.\nHe is now 18 months in.\nWe doubled our capital invested in our MOBs to ensure their competitiveness, including major redevelopments in Phoenix, Atlanta and Austin, Texas.\nWe expanded our tenant satisfaction programs under the leadership of our new property management leader.\nHe is also 18 months in.\nBecause of this focus, I'm proud to say that our MOBs now rank in the top quartile of tenant overall satisfaction as surveyed by Kingsley, the national real estate survey leader, happy tenants equals higher occupancy.\nOur focus on the fundamentals and growth is showing results, let me describe them now.\nOffice, which includes our medical office and research and innovation segments performed well, delivering 10.5% sequential same-store growth.\nOffice quarterly same-store growth was 12.6% year-on-year.\nThe R&I portfolio benefited from a $12 million termination fee from a large tenant in the Winston-Salem innovation center anchored by Wake Forest.\nAdjusted for the termination fee, office sequential same-store growth was 90 basis points and 2.8% per year-on-year same-store quarterly growth, a strong quarter.\nMedical office same-store sequential growth was 80 basis points and year-on-year quarterly same store growth was 2.4%.\nFor the quarter, we executed 230,000 square feet in Office new leasing and 460,000 square feet year-to-date, a 78% improvement from prior year.\nMedical office had strong same-store retention of 94% for the quarter and 85% for the trailing 12 months.\nThe result is the total MOB occupancy increased 20 basis points sequentially.\nTotal office leasing was 750,000 square feet for the quarter and 1.8 million square feet year-to-date.\nWe are also pleased that our annual escalators for the new MOB leases, averaged 2.9% for the quarter, which caused MOB same-store portfolio, annual rent escalators to increase from 2.4% to 2.6%.\nOur R&I business continues to excel as it strives to provide effective facilities to support the record level of investment into life sciences research.\nSame-store sequential growth was 38.9%.\nAdjusted for the termination fee, same store sequential growth was 1.1%.\nYear-on-year quarterly same-store growth was 42.6%.\nAdjusted for the termination fee, year-on-year quarterly same store growth was a strong 3.9%.\nQuarterly same-store occupancy was now standing 94% with sequential occupancy increasing by 10 basis points.\nLooking forward, we have three R&I buildings comprising of 1.2 million square feet of space under construction.\nCollectively, they are 78% leased or committed.\nOf the two buildings in our uCity complex, Philadelphia, the Drexel building is 100% leased, while one uCity Square is over 55% leased or committed.\nWe are oversubscribed for the remaining space with 11 above pro forma proposals currently outstanding.\nIn Pittsburgh, our new building is 70% pre-leased, University of Pittsburgh and UPMC was significant activity on the remaining space.\nAt our recently opened project with Arizona State University in Phoenix, we are 86% leased or committed and expect to be 100% leased shortly.\nThese performance numbers reflect the quality of our well located R&I assets.\nNow let's turn to healthcare triple-net.\nDuring the second quarter, our healthcare triple net assets showed continued strength and reliability with 100% rent collections.\nSecond quarter same store cash NOI growth was 2.5% year-on-year.\nTrailing 12 month EBITDARM cash flow coverage through June 30 was strong across the portfolio.\nHealth systems trailing 12 month coverage was an excellent 3.6 times in the first quarter, a 10 basis point sequential improvement.\nAs Debbie mentioned, Ardent continues to perform extremely well in this dynamic market.\nIRF and LTAC coverage improved 20 basis points to 1.9 times in the first quarter, buoyed by strong business results.\nAlthough skilled nursing declined 10 basis points to 1.8 times as the pandemic continued to impact centers, total post-acute coverage increased sequentially by 20 basis points to 1.9 times in the first quarter of '21.\nFinally, several of our partners have an approach for M&A opportunities.\nKindred is expected to merge with LifePoint, and Spire recently entertained multiple offers by Ramsay.\nIt is a testament to the underlying value of our healthcare operators and the associated real estate.\nIn my remarks today, I'll cover our second quarter results, our recent liquidity balance sheet and capital activities and finally, our expectations for the third quarter of '21.\nStarting with our results in the second quarter.\nVentas recorded strong second quarter net income of $0.23 per share, normalized funds from operations of $0.73 per share.\nNormalized FFO per share with $0.02 pennies above the high end of our initial guidance range of $0.67 to $0.71 for the quarter and is consistent with our June update to be at the high end or better than that original range.\nThe Q2 outperformance was driven by growth in Office, continued stable performance from triple-net, strong results from Ardent and better than expected NOI in our SHOP portfolio.\nTurning to capital, we've been busy proactively managing our capital structure, duration of debt and liquidity since our last earnings call.\nFirst, following the announcement of the New Senior agreement, we raised $300 million of equity at an average gross price of approximately $58.60 per share under our ATM program.\nThe $300 million equity raise together with the $100 million of new equity to be issued New Senior shareholders for the fixed exchange ratio, and $1.2 billion of New Senior debt to be assumed or refinance constitutes the overall $2.3 billion funding of the New Senior transaction.\nSecond, through August 5th, we received $450 million of disposition proceeds through receipt of loan receivable.\nIncluded in the $450 million received today, this repayment of two well structured loans in July, part of the investment of $200 million of 9.75% Senior Notes due 2026 and Holiday's repayment of $66 million or 9.4% notes due in 2025.\nMedical office fully sold in the second quarter also resulted in proceeds to approximately $107 million.\nUsing proceeds from this division, in the third quarter, Ventas will improve its near-term debt maturity profile further by fully repaying as little as $664 million and 3.25% Senior Notes due August 2022, and 3.13% notes due June of 2023.\nAs a result of recovery senior housing NOI capital structure actions we're seeing strengthening credit metrics.\nReported Q2 net EBITDA was better than expectations improving 10 basis points sequentially to 7 times.\nWithin SMB point improvement underlying SHOP annualized EBITDA improved nearly $50 million or 25 basis point beneficial impact of the ratio in just one quarter.\nThis organic improvement was offset by the elimination of SHOP we did experience, we did experienced in Q2.\nThis provides a proof point of the anticipated material improving leverage resulting from the underlying recovery in senior housing over time.\nPro forma for announced ATM issuance of capital activities since of Q2 net debt to EBITDA on lower from 7 times to 6.8 times.\nI would highlight that the New Senior transaction is expected to be 30 basis point level, are projected here 2020 NOI supported by the forecasted growth in cash flows from the New Senior portfolio.\nSince assets liquidity totaling $3.3 billion as of our finished the Company at $2.7 billion of undrawn revolver capacity $600 million cash and no commercial paper outstanding.\nLet's finish with our future guidance.\nThird quarter net income was estimate range from flat to $0.05 per fully diluted share.\nOur guidance range for normalized FFO for Q3 is $0.70 to $0.74 per share.\nQ3 FFO $0.72 can be bridged from Q2 of $0.73 by $0.02 benefit from the loan prepayment fee in Q3.\n[indecipherable] in Q2, offset by $0.02 from lost interest income on the loan repayments and the July equity raise.\nThird quarter assumptions underlying our guidance as follows.\nSHOP Q3 spot occupancy from June 30 to September 30 is forecast to increase between 150 to 250 basis points with the midpoint roughly continuation of occupancy growth trends there in July.\nThird quarter is expected to be roughly flat sequentially.\nAnd move in incentives are expected to narrow in the quarter.\nSHOP strong revenue growth is expected to be offset by increase in operating costs.\nAdditional day in the quarter.\nHigher occupancy, labor and retain seasonal items including repair deficiency utility costs.\nNow we can test for interesting to you're seeing in the third quarter sales performance is expected in the office and triple-net segments we continue to expect $1 billion in asset sales and move-in payments for the full year 2021 with line of sight for the remaining balance in the second half of this year.\nFully diluted share count is now 383 million shares reflecting in anticipation of New Senior.\nGuidance does not include any other announced capital markets activity.\nOur Q3 guidance excludes any impact from the pending acquisition of New Senior.\nNew Senior transaction is expected to close in the second half of 2021 and the close is forecast to be between $0.09 to $0.11 accretive to normalized FFO per share in 2022.\nI'd like to underscore that we're still in a highly uncertain environment, growth trends in SHOP are positive the pandemic impact on our business very difficult to predict.\nAs I'm excited about our business in the future and we believe we have the well-diversified portfolio, best in class operators and experienced team to win the recovery that is now underway.\nBefore we start with Q&A, we are limiting each caller to two questions to be respectful to everyone on the line.\n",
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"content": "sees q3 normalized ffo per share $0.70-$0.74.\nqtrly normalized ffo per share $0.73.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These materials are available on the Ventas website at ir.\nVentas delivered positive results in the third quarter, saw outstanding sequential SHOP average occupancy growth, benefited from its large medical office, life science and healthcare triple-net businesses, and executed on its investment priorities.\nDelivering $0.73 of normalized FFO per share, which is in the upper half of our guidance range.\nOur same-store SHOP portfolio increased rate and grew occupancy at record levels in Q3 despite the high incidents of COVID-19 in the broader environment.\nOccupancy in this portfolio has now increased for eight consecutive months through October.\nDemonstrating powerful demand, our U.S. same-store SHOP portfolio has increased occupancy 750 basis points since mid March 2021, lifting the entire same-store SHOP portfolio nearly 600 basis points during the same period.\nI'm also encouraged that our year-over-year SHOP occupancy turned positive for the first time since the onset of the pandemic, so a robust senior housing recovery is well underway.\nBut as we stated, it may not progress in a straight line.\nConsistent with macro trends and as we anticipated in our last call with you, the pandemic has created a tight labor market, resulting in labor cost pressures that accelerated in September.\nLooking ahead, we expect to see meaningful revenue increases in the first quarter of 2022 and improving pricing power.\nAt a macro level, many economists forecast that labor force participation will expand from its current low rate for a variety of reasons.\nThese factors should cause current conditions to ease considerably over time.\nEven more importantly, Dr. Scott Gottlieb, who has been consistently the most accurate expert throughout the pandemic stated today that the COVID-19 pandemic is effectively behind us in the U.S., given all the tools we now have to combat it, including Pfizer's new treatment.\nIf Scott continues to be right, it is a momentous day for all of us.\nWe continue to be delighted that one-third of our business consists of medical office outpatient and life science research and innovation.\nOur operational initiatives in medical office and aggressive capital deployment in life science are providing reliable growth and value creation for our enterprise and stakeholders.\nTurning to capital allocation, we have been highly active with $3.7 billion of investments announced or closed year-to-date.\nOur current capital allocation focus remains senior living, selective private medical office building opportunities and life science R&I.\nLet me highlight a few new investments we've made.\nWe've completed $2.5 billion in independent living investments, including our accretive acquisition of New Senior's hundred plus independent living communities at an attractive valuation well below replacement costs and a six community Canadian Senior Living portfolio with one of the New Senior operators, Hawthorne.\nIn medical office we've completed or announced $300 million of investments.\nFirst, establishing a new relationship with industry leader Eating Recovery Center, we acquired a Class A asset under a long-term lease in this rapidly growing sector.\nSecond, by acquiring our partner PMB's interest in this Sutter Van Ness Trophy MOB in downtown San Francisco, we now own a 100% of this asset at a 6% yield.\nWith 92% of the MOB already leased, we intend to capture additional NOI growth and value.\nFinally, we intend to expand our relationship with Ardent Healthcare by acquiring 18 of their 100% leased medical office buildings for $200 million by year-end.\nOn our third capital allocation priority, we are delighted to announce that we have commenced development of a 1 million square foot life science project anchored by Premier Research University, UC Davis with our exclusive partner Wexford.\nPurpose-built for clinical research, this project will be 60% pre-leased to UC Davis, and total project cost are expected to be $0.5 billion.\nTurning to our robust investment pipeline, our team remains busy evaluating attractive opportunities.\nIn fact, we've now reviewed more deal volume this year than we saw in all of 2019, over $40 billion and we continue to pursue those that meet our multi-factor investment framework.\nCapital continues to flow into our sectors as global institutional investors agree with our thesis on the favorable trend benefiting all of our asset classes.\nThese strong capital flows are also supporting our intention to recycle $1 billion of capital this year to enhance both our balance sheet and our portfolio.\nOur diversified business model continues to provide significant benefit.\nOur early and aggressive investments into medical office and life science are creating significant value.\nWe are also proud to be associated with so many leading care providers, operators and developers in all our business lines and to be establishing new platforms for growth through both our investment and our portfolio actions.\nIn closing, the U.S. is in the midst of an impressive economic recovery that together with demographic demand for our asset classes gives us confidence and optimism in our future.\nWe believe that the more widespread administration of vaccines and new efficacious treatments for COVID-19 will benefit both the broader economic recovery and our company.\nOur aligned and experienced team continues to be focused on capturing the double upside in senior housing from both pandemic recovery and the projected growth in the senior population and also to continuing our long track record of external growth.\nI'll start by saying it is a very exciting to see the strong supply demand fundamentals supporting occupancy growth in the senior housing sector.\nWe have been busy taking actions through acquisitions, dispositions and transitions to ensure we are strongly positioned during this period of sector recovery.\nOur industry-leading operators are successfully driving revenue growth in the early stages of the recovery and taking actions to address elevated labor costs, driven by the macro backdrop.\nMoving on to third quarter performance; in SHOP, leading indicators continue to trend favorably during the quarter as leads and move-ins each surpassed a 100% of 2019 levels while move-outs remain steady.\nStrong sales activity has now driven eight consecutive months of occupancy growth inclusive of October.\nIn the third quarter, average occupancy grew by 230 basis points over the second quarter, led by the U.S. with growth of 290 basis points and a 110 basis points in Canada, which is over 93% occupied.\nOctober leading indicators remain solid as leads and move-ins continue to perform above pre-pandemic levels and move-outs remained relatively stable.\nTurning to SHOP operating results, same-store revenue in the third quarter increased sequentially by $13.6 million or 3.1% driven by strong occupancy growth and slight rate growth.\nRegarding rate growth, our operators have proposed rent increases to the residents of 8% in the U.S. and 4% in Canada, which on a blended basis is approximately 200 basis points higher than the historical levels.\nWe also continue to see improvement in our releasing spreads, which are trending close to pre-pandemic levels.\nOperating expenses increased sequentially by $16.7 million or 5.4% of which approximately half is due to overtime and agency costs.\nAlthough we largely anticipated the additional labor costs September spike represented approximately half of the sequential agency expense increase.\nWe carried the elevated September cost forward in our Q4 guidance, which Bob will cover shortly.\nDespite the higher agency and overtime costs, our operators are now witnessing net positive hiring and are actively addressing labor challenges through a number of initiatives.\nThese include centralized recruitment of line staff, implementation of applicant tracking systems, delivering on the increased demand by employees for flexible schedules and other workplace improvements to become more competitive.\nFor the sequential same-store pool SHOP generated $106.7 million of NOI in the third quarter, which represents a sequential decrease of $3.7 million or 3.4%.\nMoving on to portfolio actions; our New Senior acquisition closed on September 21.\nThe portfolio consists of 103 independent living communities located in attractive markets with favorable demand characteristics.\nIntegration efforts have gone extremely smoothly and we are on track to realize our expected synergies.\nWe are pleased with the performance and operating trends of the portfolio.\nIts third quarter spot occupancy grew 110 basis points sequentially.\nThe same-store pool, which excludes the 33 communities that transitioned to new operators this year, grew 180 basis points in the third quarter and then another 10 basis points in October, marking occupancy growth in six out of the past seven months.\nWe have also recently closed on an acquisition in Canada, which includes five independent living and one assisted living communities.\nThese acquisitions expand our independent living exposure to 59% of NOI on a stabilized basis.\nWe believe the structural benefits of the independent living model present attractive opportunities to further strengthen our senior housing NOI margin through less intensive staffing requirements, longer resident length of stays and accessible price points, all underpinned by exposure to a large and growing middle market.\nThis is in combination with our existing portfolio positions us well to capture demographic demand with the 80-plus population expected to grow over 17% over the next five years, while facing less new supply versus historical levels.\nI'd also like to note our previously announced transition of 90 assisted living and Memory Care communities is off to a solid start as 65 communities have already transitioned and the rest are planned by year-end.\nWe believe the enhanced oversight provided by the experienced mid-market, mid-size assisted living operators will improve the execution of local market strategy and with increased accountability.\nI have long-standing relationships and familiarity with the incoming CEOs and I can say they are really fired up about the new portfolios.\nThey are actively engaged with personal site visits to the communities and transition planning.\nVentas has 37 operator relationships including seven of the top 10 largest operators in the sector and 8 new relationships added this year.\nWe look forward to the opportunity to grow our relationships with these companies over time.\nIn summary, the senior housing sector is benefiting from a strong macro supply demand backdrop.\nWe are actively positioning ourselves for success through portfolio actions and our operators are driving revenue and managing the elevated labor situation.\nWe look forward to forging ahead during a very exciting time of sector recovery.\nOur life science and MOB businesses led by Pete Bulgarelli and which represent nearly one-third of our company's NOI once again delivered robust and reliable growth in the third quarter.\nThese businesses taken together increased same-store NOI by 4.2% year-over-year and increased 1.2% sequentially on an adjusted basis.\nMOB NOI grew 3.2% year-over-year and R&I increased 7.1%.\nSome stats of interest that underpin this strong performance.\nMOB occupancy is up 130 basis points year-to-date.\nSame-store MOB occupancy of 91.3% is at its highest point since the first quarter of 2018.\nMOB tenant retention was 91% in the third quarter and MOB new leasing increased 43% versus prior year.\nR&I occupancy remains outstanding at 94.4% and improved 50 basis points sequentially due to exciting demand for lab space.\nMOB expenses increased less than 1% year-on-year as a result of completed energy conservation projects and sourcing initiatives.\nAnd for the second year in a row, we ranked in the top quartile of our peer group for tenant satisfaction as measured by Kingsley Associates.\n2021 rankings for each major key performance indicator increased when compared to 2020.\nAt the enterprise level, we delivered $0.73 of FFO per share in the third quarter.\nThis result is at the higher end of our $0.70 to $0.74 guidance range and benefited from the stable performance of our diversified portfolio as well as a $0.04 Ardent bond prepayment fee that was included in our guidance.\nWe were also very active in the third quarter managing our balance sheet and capital structure.\nConsistent with our prior $1 billion disposition guidance, we now have $875 million of disposition proceeds in the bank with $170 million of senior housing and MOB portfolios under contract and expected to close in the fourth quarter.\nThese dispositions have enhanced and reshaped our portfolio and we view these proceeds to reduce $1.1 billion of near-term debt so far this year.\nWe also issued $1.4 billion of equity in the third quarter including $800 million for New Senior and $600 million in ATM issuance at $58 a share.\nAs a result, our net-debt-to-EBITDA ratio, excluding New Senior improved sequentially to 6.9 times, while including New Senior Q3 leverage was better than forecast at 7.2 times.\nAs an administrative side note, we plan to enter into a new ATM program replacing our 2018 program, which is nearly complete.\nTurning to Q4 guidance, we expect fourth quarter net income will range from a $0.01 to $0.05 per fully diluted share.\nQ4 normalized FFO is expected to range from $0.67 to $0.71 per share.\nOur SHOP portfolio NOI is estimated to be flat sequentially.\nKey fourth quarter assumptions underlying our guidance are as follows.\nStarting with our SHOP same-store expectations, SHOP Q4 average occupancy is forecast to increase between 80 basis points and 120 basis points versus the Q3 average growing ahead of pre-pandemic levels while following seasonal trends.\nAt the guidance midpoint spot occupancy, September 30 to December the 31 is expected to be approximately flat.\nThe resulting sequential SHOP revenue growth is expected to be offset by increased operating expenses due to continued elevated labor costs.\nNo HHS grants are assumed to be received in the fourth quarter though our license assisted living communities have applied for qualified grants under Phase 4 of the Provider Relief Fund for COVID losses incurred at the communities.\nOutside of SHOP continued stable performance is expected in the office and triple-net segments.\nWe expect to receive an M&A fee in Q4 of $0.03 for the announced Kindred sale, which Kindred communicated is expected to be completed in the fourth quarter subject to customary closing conditions.\nWe continue to expect a $1 billion in asset sales and loan repayments for the full year 2021 at a blended yield in the high fives.\nAnd our fully diluted share count is now 403 million shares reflecting the equity raised today.\nI'd like to underscore that we are still in a highly uncertain environment and the pandemic's impact on our business remains very difficult to predict.\nTo close, my colleagues and I are excited for the future of Ventas given expected robust recovery in senior housing and the external growth opportunities both under our belt and that lie ahead.\n",
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"content": "qtrly normalized ffo $0.73 per share.\nsees q4 normalized ffo per share $0.67 - $0.71.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These materials are available on the Ventas website at ir.\nI will now turn over the call to Debra A. Cafaro, Chairman and CEO.\nLet me begin by expressing my deep gratitude and optimism borne of the strength, resilience, and innovation so many have demonstrated over the past year and the positive developments we are seeing on the ground in our portfolio virtually every day.\nOur results in the fourth quarter demonstrated Ventas' resilience with normalized FFO reported at $0.83 a share and $0.74 ex much appreciated funding from HHS to our senior living communities that have been affected by COVID-19.\nI've reflected on the grueling year we've all had.\nI couldn't be prouder of our productive and skilled team, our enterprise, and our capable dedicated partners.\nAfter a fast and positive start to 2020, the last year has been dominated by the COVID-19 pandemic and punctuated by extreme weather disruptions, both of which have continued into the first quarter of 2021.\nThroughout, we've put the full force of our firm's resources and energy behind keeping people safe, demonstrating remarkable resilience and becoming part of the solution whether in employee testing, advocacy or assistance to tenants and operators who needed it.\nFinancially, through our foresight, our long-standing diversification strategy, and our decisive action, we've kept our enterprise strong and stable, generating almost the same EBITDA in 2020 as we did in 2019 and benefiting from our investments in people, systems, and preparedness, our balance sheet flexibility, and our embedded relationships with best-in-class partners.\nAnd we found ways to grow and advance our strategic objectives, including building value through acquisition and development in life sciences, investing in Le Groupe Maurice's attractive senior housing development pipeline, creating new partnerships, and establishing a third-party investment management platform that will provide more options for future growth.\nWe remain committed to our core values of respect and integrity and accelerated our actions to promote sustainability, diversity, and social justice in our company, our communities, and our country.\nFinally, we were very fortunate to recently add two top notch directors to the company.\nOne, a leader in healthcare and the other in real estate and REITs.\nMy gratitude and optimism also flow from the life-saving COVID-19 vaccine discovery by doctors and scientists in record time and the recent acceleration of vaccine delivery by the Biden administration.\nNationally, ending COVID-19 is foundational to spur sustained economic recovery and restore vitality to so many businesses, households, and workers.\nAt Ventas, we're proud that 100% of our U.S. SHOP, AL, and memory care communities have already received the vaccine and nearly 90% of them will complete their second dose by the end of this month.\nNotably, senior housing vaccine delivery represents one of the shining successes in our fight against COVID-19.\nIn our SHOP communities, it is wonderful to know that about 30,000 vulnerable residents have already been vaccinated and are one step closer to feeling safe, seeing loved ones, and enjoying a richer life.\nFrom our real-time data, we also know that confirmed COVID-19 cases in our communities have recently begun to improve significantly creating an enhanced sense of well-being and enabling more operators to open communities to new move-ins and leads at our communities built to their highest level since the pandemic began in January once again demonstrating the strength of the value proposition of senior housing and the resilient demand for the services our care providers deliver.\nWhile we expect SHOP first quarter NOI and occupancy, which are lagging indicators to decline sequentially as a result of November to January extreme COVID-19 conditions, we are encouraged by the breadth and consistency of all positive leading indicators.\nConditions remain dynamic and it is too early to declare a definitive trend, but we like the picture we are starting to see.\nPost-pandemic senior housing growth represents an incredibly significant value creation opportunity for our shareholders.\nTurning to our investment outlook, our diversified asset base with five verticals has given us the ability to continue successfully allocating capital over time and through cycles.\nFor example, we've created tremendous value since our early cycle investments in our research and innovation business in 2016.\nWe continue to find meaningful opportunities to drive that business forward in both ground-up development and asset acquisitions with university and in cluster markets alike.\nOur decision to add life sciences to our enterprise has provided uplift to our results, our investment activity, and our value.\nHere are a couple of current examples.\nOur $280 million life sciences project known as One uCity in this rising research sub-market of Philadelphia, which is book ended by tenant Drexel is attracting significant leasing interest.\nIn addition to the nearly $1 billion ground-up development projects already under way, our university based development pipeline continues to hold about another $1 billion in active potential projects with both new and existing university relationships.\nIn particular with Wexford, we are in the design development phase of a nearly $0.5 billion project with a major research university on the West Coast that is substantially pre-leased.\nWe look forward to sharing more information with you later this year.\nOutside of research and innovation, we continue to allocate capital to develop large Class A independent living communities with our partner LGM in Quebec.\nWe've had five projects under way with investment also totaling nearly $0.5 billion and two of the projects were delivered in the fourth quarter.\nWe are pleased to report that the two open communities have leased up quickly and occupancy is already nearly 80%.\nIn addition, our pipeline of potential acquisitions and all five of our verticals is active and growing.\nWe continue to invest with an eye toward growing reliable cash flow and favorable risk adjusted return.\nWe will also continue to evaluate and execute opportunities to recycle capital as well.\nBoth Justin and Pete have been working with our deal team to target about $1 billion of disposition during the year to optimize our portfolio.\nFinally, our institutional investment capital management platform continues to grow and succeed with well over $3 billion in assets under management.\nBringing together our pre-existing and new third-party capital vehicles under one umbrella, the Ventas Investment Management business includes our life sciences and healthcare fund.\nThe Ventas fund stands out as one of the most successful launches of a first-time real estate fund in any asset class.\nOur investment management platform provides a significant competitive advantage to Ventas.\nIt broadens our capital sources, augments our investment capacity, expands our footprint, leverages our team and industry expertise, improves our financial flexibility and liquidity, and adds an incremental source of earnings.\nThere is tremendous market opportunity within life science, medical office, and senior housing real estate and we are well positioned to capitalize on it in multiple ways.\nIn closing, let me reiterate that demographically driven demand is right in front of us.\nThe leading indicators in senior housing are improving rapidly, vaccine delivery is accelerating, and the long-term thesis for all of our asset classes and for Ventas remains firmly positive.\nAll of us at Ventas have an abiding commitment to staying strong and steady and winning the recovery on behalf of all of our stakeholders.\nI'd like to begin by highlighting the fourth quarter performance and first quarter performance expectations.\nFirst, I would like to mention that we are humbled and grateful that HHS continues to recognize the crucial role senior living plays in protecting vulnerable older Americans.\nThrough the CARES Act, HHS has provided several rounds of funding to assisted living communities to partially mitigate losses directly suffered because of the COVID-19 pandemic.\nThrough this program, applicable to sequential same-store SHOP assets, our communities have received $34 million in the fourth quarter and $13 million to date in the first quarter, which has been applied as a contra expense to offset COVID-19 related expenses incurred.\nAfter a challenging fourth quarter and January in which the national spread of COVID-19 hit all-time highs, our communities experienced an increase in resident cases and we had more communities close to move-ins.\nLeading indicators have followed a similar pattern.\nLeads and move-ins drifted down throughout November and December while at the same time move-outs were elevated.\nAlthough the fourth quarter was a challenging quarter, we are pleased our occupancy hung in there with a 90 basis point decline.\nLooking ahead to the remainder of the first quarter, for the forecast Q1 sequential same-store SHOP portfolio, we expect cash NOI to decline from the fourth quarter to the first quarter excluding HHS grants of $34 million and $13 million to date in each respective period.\nThis NOI deterioration is driven by 250 basis point to 325 basis point expected occupancy decline partially offset by modest rate increase.\nWe expect to see continued elevated operating expenses into the first quarter.\nAnd while we are seeing continued high levels of COVID related costs, these are partially mitigated by $13 million of Phase 3 HHS grant money received to date in the first quarter.\nI'll add that recent severe winter weather across the country could cause additional expenses as well as delays in move-ins.\nWe haven't included any impacts, if any, in our guidance.\nWhile we are experiencing choppy waters at this stage of the pandemic, I would like to highlight green shoots that support a more optimistic outlook ahead.\nI'll start by highlighting our improving clinical trends.\nConsistent with the U.S. COVID case trends, our SHOP communities are experiencing a significant decline in new COVID cases.\nIn the most recent week, we are averaging nine cases per day, which is the lowest since October and down from 92 cases per day at the peak in January.\nWe couldn't be more relieved about this improvement knowing this means less illness and less people potentially dying from COVID.\nThis positive clinical trend is also important to local health departments support of our communities' ability to accept new move-ins and to offer a more robust living experience for our residents.\nI'd like to comment on the early success our operators have had deploying the vaccine to residents and employees within our SHOP portfolio.\nAs Debbie mentioned, 100% of our assisted living and memory care communities have hosted their first vaccine clinic.\nIn other good news related to the vaccine, two studies from Spain and Israel have come out showing favorable data that people who are vaccinated and still contract COVID-19 are far less likely to spread the illness to others than if they were not vaccinated.\nThe execution of the vaccine is a massively important step toward the stabilization and growth in our senior housing platform.\nI'll note that 95% of our communities are already open to move-ins, which is near pandemic high.\nI'll remind you of the importance of the segments mentioned in our business update.\nCurrently, 80% of our communities are operating in Segment 3.\nThis is up from 64% a month ago.\nSegment 3 is the least restrictive operating environment.\nThe communities in this segment offer a more robust living experience, includes a more open dining experience and small group activities.\nMost importantly, it allows for less restrictive visitation between residents and their loved ones.\nAs more communities expand their service offering, demand for our services should improve.\nLeads and move-ins started to pick up again in January with the highest number of leads we have witnessed since the beginning of the pandemic.\nWe have seen broad based strength in lead volume across regions and the initial indication is that this momentum has continued into February.\nTo summarize our optimism, new COVID cases down, vaccine distribution on track leading to a more robust living experience and all combining to support higher leads.\nWe continue to monitor these positive trends on a real-time basis and remain focused on supporting our operating partners as they get in position to win the recovery.\nMoving on to triple-net senior housing, in the fourth quarter and through January, Ventas received all of it's expected triple-net senior housing cash rent.\nOur underlying triple-net senior housing portfolio performance continues to be impacted by COVID-19.\nHowever, due to a mix of lease resolutions executed in 2020, government subsidies including PPP loans and HHS funds and other tenant resources, our tenants have continued to pay as expected.\nOur trailing 12 month cash flow coverage for senior housing is 1.3 times respectively.\nI'll comment on the senior housing industry outlook.\nOur competitive outlook has continued to evolve amid the pandemic.\nIn 2020, construction starts nationally were down 50% year-over-year and deliveries were at their lowest levels since 2013.\nOur SHOP markets witnessed particularly favorable supply trends with starts down 66% versus the prior year and deliveries down over 40%.\nWe are optimistic about the long-term impact from lower construction starts.\nFewer starts today combined with a compelling aging demographic trends where the 80-plus population is expected to grow nearly 15% between now and 2024, which is 5 times faster than the broader population, will provide a potent tailwind over the next few years.\nMoving on to final comments.\nI'd like to comment on the tremendous job well done our operator partners and front line staff have done prioritizing the health and safety of our residents and employees throughout a very challenging period.\nWe couldn't be more proud of their focus, determination, courage, and perseverance throughout the pandemic.\nI'd also like to note our excitement and support for Jack Callison, the new CEO of Sunrise Senior Living.\nWe know Jack to be an accomplished and charismatic leader who is extremely qualified to lead Sunrise.\nI'll finish by reiterating our optimistic outlook as we consider the improving clinical trends, vaccine roll out, communities opening for move-ins with a more robust living experience and post-pandemic supply/demand tailwinds that give us continued confidence in a very strong positive growth trajectory in senior housing.\nWith that, I'll hand the call to Pete.\nTogether, these segments represent 47% of Ventas' NOI.\nThey continue to produce strong results showcasing their value proposition and financial strength among the pandemic.\nIn fact, for the full year 2020, these segments combined to generate same-store cash NOI growth of 3%.\nFirst, I'll cover office.\nMOBs and research and innovation centers, the two lines of business within our office portfolio, they play a key role in the delivery of crucial healthcare services and research for life-saving vaccines and therapeutics.\nThe office portfolio continues to provide steady growth, delivering $128 million of same-store cash NOI in the fourth quarter.\nThis represents a 1.5% sequential growth led by our R&I portfolio which generated 3.6% same-store cash NOI growth.\nMoreover, full year office same-store cash NOI grew 3.3% versus 2019, near the midpoint of original 2020 office guidance of 3% to 4% despite the impacts of COVID-19.\nNormalizing for a paid parking shortfall and increased cleaning costs due to COVID, same-store cash NOI grew 4.5%, surpassing our pre-COVID guidance range.\nIn terms of rent receipts, office tenants paid an industry-leading 99.2% of contractual rents in the fourth quarter.\nFor the entire period from April through December, tenants paid 99.4% of contractual rent.\nThis is without deducts or deferrals which were de minimis.\nSubstantially all granted deferrals have been repaid and new deferrals were negligible during the fourth quarter.\nContinuing the trend, we have collected 98% of January contractual rents, on track to meet or exceed the fourth quarter collection rate.\nFebruary to date collection results are also strong and are on a consistent pace when compared to the fourth quarter.\nThis strong performance is enabled by the mission critical nature of our portfolio and by our high-quality credit-worthy tenancy.\nIn our medical office portfolio, nearly 85% of our NOI comes from investment grade rated tenants and HCA.\nIn our R&I portfolio, 76% of our revenues come directly from investment grade rated organizations and publicly traded companies.\nMedical office had a record level of retention of 88% for the fourth quarter and 87% for the trailing 12 months.\nDriven by this retention, total office leasing was 700,000 square feet for the quarter and 3.4 million square feet for the full year of 2020.\nThis includes 540,000 square feet of new leasing.\nTotal leasing far exceeded our pre-COVID 2020 plan.\nAll of our MOB properties are in elective surgery restriction free locations.\nAs a result, we are seeing positive utilization trends that mirror increased admissions and surgery volumes being reported by the health systems.\nAs an example, paid parking receipts during the second quarter of 2020 were only 46% of normal.\nDuring the fourth quarter, however, paid parking recovered to 71% of normal.\nAs Debbie mentioned, we continue to be excited with the office business and particularly investment opportunities in the R&I space.\nIn the fourth quarter, we closed our acquisition of the three-asset, 800,000 square foot Trophy Life Sciences Portfolio in San Francisco.\nSince last quarter's announcement, we have renewed a large tenant and signed two new leases, bringing the building to a 100% leased, a clear demonstration of the attractiveness of these buildings to the marketplace.\nWe also opened our $80 million R&I development on the campus of Arizona State located within the Phoenix Biomedical Campus, a 30-acre innovation district established by the City of Phoenix in the heart of downtown.\nThe building is over 50% pre-leased and is ahead of pro forma.\nNow let's turn to healthcare triple-net.\nDuring the fourth quarter, our healthcare triple-net assets showed continued strength.\nWe have received 100% of fourth quarter rents as well as 100% of January and 100% of February rents.\nTrailing 12-month EBITDARM cash flow coverage improved sequentially for all our healthcare triple-net asset classes except skilled nursing despite COVID-19.\nAcute and post-acute providers had early access to significant government funding to create liquidity and mitigate pandemic-related losses.\nAcute care hospitals trailing 12-month coverage was a strong 3.3 [Phonetic] in the third quarter, a 20 basis point sequential improvement driven by a rebound in elective surgical procedures, prudent expense management as well as government funding.\nArdent continues to perform extremely well in this dynamic market condition and all of Ardent's hospitals reside in jurisdictions that are open for elective procedures.\nWe are excited to continue growing with Ardent.\nDuring the fourth quarter, Ardent opened a new outpatient cancer center on the campus of their hospital in Amarillo, Texas.\nThe cancer center features best-in-class equipment and facilities for radiation therapy, chemotherapy, and cancer care.\nWe invested approximately $30 million at a near 8% stabilized yield.\nIRF and LTAC coverage improved 10 basis points to 1.6 times in the third quarter buoyed by strong business results and government funding.\nIn particular, Kindred has demonstrated its core competency in treating complex patient cases.\nCensus levels continued to be very high.\nAnd finally, within our loan portfolio, our Colony, Holiday, and Brookdale loans are all fully current.\nYou are all heroes.\nIn my remarks today, I'll cover our 2020 enterprise fourth quarter results, our expectations for the first quarter of 2021, and our recent liquidity, balance sheet, and capital activities.\nLet's start with our fourth quarter financial performance.\nVentas reported fourth quarter net income attributable to common stockholders of $0.29 per share and normalized funds from operations of $0.83 per share or $0.74 excluding the $0.09 in HHS grants received in SHOP in Q4.\nOther sequential fourth quarter drivers to highlight include $0.04 of income recorded in our unconsolidated entities offset by a $0.05 Q4 sequential decline in NOI principally in SHOP.\nMeanwhile, office and triple-net healthcare was stable on a sequential basis in the fourth quarter.\nThat's a good segue to our Q1 guidance as Q4 is an appropriate start point for our first quarter 2021 expectations.\nThe key components of our Q1 guidance are as follows: net income attributable to common stockholders is estimated to range between minus $0.07 and minus $0.01 per fully diluted share; normalized FFO is forecast to range from $0.66 to $0.71 per share.\nThe midpoint of our FFO guidance $0.68 per share represents $0.15 sequential decline from the fourth quarter.\nThis change can be largely explained by $0.09 reduction in HHS grant income and income from unconsolidated entities.\nThe balance is driven by a $0.05 reduction in organic SHOP NOI performance.\nA few of the key SHOP Q1 assumptions include Q1 2021 average occupancy ranging from 250 basis points to 325 basis points lower versus the fourth quarter average, sequential growth in RevPOR as a result of the annual in-place rent increases implemented at the start of 2021, and continued elevated levels of operating expenses driven by COVID labor and testing.\nOutside of SHOP, we expect our property NOI to be stable on a sequential basis in the first quarter.\nI'll close with our balance sheet and capital activity.\nI am proud of the actions the Ventas team has taken to manage our balance sheet leverage and liquidity.\nWe have navigated the disruption created by COVID and kept Ventas strong and stable while protecting shareholder capital.\nI'd highlight a few of our most recent actions and results.\nFirst, some key stats from 2020.\nWe finished 2020 with full year net debt-to-EBITDA of 6.1 times, maintained a strong maturity profile with duration exceeding six years, held total debt to gross asset value at 37%, reduced our net debt at year-end by over $500 million year-over-year, and retained robust liquidity exceeding $3 billion.\nIn 2020, we also took advantage of the strong bid for healthcare real estate and realized over $1 billion in asset sales at a blended 5.3% cash yield.\nIn 2021, we're targeting an additional $1 billion in asset sales across our verticals in the second half of the year.\nProceeds from dispositions are expected to be used to reduce debt and to fund future growth through development and redevelopment capital spend.\nIn January 2021, we closed on a new four-year $2.75 billion unsecured credit facility.\nWe had great demand from 24 new and incumbent financial institutions and we're able to realize better pricing.\nThey are critical to our success.\nAnd finally, in March 2021, Ventas will use cash on hand from recent dispositions to reduce our near-term maturities by fully repaying $400 million of our 3.1% Senior Notes due January 2023.\nAs a result of these and other actions, we're positioned to capitalize on the powerful upside across our business once the pandemic is finally in the rear view mirror.\nBefore we start with Q&A, we're limiting each caller to two questions to be respectful to everyone on the line.\n",
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"content": "sees q1 adjusted normalized ffo $0.66-$0.71 per share.\nqtrly attributable net income per share $0.29.\nqtrly normalized ffo per share $0.83.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During the call, you'll be hearing from Steve Moster, our president and CEO; David Barry, our president of Pursuit; and Ellen Ingersoll, our chief financial officer.\nDuring the call, we'll be referring to certain non-GAAP measures, including loss before other items, adjusted segment EBITDA, and adjusted segment operating income or loss.\nI hope you all are staying safe and healthy.\nFollowing my opening comments, I'll hand the call over to David Barry to discuss our Pursuit business, and then I'll come back on to cover the GES business.\nBefore turning to the business, I, first and foremost, want to commend our team members at Viad for their resiliency, positivity, and dedication during these challenging times.\nLike many businesses, we've had to make tough decisions by way of employee furloughs and wage reductions in order to protect our financial position in this unprecedented operating environment.\nNevertheless, our team members have not missed a beat in acting quickly to help maintain the health and safety of our clients, guests, and the communities we operate in as our No.\nNow moving into our business.\nThe first two months of the quarter were largely in line with our expectations.\nIn March, we began to experience some operational impacts as the spread of COVID-19 began to reach all corners of the world, including some event postponement and cancellations.\nThere were some signs of reprieve as CONEXPO-CON/AGG took place in early March with less than 3% of the floor space affected by exhibitor cancellations and attendee registrations of more than 100,000.\nHowever, by the end of March, travel and live event activity had essentially halted and with continued travel restrictions and social distancing guidelines in place, we are anticipating a very weak second quarter for 2020.\nIn response, we took swift and effective steps to bolster our company's liquidity and financial position.\nWe drew on our revolving line of credit to increase our cash position, and we've obtained a waiver of our financial covenants for the second quarter.\nWe implemented aggressive cost-reduction actions, including furloughs, mandatory unpaid time off, and salary reductions for all employees across the company.\nOur executive management team voluntarily reduced its base salaries by 20% to 50%, and each of our nonemployee members of our Board of Directors has agreed to reduce his or her cash retainer by 50% for payments typically made to them in second quarter of 2020.\nWe have limited all nonessential capital expenditures and discretionary spending.\nWe have suspended future dividend payments and share repurchases.\nAnd finally, we've made changes to our executive management team to reduce costs and prioritize client-facing team members.\nIn addition to some other terminations, Jay Altizer, president of GES, will be leaving the company, and I will be taking over the leadership of GES.\nAs many of you know, this is a position I know well, having led GES before bringing Jay on board about two years ago.\nDuring the last two years, GES has undergone significant streamlining to improve the cost structure and create a more nimble organization, putting us in a much better position today to navigate the current environment.\nWhile these are extremely difficult steps to take, these actions are necessary to ensure that Viad and GES can outlast the challenging road ahead.\nI firmly believe the management team that's in place today is the right one to steer the company through these challenging times.\nWe have successfully navigated past periods of disruption with a strict focus on cash flow and liquidity, a proven playbook that we are once again turning to.\nAnd as with other prior macro shocks, we believe this one presents us with an opportunity, if not a mandate, to rethink and reimagine how we run our business so that we can emerge in a stronger, more flexible position.\nSo Pursuit came into the year with lots of momentum, and we saw a very strong start to 2020.\nAt the end of February, revenue and EBITDA were well ahead of plan, with revenue up significantly from the prior year.\nAnd that's largely due to our acquisition of a controlling stake in the Mountain Park Lodges and outstanding results at FlyOver Iceland.\nBy the middle of March, though, the effects of the global health crisis and pandemic were becoming more clear.\nSo working with regional health authorities in three countries, we moved quickly to both facilities and organized teams into two workstreams, one being shutdown mode and the other being post-crisis recovery.\nMore than anything, this decision to organize our teams along multiple workflows has given us the bandwidth to move quickly in a crisis and make good decisions.\nIn the past 61 days, we've supported our communities through the donation of PP&E to regional health authorities, and we fed literally thousands of team and community members through a volunteer-driven meal program.\nLike all of you, we stand strongly behind emergency responders, doctors and especially nurses who are working bravely to help those who are sick, and we offer our sympathies to those who have lost loved ones.\nAnd It's obvious to point out that most of our second quarter bookings were impacted by governmental stay-at-home orders and the overall reduction in domestic and international travel, resulting in large numbers of cancellations.\nWe're not isolated from the global impact on travel and hospitality, we find ourselves among many fine brands and companies that are facing these same challenges.\nSafety first is and always has been our No.\nIt was never a question of if we would be reopening, but more importantly, how?\nLast week, we launched Pursuit Safety Promise, which was constructed using material from the CDC and regional health authorities.\nAs guests return to our iconic locations and our team members are present to host them, we've taken steps to ensure that we can do that safely.\nAnd you can see all about that on the specifics on the Pursuit website.\nSo fast forward 60 days, looking to our iconic locations and FlyOver experiences, we're seeing the world begin to open back up.\nFlyOver Iceland reopened last week in Reykjavik, and we expect to benefit from the over 30,000 units of presold product already in the hands of our Icelandic guests in that market.\nAnd for our first weekend of operation, we handily surpassed our visit projection while maintaining a safe environment for visitors.\nWe appreciate the support of the Icelandic government as they've moved quickly to support both workers and businesses in this unprecedented global pandemic.\nAs travel restarts, we believe Iceland's thoughtful management of this public health crisis and renowned reputation as a safe destination, will position the country and our FlyOver Iceland experience well.\nSo let's travel to Canada, Western Canada, and we expect to begin safely opening facilities in Banff National Park and Jasper National Park at the beginning of June.\nWe expect visitation to be below 2019 levels with less international visitors.\nHowever, we do anticipate more Canadians traveling within the country than usual.\nTo date, we have bookings in late June, and well into the third and fourth quarters of 2020.\nWe continue to take more every day.\nFor the week ending May 10, we were net positive for bookings, meaning we took more new reservations than cancellations at both the Mount Royal Hotel and the Glacier View Lodge.\nCanadian government has been very industry-focused, has enacted several programs that have been super helpful, including wage subsidies of up to 75% for team members, and that's called the CEWS program.\nAnd this has been extended to August, as well as everything from rent abatements within National Parks.\nWe head north to the great state of Alaska, we expect the National Parks in Denali and Kenai Fjords will open for summer 2020.\nWhen they do, we'll be there to safely host guests and staff.\nOur properties and attractions will open in Alaska on a staggered basis beginning mid-June, because we expect business levels to be impacted by the partial cancellation of many cruise departures from the lower 48.\nWe'll be prepared to adapt our properties and attractions accordingly.\nSo that means we'll shrink and expand the operating capacity of our experiences based on demand.\nDown the West Coast of Vancouver, talk about Vancouver for a second.\nVancouver obviously expects that international visitation will be down from historical levels, but we do expect more Canadians will visit Vancouver and enjoy the culture and beauty of that amazing city, including FlyOver Canada.\nAnd next, south of Montana, we expect to begin opening our facilities around Glacier National Park in June.\nOver 90% of guests to this area are self-driving Americans, and so with record low gas prices and the overall safety allure of a family road trip, we anticipate attendance in Glacier will be less impacted than other locations.\nIn terms of future projects, we've made great progress on Sky Lagoon in Iceland and are on track for a late spring 2021 opening.\nThe team has been working hard on FlyOver Las Vegas.\nAnd we've made great strides on the development of the creative product that will be shown in 2021.\nBut finally, we believe that the power of iconic locations will not be dimmed.\nAnd looking back throughout history and now looking ahead into 2021, Pursuit is well-positioned to benefit from the pent-up perennial demand for iconic, unforgettable and inspiring experiences.\nSo back over to Steve to talk about GES.\nThrough February, GES performed well with overall results tracking slightly ahead of forecast.\nWe were looking forward to a tremendous year with strong momentum on the corporate side and an incremental $100 million of revenue from three nonannual events all set to take place this year.\nFortunately, the first of the major nonannual events, CONEXPO-CON/AGG took place as scheduled in early March before wide-sweeping stay-at-home orders and other restrictions went into place as a result of COVID-19.\nAs event activity essentially halted, we drew upon our logistical capabilities to help our communities in the battle against COVID.\nWe partnered with facilities, other contractors and members of the trade to convert four large exhibition centers in Chicago, London, New York City and Edmonton, Canada into temporary hospitals or shelters.\nThis was around the clockwork completed in a very short time, and we're proud of our employees for their drive and commitment to this important work.\nWhere we sit today, event activity has largely been canceled or postponed through July.\nExactly when large-scale events will resume remains unclear and will ultimately be determined by the lifting of restrictions by local authorities and at the discretion of the event organizers.\nJust yesterday, MINExpo, one of our three major nonannual events that was scheduled to take place in Las Vegas in September, officially announced that it was postponing until September 2021.\nAnd based on a reopening plan recently announced in Illinois, it appears unlikely that IMTS will be able to take place as previously scheduled for this September in Chicago.\nThat said, we do still have events on the books for the third and fourth quarter, including the International Woodworking Fair, a biannual event that is set to take place in Atlanta this August.\nAnd we continue to receive and win RFPs for client work in late 2020 and 2021.\nSo there are definite signs that the live event industry is ready for a comeback as circumstances permit.\nWe are closely monitoring commentary and decisions made by local governments to understand how they intend to handle the reintroduction of exhibitions and conventions in their economic reopening plans.\nWhile we wait for those decisions, we have effectively hibernated GES by leveraging its high variable cost model to minimize operating costs, while retaining the ability to reactivate parts of the company as business returns.\nWe expect certain sectors will return faster than others, including pharma and technology, which are two of our strongest verticals on the corporate side of our business.\nWe are taking this opportunity to design and build a better business, one that's more profitable, less asset-intensive, and more focused on our clients' future needs.\nOur focus continues to be on transforming our exhibition business, which is the largest part of our revenue today and driving share gains in our corporate business, while smaller competitors struggle to stay alive during this challenging time.\nWhen we begin to restart GES, we will do so with the future in mind and expect to emerge leaner, more nimble and more client-focused.\nAs a service business, we have a highly variable, largely labor-based cost structure, which allowed us to act very quickly when the COVID-19 restrictions began occurring.\nBoth business segments were able to flex down very quickly as conditions weakened.\nAt Pursuit, we immediately reduced more than half of our costs and still have additional cost levers to pull if conditions do not begin to improve in the coming months.\nWe can expand and contract the operating capacity of our experiences based on fluctuating business levels, which is a core competency for us, given the normal seasonal demand patterns of this business.\nAt GES, more than two-thirds of our costs are entirely variable with an even larger percentage able to be quickly adjusted based on business demand.\nWe essentially entered a hibernation mode until events return, reducing our semi-variable cost by approximately 70%, and we stand ready to quickly turn the faucet back on as events return.\nIn addition to reducing our costs, we took a variety of other steps to preserve cash.\nWe significantly reduced or eliminated planned capital expenditures, including both nonessential maintenance and small growth capital projects, and we slowed the pace of the two Pursuit FlyOver projects in development.\nWe amplified our focus on working capital management, we engaged in productive dialogues with landlords and local tax jurisdictions to eliminate or defer spending where possible and we received some benefits from various government relief programs, including wage subsidies offered in Canada, the U.K. and the Netherlands, as well as U.S. payroll tax deferrals available under the CARES Act.\nWe believe we have an adequate cash position and balance sheet to weather the near-term impacts of COVID-19.\nAt March 31, our cash balance was $130.5 million, and in early April, we drew the remaining $33 million down on our revolver, bringing our total cash at the beginning of the second quarter to approximately $163 million.\nGiven the swift and deep cost savings actions we've taken, we have significantly reduced our operating costs and expect our cash outflow during the second quarter will approximate $40 million.\nThis assumes continued collection of outstanding receivables, minimal new revenue, and no postponed events coming back in the quarter.\nAs it relates to our revolving credit facility, we were in compliance with all financial covenants at the end of the first quarter, and we have already received a waiver of financial covenants for the second quarter.\nThis waiver, combined with our cash position, gives us important breathing room to negotiate longer-term covenant relief and line up additional sources of capital as we prepare for COVID impacts to persist into the third quarter and perhaps beyond.\nWe are working closely with our lender group and outside advisors to ensure that Viad is sufficiently capitalized to withstand the downturn and emerge in a position of strength, with Pursuit poised to continue its pre-COVID growth trajectory.\nAs David mentioned, we believe experiential trips will rebound more quickly than large events, and this economic downturn may ultimately bring interesting investment opportunities we hope to be able to pursue.\nNow switching over to our preliminary first-quarter results, which were in line with our pre-announcement in mid-March.\nFirst, let me comment on the preliminary nature of these results.\nThe impact of COVID-19 has necessitated additional asset impairment testing, which we are currently working through.\nWe do not expect the noncash impairment charges to impact cash flow, debt covenants or ongoing operations.\nHowever, we do expect the impairment charges to have a material impact on the final GAAP financial results presented in our Form 10-Q, which we expect to file no later than June 15, 2020.\nPreliminary revenue was $306 million, up 7.1% from the 2019 first quarter primarily due to positive share rotation of approximately $57 million at GES, partially offset by show postponements and cancellations due to the COVID-19 pandemic.\nJanuary and February were in line with our original expectations, while March was impacted by postponements and cancellations resulting from virus concerns, causing us to reduce our original guidance for the first quarter and withdraw our full-year guidance.\nGES revenue was $292.5 million, up $17.6 million or 6.4%.\nThis growth was largely due to the occurrence of a nonannual CONEXPO-CON/AGG trade show in early March before the COVID effects were fully felt.\nPursuit revenue was $13.5 million, up $2.9 million or 26.8%.\nThis is a seasonally slow quarter for Pursuit and although we began to feel the effects of COVID-19 during late March, Pursuit finished the quarter with higher revenue than 2019, largely due to strong pre-COVID results from our acquisition of Mountain Park Lodges and our new FlyOver Iceland attraction.\nPreliminary net loss attributable to Viad was $10.6 million versus $17.8 million in the 2019 first quarter.\nAnd preliminary net loss before other items was $8.5 million versus a loss of $10.2 million in the 2019 first quarter.\nThis non-GAAP measure excludes impairment and restructuring charges, acquisition, integration and transaction-related costs, and attraction start-up costs, as well as a legal settlement recorded in the 2019 first quarter.\nPreliminary adjusted segment operating loss was $8.4 million versus a loss of $11 million in the 2019 first quarter, and adjusted segment EBITDA was $6.9 million, up $4.7 million from the 2019 first quarter.\nThe increase in adjusted segment EBITDA was primarily due to higher revenue at GES and the elimination of performance-based incentives partially offset by increased seasonal operating losses at Pursuit driven by the June 2019 acquisition of Mountain Park Lodges and the opening of FlyOver Iceland.\nGES adjusted segment EBITDA was $19.1 million, up from $10.9 million in the 2019 first quarter.\nAnd Pursuit adjusted segment EBITDA was negative $12.2 million versus negative $8.8 million in the 2019 first quarter.\nThe second quarter will be extremely difficult, but our quick move to reduce variable expenses into increased liquidity will help protect our financial position.\nWe've essentially been in hibernation mode since early in second quarter, maintaining the lowest level of expenses we prudently can, while we wait for the slow resumption of travel and events.\nAt Pursuit, as you know, the seasonally strongest period is June through September.\nAnd as David said, we believe the business will be the first to recover and are beginning to see signs of this.\nGES is expected to take longer, although we are hopeful that as certain locations begin to lift restrictions, events will start to take place again during the third quarter.\nWe've controlled the factors we can control.\nWe've reduced expenses, prudently managed our balance sheet and maintained very close contact with our lending partners.\nWe are in a good financial footing to manage through a brutal second quarter and hope to emerge in the third quarter with growing visitation and bookings at Pursuit and the cessation of cancellations for future events at GES.\nAnd now I'll hand the call back to you, Steve, for your concluding remarks.\nIn closing, the spread of COVID-19 affected our overall results for first quarter and we anticipate continued impact in the near term as planned events further unfold, air travel remains at a bare minimum for the time being, and the state-by-state regulations continue to shift.\nWe expect GES will experience a patient Rebound, whereas Pursuit will see more benefit in the short term as stay-at-home orders are lifted and domestic regional travel resumes.\nAs Ellen shared previously, we have taken swift steps to bolster our near term liquidity, and we are prepared to take other prudent steps to ensure we weather the storm.\nWe have an experienced management team that has navigated through previous downturns and are more than capable of leading this company through this uncertain time.\nWe see the current environment as an opportunity to reimagine the demand side of our two business segments and map out where we believe to be the most profitable pockets of opportunity and growth as we exit this downturn.\nWe anticipate making some strategic changes to the business in order to better facilitate the evolving needs of our clients, better serve our guests and provide significant value for our stakeholders as we improve our competitive position in a post-COVID-19 universe.\nAnd we believe in the longevity and resiliency of our business, exhibitions, conferences and corporate events are a vital part of the economic engine, facilitating sales, networking and education and a relatively low-cost and high-impact way.\nThe replacement of live events by virtual events has been tested in the past and will likely be tested again.\nBut even in the most productive of virtual worlds, we do not believe that face-to-face meetings will go away.\nThey may change and our industry will change along with it.\nIn our GES business, we will focus on shrinking our footprint and choosing which markets we want to be in and which ones we don't.\nOn the Pursuit side, iconic location and experiences cannot be replaced, and people will not choose to stay at home indefinitely.\nWe will once again venture out to explore the world in its amazing places perhaps with pent-up demand.\nMore than ever, we believe that experiences will be more valuable than things.\n",
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"content": "viad q1 revenue rose 7.1 percent to $306 million.\nq1 revenue rose 7.1 percent to $306 million.\nsuspended future dividend payments and share repurchases.\nexecutive management team voluntarily reduced its base salaries by 20% to 50%.\neliminated all non-essential capital expenditures and discretionary spending.\nfully drawn on our revolving line of credit to increase our cash position.\nobtained a waiver of our financial covenants for q2.\nimplemented aggressive cost reduction actions, including furloughs, mandatory unpaid time off, and salary reductions for all employees.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Brady Connor, and I'm here with our Chairman and Chief Executive Officer, Hans Vestberg; and Matt Ellis, our Chief Financial Officer.\nBefore we get started, I'd like to draw your attention to our Safe Harbor statement on Slide 2.\nDiscussion of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our website.\nReconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials posted on our website.\nAs a reminder, we've entered the quiet period for the 3.45 gigahertz spectrum auction.\nSo we will not be able to comment on our spectrum holdings or strategy.\nNow let's take a look at the consolidated earnings for the third quarter.\nIn the third quarter, we reported earnings of $1.55 per share on a GAAP basis.\nReported results include a net pre-tax gain on the sale of Verizon Media of $706 million and a net pre-tax charge of approximately $247 million, which includes a net charge of $144 million related to a mark-to-market adjustment for our pension liabilities and $103 million related to a severance charge for voluntary separations under our existing plans.\nExcluding the effect of these special items, adjusted earnings per share was $1.41 in the third quarter compared to $1.25 a year ago.\nPlease note, our results include two months of Verizon Media as the sale to Apollo funds closed on September 1.\nWe had a solid performance in the third quarter, growing total wireless service revenue by 3.9% year-over-year with earnings growth.\nThis was supported by a strong net additions in wireless and broadband, which are both translated to bottom line growth.\nThis definitely confirms our strategy to grow our business with high quality offerings.\nAs I said throughout the year, we have all the assets we need to extend our number one position in the market.\nOur strategy remains unchanged, and we're delivering on everything we promised.\nAnd we're gaining momentum on all of five vectors of growth.\nWe are more passive to grow than antibody else and we're confident with our growth targets for outer years based on our third quarter and continued momentum into the fourth quarter.\nAs an evidence, we're updating financial guidance for the full year.\nWe now expect total wireless service revenue growth of around 4%, which is on the high-end of our prior guidance.\nAnd adjusted earnings per share or $5.35 to $5.40, up from $5.25 to $5.35.\nWe remain on track to achieve our targeted capex levels in 2021, assuming no further disruption into the supply chain.\nOur team is working diligently and doing a fantastic work with vendors and suppliers to ensure we have adequate equipment to meet our C-Band build and that we have devices that our customer wants.\nOur operational excellence and our partnership strategy is the best in industry, which I've been so impressed by since I joined Verizon.\nAnd in times like these, it matters.\nLet's talk about business.\nWe continue to provide a best-in-class experience across the board.\nOn the network front, third-parties continue to recognize us as the best network experience.\nThis includes RootMetrics for the 16th consecutive time and JD Power for the 27th consecutive time.\nOur network team is doing a great job.\nOn the commercial front, we've got great momentum in the 5G adoption with over 25% of our consumer phone base using a 5G capable device.\nThis is tracking well ahead of the 4G adoption, as I've said before.\nFor context, 12 months of the 4G launched, 10% of the devices were on 4G.\nLess than 12 months after 5G DSS launch, more than the double were on 5G devices, and it's growing at the rapid pace.\nThis combined with our millimeter wave strategy is an important combination, and that is paying off.\nIn the third quarter, the total millimeter wave usage more than double sequentially.\nWe're doing more gigabit of usage in a month now than we did in all the first quarter.\nIn some or more established build outs, we're seeing more than 20% of usage of millimeter wave.\nAnd we are on track to have 5% to 10% of all traffic in the urban millimeter wave polygons by year end.\nFor Business segment, we continue to add wireless subscribers and take broadband share in our ILEC footprint with Fios.\nAnd finally, we delivered significant value creation and strategy refinement with the sale of the Verizon Media Group in September depending TracFone acquisition and also the issuance of our third green bonds, which is a vital step toward our net-zero goal in 2035.\nAll this was accomplished in tandem with a strong quarter results.\nWhen it comes to the finances, we are on track to meet and exceed all our 2021 guidance.\nWe expect to have a strong finish of the year as we approach the launch of C-Band.\nWe continued to deliver excellent revenue performance in wireless service and within Fios.\nWe have a diversified path to revenue growth with all five vectors contributing.\nEBITDA was up 3.3% year-over-year.\nAnd on an adjusted basis, earnings per share was up 12.8%.\nOur capital allocation stands firm.\nWe invest in our business to create shareholder value.\nWe continued to increase our dividend, which we did for the 15th consecutive year.\nAnd Matt and team are working diligently on our debt reduction.\nAs we said last quarter, our guidance raise is broad-based and across all our five vectors of growth.\nConsumer segment EBITDA increased by 2% driven by positive trends in customer acquisition, premium plan adoption, products and services and content as well as prepaid and reseller growth.\nThe service revenue momentum in the third quarter was driven by continued execution of our migration strategy to higher valued price plans as well as high quality net adds, but our growth is more than that.\nMuch of our long-term growth is in fixed wireless access and Mobile Edge Compute.\nOur strategy is becoming a national broadband provider with the best access to detect for our customers includes Fios, fixed wireless access on 5G, 4G, millimeter wave and C-Band.\nWhen it comes to the Mobile Edge Compute, we are the Mobile Edge Compute leader, both in public and private.\nAnd we just announced a private Mobile Edge Compute partnership with Amazon that we're pleased with.\nAnd this just scratches the surface on how we'll continue to utilize our assets.\nWe're confident in our growth opportunities as we move into the investment cycle with C-Band.\nBefore I hand it over to Matt, I want to briefly touch on our broadband expansion.\nWe are on track to meet our fixed wireless access household coverage targets with an expected 15 million homes passed by the end of the year between 4G and 5G.\nTo date, 5G Home is in 57 markets and the 4G LTE Home in over 200 markets across all 50 states.\nIn addition to fixed wireless access, we're pleased with the great performance of Fios and continue to grow the open for sales volumes within our footprint.\nWe are on track on exceeding all the commitments for 2021 and on track for long-term growth expectations outlined in our Investor Day earlier this year.\nYou can expect us to provide 2022 guidance during our Q4 '21 earnings call.\nAnd now, Matt, over to you.\nI'm pleased to be with you today to share our Q3 results, another quarter in which we delivered strong financial and operating performance.\nAs we have said previously, our focus is not solely on volume growth as a goal in itself, but on a high value volume growth that will yield sustainable increases in revenue and profitability going forward.\nBy delivering the best-in-class network experiences to customers with additional services and products like Disney+ that others can't provide, our strategy is focused on increasing the value we receive from every connection.\nAs you can see from our results, our disciplined approach is driving profitability and strong earnings results.\nIn the third quarter, consolidated total revenue was $32.9 billion, up 4.3% from prior year.\nOur results are inclusive of two months of Media revenue, which approximated $1.4 billion on a segment basis.\nExcluding Verizon Media, total revenue grew 5.5%.\nOur service and other revenue growth rate was 0.5% and 1.6% without Verizon Media.\nEquipment revenue growth was approximately 30% compared to the prior year, mainly due to the timing of iconic device launches and the continued pandemic recovery.\nFios revenue was $3.2 billion, up 4.7% year-over-year, driven by continued growth in customers as well as our efforts to increase the value of each customer by encouraging them to step-up in speed test.\nTotal wireless service revenue, which is the sum of consumer and business, was $17.1 billion, an increase of 3.9% over the prior year.\nThe results were driven by higher access revenue, volume growth and products.\nWe are creating more positive growth with connectivity and non-connectivity services.\nAdjusted EBITDA in the third quarter was $12.3 billion, up 3.3% from prior year.\nTop-line growth and a reduction in non-equipment-related expenses contributed to the year-over-year EBITDA growth.\nOur net EBITDA growth is helping us drive earnings per share growth.\nFor the quarter, adjusted earnings per share was $1.41, up year-over-year by 12.8%.\nNow, let's take a look at our consolidated metrics.\nThroughout the quarter, we remain focused on bringing in high quality net adds, a key component in helping us continue to deliver strong quarter-over-quarter revenue growth.\nWe are seeing strong demand for connectivity across our consumer and business units.\nOur Mix and Match value propositions, network quality and unique partnerships are resonating with both new and existing customers.\nFor the quarter, we delivered 429,000 wireless retail postpaid phone net adds, up more than 50% from prior year and in line with 2019 levels.\nWe're seeing growth in new accounts as well as high retention levels, allowing us to grow our base with high quality net adds.\nPhone churn for the quarter was 0.74%, well below pre-pandemic levels.\nChurn continues to benefit from a number of sustainable factors, including our best-in-class network with unmatched reliability and coverage and overall value propositions within our Consumer and Business unlimited plans.\nAdditionally, consumer payment patterns continue to be better than pre-pandemic norms.\nTotal broadband net adds, defined here as Fios, DSL and fixed wireless, were 129,000.\nFios Internet net adds were 104,000 compared to 144,000 last year.\nAs a reminder, last year's 3Q Fios results included a benefit from a higher backlog entering the quarter, as we had largely paused installs in Q2 2020 due to COVID.\nFios has continued momentum driven by our best-in-class value proposition built on network quality and our Mix and Match pricing structure.\nThis combination is helping us to take share and deliver historically low churn rates.\nFor the first time, we are providing fixed wireless net adds, which include both Consumer and Business fixed wireless products.\nWe are building momentum and our pre-C-Band success in Q3 demonstrates there is demand for the product from consumers and businesses.\nBoth our 5G and LTE fixed wireless products are performing very well.\nWe're pleased with what we're seeing around the install process as well as the quality and reliability of the product.\nNow, let's turn to our Consumer Group results.\nOur Consumer Group had another strong quarter, continuing the momentum that we've been seeing in wireless and FIos.\nTotal revenue was $23.3 billion, up 7.3% year-over-year.\nService and other revenue was $18.8 billion, an improvement of 2.5% versus prior year.\nThese results include strong wireless revenue as well as growth in Fios.\nFios revenue was $2.9 billion, up 4.3% year-over-year, mainly driven by growth in our Internet base of approximately 400,000 or 6.2% over the past year and migration to higher speeds.\nOur actions around Mix and Match, which include a broadband first approach, is helping us to grow Fios revenue and Consumer EBITDA.\nWe're still seeing plenty of room for additional growth within Fios as we continue to increase our share Mix and Match penetration rates and our open for sale locations.\nWireless service revenue was $14 billion, up 4% from the prior year.\nWe have been driving access gains both in growing accounts and phone net adds as well as by continuing to execute on our migration strategy.\nAs a result of migrations and step-ups, over 30% of our account base is now on premium unlimited plans.\nOur growth in access is being complemented by product revenue, which includes items such as protection plans, content and others.\nOur wide range of product offerings helps us to not only grow revenue, but provides differentiated experiences and more value to our customers.\nFor the quarter, EBITDA was $10.5 billion, up 2% year-over-year or more than $200 million, driven by a high quality service and other revenue gains coming from multiple growth vectors.\nThese results show the impact of our strategy to enhance the value of each connection, which we believe will drive continued growth into the future.\nThe Mix and Match pricing structure for both wireless and Fios provides tremendous opportunity to migrate customers to higher value tiers and bringing customers in the higher value plans.\nWe are very pleased with how this strategy is working to help us increase value from our base and from new customers.\nYou can see the impact of this strategy throughout our results.\nPostpaid phone net adds were 267,000, above our Q3 performance in 2019 and 2020.\nThe performance was consistent during the period as we were able to grow accounts and deliver sustainably low churn throughout the quarter.\nMost importantly, we continue to be very pleased with the quality of customers we're adding with approximately 66% of new accounts taking a premium unlimited plan.\nAnd Q3 was another quarter in which we saw a strong acceleration in our 5G penetration, exiting the quarter with over 25% of our phone base now equipped with a 5G capable device, which is great progress in advance of our launch of 5G service on C-Band spectrum in the coming months.\nFios Internet net adds were 98,000 for the quarter, up slightly from the prior quarter.\nWe continue to be pleased with the results we're seeing, especially on retention.\nNow let's move to Slide 11 to review the Business Group results.\nOur Business segment continues to see strong demand for wireless services across multiple verticals.\nWe are continuing to focus on what we believe will be the highest growth portions of the Business segment; our small and medium business unit, private wireless and the MEC space or enterprise customers as well as building momentum for fixed wireless access to serve multiple customer groups.\nTotal revenues for the Business segment was $7.7 billion.\nWe continue to see growth in wireless revenue, being offset by ongoing legacy wireline declines.\nWireless service revenue was $3.1 billion, up 3.6% year-over-year.\nWe saw quarter-over-quarter expansion driven by small and medium business, which was partially offset by distance learning process in public sector.\nWireline revenues continue to be pressured by secular trends, while also facing elevated year-over-year comps due to 2020 COVID spending.\nConsistent with our focus on driving high value business in the wholesale space, we continue to rationalize our international voice traffic, which is contributing to the revenue decline, as shown on the slide.\nBusiness segment EBITDA was $1.9 billion, down 2.4% from the same quarter last year, and Business segment EBITDA margin was 24.8% in the quarter.\nWhile secular trends within wireline will continue to put pressure on margins in the near-term, we're encouraged by the growth opportunities associated with our business transformation efforts as they start to gain traction.\nOur market leadership in wireless across all customer groups and our continued investment in primary growth areas for Verizon Business Group will position us to take advantage of the growth opportunities in the future.\nWe are encouraged by the results we delivered for the highest value portions of the segment in 3Q.\nPhone gross add volumes were above pre-pandemic levels, up 11.4% year-over-year and up 3% versus the same quarter in 2019.\nTotal postpaid net adds for the quarter were 276,000.\nTo better highlight some of the trends, on this slide we've broken out the net adds by public sector and our higher growth commercial businesses, which includes small and medium business and enterprise.\nDuring 3Q 2020, the commercial space, primarily within small and medium business, was depressed, while public sector buoyed by distance learning programs saw elevated net adds.\nIn 3Q '21, we've seen a rebound in the commercial space, while distance learning disconnects have driven public sector volumes to lower levels.\nWe expect these trends to continue into the fourth quarter.\nA portion of distance learning disconnects also impacted our phone churn and net add performance.\nDespite this, we delivered postpaid phone net adds of 162,000.\nNow, let's move to our consolidated cash flow summary.\nThe business continues to generate strong cash flow.\nYear-to-date cash flow from operating activities totaled $31.2 billion.\nThe year-over-year change was primarily driven by lower cash taxes last year from a one-time benefit and higher working capital requirements this year due to greater volumes.\nYear-to-date capital spending totaled $13.9 billion as we continue to support traffic growth on our 4G LTE network, while expanding the reach and capacity of our 5G Ultra Wideband network.\nC-Band capex was more than $1 billion through the third quarter.\nAnd we have placed orders for approximately $2 billion of related equipment year-to-date, giving us confidence that we will be within the previously guided incremental capex range of $2 billion to $3 billion for the year as we accelerate our C-Band deployment.\nThe net result of cash flow from operations and capital spending is $17.3 billion of free cash flow for the nine month period.\nNet unsecured debt at quarter end was $131.6 billion, a $5.2 billion decrease versus the prior quarter.\nIn addition to our third green bond issuance, we extended over $4.6 billion of near-term debt into a new 2032 maturity as we continue to optimize borrowing costs and our debt profile.\nOur net unsecured debt to adjusted EBITDA ratio was approximately 2.7 times.\nOur cash balance at the end of the quarter was $9.9 billion, which included the proceeds associated with our sale of Verizon Media Group.\nWe expect lower levels of cash on hand as we progress through the fourth quarter and approach to close of the TracFone acquisition, while continuing to execute on our business strategy within our capital allocation framework.\nLet's move on to Slide 14 for an update on guidance for the remainder of the year.\nWe continued our strong first half performance momentum in the third quarter.\nHans and I are very pleased with the hard work our team is putting forth, and we are excited about the opportunities that lie ahead as we prepare for the C-Band launch.\nOur strong year-to-date results and momentum heading into the fourth quarter are allowing us to update guidance on both wireless service revenue growth and EPS.\nWireless service revenue growth is now expected to be around 4%, the high-end of the prior guidance.\nAdjusted earnings per share guidance is being increased to $5.35 to $5.40, up from the prior range of $5.25 to $5.35.\nOur guidance for the effective tax rate is unchanged.\nCapex guidance is also unchanged, though I'd note that our assumption for our BAU spend of $17.5 billion to $18.5 billion is dependent upon no material changes in the current state of our supply chain.\nOur team continues to execute on our strategy and deliver strong operational and financial results.\nWe are attracting high quality customers that see value in our products and services, evidenced by growth in accounts, migrations and step-ups.\nI look forward to continued momentum as we wrap up the year and position our base to take full advantage of all the things 5G built ride has to offer.\nAs you heard, we delivered solid third quarter results and we are on track to meet or exceed all our 2021 commitments to the investment community.\nOur strategy is working.\nAnd I'm confident in the strategy will help to deliver both strong results and premium experiences going forward.\nAs we look ahead, we'll continue to focus on expanding our 5G leadership, capitalizing on wireless momentum and work toward our C-Band launch, deploying differentiating experiences for our customers and execute our Network-as-a-Service strategy delivering all five vectors of growth.\nI will look forward to delivering on all fronts and sharing our results in the coming months.\nWith that I hand it back to Brady.\nBrad, we're ready to take questions.\n",
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"content": "compname posts q3 earnings per share $1.55.\nq3 adjusted earnings per share $1.41 excluding items.\nq3 earnings per share $1.55.\nverizon - qtrly operating revenue of $32.9 billion, up 4.3 percent from third-quarter 2020.\nverizon - qtrly total wireless retail postpaid churn of 0.94 percent, and retail postpaid phone churn of 0.74 percent.\nverizon - now expects full year 2021 total wireless service revenue growth of around 4 percent.\nverizon - now expects full year 2021 adjusted eps* of $5.35 to $5.40, an update from prior guidance of $5.25 to $5.35.\nverizon - capital spending to be in range of $17.5 billion to $18.5 billion in full year 2021.\nverizon - excluding verizon media, qtrly operating revenues increased 5.5%.\nverizon - capex guidance includes expansion of 5g mmwave in new and existing markets, densification of 4g lte wireless network to manage future traffic demands.\nverizon - q3 earnings per share included net pre-tax gain on sale of verizon media to apollo funds of $706 million, a net pre-tax charge of about $247 million.\nverizon - q3 2021 results also included two months of verizon media, as sale closed on september 1.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics.\nWe appreciate you joining us today.\nTurning to slide three.\nWe continue to see a recovery across the global freight and transit rail markets, with North American freight volumes and equipment utilization sequentially improving in the first quarter and investments in transit infrastructure continuing.\nThese directional trends, along with the focused performance of our team and execution against our strategic plan are reflected in our first quarter results.\nTotal sales for the quarter were $1.8 billion.\nThis was largely driven by international freight markets, services and our recovery in transit, but offset by continued weakness in the North America OEM market.\nAdjusted operating margin was 15.1%, driven by lean initiatives, cost actions and favorable mix from mining and mods.\nCash conversion was strong with cash flow from operations of $292 million, cash generation was due in large part to good working capital management, allowing us to deliver on our financial priorities, including the strategic acquisition of Nordco, which I'll touch up on more in a moment.\nTotal multiyear backlog was $21.7 billion, up sequentially over the prior quarter, providing us better visibility into 2021 and beyond.\nOverall, we ended the quarter with adjusted earnings per share of $0.89, a strong reinforcement that our teams are continuing to take the necessary steps to control what we can, deliver long-term growth of the company and increased shareholder value.\nIn the area of synergies, we're on track to deliver the full run rate of $250 million in synergies this year, and we have positioned the company for long-term profitable growth.\nIn the first quarter, we exited all shared service agreements stemming from the GE Transportation merger ahead of schedule.\nThis was a tremendous execution by the team on a complex transaction.\nIn addition, we continue to take aggressive actions on structural cost.\nThis includes reducing total operational square footage by 5% since January of last year, and we will further reduce our square footage by an additional 2% for the remainder of 2021.\nMoving forward, we'll continue to drive additional cost reductions through lean initiatives and balance our focus on execution with strategic investments in high-return opportunities that drive long-term profitable growth.\nYou saw that with our recent acquisition of Nordco, which is a leader in the maintenance of waste space, with 60% of its revenues coming from aftermarket services and a significant installed base of over 5,000 units.\nWe really like this business, and it's leading edge technologies.\nIt opens up significant opportunities to expand domestically and internationally in the growing maintenance waste segment while driving long-term profitable growth.\nIntegration activities are already under way, and we expect this strategic acquisition to be accretive to earnings, cash flow and return on invested capital in 2021.\nOn the commercial front, we're also focused on driving growth and won some key orders in the quarter despite a challenging environment.\nThis included a significant deal for our FDL Advantage product, which is a fuel upgrade cash.\nAs we have shared before, there are more than 10,000 FDL locomotives running globally.\nWith this next-gen technology, we're opening up a multimillion-dollar pipeline of opportunity that is helping customers drive down fuel consumption by up to 5% as well as drive down emissions.\nThat means for a single locomotive burning 250,000 gallons of fuel, it can translate into a $25,000 in savings per year.\nAlso, when it comes to technology differentiation, and sustainable transportation, we completed a significant operational milestone with our flex drive battery electric locomotive, testing it in revenue services with BNSF across more than 13,000 miles of track.\nThrough this demonstration, the flex drive was able to reduce both fuel consumption and emissions by more than 11%, a game changer in decarbonizing rail.\nWe continue to see growing interest in this next-gen technology from customers in both North America and internationally, and we expect our battery electric locomotive to become an important area of growth for the company over the long term.\nIn digital and electronics, we're also leading the way in rail, safety and utilization.\nWe closed the key order for positive train control internationally, and we are encouraged by the strong order pipeline for international PTC expansion.\nFinally, we had a solid quarter in transit, winning new brakes, doors, and HVAC contracts in India, Taiwan and France, including a significant order for platform doors and gates at over 30 train stations in Marcel.\nOverall, our order pipeline continues to strengthen, driven by multiyear orders in freight services, equipment and digital electronics.\nBased on this factor and orders, Wabtec is in a strong position to drive profitable growth and perform for our shareholders, for our customers and for our employees.\nWe had a solid operational start to the year, despite the challenges in our North America OEM markets and ongoing disruption from the pandemic.\nWe demonstrated our ability to deliver on synergies, generate cash flow invest for the future and position Wabtec for profitable growth.\nTurning to slide four.\nI'll review the first quarter in more detail.\nSales for the first quarter were $1.8 billion, which reflects a 5% decrease versus the prior year, driven by lower North America OE freight markets as a result of the disruption caused by the pandemic.\nFor the quarter, operating income was $192 million, and adjusted operating income was $277 million, which was down 9% year-over-year.\nAdjusted operating income excluded pre-tax expenses of $85 million of which $70 million was for noncash amortization and $16 million of restructuring and transaction costs related to the acquisition of Nordco, along with restructuring due to the 2021 locomotive volumes and restructuring in our U.K. operations.\nAdjusted operating margin was 60 basis points lower than the first quarter last year, but up 110 basis points from the fourth quarter versus last year, adjusted operating margin was impacted by under absorption costs at our manufacturing facilities, stemming from fewer locomotive deliveries as well as sales mix impacted from lower digital electronics and a higher level of transit sales.\nAt March 31, our multiyear backlog was $21.7 billion, up quarter-over-quarter, our rolling 12-month backlog, which is a subset of the multi-year was $5.7 billion and continues to provide good visibility into the year.\nLooking at some of the detailed line items for the first quarter, adjusted SG&A declined 2% year-over-year to $224 million.\nThis was the result of cost actions during the downturn and excludes $11 million of restructuring and transaction expenses.\nSG&A expense benefited from headcount reductions and the realization of synergies.\nFor the full year, we expect SG&A to be up about 5% versus 2020, driven by the normalization of costs following the COVID disruption.\nThat said, we will continue to aggressively manage headcount and structural costs.\nEngineering expenses decreased from last year.\nThis was largely due to the lower locomotive volume outlook for the year as well as some changes in project timing.\nOverall, our investment in technology is still expected to be about 6% to 7% of sales.\nAmortization expense were $70 million.\nFor 2021, we expect noncash amortization expense to be about $285 million and depreciation expense of about $195 million.\nOur adjusted effective tax rate was 27.5%, which was higher than year-over-year due to certain discrete items during the quarter.\nWe expect a full year 2021 effective tax rate to be about 26%.\nAnd the first quarter GAAP earnings per diluted share were $0.59 and adjusted earnings per diluted share were $0.89.\nNow let's take a look at the segment results on slide five.\nAcross the freight segment, total sales decreased 9% from last year to $1.2 billion, primarily driven by North America OEM markets but partially offset by strong services and aftermarket growth.\nIn terms of our product lines, equipment sales were down 36% year-over-year, mainly due to zero deliveries in North America, which resulted in roughly 50% fewer locomotive deliveries versus last year, a dynamic that unfortunately persists.\nHowever, mining was a bright spot with units and revenues up double digits during the quarter.\nIn line with improving freight traffic, our services sales improved a solid 13% versus last year and was up 3% sequentially.\nThis was largely driven by strong modernization deliveries, and higher aftermarket sales from un-parking of locomotives due to the extreme weather in the quarter.\nI'd note that the timing of mod deliveries vary from quarter-to-quarter, but we expect our services sales to improve with the gradual recovery in freight volumes.\nDigital electronics sales were down 10% year-over-year as orders shifted to the right in North America due to the COVID disruption.\nYet, we had another quarter of strong momentum for multiyear orders and continue to see a significant pipeline of opportunities in our digital electronics product line as customers focus on safety and improved productivity.\nComponent sales were down 8% year-over-year.\nThis is compared to a 45% lower railcar build year-over-year, demonstrating the diversification within our Components business.\nWe continue to see signs of improvement in demand for aftermarket components as more railcars come out of storage.\nFreight segment adjusted operating income was $214 million for an adjusted margin of 18.1% versus last year, the benefit of synergies and cost actions were offset by sales mix as well as under absorption due to lower locomotive deliveries.\nWe will continue to execute on our synergy plans and further improve costs to drive margin improvement.\nFinally, Freight segment backlog was $18 billion, up from the prior quarter on broad multiyear order momentum across the segment.\nTurning to slide six.\nAcross our Transit segment, sales increased 3% year-over-year to $647 million, driven largely by steady aftermarket sales and favorable foreign exchange rates, offset somewhat by the disruption from the COVID-19 pandemic.\nOE sales were roughly flat year-over-year, demonstrating continued investments and green infrastructure.\nAftermarket sales were up about 5% from last year.\nWe expect aftermarket sales to continue to improve as transit ridership and services increase globally.\nAdjusted segment operating income was $79 million, which was up 6% year-over-year for an adjusted operating margin of 12.2%.\nAcross the segment, we continue to drive down cost, and improved project execution, demonstrated by our good operating performance despite a challenging environment due to the pandemic.\nWe are pleased with the momentum under way, and the teams are committed to execute on more actions to drive 100 basis points of margin improvement for this segment in 2021.\nFinally, Transit segment backlog was $3.7 billion.\nNow let's turn to our financial position on slide seven.\nDespite a seasonally challenging quarter, we generated $292 million of operating cash flow, demonstrating the resiliency and quality of our business portfolio.\nCash flow was driven largely by good conversion of net income and focused working capital management, including a $93 million incremental benefit from accounts receivable securitization, which provides attractive financing and provides liquidity.\nDuring the quarter, total capex was $27 million.\n2021, we expect capex to be about $180 million or about 2% of our expected sales.\nOverall, our strong cash generation allowed us to execute on strategic plans and capital allocation priorities, including the strategic acquisition of Nordco, which will drive profitable growth for Wabtec.\nOur adjusted net leverage ratio at the end of the first quarter was 2.7 times, and our liquidity is robust at $1.7 billion.\nAs you can see in these results, our balance sheet remains strong, and we are confident we can continue to drive solid cash flow generation, giving us the liquidity and flexibility to allocate capital to grow shareholder value.\nTurning to slide eight.\nLet's look at some of the market dynamics by segment.\nOverall, we're seeing a gradual recovery across most end markets as global economic activity improves.\nAnd we're continuing to monitor the evolving COVID situation in regions like India.\nThis aligns with what you've heard from our customers as well.\nWhile we continue to work through the trough in the OEM North American market, where new local orders remain stagnant, we are encouraged by the sequential improvement in freight volumes and a broad recovery across agriculture, intermodal, in the industrial markets.\nLocomotive parkings, after peaking to a record high in 2020, are improving as a result of the increased freight traffic and demand is stemming from weather disruptions during the quarter.\nWe expect demand for reliability and productivity to improve as railroads continue to recover.\nThis will put us in a position of strength across our freight portfolio.\nWhen it comes to North America railcar built, railcars are coming back into use, more than 20% of the North American railcar fleet remains in storage, but it's back to pre-COVID levels.\nIndustry orders for new railcars remain weak.\nAnd forecast, estimate the railcar build this year to be below 30,000 cars.\nWe have a strong order pipeline internationally, and we expect long-term revenue growth in several of these markets going forward.\nAnd in mining, market conditions are also improving.\nTransitioning to the transit sector, rider shift is uneven, but recovering as economies open up.\nWe are watching short-term dynamics as the pandemic evolves in several geographies, including India and Europe.\nOverall, the long-term market drivers for passenger transport remains strong in infrastructure spending for green initiatives continue to be a focus, especially as governments globally churn to rail for clean, safe and efficient transport.\nTurning to guidance for the year.\nWe are updating our sales guidance to $7.7 billion to $7.9 billion and updating adjusted earnings per share guidance to a range of $4.05 to $4.3.\nThis largely reflects upside from the acquisition of Nordco, our operational execution to date and visibility to backlog.\nConsistent with our initial forecast for 2021, with more growth weighted to the second half of the year we expect second quarter earnings only slightly higher than the first quarter.\nThis is in line with the positive and gradual trends in our freight markets.\nThat said, we are seeing disruption from the resurgence of COVID, especially in a key region for us like India, and we will continue to take swift and necessary action as conditions evolve.\nFinally, we remain confident in delivering strong cash generation for the year as well as margin expansion to prioritize cost actions.\nTurning to slide nine and to conclude, I'm proud of the strong execution by the team in the first quarter despite a challenging environment.\nAs we go forward, we will continue to lean into the strong long-term fundamentals of the company and remain committed to executing on our strategic plan.\nThis includes reducing costs and executing on synergies, driving margin expansion across our Freight and Transit segments generating strong cash flow and delivering long-term profitable growth.\nAs we've said before, Wabtec's mission holds a larger purpose to move and to improve the world and our teams globally leave up to this mission every day.\nAfter demonstrating a strong performance in 2020 and in the first quarter of '21, I'm confident that this company will drive profitable long-term growth and be a leader in transitioning our customers and the industry to a more sustainable future.\nWe will now move on to questions.\nBut before we do and out of consideration for others on the call, I ask that you limit yourself to one question and one follow-up question.\nIf you have additional questions, please rejoin the queue.\nOperator, we are now ready for our first question.\n",
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"content": "q1 adjusted earnings per share $0.89.\nq1 gaap earnings per share $0.59.\nsees fy adjusted earnings per share $4.05 to $4.30.\nsees fy sales $7.7 billion to $7.9 billion.\nq1 sales $1.8 billion.\nwabtec corp - on-track to deliver $250 million run-rate of synergies from ge transportation merger in 2021.\nwabtec corp - at march 31, 2021, wabtec's total multi-year backlog was $21.7 billion.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables carefully as you consider these metrics.\nJohn is a well-respected leader with broad operational and financial experience.\nHe is already bringing a great perspective to our business and long-term strategy with a clear focus on growing shareholder value.\nWe are thrilled to have him on the team.\nI also want to take a moment to tank Pat Dugan for his nearly 20 years of service to Wabtec.\nWe're grateful for all that he has contributed to the company.\nI will start with an update on our business, my perspective on the quarter and our long-term value framework and then John will cover the financials.\nOverall, we made significant progress against our strategy and delivered a strong third quarter as noted by our sales growth, adjusted margin and adjusted earnings per share each of which were up year-over-year.\nTotal sales for the quarter were $1.9 billion driven by growing demand in freight services and components but offset by continued weakness in the North America OE end market.\nAdjusted operating margin was 17% driven by strong mix and productivity, ongoing lean initiatives and cost actions.\nTotal cash flow from operations was $244 million this takes year-to-date cash from operations to $759 million versus $458 million a year ago.\nThis is a solid illustration of how the team is driving good operational performance.\nCash conversion for the year is at 103%.\nFinally, we ended third quarter with adjusted earnings per share of $1.14 up 20% year-over-year.\nToday, we're also pleased to share that we have achieved our $250 million synergy run rate, a full-year earlier than expected at the time of the GE Transportation acquisition.\nWe have consolidated and optimized our operations reduced costs to drive stronger profitability, accelerated lean across the enterprise and created additional capabilities in best cost countries.\nWe're already feeling the benefit of these efforts which will continue to improve our competitiveness.\nSo overall, really strong execution by the team as we continue to deliver on our long-term strategy.\nShifting our focus to Slide 5 let's talk about our end market conditions in more detail.\nInternationally, freight activity continued to improve in the third quarter, across our major markets and our order pipeline remains strong.\nWe expect long-term revenue growth in Russia/CIS Brazil, Africa, Asia and Australia.\nRate trends in North America weakened slightly year-over-year in the third quarter, not driven by lack of demand but by global supply chain disruption that has impacted intermodal volumes and auto production.\nConsumer and industrial activity continue to spur volume growth in chemicals, metals and materials.\nLocomotive parkings continue to decline despite weaker freight traffic in the quarter.\nWe expect demand for reliability, productivity and fuel efficiency to continue to increase placing our services business in a position of strength.\nWhen it comes to the North America railcar build, demand for railcars is improving.\nAbout 21% of the North American railcar fleet remains in storage a slight improvement from the previous quarter and in line with pre-COVID levels.\nAs a result, industry orders for new railcars are starting to improve.\nWe forecast the railcar built this year will be in the neighborhood of 30,000 cars.\nTransitioning to the transit sector, ridership remains a bit uneven in some markets, however infrastructure spending for green initiatives continues to be a bright spot, especially as governments globally turn to rail for clean, safe and efficient transportation.\nOverall, the long-term market drivers for passenger transport remain strong.\nShifting to Slide 6, we are developing innovative solutions that address the main cost drivers for our customers, including fuel efficiency and increased velocity in the transportation sector.\nOur commitment to succeed in these efforts is underscored by our focused on continuing to position rail transportation as the safest and most sustainable way to move freight and people overland.\nToday, we have the capability and expertise to transition diesel-powered locomotives to battery power and drastically reduce emissions as we're doing with our FLXdrive locomotive.\nWe expect to extend this technology further to hydrogen fuel cells and help lead the industry to a zero emission rail networks of the future.\nAnd we're not stopping there; we have extended battery technology to other areas of our business as well and we are driving several technology breakthroughs to boost transit efficiency and reduce emissions and pollutants.\nAn example of this is our Green Friction technology which drastically reduces brake emissions by up to 90% an incredible milestone and significantly improving the quality of the air in our metros.\nWe're also leading the change to create a safer and more efficient rail network; a great example of this and a solution of growing interest among Class 1 customers is Trip Optimizer Zero-to-Zero.\nThese advanced technology allows an operator to autonomously start a train from 0 miles per hour and stop it using software integrated with positive train control.\nIt builds on Trip Optimizer's proven performance which has saved railroads more than 400 million gallons of fuel since inception and reduces emissions by over 500,000 tons per year.\nLooking forward, we will continue to advance efforts toward cleaner, more energy efficient transport and will share our progress on this front as well as our broader environmental social and governance priorities in our next sustainability report which will be released in a couple of weeks.\nIn the third quarter, we secured new orders for our FLXdrive locomotive.\nWe also closed a significant order for international locomotive kits and one additional contract in Asia to help our customers improve asset utilization and reduce emissions.\nIn Freight Services, we want a significant long-term service contract as well as an order for 100 locomotive modernizations in North America.\nOverall, mods backlog remains strong and we are showing good momentum on deliveries.\nFinally in transit we won new power collection, HVAC and service contracts in Germany, Switzerland and the UK.\nLooking ahead, we are confident Wabtec will continue to capture growth with innovative and scalable technologies that address our customers' most pressing needs.\nWe also will continue to control while we can and leverage the strength to combat the current challenges that we are facing due to supply change disruptions, increasing metal and commodity costs and labor shortages.\nThese dynamic have adversely impacted our third quarter results and have resulted in significant cost increases.\nAcross the board, our team's working hard to mitigate the impact of these pressures by triggering price escalations and surcharges as well as driving operational efficiencies wherever we can.\nWe anticipate our costs will continue to increase over the next few quarters and we will continue to aggressively manage these challenges.\nIt's great to be with you and I'm very excited to join the team at Wabtec.\nIt is a storied company with incredible talent, deep innovation and best-in-class differentiated technologies that is well positioned to deliver the future of rail while growing shareholder value and I look forward to meeting with many of you in the coming months.\nNow, turning to Slide 8 before getting into the financials, we would like to discuss the dynamic cost environment and supply chain challenges that we face.\nDuring the third quarter, we experienced delays in production and deliveries of our products as well as significant increases in many key input costs.\nOn the revenue side, we are experiencing adverse impacts to our sales results due to shortages across many component parts, including computer chips, which are causing delays in production and customer delivery.\nWe believe that our enterprise revenues were to 2% to 3% lower than they would have been without the supply chain disruptions and that the majority of these lower revenues represent delayed sales, not lost sales.\nThe impacts to Wabtec's cost structure come in four areas.\nFirst, commodity inflation; where markets year-over-year are up more than 200% for steel, 94% for aluminum and roughly 40% for copper.\nThe second area of impact is elevated freight and logistics costs, which in many cases are up over 3 times to 4 times from pre-COVID levels.\nThird is wage inflation and labor availability, which are adversely impacting the business and finally, we are experiencing loss manufacturing efficiencies, largely due to component and chip shortages.\nOur costs have increased during the quarter and have impacted both our Freight and Transit segments.\nWe estimate that cost increases in the third quarter are in the range of $15 million to $20 million.\nHaving said that, we expect these headwinds to intensify as the full cost of rising metals and lower manufacturing efficiencies work their way through our inventories and purchase contracts.\nWe anticipate cost to continue to increase over the next few quarters.\nOur team is working hard to mitigate the impact of these cost pressures and supply chain disruptions by triggering price escalation clauses that are included in many of our long-term contracts, implementing price surcharges, driving operational productivity, and lean initiatives and finally through higher realization of synergies.\nTurning to Slide 9, I'll review our third quarter results in more detail.\nWe had good operational and financial performance during the quarter, sales for the third quarter were $1.91 billion, which reflects a 2.2% increase versus the prior year.\nSales were positively impacted by the continued broad-based recovery we are experiencing across much of our portfolio.\nThe acquisition of Nordco and favorable currency exchange, partially offset by continued weakness in the North America OE locomotive market and lower year-over-year sales in Transit.\nFor the quarter adjusted operating income was $325 million which was up 10.6% versus the prior year.\nMost notably, we delivered margin expansion in both our segments, up 1.3 percentage points on a consolidated basis.\nMargins were aided by strong mix favorability, improved productivity and better than expected realization of synergies.\nAs Rafael stated during the quarter, we achieved our goal of $50 million of synergy run rate a significant milestone delivered a full year earlier than originally forecasted.\nWhat makes this quarter's margin expansion even more impressive is the fact that our margin gains were achieved in the face of an incredibly dynamic supply chain and inflationary environment.\nLooking at some of the detailed line items for the third quarter; adjusted SG&A was $257 million which was up $16.1 million from the prior year due to the normalization of certain expenses, higher incentive compensation and employee benefit costs and the acquisition of Nordco.\nFor the full year, we expect SG&A to be about 12.25% of sales, adjusted SG&A excludes $12 million of restructuring and transition expenses, of which most was allocated to further optimize our European footprint.\nEngineering expense increased from last year, we continue to invest engineering resources and current business opportunities but more importantly, we are investing, our future as an industry leader in decarbonization and digital technologies that improve safety, productivity and capacity utilization.\nOur 2021 investment in technology, which includes engineering expense remains at 67% of sales.\nAmortization expense was $72.5 million and our adjusted effective tax rate during the quarter was 24.8%, bringing our year-to-date adjusted effective tax rate to 25.8%.\nFor the full year, we still expect an effective tax rate of about 26% excluding discrete items.\nIn the third quarter, GAAP earnings per diluted share were $0.69 and adjusted earnings per diluted share were $1.14 up 20% versus prior year.\nWe are pleased with our Q3 results.\nIn particular, our sales growth in the face of supply chain disruptions, our margin growth in the face of sharp cost increases.\nWe remain diligent and proactive as we work to minimize these challenges.\nNow, let's take a look at segment results on slide 10 starting with the Freight segment.\nAcross the Freight segment, total sales increased 4.7% from last year to $1.3 billion, primarily driven by continued strong growth at our services and component businesses.\nIn terms of product lines, equipment sales were down 5.7% year-over-year due to fewer locomotive deliveries this quarter versus last year and no new locomotive deliveries in North America, partially offset by strong mining sales.\nThis year-over-year performance demonstrates the resiliency of our equipment portfolio.\nIn line with an improved outlook for rail, our services sales grew a robust 13.6% versus last year.\nThe year-over-year sales increase was largely driven by higher aftermarket sales from our customers modernizing their fleets, the unparking of locomotives and the acquisition of Nordco.\nThe performance, reliability and availability of our fleet continues to drive customer demand as railroads increasingly look for predictable outcomes across their fleet.\nExcluding Nordco, organic sales for the third quarter were up 6.1%.\nDigital Electronics sales were down 3.6% year-over-year driven by delays in purchase decisions due to economic and cost uncertainties as well as chip shortages.\nWe continue to see a significant pipeline of opportunities in our digital electronics product line as customers globally focus on safety, improved productivity, increased capacity and utilization.\nComponent sales continued to show recovery and were up 6.7% year-over-year driven by demand for railcar components and recovery in industrial end markets.\nWe remain encouraged by the continuing trend of railcars coming out of storage higher order rates of new railcars and accelerated recovery across industrial end markets.\nShifting to operating income for the segment; Freight segment adjusted operating income was $266 million for an adjusted margin of 20.6%, up 1.7 percentage points versus the prior year.\nThe benefit of higher volumes, improved mix across our portfolio and increased synergies and productivity were partially offset by significantly higher input costs.\nFinally, segment backlog was $18.2 billion, up $375 million from the prior quarter and the broad multiyear order momentum that Rafael discussed across the segment.\nTurning to Slide 11, across our Transit segment sales decreased 2.5% year-over-year to $612 million.\nSales were down versus last year, due in large part to supply chain issues and COVID related disruptions.\nThis was partially offset by positive ridership trends.\nExcluding near term supply chain challenges, we estimate that Transit sales would have been up slightly on a year-over-year basis.\nWe believe the medium and long-term outlook for this segment remains positive as infrastructure spending for green initiatives continues.\nAdjusted segment operating income was $77 million, which resulted in an adjusted operating margin of 12.5%, up 50 basis points versus prior year.\nAcross the segment, we continue to drive down cost and improve project execution despite the volatile cost environment.\nFor the year, we remain committed to deliver about 100 basis points of margin improvement for the segment and the team continues to take aggressive action to mitigate rising costs and supply chain disruption, which will pressure the pace of near term margin improvement.\nAs we execute in the fourth quarter, we expect significantly improved operating margin driven by strong productivity gains, improved project mix and more favorable comps versus the prior year's fourth quarter.\nFinally Transit segment backlog for the quarter was $3.6 billion, which was flat with the prior quarter after adjusting for the negative effect of foreign exchange.\nNow, let's turn to our financial position on Slide 12.\nWe had another strong quarter for cash generation.\nWe generated $244 million of operating cash flow during the quarter, bringing year-to-date cash flow generated to over $759 million.\nThis performance, clearly demonstrates the quality of our business portfolio.\nDuring the quarter, total capex was $23 million bringing year-to-date capex to $78.5 million.\nIn 2021, we now expect capex to be approximately $120 million.\nThis is $20 million lower than our previous guidance as the team judiciously manages every dollar of spend.\nOur adjusted net leverage ratio at the end of the third quarter was 2.6 times and our liquidity is robust at $1.62 billion.\nAlso during the quarter we returned capital to shareholders, repurchasing $199 million of shares.\nAs you can see in these results, our balance sheet continues to strengthen and we are confident we can continue to drive solid cash generation, giving us the liquidity and flexibility to allocate capital toward the highest return opportunities and to grow shareholder value.\nLet's flip to Slide 13 to discuss our updated 2021 financial guidance.\nWe believe that the underlying customer demand for our products and the end market momentum remains strong.\nAs John indicated, we do expect continued headwinds from a more challenging sales and cost environment into the fourth quarter.\nTaking into consideration this market backdrop and volatile cost environment combined with our solid performance in the first three quarters we are narrowing our full year revenue and earnings per share guidance.\nWe expect sales of $7.9 billion to $8.05 billion and adjusted earnings per share to be between $4.20 and $4.30 per share.\nWe expect cash flow conversion to remain greater than 90% resulting in strong cash generation of about $1 billion for the full year.\nNow, let's turn to our final slide; everything we've outlined today reinforces that we have a clear strategy to accelerate long-term profitable growth.\nOur strategy is built on our expansive installed base and deep industry expertise grounded in innovation, breakthrough initiatives and scalable technologies that drive value for our customers and accelerated by our lean continuous improvement culture and disciplined capital allocation.\nI'm proud of the strong execution by the team in the third quarter despite a challenging supply chain, cost and market environment.\nYou are seeing their efforts in the strength of the company and our financial results.\nAs we go forward the rail sector is well positioned to increase share and address the critical issues facing the world's freight and logistics sector.\nWe will continue to lean into the strong fundamentals of this industry and our company to deliver long-term profitable growth.\nAs we've said before, Wabtec's mission holds a larger purpose to move and improve the world.\nAfter demonstrating strong performance in the first three quarters of 2021, I'm confident that this company will continue to deliver and lead the transition to a more sustainable future.\nWe will now move on to questions.\nBut before we do and out of consideration for others on the call, I ask that you limit yourself to one question and one follow-up question.\nIf you have additional questions, please rejoin the queue.\nOperator, we are now ready for our first question.\n",
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"content": "compname reports q3 adjusted earnings per share $1.14.\nq3 adjusted earnings per share $1.14.\nq3 gaap earnings per share $0.69.\nq3 sales rose 2.2 percent to $1.91 billion.\ncompname says tightened its 2021 sales guidance to a range of $7.90 billion to $8.05 billion.\nsees fy 2021 adjusted earnings per share $4.20 to $4.30.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And joining me on the call today are Dale Gibbons, our -- and our Chief Credit Officer, Tim Bruckner.\nI'll begin by laying out Western Alliance's approach to the COVID, an economic crisis.\nFirst and most importantly, I hope that everyone on the line is doing well, and that your families and loved ones are safe and healthy.\nThese wishes are especially extended to all the care and safety workers actively putting themselves in harm's way to protect our communities.\nAt Western Alliance Bank, our people remain healthy and engaged, and despite the vast majority working-from-home for the last month, continue to go above and beyond the call of duty to serve our customers and the communities we operate to navigate this challenging time.\nOur business continuity plans have been working as anticipated, and I am proud of the entrepreneurial spirit our people continue to demonstrate to get the job done and develop unique solutions for our clients.\nFirst, I'd like to lay out the business actions Western Alliance has taken in light of the evolving environment.\nAlthough we did not anticipate the widespread severity and likely duration of the virus, we did start assessing potential risks and mitigants as early as mid-January.\nAnd as the breadth of the pandemic became apparent, we accelerated implementing plans in mid-February to prioritize asset quality, capital and liquidity management.\nWe have since divided the business into appropriate risk segments led by senior managers with deep credit and workout experience to monitor and force the early engagement with our borrowers and begin the necessary credit triage process.\nFor example, Robert Sarver is leading the hotel franchise group, while I am leading the warehouse lending and gaming groups, Dale has corporate finance; and Tim Bruckner coordinates overseas and directs' all credit activities.\nOur overall risk management approach is focused on establishing individual borrower level strategies in which we are proactively engaging in customer conversations to evaluate and agree upon financial plans focused on liquidity management to conserve resources in anticipation of an elongated economic downturn.\nToday, we have had direct dialogue with all borrowers with over $3 million in exposure or 86% of our portfolio, and substantial dialogue below this level.\nWe assume that all borrowers will have some level of COVID-19 impact and are focused on evaluating our borrowers' remediation efforts, access to capital and contingency plans.\nWe're also very pleased that Congress and the entire federal government came together to expeditiously pass the CARES Act and stimulus measures a few weeks ago.\nAdditionally, we applaud the Fed's actions to reduce interest rates to support liquidity in the financial markets to quantitative easing for a wide variety of asset classes and provide support for small and medium-sized businesses through its innovative new lending programs.\nWe recognize that the SBA has a large task in front of them, and I'm extremely proud to say that our people work tirelessly with them so that we could successfully process the PPP program loans on the first day.\nWe have dedicated over a quarter of our workforce to avail our clients of this important program and have successfully approved over 2,600 applications totaling $1.5 billion today.\nWe anticipate funding approximately $150 million per day.\nAs part of our broader risk management strategy, we have prioritized implementing the PPP program as the most expedient method to quickly get incremental liquidity to our clients.\nFurthermore, we believe that the newly initiated mainstream lending program when implemented provides incremental liquidity for our large clients as well as PPP participants.\nOur approach to loan modifications and deferment request is to look for resourceful ways to partner with our clients along with assessing their willingness and capacity to support their business interests.\nWe are asking our clients to work hand-in-hand with us for a long-term solutions to hopefully short-term challenging environment, whereby our clients contribute liquidity, capital or equity as an integral component to loan modifications.\nOur longer term solutions-based approach distinguishes us from industry standardized 90-day deferral programs.\nOur approach collectively uses the resources of the borrower, government and the banks' balance sheets to develop solutions that extend beyond six-month window provided for in the CARES Act.\nThis negotiation process has likely slowed our modification pipeline as approximately $400 million has been processed today.\nWe learned during the last downturn when both the borrower and the bank use their resources to bridge the gap, it generates a mutually favorable outcome.\nWith all of this as the backdrop, I'd like to walk through our financial performance for the quarter.\nDespite a uniquely challenging operating and rate environment, I am proud to report that in the first quarter, Western Alliance generated $163.4 million of operating pre-provision net revenue, up 10% year-over-year and 3% quarter-to-quarter.\nWe continued with the adoption of CECL accounting changes this quarter, which resulted in a provision for credit losses of $51.2 million for the quarter, 47% of which was driven by our robust balance sheet growth.\nDale will go into more detail in a bit on how the unique features of CECL drove our provisions, but our ACL to funded loan ratio now stands at 1.14%.\nWAL generated net income of $84 million or $0.83 per share and tangible book value per share was $26.73.\nThis quarter, we produced a NIM of a 4.22% and had net recoveries of $3.2 million and continue to improve our operating leverage.\nEven with our increased vigilance, organic balance sheet continue to be healthy in Q1 for both loans and deposits.\nDeposits grew $2 billion to $24.8 billion as we gained market share in several of our key business lines as well as traction in one of our recently launched deposit initiatives, which added over $400 million.\nThis highlights the continued strength of our diversified funding channel and overall deposit franchise to generate stable low-cost liquidity irrespective of the macroeconomic environment.\nContinuing on our strong momentum from 2019, total loans increased $2 billion to $23.1 billion.\nApproximately $1.5 billion of this was through organic loan growth from new client projects and another $500 million was credit line drawdowns, of which approximately half was redeposited into the bank.\nLet me take a moment now to make a few high level comments on Western Alliance's loan portfolio.\nWe believe that our well-diversified business model and purposeful decisions made over the past decade regarding conservative underwriting criteria and sector allocations positioned the portfolio to withstand the current economic environment.\nAt quarter end, asset quality was stable with a decline in totally adverse graded loans and OREO to assets of 1.2% from 1.27% in Q4.\nWestern Alliance has no direct energy or large retail mall exposure.\nWe stopped making loans to the quick service restaurants sector several years ago with current exposure of only $150 million.\nOur construction and land and development portfolio is now under 9% of our loan book.\nIn our institutional lot banking business, which makes up 30% of the CLD portfolio, we have not received any deferral request at this time.\nSingle family residential construction, which composes another 27%, were still experiencing positive absorption trends through March.\nHowever, April's traffic has fallen off.\nOur portfolio is extremely well positioned coming into the pandemic and right now is performing as expected.\nWe are especially focused on monitoring and engaging with our clients in our hotel franchise finance and technology and innovation segments, which will be reviewed in more detail later in the call.\nDuring the quarter, we repurchased 1.8 million shares at an average price of $35.30.\nAdditionally, consistent with our 10b5 plan, we repurchased 270,000 shares thus far in Q2.\nHowever, given the rapidly changing environment, we have now paused our share repurchase activity.\nFinally, Western Alliance arrives at this crisis in a position of strength uniquely prepared to address what's ahead.\nWe remain well capitalized and highly liquid with the CET1 ratio of 9.7% and ample liquidity -- total liquidity resources of over $10 billion.\nDale will now take you through our financial performance.\nFor the first quarter, Western Alliance generated net income of $84 million or $0.83 earnings per share.\nNet income was reduced by a $51.2 million provision for credit losses driven by the adoption of CECL, balance sheet growth as well as the change in the economic outlook due to pandemic.\nStrong ongoing balance sheet momentum, coupled with diligent expense management, drove operating pre-provision net revenue to $163.4 million, up 10% from a year ago, which we believe is the most relevant metric to evaluate the ongoing earnings power of the company.\nNet interest income and fee income remain relatively stable producing net operating revenue of $285.3 million, primarily a result of lower yields on loans, which was partially offset by lower rates on deposits and borrowings.\nNon-interest income declined $10.9 million to $5.1 million from the prior quarter due to mark-to-market of preferred stock holdings of primarily large money center banks of $11.3 million, partially offset by $3.8 million equity investment gain.\nTo-date, of the $11.3 million mark, $3.5 million has been recovered.\nAs credit spreads widened during the last quarter, the yield on preferred stocks followed impacting valuations.\nWe do not believe this represents a premanently reduced valuation and that preferred stock values will continue to recover over time.\nFinally, non-interest expense declined $9.3 million as compensation and other operating expenses declined by $7 million.\nRegarding implementing CECL in our allowance for credit losses, in our 10-K, we disclosed the adoption impact of $37 million, $19 million of which was attributable to funded loans, $15 million for unfunded commitments and $2.6 million for held-to-maturity securities.\nThis resulted in a combined January 1st allowance of $214 million.\nDuring Q1, loan growth drove an additional $24 million of required reserves and another $30 million was driven by changes in the economic outlook as a result of the pandemic.\nIn total, reserve availed during the first quarter was $91 million, an increase of 50% from the year-end reserve.\nThe quarter end ACL of $268 million was 1.14% of funded loans, up 30 basis points.\nProvision expense for the quarter was $51.2 million, which is over 10 times the average quarterly provision during 2019.\nAs of March 31st, the reserve bill reflects our best estimate of the future economic environment, including the impact of government stimulus programs.\nWe utilized an assimilation of various Moody's macroeconomic outlook scenarios to capture the most likely economic outcomes in a more severe scenario for potential tail risks.\nAs the economy continues to change, we will adjust our ACL modeling accordingly.\nTurning now to net interest drivers.\nNet interest income for the quarter declined a modest $3 million from the prior quarter to $269 million as there was one less day during the quarter compared to Q4 and margin compression was offset by loan to deposit growth.\nInvestment yield showed a modest improvement of 2 basis points from the prior quarter to 2.98%.\nHowever, on a linked quarter basis, loan yields increased 31 basis points due to the lower rate environment.\nThe average yield of our portfolio at quarter end or the spot rate was 5.02%.\nInterest bearing deposit cost increased 18 basis points in Q1 to 90 basis points as a result of immediate steps taken to reduce our deposit costs after the FOMC cut rates twice in March.\nThe spot rate of total deposits at quarter end was 29 basis points.\nTotal funding costs decreased 11 when all of the company's funding sources are considered, including non-interest bearing and borrowings.\nThrough the transition to a substantially lower rate environment during the quarter, net interest income was $269 million, a decline of 1.1% from Q4.\nContinued strong balance sheet growth and immediate steps taken to reduce the cost of interest bearing deposits counteracted the decline in Prime and LIBOR.\nNet interest margin declined 17 basis points to 4.22% during the quarter as their earning asset yield fell 28 basis points, partially offset by 19 basis points funding cost decrease.\nWith regards to our asset sensitivity, our rate risk profile has declined notably as the majority of our variable rate loan portfolio has flipped to fixed rate as floors have been triggered in the declining rate environment.\nPresently, 82% or $8.1 billion of variable rate loans with floors are at the floors.\nWith the addition of our mix shift primarily to fixed rate residential loans, $16.2 million or 70% of loans are now behaving as a fixed rate portfolio.\nThis has reduced our interest rate risk on a 100 basis point parallel shock lower scenario to 3% at March 31st from 6.5% one year ago and assumes that rates are held flat at zero across the term structure.\nTurning now to operating efficiency.\nOn a linked quarter basis, our efficiency ratio decreased 200 basis points to 41.8%.\nAs mentioned earlier, the improvement was attributed to decreases in compensation and other operating expenses while our revenues increased modestly.\nAs a core component of our strategy, we continue disciplined expense management to sustain industry-leading operating leverage and profitability.\nOur core underlying earnings power remains strong as pre-provision net revenue ROA was 2.38%, flat from the prior quarter, while return on assets was down 70 basis points to 1.22% directly related to our provision expense in excessive charge-offs of $54.4 million.\nAs Kim mentioned earlier, our strong balance sheet momentum from 2019 continued into Q1.\nDuring the quarter, loans increased $2 billion to $23.2 billion and deposits also grew $2 billion to $24.8 billion.\nLoan to deposit ratio increased to 93.2% from 92.7% in the fourth quarter.\nOur strong liquidity position continues to provide us with balance sheet capacity to meet funding needs.\nShareholders equity declined by $17 million as dividends and share repurchases were matched by net income.\nTangible book value per share increased $0.19 over the prior quarter to $26.73 per share as our share count declined.\nWe continue to believe our ability to profitably grow deposits is both a key differentiator and a core value driver to our platform's long-term value creation.\nQ1 is a seasonally strong deposit quarter, and coupled with the roll out of our deposit initiatives, deposits grew $2 billion.\nThe increase was driven by growth of $1.3 billion in non-interest bearing DDA primarily from market share gains in our mortgage warehouse operations.\nAdditionally, HOA continues to perform well and contributed $330 million of low cost deposits.\nDuring the quarter, the relative proportion of non-interest bearing DDA grew to nearly 40% of deposits from 37.5% on a linked quarter basis.\nTurning to loan growth.\nIn line with the industry, the vast majority of growth was driven by increases in C&I loans totaling $1.8 billion, followed by $107 million in construction and land development, and $92 million in residential.\nResidential homes now comprise 9.7% of our portfolio, while construction loans decreased as a relative proportion of the portfolio to 8.9% from 9.2% in the fourth.\nAt the segment level, Tech & Innovation loans grew $626 million, with $124 million from capital call and subscription lines and $176 million from existing technology loan draws, in turn bolstering technology-related deposits by $383 million.\nCorporate finance loans grew $408 million, which was primarily due to line draws, two-thirds of which were from investment grade borrowers bringing utilization rates to 38% from 13% during the prior quarter.\nMortgage warehouse also contributed to loan growth of $550 million, approximately 50% of which was due to line draws.\nAcross the bank, one quarter or about $500 million of our net new loan growth was driven by drawdowns on existing loan commitments from the beginning of the quarter.\nIn all, total loan growth of $2.2 million for the quarter was fully funded by deposit growth for the same amount.\nOverall, asset quality was stable during the quarter with total adversely graded assets increasing $10 million during the quarter to $351 million, while non-performing assets comprised of loans on non-accrual and repossessed real estate increased $27 million to $97 million or 0.33% of total assets, and is now held-for-sale.\nWithin these categories, we had migration from special mention to substandard and some of the normal investor funding was delayed in tech and innovation.\nAs a precaution, when remaining liquidity declines below six months, repaying those loans into either special mention or sub for enhanced monitoring and engagement.\nThis quarter, we also -- we saw the cumulative impact of our efforts of managing certain special mention and substandard loans as several resolved in our favor with no losses, a $100 million of adversely graded loans resolved during the past quarter, 37 loans or $50 million paid-off in full, while the other $50 million were upgraded to pass.\nAs Ken mentioned in his introduction, we're well positioned entering this economic cycle.\nWe only incurred $100,000 of gross credit losses during the quarter, which was more than offset by $3.3 million in recoveries, resulting in net recoveries of $3.2 million.\nWe typically have one or two one-off credit charges every quarter.\nHowever, highlighting the strength of our loan book, we didn't experience any of these in Q1.\nWe believe early indication in identification and conservative management helps mitigate losses on these assets.\nIn all, the ACL-to-funded loans increased 30 basis points to 1.14% in Q1 as a result of CECL adoption and the result in provision expense related to Q1 loan growth and changes in the economic outlook.\nWe continue to generate capital and maintain strong regulatory capital ratios with tangible common equity, the total assets of 9.4% and a CET1 ratio of 9.7%.\nIn Q1, a reduction of TCE-to-total assets was mainly driven by $2.3 billion increase in tangible assets due to our significant loan growth, while the tangible common equity was affected by $15.4 million of provisions in excess of charge-offs due to CECL adoption.\nIn spite of reduced quarterly earnings and the payment of quarterly cash dividends of $0.25 per share, our tangible book value per share rose $0.19 in the quarter to $26.73 and is up 15.2% in the past year.\nOur diversified deposit generation platform and access to significant liquidity resources is critical in times of economic stress.\nOverall, we have access to over $10 billion in liquidity, primarily through our $4.7 billion investment portfolio, of which $2.7 billion are investment grade readily marketable and not pledged on any borrowing base.\nAdditionally, we have $7 billion in unused borrowing capacity with the Fed, Federal Home Loan Bank and Correspondent.\nOur strong capital base, access to liquidity and diversified business model will allow us to address any credit demands in the future.\nI'll now hand back the call to Ken to conclude with comments on a few of our specific portfolios.\nRegarding our Hotel Franchise Finance business, we believe our focus on the Select Service subsegment, conservative loan to cost underwriting discipline and strong operating partners sets us up for a maximum financial flexibility to weather the duration of the crisis.\nLike most hotels in the country, our clients have seen a dramatic reduction in occupancy rates over the last month, and senior management is involved in active dialogue with each borrower to evaluate remediation efforts and contingency plans.\nGoing into the pandemic, 75% of the portfolio had an LTV under 65% and more than 73% had a debt service coverage ratio of 1.3 times.\nAdditionally, we only partner with experienced hotel operators with significant invested equity and resources to support ongoing operations.\nFully 66% of the portfolio is with large sponsors who operate more than 25 hotels and 90% operate 10 or more properties with top franchises or flags.\nBased on our ongoing constructive dialogue, we believe that sponsors view this as a temporary event and want to continue to maintain and support these properties over the long-term, given their significant equity investments.\nWe are actively working with them to appropriately utilize the PPP program and the Main Street lending programs, along with their own liquidity as a helpful financial bridge to arrive at a longer-term solution.\nBased on the mutually developed financial action plans, we will selectively implement loan modifications along the lines we previously discussed.\nThis is a prime example where both parties contribute to a comprehensive solution.\nNow, regarding our Tech & Innovation business, we primarily financed established growth technology firms with a strong risk profile, mainly companies classified as Stage 2 with an established business model, validated product, multiple rounds of investment, and a path to profitability.\nThis provides greater operating and financial flexibility in times of stress.\n99% of the borrowers have revenues greater than $5 million and have strong institutional backing with 86% backed by one or more DC or PE firms.\nDuring the quarter the portfolio grew $495 million to $2 billion or 8.8% of the total portfolio, which was attributed to $175 million of existing line drawdowns in the technology division and an additional $124 million from capital call lines, a product that historically has had zero losses.\nTech & Innovation commitments grew $284 million in Q1 and utilization rates increased to 60% from 49% in Q4 2019.\nThe portfolio is fairly granular with average loan size of $6 million and these borrowers are generally liquid with more than 2:1 deposit coverage ratio.\nAdditionally, since 2007, warrant income has covered cumulative net charge-offs 2 times over.\nCurrently 14% of technology loans or $164 million has less than six months remaining liquidity, which is in line with historical trends.\nAlthough some fund raising has been delayed, we were pleased to see several investment rounds closed over the last several weeks and days with strong continued sponsored support.\nIn conclusion, we see increased cash generation driven by our balance sheet momentum going into the quarter-end as well as continued loan growth from the PPP distributions.\nWe expect pre-provision net revenue to continue to grow to Q2 with the ability to absorb any necessary future provisions.\nGiven uncertainty surrounding the likely duration of the virus and evolving economic environment, we will continue to reassess our outlook as health and economic facts warrant.\nRegarding asset quality, our proactive risk management approach is institutionalized throughout the Company.\nWe are actively working with our borrowers to develop mutually agreed upon financial plans assuming an elongated economic downturn that leads to long-term solutions.\nOur strong collateral positions and little unsecured or consumer lending should serve us well in mitigating potential risk of loss as we navigate these uncertain times.\nWe stand ready to implement the likely next phase of PPP and the Main Street Lending Program to assist our clients and communities.\nFinally, Western Alliance has assembled a seasoned management team that has weathered several economic downturns and is applying the lessons learned from the Great Recession to face these uncertain economic times.\nAnd with that we'll open up the line, operator, and we'll take everyone's questions.\n",
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"content": "q1 earnings per share $0.83.\nwill pause its stock repurchase program for remainder of q2.\nwestern alliance - q1 results were affected by current economic environment resulting from covid-19, contributing to $51.2 million provision for credit losses.\noffering flexible repayment options to current customers and a streamlined loan modification process, when appropriate.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining me on the call today are Dale Gibbons and Tim Bruckner, our Chief Financial Officer and Chief Credit Officer.\nI will first provide an overview of our quarterly results and how we are managing the business in this current economic environment, and then Dale will walk you through the bank's financial performance.\nThe continued growth in Western Alliance's national commercial business strategy drove financial results and balance sheet growth through record quarterly highs to kick off 2021.\nBarring the company's strong fourth quarter performance and underlying fundamental trends, WAL earned net income of $192.5 million and earnings per share of $1.90 for the quarter, up $108 million year-over-year and nearly flat to Q4.\nNet revenue expanded 4.5 times the rate of expense as improvement in asset quality and economic conditions drove a $32.4 million relief in loan loss reserve this quarter.\nOur focus continues to be on PPNR growth, which rose approximately 31% year-over-year to $202 million while marginally lower than last quarter due to two fewer days.\nRegarding the acquisition of AmeriHome, I am pleased that the closing took place approximately three weeks ahead of schedule.\nWhile personnel and technology integrations are minimal, we have begun to focus on balance sheet and funding synergies with the paydown of external credit lines.\nAdditionally, we signed agreements with the sale of approximately $750 million of mortgage servicing rights to strong counterparties that will allow Western Alliance to retain substantially all the custodial deposits.\nWe expect this to be completed in early May.\nAmeriHome was an attractive strategic acquisition, expanding Western Alliance's fee income and lowering the company's reliance on spread income while providing growth optionality to our commercial portfolio of businesses.\nTurning to the first quarter balance sheet trends, outstating quarterly loan and deposit growth of $1.7 billion and $6.5 billion respectively, lifted total assets to $43.4 billion, up 49% from the prior year.\nOur near-term focus on growing loans in low-risk asset classes was on display as loan growth was primarily driven by warehouse funding, residential loan purchases and increased activity throughout our traditional banking and regional footprint.\nOur deposit growth was broad-based across our franchise, which pushed down our loan-to-deposit ratio of 75% and creates a strong funding foundation for ongoing loan and earnings growth from our commercial loan pipeline and the AmeriHome acquisition.\nThe continued excess liquidity from our improving deposit franchise is at the expense of short-term NIM compression, but it's a trade-off we are willing to accept for long-term value creation.\nThis impressive loan growth drove net interest income of $317.3 million, or $2.5 million higher than last quarter and up 18% on a year-over-year basis.\nQuarterly net interest margin was 3.37%, down 47% from the fourth quarter as we continued to deploy excess liquidity into loans and investment securities.\nNon-interest income totaled $19.7 million for the quarter, aided by $7.3 million of warrant income from Bridge Bank.\nAsset quality remained stable this quarter as the economic recovery gained steam.\nFor the quarter, net loan charge-offs were $1.4 million or 2 basis points on an annualized basis.\nCredit losses may not appear in any meaningful way as prior and proposed stimulus packages continue to positively impact consumer spending habits and many businesses were provided the liquidity to weather the pandemic.\nFinally, Western Alliance continues to generate significant excess capital, which grew tangible book value per share to $33.02, or 23.5% year-over-year -- or 23.5% year-over-year growth.\nWe remain one of the most profitable banks in the industry with return on average assets and return on average tangible common equity of 1.93% and 24.2%, respectively.\nThis strong momentum, coupled with economic reopening, positions Western Alliance well for an industry-leading 2021.\nAt this time, I'll let Dale take you through the financial performance.\nFor the quarter, Western Alliance generated net income of $192.5 million or $1.90 per share, each down about 1% from the prior quarter.\nThis is inclusive of a reversal of credit loss provisions of $32.4 million due to continued improvement in economic forecasts relative to year-end 2020 and continued loan [Phonetic] -- in [Phonetic] loan segments with historically very low loss rates.\nAdditionally, merger expenses related to the AmeriHome acquisition of $400,000 were recognized.\nWe expect total merger charges to be approximately $15 million, preponderance of which will be incurred in Q2 as integration continues.\nNet interest income grew $2.5 million during the quarter to $317.3 million, an increase of 18% year-over-year, primarily as a result of our significant balance sheet growth.\nHowever, while average earning assets grew $5.7 billion, the relative proportion held in cash and lower-yielding securities increased to approximately 32% in Q1 from 22% in Q4, which temporarily muted our interest income growth as we prepare to deploy excess liquidity into AmeriHome-generated assets and higher-yielding commercial loans.\nQuarter-over-quarter, our loan-to-deposit ratio fell to 75% from 85% in Q4 as we proactively look to grow low-cost deposits as dry powder for future loan growth.\nNon-interest income fell $4.1 million to $19.7 million from the prior quarter, mainly driven by smaller fair value gain adjustments in our securities measured at fair value, but partially offset by $7.3 million in the warrant income.\nNon-interest expense increased $2.8 million, mainly due to higher deposit costs as lower rates were offset by higher average balances.\nContinued balance sheet growth generating superior net interest income drove pre-provision net revenue of $202 million, up over 30% from a year ago.\nTurning now to net interest drivers.\nAs our strong core deposit growth continued throughout the quarter, we look to redeploy excess liquidity into the investment portfolio and loans.\nTotal investments grew $2.4 billion for the quarter or 43% to $7.9 billion compared to an average balance of $6.5 billion.\nInvestment yields declined 24 basis points from the prior quarter to 2.37% due to lower reinvestment rates in the current environment.\nSimilarly, on a linked-quarter basis, linked -- loan yields declined 8 basis points following ongoing mix shift toward residential loans and asset class with generally lower yields than the remainder of the portfolio and lower credit risk.\nThis was partially offset by modestly higher PPP fees, strong loan growth and liquidity deployment toward the end of the quarter.\nSignificantly, quarter-end balances for loans and investments were $3.3 billion higher than the average balances and yielded 3.5% more than our Fed account.\nHigher income from this already-deployed liquidity positions us well for Q2.\nInterest-bearing deposit costs were reduced by 3 basis points in Q1 to 22 basis points, due to ongoing repricing efforts and maturities of higher cost CDs.\nThe spot rate for total deposits, which includes non-interest-bearing, was 11 basis points.\nWe expect funding costs have generally stabilized at these levels.\nNet interest income increased $2.5 million to $317.3 million during the quarter or 18% year-over-year as higher loan and investment balances offset net interest margin compression.\nNIM declined 47 basis points to 337 basis points as our purposeful strong deposit growth in advance of closing the AmeriHome acquisition negatively impacted the margin by 43 basis points.\nTo put this in perspective, average securities and cash balances to interest-earning assets increased meaningfully in Q1 32% from 22%.\nGiven our higher end of quarter loan balances, healthy loan pipeline and ability to deploy this excess liquidity over the coming quarters into higher-yielding earning assets, we expect this margin drag to moderate while net interest income declines [Phonetic].\nAdditionally, a PPP loan yield of 4.9% benefited the NIM by 8 basis points, which was similar to the fourth quarter benefit.\nCumulatively, over the remainder of 2021, we expect to recognize $15.4 million of BBB fees.\nOur efficiency ratio rose 90 basis points to 39.1%, an increase from 38.2% in Q4.\nThis higher efficiency ratio was driven by a modest decline in non-interest income and an increase in expenses, partially offset by increased net interest income.\nNon-interest expense linked quarter growth increased by 2.1%, driven by higher deposit fees related to the 82% annualized rise in deposit balances.\nExcluding PPP, net loan fees and interest, the efficiency ratio for the quarter would have been 41%.\nInclusive of AmeriHome, we expect the efficiency ratio to rise to the mid-40s this quarter.\nPre-provision net revenue declined $4.4 million or 2.1% from the prior quarter, but increased 31% from the same period last year.\nThis results in PPNR and our ROA of 2.03% for the quarter, a decrease of 21 basis points compared to 2.24% for the year-ago period, partially impacted by a much larger asset base.\nThis continued strong performance in capital generation provides us significant flexibility to fund ongoing balance sheet growth, capital management actions or meet credit demands.\nBalance sheet momentum continued during the quarter as loans increased $1.7 billion or 6.1% to $28.7 billion and deposit growth of $6.5 billion brought balances to $38.4 billion at quarter end.\nInclusive of the second round of PPP funding, loans grew 24% year-over-year, while deposits grew approximately 55% year-over-year, with our focus on low loan loss segments and DDA.\nIn all, total assets have grown 49% year-over-year as we approach the $50 billion asset level, including AmeriHome.\nFinally, tangible book value per share increased $2.12 over the prior quarter to $33.02, an increase of $6.29 or 23.5% over the prior year, attributable to both net income and the common stock offering of 2.3 million shares completed during Q1 in anticipation of the AmeriHome acquisition.\nOur strong loan growth continues to benefit from flexible national commercial business strategy.\nThe majority of the $1.7 billion in growth was driven by an increase in C&I loans of $746 million.\nLoan growth was also strong in residential real estate loans of $675 million, supplemented by construction loans of $337 million and CRE non-owner-occupied loans of $27 million.\nResidential and consumer loans now comprise 10.9% of our loan portfolio, an increase from 9.9% a year ago.\nWithin the C&I growth for the quarter and highlighting our focus on low-risk assets, mortgage warehouse loans grew $562 million and Round 2 3P [Phonetic] loans, originations were $560 million, which were nearly offset by $479 million from Round 1 of payoffs.\nWe continue to believe our ability to grow core deposits from diversified funding channels is our key to firm's long-term value creation.\nGiven the ability to deploy funds into attractive assets in the near term, we purposefully looked to expand balance sheet liquidity in Q1.\nDeposits grew $6.5 billion or 20% in the first quarter driven by increases in non-interest-bearing DDA of $4.1 billion, which now comprise 46% of our deposit base and the savings in money market of $2.9 billion.\nMarket share gains in mortgage warehouse continued to be a significant driver of deposit growth during the quarter, along with robust activity in tech and innovation and seasonal inflows from HOA banking relationships developed during 2020.\nOur asset quality remains strong, and borrowers are stable, liquid and supported by strong sponsors.\nTotal classified assets increased $57 million in Q1 to $281 million due to migration of a few borrowers and COVID-impacted industries, such as travel, leisure and entertainment as reopening continues but at an uneven pace.\nWe see the potential for these credits to be upgraded as travel and events increase in the coming quarters.\nOur non-performing loans plus OREO ratio declined to 27 basis points to total assets and total classified assets rose 4 basis points to total assets up to 0.65% compared to the ratio at the end of 2020.\nSpecial mention loans increased $23 million during the quarter to 1.65% of funded loans.\nAs we've discussed before, SM loans are a result of our credit [Indecipherable] litigation strategy to early identify, elevate and apply heightened monitoring to loans or segments impacted by the current COVID environment and fluctuate as credits migrate in and out.\nWe do not see credit losses emerging from special mention volatility.\nRegarding loan deferrals, as of quarter end, we had $68.5 million of deferrals, all of which are in low LTV residential loans.\nQuarterly net credit losses were modest to $1.4 million or 2 basis points of average loans compared to $3.9 million in the fourth quarter.\nOur loan ACL fell $36 million from the prior quarter to $280 million due to improvement in macroeconomic forecast loan growth in portfolio segments with low expected loss rates.\nIn all, total loan ACL to funded loans declined 20 basis points to 97 basis points or 1.03% when excluding PPP loans.\nFor comparison purposes, the loan ACL to funded levels was 84 basis points at year-end 2019 before CECL adoption.\nWe continue to generate capital and maintain strong regulatory ratios with tangible common equity to total assets of 7.9% weighed down this quarter by strong asset growth, and the common equity Tier 1 ratio of 10.3%, an increase of 40 basis points during the quarter, mainly driven by our common stock offering and growth in low-risk assets.\nInclusive of our quarterly cash dividend payment of $0.25 a share, our tangible book value per share rose $2.12 in the quarter to $33.02, an increase of 23% in the past year.\nI'll now hand the call back over to Ken.\nWestern Alliance is one of only a handful growth banks in the industry with double-digit loan growth, liquidity to fund the growth, strong improving net interest income that generates consistent peer-leading ROA and return on average tangible common equity with steady asset quality and low net charge-offs.\nGoing forward, based on our current pipelines, we expect loan and deposit growth of $1 billion to $1.5 billion per quarter, which will drive higher net interest income and PPNR growth.\nWe expect NIM pressure to subside through the deployment of liquidity into attractive asset classes.\nOne of the characteristics of AmeriHome that we found very attractive is that it provides a natural solution to WAL's excess liquidity.\nAmeriHome will be expanding its product ray to include higher-yielding non-QM and jumbo loans that fit our established credit box.\nPlacing and holding these loans on our balance sheet enhances our existing residential mortgage purchase program, and is a worthy credit solution for the swift deployment of excess liquidity.\nTo keep pace with balance sheet performance, our risk management programs and technology platforms are evolving and expenses will rise, but will be offset by the revenue generated from excess liquidity deployment.\nThere will be no drag on PPNR or earnings per share from these investments.\nInclusive of AmeriHome, the efficiency ratio will rise to the mid-place [Phonetic].\nFinally, our long-term asset quality and loan loss reserves are informed by the economic consensus forecast incorporating risk for tail economic events, which is consistent going forward, could imply a steady reserve balance.\nDepending on the timing and pace of the recovery, there could be some loan migration into the special mention category, but we do not expect material migrations into substandard.\nWe believe the provisions in excess of charge-offs since the pandemic began are more than sufficient to cover charge-offs through the cycle as we do not see any indicators that have implied material losses are on the horizon.\nTo conclude, Western Alliance is well positioned for balance sheet growth with steady asset quality.\nPPNR should continue its upward trajectory from Q1, along with industry-leading return on assets and equity.\n",
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"content": "western alliance bancorp q1 earnings per share $1.90.\nq1 earnings per share $1.90.\nq1 revenue fell 0.5 percent to $337 million.\nnet interest income was $317.3 million in q1 2021, an increase of $2.5 million from $314.8 million in q4 2020.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining me on the call today are Dale Gibbons and Tim Bruckner, our Chief Financial Officer and Chief Credit Officer.\nI will provide an overview of our quarterly results and how we are managing the business in this current economic environment and then Dale, will walk you through the Bank's financial performance.\nI like to focus on three trends that define our third quarter results and will continue into the future; robust balance sheet growth, provision reflecting asset quality and consensus outlook and strong net interest income and PPNR that continue to build capital.\nThe combination of these variables generated record net income of $135.8 million and earnings per share of $1.36, each up more than 45% versus the prior quarter and exceeding our pre-pandemic performance in 2019.\nThe flexibility of Western Alliance's diversified business model was again demonstrated this quarter as our deep segment and product expertise enable us to actively adapt our business in response to the changing environment and continue to achieve industry-leading profitability and growth, while maintaining prudent credit risk management.\nTotal loans grew $985 million for the quarter to $26 billion and deposits increased $1.3 billion to $29 billion, reducing our loan to deposit ratio to 90.2%.\nOur loan growth continues to be concentrated in low-loss asset classes such as warehousing lending, which accounted for over 100% of the loan growth and 56% of the deposit growth and $267 million in capital call lines where the risk-reward equation is heavily skewed in our favor.\nThe impact of this strategy will be seen near term in our reduced provisioning expense and longer term in lower net charge-offs.\nWe are encouraged by our expanding pipeline as clients have applied lessons learned from prior recessions to right-size cost structures and to begin to plan for future opportunities.\nIn the quarter, high average interest earning assets of $1.9 billion were offset by lower rates, substantial liquidity build and a one-time adjustment to PPP loan fee recognition to reflect modification and extension of the CARES Act forgiveness timeframe, which pushed our net interest margin downward to 3.71%, as net interest income declined $13.7 million from the second quarter to $285 million, but improved $18.3 million from a year ago period.\nExcluding the impact of PPP loans, net interest income would have only fallen by $4 million, which was largely the impact of interest expense on our new subordinated debt issued in middle of the second quarter.\nWe believe approximately 21 basis points of this compression is transitory in nature and NIM is expected to rise as excess liquidities put to work through balance sheet growth, deposit seasonality and warehouse lending, driving balances lower and PPP loan forgiveness assumptions normalize.\nGiven these margin trends and balance sheet growth, we believe Q4's net interest income performance returns to Q2 levels and PPNR rises above Q3.\nProvision for credit losses was $14.7 million in the third quarter considerably less than the $92 million in the second quarter, which was primarily attributable to stable to modest improvements in macroeconomic forecast assumptions, loan growth in low-risk asset classes and limited net charge-offs of $8.2 million or 13 basis points of average assets.\nDale, will go into more detail on the specific drivers of our provision but our total loan ACL to funded loans ratio now stands at 1.37% or $355 million and 1.46%, excluding PPP loans, which are guaranteed by the CARES Act.\nIf macroeconomic trends remain stable or begin to improve, future provision expense will likely mirror net charge-offs and reserve levels could decline.\nLoan deferrals trended lower for the quarter as many of our clients have returned to paying as agreed following their deferral period.\nAs of Q3, $1.3 billion of loans are on deferral or 5% of the total portfolio, which represents a 55% decline from Q2.\nWe expect $1.1 billion of loan deferrals will expire next quarter, which will continue to drive down our outstanding modifications.\nOur quarterly efficiency ratio improved to 39.7% compared to 43.2% from the year ago period, becoming more efficient during the economic uncertainty provides the incremental flexibility to maintain PPNR.\nFinally, Western Alliance continues to generate significant excess capital, which grew tangible book value per share to $29.03, or 4.3% over the previous quarter and 13.4% year-over-year.\nSupported by our robust PPNR generation, capital rose $121.6 million with a CET1 ratio of 10%, supporting 15.6% annualized loan growth.\nDale, will now take you through our financial performance.\nOver the last three months Western Alliance generated record net income of $135.8 million or $1.36 per share, which was up 46% on a linked-quarter basis.\nAs Ken mentioned, net income benefited reduction in provision expense for credit losses to $14.7 million, primarily driven by stability and the economic outlook during the quarter in a release of specific reserves associated with the fully resolved credit.\nNet interest income grew 1$8.3 million year-over-year to $284.7 million but declined $13.7 million during the quarter, primarily result of changes in prepayment assumptions on PPP loans that impacted fee accretion recognition.\nThe SBA's interim final rule published in August more than doubled the amount of time that people have to receive forgiveness on their loans and coupled with the systems delay in forgiving -- forgiveness request processing, we now expect that forgiveness processes to be elongated and the average time the loans will be outstanding is projected to double as well.\nAs a result, using the effective interest method, we reversed out $6.4 million of the fees recognized in Q2 and overall PPP fee recognition has been extended.\nThis is purely a change in timing, impacting NIM but with no change to cumulative fee revenue ultimately recognized from this program.\nThe $43 million, we are to receive will be simply be booked to income more slowly than our original expectations.\nNet interest income was impacted in Q3, as a result of this timing change by $10.6 million.\nNon-interest income fell $700,000 to $20.6 million from the prior quarter.\nWe benefited from a recovery of an additional $5 million mark-to-market loss on preferred stocks that we recognized in the first quarter.\nOver the last two quarters, we recovered 80% of that $11 million original loss.\nFinally, non-interest expense increased $9.3 million, as the deferral of loan origination cost fell, as PPP loan originations dropped, as well as an increase in incentive accruals as our third quarter pandemic -- as our third quarter performance exceeded our original third quarter budget, which was established before the pandemic.\nStrong ongoing balance sheet momentum coupled with diligent expense management drove pre-provision net revenue to $181.3 million, up 13.5% year-over-year and consistent with our overall growth trend from the first quarter, as the second quarter benefited from one-time PPP recognition of BOLI restructuring in FAS 91 loan cost deferrals.\nTurning now to net interest drivers.\nInvestment yields decreased 23 basis points from the prior quarter to 2.79% and fell 29 basis points from the prior year due to the lower rate environment.\nLoan yields decreased 35 basis points following declines across most loan types, mainly driven by changing loan mix and in the reduction of PPP loan fees, resulted in lower PPP loan yield during the quarter.\nNotably, for both investments and loans, spot rates as of September 30, are higher than the third quarter average yields.\nCosts of interest bearing deposits was reduced by 9 basis points in Q3 to 31 basis points with an end of quarter spot rate of 0.27% [Phonetic], as we continue to lower posted deposit rates and push out higher cost exception price funds.\nThe spot rate for total deposits, which includes non-interest bearing deposits was 15 basis points.\nWhen all of the company's funding sources are considered, total funding costs declined by 2 basis points with an end of quarter spot rate of 0.25%.\nUnlike last quarter where spot rates indicated a likely margin compression in the third quarter, these rates appear to demonstrate that the margin will improve as both earning asset yields will rise and funding cost will fall in the fourth quarter.\nAdditionally, in October, we called $75 million of subordinated debt that has diminishing capital treatment with the current rate of 3.4%.\nDespite the transition to a substantially lower rate environment during 2020, net interest income increased 6.9% year-over-year to $284.7 million.\nAs mentioned earlier, during Q3, our extraordinary build and liquidity and adjustments to PPP loan fee recognition compressed our net interest margin of 3.71%, as net interest income declined $13.7 million.\nHowever, the majority of these reduction drivers are transitory.\nPPP loans reduced our NIM during the quarter by 13 basis points.\nThis changes to prepayment assumptions, reduced SBA fees recognized resulting in PPP loan yield of 1.76%.\nExcluding this timing difference, net interest income declined only $4 million quarter-over-quarter, primarily due to interest expense on the new subordinated debt that we issued last May, resulting in a net interest margin of 3.84%.\nReferring to the bar chart on the lower left section of the page, of the $43 million in total PPP loan fees net origination costs that we received, only $3.3 million was recognized in the third quarter.\nThe recognized reversal of PPP was $6.1 million in Q3 and expect fee recognition to be approximately $6.9 million in the fourth quarter and taper off as prepayments and forgiveness are realized.\nIn reality, these assumptions are dependent on actual forgiveness from the SBA.\nAdditionally, average excess liquidity relative to loans increased $1.3 million in the quarter, the majority of which are held at the Federal Reserve Bank earning minimal returns, which impacted NIM by approximately 21 basis points in aggregate.\nGiven our healthy loan pipeline and ability to deploy these funds to higher yielding earning assets, we expect this margin drag to dissipate in the coming quarters.\nRegarding efficiency, on a linked-quarter basis, our efficiency ratio increased to 39.7%, as we continue to invest in our business to support future growth opportunities.\nAs described earlier, the non-interest expense increase was largely related to a net increase in compensation costs, as we now have greater confidence in our ability to execute on our pre-pandemic budget and are no longer benefiting from deferred costs for PPP loan originations.\nExcluding PPP, net loan fees and interest, the efficiency ratio for the quarter would have been 40.7%, which as we indicated last quarter should be moving closer to our historical levels in the low-40s.\nReturn on assets increased 44 basis points from the prior quarter to 1.66%, while provisions fell.\nPPNR ROA decreased 47 basis points to 2.22%, as attractive decline in margin from the prior quarter.\nThis continued strong performance in capital generation provides us significant flexibility to fund ongoing balance sheet growth, capital management actions or meet our credit demands.\nOur strong balance sheet momentum continued during the quarter as loans increased $985 million to $26 billion and deposit growth of $1.3 billion brought our deposit balance to $22.8 billion at quarter-end.\nInclusive of PPP, both loans and deposits grew approximately 29% year-over-year with our focus on loan loss segments and DDA.\nThe loan to deposit ratio decreased to 90.2% from 90.9% in Q2, as our strong liquidity position continues to provide us with balance sheet capacity to meet funding needs.\nOur cash position remains elevated at $1.4 billion at quarter-end compared to $2.1 billion quarterly average, as deposit growth continues to outpace loan originations.\nWhile this does impair margin near term, we believe it provides us inventory for selective credit growth this demand resumes.\nFinally, tangible book value per share increased to $1.19 over the prior quarter to $29.03, an increase of $3.43, or 13.4% over the past 12 months.\nThe vast majority of the $985 million in loan growth was driven by increases in C&I loans of $892 million, supplemented by construction loan increases of $103 million.\nResidential and consumer loans now comprise 9.3% of our portfolio, while construction loan concentration remains flat at 8.8% of total loans.\nWithin the C&I growth for the quarter and highlighting our focus on low-risk assets that Ken mentioned, capital call lines grew $267 million, mortgage warehouse loans grew over $1 billion and corporate finance loans decreased $141 million this quarter.\nResidential loan originations were offset by higher prepayment activity leaving the balanced fairly flat.\nWe continue to believe our ability to profitably grow deposits as both a key differentiator and a core value driver to our firm's long-term value creation.\nNotably, year-over-year deposit growth of $6.4 million is higher than the annual deposit growth in any previous calendar year.\nDeposits grew $1.3 billion or 4.7% in the third quarter, driven by increases in non-interest bearing DDA of $777 million, which now comprise over 45% of our deposit base plus growth in savings in money market accounts of $752 million.\nMarket share gains and mortgage warehouse and robust activity in tech and innovation continue to be significant drivers of deposit growth.\nAs we initially described on our Q1 earnings call, while unique credit risk management strategy is focused on establishing individual borrower level strategies and direct customer dialog to develop long-term financial plans.\nOur approach to payment deferral requests is to look for resourceful ways to partner with our clients along with assessing their willingness in capacity to support their business interests.\nWe ask our clients to work with us hand-in-hand whereby our clients contribute liquidity, capital or equity as an inaugural component to modified prepayment plans.\nOur approach collectively uses the resources of the borrower, government and the bank's balance sheet to develop solutions that extend beyond the six-month window provided for in the CARES Act.\nBy quarter-end, deferrals had declined by $1.6 billion or 55%, reducing total loan deferrals from 11.5% in Q2 to 5%.\nExcluding the hotel franchise finance segment in which we executed a unique sector specific to hurdle strategy, the bank wide deferral rate is approximately 1.6%.\nWe have received minimal additional request for further deferrals and 98% of clients with expired deferrals are now current in payments.\nWe expect $1.1 billion of loan deferrals will expire in the current quarter, which will substantially drive down outstanding modifications.\nConsistent with this trend, as of yesterday deferrals are down $420 million in October, bringing the current total to $880 million.\nRegarding asset quality, our non-performing assets and OREO to loan ratio remained flat at 47 basis points to total assets, while total classified assets increased to $28 million or 4 basis points to 98 basis points to total assets.\nClassified accruing loans rose by $21 million, explainable by a few loans 90 days past due as of September 30.\nAll of these loans are now current.\nSpecial Mention loans increased $81 million during the quarter to 1.83% of funded loans, which is a result of our credit mitigation strategy to early identify, elevate and apply heightened monitoring to loans and segments impacted by the current COVID environment.\nOver 60% of the increase in Special Mention loans are from previously identified segments uniquely impacted by the pandemic, such as the hotel portfolio and a component of our corporate finance division credits determined to have some level of repayment dependency on travel, leisure or entertainment.\nAs we have discussed in the past, Special Mention loans are not predictive of future migration to classified or loss, since over the past five years, less than 1% has moved through charge-offs.\nIf borrowers do not have through cycle liquidity and cash and capital plans, we downgrade to substandard immediately to remediate.\nOur total allowance for credit losses rose a modest $7 million from the prior quarter due to improvement in macroeconomic forecasts and loan growth in portfolio segments with lower expected loss rates.\nAdditionally, we covered $8.2 million of net charge-offs.\nThe ending allowance related to loan losses was $355 million.\nFor CECL, we are using a consensus economic forecast outlook of blue chip -- blue chip forecasters as it tracks management's view of the recession and recovery.\nThe economic forecast improved during the quarter, which would have implied a reserve release.\nHowever, given the still unknown time horizon of COVID impacts, political uncertainty and the unknown status of further stimulus, we adjusted our scenario weightings to a less optimistic outlook.\nIn all, total loan allowance for credit losses to funded loans declined a modest 2 basis points to 1.37% or 1.46%, when excluding PPP loans.\nOn a more granular level, our loan loss segments account for approximately one-third of our portfolio and includes mortgage warehouse, residential and HOA lending, capital call lines and resort lending.\nWhen we exclude these segments, the ACL to funded loans on the remainder of the portfolio is 2%.\nProvision expense decreased to $14.7 million for Q3, driven by loan growth in lower loss segments and improved macroeconomic factors, while fully covering charge-offs.\nNet credit losses of $8.2 million or 13 basis points of average loans were recognized during the quarter compared to $5.5 million in Q2.\nRelative to other banking companies our lower consumer exposure continues to result in much lower total loan losses.\nWe continue to generate significant capital and maintain strong regulatory capital ratios with tangible common equity to total assets of 8.9% and a Common Equity Tier 1 ratio of 10, a decrease of 20 basis points during the quarter due to our strong loan growth.\nExcluding PPP loans, TCE to tangible assets is 9.3%, a modest decline of 10 basis points from the first quarter.\nInclusive of our quarterly cash dividend payments of $0.25 per share, our tangible book value per share rose $1.19 in the quarter to $29.03, up 13.4% in the past year.\nWe continue to grow our tangible book value per share rapidly as it has increased three times that of the peers over the last 5.5 years.\nI would now like to briefly update you on our credit risk mitigation efforts and the current status of a few exposures to industries generally considered to be the most impacted by COVID- 19 pandemic.\nThroughout the quarter, Tim Bruckner and the credit administration team led ongoing focus portfolio reviews by risk segments to monitor credit exposures and performance against cash budgets, operating plans through the liquidity trough.\nWe are not waiting for deferrals to run out to make great changes or effect remediation strategies.\nIf borrowers are non-performing against defined operating plans or determined to not have a sufficient through cycle liquidity, we downgrade them now to substandard and enact remediation strategies to ensure the best outcomes.\nWe do not hold loans in SM, the Special Mention for a time to eventually downgrade.\nAnd as a result, Special Mention graded loans slowly migrate to classified or substandard.\nThese facts and daily conversations with our people and our clients help me feel confident that our credit mitigation strategy and early approach to proactively manage our risk segments is bearing fruit and puts Western Alliance in a strong position to come out on the other side of the pandemic in better shape than our peers.\nIn our $500 million gaming book focused on all strip, middle market gaming-linked companies, total deferrals were reduced from 37% of the portfolio to only 4% and as of today, it's zero, as our clients are now open for business and are performing at or above their reopening plans.\nThe $1.3 billion investor dependent portion of our Technology and Innovation segment has continued to benefit from significant sponsor support for technology firms best positioned to succeed in this COVID environment and an active fund raising environment as well.\nSince March 2020, 65 of our clients have raised over $1.7 billion in capital, resulting in 87% of borrowers with greater than six months remaining liquidity, up from 77% in Q1.\nOur CRE retail book of $674 million focus on local personal services based retail centers with no destination mall exposure, continues to modestly exceed national trends that shows rent collections rising from 50% in May to 80% in August.\nSimilarly, the portfolio's deferrals have fallen from $176 million to $31 million.\nLastly, our $2.1 billion Hotel Franchise Finance business focused on select service hotels with greater financial flexibility and LTVs at origination of approximately 60% continues to trend toward stabilization.\nOccupancy rates are tracking national averages, currently around 50%, which have tripled from April lows.\nAt approximately 55% occupancy, select service hotels are estimated to cover amortizing debt service, so a typical hotel is operating at break even.\nFurthermore, we have seen deferrals declined from 83% of the portfolio to 44% of the portfolio and currently, we do not anticipate granting any additional deferrals in the hotel portfolio.\nWe are proactively engaging with hotel sponsors to validate ongoing support and hotel performance against operating plants.\nAs mentioned earlier, we are not waiting for deferrals to end before migrating to ensure remediation options.\nWith strong sponsor support the worst a great hotel typically receives is SM or Special Mention.\nLet me just finish up with our management outlook.\nWe believe that our third quarter performance is the baseline for future balance sheet and earnings growth.\nWith this record quarter, we beat our quarterly budget that was established pre-pandemic.\nOur pipelines are strong and we expect loan growth to return to previously anticipated levels of $600 million to $800 million for the next several quarters in low risk asset classes.\nHowever, there will be some offsets as PPP loans pay-off or are forgiven.\nDepending on the timing of the realized PPP forgiveness, organic loan growth should be -- should more than offset PPP run-off.\nIn Q4, we expect to see the seasonal declines associated with our mortgage warehouse clients.\nTherefore, deposit growth will be at the lower end of the target range, reducing our excess liquidity.\nTo supplement our residential lending initiative, we acquired Galton Funding, a residential mortgage platform that specializes in the acquisition of prime non-agency residential home loans.\nThe acquisition is a low risk, low cost entry point to build a meaningful residential mortgage business line at an accelerated timeframe with over 100 additional mortgage originator relationships.\nWe anticipate that the Galton team will be fully integrated by the end of October and be contributing to loan growth by the end of the year.\nAs Dale mentioned, our current spot rates indicate that the net interest margin pressure experienced this quarter will subside and net interest margin will trend upwards toward 3.9% in Q4.\nWe expect net interest income to rise in Q4, aided by both an increased NIM and higher end of quarter loan balances compared to the quarterly average.\nAdditionally, it is expected that PPP fee income will pick up next quarter as forgiveness is granted.\nThis will however, abate during 2021 PPNR is expected to increase as net interest income growth will more than offset any increase in non-interest expense.\nLooking ahead, we will continue to invest in new product offerings and infrastructure to maintain operational efficiency but Q2 and Q3 efficiency ratios are temporary and will eventually return to sustainable level in the low-40s.\nOur long-term asset quality and loan loss reserves are informed by economic consensus forecast, which is consistent going forward, could imply reserve releases in the coming quarters.\nWe believe that the provisions in excess of charge-offs year-to-date are more than sufficient to cover charge-offs through the cycle as we do not see any indicators that imply material losses are on the horizon.\nFinally, Western Alliance is one of the most prolific capital generators in the industry.\nOur strong capital base and access to ample liquidity will allow us to take advantage of any market dislocations to maintain leading risk adjusted returns to address any future credit demands, all while maintaining flexibility to improve shareholder returns.\nOperator, if you want to open up the line.\n",
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"content": "compname posts q3 earnings per share $1.36.\nq3 earnings per share $1.36.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Also joining us here today is Tim Bruckner, our Chief Credit Officer.\nThis quarter's results continue to demonstrate the unique benefits of Western Alliance's national commercial business strategy to position WAL as one of the country's premier growth commercial banks that consistently generates leading balance sheet and earnings growth with superior asset quality across economic cycles.\nAs a company, we are proud of our thoughtful, safe, sustainable growth and are excited to have passed the $50 billion asset milestone.\nValidating our strategy during the quarter, we raised $300 million in inaugural preferred offering, achieving the lowest ever preferred dividend rate for a US bank under $100 billion in assets at 4.25%.\nIn the third quarter, exceptional balance sheet expansion continued with our highest ever quarterly loan growth of $4.8 billion or 63% on a linked quarter annualized basis and deposits rose by $3.4 billion or 32% annualized as we continue to effectively deploy liquidity.\nLoan demand continued to broaden across our business lines, with C&I loans increasing by $2.2 billion, inclusive of $240 million of PPP runoff, along with $2.3 billion of growth in our residential portfolio.\nNotably, capital call lines drove $1.9 billion of growth within C&I as deal activity continues to be strong and utilization rates rose.\nAdditionally, resort lending and hotel franchise finance contributed approximately $114 million to loan growth as well as $148 million increase in CRE investors.\nFor the third quarter, WAL generated record total net revenues of $548.5 million, a 57% annualized rise, in PPNR to $317.1 million and adjusted earnings per share of $2.30.\nAdjusted earnings per share quarter-to-quarter rose by $0.01 as the company recorded a provision for credit losses, totaling $12.3 million, an increase of $26.8 million from the $14.5 million provision release in the second quarter.\nWe remain one of the most profitable banks in the industry with return on average assets and return on average tangible common equity of 1.83% and 26.6%, respectively, which will continue to support capital accumulation and strong capital levels in the quarters to come.\nI would like to reiterate that AmeriHome is now integrated into the strategic fabric of Western Alliance and is thoughtfully managed to maximize value for the entire bank through loan, deposit and net interest income growth.\nA $5.2 billion increase in average earning assets drove net interest income growth of $39.9 million or 10.8% for the quarter or 43% annualized to $410.4 million of excess liquidity deployment into loans and loans held-for-sale contributed significantly to earnings.\nFee income increased $2.1 million to $138.1 million and now represents over 25% of total net revenue.\nAsset quality continues to remain stable as total nonperforming assets declined to $10 million to 17 basis points of total assets and net charge-offs were $3 million or 4 basis points.\nFinally, what excites me most is the diverse set of growth opportunities in front of us.\nWe will continue to do what we do best and support our clients in attractive markets nationally where they do business.\nI believe we have exited the pandemic as an employer of choice for leading specialized commercial lenders, which positions us well or extremely well to attract and retain uniquely qualified talent to thoughtfully sustain growth with superior risk-adjusted returns.\nFor example, during the quarter, we hired two seasoned teams.\nWe added 11 people based in Texas to our single-family home construction CRE national business line and brought on the leading national restaurant franchise finance team with the hire of six loan and credit professionals.\nBoth teams join us from larger commercial banks where they improved their business plans and built robust multibillion-dollar books of business.\nThe Texas CRE team has $10 million in outstandings and an additional $110 million approved to be funded and a $400 million pipeline.\nLikewise, the restaurant franchise finance team has $90 million in outstandings and $54 million approved to be funded and a pipeline of $300 million.\nDale will now take you through the details of our quarterly financial performance.\nFor the quarter, Western Alliance generated record net revenue of $548.5 million, up 8.3% quarter-over-quarter or 33% annualized.\nNet interest income grew $39.9 million during the quarter to $410.4 million, an increase of 44% year-over-year, primarily a result of our significant balance sheet growth and deployment of liquidity into higher-yielding assets.\nPPNR rose 57% on an annualized linked quarter basis to $317.1 million excluding acquisition and restructuring expenses.\nNoninterest income increased $2.1 million to $138 million from the prior quarter as mortgage banking-related income rose $12 million for the quarter and totaled $123.2 million.\nServicing revenue increased $23 million in the quarter as refinance activity slowed, despite a smaller servicing portfolio of $47.2 billion in unpaid principal balance.\nGain on sale margin was 51 basis points for the quarter as we extended the time from funding to sale, which positively impacted net interest income.\nWith these evolving mortgage sector fundamentals, AmeriHome continues to meet our pro forma acquisition expectations, contributing $0.58 during the quarter, which is inclusive of $0.20 in net interest income from AmeriHome using our balance sheet, an opportunity most stand-alone correspondent lenders don't have.\nFinally, adjusted net income for the quarter was $238.8 million or $2.30 in adjusted EPS, which is inclusive of a credit loss provision of $12.3 million, but excludes pre-tax merger and restructuring charges of $2.4 million.\nTurning to net interest drivers.\nDuring the quarter, deployment of our excess liquidity into higher-yielding assets drove both loan growth and net interest income growth.\nLoans held-for-sale increased $2.1 billion and are yielding 3.35%.\nOn a linked-quarter basis, yields on loans held-for-investment declined 20 basis points to 4.28%, which is fully explained by the continued strong growth of low to no loss asset categories, namely residential loans and capital call lines.\nInterest-bearing deposits remained relatively stable from the prior quarter at 21 basis points as were total cost of funds at 28 basis points.\nConsistent with our previous comments, we believe that in the current rate environment, funding costs have stabilized.\nNet interest income grew $39.9 million during the quarter to $410 million or 44% year-over-year as balance sheet growth and optimization of earning asset mix generated robust spread income.\nAverage earning assets increased $5.2 billion or 12% during the quarter to $48.4 billion.\nAdditionally, we successfully deployed liquidity into loans and have held the investment portfolio relatively flat in favor of loans held for sale, which we view as a higher-yielding cash-like alternative.\nDespite our successful liquidity deployment in Q3, we still have meaningful dry powder of $1 billion in cash and the opportunity to further fund loans through continued deposit growth.\nAs a result of loan growth in lower yielding categories, NIM declined 8 basis points to 3.43%.\nWe expect continued strong net interest income growth as we're well positioned to take advantage of a rising rate environment as 71% of our commercial loan portfolio is variable rate, and we have 47% noninterest-bearing deposit funding.\nOur efficiency ratio improved to 41.5% from 44.5% during the quarter, while we continue to make investments to support risk management and sustained growth.\nThe inherent operating efficiency of deploying excess liquidity has helped push our efficiency ratio to the lower 40s.\nPre-provision net revenue increased $39.7 million or 14% from the prior quarter and 75% from the same period last year.\nThis resulted in a PPNR ROA of 2.45% for the quarter, an increase of 14 basis points compared to 2.31% from the last quarter.\nThis continued strong performance and leading capital generation provides us significant flexibility to fund ongoing balance sheet growth, support infrastructure and capital -- other capital management actions as well as meet credit demand.\nBalance sheet momentum continued during the quarter as loans increased $4.8 billion or 15.9% to $34.8 billion.\nStrong deposit growth of $3.4 billion brought balances to $45.3 billion at quarter end, and all total assets have grown 58% year-over-year to $52.8 billion.\nTotal deposits increased $313 million over the prior quarter to $2.1 billion, primarily due to overnight borrowings of $400 million, partially offset by redemption of $75 million in subordinated debt.\nAs Ken described, we experienced record quarterly loan growth this quarter with growth evenly split between residential and C&I loans.\nIn all, loans grew $4.8 billion during the quarter and were up $5 billion ex PPP runoff and 34% year-over-year.\nResidential real estate and C&I loans grew $2.3 billion and $2.2 billion, respectively.\nWe continue to see broad-based core deposit growth across our business channels.\nDeposits grew $3.4 billion or 8% in the third quarter, with the strongest growth in savings and money market accounts of $1.6 billion.\nNoninterest-bearing DDA accounts contributed $950 million and represents 47% of total deposits.\nStrong performance from commercial clients, robust fundraising activity and tech and innovation and seasonal inflows in HOA banking relationships were all significant drivers of deposit growth during the quarter.\nWe are confident in the stickiness of deposits that we've generated in recent quarters, particularly as our newer initiatives are finally taking root.\nOur asset quality remains strong and stable.\nSpecial Mention loans continue to decline to $364 million or 105 basis points of funded loans.\nTotal classified assets rose $26 million in the third quarter to $265 million or 50 basis points in total assets, but are down more than 40% from a year ago on a ratio basis.\nTotal nonperforming assets declined $10 million to 17 basis points in total assets.\nQuarterly credit losses continue to be nominal.\nIn the third quarter, net charge-offs were $3 million or 4 basis points of average loans annualized compared to $100,000 in the second quarter.\nOur loan allowance for credit losses increased $15 million from the prior quarter to $275 million due to robust loan growth.\nIn all, total loan ACL to funded loans is 80 basis points or 82 basis points when excluding PPP loans.\nAs mentioned in prior quarters, the strategic focus of the bank is to source a significant portion of loan growth from low to mid last [Phonetic] segments to achieve a diversified risk -- risk-diversified portfolio.\nWith the third quarter loan growth, our low to no loss segments now comprise over half of total loans.\nGiven our industry-leading return on equity and assets, we generate sufficient capital to fund about 25% to 35% annual loan growth depending on the mix and this is after dividend service.\nOur tangible common equity to total asset ratio of 6.9% and common equity Tier 1 of 8.7%, were weighed down this quarter by robust asset growth in excess of these levels.\nAs you have seen throughout the year, we took several capital actions to enhance our capital staff and support ongoing growth.\nDuring Q3, we issued $300 million of preferred equity, which was slightly offset in total capital as we redeemed $75 million of subordinated debt.\nWe are also redeeming $175 million of 6.25% subordinated debt this quarter, which we anticipate to be completed in November.\nWe will recognize a $6 million pre-tax nonrecurring charge associated with this redemption as we accelerate amortization of origination costs on net debt.\nInclusive of our quarterly cash dividend payment, which we increased to $0.35, our tangible book value per share rose $1.81 in the quarter to $34.67 or 19% growth from the past year.\nOur tangible book value per share growth is industry-leading and has grown 2.5 times that of the peers over the past five years or at a compound annual rate of over 19%.\nI'll now hand the call back to Ken to conclude.\nThe third quarter really was an exceptional quarter from an earnings and loan growth perspective as our distinctive national business strategy model continues to hit on all cylinders.\nImpressively, end-of-period loan balances were $3.3 billion greater than the average balance, which provides a strong jump-off point for the fourth quarter, net interest income in addition to the $1 billion in excess liquidity that we are gradually deploying in the coming quarters.\nWe're very excited about the diverse set of growth opportunities in front of us as we enter the fourth quarter.\nLooking forward, for full year 2022, you can expect loan held for investments to continue robust growth with a quarterly minimum of $1.5 billion to $2 billion, an increase from the prior guidance of $1 billion to $1.5 billion or a low to mid-20s percent growth rate for the year with flexible origination mix designed to maximize net interest income.\nToday, approximately half of our growth was generated from low to no loss residential mortgages.\nDeposits are expected to grow in line with loans as we work to deploy excess liquidity and normalize the loan-to-deposit ratio, which today stands at 77%.\nWe expect to maintain our efficiency ratio in the lower 40s as we continue to invest in risk management and technology and work to bring new business lines, products and services to market.\nTotal revenue and PPNR growth will track balance sheet growth as we benefit from operational leverage.\nRegarding capital, we are targeting a CET1 ratio of 9%, which our robust quarter-end loan growth impacted.\nWe have several mechanisms to address our capital levels.\nMost importantly, we generate significant capital through earnings growth and have historically demonstrated our success in accessing the capital markets.\nIn conclusion, we continue to see strong pipelines and have the operating flexibility to both execute on near-term opportunities while investing for the long-term growth.\n",
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"content": "q3 revenue rose 8.3 percent to $548.5 million.\nnet interest income was $410.4 million in q3 2021.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining me on the call today is Dale Gibbons and Tim Bruckner, our Chief Financial Officer and Chief Credit Officer.\nI will first provide an overview of our quarterly results and how we are managing the business in this current economic environment.\nAnd then Dale will walk you through the bank's financial performance.\nAnd in 2020, Western Alliance broke many of our own records for balance sheet growth, net interest income, and earnings.\nAll the while fortifying our balance sheet position.\nOur strategy to align the company with strong borrowers nationwide provided us the strength and flexibility to navigate the economic volatility as we grew our balance sheet and income, while simultaneously managing asset quality.\nDespite external challenges, financially 2020 was a strong year and was our 11th consecutive of rising earnings.\nFor the year, we produced record net revenues of $1.2 billion, net income of $506.6 million and earnings per share of $5.04, 4% greater than 2019 despite increasing the provision expense by $124 million.\nOur focus continues to be on PPNR growth, which rose approximately 20% to $746 million and net interest income increased $126.5 million or 12%, while total expenses increased a modest $9.6 million.\nTo put this in perspective, 2020 revenue expanded 13 times the rate of expenses in a difficult, uneven and complex operating environment.\nGiven all these actions, tangible book value per share grew 16.4% year-over-year to $30.90.\nTurning to the fourth quarter results.\nWe achieved a record $193.6 million of net income and earnings per share of $1.93 for the quarter, an increase of 54% from prior year.\nThese results benefited from a $34.2 million reversal of credit loss provision consistent with our strong asset following results and improved go forward consensus economic outlook.\nOutstanding quarterly loan and deposit growth of $1 billion and $3.1 billion, respectively, lifted total assets to $36.5 billion, which was driven by broad based growth throughout our business lines and geographies as clients delayed [Indecipherable] under investment for future opportunities.\nAdditionally, several of our internal business initiatives gained traction.\nFor the full year, loans increased $4.5 billion, excluding PPP program or 21% and deposits grew a record shattering, $9.1 billion, which we believe created a strong funding foundation for ongoing loan and earnings growth as the economy continues to heal from COVID shutdowns.\nThis balance sheet growth propelled net interest income decline of $315 million for the quarter or 16% on a year-over-year basis.\nQuarterly NIM was 3.84%, up 13 basis points of the third quarter as PPP income improved and costs, CET costs fell.\nFee income increased to $23.8 million for the quarter, aided by $6.4 million of equity and warrant income.\nOn a full year basis, fee income grew a healthy 8.8% to $70.8 million.\nFull year operating non-interest expense grew $9.6 million to $491.6 million, producing an efficiency ratio of 38.8%.\nIn the fourth quarter, our efficiency ratio improved to 38.2% as revenue growth was 4 times non-interest expense growth and continues to provide [Indecipherable] flexibility to grow PPNR.\nAsset quality continued to improve this quarter as our COVID remediation strategy produce increasingly positive results for our clients.\nTotal classified assets declined $102 million in Q4 to 61 basis points of total assets, which was lower than Q1 '20 levels on both a relative and absolute dollar amount.\nJust as the pandemic impact was being felt.\nAt quarter-end total deferrals had fallen to $190 million or 70 basis points of total loans, including $77 million for low LTV and residential loans.\nAs of today there are less than $10 million of deferrals excluding the residential portfolio and all of our hotel franchise findings loans are paid as agreed.\nThese noticeably positive credit trends, the improved consensus economic outlook and amount of loan growth of low risk asset financials drove our $34.2 million release in loan loss reserves this quarter.\nDale will go into more details on specific drivers of our provision, but our total loan to ACL to funded loans ratio excluding PPP loans now stands at 1.24% or $316 million.\nAnd total loan ACL to total classified assets is 142%.\nCharge-offs were $3.9 million in Q4 and full-year charge-offs were 6 basis points of loans.\nOur robust PPNR generation continues to drive strong capital levels for the CET 1 ratio of 9.9%, supporting 28% year-over-year loan growth.\nReturn on average assets and return on average tangible common equity were 161 basis points and 17.8% respectively.\nWe remain one of the most profitable banks in the industry.\nAs we demonstrated throughout 2020, we will continue to support our clients and are encouraged by their participation in PPP program as the second round is rolling out.\nWe have begun processing application and are seeing steady volumes.\nBut given the size constraints and other factors, we don't expect the total amount to rise to levels we saw in round one.\nFinally, and most importantly, all of our accomplishments cannot be achieved without the [Indecipherable] made by the people of Western Alliance, to successfully respond to the challenging COVID-19 environment.\nWe had strong position and prepare the company [Indecipherable] long way as we enter 2021.\nWe take pride in our peer leading performance in good times, but above all during the challenging events.\nDale will now take you through our financial report.\nFor the quarter, Western Alliance generated net income of $193.6 million or $1.93 EPS, each up more than 40% on a link quarter basis.\nAs mentioned, net income, benefited from a release in provision expense of $34.2 million, primarily driven by improvement in the economic outlook during the quarter and loan growth in lower risk asset classes.\nNet interest income grew $30.1 million during the quarter to $314.8 million, an increase of 10.6% quarter-over-quarter and significantly above Q2 performance as -- to which we guided.\nNon-interest income increased $3.2 million to $23.8 million from the prior quarter, supported by $5.1 million of warrant gains related to technology lending.\nNon-interest expense increased $8.1 million, mainly driven by an increase in incentive accruals and our fourth quarter performance exceeding the original budget targets, which were established pre-pandemic.\nContinued balance sheet growth generating superior net interest income, grow pre-provision net revenue of $206.4 million, up 30.4% year-over-year and up substantially from the first and third quarters of 2020 as the second quarter benefited from one-time items of PPP loan fee recognition and bank-owned life insurance restructuring.\nFor the year, Western Alliance generated record net income of $506.6 million or $5.04 per share, an increase over full-year 2019 even when considering elevated provision expense of $124 million for the year.\nNet interest income grew $126.5 million during the year to $1.2 billion, an increase of 12.2% year-over-year mainly attributable to increased loan balances, PPP loan fees, and 49% reduction in interest expense.\nNon-interest income increased $5.7 million to $70.8 million from the prior year.\nWe recognized a one-time benefit of fully restructuring during Q2 of $5.6 million.\nFinally, non-interest expense increased $9.6 million or just 2% year-over-year as increases in short-term incentive accruals and technology costs were offset by lower deposit costs.\nTurning now to our net interest drivers.\nInvestment yields decreased 18 basis points from the prior quarter to 2.61 [Phonetic] and fell 35 basis points from the prior year due to a lower rate environment.\nOn a link quarter basis, loan yields rose 20 basis points following increased yields across most loan types, mainly driven by a changing loan mix and higher PPP yields related to prepayment assumptions on forgivable amounts.\nPPP yield for the quarter was 3.67% compared to 1.76% for the third quarter.\nInterest-bearing deposit costs were reduced by 6 basis points in Q4 to 25 basis points, with an end of the quarter spot rate of 23 basis points as higher cost CD roll off.\nSpot rate for total deposits, which includes non-interest bearing deposits was 13 basis points.\nWe expect funding costs have essentially stabilized at these levels.\nHowever, there could be marginal benefits as higher cost CDs continue to mature and are in place at lower rates.\nCurrent spot rates indicate a relatively stable margin as we enter 2021.\nSome decline in loan yields is expected as the mix has changed to lower risk segments.\nWith regards to our asset sensitivity, our rate risk profile has declined notably since the beginning of 2019, with 82% of our loans now behaving as fixed due to floors for variable rate loans and mix shift toward fixed rate residential loans.\nWe continue to be asymmetrically positioned to benefit from any future rate increases, with an estimated increase in net interest income of 5.7% from 100 basis point rate increase in a parallel [Phonetic] shock scenario versus 0.9% contraction in net interest income, if rates fell and flat line at zero.\nAs Ken, mentioned this year we demonstrated our ability to grow net interest income by 15.7% year-over-year despite the transition to a substantially lower rate environment.\nNet interest income increased $30.1 million or 10.6% during the quarter as net interest margin increased 3.84%.\nMargin benefited from both a true-up related to PPP fee recognition, favorable deposit mix shift, and improved deposit rates.\nAs mentioned earlier, during the fourth quarter of our extraordinary deposit growth and build liquidity continues to weigh on the margin and had a negative impact of 9 basis points this quarter.\nAdjusting for this, the margin would have been slightly above the 3.9% guidance we gave during the last quarterly call.\nPPP loans increased our NIM during Q4 by 11 basis points as we trued up changes to prepayment assumptions made during Q3.\nResulting in PPP loan yield of 3.67%.\nNotice the gold line on the bar chart showing NIM, excluding volatility related to PPP, NIM was 3.8% for Q4 and essentially flat from the third quarter.\nAverage excess liquidity relative to loans increased $467 million in the quarter, the majority of which is held at the FRB or a minimal returns, which reduced NIM by approximately 9 basis points in aggregate.\nGiven our healthy loan pipeline and ability to deploy these funds to higher yielding earning assets, we expect margin drag to dissipate in coming quarters.\nReferring to the chart on the lower left section of the page, from the $43 million in total PPP loan fees, net of origination costs, $11 million was recognized in the fourth quarter.\nWe recognized a reversal of PPP loan fees in the third quarter and it is up $6.4 million and expect fee recognition to be approximately $6.6 million in Q1 and taper off as prepayments and forgiveness are realized.\nAs the second round of PPP is just under way, these fee accretion assumptions only apply to the initial round of funding.\nTurning now to the efficiency.\nOur efficiency ratio improved to 38.2% in Q4, as the increase in expenses was outweighed by revenue growth and only rose 2% from the fourth quarter of 2019.\nExcluding PPP net loan fees and interest, the efficiency ratio for the quarter would have been 39.9%.\nAnd as we indicated last quarter, should be returning to historical levels in the low 40s [Phonetic].\nPre-provision net revenue increased $25.2 million or 13.9% from the prior quarter and 30.4% from the same period last year.\nThis resulted in pre-provision net revenue ROA of 2.37 for the quarter, an increase of 15 basis points from Q3 and equal to the year-ago period.\nThis strong performance in capital generation provides us significant flexibility to fund ongoing balance sheet growth, capital management actions to meet credit demands from our clients.\nOur strong balance sheet momentum continued during the quarter as loans increased $1 billion, net of $271 million of PPP loan payoffs to $27.1 billion and deposit growth of $3.1 billion, broader deposit balances of $31.9 billion at year-end.\nInclusive of PPP, loans grew 28% year-over-year while deposits grew approximately 40% year-over-year, with a focus on -- focus on loan loss -- loan segments in DDA.\nLoan to deposit ratio decreased 84.7% from 90.2% in Q3 as our strong liquidity position continues to ride with balance sheet capacity, with [Indecipherable] needs.\nAs deposit growth continues to outpace loan origination, our cash position remains elevated at $2.7 billion at year-end.\nHowever, we believe it provides inventory for selective credit growth as demand resumes.\nFinally, tangible book value per share increased $1.87 over the prior quarter to $30.90, with an increase of $4.36 or 16.4% over the prior year.\nOur strong loan growth is a direct result of our flexible business model, which combines national commercial banking relationships with our regional footprint and enables thoughtful growth throughout economic cycles.\nThe vast majority of the $1 billion growth was driven by increases in C&I loans of $655 million supplemented by CRE non-owner occupied loans of $248 million.\nResidential and consumer loans now comprise 9.2% of our loan portfolio.\nWhile construction loan concentration increased modestly to 9% of total loans.\nWithin the C&I growth for the quarter and highlighting our focus on low-risk assets, capital call lines grew $408 million, mortgage workout lines grew $413 million and corporate finance loans decreased to $122 million this quarter.\nResidential loan originations added $56 million in balances by quarter end, net of repayment activity.\nWe continue to believe our ability to profitably grow deposits is both a key differentiator and a core value driver to our firm's long-term value creation.\nNotably, year-over-year deposit growth of $9.1 million is more than double the annual deposit growth of any previous calendar year.\nDeposits grew $3.1 billion or 10.7% in the fourth quarter, driven by increases in savings and money market of $1.8 billion, interest-bearing DDA of $842 million and non-interest bearing DDA of $450 million, which comprises 42% of our deposit base.\nRobust activity in tech and innovation and market share gains in mortgage warehouse continue to be significant drivers of deposit growth during the quarter.\nAdditionally, one of our core deposit -- one of our deposit initiatives that is pulling online contributed over $1 billion in deposit growth in 2020.\nLooking at asset quality, total classified assets decreased to $102 million in Q4 due to credit upgrades, payoffs, and refinance activity away from [Indecipherable].\nOur non-performing loans and ORE ratio decreased to 32 basis points to total assets and total classified assets fell to 61 basis points of total assets at year-end, which was below the ratio at the end of 2019.\nSpecial mentioned loans decreased $26 million during the quarter to 1.67% of funded loans.\nAs we've discussed before, special mentioned loans are result of our credit mitigation strategy too early identify, elevate, and apply heightened monitoring to loans or segments impacted by the current COVID environment and fluctuate as credit migrates in and out.\nWe do not see a risk of material losses coming from these credits.\nRegarding loan deferrals, as Ken mentioned, as of today, we have less than $10 million of deferrals.\nExcluding approximately $77 million in low LTV residential loans, with weighted average loan to value of under 67%.\nAll of our hotels franchise finance loans are paying as agreed and our sophisticated hotel sponsors continue to confirm support for their project.\nNet credit losses of $3.9 million or 6 basis points in average loans were recognized during the quarter compared of $8.2 million in Q3.\nOur loan allowance for credit losses decreased $39 million from the prior quarter to $316 million due to improvement in economic forecasts and loan growth in portfolio segments with low expected loss rate.\nIn all, the total ACL to funded loans declined 20 basis points to 1.17% or 1.24% when excluding PPP loans.\nOn a more granular level, our low [Phonetic] less assets account for approximately 40% of our portfolio and include mortgage warehouse, residential and HRA lending, capital call lines, public finance and resort lending.\nWhen excluding these components, the ACL for funded loans on the remainder of the portfolio is 1.7%.\nWe continue to generate significant capital and maintain strong regulatory capital ratios with tangible common equity to tangible assets of 8.6% and a common equity Tier 1 ratio of 9.9%, the decrease of 10 basis points during the quarter due to our strong loan growth.\nInclusive of our quarterly cash dividend, payment of $0.25 per share, our tangible book value per share rose $1.87 in the quarter to $30.90, an increase of 16% in the past year.\nWe continue to grow our tangible book value per share rapidly has it increased at 3 times that of the peer group the past six years.\nI'll now hand the call back over to Ken.\nWe believe that our fourth quarter performance was a baseline for future balance sheet and earnings growth, building off a robust growth we had in the fourth quarter.\nOur pipelines are strong and we expect loan and deposit growth of $600 million to $800 million for the next several quarters.\nBoth loan and deposits each have their own cyclical and seasonal behavior that are not aligned on a quarterly basis.\nAs Dale mentioned, given our deposit growth and liquidity, we expect there to be some downward pressure on these related to mix changes and the deployment of liquidity into attractive asset class.\nAdditionally, we will continue to see influence on a quarterly basis by the wave of PPP loans being forgiven and the second round of PPP loans coming online.\nStrong PPNR growth will continue, down momentum will drive higher net interest income, which more than offset the planned increase in non-interest expense.\nLooking ahead, we will continue to invest in new product offering and infrastructure to maintain operational efficiency, which we will eventually push our efficiency ratio back to sustainable levels in the low 40s.\nOur long-term asset quality and loan loss reserves are formed by the economic forecast, which is consistent going forward, could imply a steady reserve ratio.\nDepending on the timing and pace of the recovery, it could be some long migration into the special mentioned category, but we do not expect material migration fee to sub-standard.\nWe believe that the provision that [Indecipherable] since pandemic began are more than sufficient to cover charge-offs through the cycle as we do not see any indicators that imply material losses are on the horizon.\nFinally, [Indecipherable] one of the most prolific capital generators in the industry.\nOur strong capital base and access to ample liquidity allows to take advantage of any market dislocation we take, leading risk-adjusted returns and to the trust any future credit demands, all while maintaining flexibility to improve shareholder returns.\n",
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"content": "compname posts q4 earnings per share $1.93.\nq4 earnings per share $1.93.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I would like to start by expressing how grateful I am to our colleagues for their continued hard work and commitment, especially to those who are continuing to experience the devastating effects of the pandemic.\nWe have not yet seen a uniform recovery as there are still many regions around the world that have been ravaged by the pandemic.\nAs many of you are aware, India is facing a particularly dire situation at the moment.\nOur colleagues and customers that are very much on our minds and we are working closely with our team in India to ensure safety of our employees and their families, and we're doing all we can to support our customers.\nDuring today's call, I will provide you a brief overview of our first quarter operating results as well as an update on our three phase transformation plan focused on; Number 1, beginning our commercial momentum; Number 2, further strengthening our organization with leadership and performance management; and Number 3, aligning our portfolio with growth areas.\nNext, I will provide some thoughts on how our business is positioned to drive sustainable growth.\nMike will then review our financial results in detail and provide comments on our updated second quarter and full-year financial outlook.\nBriefly reviewing our operating results, for the first quarter revenue grew 31% as reported, 27% on a constant currency basis, and non-GAAP adjusted earnings per share grew 99% year-over-year.\nThis strong start for the year was driven by growth across all end markets as we saw continued strength in pharma and earlier-than-expected recovery in non-pharma spending by our customers, new product traction and strong commercial execution by our team.\nLooking more closely at our top-line results.\nFirst, from a customer end market perspective, all our end markets grew double-digits during the first quarter.\nOur largest market category pharma grew 28% in constant currency, industrial grew 24%, and academic and government grew 29%.\nMoving now to our sales performance by geography.\nOn a constant currency basis; sales in Asia grew 41%, with China up 109%; sales in Americas grew 14%, with US growing 13%; and sales in Europe grew 25%.\nFrom an operating segment perspective, our Waters division grew 26%, while TA grew by 28% on a constant currency basis.\nCustomer activity continued to improve in the first quarter with pharma leading the way driving better-than-expected trends in recurring revenues and a significant growth in instrument revenue.\nRecurring revenues grew 15%, with services growing 14% and chemistry consumables revenue growing 18%, driven by combined pharma strength and improved industrial demand.\nLC instruments grew across all of our major geographies and market categories with more than 40% growth.\nIt's encouraging to see both HPLC and UPLC instrument units grow double-digits, driven by pent-up demand, integration of the Arc HPLC and strong execution of our LC replacement initiative.\nThe success of the launch of the Arc HPLC in the general purpose HPLC space cannot be understated and the ACQUITY PREMIER has been received very well by customers since its February launch.\nMass spec sales were also strong in the first quarter with growth in excess of 50% as demand in the pharma market remains robust.\nIn addition to rebound, we saw in other markets, including clinical, food and environmental and biomedical research.\nDemand was solid for our tandem quads in Europe and China, particularly in pharma and in food.\nRevenue grew 28% as demand rebounded in the core industrial business and strength continued in pharma medical devices and semiconductors.\nGrowth was robust across all major geographies and product lines with particular strength in thermal and electrophoresis.\nLooking deeper at our sales performance by geography.\nAll major regions grew double-digits.\nChina built further on last quarter's strength, more than doubling sales year-over-year, results were strong across all end markets as China continued its recovery from last year's COVID disruptions.\nPharma was particularly strong in China, driven by triple-digit growth in both contract labs and traditional Chinese medicine.\nOur food business in China also saw meaningful growth, driven by a significant rebound in contract testing organizations to the level that were above those we saw in 2018 and in 2019.\nThis is just one quarter and not indicative of a trend, but it demonstrates that the market is recovering and our execution has improved.\nIndia sales grew double-digits for the third consecutive quarter, despite worsening conditions and continued pandemic challenges throughout the country.\nEurope experienced broad-based strength across all customer end markets, including meaningful sequential improvements in both industrial and academic and government markets.\nIn the US, both pharma and industrial markets had strong growth in the quarter, while demand in our academic and government market remained soft as it lags behind other markets in reopening.\nIn summary, we had a great start for the year with strong year-on-year growth that was broadly based than last quarter.\nWith impressive performance across all our regions, end markets and product categories.\nPharma demand has not subsided and many of our non-pharma markets are now in the process of recovering, which gives us greater confidence as we look to the remainder of the year.\nNow I would like to talk more broadly about our business and its overall direction moving forward, including the strength of the Company, the effectiveness of the markets that we serve, and our deep commitment to innovation as we look beyond this quarter into the longer term.\nOur three-phase transformation plan is; Number 1, beginning our commercial momentum; Number 2, strengthening our organization with leadership and performance management; and Number 3, aligning our portfolio with growth areas.\nLooking at our first priority of beginning our commercial momentum, let me review some initiatives I mentioned previously.\nFirst, our instrument replacement initiative.\nWe delivered a significant acceleration in instrument revenue growth to 45%.\nIn February, we launched the ACQUITY PREMIER system augmenting the already solid placement of Arc HPLC launched in June of 2020, creating new opportunities for instrument replacements.\nAdditionally, we have gained traction with customers to replace aging tandem quad mass spec instruments with newer instruments.\nSecond, as part of our CROs CDMO expansion initiative, we've seen revenue growth accelerate to strong double digits in both these customer segments.\nCustomers continue to perceive us as a strong technical partner as they transfer methods from originators and they see us as a strong collaborator rather than a competitor.\nThird, our e-commerce initiative has begun to deliver tangible results, search engine optimization and paid search had lead to search impressions that are up more than 40% year-on-year.\nWhile not every click translates to immediate revenue increasing traffic is an important first step in our e-commerce efforts.\nFourth, driving launch excellence.\nLet me start with liquid chromatography.\nWhile the Arc HPLC is a leader in general purpose HPLC space, I want to focus on the ACQUITY PREMIER.\nLast year we launched the ACQUITY PREMIER Columns and follow that up with the ACQUITY PREMIER System last quarter.\nThough, we are still in the early stages of the revenue ramp up for both the Columns and the System sales of ACQUITY PREMIER Columns are significantly outpacing prior successful chemistry launches, including the original ACQUITY Columns.\nTurning to mass spec.\nIn 2019, we launched the BioAccord, Cyclic IMS, SYNAPT XS, TQ-S cronos and a next generation version of our TQ-S micro.\nPairing our tandem quad with ACQUITY PREMIER creates industry-leading reproducibility and sensitivity for challenging assays.\nWith expanding applications of the BioAccord, we've maintained our focus on bringing a versatile, easy to use and robust LCMs system to the QA-QC space.\nDuring Q1, we launched a full workflow for peptide multi-attribute method on the new Waters Connect platform to enable the monitoring of quality attributes at the peptide level.\nThis adds to already existing simple use applications of peptide mapping impacts of unit mass analysis, released glycan profiling and oligonucleotide mass confirmation.\nOver the last year, we established the BioAccord into the workflows for characterizing mRNA molecules that have since become vaccines.\nIn fact, BioNTech recognized Waters for our support of its COVID-19 vaccine development and relief efforts.\nLastly, Cyclic was launched in September of 2019 and is targeted at the most advanced high resolution mass spec users.\nAugmenting traditional LCMs with high-resolution ion mobility allows us to separate molecules with additional -- with identical molecular weight based on their different shapes.\nThis is now especially relevant from one of the structural changes in the sugar pattern of the spike protein of the SARS-CoV-2 virus.\nWe do recognize that we still have a bit of work to do on our mass spec informatics applications and we are addressing this through the development and rollout of our Waters Connect software platform across our full mass spec portfolio.\nToday, Waters Connect support biopharma characterization and monitoring workflows with a range of capabilities on the BioAccord, Xevo QTof and [Indecipherable].\nAnd with the launch of our RDa Benchtop -- Benchtop Tof in Q1, Waters Connect also enables small molecule workflows.\nWe're grateful that we've earned the trust and partnership with our customers as we develop further applications and beta test upcoming products and software.\nNext from our TA Instrument division.\nLast year we launched the X3 DSC, which offers unique advantages for routimg high throughput labs and R&D, especially in pharma, electronics and advanced materials.\nThe ability of the X3 DSC to deliver high sensitivity measurements of physical properties more quickly than comparable products is enabling these measurements to be more broadly deployed in manufacturing processes, where scientists can evaluate multiple combinations in parallel, reducing time to market.\nThe more time I spend with my R&D colleagues together with our customers the more impressed I am with the strength of our deeply, deeply technical culture.\nMoving on to our second priority.\nYou've already seen the plan leadership transitions we announced last month.\nAmol Chaubal will join as the CFO on May 12th, Amol has deep experience in pharma and diagnostics and has led many transformations in his prior roles through both organic and inorganic growth.\nMike will continue to serve as our Corporate Controller and I'm pleased to add that Mike will also assume the role of Chief Accounting Officer.\nSecondly, we have established a dedicated Innovation Board, which I will share that includes leaders from R&D, Business Development and Marketing.\nThe Innovation Board will review unmet needs in markets we serve, assess technology proof of concepts and monitor the execution of top R&D programs.\nThough their retirements are effective July 2, they've graciously which we offer to service consultants for a period of time to ensure a smooth transition.\nBoth Jon and Jianqing have deep commercial and transformation experience in global leadership roles in fast growing markets such as molecular diagnostics and bioprocessing.\nI'm really pleased with our new team and I look forward to introducing them to you in the coming months.\nThat brings us to our third priority aligning our portfolio with high growth areas.\nWhile we won't take our eye off commercial execution, which remains our top priority, we have recently started our strategic planning process.\nAnd I'd like to share you -- share with you some high-level thoughts on where we are today.\nOur number one priority is to continue strengthening the core meaning LCMs, and materials characterization instruments, informatics, service and consumables.\nSecond, is staffing into faster growing adjacencies where we can bring our strength of managing compliant data without competing directly with our customers.\nThese adjacencies include opportunities to increase our exposure to biologics, be it in reagents, other instrument technologies or bioprocessing, all in accelerating LCMs into diagnostics or other high-growth markets.\nLastly, we will maintain our long-standing disciplined approach to financial management, capital structure and capital deployment as we are focused on maintaining a top-tier ROIC.\nOver the coming year, I look forward to sharing more with you on our strategy, as well as the data points that give us confidence that we have the foundation in place to sustainably grow in this attractive market.\nWith that, I'd like to pass the call over to Mike Silveira for a deeper review of the first quarter financials and our outlook for the remainder of 2021.\nIn the first quarter, we recorded net sales of $609 million, an increase of approximately 27% in constant currency.\nCurrency translation increased sales growth by approximately 4%, resulting in sales growth of 31% as reported.\nLooking at product line growth.\nOur revenue -- our reoccurring revenue, which represents the combination of precision chemistry products and service revenue increased by 15% for the quarter, while instrument sales increased 45%.\nChemistry revenues were up 18% for the quarter, driven by strong pharma market growth and improving industrial demand.\nOn the service side of our business, revenues were up 14% as customers continue to reopen labs and catch up on performance maintenance, professional services and repair visits.\nAs we noted on our last earnings call, reoccurring sales were impacted by five additional calendar days in the quarter, which primarily impacted service revenues.\nLooking ahead, compared to 2020, there is no year-over-year difference in the number of calendar days for this year's second or third quarter.\nHowever, there are six fewer calendar days in the fourth quarter of this year.\nBreaking first quarter operating segment sales down further, sales related to Waters Division sales grew 26%, while TA Instrument sales grew 28%.\nCombined LC and LCMs instrument sales were up 47%, while TA system sales grew 34%.\nNow I'd like to comment on our first quarter non-GAAP financial performance versus the prior year.\nGross margin for the quarter was 58.2%, a 350 basis point increase compared to 54.7% in the first quarter of 2020, primarily due to an increase in sales volume and favorable effects.\nMoving down to first quarter P&L.\nOperating expenses increased by approximately 9% on a constant currency basis and 11% on a reported basis.\nThe increase was primarily attributed to higher labor incentive compensation costs and higher depreciation from IT investments we made over the last few years.\nIn the first quarter, our effective operating tax rate was 14% an increase from last year, as compared to the comparable period included some favorable discrete items in the prior year.\nNet interest expense was $7 million for the quarter, a decrease of about $3 million, as anticipated on lower average outstanding debt balances.\nOur average share count came in at 62.6 million shares, flat with the first quarter of last year.\nOur non-GAAP earnings per fully diluted share for the first quarter increased 99% to $2.29 in comparison to the $1.15 last year.\nOn a GAAP basis, our earnings per fully diluted share increased to $2.37 compared to $0.86 last year.\nTurning to free cash flow, capital deployment and our balance sheet, I would like to summarize our first quarter results and activities.\nWe define free cash flow as cash flow from operations less capital expenditures and excluding certain special items.\nIn the first quarter of 2021, free cash flow grew 60% year-over-year to $193 million, after funding $40 million of capital expenditures.\nExcluded from free cash flow was $14 million related to the investment in our Taunton precision chemistry operation.\nIn the first quarter, this resulted in $0.32 of each dollar of sales converted into free cash flow.\nOur increased free cash flow was primarily a result of sales growth and better operating margins compared to the prior year.\nIn the quarter, accounts receivable days sales outstanding came in at 84 days, down 15 days compared to the first quarter of last year.\nInventory decreased by $16 million in comparison to the prior year quarter on higher sales volumes.\nWaters maintains a strong balance sheet, access to liquidity and a well-structured debt maturity profile.\nIn terms of returning capital to shareholders, we repurchased approximately 600,000 shares of common stock for $173 million in the first quarter.\nThese capital allocation activities along with our free cash flow results in cash and short-term investments of $810 million in debt of $1.7 billion on our balance sheet at the end of the quarter.\nThis resulted in a net debt position of $893 million and a net debt to EBITDA ratio of about 1 times at the end of the first quarter.\nOur capital deployment priorities remain consistent, invest for growth, maintain balance sheet strength and flexibility, and return capital to shareholders.\nWe remain committed to deploying capital against these priorities and as Udit commented earlier, we have begun a new strategic planning process.\nAs we continue to execute against our priorities, we will evaluate deploying capital to open up attractive and adjacent markets.\nAs we look forward to the remainder of the year ahead, I would like to provide some updated context on our thoughts for 2021.\nOne, while the business environment remains subject to volatility, we are seeing good momentum in our market segments, which will help us exceed the 2019 levels.\nTwo, we believe this momentum will continue into the second quarter, but that the strong double-digit growth will mostly occur in the first half of the year due to more challenging comparisons in the second half of the year and the six fewer calendar days that we will have in the fourth quarter.\nThree, we continue to expect that all major geographies will perform better this year than they did in 2020 led by growth in China.\nFour, our near-term growth initiatives are expected to continue to ramp, led by our LC replacement initiative, which we expect to contribute increasingly to our performance.\nThese dynamics support updated full-year 2021 guidance for constant currency sales growth up 8% to 11%.\nAt current rates, the positive currency translation to 2021 sales growth is expected to be approximately 1 percentage points to 2 percentage points.\nGross margin for the full year is expected to be between 57.5% and 58%.\nEvery year we look to balance growth, investment and profitability.\nAccordingly, we expect 2021 operating margins of between 28% and 29% based on a combination of investments, the normalization of COVID-related cost, and disciplined expense controls.\nMoving now below the operating income line, other key assumptions for the full year guidance are as follows; net interest expense of $35 million to $38 million; a full year tax rate in the range of 14.5% to 15.5%; the net impact of our share repurchase program in 2021 that will result in an average diluted 2021 share count of 61.5 million to 62.0 million shares outstanding.\nOver the course of the year, we will evaluate our share repurchase program and provide quarterly update as appropriate.\nRolling all this together, and on a non-GAAP basis, full-year 2021 earnings per fully diluted share are now projected in the range of $9.85 to $10.05, which assumes a positive currency impact on full year earnings-per-share growth of approximately 3 percentage points.\nLooking at the second quarter of 2021.\nWe expect constant currency sales growth to be 14% to 16%.\nAt today's rates, currency translation is expected to increase second quarter sales growth by approximately 3 percentage points.\nSecond quarter non-GAAP earnings per fully diluted share are estimated to be in the range of $2.15 to $2.25 as the significant prior year COVID cost savings actions start to normalize.\nAt current rates, the positive currency impact on second quarter earnings-per-share growth is expected to be approximately 1 percentage point.\nLike in summary, there is much to be pleased about -- with our first quarter results, driven by strong growth across each of the major end markets with pharma leading the way.\nOur transformation plan is well under way with commercial momentum and a strong leadership team in place.\nWe now turn toward developing a new strategy as we work more closely to align our portfolio with higher growth areas of the market.\n",
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"content": "compname reports non gaap earnings per share $2.29.\nq1 non-gaap earnings per share $2.29.\nq1 sales rose 31 percent to $609 million.\nsees q2 non-gaap earnings per share $2.15 to $2.25.\nsees fy non-gaap earnings per share $9.85 to $10.05.\nq1 gaap earnings per share $2.37.\nexpects full-year 2021 constant-currency sales growth in range of 8% to 11%.\nexpects q2 2021 constant-currency sales growth in range of 14% to 16%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Over the course of the last few months, which have been particularly challenging against the background of a global pandemic, Chris has kept the team focused on execution.\nThroughout his tenure, Chris has demonstrated a clear commitment to advancing a new product cycle that has in part helped us establish a strong foundation for growth.\nAs you know, on July 15th, we announced that Udit will be joining us on September 1st.\nUdit is a highly accomplished executive with more than two decades of leadership and operational expertise in our industry.\nHe has demonstrated a proven track record of delivering tangible financial, and operational results as evidenced by his prior roles at Merck KGaA, headquartered in Darmstadt, Germany.\nImportantly, he also has a strong appreciation for our purpose, culture and people.\nWe are confident he will help Waters build on our foundation and usher in our next chapter of innovation, growth and shareholder value.\nI know Udit is eager to get going and we look forward to introducing him when he officially joins us in September.\nI hope that you and your loved ones are doing well as the world continues to manage through this truly extraordinary time of the global COVID-19 pandemic.\nIt's amazing how much is happening on a daily basis, and I wish you peace and fortitude as we all work hard to improve both health and economic conditions for everyone.\nDuring today's call, I will provide an overview of our second quarter operating results as well as some broader commentary on our business in the context of COVID-19 and describe the actions we are taking to emerge from this period stronger than ever.\nSherry will then review our financial results in detail, and update you on our financial actions as it relates to the balance sheet and cost structure.\nTo briefly review our operating results for the quarter, Q2 sales declined 12%, and adjusted earnings per share declined 2%.\nWhile Q2 was expectedly a bit softer than Q1 in terms of year-over-year growth, our revenue results reflected modestly better market conditions than we had anticipated, an increasing impact of new products as well as strong execution by our global sales, service and operational teams.\nDuring the quarter, we also executed well on our plans to achieve meaningful near-term cost savings to ensure our financial strength and flexibility under a variety of recovery scenarios.\nThis combination of higher-than-expected revenue and the timing of our near-term cost actions enabled us to exceed our margin and earnings per share expectations.\nAs we enter the second half of the year, we are focused on our recovery trajectory and normalizing our operating spend and investment in the business.\nI am very proud of our team's execution across the business in this dynamic environment.\nLooking ahead, while risks and uncertainties in our operating environment remain as a result of the COVID-19 pandemic, we believe that our end markets and geographies will see modestly better conditions in the second half of 2020 than they did in the first half.\nI will provide some additional color on this later in my remarks.\nAs we navigate the COVID-19 global pandemic, we continue to execute against our five point value creation model which emphasizes our unique specialty positioning, organic innovation, operating excellence, disciplined capital deployment, and a sharp focus on people and culture.\nThat said, I'd like to focus my comments today on our near-term operating priorities relating to the COVID-19 period that I outlined on our last earnings call.\nWe are making great progress against each of them.\nFirst, our top priority remains the health, safety and well-being of our employees and our customers.\nThe deliberate actions and cautions we have taken during the pandemic have minimized the infection rate within our employee population, while still enabling the organization to operate efficiently and effectively.\nOur multi-phased safe return to workplace process is well under way with teams returning to our major facilities in several stages.\nOur second priority is to ensure business continuity.\nOur service engineers have consistent access to customer sites globally in order to maintain, service and install instruments, while our sales reps have less consistent access given the varied pace of recovery across our geographies.\nSalesforce access has been improving however, as customers continue to ramp up their laboratory operations.\nThat said, our strategic technology investments over the last several years are paying off, and have enabled us to effectively serve the vast majority of sales, service and scientific activities with a hybrid in-person and digital effort.\nWe have been successful getting our experts in front of customers through virtual events and we are restoring normal interactions with sales reps and regional specialists where possible.\nOperationally, we have confidence in the continuing stability of our supply chain, manufacturing and distribution processes.\nOur third priority is maintaining our financial strength, flexibility and liquidity even in our most conservative forward looking scenarios.\nExiting the second quarter, we are on track to achieve our $100 million cost savings plan for the year relative to our prior internal forecast.\nWe are nearly complete, returning those employees on temporary 90-day furlough to work, we have restored full hours and salaries and we have now reoriented our focus toward investment in the business in the second half to enable our return to growth.\nSherry will provide more details on these measures during her remarks.\nOur fourth priority is to accelerate our recovery, by focusing on actions we can control.\nIn particular, we are taking direct action to a, maximize the impact of our strong new product cycle, b, target our R&D efforts on near-term product introductions, c, service our installed base either remotely or in person as customer labs allow, and d, focus our sales efforts on customer labs that are open to operation.\nIn Q2, we saw an increased contribution from our recently launched mass spec products while launching an important new LC instrument.\nMore on this in a few minutes.\nFinally, we are continuing to contribute our expertise and capabilities in the global fight against COVID-19.\nOur customers have responded enthusiastically to our offers of deep scientific and technical expertise across a range of COVID-19 therapy and vaccine candidates under development.\nIn particular, our unique system solutions have been very useful in critical workflows including peptide mapping, glycans analysis and oligonucleotide analysis.\nWhile the short-term revenue impact is minimal, these efforts have been deeply appreciated and have greatly advanced relationships across our customer base while also advancing the fight against COVID-19.\nNow, I would like to make a few comments on our outlook.\nAs we outlined last quarter, our planning scenarios are based on a categorization of each geography into one of three phases of the COVID-19 pandemic: Containment, Recovery, and Return to growth.\nWe currently believe that all of our major geographies have now transitioned to the recovery phase.\nAs a result, and as I mentioned before, we believe the second half will be modestly better than the first half.\nHowever, we don't anticipate that quarterly revenue growth will turn positive until 2021.\nFrom an end market perspective, our largest market, pharmaceutical is leading the recovery.\nEncouragingly, our top global pharma accounts grew in the second quarter and year-to-date.\nIn addition, CXOs and large molecule pharma customers are recovering nicely, while generic and specialty pharmaceutical customers are still operating with more constrained capital budgets.\nLooking ahead, though we expect most pharma customers to return to normalized operations this fall, risks and uncertainties certainly remain, particularly in Q4 around meaningful year-end budget releases that we typically see.\nOur industrial markets are recovering more slowly with customers generally operating under tighter capital budgeting restrictions than in pharma.\nNotably, because these customers provide less recurring revenue than our pharma customers returning to normal operations doesn't immediately result in a corresponding return of spending in the form of capital equipment.\nWithin the industrial category material, science labs are operating at higher activity levels than food and environmental labs and we expect them to return to normal levels more quickly.\nLastly, academic and governmental markets are lagging corporate customers, and are expected to be the slowest to recover.\nMany academic labs remain closed or only partially open, while governmental business has been significantly impacted by delayed tender activity.\nTurning now to our geographies, all major regions have transitioned from containment to recovery phase with each seeing steadily increasing customer activity throughout the quarter.\nA number of countries including China, other countries in Asia and parts of Europe are moving through the recovery phase more rapidly.\nOn the other hand, the United States, India and remaining parts of Europe are progressing more cautiously through these various stages of easing restriction.\nIn aggregate, as we look to the second half of the year, we are expecting improved demand across the business, in particular for instruments as we expect a gradual easing of capital spending with constraints in all of our end markets.\nLooking specifically at China, the pharma market is leading the recovery with solid growth in large molecule pharma and CXOs.\nGeneric pharma remains under pressure as customers remain cautious on capital spending in the context of both the GPO program implementation and the COVID-19 pandemic.\nThat said, China's pharma recurring revenues grew in the quarter across both large and small molecule which we expect to continue bolstering our confidence that we will see increasing instrument demand over time.\nChina's food and environmental markets were down in the second quarter, reflecting the continued funding pressure that is impacting government labs, partially offset by growth within independent labs.\nElsewhere in Asia, recovery is a mixed picture with strength in certain geographies such as Korea and slower recoveries in other regions such as Japan and India.\nTurning to the US, we are seeing a dynamic and somewhat uncertain environment with various states experiencing increasing COVID-19 cases over the past several weeks.\nAnd therefore, are seeing rollbacks of previously implemented reopening plans.\nThe pharma market is leading the recovery, driven by large molecule customers.\nCapital spending is slowly, but steadily improving, and we are seeing strong customer support for our new products.\nElsewhere in the Americas, Latin America remains very soft.\nLastly in Europe, recoveries in the countries of Southern Europe and Northern Europe are lagging those in Eastern Europe and Central Europe.\nPharmaceutical markets are recovering more quickly than other markets with QA/QC reporting growth in the second quarter.\nOur recent European performance has been stronger compared to the Americas, because many European countries have been more effective managing COVID-19 containment efforts and European customers are adopting some of our new mass spec technology at a faster rate than other geographies as we typically see.\nAside from these current market dynamics, we remain sharply focused on our primary growth strategy of organic innovation.\nWe believe we are well positioned to leverage our robust and growing new product pipeline as demand normalizes and we expect continuing increases in contribution from new products.\nLooking at the Waters product line, there is increasing evidence of traction of new products throughout the quarter particularly BioAccord and Cyclic IMS. In addition, we launched six new instruments year-to-date and have received very positive initial feedback.\nThese new product launches were highlighted by the Arc HPLC, a rugged, reliable and modern HPLC system that is a significant advancement, and enhances our strong technology leadership position in the core, liquid chromatography market.\nIn our TA Instruments product line, the three new products launched last quarter at PittCon have received strong customer interest.\nMaterial science markets have been challenged, but these products are poised to support future growth and market share gains.\nIn summary, the sales in our second quarter continued to be impacted by the COVID-19 pandemic.\nOur revenue results reflected modestly better market conditions than we had anticipated, and increasing impact from our new products as well as strong execution by our global sales, service and operations teams.\nWe also took decisive actions to manage our cost to ensure the largest portion of our 2020 savings plan in the second quarter, which as expected was a more challenging environment than the first quarter.\nThis combination of better than expected top line performance with the benefits of our cost containment efforts enabled us to exceed our margin and earnings per share expectations.\nAlthough risks remain with the uncertain trajectory of the global COVID-19 pandemic, we expect market conditions to improve modestly in the second half versus the first half of the year, and therefore have accelerated our growth investments to take advantage of opportunities as demand recovers.\nWith that, I'd like to pass the call over to Sherry Buck for a deeper review of our second quarter financials.\nIn the second quarter, we recorded net sales of $520 million, a decrease of approximately 12% in constant currency.\nCurrency translation decreased sales growth by approximately 1% resulting in a sales decline of 13% as reported.\nIn the quarter, sales into our pharmaceutical market declined 10%, sales into our industrial market declined 13% while academic and governmental markets declined 21%.\nLooking at our product line growth, our recurring revenue, which represents the combination of precision chemistry products and service revenue declined 3% in the quarter while instrument sales declined 23%.\nAs we noted last quarter, there was no year-over-year difference in the number of calendar days during the second or third quarters, but there are two additional calendar days in the fourth quarter of 2020 compared to 2019.\nChemistry revenues were down 4% in the quarter, driven mostly by weakness in academic and governmental.\nOn the service side of our business, revenues were down 2% as mid single digit growth in service contract revenues were offset by a decline in on-demand service revenues and spare parts.\nBreaking second quarter product sales down further, sales related to Waters branded products and services declined 12%, while sales of TA-branded products and services declined 20%.\nCombined, LC and LCMS instrument platform sales declined 24% and TA's instrumentation system sales declined 20%.\nLooking at our growth rates in the second quarter geographically, and on a constant currency basis, sales in Asia declined 12% with China down 20%.\nSales in Americas declined 15%, including a 14% decline in the US and European sales were down 9%.\nBefore I comment on our second quarter non-GAAP financial performance versus the prior year, I would like to update you on the progress of our cost actions in response to the COVID-19 pandemic that we shared with you during our last quarterly earnings call.\nWe are on track to achieve cost savings of approximately $100 million for the year relative to our prior pre-COVID internal plan.\nWe achieved about 60% of our planned annual savings in the first half of the year, which was better than expected, as we focused on aligning our operations and investments with our growth challenge in the second quarter.\nThis result flow through our P&L and is the primary driver for favorable performance in gross and operating margins versus the second quarter of 2019.\nLooking ahead, while we plan to maintain strong operating discipline through the end of the year, a significant portion of our cost actions were enacted for a 90-day period and are nearly complete.\nEmployees are returning from temporary 90-day furloughs, and we have restored reduced work hours and salaries to normal levels.\nAs a result, the second half of the year will not reflect the same level of savings reported during the second quarter, as we reorient our focus toward growth investment in the business in the second half.\nWe anticipate the remaining 40% of our cost savings to be achieved in the second half of the year.\nThis plan reflects our core assumption that the business moves to the recovery phase and business conditions improve in the second half.\nWe're monitoring our business conditions and we will adjust our plans as appropriate based on the pace of the recovery.\nReturning to our second quarter's non-GAAP financial performance, gross margin for the quarter was 59% compared to 58.4% in the second quarter of 2019, primarily as a result of our cost savings actions.\nMoving down the second quarter P&L, operating expenses decreased by approximately 13% on a constant currency basis, and foreign currency translation decreased operating expense growth by approximately 1% on a reported basis.\nIn the quarter, our effective operating tax rate was 15.4% compared to 15.7% in the prior year.\nNet interest expense was $9 million, an increase of about $3 million as anticipated.\nOur average share count came in at 62.2 million shares, a share count reduction of approximately 11% or about 7 million shares lower than in the second quarter of last year as a result of shares repurchased through the end of the first quarter of 2020, subsequent to which we paused the share repurchase program.\nOur non-GAAP earnings per fully diluted share for the second quarter decreased to $2.10 in comparison to $2.14 last year.\nOn a GAAP basis, our earnings per fully diluted share decreased to $1.98 compared to $2.08 last year.\nTurning to free cash flow, capital deployment and our balance sheet, I'd like to summarize our second quarter results and activities.\nWe define free cash flow as cash from operations, less capital expenditures and excluding special items.\nWe made good progress in the quarter on our capital expenditure and working capital improvement plans shared during the last quarterly earnings call, and we also remain on track for the full year.\nIn the second quarter of 2020, our free cash flow came in at $175 million after funding $46 million of capital expenditures.\nExcluded from free cash flow was $23 million related to the investment in our Taunton precision chemistry operation.\nIn the second quarter, this resulted in $0.34 of each dollar of sales converted into free cash flow, and $0.30 year to date.\nOur strong free cash flow was primarily a result of cost savings actions implemented in the second quarter.\nTurning to working capital, accounts receivable days sales outstanding came in at 87 days this quarter, up 8 days compared to the second quarter of last year and inventories decreased by $8 million in comparison to the prior year quarter, reflecting revised production schedules.\nWaters maintains a strong balance sheet, access to liquidity and a well structured debt maturity profile.\nWe ended the quarter with cash and short-term investments of $356 million and debt of $1.7 billion on our balance sheet at the end of the quarter.\nThis resulted in a net debt position of $1.3 billion, and a net debt to EBITDA ratio of about 1.8 times at the end of the second quarter.\nWe also have $1 billion available on our bank revolver for a total available liquidity of $1.4 billion at the end of the second quarter.\nIn terms of returning capital to shareholders, while our future capital structure target of approximately 2.5 times net debt to EBITDA remains unchanged, our near-term focus is maintaining financial flexibility and preserving liquidity.\nAs a result, our share repurchase program remains on hold, and so we see a more stable and predictable business environment.\nWe expect the actions we've taken will continue to provide us with adequate flexibility under a variety of potential recovery scenarios.\nGiven the uncertainty surrounding the magnitude and duration of the COVID-19 pandemic, and its impacts on our customers, we're not providing full year guidance.\nHowever, there are a few data points that will be helpful for modeling purposes.\nDue to the timing of our cost actions, as discussed earlier, we expect full-year operating expense growth in the range of negative 1% to positive 1% year-over-year in constant currency.\nFor the full year at current rates, currency translation is expected to decrease sales growth by about one percentage point and to negatively impact earnings per share by about 3 percentage points.\nFor the full year, net interest expense is expected to be in the range of $40 million to $42 million primarily due to lower interest rates.\nIn summary, while the second quarter was challenging as we expected, we were very pleased with our results, which were driven by a modestly better market conditions than we anticipated, increasing impact from new products and the strong execution by our team.\nWe are looking forward to the back half of the year, and we are optimistic that the Company is well positioned to return to growth in 2021.\nBefore we take questions, I would like to add a few brief comments on our upcoming CEO transition.\nIt has been the honor and privilege of my career to serve as the CEO of Waters Corporation.\nI have loved every single day working with such inspiring customers and an incredibly talented and committed group of colleagues.\nTogether, we have significantly advanced Waters over the course of the last five years, including, we have transformed our organic innovation engine and established an unprecedented new product pipeline and supplemented our technology portfolio through external investments and tuck-in acquisitions.\nWe have implemented a new capital deployment framework with increasing emphasis on growth investments while also returning capital to shareholders.\nAnd we have significantly advanced the Company's talent organizational capability and technology infrastructure.\nI will pass the reins to Udit Batra on September 1st knowing that Waters is moving forward from a strong foundation.\n",
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"content": "compname reports q2 earnings per share of $1.98.\nq2 non-gaap earnings per share $2.10.\nq2 gaap earnings per share $1.98.\nq2 sales $520 million versus refinitiv ibes estimate of $496.9 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It has been a very busy eight weeks.\nAlong with Bryan, our CFO, Sherry Buck, is joining me in today's call.\nDuring the call, I will provide a brief overview of our third quarter operating results and then share some of my early impressions of the company and the opportunities that I see.\nSherry will then review our financial results in detail and provide comments on our fourth quarter financial outlook.\nLet's start with the third quarter.\nOur teams have worked tirelessly during the pandemic to stay close to our customers.\nWe've seen a cautious return to work by our customers and this is reflected in our results.\nAfter steep declines in the second quarter, third quarter sales were up 2% year-over-year on a constant currency basis and adjusted earnings per share grew 1%.\nFirst, from a customer perspective, our largest segment, Pharma, was the primary growth driver in the quarter with 4% organic growth, followed by Industrial, which grew 3% and Academic and Government, which declined 7%.\nFrom a product perspective, our Waters branded products and services grew 3% organically, while TA declined by 8% on a constant currency basis.\nImproving access to labs, especially in pharma, continued to help drive growth in the recurring revenues.\nServices grew 4%, while consumables business grew approximately 7% organically, driven largely by pharma.\nConsumables remained a growth area for us.\nIn fact, earlier this month, we introduced our ACQUITY PREMIER Columns, which reduce variability risks and save time when analyzing metal-loving analytes, ranging from oligonucleotides, peptides, glycans and phospholipids.\nThe chemistry on the surface reduces unwanted analyte to surface interactions to produce real improvements in sensitivity, peak shape and recovery.\nThe third quarter was strong for our mass spec systems with double-digit growth.\nWe were encouraged by the demand of our high-resolution mass spec systems in pharma and biomedical research, particularly in the U.S. and Europe and the demand for our tandem quad systems in food safety in China.\nBioAccord also grew nicely in the quarter.\nHowever, it still does not represent a material portion of our revenue.\nWith its simplicity and dedicated workflows in peptide mapping, glycan analysis, intact mass and oligonucleotide analysis, we believe it is the right instrument to bring LC-MS into the manufacturing in QA/QC space.\nI have spent time with several of our customers who are using BioAccord instruments and many of them highlighted its ease of use and a robust feature set that can be utilized across multiple lab applications.\nSo, I think BioAccord has a good future, but I also think it will take longer than originally anticipated to significantly impact our core growth.\nThis is a dynamic Waters has seen with prior new product launches, such as ACQUITY, which took almost four years to reach its peak sales.\nLC Instruments also saw a better quarter after double-digit declines in the first half of the year with a modest decline in Q3.\nSome of this improvement can be directly attributed to Arc HPLC, which was launched in June.\nFinally, to TA, revenues continued to decline in the high-single digits due to constraint capital spending at our industrial customers.\nPharma and electronics revenue saw a nice double-digit increase, but this was not enough to offset the industrial declines.\nTurning to our key geographies, both the Americas and Europe grew mid-single digits, while Asia was flat.\nIn the U.S., the growth was driven by pharma, food and academia, partially offset by declines in material science and clinical.\nWe saw especially strong engagement with customers who are assisting the fight against the pandemic.\nLatin America remained soft, mostly due to the continued impact of closures due to COVID-19.\nEurope also experienced a recovery with mid-single digit growth, largely driven by biologics, CROs and genetics, including strong growth at large pharma accounts.\nAfter very significant declines in the first half, China grew at low-single digits, driven by an acceleration in food and pharma as well as strength in TA Instruments driven by investments in 5G networks across the country.\nThis was partially offset by continued weakness in academia and government.\nIndia also recovered with double-digit growth.\nThe third quarter benefited from some catch-up of revenues, which was delayed from the first half of the year.\nAnd looking ahead, while customer activity and access are improving, we remain cautious.\nWe continue to face variability in our end markets and macroeconomic concerns prior to COVID-19, and academic customer trends remain depressed.\nMoreover, we are uncertain on the level of capital spending in the fourth quarter, particularly by our pharma and industrial customers.\nNow, let me share with you some of my early thoughts on the company.\nAs a former researcher who have used Waters products in the lab, as an engineer who has modified rheometers and DSCs, and as a former customer, I believe my 25-year experience at pharma and tools has prepared me well to work with my colleagues to transform Waters.\nIndeed, it is a transformation to return a champion to where it belongs.\nSince the announcement in mid-July, I spent most of my time listening and learning.\nI met with investors and shareholders, including many of you; talked with and visited customers; read and researched and conducted many deep dives with my colleagues around the globe.\nMy learning is far from done.\nBut today, I can share with you few ideas that resulted from this deep transparency phase.\nFirst, Waters has built a solid foundation with exposure to a number of attractive end markets.\nSecond, despite the strong foundation, our momentum has stalled in the last few years.\nThird and finally, we are already developing a transformation plan with tangible short-term actions.\nLet's take each of these in turn.\nFirst, we have a solid foundation in attractive markets.\nOur largest end market, pharma, is benefiting from growth of biologics and continued development of novel modalities.\nMoreover, our strong base of small molecules, which represents approximately 75% to 80% of pharmaceutical industry sales will benefit from the growth of CROs, oligonucleotides and mRNA therapeutics, as well as the increasing potential for repatriation of small molecule manufacturing.\nWe have a global footprint with 25% of our sales coming from China and India.\nWe have a solid base in these markets that is characterized by trusted brands, deep customer relationships and a culture that is rooted in science and engineering.\nIn my customer meetings, Waters' employees are acutely aware of the issues facing our customers and are so tightly integrated with them that I often had a tough time distinguishing between our employees and that of our customers.\nSecond, despite the strong foundation, we have underperformed both our historical growth and that of the market for the last few years.\nOur performance has trailed the market in LC, mass spec and thermal analysis.\nWe were slow to respond to the transition of food testing from government labs to contract testing labs in China.\nOur product launches have not met expectations that we set.\nBioAccord, while a product that clearly meets the need, has been slower on the uptake than anticipated.\nOur culture is one that appreciates deep scientific insights, but one that has lacked focus and urgency.\nStrategically, the focus on our portfolio on LC, LC-MS and thermal analysis has limited our ability to keep up with the emerging trends like bioprocessing, contract manufacturing and testing or diagnostics.\nThis is evident in our lack of exposure to tailwinds from COVID-19 as compared to some of our peers.\nThird, where to from here?\nWhile we are still continuing an in-depth analysis and developing our transformation strategies, some teams are already emerging.\nAnd let me break these into three.\nFirst, in the near term, we're focused on making changes to regain commercial momentum.\nSecond, in the mid-term, the focus is on the pipeline and organic growth with intense focus and urgency.\nAnd finally, as we strengthen our organic growth, we will start to examine strategic investments.\nLet me give you some concrete examples in the near term.\nFirst, we are squarely focused on regaining our footing in healthy instrumentation.\nFor instance, we've identified all the units in both our installed base and in the larger and power network and implemented a specific program to upgrade and replace older systems with Waters HPLC instrument portfolio, including with the new Arc HPLC.\nFor example, there are thousands of Alliance Systems in service that are more than 20 years old and in need of an upgrade.\nSecond, approximately 20% of our consumable sales go through the e-commerce channel.\nFor many of our competitors, this number is over 50%.\nIn the near term, we're implementing actions to increase traffic to these channels, such as increasing paid search and improving search engine optimization.\nThird, our penetration in CRO channel trails our competition.\nWe will increase our commercial presence to penetrate this growing channel at a level that better aligns with our peers.\nFourth, as I mentioned earlier, we still have a lot of faith in the success of BioAccord.\nCustomers in QA/QC are conservative, and we need to spend a lot more time developing methods in collaboration with them and further developing enterprise-level software to help them deploy the system seamlessly.\nAs you can see, they are near-term actions that are backed by detailed targets and KPIs.\nHowever, I want to be clear, these changes will take time and will not significantly impact our results overnight, especially as we implement these initiatives on the background of COVID-19.\nHowever, I can assure you the team is very engaged and have seen an impressive increase in drive and ambition in the eight weeks that I've been here.\nWith that, I'd like to pass the call over to Sherry Buck, for a deeper review of the third quarter financials.\nIn the third quarter, we recorded net sales of $594 million, an increase of approximately 2% in constant currency.\nCurrency translation increased sales growth by approximately 1%, resulting in sales growth of 3%, as reported.\nIn the quarter, sales into our pharmaceutical market increased 4%, sales into our industrial market increased 3%, while academic and governmental markets declined 7%.\nLooking at our product line growth, our recurring revenue, which represents the combination of precision chemistry products and service revenue, increased by 5% in the quarter, but instrument sales declined 1%.\nAs we noted last quarter, there was no year-over-year difference in the number of calendar days during the third quarter.\nIndustry revenues were up 7% in the third quarter, driven by strong pharma market growth.\nOn the service side of our business, revenues were up 4% as on-demand service bounced back to mid-single digit growth along with continued growth in service plan revenues within the Waters product line, bringing third quarter product sales down further.\nSales related to Waters branded products and services grew 3%, while sales of TA branded products and services declined 8%.\nCombined LC Instrument platform sales and LC-MS Instrument platform sales were flat and TA's instrumentation system sales declined 10%.\nLooking at our growth rates in the third quarter geographically and on a constant currency basis, sales in Asia were flat with China up 3%, sales in Americas grew 2% with U.S. growing 5%, and European sales grew 5%.\nBefore I comment on our third quarter non-GAAP financial performance versus the prior year, I'd like to update you on the progress of our cost actions in response to the COVID-19 pandemic.\nWe are on-track to achieve cost savings of approximately $100 million for the year relative to our pre-COVID internal plan.\nWe achieved approximately 25% of our planned annual savings in the third quarter, bringing our year-to-date savings against our internal plan to 85%, with the majority recognized in the second quarter.\nWe expect to realize remaining 15% in the fourth quarter.\nReturning to our third quarter non-GAAP financial performance, gross margin for the quarter was 55.8% compared to 58.2% in the third quarter of 2019, primarily as a result of unfavorable FX as well as fixed cost absorption and sales mix.\nMoving down the third quarter P&L, operating expenses increased by approximately 1% on a constant currency basis and foreign currency translation increased operating expense growth by approximately 2% on a reported basis.\nThe increase was primarily attributable to the timing of variable costs in the prior year quarter and FX.\nIn the quarter, our effective operating tax rate was 15.8%, which was about flat for the prior year.\nNet interest expense was $7 million, a decrease of about $1 million.\nOur average share count came in at 62.3 million shares, a share count reduction of approximately 7% or about 4 million shares lower than in the third quarter of last year as a result of shares repurchased through the end of the first quarter of 2020, subsequent to which we paused the share repurchase program.\nOur non-GAAP earnings per fully diluted share for the third quarter increased to $2.16 in comparison to $2.13 last year.\nOn a GAAP basis, our earnings per fully diluted share decreased to $2.03 compared to $2.07 last year.\nTurning to free cash flow, capital deployment and our balance sheet, I'd like to summarize our third quarter results and activities.\nWe define free cash flow as cash from operations, less capital expenditures and excluding special items.\nIn the third quarter of 2020, free cash flow grew 53% year-over-year to $190 million, after funding $28 million of capital expenditures.\nExcluded from free cash flow was $7 million related to the investment in our Taunton precision chemistry operation and a $38 million transition tax payment related to 2017 U.S. Tax Reform.\nIn the third quarter, this resulted in $0.32 of each dollar of sales converted into free cash flow and $0.31 year-to-date.\nOur increased free cash flow is primarily a result of our cost savings actions and improvements in our cash conversion cycle.\nWe continue to make good progress on our working capital improvement plans.\nAccounts receivable days sales outstanding came in at 76 days this quarter, down four days compared to the third quarter of last year and down 11 days from the second quarter.\nInventories decreased by $42 million in comparison to the prior year quarter, reflecting stronger revenue growth and revised production schedules.\nWaters maintains a strong balance sheet, access to liquidity and a well-structured debt maturity profile.\nWe ended the quarter with cash and short-term investments of $397 million and debt of $1.6 billion on our balance sheet at the end of the quarter.\nThis resulted in a net debt position of $1.2 billion and a net debt-to-EBITDA ratio of about 1.6 times at the end of the third quarter.\nWe also have $1.2 billion available on our bank revolver for total available liquidity of $1.6 billion at the end of third quarter.\nOur capital deployment priorities remain consistent: invest for growth, balance sheet strength and flexibility and return of capital to shareholders.\nWe remain committed to deploying capital against these priorities.\nOur future capital structure target of approximately 2.5 times net debt-to-EBITDA remains unchanged, while our near-term focus is maintaining financial flexibility and variability in the macro environment.\nWhile our share repurchase program is paused during the fourth quarter, it still remains an important part of our capital deployment priority.\nWe will provide an update on our capital deployment plans during our Q4 earnings call in February of 2021.\nLastly, I would like to make a few comments on our outlook.\nMarket conditions remain variable, largely due to the COVID-19 pandemic.\nAs a result, we're not in a position to provide detailed guidance.\nHowever, I'd like to provide you with color on how we're viewing market conditions in the fourth quarter.\nWe assume similar levels of customer access as we saw in the third quarter, which reflects the challenging macro environment.\nOur outlook does not anticipate a return to lockdowns seen earlier in the year at the height of the pandemic.\nAnd in addition, we believe that some delayed purchases from the first half of the year were realized during the third quarter and there is limited visibility into year-end capital budgeting plans for both pharma and industrial customers in the fourth quarter.\nIn light of these dynamics, we anticipate that fourth quarter revenue, on a constant currency basis, will most likely decline at a low- to- mid-single digit range.\nIn addition, I'd like to provide a few other assumptions that will be helpful for modeling purposes.\nRecurring revenue benefits from two additional calendar days in the fourth quarter of 2020 compared to 2019, which is factored into our outlook.\nWe now expect full year operating expenses to be in the range of down 1% to flat year-over-year in constant currency.\nFor the full year, at current rates, currency translation is expected to be about neutral to sales growth to positively impact operating expense growth by less than 1 percentage point and to negatively impact earnings per share by about 3 percentage points.\nFor the full year, net interest expense is expected to be in the range of $38 million to $40 million primarily due to lower debt levels.\nIn summary, we're pleased with the third quarter results, but market conditions remain variable amid ongoing macroeconomic uncertainty, lingering concerns around fourth quarter capital spending by both pharma and industrial customers and academic customer trends.\nOverall, I believe that we have a solid foundation.\nBut to return to our deserved place in the tools industry, we need to improve our operational execution in the short-term and focus our teams on what matters.\nAnd then in the mid-term, our focus will return to strategically building our portfolio.\n",
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"content": "compname reports q3 non-gaap earnings per share $2.16.\nq3 non-gaap earnings per share $2.16.\nq3 gaap earnings per share $2.03.\nq3 sales $594 million versus refinitiv ibes estimate of $546.5 million.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We have reported another quarter of strong broad-based momentum across our portfolio and geographies.\nOur teams have remained focused on supporting our customers and developing and delivering exciting new products despite the continuing impact of the pandemic.\nSeptember 1 marked one year since I joined the company and what a year it has been.\nI'm often asked what is different.\nI would first like to talk about what is the same because that is what is giving us the ability to compete more effectively.\nOur brand stands for deep scientific expertise, a clear understanding of our customers' challenges and courage to invest in game-changing innovation; this remains the same.\nWhat we have injected with our new leadership team is a stronger focus on execution, a sense of urgency and accountability.\nWe are a work in progress but the trend is positive.\nNow moving to Slide 3 which summarizes where we are on our journey.\nFirstly, we're sustaining our commercial momentum with another strong quarter delivering flat sales growth of 6%, showing solid business performance with minimal COVID tailwinds.\nMeanwhile, our commercial initiatives and strong traction of new products like premier columns and instruments and Arc HPLC were well-positioned to deliver market cost growth through 2022.\nFinally, preparing on this momentum by taking decisive steps and solving key problems that are present in higher growth adjacencies like biologics manufacturing.\nI will now provide a brief overview of our third quarter operating results, as well as commentary on our end markets, geographies and technologies.\nAmol will then review our financial results in detail and provide comments on our updated financial outlook.\nMoving now to Slide 4.\nIn the third quarter, our revenue grew 11% as reported and on a constant currency basis, reflecting continued strength in our pharma and industrial end markets, with balanced demand for our instruments and recurring revenue products.\nThis translates to a 6% stack CAGR for the quarter versus 2019 on a constant currency basis.\nYear-to-date, revenue has increased 21% with a constant currency tax CAGR versus 2019 also above 6%.\nOur top line growth resulted in Q3 non-GAAP adjusted earnings per share of $2.66, growing 23% year-over-year.\nYear-to-date, non-GAAP adjusted earnings per share have grown 39% to $7.54.\nLooking more closely at our top-line results for the quarter on Slide 5 in constant currency, first, by operating segment.\nThe Water division grew 9% while DA grew by 27%.\nBy end market, our largest market category, pharma, grew 16%, industrial grew 9%, while academic and government declined by 11%.\nIn Pharma, we saw a broad-based continued strength in sales across customer segments, geographies and applications.\nSpecced [Phonetic] was both in small molecule and large molecule applications which both grew in mid-teens for the quarter.\nIndustrial growth was regionally broad and led by our TA business which saw strong growth globally in thermal, microcalorimetry and theology.\nTurning to academic and government which is about 10% of our business, continued strength in Europe was offset by softer performance in China and other regions.\nMoving now to our sales performance by geography, on a constant currency basis, sales in the Americas grew 16%, with the U.S. growing 13%.\nSales in Europe grew 8%.\nSales in Asia grew 8%, with India over 40% and China sales were down 3%.\nNow to a bit of clarification on China; demand remains very healthy as does the execution of our initiatives.\nA shipment of approximately $12 million got delayed at an airport in the last few days of the quarter due to a third-party shipping issue and has been delivered in the first few days of the fourth quarter.\nLooking therefore at China orders for the quarter, this was up mid-teens year-over-year.\nSo really no challenge from a demand perspective.\nIn the U.S., growth was led by a broad-based continued strength in our pharma and industrial end markets.\nIn pharma, we saw strength across our instrument and chemistry portfolios.\nIn Industrial, our Waters and TA businesses both saw strong growth.\nEurope demand remains robust across all end markets with continued strength in pharma, industrial and academic and government.\nFor the quarter, India was our fastest-growing market, driven by very strong growth in instrument sales to our pharma customers.\nAs you know, India is primarily a small molecule and generic market for export and this is indicative of continued strength in global pharmaceutical demand for small molecule drugs.\nAt products and services, customer demand for our instruments remain strong after an impressive first half of the year, while recurring revenues also continued to see sustained growth.\nOverall, instrument sales grew 10% for the quarter, driven by robust demand, our improved commercial execution, new product contribution and instrument replacement.\nIn LC, the newly released Arc HPLC continued to see strong growth and uptake of our premier instruments, both Arc and acuity, especially for applications in novel modalities like mRNA and Biologics remain solid.\nThe strength we are seeing in our LC instrument portfolio remains a positive indicator for sustainable future growth in consumables and service.\nIn mass spec, demand strength from pharma customers continued with strong demand for our single quad led by users for oligo and biologics purification as well as strength in our tandem quad used in late-stage product development.\nWe're also encouraged by early interest in our Select Series MRT Time-of-Flight platform which delivered highest quality resolution at fast speeds.\nNow for our recurring revenues, chemistry sales grew 13%, driven by an increase in utilization of our pharma customers, as well as strength in our industrial end markets.\nDemand for our new premier columns remains strong, while our e-commerce initiative is progressing and making it easier for our customers to do business with us.\nSo far this year, our chemistry consumables have grown almost double digits when compared to our 2019 base.\nWe're pleased that our premier technology is continuing to provide important benefits in separation and purification of mRNA and oligonucleotide molecules, given it's unique ability to reduce selective binding of plasmids and mRNA to various services.\nService also grew double digits again this quarter even as last year's comps have become tougher.\nOn a two year stack basis, service grew 7% in constant currency for the quarter and 6% year-to-date.\nBy focusing on our value proposition and commercial execution, we have seen an increase in service plan attachment rates and plan renewals.\nFinally, TA had a great quarter, with sales up almost 30% as demand has rebounded with strong growth across all regions.\nTA instrument sales have grown at 8% on a two year stack basis so far this year driven by strong demand for our thermal instruments used in the analysis of advanced materials, as well as microcalorimetry instrument demand for our pharma and academic customers.\nMoving now to Slide 6.\nLet me now focus on why we believe that we will continue to deliver market class growth.\nI think you're used to seeing these initiatives, so let me use the same trend starting from the left-hand side of the slide.\nIn 2021, we expect our instrument replacement initiative to deliver over $30 million in revenue.\nIn 2022, we expect this to become over $40 million which means an incremental $10 million over 2021.\nOur focus on commercial execution is positively impacting our service business with planned coverage rates having increased by 2% so far this year compared to the first three quarters of 2019.\nIn 2022, we think a further 100 basis points of expansion in service plan adoption is attainable.\nGrowth in e-commerce adoption also remains strong with chemistry sales through our e-commerce channels approaching roughly 30% versus the 21% we saw in 2019.\nWe expect this to continue reaching over 35% by the end of next year.\nSo far, this year, revenue from contract organizations has grown over 40% versus the comparable period in 2019.\nNext year, we expect the expect this to grow low double digits for the year versus 2021.\nAnd new products continue to do well.\nWe are just taking the example of Arc HPLC and Premier to illustrate the point here.\nBoth Arc HPLC and Premier continue to be strong drivers with over $45 million revenue expected from these sources of this year in and separate to the replacement initiative.\nIn 2022, we are expecting this number to be over $60 million.\nSo in all, these initiatives alone should give us approximately 1% over our base business growth for 2022 which reaffirm our belief in market plus growth rates.\nMoving now to Slide 7, we operate a strong core business in healthy and durable end markets.\nThis strong foundation provides us a platform for solving critical problems facing our industry, where we can bring our scientific expertise and product portfolio capabilities.\nI would like to say, there are three areas of focus which also happen to be in high-growth end markets.\nFirst, in the biologics arena on the reagent side and bioseparations.\nWe believe there are significant problems to solve in separating and purifying these newer modalities, having a deeper understanding of reagents coupled with our chemistry expertise will allow us to solve these problems.\nSecond, in bioprocessing, the largest challenge I felt as an engineer in bioprocessing versus small molecule processing was that once you define the process, you got stuck with it because it was in a drug master file.\nWe have to decouple the process from the product.\nSeparately, the process development time scales are longer versus small molecules, given the sheer complexity of attributes you need to measure.\nA simple and robust tool that can measure multiple attributes as a potential solution.\nWe believe that the bio cohort is the right LCMS tool that can begin to address this challenge.\nThird area is diagnostics, where we need a fast unbiased detection of multiple biomarkers to enable early disease detection.\nWe believe, again, mass spec has a significant role to play here.\nMoving now on to Slide 8.\nLet me illustrate what I mean by sharing what we are doing to solve some of the key problems in bioprocessing.\nLast week, we announced a partnership with Sartorius, a leader in bioprocessing.\nWe will combine our water Biocare system as a bioprocess analyzers with Sartorius amber bioreactors, giving scientists both faster and at line direct access to advanced quality characterization information.\nScientists across Sartorius, Waters and some of our customers have already shown that the combined offering will shorten product development timelines considerably, taking what currently takes six weeks to analyze down to only two days.\nIt also lays the foundation for using the BioCore as a bioprocess analyzer for process control and quality testing in the future.\nBioAccord is both versatile and easy to use and we expect that process engineers will be able to master it's operation within one to two weeks.\nIn fact, one of our customers had summer interns use the BioAccord and gave raving reviews on how simple it is to use.\nI'm also an engineer who have been out of the last for many years and I was able to learn quickly.\nResulting configuration will allow direct analysis of bulk substance not just cell culture media, while targeting over 250 cell culture media analytics.\nSeparately, we also announced a multiyear collaboration with the University of Delaware to develop technology for analytical characterization of manufacturing processes for biologics and normal modality.\nThrough these partnerships, researchers from both Waters and the University of Delaware will identify and develop solutions that can provide better aseptic sampling, make sensor and analytical instrument improvements and develop data analytics and process control.\nThis partnership will help us expand our capabilities to characterize biological manufacturing processes in order to drive improvements in quality, yield, efficiency and process control.\nIn summary, 2021 so far has been a very successful year for Waters.\nWe are laser focused on our commercial execution.\nThe markets we serve are in a healthy state and our geographic regions have rebounded solidly from pandemic lows.\nMeanwhile, I'm convinced of the great opportunity that lies ahead of us higher growth adjacencies to impact and deliver value by extending our scientific expertise and product portfolio toward helping customers solve the most complex problems in our industry.\nWith that, I'd like to pass the call over to Amol for a deeper review of third quarter financials and our outlook for the remainder of 2021.\nAs Udit outlined, we recorded net sales of $659 million [Phonetic] in the third quarter, an increase of 11% in constant currency.\nReported sales growth was also 11%.\nLooking at product line growth, our recurring revenue which represents the combination of chemistry and service revenue increased by 11% for the quarter, while instrument sales increased 10%.\nChemistry revenues were up 13% and service revenues were up 10%.\nAs we noted in our last earnings call, recurring revenues were not impacted by a difference in calendar days this quarter.\nLooking ahead, there are six fewer days in fourth quarter of this year compared to 2020.\nNow, I would like to comment on our third quarter non-GAAP financial performance versus the prior year.\nGross margin for the quarter was 58.9%, as compared to 55.8% in the third quarter of 2020.\nImprovement was driven primarily by volume leverage and revenue mix.\nThe foreign exchange benefit in the quarter was about 1%.\nMoving down the P&L, operating expenses increased by approximately 17% on a constant currency basis and on a reported basis.\nThe increase was primarily attributable to higher labor cost due to the normalization of prior year cost actions, as well as higher variable compensation on the higher sales volume.\nIn the quarter, our effective operating tax rate was 11.7%, a decrease from last year due to some favorable quarter specific discrete items.\nExcluding the impact of these discrete items, our year-to-date tax rate is consistent with the prior year.\nOur average share count came in at 61.9 million shares or about 400,000 less than the third quarter of last year as a result of our share repurchase program.\nOur non-GAAP earnings per fully diluted share for the third quarter increased 23% to $2.66 in comparison to $2.16 last year.\nOn a GAAP basis, our earnings per fully diluted share increased to $2.60 compared to $2.03 last year.\nTurning to free cash flow, capital deployment in our balance sheet.\nWe define free cash flow as cash from operations less capital expenditures and exclude special items.\nIn the third quarter of 2021, free cash flow was $140 million after funding $40 million of capital expenditures.\nExcluded from the free cash flow was $12 million relating to investment in our Taunton precision chemistry.\nYear-to-date free cash flow has increased to $488 million and at approximately $0.25 of each dollar of sales converted into free cash flow.\nIn the third quarter, accounts receivable DSO came in at 71 days, down five days compared to the third quarter of last year and down two days compared to the last quarter.\nInventory DIO decreased by 13 days compared to the third quarter of last year.\nGiven the higher sales volume and our proactive measures to secure supply, inventory increased by 62 million in comparison to the prior year.\nWe maintain a strong balance sheet, access to liquidity and well-structured debt maturity profile.\nIn terms of returning capital to shareholders, we repurchased approximately 369,000 shares of our common stock for $151 million in Q3.\nAt the end of the quarter, our net debt position was $958 million, with net debt-to-EBITDA ratio about one.\nOur capital deployment priorities are to invest in growth, maintain balance sheet strength and flexibility, return capital to shareholders and to deploy capital to well thought out, attractive and adjacent growth opportunities.\nAs we look forward to the remainder of the year, I would like to provide you with some update on our thoughts for 2021 on Slide 11.\nThroughout this year, we've seen good momentum driven by robust end market demand and strong commercial execution.\nWe believe that this momentum will continue and expect our near-term growth initiatives to continue to contribute meaningfully to our performance.\nLooking at the fourth quarter, the comparison is more challenging as it was the first quarter in our transformation journey and was further favorably impacted by post lockdown elevated year-end budget plus spending.\nIn addition, we have six fewer calendar days in the fourth quarter of this year.\nThis dynamic supports raising full year 2021 guidance to 15% to 16% constant currency sales growth.\nAt current exchange rates, the positive currency translation is expected to add approximately one percentage point, resulting in full year reported sales growth guidance of 16% to 17%.\nGross margin for the full year is expected to be approximately 58% to 59% and operating margin is expected to be approximately 29% to 30%.\nWe expect our full year net interest expense to be $34 million and full year tax rate to be 14% to 15%.\nAverage diluted 2021 share count is expected to be approximately $62 million.\nOur share repurchase program will also continue into Q4 and we'll provide quarterly updates as appropriate.\nRolling all this together on a non-GAAP basis, full year 2021 earnings per fully diluted share are now projected in the range of $10.94 to $11.04.\nThis includes a positive currency impact of approximately two percentage points at today's rate and assumes no material adverse supply impact from COVID.\nLooking at the fourth quarter of 2021, we expect constant currency sales growth to be 5% to 7%.\nAt today's rates, currency translation is expected to subtract approximately two percentage points resulting in fourth quarter reported sales growth guidance of 3% to 5%.\nFourth quarter non-GAAP earnings per fully diluted share are estimated to be in the range $3.40 to $3.50.\nThis includes a negative currency impact of approximately three percentage points at today's rates and assumes no material adverse supply impact from COVID.\nBefore I wrap things up, I would like to make a few comments on our ESG efforts and our core principles to fuel innovation and make a positive impact.\nThis includes doing our part to reduce our environmental footprint and leave the world better than we found it, being representative of the diverse society we live in and providing effective governance that enhances long-term shareholder value.\nYou will see more of our progress in each of these areas in our 2021 sustainability report coming out later this month.\nTurning to Slide 10, I was particularly moved recently by the new internship program we developed with Team New England designed to increase access to STEM education for students of all backgrounds.\nOver the course of six weeks, we gave high school students a hands-on learning experience with a mix of science, business and soft skills.\nOver 70 Waters employees were involved, who gave practical exposure and mentorship.\nWe look forward to continuing these efforts in the future.\nIn summary, we continue to be pleased with our performance this year, we're sustaining our commercial momentum with our initiatives which continue to perform well and should provide a multiyear benefit as we continue to strengthen our core.\nWe are continuing to track 6% on a two year CAGR [Phonetic] 6% on a two year CAGR for our revenue in constant currency, showing that our core is strong.\nWe are focused on accelerating innovation to our portfolio and reaching these higher growth rate areas in adjacent markets.\n",
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"content": "q3 non-gaap earnings per share $2.66.\nq3 sales rose 11 percent to $659 million.\nsees q4 non-gaap earnings per share $3.40 to $3.50.\nsees fy non-gaap earnings per share $10.94 to $11.04.\nq3 gaap earnings per share $2.60.\nsees fy21 constant currency sales growth in range of 15-16%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It is one that has brought significant change and sacrifices.\nFrom navigating the pandemic and resulting short-term cost-saving initiatives earlier this year to changes in leadership, the Waters team has responded with drive, determination, and an indomitable spirit.\nI am impressed by and grateful for our team's resilience and commitment to our customers and to each other.\nDuring today's call, I will provide a brief overview of our 4th quarter and full-year operating results as well as an update on the, on the stabilization that we have seen in the LC market and a few factors influencing our thinking for 2021.\nMike will then review our financial results in detail and provide comments on our first quarter and full-year financial outlook.\nBriefly reviewing our operating results for the 4th quarter, revenue grew 10% as reported, 7% on a constant currency basis and adjusted, adjusted earnings per share grew 14%.\nFor the full year, revenue declined 2% and adjusted earnings per share was up 1%.\nThe strong finish to the end of a challenging year was driven by the pharmaceutical market improvement, capital spending recovery in the second half of the year, strong -- strong execution and early contributions from our near-term growth initiatives.\nLooking more closely at our top line results, first from a customer perspective.\nOur largest market category pharma was the primary growth driver in the quarter with 15% growth.\nOur industrial market grew 5% while academia and government declined 15%.\nOn a constant currency basis, sales in Asia were up 12% with China, up 19%.\nMeanwhile, sales in the Americas grew 3% for the US growing 4% and European sales grew at 6%.\nFrom a product perspective, our Waters branded products and services grew approximately 8% while TA declined by around 1% on a constant currency basis.\nWhile still navigating the global pandemic, we are seeing clear signs of improving customer activity, positive growth trends in our recurring revenues, and an evidence of stabilization in LC instrument demand.\nServices grew 10% while consumables business grew approximately 14% driven largely by global pharma strength, including sales of our recently launched PREMIER Columns, which performed exceedingly well in the first quarter on the market.\nLC Instruments grew most -- grew across most of our major geographies with high single-digit growth.\nThis improvement in capital equipment purchasing reflects the combination of the return of some of the planned capital spending that was delayed from the first half of the year, a normal pharma year end budget flush, and early contributions from our LC replacement initiatives.\nFollowing last June's release of the Arc HPLC System in the core HPLC market with a particular focus on the small molecule development and QA-QC space, we look forward to the continued expansion of our liquid chromatography portfolio.\nOn February 10, we will launch ACQUITY PREMIER, a next generation UPLC system that offers customers an extraordinary breakthrough in efficiency, sensitivity, and overall capability.\nThis new system will benefit both large and small molecule discovery and development as well as biomedical research.\nThis new system has even more profound benefits when paired with our ACQUITY PREMIER Columns, which I mentioned earlier and were launched in the 4th quarter.\nThe combined solution will alleviate non-specific binding absorption losses and provide a significant leap forward with enhanced reproducibility, reduced passivation, and an increased confidence in analytical results.\nAfter a very strong 3rd quarter, mass spec sales were about flat in Q4.\nAs you know, the mass spec business can be lumpy, which we saw with biomedical research.\nThere was also a general softness in clinical diagnostics as budgets were diverted to COVID-19 testing.\nNotably, however, mass spec sales to pharma customers grew double-digits, driven by the strong double-digit growth of both BioAccord and the QDA.\nFinally, to TA, revenues declined low single digits, which was -- which was much improved from earlier in the year.\nWe saw the core thermal business start to pick up driven by market improvement in Asia.\nIn particular, life sciences including pharma and medical devices grew double-digits.\nCombined these, comprised approximately 10% to 15% of TA's total revenues.\nHowever, this was not enough to offset declines from TA's industrial customers.\nLooking now, at our geographies, all major regions grew.\nThe Americas grew low single digits, Europe grew mid-single digits, and Asia grew double-digits.\nIn the US, the growth was driven by pharma, which was partially offset by declines in material science, environmental, academic, and government.\nThough Latin America continued to decline, it improved meaningfully relative to earlier in the year.\nEurope also experienced strong pharma performance, partially offset by material science, food, and academic and government.\nIn both US and Europe, pharma growth was broad-based including strength in big pharma, large molecule customers, genetics, and contract labs.\nChina had an impressive quarter with strong double-digit growth driven by continuing acceleration in pharma as well as strong environmental growth.\nThe pharma growth was driven by both small and large molecule customers including particularly strong growth at contract labs.\nIndia also continued to grow double-digits.\nIn summary, overall in the 4th quarter, we saw further relative strength in the market and benefited from strong year end spending trends.\nNow for the year, our pharmaceutical market category achieved 1% growth with the US, Europe, and India all seeing positive growth.\nIndustrial declined 3% for the full year and academic and government declined 16%.\nNotably, our pharma market category grew 10% in the second half compared to the first half decline of 8% owed in part to strength in small molecules, the industry recovered from lock-downs.\nIndustrial also grew in the second half at 4% while academic and government declined 12% compared to the first half declines of 10% and 22% respectively.\nGeographically for the year, Asia sales were down 4% with China -- China sales down 8%.\nSales in Americas were down 4%; for the US, down 2%.\nEurope sales were up 2%.\nNotably, all our major geographies grew in the second half of the year with the US up 4% and Europe up 6% following first half declines of 9% and 3% respectively.\nChina market grew in the second half, up 11%, reversing much of its sharp 31% decline in the first half of the year.\nNow, I would like to share some of the progress we've made in our transformation program, as several of the initiatives we're putting interaction are starting to contribute to growth.\nFirst, I would talk about our instrument replacement initiative, then our progress in contract lab expansion followed by e-commerce and lastly, I'll give you a BioAccord update.\nFirst, as it relates to our instrument replacement initiative, which is the most advanced initiative under way, we delivered our first quarterly LC Instrument revenue growth in two years and our LC Instrument win-loss was the highest it has been in three years.\nInitial customer feedback has been very positive on the Arc HPLC as well.\nSecond, as part of our contract lab expansion initiatives, we have made important progress in targeting this high growth customer group.\nWe have contacted a number of customers globally, particularly in China and have strengthened our value proposition with expanded alternative revenue and service offerings, which have -- which have been well received by the segment.\nIt is still early days, but we're pleased with the progress we're making.\nThird, our e-commerce initiative is still in the early stages, but waters.com traffic is up double digits, driven by search engine optimization and paid search.\nWhile there isn't a one-to-one relationship between traffic and revenue, increased traffic is an important first step in driving revenue growth through the e-commerce channel.\nIn tandem with our e-commerce actions, we've also enhanced our e-procurement platform on which we have expanded our coverage of customers leveraging this channel.\nThis supported strong e-procurement growth indicating that it's now easier to work with Waters.\nFourth, driving launch excellence.\nBioAccord sales exceeded expectations in the quarter as our market development efforts and our specialty sales model have started to take effect, particularly in the US and Europe.\nMany customers are increasingly adopting BioAccord for manufacturing and several have placed follow-on orders.\nOnce we get BioAccord applications on an enterprise software platform, we believe we will be, we will be seeing more follow-on orders.\nMore importantly, customer activity continues to be encouraging, which makes us optimistic about 2021.\nLastly, I'd like to highlight our efforts to help mitigate the public health crisis.\nIn addition to the significant efforts by our innovation response team, we are encouraged to see Waters consumable specked in on QA-QC methods for COVID vaccines and therapeutics.\nWe're also seeing an uptick in COVID driven demand for our instruments and consumables.\nThis peaked in the 4th quarter were COVID revenues contributed an estimated 1 to 2 percentage points to the growth, driven by those pharmaceutical customers developing COVID vaccines and therapeutics who saw meaningfully higher growth than manufacturers that don't have COVID-related programs.\nIn summary, as a wrap up to 2020, we've done a great job at keeping our employees safe and our operations running.\nOur teams have focused not only on getting products out the door, but we have also assisted our customers engaged in COVID-related efforts.\nMeanwhile, our base business is showing signs of recovery, and our transformation is well under way.\nTurning to 2021, while the business environment remains uncertain, we look forward to building on the 4th quarter momentum.\nMike will provide further details on our outlook for 2021, which is based on three key factors.\nOne, we're assuming a gradual improvement in customer activity led by the pharma market.\nTwo, we expect all major geographies to perform better than they did in 2020, led by growth in China.\nLastly, our near-term growth initiatives are expected to continue to ramp up, led by our LC replacement initiative, which we expect to increasingly contribute to performance.\nIn the 4th quarter, we recorded net sales of $787 million, an increase of approximately 7% in constant currency.\nCurrency translation increased sales growth by approximately 3% resulting in sales growth of 10% as reported.\nFor the full year, sales declined about 2% in constant currency and as reported.\nLooking at product line growth, our reoccurring revenue, which represents the combination of precision chemistry products and service revenue increased by 11% in the quarter while instrument sales increased 4%.\nFor the full year, reoccurring revenue grew 3% while instrument sales declined 9%.\nChemistry revenue were up 14% in the quarter, driven by strong pharma growth.\nOn the service side of our business, revenues were up 10%, as customers continue to reopen labs, catch up on performance maintenance in professional services, and repair visits.\nAs we noted last quarter, recurring sales were impacted by two additional calendar days in the quarter, which resulted in a slight increase in service revenue sales.\nLooking ahead, there are five additional calendar days in the first quarter and six fewer calendar days in the 4th quarter of 2021 compared to 2020.\nBreaking 4th quarter product sales down further, sales related to Waters' branded products and services grew 8% while sales of TA-branded products and services declined 1%.\nCombined LC and LCMs instrument sales were up 5% while TA system sales declined 4%.\nNow, I'd like to comment on our 4th quarter and full year non-GAAP financial performance versus the prior year.\nGross margin for the quarter was 59.2%, an increase compared to the 58.2% in the 4th quarter of 2019, primarily due to the higher sales volume in FX.\nOn non -- on a full year basis, gross margin was 57.4% compared to 58% in the prior year on lower overall sales volumes in 2020.\nMoving down the 4th quarter P&L, operating expenses increased by approximately 6% on a constant currency basis and 8% on a reported basis.\nThe increase was primarily attributed to variable expenses related to the strong sales performance.\nFor the year, operating expenses were 1% lower before currency translation and flat after.\nIn the quarter and for the full year, our effective operating tax rate was 14.9% and 14.8% respectively, an increase from last year at the comparable period included some favorable discrete items.\nNet interest expense was $7 million for the quarter, a decrease of about 3 million, as anticipated on lower outstanding debt balances.\nOur average share count came in at 62.5 million shares, a reduction of approximately 3% or about 2 million shares lower than in the 4th quarter of last year.\nThis is a result of shares repurchased through the end of the first quarter of 2020 subsequent to which we paused our share repurchase program.\nOur non-GAAP earnings per fully diluted share for the 4th quarter increased 40% to $3.65 in comparison to the $3.20 last year.\nOn a GAAP basis, our earnings per fully diluted share increased to $3.49 compared to $3.12 last year.\nFor the full year, our non-GAAP earnings per fully diluted share were up 1% at $9.05 per share versus $8.99 last year.\nOn a GAAP basis, full year earnings per share were $8.36 versus $8.69 in 2019.\nTurning to free cash flow, capital deployment in our balance sheet, I would like to summarize our 4th quarter results and activities.\nWe define free cash flow as cash from operations less capital expenditures and excluding special items.\nIn the 4th quarter of 2020, free cash flow grew 52% year-over-year to $240 million after funding $47 million of capital expenditures.\nExcluded from free cash flow was $19 million related to the investment in our Taunton precision chemistry operation.\nIn the 4th quarter, this resulted in $0.30 of each dollar of sales converted into free cash flow.\nFor the full year in 2020, free cash flow generation was $726 million after funding $172 million of capital expenditures.\nThis represents a 26% increase and $0.31 per dollar of sales converted into free cash flow.\nExcluded from free cash flow was $70 million related to our investment in our Taunton chemistry operations and a $38 million transition tax payment related to the 2017 US tax reform.\nOur increased free cash flow is primarily a result of our cost actions -- cost saving actions and improvements in our cash conversion cycle.\nIn the 4th quarter, accounts receivables days sales outstanding came in at 70 days, down seven days compared to the 4th quarter of last year.\nInventories decreased by 16 million in comparison to the prior quarter -- prior year quarter, reflecting stronger revenue growth in revised production schedules.\nWaters maintains a strong balance sheet, access to liquidity, and a well structured debt maturity profile.\nWe ended the quarter with cash and short-term investments of $443 million and debt of 1.4 billion on our balance sheet at the end of the quarter.\nThis resulted in a net debt position of $913 million and a net debt to EBITDA ratio of about 1.1 times at the end of the 4th quarter.\nOur capital deployment priorities remain consistent and better growth, balance sheet strength and flexibility, and return of capital to shareholders.\nWe remain committed to deploying capital against these priorities.\nAs such, our Board of Directors has approved a two-year extension of our January 2019 share repurchase authorization that was set to expire last month.\nAs of today, we have 1.5 billion remains available credit program for share repurchases.\nAs we look forward to the year ahead, I'd like to provide some broader context on our thoughts for 2021.\nThe business environment remains uncertain, and we are assuming a gradual improvement in customer activity led by the pharma market.\nWe expect all major geographies to perform better than they did in 2020 led by growth in China.\nOur outlook does not anticipate a return to lock down seen in 2020.\nWe had a 1% tailwind from COVID-related revenue in 2000, three-quarters of which was in the second half of the year.\nWe expect a similar revenue impact in 2021, including a 1% to 2% growth tailwind in Q1.\nWe anticipate the first-half growth tailwind will moderate through the remainder of the year.\nImproved execution on our near-term growth initiatives contributed to our 4th quarter growth, but the quarter also benefited from capital spending that were delayed from the first half into the second half of the year, which we don't expect to continue in 2021.\nThe second half of 2021, we'll have to content with a challenging comp resulting from the revenue shift that took place in 2020.\nThese dynamics support full-year 2021 guidance for constant currency sales growth of 5% to 8%.\nAt current rates, the positive currency translation to 2021 sales growth is expected to be 1 to 2 percentage points.\nGross margin for the full year is expected to be in the range of 57, 5% to 58.9%.\nEvery year, we look to balance growth, investment, and profitability.\nAccordingly, we expect 2021 operating margins of 28% to 29% based on a combination of growth investments, normalization of COVID-related cost actions, and disciplined expense controls.\nMoving now below the operating income line, other key assumptions for full-year guidance are net interest expense of 35 million to 38 million, a full year tax rate of between 15% and 16%, which includes our new five-year tax agreement with Singapore that will expire in March 2026, a restart of our share repurchase program in 2021 that will result in an average diluted 2021 share count of 61 to 61.5 million shares outstanding.\nOver the course of the year, we will evaluate share repurchase program and provide quarterly updates as appropriate.\nRolling all of this together and on a non-GAAP basis, full year 2021 earnings per fully diluted share are projected in the range of $9.32 to $9.57, which assumes a positive currency impact on full year earnings-per-share growth of approximately 3 percentage points.\nLooking at the first quarter of 2021, we expect constant currency sales growth to be 7% to 10%.\nAt today's rate, currency translation is expected to increase first quarter sales growth by approximately 3 percentage points.\nFirst quarter non-GAAP earnings per fully diluted share are estimated to be in the range of $1.50 to $1.60.\nAt current rates, the positive currency impact on first quarter earnings-per-share growth is expected to be approximately 15 percentage points.\nIn summary, we're pleased with our resilience in the second half of 2020 and the strong finish to the year, which is a true testament to the determination of this team.\nThough the environment remains variable, pharma markets have shown resilience and our transformation program is already demonstrating results and contributing to growth.\nDespite the challenging environment, the progress we've made as an organization over the last five months is nothing short of extraordinary.\nI remain ever more confident in the team, our portfolio, and our market position.\nThere remains a lot of work to do, but we have a tremendous opportunity in front of us to turn the business around.\n",
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"content": "compname reports q4 non-gaap earnings per share of $3.65.\nq4 non-gaap earnings per share $3.65.\nq4 gaap earnings per share $3.49.\nq4 sales $787 million versus refinitiv ibes estimate of $713.7 million.\nsees q1 non-gaap earnings per share $1.50 to $1.60.\nsees fy 2021 non-gaap earnings per share $9.32 to $9.57.\nexpects q1 2021 constant-currency sales growth in range of 7% to 10%.\ncurrency translation is expected to increase full-year sales growth by one to two percentage points.\nexpects full-year 2021 constant-currency sales growth in range of 5% to 8%.\ncurrency translation is expected to increase q1 sales growth by approximately three percentage points.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This conference is being recorded.\nI'll now introduce Webster's Chairman and CEO, John Ciulla.\nCFO, Glenn MacInnes, and I, will review business, financial and credit performance for the quarter after which, HSA Bank President, Chad Wilkins; and Jason Soto, our Chief Credit Officer, will join us for Q&A.\nWe remain focused on managing capital, credit and liquidity as we continue to deliver for our customers, communities and shareholders.\nWe're positioning ourselves for growth and outperformance.\nOur differentiated businesses and our engaged bankers, who I'm so proud of, help us win in the marketplace every day.\nIn a challenging environment, we generated meaningful business activity in the third quarter.\nOur bankers are working with our customers and prospects and we are generating new relationships, loans and deposits.\nLoan originations were higher than a year ago and our pipelines are solid.\nHSA Bank is winning more direct-to-employer relationships than a year ago.\nOur operational execution remains strong and we continue to manage credit and enterprise risk effectively.\nTurning to Slide 2.\nPre-provision net revenue of $110.4 million increased 2% from Q2 as revenue grew in excess of expenses.\nEarnings per share in the quarter were $0.75 compared to $0.57 in Q2 and $1 in the prior year's third quarter.\nOur $23 million provision resulted in a reserve build of $11 million.\nGlenn will walk you through the assumptions underlying the CECL process and resulting provision for the quarter.\nOur third quarter return on common equity was 9% and the return on tangible common equity was 11%.\nAs I mentioned last quarter, we remain confident in our ability to again sustainably generate economic profit even in this more economically challenging and lower interest rate environment.\nI'll provide further perspective in a few minutes.\nLoans grew 12% from a year ago on Slide 3 or 5% when excluding $1.4 billion in PPP loans.\nCommercial loans grew more than 10% from a year ago or by almost $1.2 billion, led by growth of more than $900 million in high-quality commercial real estate loans.\nThe decline in floating and periodic rate loans to total loans compared to a year ago reflects the $1.3 billion of fixed rate PPP loans added in the second quarter.\nDeposits grew 16% year-over-year driven across all business lines.\nCore deposits exceeded $4.3 billion and represent 90% of total deposits compared to 86% a year ago, while CDs declined $685 million from a year ago.\nSlide 4 through 6 set forth key performance statistics for our three lines of business.\nCommercial Banking is on Slide 4.\nLoan balances increased to almost 10% from a year ago, excluding PPP loans.\nBoth investor CRE and C&I businesses in middle market banking and sponsor and specialty saw a double-digit loan growth year-over-year.\nDeposits, up 32% from a year ago, are nearly $6 billion at September 30th as our commercial clients maintain liquidity on their balance sheets.\nCommercial deposits were up 11% linked quarter on seasonal strength in our treasury and payments solutions business, which includes government banking.\nHSA Bank is on Slide 5.\nCore deposit growth was 15% year-over-year or 12.6%, excluding the impact of the State Farm transaction, which closed in the third quarter and added 22,000 accounts and $132 million in deposit balances.\nWe continued to see strong increases in new direct-to-employer business opportunities throughout the quarter, winning more new HSA RFPs than we did last year, specifically in the large employer space.\nCOVID-19 has impacted the HSA business with new account openings 28% lower from prior year when adjusting for the State Farm acquisition.\nThis is consistent with the industry and is due to slower hiring trends across our employer customers.\nHSA consumer spending increased in the quarter, a trend we expect to continue as elective medical services continue to open up across the country.\nThis spending rebound had a favorable impact on interchange revenue when compared to Q2.\nTPA accounts and balances declined 41,000 and 64,000,000, respectively linked quarter, continuing the outmigration of accounts that we disclosed a year ago.\nIn the quarter, we recognized approximately $3 million of account closure fees related to the outmigration.\nPerformance fundamentals of HSA Bank and the broader HSA market remains strong with ample opportunity for continued growth.\nAnd while it's too early to forecast the upcoming January 1 enrollment season, we're pleased with the large direct-to-employer wins we recorded in this challenging 2020 selling season.\nI'm now on Slide 6.\nCommunity banking loans grew almost 10% year-over-year and declined slightly excluding PPP.\nBusiness banking loans grew 5% from a year ago when excluding PPP.\nPersonal banking loans decreased 3% from a year ago as an increase in residential mortgages was offset by declines in home equity and other consumer loans.\nCommunity banking deposits grew 12% year-over-year with consumer and business deposits growing 6% and 32% respectively.\nThe total cost of community banking deposits was 24 basis points in the quarter, that's down 48 basis points from a year ago.\nNet interest and non-interest income both improved 3% from prior year driven by increased loan and deposit balances and by mortgage banking and swap fees, respectively.\nSelf-service transactions declined slightly linked quarter as we expanded and opened banking centers with enhanced safety protocols but grew year-over-year, reflecting the continued shift in consumer preference to digital channels.\nThe next two slides address credit metrics and trends.\nOur September 30th reported credit metrics remained favorable and actually improved modestly, which Glenn will review in more detail.\nWhile pleased with the reported metrics, we, nonetheless, remain appropriately cautious on credit as we continue to operate through the considerable uncertainties presented by the pandemic.\nOn Slide 7, we've updated our disclosure on the commercial loan sector as most directly impacted by COVID including payment deferral information.\nThe key points on this slide are that overall loan outstandings to these sectors have declined 5% from June 30th and the payment deferrals have declined $282 million or 57%.\nOn Slide 8, we provide more detail across our entire $20 billion commercial and consumer loan portfolio.\nThe key takeaway here is that payment deferrals declined by 65% to $482 million at September 30th and now represent 2% of total loans compared to 7% at June 30th.\nConsistent with industry trends, we have had meaningful declines in payment deferrals in every loan category from June 30th to September 30th.\nOf the $482 million of payment deferrals at September 30th, $251 million or 52% are first time deferrals.\nCARES Act and Interagency Statement payment deferrals, which are included in the $482 million of total payment deferrals at September 30th, decreased to 62% from June 30th and now total just $283 million.\nWhile pandemic-related challenges remain, we are pleased to have been able to provide considerable support to our customers and communities under our mission to help individuals, families and businesses achieve their financial goal.\nAs I stated last quarter, we are actively monitoring risk, we are making real-time credit rating decisions and addressing potential credit issues proactively.\nWe continue to feel good about the quality of our risk selection, our underwriting, our portfolio management capabilities and the strength of our capital and credit allowance positions.\nI'll begin with our average balance sheet on Slide 9.\nAverage securities grew $184 million or 2.1% linked quarter and represented 27% of total assets at September 30th, largely in line with levels over the past year.\nAverage loans grew $262 million or 1.2% linked quarter.\nPPP loans average $1.3 billion in Q3 and grew $403 million from Q2, reflecting the full quarter impact of loans funded last quarter.\nWe had no forgiveness activity on PPP loans during the quarter and therefore no acceleration of deferred fees.\nDuring the quarter, we had $5.5 million of PPP fee accretion and the remaining deferred fees totaled $35 million.\nApart from PPP loans, commercial real estate loans increased $124 million or 2%, while asset-based and other commercial loans decreased $108 million and $38 million, respectively.\nThe $119 million decline in consumer loans include $62 million in home equity and $32 million of residential mortgages.\nDeposits increased $1 billion linked quarter, well in excess of the combined growth of $446 million in loans and securities.\nWe saw increases across all deposit categories except CDs, which declined $280 million or nearly 10%.\nThe cost of CDs declined 36 basis points and was a significant driver of our reduction in deposit cost.\nPublic funds increased $599 million in a seasonally strong third quarter, while the cost of these deposits declined from 35 basis points to 18 basis points.\nBorrowings declined $744 million from Q2 and now represent 7% of total assets compared to 8.5% at June 30th and 10.5% in prior year.\nRegulatory risk-weighted capital ratios increased due to growth in equity.\nThe tangible common equity ratio increased to 7.75% and would be 34 basis points higher, excluding the $1.4 billion in 0% risk-weighted PPP loans.\nTangible book value per share at quarter end was $27.86, an increase of 1.7% from June 30th and 4.8% from prior year.\nSlide 10 summarizes our income statement and drivers of quarterly earnings.\nNet interest income declined $5.1 million from prior quarter.\nLower rates resulted in a quarter-over-quarter decline of $16.7 million in interest income from earning asset.\nThis was partially offset by $7.9 million due to lower deposit and borrowing costs and $3.7 million as a result of loan and security balanced growth.\nAs a result, our net interest margin was 11 basis points lower linked quarter.\nCore loan yields and balances contributed 14 basis points to the decline with PPP loans contributing another 2 basis points to the NIM decline.\nLower reinvestment rates on our securities portfolio resulted in 3 basis points of NIM compression, while higher premium amortization resulted in an additional 4 basis points of NIM compression.\nThis was partially offset by a 10 basis point reduction in deposit cost, reflective of reduced rates across all categories, which benefited NIM by 10 basis points and fewer borrowings contributed another 2 basis points of NIM benefit.\nAs compared to prior year, net interest income declined $21 million, $65 million of the decline was the net result of lower market rates, which were partially offset by $44 million in earning asset growth.\nNon-interest income increased $15 million linked quarter and $5.2 million from prior year.\nHSA fee income increased $4.1 million linked quarter.\nInterchange revenue increased $1 million, driven by a 12% linked quarter increase in debit transaction volume.\nWe also recognized $3.2 million of exit fees on TPA accounts during the quarter.\nThe mortgage banking revenue increase of $2.9 million linked quarter was split between increased origination activity and higher spread.\nDeposit service fees increased $1.5 million quarter-over-quarter driven by overdraft and interchange fees.\nConsumer and business debit transactions increased 16% linked quarter.\nOther income increased $5.7 million, primarily due to a discrete fair value adjustment on our customer hedging book recorded last quarter.\nThe increase in non-interest income from prior year reflects higher mortgage banking revenue and HSA fee income, partially offset by lower deposit service and loan-related fees.\nReported non-interest expense of $184 million included $4.8 million of professional fees driven by our strategic initiatives, which John will review in more detail.\nWe also saw a linked quarter increase of $4.3 million from higher medical costs due to an increase in utilization.\nNon-interest expense increased $4.1 million or 2.3% from prior year.\nThe efficiency ratio remained at 60%.\nPre-provision net revenue was $110 million in Q3, this compares to $108 million in Q2 and $131 million in prior year.\nThe provision for credit loss for the quarter was $22.8 million, which I will discuss in more detail on the next slide.\nAnd our effective tax rate was 20.9% compared to 21.8% in Q2.\nTurning to Slide 11, I'll review the results of our third quarter allowance for loan losses under CECL.\nAs highlighted, the allowance for credit losses to loans increased to 1.69% or 1.8%, excluding PPP loans.\nWe have summarized the key aspects of our macroeconomic scenario, which reflect the gradual improvement in employment with real GDP returning to pre-COVID levels in 2022.\nThe forecast improved slightly from prior quarter, but was offset by commercial risk rating migration resulting in a provision of $23 million.\nThe $370 million allowance reflects our estimate of life of loan losses as of September 30th.\nWe will continue to assess the effects of credit quality, loan modifications and the macroeconomic conditions as we move through the pandemic.\nSlide 12 highlights our key asset quality metrics as of September 30th.\nNonperforming loans in the upper left, decreased $10 million from Q2.\nCommercial real estate, residential mortgage and consumer each saw linked quarter decline, while commercial increased $3 million.\nNet charge-offs in the upper right decreased from second quarter and totaled $11.5 million after $4.3 million in recoveries.\nC&I gross charge-offs declined slightly and totaled $12 million, primarily reflecting credits that were already experiencing difficulty prior to the onset of the pandemic.\nCommercial classified in the lower left represented 332 basis points of total commercial loans, this compares to a 20-quarter average of 315 basis points and the allowance for credit losses increased to $370 million as discussed on the prior slide.\nSlide 13 highlights our liquidity metrics.\nOur diverse deposit gathering sources continue to provide us with considerable flexibility.\nDeposit growth of $565 million exceeded total asset growth and lowered the loan-to-deposit ratio to 81%.\nOur sources of secured borrowing capacity increased further and totaled $11.7 billion at September 30th.\nSlide 14 highlights our strong capital metrics.\nRegulatory capital ratios exceeded well capitalized levels by substantial amounts.\nOur common equity Tier 1 ratio of 11.23% exceeds well capitalized by more than $1 billion.\nLikewise, Tier 1 risk-based capital exceeds well capitalized levels by $870 million.\nLooking to the fourth quarter, we expect stable loan balances with modest PPP forgiveness.\nAssuming a flat rate environment with an average one-month LIBOR in the range of 15 basis points and an average 10-year treasury swap rate around 70 basis points, we believe we are near the bottom of core NIM compression.\nNon-interest income will likely be lower linked quarter due to reduction in mortgage banking income and lower HSA fees on TPA account.\nCore non-interest expense will remain in the range of Q3 and our tax rate will be around 21%.\nWith that, I'll turn things back over to John for a review of our strategic initiatives.\nI'm now on Slide 15 and 16.\nAs I've mentioned on recent earnings calls, we have been and remain focused on revenue enhancements and operational efficiencies across the organization.\nWell before the onset of the pandemic, our management team recognized that we would be operating in a low interest rate and more challenging business environment for an extended period of time.\nIn January, we began an enterprisewide assessment of our organization to identify revenue opportunities and cost savings using a very thorough and systematic process.\nThe onset of the pandemic in March further impacted the operating environment and accelerated changes in customer preferences and shifting workplace dynamics.\nThis not only made our commitment to this process that much stronger, but it also expanded the opportunities we have to rationalize and align our expenses with our business line execution.\nWe've identified and begun to implement dozens of initiatives across the bank, a handful of which are set forth on Slide 16, that will result in driving incremental revenue, reducing our overall cost structure and enhancing our digital capabilities to meet our customers' needs and to reduce our cost of delivery of products and services.\nOur focus remains, first, on key revenue and asset growth drivers, including accelerating growth in commercial bank by building on our proven track record in select specialized industries, driving HSA Bank growth through improved sales productivity and customer retention and continuing to grow in community core markets through product enhancements.\nWe are also focused on efficiency and organizational alignment, simplifying our org structure, capturing targeted back office synergies and redesigning and automating critical processes.\nWe also are rationalizing and consolidating our retail and corporate real estate footprint.\nThrough this process, we will continue to improve the customer experience by enhancing digital capabilities, modernizing foundational systems and improving analytical capabilities.\nWe've begun executing on many of these initiatives and we recently made a series of organizational changes to position us for success over the next year and well beyond.\nWe plan to provide more detailed information on these initiatives, including additional financial details and timing on realization on our fourth quarter earnings call in January, as we are continuing to work through all of the final decision.\nWhat I will say is that with respect to efficiency opportunities, we anticipate reducing our current expense base by 8% to 10% fully realized on a run rate basis by the fourth quarter of next year.\nWe see considerable opportunity above and beyond that as revenue initiatives and further efficiency gains are realized late in 2021 and in 2022.\nAs we stated last quarter, we remain confident that even if the current operating environment persists with low interest rates and economic uncertainty that execution on our identified revenue enhancements and efficiency opportunities will allow us to sustainably generate returns in excess of our estimated 10% cost of capital by the end of 2021.\nOur vision remains consistent and is to strengthen our position as a major regional bank in the Northeast that leads with a distinctive and expanding commercial business and aggressively growing and winning national HSA Bank business, a strong community bank franchise in our core markets, all supported by an efficient and scalable operating model.\nWith that, Maria, Glenn, Chad, Jason and I are prepared to take questions.\n",
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"content": "compname reports q3 earnings per share $0.75.\ncompname reports third quarter 2020 earnings of $0.75 per diluted share.\nq3 earnings per share $0.75.\nprovision for credit losses was $22.8 million in the quarter.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This conference is being recorded.\nI'll now introduce Webster's Chairman and CEO, John Ciulla.\nCFO, Glenn Maclnnes, and I will review business, financial and credit performance for the quarter, after which HSA Bank President, Chad Wilkins; and Jason Soto, our Chief Credit Officer, will join us for Q&A.\nAs we look back on 2020, a challenging year for all of us in so many different ways, my first thought is how proud I am of Webster bankers as they found a way to deliver for each other, our customers, our communities and for our shareholders.\nWhile increasing COVID cases continue to present real challenges, we are optimistic that 2021 will bring a level of normalization.\nAs the distribution of vaccines dramatically changes the path of the pandemic, the broader economy, including COVID impacted sectors continue to recover and the peaceful transition of power that occurred yesterday hopefully represents the beginning of a less divisive political environment.\nWe remain focused on prudently managing capital, credit and liquidity as we also position ourselves for growth and outperformance as the macro environment improves in 2021 and beyond.\nTurning to Slide 2.\nI'm really pleased with our strong business performance in the quarter.\nWe originated $1.9 billion in loans, generated strong loan-related fees, continue to grow deposits and HSA total footings approached $10 billion.\nCredit trends are favorable and the net interest margin has stabilized.\nOur adjusted earnings per share in Q4 were $0.99, up from $0.96 a year ago.\nOur fourth quarter performance includes $42 million of pre-tax charges related to the strategic initiatives we announced last quarter.\nGlenn will provide additional perspective on these charges in his remarks.\nAn improved economic outlook with continued uncertainty, along with a flat quarter-over-quarter loan portfolio, supported a $1 million CECL allowance release in the quarter.\nOur fourth quarter adjusted return on common equity was 11.5% and the adjusted return on tangible common equity in the quarter was 14.2%.\nOn Slide 3, loans grew 8% from a year ago or 2% when excluding $1.3 billion in PPP loans.\nCommercial loans grew 6% from a year ago or more than $800 million.\nDeposits grew 17% year-over-year, driven across all business lines.\nLoan yield increased 4 basis points linked quarter, while deposit costs continue to decline.\nSlides 4 through 6 set forth key performance statistics for our three lines of business.\nI'm on Slide 4.\nThis is a very strong quarter for Commercial Banking with more than $1.2 billion of loan originations, up solidly from Q3 and down only slightly from a strong 4Q 2019.\nLoan fundings of $825 million were also up solidly from Q3.\nWe continue to benefit from our industry expertise and deep relationships in select sectors, including technology that have not been adversely impacted during the pandemic.\nCommercial bank deposits are at record levels, up more than 35% from the prior year's fourth quarter.\nThe Commercial Banking loan portfolio yield increased 9 basis points in the quarter, driven by better spreads and enhanced by a higher level of acceleration of deferred fees as we saw payoff activity return to more normalized levels.\nNon-interest income in Commercial Banking was up linked-quarter due to higher syndication and other fees tied to the strong origination activity.\nNow turning to HSA Bank on Slide 5.\nHSA Bank total footings increased 17% from a year ago and now total nearly $10 billion.\nCore deposits were up 15% and 13%, excluding the State Farm acquisition, which closed in 2020.\nThe year-over-year increase in balances was driven by continued contributions as well as reduced account holders spending due to COVID-19 restrictions.\nThe TPA accounts declined from a year ago, reflecting the expected departures that occurred in Q3.\nWe added 668,000 accounts in 2020, 10% fewer than we added in 2019, consistent with industry trends and due primarily to lower enrollments with existing employers as COVID-19 impacted the overall employment environment.\nWe expect this trend to continue into the first half of the New Year.\nHSA deposit costs continue to decline as we remain disciplined in this low interest rate environment and totaled 9% in the quarter -- 9 basis points, excuse me, in the quarter.\nI'm now on Slide 6.\nCommunity Banking loans grew 5% year-over-year and declined 5% excluding PPP.\nAs indicated on the slide, PPP loans decreased $63 million as we saw repayment and forgiveness activity begin in the quarter.\nCommunity Banking deposits grew 14% year-over-year with consumer and business deposits growing 9% and 31% respectively.\nDeposit costs continue to decline and totaled 16 basis points in the quarter.\nNet interest income grew $8.3 million from a year ago, driven by overall loan and deposit growth.\nThe next two slides address credit metrics and trends which continue to be surprisingly stable given all the challenges in the macro environment.\nOn Slide 7, we show our commercial loan sectors most directly impacted by COVID, overall loan outstandings to these sectors have declined 10% from September 30th and payment deferrals have declined $64 million or 31%.\nOn Slide 8, we provide more detail across our $20 billion commercial and consumer loan portfolio.\nThe key takeaway here is the payment deferrals declined by 35% to $315 million at December 31st and now represent 1.6% of total loans compared to 2.4% of total loans at September 30th.\nAt year-end, $100 million or 32% of the $315 million in payment deferrals are first time deferrals.\nAnd CARES Act and Interagency Statement defined payment deferrals, which are included in the $315 million of total payment deferrals at December 31st, decreased 29% from September 30th and now stand at $201 million.\nWhile challenges related to the pandemic and the overall economy remain, I am pleased with the considerable support we have been able to provide to our customers as they work through these challenging times.\nWe continue to actively monitor risk, make real-time credit rating decisions and address potential credit issues proactively.\nWe remain confident about the quality of our risk selection and the underwriting processes, our portfolio management capabilities and our capital position.\nI will focus on the key aspects of performance in the quarter, including stable adjusted net interest margin, an increase in non-interest income, ongoing expense control and a favorable credit profile.\nI'll begin with our average balance sheet on Slide 9.\nAverage securities grew $160 million or 1.8% linked-quarter.\nSecurities represented 27% of total assets at December 31st.\nAverage loans declined $142 million or 0.6% linked-quarter, primarily driven by a $176 million decline in consumer loans, reflecting higher pay down rates in mortgage and home equity portfolios.\nPrepayment and forgiveness on PPP loans during the quarter totaled $98 million.\nIn Q4, we recognized $7.3 million of PPP deferred fee accretion and the remaining deferred fee balance totaled $27 million at December 31st.\nDeposits increased $276 million linked-quarter, primarily driven by growth in Community Banking and HSA.\nThis was partially offset by a reduction in CDs.\nThe strong growth in deposits allowed us to pay down borrowings, which were lower by $289 million from Q3.\nAt $1.9 billion, borrowings represent 5.2% of total assets compared to 7% at September 30th and 11.6% in prior year.\nThe tangible common equity ratio increased to 7.9% and will be 32 basis points higher, excluding the $1.3 billion and zero percent risk-weighted PDP loans.\nTangible book value per share at quarter end was $28.04, an increase of about 1% from September 30th and 3% from prior year.\nSlide 10 highlights adjustments to reported net income.\nAggregate adjustments totaled $42 million pre-tax or $31.2 million after tax, representing $0.35 per share.\nOf the $42 million in adjustments, $38 million is related to our strategic initiatives, which John will discuss further.\nThe remaining $4.1 million is associated with the debt prepayment.\nThe prepayment expense adversely impacted current quarter net interest income and impacted net interest margin by 5 basis points.\nHowever, we will benefit by approximately $1.3 million in net interest income per quarter and NIM will benefit by 2 basis points.\nOn Slide 11, we provide our reported and adjusted income statement.\nAs highlighted on the previous page, the adjustments total $42 million pre-tax.\nOn an adjusted basis, net interest income increased by $1.3 million from prior quarter.\nThis was a result of a $4.5 million reduction in deposit and borrowing costs, along with $1 million in additional loan income, which was partially offset by a $4 million decline in securities income primarily as a result of elevated prepayments.\nTaken together, our adjusted net interest margin of 2.8% was flat to third quarter.\nAs compared to prior year, net interest income declined by $11 million.\n$47 million of the decline was the net result of lower market rates and was partially offset by interest income of $29 million from earning asset growth and $8 million from a reduction in borrowings.\nNon-interest income increased $1.7 million linked-quarter and $5.9 million from prior year.\nLoan fees increased $2.5 million from prior quarter as a result of higher syndication, pre-payment and line usage fees.\nOther income increased $4.4 million reflecting higher direct investment income and swap fees.\nHSA fee income decreased $3.1 million linked-quarter as Q3 included $3.2 million of exit fees on TPA accounts.\nMortgage banking revenues decreased $3 million linked quarter as a result of lower volume on loans originated for sale.\nThe $5.9 million increase in non-interest income from prior year reflects additional loan fees, higher mortgage banking revenue and HSA fee income, partially offset by lower deposit service fees.\nNon-interest expense of $181 million reflects an increase of $2 million primarily due to technology and seasonal increases in temporary staffing to support the HSA annual enrollment.\nNon-interest expense decreased $1.5 million or 1% from prior year and our efficiency ratio was 60% in the quarter.\nPre-provision net revenue was $116 million in Q4.\nThis compares to $115 million in Q3 and $122 million in prior year.\nOur CECL provision in the quarter reflects the credit of $1 million, which I'll discuss in more detail on the next slide.\nAnd our adjusted tax rate was 22.1%.\nTurning to Slide 12, I will review the results of our fourth quarter allowance for loan losses under CECL.\nThe allowance coverage ratio, excluding PPP loans, declined from 1.8% to 1.76%, with total reserves of $359 million.\nThe reserve balance reflects our lifetime estimate of credit losses.\nA small decline from prior quarter is the net effect of an improvement in the macroeconomic forecast partially offset by additional qualitative reserves.\nThe increase in qualitative reserves is driven by uncertainty around the resolution of a pandemic and the pace of the recovery.\nThe total reserves provide a more adverse scenario than shown in the baseline assumptions at the bottom of the page.\nSlide 13 highlights our key asset quality metrics as of December 31st.\nNon-performing loans in the upper left increased $3 million from Q3.\nCommercial, residential mortgage and consumer each saw linked quarter declined, while commercial real estate increased.\nNet charge-offs in the upper right decreased from the third quarter and totaled $9.4 million after $1.9 million in recoveries.\nThe net charge-off rate was 17 basis points in the quarter.\nCommercial classified loans in the lower left increased $30 million from Q3 and represented 352 basis points of total commercial loans.\nSlide 14 highlights our liquidity metrics.\nOur diverse deposit gathering sources continue to provide us with considerable flexibility.\nDeposit growth of $414 million exceeded total asset growth and lowered the loan-to-deposit ratio to 79%.\nOur sources of secured borrowing capacity increased further and totaled $12 billion at December 31st.\nSlide 15 highlights our strong capital metrics.\nRegulatory capital ratios exceed well-capitalized levels by substantial amounts.\nOur common equity Tier 1 ratio of 11.35% exceeds well capitalized by $1.1 billion.\nLikewise, Tier 1 risk-based capital of 11.99% exceeds well-capitalized levels by $895 million.\nOur guidance will continue to be impacted by the pace and duration of the pandemic over the next few quarters.\nThat being said, we anticipate modest loan growth, excluding the timing of PPP forgiveness and Round 2 originations.\nNIM will also be influenced by the rate environment and PPP forgiveness.\nAssuming today's rates, we would expect net interest income to be around Q4's level.\nNon-interest income will be modestly lower linked quarter, driven by lower loan-related and mortgage banking fees.\nThe provision for credit losses will continue to be impacted by credit trends, the macroeconomic environment, government stimulus and the duration of the pandemic.\nCore operating expenses will be lower as we begin to recognize the benefits of our strategic initiatives.\nWith that, I'll turn things back over to John for a review of our strategic initiatives.\nI'm on Slide 16.\nAs we discussed on the October earnings call, we've been working through a comprehensive, strategic and organizational review since before the onset of the pandemic.\nAnd while today we'll provide more detail on our progress in some shorter-term financial targets, I want to stress that the work we've done over the last year and the actions we are taking are transforming our company and the way we do business.\nWe believe that we will continue delivering incremental value to our customers and shareholders for years to come, consistent with our overarching objectives of maximizing economic profits and creating long-term franchise value.\nImportantly, these actions afford us the capacity to invest in the future and provide better customer experiences through improved products, services and digital offerings, all in the furtherance of our mission to help individuals, families and businesses achieve their financial goals.\nWe are investing in revenue growth drivers that leverage our differentiated businesses.\nThese include accelerating growth in new and existing commercial banking segments, improving sales productivity, enhancing non-interest income through treasury and commercial card products and driving deeper relationships across all lines of business.\nWhile we anticipate short-term benefits from these initiatives, they will contribute meaningfully to our financial performance in 2022 and beyond.\nAdditionally, we continue to invest in technology to provide better digital experiences for our customers and bankers to further improve customer acquisition and retention rates.\nAs shown on Slide 17, we have made significant progress on our efficiency opportunities.\nWe remain on track to deliver an 8% to 10% reduction in core non-interest expense.\nWe expect this to be fully realized on a run rate basis by the end of the fourth quarter of 2021.\nOur efficiency initiatives fall into three areas of focus that we discussed last quarter: rationalizing retail and commercial estate, simplifying the structure of the organization and optimizing our ancillary spend.\nWe've taken actions to simplify our organizational structure, including combining like functions, automating manual processes and selectively outsourcing commoditized activities.\nA portion of the project-related expense adjustments that Glenn discussed relate to these actions and the associated severance costs result from a targeted reduction in the overall workforce.\nWe announced in December the consolidation of 27 banking centers and we have targeted actions aimed at reducing corporate office square footage over time.\nThe real estate optimization plan reflects our response to changes in customer preferences and the shift in workplace dynamics that have only accelerated during the pandemic.\nThe remaining quarterly cost benefits will be driven by a more disciplined approach to ancillary spend, redesigning and automating internal critical processes and leveraging back office synergies.\nSlide 18 provides an overview of the cost savings and an expense walk to our fourth quarter target run rate.\nAchieving these efficiencies will allow us to continue to invest in our franchise and improve the customer experience.\nThe last slide for me is an important one.\nWe've updated it from prior quarters.\nIt aggregates our activities during 2020 related to helping our employees, our consumer and business customers and the communities we serve navigate an extraordinarily challenging time.\nThis is what the Webster Way is all about.\nThe commitment to our customers, our shareholders and to each other has enabled Webster to continue to differentiate itself.\nAnd before we go to Q&A, I'd like to take a moment to share with you all that today is Terry Mangan's last earnings call as he will be retiring on March 31st.\nMany of us and many of you have had the pleasure of working with Terry over his 18-year career at Webster.\nTerry's efforts have been recognized at the national level by institutional investor as a top investor relations professional.\nWith that, Daryl, Glenn, Chad, Jason and I are prepared to take questions.\n",
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"content": "q4 adjusted earnings per share $0.99.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Actual results may differ materially.\nToday, we'll use certain non-GAAP financial measures.\nIt's great to have you on the team.\nI'll start out with a summary of 2020 and some of our most notable accomplishments.\nDave will take you through at that point an update on our rapid progress that we're making on integrating Anixter.\nAnd I'll take you through our fourth quarter and full year results and then give you an overview of our outlook for 2021.\nSo starting up, 2020 was an extraordinary year for WESCO.\nWe completed a transformational acquisition of Anixter, doubling our size of the Company and changing our trajectory for years to come.\nWe're off to an excellent start, and I'm more bullish than ever on delivering against our substantial value creation potential.\nAs most of you know, we announced our agreement to acquire Anixter International last January, and we were very pleased to close the transaction a little more than five months later.\nThe first six months of the integration have gone exceptionally well.\nOur synergy capture has exceeded our expectations, both in terms of size of the opportunities as well as the rapid pace of our execution.\nYou'll recall, last quarter we increased our three year post merger cost synergy target from $200 million to $250 million.\nIn addition, the highly complementary nature of WESCO and Anixter, and our substantially larger scale has enabled us to build a cross-sell pipeline that's starting to show up in our top line results, and this is very encouraging.\nAt the same time that we're working toward closing the transaction and beginning integration, we're managing through an incredibly challenging macro environment driven by the COVID-19 global pandemic.\nIn response to this, we took quick and decisive actions centered really on three priorities, and we've talked about this in the past: first, protecting our employees; second, ensuring that our customer experience service and support was seamless and exceptional; and number three, taking the necessary actions to reduce our cost and efficiently manage our operations.\nThe diversity of our end markets, our differentiated service offerings, our global footprint and the attractive secular trends we support help temper the effects of COVID-19 on our business last year.\nOn the right-hand side of this page, you can see the attractive secular growth trends that are driving demand for electrical, communication, security and utility solutions, all of which will continue to drive demand in the years ahead.\nAll three of our strategic business units have the scale and capabilities to deliver growth associated with the increasing use of automation, machine-to-machine connections, the electrification of our infrastructure and the demand for faster bandwidth and data center capacity.\nEmerging growth trends such as the relocation of supply chains back to North America and increased remote connectivity also drive additional growth opportunities.\nIn combining WESCO and Anixter, we have created the industry leader in electrical, communications and utility distribution and supply chain services just as these secular trends are poised to drive strong growth in all the markets we serve.\nNow moving to page 5.\nDuring our second quarter earnings call in August, we highlighted our priorities for the second half of 2020.\nThey were to take share, deliver synergies and focus on free cash flow generation and debt reduction.\nIn the fourth quarter, we saw improving sales momentum coming out of the COVID-19 trough and are successfully utilizing our increased scaling capabilities to take share.\nSales were up 4% sequentially in Q4 on a workday adjusted basis when typically our sales declined sequentially in the fourth quarter.\nWe closed the year with a record year-end backlog, which sets us up well to continue building on this positive momentum in 2021.\nEven more importantly, January sales reflected return to year-over-year sales growth, with sales up low single digits on a comparable workday basis.\nWe've made great progress across the board on our synergy capture efforts.\nOur team is laser-focused on driving synergies.\nAs we have combined into one organization, we've made great progress in recognizing the savings from duplicative corporate overhead and functional integration.\nAdjusted gross margin was up versus -- pro forma prior year for the second consecutive quarter.\nOur management team is now in place, and we've been able to streamline roles across functions for greater efficiency.\nWe're on track to meet the higher synergy targets that we announced last quarter, and have very high confidence in delivering upside to these targets.\nFree cash flow was another major highlight for us in 2020.\nWe generated $586 million of free cash flow last year, close to the $600 million target that we set for three years out, and more than 250% of our adjusted net income.\nThis enabled us to reduce net debt by almost $400 million and leverage by 0.4 times in just the first six months since the Anixter closed.\nAnd last month, we completed a debt refinancing of our 2021 notes that reduces our interest expense by $20 million per year, which will further enhance cash flow and support achieving our 2023 debt reduction and debt repayment target.\nOverall, we are very pleased with the results we're delivering on all fronts.\nWe're entering 2021 from a position of strength, with an unwavering commitment to our strategies and growth plan and an extraordinary team of associates and outside partners.\nCoupled with our strong execution and accelerating progress on the integration, we have very high confidence in our ability to deliver sustainable, long-term value creation.\n2021 will be another positive and important stepping stone in our transformational journey.\nBefore getting into the results for the fourth quarter, I'd like to address where we are with cost synergies from the integration with Anixter.\nWhen we announced the merger with Anixter back in January of 2020, we anticipated a mid-2020 close and provided investors with our view on synergies for the first three years post close.\nOn slide 7, you'll see that we've converted our synergy timeline to align with our fiscal year-end.\nThis chart on the left side of the slide shows the cumulative realized cost synergies that we expect to generate by fiscal year.\nRealized synergies are those that are reflected in our income statement.\nIn the first six months post close, we have realized $39 million of cost synergies, $15 million in Q3 and $24 million in Q4.\nIn 2021, we expect to realize an additional $90 million of synergies, bringing our total to $130 million by the end of the year.\nConsistent with the expectation we provided on our last earnings call, we still anticipate realizing $100 million of cost synergies in the first 12 months of the merger through June of 2021, with a cumulative cost synergies of $130 million by December.\nIn addition to the cumulative cost synergies, we have shown the cumulative one-time operating expenses to achieve the synergies below the bar chart.\nAs you can see, we have spent $37 million in one-time operating costs in the first six months, and expect to spend an incremental $78 million on one-time operating expenses to generate the incremental $90 million of synergies in 2021.\nBy June of 2023, we expect to generate $250 million of realized cost synergies on a trailing 12 month basis.\nIn total, this $250 million target is comprised of initiatives that are approximately 20% related to cost of goods sold and approximately 80% related to reducing operating expenses.\nThis is consistent with the sources of synergies we previously discussed, and we expect the synergies related to corporate overhead, G&A and field operations will drive the SG&A synergies, with the majority of the supply chain synergies impacting cost of goods sold.\nTurning to slide 8.\nIn Q4, we delivered another quarter of strong free cash flow that represented more than 160% of net income.\nFor the full year, free cash flow was $586 million or more than 250% of adjusted net income.\nThis level of free cash flow generation highlights WESCO's ability to generate strong cash flow throughout the economic cycle, and especially during down cycles like the one related to COVID-19.\nThis resilient model, coupled with our execution on the integration with Anixter gives us very high confidence that we will successfully reduce leverage below 3.5 times adjusted EBITDA over the next two and a half years, consistent with our commitment when we announced the merger.\nOur capital allocation priority remains unchanged.\nWe will allocate capital to support the integration, invest in our business and rapidly delever the balance sheet.\nWe made substantial progress on this goal in 2020 as we reduced net debt by $389 million and leverage by 0.4 times trailing 12-months adjusted EBITDA since closing the Anixter acquisition in June.\nNet debt was reduced by $109 million [Technical Issues] 2028 notes.\nLiquidity, which is comprised of invested cash and borrowing availability on our bank credit facilities, is exceptionally strong and totalled $1.1 billion at the end of the fourth quarter.\nIn early January, we increased the size of two bank credit facilities by a combined $275 million.\nWe utilized this higher capacity and existing availability to retire our $500 million 2021 notes.\nTurning to page 9.\nThis summary table compares our fourth quarter adjusted income statement results to the pro forma for the prior year period and our adjusted results in the third quarter.\nBecause Anixter and WESCO had different fiscal reporting periods, there was an extra week of Anixter sales in the fourth quarter of 2019, making comparisons to that period less meaningful.\nFor that reason, most of my comments today will be on the sequential comparison against the third quarter.\nOn a reported basis, sales were flat versus the third quarter.\nIt is important to note that the fourth quarter had three fewer workdays compared to the third quarter.\nWhen adjusting the results to a comparable workday basis, sales were up more than 4%.\nThe momentum has continued into January with workday adjusted sales up low single digits versus the prior year.\nAdjusted gross margin, which excludes the effect of merger related fair value adjustments to inventory and an out of period adjustment related to inventory absorption accounting was 19.6%, in line with the prior quarter and up 10 basis points versus the prior year.\nWe are seeing continued traction from our margin improvement initiatives, including early results from deploying Anixter's proven gross margin improvement programs across the combined business.\nNote that the out of period adjustment relates to the cumulative effect of the adjustment to inventory since WESCO was spun out of Westinghouse.\nIn no period was the adjustment material to our reported results.\nAdjusted income from operations was $172 million in the quarter, after adjusting to remove the effect of merger related costs of $40 million, merger related fair value adjustments on inventory of $16 million and the out of period adjustment of $23 million related to inventory absorption accounting.\nAdjusted income from operations was $28 million lower than the third quarter, which primarily reflects an increase in SG&A related to the discontinuance of temporary cost reduction measures we had taken in response to COVID-19.\nAs we had highlighted in our Q3 earnings call and reiterated in the 8-K that we filed on December 15, we reinstated the full salaries of legacy WESCO employees, instituted 2020 merit adjustments and resumed the retirement savings plan employer matching contributions effective October 1, 2020.\nThese measures, along with certain other actions, had generated more than $50 [Phonetic] million of savings during the second and third quarters of 2020 relative to WESCO's Q1 SG&A run rate before the merger.\nIn total, adjusted income from operations was $13 million lower than prior year pro forma, on sales that were $223 million lower, representing a decremental margin of approximately 6%.\nAdjusted EBITDA, which excludes the effect of the adjustments I just mentioned, as well as stock based compensation and other net adjustments was $216 million or 5.2% of sales, lower than the third quarter due to the higher SG&A I just discussed and approximately in line with the prior year.\nAdjusted diluted earnings per share for the quarter was $1.22.\nFirst, electrical and electronic systems, or EES, which is approximately 40% of our Company's total business.\nSecond, communications and security solutions or CSS, which is roughly one-third of the Company's revenue.\nAnd then third, utility and broadband solutions or UBS, which represents the remaining 27% of the overall sales across the enterprise.\nAs we have said previously, one of the most meaningful and positive discoveries post close is how complimentary the WESCO and Anixter portfolios are.\nThe pie charts on this page depict the legacy WESCO and legacy Anixter composition for each of the three businesses.\nIt is this very highly complementary suite of products and solutions that enables us to offer even more end-to-end solutions for our customers and supports the cross-sell programs John mentioned.\nAdditionally, we found that customer overlap between the legacy companies was more favorable than expected.\nTurning to slide 11.\nReported sales in our EES segment were up 1% versus the third quarter on a reported basis and up 6% on a comparable workday basis.\nThis growth reflects improving construction demand in North America in the second half of the year as well as the first sales from our cross-sell initiatives and our ability to offer a complete electrical package to our customers.\nWe have continued to see some project delays, primarily driven by COVID-19, but still no cancellations.\nEES backlog was a fourth quarter record, consistent with the trend we have observed since last March as some projects are delayed, and we continue to be awarded new projects.\nWe also continue to see increasing momentum in our industrial and OEM business.\nIn the fourth quarter, MRO and project activity levels improved in all of the verticals we serve.\nAdjusted EBITDA of $94 million represented 5.6% of sales, about $14 million lower than the third quarter.\nThe decrease primarily reflects higher SG&A due to the reinstatement of the temporary COVID-19 cost reductions discussed earlier.\nTurning to slide 12.\nOur CSS segment closed out a strong year, in part driven by an increased focus on bandwidth needs stemming from COVID-19 as well as our global scale, which offers greater value to our customers.\nOn a reported basis, sales were 1% lower than the prior quarter, but were up 3% on a comparable workday basis.\nWe are taking share in all geographic regions and especially in areas outside the United States.\nAs with EES, we saw continued positive momentum throughout the quarter.\nSpecifically, we experienced growth in our network infrastructure markets that was driven by increasing global accounts and continued strong demand in data centers, including [Phonetic] wireless and professional audiovisual applications.\nSequentially, security sales were up low single digits on a comparable workday basis, driven by expanding demand for secure network and IP security applications.\nCSS is uniquely well-positioned to benefit from several of the secular growth trends that we have highlighted as the pace of technological innovation, demand for data and reliance on security are all driving an accelerated pace of both new installations and upgrades to existing systems.\nAdjusted EBITDA was $112 million or 8.2% of sales.\nThis was 50 basis points higher than the prior year, but down sequentially from the third quarter, primarily reflecting the reinstatement of temporary cost reductions.\nTurning to slide 13.\nSales in our UBS segment were down slightly versus the third quarter on a reported basis, but up 4% on a comparable workday basis.\nStrong utility demand continued this quarter as our utility customers continued to invest in grid hardening and modernization projects as well as LED lighting and automation projects.\nThe broadband business was also resilient to COVID-19, driven by 5G deployments, last mile fiber installations and increasing broadband projects.\nThe global demand for data and high-speed connectivity has never been greater due to the step change in requirements driven by remote work and school environments.\nAdjusted EBITDA of $79 million was in line with the prior year and up 10 basis points as a percentage of sales.\nAdjusted EBITDA margin was down sequentially on slightly lower sales and the restoration of COVID-related cost actions.\nTurning to slide 14, I'll walk you through our outlook for 2021.\nOn a pro forma basis, sales were $16 billion in 2020.\nIn 2021, we estimate market growth of roughly 3% to 5%.\nWe recognize that COVID and the timing of broad scale vaccinations may create volatility and influence the overall demand pattern of our business.\nWe are encouraged by the economic indicators and expect the demand environment to continue to improve as we progress through 2021.\nOn top of that, we expect that the combination of the continued outperformance and our cross-sell programs will grow sales 1% to 2% above the market.\nLastly, keep in mind that 2021 has one fewer workday than 2020, and we will have the impact of the US brand sale completed in Q3 of 2020 as well as the expected completion of the Canadian divestitures in the first quarter.\n[Technical Issues] are approximately $125 million.\nThe impact of these will be a headwind of approximately 1%.\nSo in total, we expect sales to grow 3% to 6%.\nWe expect differences in foreign exchange rates to be neutral to slightly favorable for the full year.\nOn the right-hand side of the page, we have provided a bridge for our 2020 pro forma adjusted EBITDA margin of 5.3% to our outlook for adjusted EBITDA margin of 5.4% to 5.7%.\nWe expect to benefit from improving mix, market outperformance and operating leverage, which we expect to collectively drive about 50 to 80 basis points of margin expansion.\nIn addition, as you saw on the prior page, we expect to generate an incremental $90 million of realized cost synergies in 2021, which will contribute approximately 55 basis points of additional EBITDA margin.\nPartially offsetting these two margin drivers will be the restoration of the employee compensation benefit costs discussed previously and the restoration of a full accrual for incentive compensation, the aggregate amount of which is approximately 90 basis points.\nContinuing down the income statement, we expect our effective tax rate to be approximately 23% and adjusted diluted earnings per share in the range of $5.50 to $6.\nWe assume a diluted share count of approximately 51.5 million shares.\nWe expect to spend between $100 million to $120 million on capital expenditures in 2021, much of which will be invested in the early stages of aligning our systems and investing in digital tools.\nWe expect to continue generating substantial free cash flow, which we're forecasting to be at least 100% of adjusted net income.\nAs we look at the drivers of the first quarter of 2021, we expect to benefit from $28 million of realized cost synergies in the quarter.\nPlease keep in mind that the first quarter has two fewer workdays than the first quarter of 2020, as shown in the table.\nBefore opening your call to questions I'd like to walk you through a quick summary.\nAgain, 2020 was a transformational year for WESCO and highlighted many of the Company's strengths.\nFirst, we responded with quick and decisive actions, as I mentioned earlier, in response to the global COVID-19 pandemic and delivered excellent performance through the downturn.\nNumber two, our integration with Anixter is off to an excellent start and it is accelerating.\nWe made substantial progress on the integration in just the first six months, and we're very pleased to be able to increase our synergy targets.\nOur new leadership team is the strongest management team in our history and is driving our high performance culture.\nWe have launched our cross-sell programs in all three of our business units and are already seeing positive results.\nAnd three, and most importantly, the business is uniquely well-positioned to capitalize on the highlighted secular growth trends that will drive demand for our full spectrum of end-to-end solutions for years to come.\n2020 marked a watershed year and the beginning of a new era for WESCO.\nAs the industry leader, we are now larger and more diversified with differentiated scale and capabilities in what remains a highly fragmented industry.\nWe're exceptionally well-positioned and intend to lead not only a digital transformation of our business, but also of our industry.\n",
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"content": "compname posts q4 adjusted earnings per share $1.22.\nq4 adjusted earnings per share $1.22.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Revenue and adjusted EBITDA in Q2 increased 17.5% and 23%, respectively, over the prior year period, primarily as a result of continued improvement in solid waste pricing volume growth and strength in recovered commodity values.\nThese trends drove year-to-date adjusted EBITDA margin expansion of 110 basis points and adjusted free cash flow of over $585 million, up 18.5% year-over-year, and given expected continuing momentum and margin expansion from these trends position us to raise our full year outlook for revenue, adjusted EBITDA, adjusted EBITDA margin and adjusted free cash flow.\n2021 also has the potential to be another outsized year of acquisition activity.\nYear-to-date, we have signed or closed 14 acquisitions with total annualized revenue of approximately $115 million, including $75 million of franchise operations in California, Nevada and Oregon expected to close later this year.\nWe continue to see record amounts of seller interest driving elevated acquisition dialogue, and as communicated throughout the year, expect closings related to most of this activity to be more weighted to the second half of the year, which will provide further upside to our increased outlook for the year and strong rollover growth into 2022.\nOn the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to Waste Connections on both a dollar basis and per diluted share and adjusted free cash flow.\nManagement uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations.\nOther companies may calculate these non-GAAP measures differently.\nIn the second quarter, solid waste price plus volume growth of 11.4% exceeded our expectations by almost 150 basis points, primarily as a result of higher-than-expected volumes as the recovery trends that began in Q1 continued throughout the quarter, with landfill tons and roll-off pulls returning to levels about in line with or above prepandemic levels.\nTotal price of 4.9%, up 70 basis points sequentially, was above our outlook on higher core pricing of 4.7%, once again reflecting the strength of pricing retention we noted in Q1, plus about 20 basis points in fuel and material surcharges.\nOur Q2 pricing ranged from 2.6% in our mostly exclusive Western region to a range of about 4.5% to 7% in our more competitive regions.\nLooking ahead, we are positioned for higher sequential pricing growth during the second half of the year as a result of incremental price increases we have already put in place to offset certain cost pressures.\nReported volume growth of 6.5% in Q2 reflected sequential improvement of approximately 1,000 basis points from Q1 and was led by those regions where markets were hardest hit during the pandemic including the Northeast U.S. and Canada.\nAll regions showed sequential improvement from Q1 and all reported positive volumes in Q2.\nVolumes range from about 4% in our Central region, where comparisons to the prior year were tougher as many markets were relatively less impacted by the COVID-19 pandemic, to almost 10.5% in Canada, one of our most impacted regions where the volume recovery have been remarkably strong, arguably outpacing the reopening activity particularly when considering that many restrictions in Canada extended through Q2 of this year.\nAlso noteworthy is our Western region, where volumes led our other regions going into the pandemic and continue to be the strongest in the U.S. at about 8.5% in Q2.\nLooking at year-over-year results in the second quarter on a same-store basis, all lines of business increased by double digits Commercial collection revenue was up 16% year-over-year.\nRoll-off pulls increased by over 11% year-over-year, led by Canada, up almost 20% and back to above pre-COVID-19 levels.\nIn the U.S., pulls were up about 10%, and all regions showed year-over-year improvement, most notably in our more impacted markets, including in the Northeast.\nLandfill tons were up 17% year-over-year on MSW tons up 11%, C&D tons up 20% and special waste tons up 33%.\nAs a result, landfill tons have returned to above pre-pandemic levels in all of our regions, except the Eastern region, which was slightly below prior levels as a result of the delayed reopening activity in markets in the Northeast.\nLooking more closely at results.\nAs noted, all waste types were up double-digit percentages year-over-year.\nHowever, the outsized amount of special waste activity was particularly noteworthy as Q2 activity propelled tons back to 13% above pre-pandemic levels with all regions up year-over-year, perhaps due to a little pull forward from Q3.\nLooking at Q2 revenues from recovery commodities, that is recycled commodities, landfill gas and renewable energy credits, or RINs.\nExcluding acquisitions, collectively, they were up about 95% year-over-year resulting in a combined margin tailwind of about 130 basis points, 90 basis points of which was from recycling and 40 basis points from landfill gas and RINs.\nRecycling revenue increases were driven by both higher commodity values, including old corrugated containers or OCC, up 25%; and plastics and metals, both up over 100%.\nHigher volumes also contributed year-over-year, again, reflecting the pandemic impact.\nPrices for OCC averaged about $135 per ton in Q2 and our RIN pricing averaged about $2.72.\nAnd finally, on to E&P waste activity.\nWe reported $31.2 million of E&P waste revenue in the second quarter, up 26% sequentially from Q1, reflecting increased activity across multiple basins.\nLooking at acquisition activity.\nAs noted earlier, we've already signed or closed 14 acquisitions with annualized revenue of approximately $115 million, approaching what we would consider an average amount of activity for the full year.\nThese transactions include multiple West Coast franchise markets, which are core to our strategy and provide unique opportunities to expand our exclusive contract portfolio.\nMoreover, our pipeline still reflects record levels of seller interest driving the potential for outsized activity in 2021, primarily given tax-related considerations.\nThat said, we continue to be selective and disciplined in our approach to acquisitions as we recognize the importance of value creation for our shareholders as well as market selection and asset positioning.\nNow I'd like to pass the call to Mary Anne to review more in depth the financial highlights of the second quarter and our increased outlook for the year and to provide a detailed outlook for Q3.\nI will then wrap up before heading into Q&A.\nIn the second quarter, revenue was $1.534 billion, about $44 million above our outlook due primarily to higher-than-expected solid waste growth and recovered commodity values.\nRevenue on a reported basis was up $228 million or 17.5% year-over-year, including acquisitions completed since the year ago period which contributed about $47.6 million of revenue in the quarter or about $44.1 million net of divestitures.\nCommodity-driven impacts account for about 100 basis points of margin expansion, net of a 30 basis point impact from higher fuel on diesel rates up almost 20% year-over-year.\nEx fuel solid waste collection transfer and disposal margins expanded by 50 basis points as we more than offset a 60 basis points increase in incentive compensation costs, 50 basis points from higher medical and 50 basis points from increased discretionary expenses.\nAnd finally, acquisitions completed since the year ago period accounted for about 10 basis points of margin dilution.\nRegarding discretionary expenses, we've begun the process of returning to a more normalized operating environment, including in-person training, meetings and other activities we consider integral to sustaining our culture and expanding our bench strength ahead of future growth.\nGiven the challenging labor environment, we have also proactively implemented supplemental wage adjustments in many markets as we anticipate or combat labor constraints.\nThese purposeful wage and discretionary cost additions, along with higher incentives, medical and other costs resulting from more typical activity levels, largely replaced last year's COVID-19-related frontline support costs, the majority of which did not repeat this year.\nAs noted earlier, we've already implemented incremental price increases to address these higher costs, resulting in full year 2021 price of approximately 5%, up from 4% in our original outlook.\nWe delivered adjusted free cash flow up 18.5% year-over-year through Q2 at $585 million or 20% of revenue, putting us on track to achieve our revised adjusted free cash flow outlook of approximately $1 billion.\nI will now review our outlook for the third quarter 2021 and our updated outlook for the full year.\nBefore I do, we'd like to remind everyone once again that actual results may vary significantly based on risks and uncertainties outlined in our safe harbor statement and filings we've made with the SEC and the Securities Commissions or similar regulatory authorities in Canada.\nWe encourage investors to review these factors carefully.\nOur outlook assumes no significant change in underlying economic trends, including as a result of or related to impacts from the COVID-19 pandemic or the delta variant of the coronavirus.\nIt also excludes any impact from additional acquisitions that may close during the remainder of the year and expensing of transaction-related items during the period.\nLooking first at Q3.\nRevenue in Q3 is estimated to be approximately $1.56 billion.\nWe expect solid waste price plus volume growth of about 7% in Q3 with pricing of about 5%.\nRecovered commodity values and E&P waste revenue are expected to remain in line with current levels, with RINs generally in line with Q2 levels and OCC trending slightly higher.\nAdjusted EBITDA in Q3 is estimated to be approximately $495 million or 31.7% of revenue, up 60 basis points year-over-year and up sequentially from Q2.\nDepreciation and amortization expense for the third quarter is estimated to be about 13.3% of revenue, including amortization of intangibles of about $33.8 million or a rounded $0.10 per diluted share net of taxes.\nInterest expense, net of interest income, is estimated at approximately $40 million.\nAnd finally, our effective tax rate in Q3 is estimated to be about 21.5%, subject to some variability.\nRevenue for 2021 is now estimated to be approximately $5.975 billion or $175 million above our initial outlook, with the primary drivers being an additional 150 basis points of solid waste price plus volume growth and higher recovered commodity values as compared to our initial outlook, plus $25 million from acquisitions completed year-to-date.\nAdjusted EBITDA for the full year is now estimated to be approximately $1.875 billion or about 31.4% of revenue and up about $75 million over our initial outlook.\nMoreover, full year adjusted EBITDA margin guidance is 40 basis points above our initial outlook, up 90 basis points year-over-year.\nAt 31.4%, our adjusted EBITDA margin outlook reflects continued year-over-year margin expansion in the second half of 2021 in spite of wage and inflationary pressures and tougher year-over-year comparisons.\nAdjusted free cash flow in 2021 is now expected to be approximately $1 billion or over 53% of EBITDA and up $15 million from our initial outlook despite capex up $50 million from our original outlook.\nLast week, we closed our new $2.5 billion credit facility, which increased borrowing capacity by almost $300 million, reduced borrowing spreads and enhanced flexibility for continued growth.\nOur balance sheet strength, together with this increased capacity, positions us for potential above-average acquisition activity and an increasing return of capital to shareholders.\nWe have already returned over $400 million to shareholders in 2021 through share repurchases and dividends.\nAnd we are in the process of renewing our normal course issuer bid, authorizing the repurchase of up to 5% of our outstanding shares per annum.\nWe will continue to approach share repurchases opportunistically and anticipate announcing another double-digit percentage per share increase in our cash dividend in October.\nAgain, broad-based strength continues to drive results ahead of expectations as we benefit from reopening activity in a supportive macro environment, including tailwinds from recovered commodity values.\nWe've once again demonstrated the importance of being selective about markets and intentional about driving results.\nQuality of revenue and comparative price retention across markets matter.\nWe're extremely pleased to be in a position to raise our outlook for the full year.\nWe are set up for continuing margin expansion through the second half of 2021 as proactive unbudgeted price increases offset wage and inflationary pressures.\nWe are on track for adjusted free cash flow of approximately $1 billion and adjusted EBITDA margins back above pre-COVID-19 levels.\nFinally, we expect to announce another double-digit percentage increase in our regular quarterly cash dividend in October and remain well positioned for potential significant increase in acquisition outlays to drive further growth in 2021 and beyond.\nWe appreciate your time today.\n",
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"content": "qtrly revenue of $1.534 billion, up 17.5% year over year.\nwaste connections inc - provides full year 2021 outlook for revenue of approximately $5.975 billion.\nq2 revenue rose 17.5 percent to $1.534 billion.\nsees fy revenue is estimated to be about $5.975 billion.\ncompname says for q3 of year, estimate revenue to be about $1.56 bln.\nfor q3, estimate expect solid waste price plus volume growth to be about 7%, with price growth of about 5%.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Kelsey Duffey, Vice President of Investor Relations at Walker & Dunlop.\nHosting the call today is Willy Walker, Walker & Dunlop Chairman and CEO.\nHe is joined by Steve Theobald, Chief Financial Officer.\nThese slides serve as a reference point for some of what Willy and Steve will touch on during the call.\nMore detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC.\nWe started off 2021 with strong first quarter financial performance, with the combination of our people brand and technology, continuing to differentiate us in the marketplace, enhance our competitive positioning, and drive terrific financial performance.\nFirst Quarter revenues of $224 million generated diluted earnings per share of $1.79 up 20% over q1 2020 on total transaction volume of $9 billion.\nThis is a very strong start to the year that appears to be accelerating by the day.\nWe laid out our five year strategic growth plan in December of last year, with one of the objectives being to move from the number five multifamily lender in the United States to number one.\nWe plan to build a small loan lending business that rival JP Morgan chases, and amazingly property sales business that rival CBR s two firms ahead of us in the 2019 league tables.\nDue to the use of technology, growth of our brand and truly fantastic execution by our team.\nWe vaulted to the number one position as the largest provider of capital to the multifamily industry.\nMy father gave me a T shirt when I was in college that read unless you are the lead dog, the scenery never changes.\nWell, the scenery can now change and we will use our market leadership position to win more clients continue investing in technology and benefit from the fantastic branding that this accomplishment establishes our vision to be the premier commercial real estate finance company in the United States was established in 2010 when Walker and Dunlop Lync $2.7 billion on commercial properties, or 7%.\nof the $37 billion that Wells Fargo lent that year as the largest lender in the country, and over the last decade due to hiring great people investing in technology and building our brand.\nby executing for our clients each and every day.\nWe moved up to the number four spot in the league tables after lending $24.7 billion on commercial real estate in 2020.\nNumber four, right behind Key Bank, Wells Fargo and JPMorgan Chase.\nAnd while that accomplishment by our team is amazing.\nWhat is even more exciting is how we are positioned to grow going forward.\nThe use of technology and financial services and commercial real estate expands every day, and will continue to accelerate over the coming decades.\nWalker no ops use of technology in 2020 allowed us to vault to the top of the league tables.\nBy making our bankers and brokers more insightful to their clients.\nMore efficient in the business they processed and more productive.\nWe are a company of only 1000 people with a very real opportunity to grow to three to 5000 people by investing in technology and entering new markets.\nOur largest competitors have 10s of 1000s and in some instances hundreds of 1000s of employees and will constantly be challenged over the coming years with how technology is going to disintermediate their existing employee base, and businesses.\nOur technology investments will continue to focus on actionable technology that enhances the capabilities of our people, as we grow Walker and Dunlop and expand into new markets.\nThe fact that we ended 2020 with 1000 employees, and over $1 billion in revenues allowed us to maintain our metric of over $1 million of revenue per employee.\nAs this slide shows, revenue per employee of over $1 million places Walker and Dunlop in line with VSA and just behind the global tech giants, Facebook, Google and Apple.\nWe believe that over the coming years as we continue to implement more technology and expand our brand, that our revenue per employee can move closer and closer to the tech giants.\nThe numbers behind our brand strategy are stunning.\nThis has not only expanded the web brand dramatically, but generated new business.\nJust last week, we closed on a $37 million financing.\nThis transaction brought us brought to us through the combination of digital marketing, branding, technology and flawless execution by our team.\nThis part of the 27% of our total transaction volume in q1 coming from new clients to Walker and Dunlop.\nThat is up from 23% for all of 2020.\nThe other technology proof point we introduced in 2020.\nnew loans to our servicing portfolio increased to 79% in q1 of 2020, up from 66% for all of 2020 so rather than simply refinancing the loans in Walker and daube sizable $110 billion servicing portfolio.\nAlmost 80% of the loans we refinanced in q1 were new loans to Walker and Dunlop, generating finance financing fees, and adding mortgage servicing rights to our loan portfolio.\nThe amount of capital targeting commercial real estate investments continues to fuel the acquisitions market.\nAccording to pre Quinn, commercial real estate focused funds began 2021 with a record $324 billion of dry powder.\nA robust investment and acquisition market, combined with a wave of loan maturities will drive healthy transaction volumes over the coming years.\nWith banks life insurance companies and debt funds coming back into the market and $105 billion of capital for Fannie and Freddie left to lend in 2021.\nWe expect the financing markets to be very active over the remainder of the year.\nAnd as you can see on this slide, over $320 billion of multifamily loans mature over the next five years.\nAnd since our technology can tell us exactly who holds those loans, there is a massive opportunity for us to capture significant refinancing volume in 2021 and beyond.\nAnd then I'll come back to talk about the terrific accomplishments we weighed in q1 toward our long term strategic growth objectives.\nWe entered 2021 with momentum from the unique combination of our people brand and technology.\nAnd that momentum contributed to both strong financial results and good progress toward the achievement of our drive to 25 long term strategic objectives in the quarter.\nFor the first quarter, we generated diluted earnings per share of $1.79 of 20% year over year on 224 million of total revenues.\nearnings in the quarter included the positive benefit of reducing our allowance for credit risk by $11.3 million, which added 25 cents to ups.\nOne personnel expense as a percentage of total revenues was 43%, which is elevated compared to a typical first quarter due to recent investments in people as we continue to scale our business and support our future growth.\nDuring the quarter, we grew our team of bankers and brokers to 214 from 205 at the start of the year, further increase in both our geographic reach with hires in Ohio, California, Texas and Maryland, and our investment sales product capabilities with the acquisition of student housing focused four point even with the increase in compensation expense, operating margin was 33%, inclusive of the reserve release, and 28% without within our typical range of 28 to 30%.\nAs non personnel expenses continue to grow at a slower rate.\nWe manage operating margin very closely and are confident that it will remain within our expected range over the course of the year.\nReturn On Equity was 19% in the quarter, consistent with last year and within our expected range of 18 to 20%.\nTotal transaction volume of $9 billion was down 20% from the first quarter of 2020.\nas anticipated, given that we originated the largest portfolio in our company's history, a $2.1 billion Fannie Mae transaction last q1.\nNotably, we saw strong debt brokerage volumes of $4.3 billion in a quarter of a percent from last year has very strong values indicative of an active market for commercial real estate financing is attracting significant amounts of capital as we continue to progress toward a post COVID environment.\n72% of our debt brokerage volumes were multifamily compared to 94% in the year ago quarter, reflecting the pickup in London on other asset classes.\nA mix of our $7.6 billion of debt financing volume in q1 21 was skewed more heavily toward debt brokerage originations as compared to the first quarter of last year.\nprimarily due to the large portfolio that I just mentioned.\nOur hot volumes at 622 million, we're up 75% from q1 20, continuing the strong performance off of 2020s record year.\nIn addition, our interim lending program was very active in the quarter with $178 million of multifamily bridge loans originated through our JV with Blackstone, and on our own balance sheet.\nThe GSE has had a relatively slow start to the year, they carried over a lot of deliveries from 2020 into 2021.\nOur market share with Fannie and Freddie remained above 11%.\nAnd we expect that our overall volumes will pick up over the next three quarters, as the GSE has managed their deal flow to ensure that they use all of their remaining $105 billion of lending capacity for the year.\nWe also expect broker debt volumes for the remainder of the year to rebound strongly from last year's COVID impacted markets.\nAs life insurance companies, banks, and debt funds are all very competitive capital providers in the market today.\nInvest in sales volume of 1.4 billion was down 19% from last year's first quarter.\nHowever, the pipeline of deals entering q2 is extremely robust, and we expect significant growth and investment sales volumes over the remainder of the year, as our recruiting efforts continue to build out both the geographic and product capabilities of the team.\nThe increase in investment sales activity will also contribute to additional debt financing opportunities over the next three quarters.\nq1 adjusted EBIT da $61 million is down slightly from q1 of last year, but it's the highest quarter of the EBIT da since the start of a pandemic.\nAs we are seeing the benefit of the strong mortgage servicing rights that we booked during 2020 translate into cash servicing fees, which were up 19% in the quarter.\nAs you can see on this slide, the servicing portfolio ended the quarter at $110 billion with a weighted average servicing fee of 24.3 basis points of one fold basis point from the first quarter of last year, which is huge given the overall size of the book, and the fact that we have added over $15 billion of net new loans to the portfolio in the last 12 months.\nWith 85% of the portfolio's future servicing fees being prepayment protected, the portfolio will continue to fuel meaningful stable cash servicing fees, approaching $275 million on an annual basis.\nAdditionally, this should be the last quarter of significant year over year declines in escrow interest and short term rates which drive the pricing of our escrow deposits collapsed at the end of first quarter of 2020 due to the pandemic.\nDuring the quarter we lowered the loss forecast used to determine the allowance for risk sharing obligations.\nAs I mentioned earlier, this resulted in an $11.3 million recapture of provision for credit losses in q1 of 2021.\nCompared to an expansive $23.6 million in the first quarter of 2020 when the pandemic was declared one year later, we have very few loans in forbearance.\nOur portfolio has had no defaults related to the pandemic, reflecting the resiliency of multifamily.\nAnd the quality of our underwriting and servicing teams have done an expert job of managing our credit risk, both before and during the pandemic further Evidence of the strong performance of our portfolio.\nThe debt service coverage ratio of the $50 billion of loans we have risk on, remained above two times at the end of 2020, consistent with the end of 2019, while unemployment rates are still relatively elevated at 6%, this is a significant improvement from the higher 14.7% that we saw in April of 2020.\nReflecting the return of jobs across the Academy, the most recent stimulus bill, combined with an anticipated full reopening of the economy by the fall in forecast and strong economic growth over the next year, gives us confidence that the fantastic credit metrics we are seeing in the portfolio today will persist into the future.\nWe feel that the current level of the allowance at $64.6 million is sufficient to cover any future losses that could arise in the portfolio over its expected remaining life.\nWe ended the quarter with over $277 million of cash on our balance sheet, and another $62 million funding loans held for sale, bringing our total cash available to $339 million.\nWe are currently exploring a number of strategic acquisition opportunities that are in line with our drive to 25 objectives, investing in revenue generating technology and initiatives and continuing to bring on banking and brokerage talent, all of which is supported by our strong cash position today.\nYesterday we announced the acquisition of 75% of Zelman and Associates, the leading housing focused research firm in the country.\nThe transaction is expected to close sometime in the third quarter, pending regulatory approval.\nWe expect the Zellman platform to contribute between 15 and 20 cents in earnings per share in its first year.\nOur focus remains reinvesting our capital back into the business through acquisitions like Zelman our strong financial position, and the steady cash generation of our business enables us also to return a portion of our capital to shareholders.\nYesterday, our board of directors approved the quarterly dividend at 50 cents per share payable to shareholders of record as of May 20.\nQuarter ago, we laid out ambitious goals for double digit growth and earnings per share, and adjusted EBIT da for 2021.\nStrong start to the year in terms of our financial performance, credit, quality, and cash position, and our expectations for the market opportunity ahead, give us confidence that we will achieve both of those goals.\nAlong with delivering strong financial results.\nDuring q1, we made significant progress toward our strategic objective of our five year growth plan to drive to 25.\nThe overarching goal of the drive to 25 is to grow revenues from $1 billion in 2020 to $2 billion in 2025.\nBy continuing to invest in people brand and technology in our core businesses, and building three new businesses in small balance lending, appraisals and investment banking.\nAs I previously mentioned, to become the largest provider of capital to the multifamily industry, we thought we needed to enter and grow dramatically our small balance lending business.\nRoughly half the multifamily loans originated every year are considered small balanced loans.\nMost of the small balance lending is done by banks, where a property owner may use the bank for checking and savings accounts and asked for a small balanced multifamily loan.\nWe see this market where local, regional and national banks are the incumbent lenders as ripe for disintermediation, using our brand technology and people.\nIf you enter a bank branch office and ask for a small multifamily loan, your loan officers a generalist who could just as easily provide you with a boat loan as an apartment building loan.\nWe think our focus and brand is the largest provider of capital, the multifamily industry can win this customer over.\nWe have data and visibility into who owns these properties.\nAnd we are building digital marketing strategies to capture clients attention.\nWe are also investing in technology to drive down the cost of underwriting a small balance loan.\nWe are acquiring a technology company that allows us to quote a small balance loan in just over a minute and also streamline the loan application, underwriting and closing process.\nWe've also completely revamped our small loan origination team, bringing in new leadership and establishing a regional origination model that we believe will allow us to originate higher volumes of loans with fewer people.\nThrough our multifamily appraisal business uprise we have quietly built out our licensed appraisers across the country, and are now capable of producing by Ria compliant appraisals using more technology and fewer people than any competitor in the market.\nA year ago, a prize produced 55 appraisals in q1 this year, we did 5x that volume and we intend to continue growing that number by multiples.\nThe use of technology in our appraisal business has broad applications in our lending and investment and sales businesses as well.\nThe final growth area that we made significant progress on in q1 is investment banking.\nAs our brand is expanded and our relationships with our clients have deepened, the need for investment banking capabilities to meet all our clients needs has become more pressing.\nMany of our bankers and brokers serve their clients in advisory capacities today.\nBut as part of our drive to 25 objectives, we set a goal to formalize and expand our investment banking services.\nTo that end, yesterday, we announced the acquisition of Zelman and Associates, a wonderful boutique, real estate focused search and investment banking firm IV Zelman, Dennis McGill and their team have built out what one of the most well respected housing research and analytics teams in the industry.\ngentleman's research team covers both single family and multifamily housing.\nAnd as these two industries collide in the single family homes for rent market, Zelman and WD will be perfectly positioned to provide expert coverage of these markets, gentleman's research and analytical capabilities, coupled with Walker and dunlops vast data from our 100 and $10 billion servicing portfolio, and technology investments provide the bankers and brokers at Walker and Dunlop with the very best insight into micro and macro markets across the country to enable their sales efforts.\nIt is our expectation that w Andy's proprietary research and market insights will make us more relevant and valuable to our clients than ever before.\nGentlemen, is a registered broker dealer.\nAnd as a housing focused investment banking team that has an incredible track record in the m&a debt and equity transaction markets, including advising in the IPOs of firms such as Rocket Mortgage and invitation homes.\nThe broker dealer and investment banking capabilities inside Zelman provide a fantastic launching pad for W Andy's investment banking business in the commercial real estate arena.\nIf you add to that equation, being the largest provider of capital to the multifamily industry, and fourth largest lender on commercial real estate in the United States, the opportunities for new recruits is vast.\nBut there is one point about our brand and digital marketing that is very important to underscore.\nWe have just begun to capitalize on what we have created.\nThat is one of many examples where our brand has generated new opportunities for Walker and Dunlop.\nWe will figure this out.\nBut we are just scratching the surface on how to identify and convert these new client touchpoints into new business and opportunities for growth.\nAs we make significant strides toward the strategic and financial components of the drive to 25.\nWe remain focused on the environmental, social and governance elements of our 2025 goals, with significant attention being given to our diversity, equity and inclusion efforts.\nWe recently launched a diversity initiative called care united in partnership with some of the largest players in the commercial real estate industry, including Fannie, Freddie greystar KKR, Kayne Anderson and Pacific life.\nThe Alliance is working to identify the obstacles that minority care owners and operators face and implement real changes across the industry to break down these barriers.\nInternally, Walker and Dunlop is also setting ambitious DNI goals, including increasing the proportion of women and minorities among management and top company earners by 2025.\nas outlined in our recent proxy statement, our compensation committee will oversee our progress toward these ambitious long term goals, which will be directly tied to executive compensation.\nI've watched this wonderful company grow from one office and just over 40 employees into the national powerhouse it is today and I must say I've never been prouder, nor more excited about all we are currently doing.\nWe established another ambitious five year growth plan at the end of 2020.\nAnd in just a few months, we have made real and exciting progress toward our goals.\nWe remain a great place to work due to the incredible people that that make W and D what it is, we continue to invest in technology to enable our people to be more insightful, more efficient, and more productive than the competition.\n",
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"content": "compname reports 20% growth in diluted earnings per share to $1.79.\nq1 earnings per share $1.79.\n",
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"content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Kelsey Duffey, Vice President of Investor Relations at Walker & Dunlop.\nHosting the call today is Willy Walker, Walker & Dunlop, Chairman and CEO.\nHe is joined by Steve Theobald, Chief Financial Officer.\nThese slides serve as a reference point for some of what Willy and Steve will touch on during the call.\nWe expressly disclaim any obligation to do so.\nMore detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC.\nBut before I dive in comments about second quarter for Walker & Dunlop, I want to reiterate our condolences to those who lost loved ones due to the COVID-19 virus and express our concern and support to the millions of Americans, who have been adversely affected by the economic downturn.\nWhile Walker & Dunlop's last Q2 financial results are exceptional.\nMany individuals and businesses have been hit extremely hard, and it is our great hope and wish, that we can control of the virus, so that jobs and businesses can be restored.\nAs we've seen since the advent of the pandemic, certain businesses have benefited from the forced changes through the way we live and work, and others have been badley damage.\nFortunately for Walker & Dunlop, we have benefited and generated record revenues of $253 million during the quarter, on the back of exceedingly strong loan origination and property sales volume of $7.1 billion.\nOur recorded loan and origination volume of $6.7 billion coupled with our Q1 lending volume of $9.6 billion, catapulted Walker & Dunlop's market share, total commercial real estate lending in the United States for the first half of 2020% to 13.2%, nearly tripling our market share from last year.\nAll these investments in people, technology and branding, came together in Q2 2020 to generate 26% year-over-year growth in revenues, and 47% year-over-year growth in diluted earnings per share to $1.95, in the midst of the global pandemic, when our entire team was working remotely.\nAnd if record revenue growth explosive earnings were not enough, we added a record net $5.2 billion of servicing from loan originations to our portfolio during the quarter, pushing our servicing portfolio to $100 billion at the end of July, and officially achieving the first pillar of our highly ambitious five-year strategic growth plan entitled Vision 2020.\nRevenue growth of 26% during the quarter and our debt brokerage and property brokerage businesses were significantly curtailed, highlights the volume of lending we did with the GSEs and HUD.\nWe originated $4.5 billion of financing with Fannie Mae and Freddie Mac in the second quarter, increasing our market share with the GSEs from 10% last year, up to 14% through the first half of 2020.\nOur partnership with Fannie Mae, which dates back to 1988, has had an incredible year, with Walker & Dunlop representing 20% of Fannie Mae's total multifamily lending volume for the first half of the year.\nWe've been Fannie Mae's largest lending partner for four the last seven years, and our performance this year leaves little doubt, that we are not only Fannie Mae's largest partner, but their very best.\n$5.2 billion of new loans into our servicing portfolio, during a quarter when we originated $6.7 billion in total financing; means, we were not simply refinancing loans that already existed in our servicing portfolio, but rather taking business from our competition and bringing in new clients into Walker & Dunlop.\nThese new mortgage servicing rights and client relationships will add huge long-term value to Walker & Dunlop.\nAs slide 6 shows, we had strong growth in our Fannie and Freddie origination volumes in Q2, and as the middle column shows, we had explosive growth with HUD this quarter, growing from $190 million of loan originations in Q2 of 2019, to $640 million loan originations this quarter, by far our largest HUD quarter ever.\nThere are several items of note in our HUD origination numbers.\nFirst, Sheri Thompson joined Walker & Dunlop 18 months ago to lead our HUD business, and has done an absolutely magnificent job, taking our team from being a market leader to being the leader in HUD financing.\nSecond, as anyone who has ever done HUD financing will tell you; HUD business takes a long time to originated process and nothing ever happens in the quarter.\nSo our fantastic Q2 was due to our team's incredible work over the past year, not due to rates dropping and HUD becoming wildly more competitive in Q2.\nBut that has happened, and rates in HUD's countercyclical role should benefit our HUD volumes in future quarters.\nFinally, as you can see just to the right of the HUD volumes, we've brokered $1.5 billion of debt to third parties during Q2.\nThat number is down 23% from Q2 2019, but still very strong, given the dislocation in place in the markets.\nIt is noteworthy, that the New York-based debt brokerage team we added in Q1 was responsible for 26% of our total brokered volume in Q2, quite an accomplishment for first quarter at Walker & Dunlop, particularly considering they are based in the epicenter of the early COVID crisis.\nSimilar to our debt brokerage business, our multifamily property sales business slowed dramatically in Q2 due to the pandemic.\nWe closed $447 million of sales volume in Q2, a slow quarter for our team, but we were seeing the market pick back up and currently have 33 properties worth $1.4 billion under contracts for closing in Q3 and Q4.\nSo with very robust GSE and HUD pipelines, our debt brokerage business rebuilding nicely, as capital begins to return of the broader market and our multifamily property sales business rebounding nicely, we feel extremely well positioned to continue outperforming the market for the remainder of 2020.\nVision 2020 was established in 2016 with very ambitious five-year goals, $30 billion of annual debt financing, $8 billion of annual investment sales, $8 billion in assets under management and $100 billion of loans in our servicing portfolio, which if achieved, would drive $1 billion in annual revenues.\nAs the left hand side of this next slide shows, we established the debt financing goal of $30 billion after originating $16.2 billion of debt financing in 2015 and on a trailing 12 month basis, as you can see in the last column of this chart, we have achieved our Vision 2020 debt financing goal by originating $31.4 billion of loans, which is a five-year compound annual growth rate on loan originations of 14%.\nSimilarly in the right side of this slide shows the growth in property sales, from established goal selling $8 billion in multifamily properties, after selling $1.5 billion in 2015, to selling $5.8 billion over the last 12 months.\nWhile the pandemic has clearly slowed down our property sales business, we have grown this business at a compound annual growth rate of 31% over the past five years and have, built an absolutely incredible team.\nI mentioned previously, the growth in our servicing portfolio to $100 billion and as this slide shows, over the past five years, we have grown the portfolio from $50.2 billion in 2015 to $100 billion today, at a compound annual growth rate of 15%.\nThe dramatic growth in loan originations, property sales, and servicing, have grown revenues, as you can see on the right side of this slide, from $468 million in $2015 to $916 million over the past 12 months, or at a compound annual growth rate of 14%.\nSo all of this brings us close, but not quite to our Vision 2020 goal of $1 billion in annual revenues, which we will continue chasing for the remainder of this year.\nWe announced twice during the second quarter, that the number of forbearance requests in our at-risk portfolio have been extremely low.\nAs seen on this slide, for various requests on office, retail and hospitality loans in our portfolio are dramatically higher than multifamily, but we have zero credit risk on any office, retail, industrial or hospitality loan we have originated and serviced today, zero.\nOur only credit risk is on multifamily, and that portfolio continues to perform exceedingly well.\nAs Steve will discuss, we took a large loan loss reserve in Q1 to incorporate the expected impacts recorded and added another $5 million to that reserve in Q2.\nThe additional reserves added in this quarter, were due entirely to growth in our servicing portfolio, and not due to any specific reserves or degradation in the credit quality in our at-risk portfolio.\nWhile it is still early days in the COVID-induced economic crisis, given the extremely small number of forbearance requests we've received in Q2, we feel extremely good about the long-standing reputation for outstanding credit discipline at Walker & Dunlop, showing itself once again.\nThere are two other topics I'd like to focus on, before turning the call over to Steve.\nFirst, when the pandemic hit, we decided we needed to communicate with our employees and customers on a direct and consistent basis.\nI started filming daily videos to all Walker & Dunlop employees, that helped every one in the team know what was going on inside and outside of the company.\nThe videos also helped maintain the exceptional corporate culture, that defines Walker & Dunlop, during a time when everyone was working from home.\nFor example, our client email database was 19,000 people prior to the COVID pandemic.\nToday, it is over 120,000 email addresses.\nOur media outreach has exploded, having Walker & Dunlop mentioned in 129 press articles in target publications during Q2, an all-time record by over 55%.\nThe second topic is racial justice and diversity.\nIt is time for real action.\nWalker & Dunlop has consistently been a leader in the commercial real estate and mortgage industries, with regard to racial diversity, and we will continue to do so.\nWe've been a major sponsor of Project Destined, Management Leadership for Tomorrow, GEAR UP, and Future Housing Leaders, and we will continue to invest our capital in time, to make these important programs to have greater impact.\nWe have reinforced our commitment to building a robust diversity and inclusion program, driven in large part by our minority employee resource group, and our women's initiative.\nAnd we have put diversity and inclusion at the center of our environmental, social and governance goals, and are in the process of tying the accomplishment of these goals to long term executive compensation.\nAs I wrote to all Walker & Dunlop clients two weeks ago, the commercial real estate industry is premised on the concept of community; communities to work, communities to shop and communities to live.\nWe must as an industry, do all we can to promote community and equality across our country during these challenging times, and most importantly, over the coming years to ensure systemic chain actually happens.\nOur second quarter results once again demonstrated the power of our business model, as we delivered exceptional top and bottom line growth and continue to strengthen our balance sheet, all while operating with a fully remote workforce.\nQ2 total transaction volume of $7.1 billion, included a significant year-over-year increase in our Fannie Mae loan originations, which drove the 26% year-over-year increase in total revenues, to a quarterly record of $253 million.\nSecond quarter net income of $62 million and diluted earnings per share of $1.95, were both up 47% from Q2 '19.\nSecond quarter total debt financing volume of $6.7 billion was led by $2.8 billion of Fannie Mae originations.\nFor the second consecutive quarter, Fannie Mae originations comprised over 40% of debt financing volume, which along with our robust HUD originations, pushed gain on sale margin to 252 basis points, well above our forecast range of 170 basis points to 200 basis points.\nThe first half of the year has been characterized by our dominant market share with Fannie Mae.\nLooking at our current pipeline of GSE business, we expect to see an increase in our Freddie Mac originations in the second half, particularly in Q3.\nOur HUD business is poised for a breakout year in 2020, having originated $640 million in the quarter and with a strong pipeline for the rest of the year, while debt brokerage volumes will likely continue to be constrained by the current economic environment.\nAnticipating the shift to more Freddie Mac originations in Q3, we expect gain on sale margin to be in the range of 190 basis points to 210 basis points for the quarter.\nOur scaled business model continues to produce healthy key financial metrics, with second quarter operating margin of 33% and return on equity of 23%, both well above the top end of our target ranges of 30% and 20% respectively.\nPersonnel expense as a percentage of revenue was 42%, due to an increase in variable expenses for commissions and bonus, driven by the strong performance during the quarter.\nVariable compensation expense was 60% of our total personnel costs during the quarter.\nAnd finally, year-to-date revenue per employee has increased to over $1.1 million, as revenue growth has outpaced the hiring of new employees.\nOur strong debt financing volumes in the first half of the year have enabled us to grow our servicing portfolio by more than $6.5 billion in the last six months and our servicing portfolio ended the quarter at just $12 million below the $100 billion mark.\nAs Willy, mentioned we have since crossed over $100 billion, successfully achieving an important pillar of our Vision 2020 goals.\nThe portfolio continues to fuel strong cash revenues, with record servicing fees totaling $57 million in Q2.\nAdditionally, the record mortgage servicing rights revenues of $90 million in the quarter, which were more than double those of Q2 '19, will translate into higher cash servicing fees in the future.\nTurning now to liquidity, we continue to strengthen the balance sheet, increasing our available cash on hand, from $205 million at the end of Q1 to $275 million at the end of June.\nThe increase in cash was driven by strong operating cash flows and continued payouts in our interim loan portfolio.\nAdjusted EBITDA in the quarter was $48.4 million, down from $62.6 million in the year ago quarter.\nThe decline was driven primarily by the impact of low short-term interest rates on our escrow earnings, which declined by $12 million year-over-year.\nOur average escrow balances at the end of June were $2.2 billion, which will drive significant upside to earnings and adjusted EBITDA, if interest rates start to rise.\nDuring the quarter, we also finalized the servicing advance line mentioned in our last call, to facilitate the advancing the principal and interest payments on our Fannie Mae portfolio.\nThe advanced line is structured as a $100 million supplement to an existing agency warehouse line, and may be used to fund advances of principal and interest payments on loans that are in forbearance or are delinquent within our Fannie Mae DUS portfolio.\nThe facility provides 90% of the principal in interest advance payment, at a rate of LIBOR plus 175, and is collateralized by Fannie Mae's commitment to repay the advances.\nTo date, we have had very few requests for forbearance.\nThrough the end of July, we had only nine Fannie Mae loans, totaling $261 million that took forbearance, which is less than 60 basis points of our Fannie Mae portfolio and we have granted no new requests since May.\nIn addition, the three loans that took forbearance in April, all made their first post forbearance period payments in July, a really good sign as the initial three month forbearance periods come to an end.\nDuring the quarter, we took an additional $5 million provision expense, to increase our allowance for credit obligations related to our at-risk Fannie Mae portfolio.\nThe provision expense was driven by the growth in our portfolio during the quarter, and was not related to any change in our forecast for future losses.\nSince we established our loss forecast in the first quarter, our portfolio has continued to perform very well.\nAs demonstrated by the de minimis number of forbearance requests to date, and with those who requested forbearance in April, all making their required post forbearance payment in July.\nUnemployment rates are at the levels we expected, and it seems likely that additional government stimulus will be provided, while the economy remains burdened by COVID-19.\nOur allowance now stands at just over $69 million or 17 basis points of our at-risk portfolio.\nWe fully expect that there will be defaults in the portfolio over the next year, but that is baked into our forecast.\nWith respect to our interim loan portfolio, we reduced our allowance by $200,000 during the quarter, due to the overall decrease in the size of the portfolio, which declined from $458 million at March 31, to $408 million at the end of June.\nSo far this year, we've reduced the portfolio by 25%.\nInclusive of the interim loans in the Blackstone JV, we've had 12 loans, totaling $240 million, either rate lock or pay-offs so far this, year reducing the risk profile significantly.\nAnd of those 12 loans at rate locked or paid off, we refinanced 10 of them with third party capital, mostly Fannie and Freddie, for over $290 million in permanent loan financing, achieving exactly the objective we have always had for the interim lending program.\nWe expect to restart our interim lending in Q3.\nCautiously at first, given the opportunities we see in the market to originate high quality loans from our very best sponsors.\nOverall, we feel really good about the performance of our entire portfolio to date, and the strong performance of the multifamily market through this crisis.\nLast quarter, in light of the massive uncertainty we faced at the time, we backed off of our goal for double-digit earnings-per-share growth in 2020.\nOur strong financial results for the first half of the year and the pipeline of business we see for Q3, have put us back on track to achieving our annual operating margin and return on equity goals of 28% to 30%% and 18% to 20% respectively, and we believe double-digit earnings per share growth for 2020 is now achievable.\nIn addition, our robust capital and liquidity position give us great confidence in maintaining our dividend, as the Board approved a $0.36 dividend per share for the quarter, payable to shareholders of record as of August 21.\nWe had an amazing first half of 2020, on the face of uncertain economic environment.\nThis is all due to our resilient business model and exceptional team, which continues to deliver for our clients, shareholders and each other quarter-after-quarter and year-after-year.\nWe have been using Zoom to conduct our weekly Executive sales calls, long before the COVID pandemic hit, as well as Salesforce and Box to manage our client outreach and collaboration.\nAnd our team of 900 employees took it upon themselves, to figure out how to inspect properties, receive appraisals, close loans and continue providing the exceptional service to our customers, this is expected to Walker & Dunlop each and every day.\nThe seamless transition to remote working, low interest rates and tight Investor spreads on agency backed commercial mortgage debt has created a terrific environment for refinancing activity in the multifamily sector.\nAnd as I mentioned previously, W&D has been refinancing new loans, not [Phonetic] our own portfolio, which has dramatically expanded our market shift.\nAnd with multifamily comprising close to 80% of total commercial real estate financing volumes so far this year, we are extremely well positioned to be one of the largest providers of capital to the commercial real estate industry over the coming years.\nA strong macroeconomic environment coming out of the pandemic, should drive continued financing volumes in our core multifamily business, and as the multifamily property sales business rebounds, so should our capital markets business, as non-multifamily asset classes, such as office, retail and hospitality stabilize.\nAs I ran through Vision 2020 on a trailing 12 month basis, I did not discuss our asset management business, which as we started at the end of -- to as we stated at the end of 2019, is not going to achieve the 2020 Vision goal of $8 billion of AUM.\nThere are however several noteworthy accomplishments during the quarter, that I'd like to underscore.\nFirst our AUM of $1.9 billion comprises three components; equity capital, invested in a broad array of commercial property types by JCR Capital; debt capital we lend on behalf of life insurance companies through separate accounts; and multifamily bridge loans we originate into our joint venture with Blackstone Mortgage Trust.\nDuring Q2, we reached an agreement with a large Canadian pension fund to provide up to $250 million of preferred equity capital on multifamily deals, where we are originating first trust mortgage financing with Fannie Mae or Freddie Mac.\nWe also rebranded JCR Capital to Walker & Dunlop Investment Partners, and reorganize the business going forward.\nFinally, during the quarter, we began efforts to raise our sixth fund, an Opportunity Fund.\nSo while our management business has not grown as rapidly as Vision 2020 had outlined, we were extremely pleased with the progress made during the quarter and its outlook going forward.\nSteve made a point during his comments that I'd like to underscore, as we think about the new business we are originating today and how it will play out in future quarters.\nThe loans we are currently originating, carry with them significant servicing fees, demonstrated by our 252 basis point gain on sale margin in Q2.\nAs you can see in our net income and EBITDA numbers, we are generating a huge amount of non-cash revenue in mortgage servicing rights, that will convert into cash revenues over the next seven, 10 and even 40 years, depending on the life of the loan.\nSo non-cash revenues today convert to cash tomorrow.\nWe also expect our debt and property brokerage volumes to be significantly higher in Q3 and going forward into next year, which will add cash origination fees.\nAnd finally, at some point, interest rates will begin to rise, and we will generate substantial cash interest income off our $2.2 billion in escrow deposits.\nSo while we have had an exceedingly successful quarter by any measure, it is truly exciting to think about the future cash generation of the platform we have built.\nWalker & Dunlop went public in Q4 of 2010, just as the economy was emerging from the great financial crisis.\nThat quarter and our IPO were seminal moments in our company's long history, and set us up for dramatic growth we have generated over the past decade.\nQ2 2020 is another seminal quarter for our company.\nWhere the team, scale brand and culture we have built, immediately differentiated us from the competition.\nWalker & Dunlop has proven time and again, that we can weather commercial real estate cycles and emerge as the very best in the industry.\nAnd during times of market uncertainty, borrowers want to work with the very best.\nWe use the momentum gained during the quarter to add property sales talent in Los Angeles and Nashville, acquire a debt and equity placement team in New York, and bring on a HUD team in Dallas.\nWe just became a Freddie Mac small balance lender, which gives our team, the ability to originate small loans for both Fannie Mae and Freddie Mac.\nAnd we hired one of the top small balance loan originators in the industry, to help us grow this area of our business.\nFinally, we continue to invest heavily in our appraisal joint venture.\nApprise and other technology initiatives.\nEven during a period of market stress, our strong market position and financial stability have allowed us to remain focused on our long-term growth strategy initiatives, and continue to invest in our people and platform, to drive growth in future years.\nI've been proud of our teams since the day I joined Walker & Dunlop.\nBut never in my 17 years at the company, have I seen how good we truly are, demonstrated so dramatically.\nAll while continuing to invest in future growth.\nThere are plenty of challenges that we will face in the coming months and years, but as we have shown time and again, Walker & Dunlop is not only up for the challenge, but will emerge the winner.\nI know working remotely has its challenges and its benefits, but we are blessed to have an incredible company, with an outstanding corporate culture and if our performance in Q2 is any indicator, we have plenty of exciting times ahead.\n",
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"content": "walker & dunlop q2 revenue rose 26 percent to $252.8 million.\ncompname reports record revenues of $253 million as diluted earnings per share grows 47% to $1.95.\nq2 revenue rose 26 percent to $252.8 million.\nq2 earnings per share $1.95.\ntotal transaction volume of $7.1 billion, down 2% from q2'19.\n",
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